AMENDED STOCK PURCHASE AGREEMENT
Exhibit 10.1
AMENDED STOCK PURCHASE AGREEMENT
This Amended STOCK PURCHASE AGREEMENT (this “Agreement”), is made and entered into as of
August 29, 2006, by and between VIRCO MFG. CORPORATION, a Delaware corporation (the “Company”), and
the purchasers listed on the signature page of this Agreement (each a “Purchaser” and collectively
the “Purchasers”).
WHEREAS, the Company and the Purchasers entered into certain Stock Purchase Agreements dated
as of June 26, 2006 (the “Prior Agreements”) whereby the Company agreed to issue and sell, and the
Purchasers agreed to purchase and pay for, an aggregate of 60,246 shares of the Company’s Common
Stock, par value $.01 per share (the “Shares”); and
WHEREAS, following discussions with the American Stock Exchange (the “Amex”) in connection
with the Company’s application to list the Shares on the Amex, it was mutually agreed that the ten
(10) day measuring period to calculate the fair market value of the Shares was inappropriate and
should relate instead to the June 26, 2006 date of the Stock Purchase Agreements, rather than to
the date of the Company’s agreement with its third party investors; and
NOW THEREFORE, the parties hereto agree that the Prior Agreements are hereby cancelled and
rescinded, and the entire continuing understanding and agreement of the Company and the Purchasers
with respect to sale and purchase of the Shares is as set forth in this Stock Purchase Agreement.
Subject to the terms and conditions of this Agreement, the Purchasers hereby agree to purchase
(severally and not jointly), and the Company hereby agrees to sell and issue to the Purchasers, at
the Closing (as defined below) the respective number of Shares, as are set forth on Schedule A to
this Agreement, and each Purchaser agrees to purchase and pay for that number of the Shares as is
indicated next to his/her name on Schedule A.
(a) Completion of the purchase and sale of the Shares (the “Closing”) shall occur at the
offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company, at 0000 Xxxxxxx Xxxx Xxxx, 00xx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at 11:00 a.m. local time on September 31, 2006, or such other time
and date as may be agreed by the parties (the “Closing Date”).
(b) At the Closing, the Company shall issue and deliver to each Purchaser a stock certificate
registered in the name of such Purchaser representing the number of Shares purchased by such
Purchaser as set forth on Schedule A hereto. Each stock certificate shall bear an appropriate
legend referring to the fact that the Shares are being sold in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”) and Rule 506 under the Securities Act, as applicable.
(c) At the Closing each Purchaser shall pay to the Company readily available funds in the
respective amount committed as set forth opposite his name on Schedule A (collectively in the
aggregate, the “Purchase Price”).
The Purchase Price for the Shares deliverable by the Company to the Purchasers at Closing
shall be $5.02 for each of the Shares purchased, which was the average daily closing price for
shares of the Company’s Common Stock on the American Stock Exchange (“Amex”) during a ten (10) day
measuring period prior to the date of the Prior Agreement.
(a) The Company’s obligation to complete the sale of the Shares shall be subject to its
receipt on the Closing Date of funds in the full amount of the Purchase Price in payment for the
Shares.
(b) The Purchasers’ obligation to pay for the Shares shall be subject to their receipt of the
following items on the Closing Date:
(i) Stock certificates representing the Shares in form satisfactory to the Purchasers;
(ii) Warrant certificates in the form attached hereto as Schedule B (the “Warrants”)
representing the Purchasers’ right to acquire 25% of the number of Shares being purchased on
the Closing Date (the “Warrant Shares”) over a five year period at an exercise price of
$5.60 per share during the first three (3) years following the Closing Date and of $6.06 per
share during the fourth (4th) and fifth (5th) years following the Closing Date; and
(iii) Evidence of listing of the Shares on the Amex.
The Company hereby represents and warrants to the Purchasers as follows:
The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware. The Company has the corporate power and
authority to own, lease and operate its properties and to conduct its business as currently
conducted and to enter into and perform its obligations under this Agreement. The Company is duly
qualified as a foreign corporation to transact business and is in good standing in any other
jurisdiction in which such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure to so qualify would not, singly or
in the aggregate, have a material adverse effect on the financial condition or the earnings or
assets of the Company.
(a) This Agreement has been duly executed and delivered by the Company and constitutes a valid
and binding obligation of the Company, enforceable against the Company in accordance with its
terms.
(b) The execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement and the fulfillment of the terms of this Agreement (i)
have been duly authorized by all necessary corporate action on the part of the Company; (ii) will
not conflict with or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease, sublease, voting agreement,
voting trust or other agreement to which the Company is a party or by which it may be bound, or to
which any of the property or assets of the Company is subject; (iii) will not trigger anti-dilution
rights
or other rights to acquire additional equity securities of the Company; and (iv) will not
result in any violation of the provisions of the certificate of incorporation or bylaws of the
Company or any applicable statute, law, rule, regulation or order.
(a) The Shares have been duly authorized for issuance and sale pursuant to this Agreement,
and, when issued and delivered by the Company pursuant to this Agreement against payment by the
Purchasers of the Purchase Price, they will be validly issued and fully paid and nonassessable and
free and clear of all pledges, liens and encumbrances.
(b) Issuance of the Shares is not subject to preemptive or other similar rights. No further
approval or authority of the stockholders or the Board of Directors of the Company will be required
for the issuance and sale of the Shares as contemplated in this Agreement.
(c) Subject to the accuracy of the Purchasers’ representations and warranties in Section 5 of
this Agreement, the offer, sale, and issuance of the Shares in conformity with the terms of this
Agreement constitutes a transaction exempt from the registration requirements of Section 5 of the
Securities Act.
(a) The authorized capital stock of the Company consists of twenty five million (25,000,000)
shares of Common Stock and three million (3,000,000) shares of Preferred Stock.
(b) As of July 6, 2006, the issued and outstanding capital stock of the Company consisted of
fourteen million three hundred twenty two thousand fifty one (14,322,051) shares of Common Stock.
No shares of preferred stock are issued and outstanding. The shares of issued and outstanding
Common Stock of the Company have been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of any preemptive or other similar rights.
(c) The Company has reserved, and has available for future issuance, an aggregate of 686,559
shares of Common Stock under the Company’s stock option plan (i) for issuance of shares upon the
exercise of stock options granted or available for future grant and (ii) for issuance of shares of
restricted stock. With the exception of the foregoing, there are no outstanding subscriptions,
options, warrants, convertible or exchangeable securities or other rights granted by the Company to
purchase shares of Common Stock or other securities of the Company, and there are no commitments,
plans or arrangements to issue any shares of Common Stock or any security convertible into or
exchangeable for Common Stock.
The January 31, 2006 financial statements of the Company filed with the Securities and
Exchange Commission (“SEC”) as part of the Company’s Form 10-K dated April 13, 2006 present fairly
the financial position of the Company as of the dates indicated and the results of the Company’s
operations for the periods specified. These financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis and any supporting
schedules included with the financial statements present fairly the information stated in the
financial statements. The financial and statistical data set forth in the Company’s Form 10-K
referred to above were prepared on an accounting basis consistent with such financial statements.
Since July 6, 2006,
(a) there has been no material adverse change in the financial condition or in the earnings or
assets of the Company, whether or not arising in the ordinary course of business;
(b) there have been no transactions entered into by the Company other than those in the
ordinary course of business which are material with respect to the Company;
(c) there has been no issuance of additional shares of the Company’s Common Stock;
(d) there has been no dividend or distribution of any kind declared, paid or made by the
Company on its Common Stock; and
(e) the Company has incurred no material liabilities or material contingent obligations.
The Company intends to use the proceeds from sale of the Shares for working capital and other
general corporate purposes.
The Company is not in violation of its certificate of incorporation or bylaws or in material
default in the performance or observance of any obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement, note, lease, sublease,
voting agreement, voting trust, or other material agreement to which the Company is a party or by
which it may be bound, or to which any of the property or assets of the Company is subject.
There is no action, suit or proceeding before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against the
Company which, singly or in the aggregate, would result in any material adverse change in the
financial condition or in the earnings or business prospects of the Company, or which, singly or in
the aggregate, might materially and adversely affect the properties or assets of the Company or
which might materially and adversely affect the consummation of this Agreement, nor, to the best
knowledge of the Company, is there any reasonable basis therefor. The Company is not in default
with respect to any judgment, order or decree of any court or governmental agency or
instrumentality which, singly or in the aggregate, would have a material adverse effect on the
assets, properties or business of the Company.
All of the contracts filed with the SEC as part of the Company Documents are in full force and
effect on the date hereof, except for contracts the termination or expiration of which would not,
singly or in the aggregate, have a material adverse effect on the business, properties or assets of
the Company. Neither the Company nor, to the best knowledge of the Company, any other party is in
material breach of or default under any such contracts. The Company is in full compliance with all
covenants, financial or otherwise, contained within its loan agreements and the Company has not
received any correspondence from any of its lenders questioning or otherwise relating to the
Company’s compliance with any such covenants.
Except as would not, singly or in the aggregate, reasonably be expected to have a material
adverse effect on the financial condition or the earnings or assets of the Company,
(a) the Company is in compliance with all applicable Environmental Laws (as defined below);
(b) the Company has all permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance with the requirements of such permits authorizations and
approvals; and
(c) there are no pending or, to the best knowledge of the Company, threatened Environmental
Claims (as defined below) against the Company.
For purposes of this Agreement, the following terms shall have the following meanings:
“Environmental Law” means any United States (or other applicable jurisdiction’s) Federal, state,
local or municipal statute, law, rule, regulation, ordinance, code, policy or rule of common law
and any judicial or administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety or any chemical,
material or substance, exposure to which is prohibited, limited or regulated by any governmental
authority. “Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
No labor dispute with the employees of the Company exists or, to the best knowledge of the
Company, is threatened. To the best knowledge of the Company, no management level or other
significant employee has indicated that he or she intends to terminate his or her employment with
the Company and the Company has no plans to terminate any management level or other significant
employee.
The Company has good and marketable title to its properties, free and clear of any material
security interests, mortgages, pledges, liens, charges, encumbrances and claims of record, except
for the lien on substantially all of the assets and properties of the Company held by Xxxxx Fargo
Bank. The properties of the Company are, in the aggregate, in good repair (reasonable wear and
tear excepted) and suitable for their respective uses. All real property held under lease by the
Company is held under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company. The Company owns or
leases all such properties as are necessary to its business or operations as now conducted.
(a) The Company owns or is licensed to use all patents, patent applications, inventions,
trademarks, trade names, applications for registration of trademarks, service marks, service xxxx
applications, copyrights, know-how, manufacturing processes, formulae, trade secrets, licenses and
rights in any thereof and any other intangible property and assets that are material to the
business of the Company as now conducted and as proposed to be conducted (in this Agreement called
the “Proprietary Rights”).
(b) The Company does not have any knowledge of, and the Company has not given or received any
notice of, any pending conflicts with or infringement of the rights of others with respect to any
Proprietary Rights or with respect to any license of Proprietary Rights which are material to the
business of the Company.
(c) No action, suit, arbitration, or legal, administrative or other proceeding, or
investigation is pending, or, to the best knowledge of the Company, threatened, which involves any
Proprietary Rights, nor, to the best knowledge of the Company, is there any reasonable basis
therefor.
(d) The Company is not subject to any judgment, order, writ, injunction or decree of any court
or any Federal, state, local, foreign or other governmental department, commission or board,
domestic or foreign, or any arbitrator, and has not entered into or is not a party to any contract
which restricts or impairs the use of any such Proprietary Rights in a manner which would have a
material adverse effect on the use of any of the Proprietary Rights.
(e) The Company has not received written notice of any pending conflict with or infringement
upon any third-party proprietary rights.
(f) The Company has not entered into any consent, indemnification, forbearance to xxx or
settlement agreement with respect to Proprietary Rights. No claims have been asserted by any
person with respect to the validity of the Company’s ownership or right to use the Proprietary
Rights and, to the best knowledge of the Company, there is no reasonable basis for any such claim
to be successful.
(g) The Company has complied, in all material respects, with its obligations relating to the
protection of the Proprietary Rights which are material to the business of the Company pursuant to
licenses.
(h) To the best knowledge of the Company, no person is infringing on or violating the
Proprietary Rights.
The Company possesses and is operating in compliance with, all material licenses,
certificates, consents, approvals and permits from all state, federal, foreign and other regulatory
agencies or bodies necessary to conduct the businesses now operated by it, and the Company has not
received any notice of proceedings relating to revocation or modification of any such permit or any
circumstance which would lead it to believe that such proceedings are reasonably likely which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the financial condition or the earnings, assets or business
prospects of the Company.
The Company has filed all tax returns required to be filed, which returns are true and correct
in all material respects, and the Company is not in default in the payment of any taxes, including
penalties and interest, assessments and fees, shown thereon due or otherwise assessed, other than
those being contested in good faith and for which adequate reserves have been provided or those
currently payable without interest which were payable pursuant to said returns or any assessments
with respect thereto.
The Company has conducted, and is conducting, its business in compliance with all applicable
Federal, state, local and foreign statutes, laws, rules and regulations, except where the failure
to do so would not, singly or in the aggregate, have a material adverse effect on the financial
condition, earnings or assets, of the Company.
The Company maintains insurance of the type and in the amount that the Company reasonably
believes is adequate for its business, including, but not limited to, insurance covering all real
and personal property owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated companies, all of
which insurance is in full force and effect.
No registration, authorization, approval, qualification or consent with or required by any
court or governmental/ regulatory authority or agency is necessary in connection with the execution
and delivery of this Agreement or the offering, issuance or sale of the Shares under this
Agreement, except for the filings disclosed in this Agreement to be made with the SEC and the Amex.
(a) The Company has timely filed with the SEC all documents required to be filed by the
Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
(b) The information contained in the following documents (the “Company Documents”), is true
and correct in all material respects as of their respective filing dates and as of the date of this
Agreement:
(i) | the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2006; and | ||
(ii) | the Company’s Proxy Statement for its 2006 Annual Meeting of Stockholders. |
(c) As of their respective filing dates, the Company Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, and none of the Company Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not misleading.
Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales in any security or solicited any offers to buy
any security under circumstances that would require registration under the Securities Act of the
issuance of the Shares to the Purchasers. The issuance of the Shares to the Purchasers will not be
integrated with any other issuance of the Company’s securities (past, current or future) for
purposes of the Securities Act or any applicable rules of the Amex. The Company will not make any
offers or sales of any security that would cause the offering of the Shares to be integrated with
any other offering of securities by the Company for purposes of any registration requirements under
the Securities Act or any applicable rules of the Amex.
The Company has not taken, and will not take, any action that might reasonably be expected to
cause or result in unlawful manipulation of the price of the Common Stock to facilitate the sale of
the Shares.
Except (a) as disclosed in the Company’s Form 10-K dated April 13, 2006, and (b) as set forth
in the Virtue Family Agreement, the Company does not have any oral or written contracts,
arrangements or other agreements with any officer, director or 5% or greater stockholder of the
Company or any affiliate of any such person.
Each Purchaser represents, warrants and covenants to the Company as follows:
(a) Such Purchaser has a preexisting business relationship with the Company and by reason of
his business or financial experience has the capacity to protect his own interests in connection
with purchase of the Shares.
(b) Such Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D
promulgated under the Securities Act and is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares representing an
investment decision like that involved in the purchase of the Shares, including investments in
securities issued by the Company. Such Purchaser has requested, received, reviewed and considered
all information deems relevant in making an informed decision to purchase the Shares.
(c) Such Purchaser is acquiring the Shares for his own account for investment only and, except
as contemplated by this Agreement, has no present intention of distributing any of the Shares nor
any arrangement or
understanding with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in Section 7 of this
Agreement.
(d) Such Purchaser has, in connection with its decision to purchase the Shares, relied solely
upon the representations and warranties of the Company contained in this Agreement, review of the
Company Documents and his own due diligence examination of the Company.
(e) Such Purchaser acknowledges that an investment in the Shares is a speculative investment
and has a high degree of risk. Such Purchaser acknowledges that he has had the opportunity to
obtain and review all information from the Company necessary to make a reasonably informed
investment decision and he has had all questions asked of the Company answered to his reasonable
satisfaction. Such Purchaser is able to bear the economic risk of an investment in the Shares.
This Agreement has been duly executed and delivered by such Purchaser and constitutes a valid
and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its
terms.
(a) Such Purchaser will not make any sale of the Shares without satisfying the requirements of
the Securities Act and the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the Securities Act, and such
Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company
pursuant to a resale under the Registration Statement unless the stock certificate submitted to the
Company’s transfer agent evidencing the Shares is accompanied by a certificate from such Purchaser
to the effect that (i) the Shares have been sold in accordance with the Registration Statement and
(ii) the requirement of delivering a current prospectus has been satisfied.
(b) Such Purchaser will notify the Company promptly of the sale of any of the Shares, other
than sales pursuant to a Registration Statement contemplated in Section 7 of this Agreement or
sales upon termination of the transfer restrictions pursuant to Section 7 of this Agreement.
Notwithstanding any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the Purchasers in this Agreement
shall survive the execution of this Agreement, the delivery to the Purchasers of the Shares being
purchased and the payment therefor.
Except as otherwise expressly provided in this Agreement, the Company and the Purchasers shall
each pay their own respective fees and expenses (including, without limitation, the fees of any
attorneys, accountants or others engaged by such party) incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are consummated.
This Agreement constitutes the complete and exclusive statement of the terms of the agreement
between the Company and the Purchasers with respect to sale and purchase of the Shares and
supersedes all prior agreements, understandings, promises, and arrangements, oral or written,
between the parties with respect to the subject matter hereof.
All notices, requests, consents and other communications under this Agreement shall be in
writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or
nationally recognized overnight express courier postage prepaid, and shall be delivered as
addressed as follows:
(a) if to the Company, to:
Virco Mfg. Corporation
0000 Xxxxxxx Xxx
Xxxxxxxx, XX 00000
Attn: Chief Executive Officer
0000 Xxxxxxx Xxx
Xxxxxxxx, XX 00000
Attn: Chief Executive Officer
or to such other person at such other place as the Company shall designate to the Purchaser in
writing; and
(b) if to any Purchaser, at its address as set forth on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.
Notice shall be deemed effectively given upon confirmation of receipt by facsimile, one
business day after deposit with such overnight courier or three days after deposit of such
registered or certified airmail with the U.S. Postal Service, as applicable.
This Agreement may not be modified or amended except pursuant to an instrument in writing
signed by the Company and the Purchasers.
The headings of the various sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed to be part of this Agreement.
If any provision contained in this Agreement should be held to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired thereby.
This Agreement shall be governed by and construed in accordance with the laws of the state of
California and the federal law of the United States of America.
This Agreement is being executed in two or more counterparts, each of which shall constitute
an original, but all of which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by the party to this Agreement and
delivered to the other parties.
[Signature Page Follows]
VIRCO MFG. CORPORATION | ||||
By: |
/s/ Xxxxxx X. Dose | |||
Its:
|
Vice President Finance |
The “Purchasers” |
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/s/ Xxxxx Xxxxxxx |
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/s/ Xx Xxxxxx |
||
/s/ Xxxx Xxxxxx |
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/s/ Xxxxxx Xxxx |
||
/s/ Xxxxx Xxxxxxxx |
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/s/ Xxxx Xxxxxxxxx |
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/s/ Xxxxx Xxxxxx |
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/s/ Xxxxx Xxxxx |
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/s/ Xxxxxx Xxx |
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/s/ Xxxxxx Virtue |
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/s/ Xxxx Virtue |
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/s/ Xxxx Xxxxxx |
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Schedule A
No. of Shares and | Share Purchase | |||||||
Name and Address of Purchaser | Warrants Purchased | Price | ||||||
Xxxxx Xxxxxxx |
996 | $ | 4,999.92 | |||||
249 | ||||||||
Xx Xxxxxx |
929 | $ | 4,663.58 | |||||
232 | ||||||||
Xxxx Xxxxxx |
2,787 | $ | 13,990.74 | |||||
697 | ||||||||
Xxxxxx Xxxx |
1,992 | $ | 9,999.84 | |||||
000 | ||||||||
Xxxxx Xxxxxxxx |
398 | $ | 1,997.96 | |||||
100 | ||||||||
Schedule A
No. of Shares and | Share Purchase | |||||||
Name and Address of Purchaser | Warrants Purchased | Price | ||||||
Xxxx Xxxxxxxxx |
7,968 | $ | 39,999.36 | |||||
1,992 | ||||||||
Xxxxx Xxxxxx |
3,300 | $ | 16,566.00 | |||||
825 | ||||||||
Xxxxx Xxxxx |
1,998 | $ | 10,029.96 | |||||
500 | ||||||||
Xxxxxx Xxx |
4,000 | $ | 20,080.00 | |||||
1,000 | ||||||||
Xxxxxx Virtue |
5,000 | $ | 25,100.00 | |||||
1,250 | ||||||||
Xxxx Virtue |
8,576 | $ | 43,051.52 | |||||
2,114 | ||||||||
Schedule A
No. of Shares and | Share Purchase | |||||||
Name and Address of Purchaser | Warrants Purchased | Price | ||||||
Xxxx Xxxxxx |
19,511 | $ | 97,945.22 | |||||
4,878 | ||||||||
Schedule B
FORM OF WARRANT AGREEMENT
THIS WARRANT AND THE UNDERLYING COMMON STOCK MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
This certifies that, for good and valuable consideration, receipt of which is hereby
acknowledged, (the “Holder”) is entitled to purchase, subject to
the terms and conditions of this Warrant, from Virco Mfg. Corporation, a Delaware corporation (the
“Company”), an aggregate of ( ) fully paid and nonassessable shares of
the common stock, $.01 par value per share (the “Common Stock”), of the Company during the period
commencing on the date of this Warrant and ending at 5:00 p.m. California time five (5) years from
such date (the “Expiration Date”), at which time this Warrant will expire and become void unless
earlier terminated as provided herein. The shares of Common Stock of the Company for which this
Warrant is exercisable, as may be adjusted from time to time pursuant to the terms hereof, are
hereinafter referred to as the “Warrant Shares”.
Schedule B
destruction, of indemnity or security reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant, if mutilated, the Company shall make and deliver a new replacement
Warrant and dated as of such cancellation, in lieu of this Warrant.
(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time
prior to the Expiration Date subdivide its shares of Common Stock by split-up or otherwise, or
combine its shares of Common Stock, then the number of Warrant Shares as to which this Warrant is
exercisable as of the date of such subdivision, split-up or combination shall be proportionately
increased in the case of a subdivision, or proportionately decreased in the case of a combination.
Appropriate, corresponding adjustment shall also be made to the Exercise Price so that the
aggregate purchase price payable for the total number of Warrant Shares purchasable under this
Warrant as of such date remains the same.
(b) Stock Dividend. If at any time the Company declares a dividend or other
distribution on its Common Stock payable in Common Stock or Convertible Securities without payment
of any consideration by the then-existing stockholders for the additional shares of Common Stock or
the Convertible Securities (including the additional shares of Common Stock issuable pursuant to
the terms thereof), then the number of Warrant Shares as to which this Warrant may be exercised
shall be increased as of the record date for determining which holders of Common Stock shall be
entitled to receive such dividend, in proportion to the increase in the number of outstanding
shares (and shares of Common Stock issuable pursuant to the terms of the Convertible Securities) of
Common Stock as a result of such dividend, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Warrant Shares issuable hereunder immediately
after the record date (or on the date of such distribution, if applicable) for such dividend shall
equal the aggregate amount so payable immediately before such record date. As used herein,
“Convertible Securities” means evidences of indebtedness, shares of stock or other securities,
which are convertible into, exchangeable for, with or without payment of additional consideration,
shares of Common Stock, either immediately or upon the arrival of a specified date or the happening
of a specified event or both.
(c) Other Distributions. If at any time after the date hereof the Company distributes
to its stockholders, other than as part of its dissolution or liquidation or the winding up of its
affairs, any shares of its Common Stock, any evidence of indebtedness or any of its assets (other
than cash, Common Stock or Convertible Securities), then the Company may, at its option, either (i)
decrease the Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the Company’s Board of
Directors or (ii) provide by resolution of the Company’s Board of Directors that on exercise of
this Warrant, the Holder hereof shall thereafter be entitled to receive, in addition to the Warrant
Shares otherwise receivable on exercise hereof, the number of shares or other securities or
property which would have been received had this Warrant at the time been exercised.
(d) Merger. If at any time after the date hereof there shall be a merger or
consolidation of the Company with or into another corporation when the Company is not the surviving
corporation, then the Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the aggregate Exercise Price then in effect,
the number of shares or other securities or property of the successor corporation resulting from
such merger or consolidation, which would have been received by the Holder for the Warrant Shares
had this Warrant been exercised at such time.
(e) Reclassification. If at any time after the date hereof there shall be a change or
reclassification of the securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes, then the Holder shall
thereafter be entitled to receive upon
Schedule B
exercise of this Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares or other securities or property resulting from such
change or reclassification, which would have been received by Holder for the Warrant Shares had
this Warrant been exercised at such time.
(a) a dissolution, liquidation or winding up of the Company shall be submitted to the
stockholders of the Company for approval; or
(b) a capital reorganization or reclassification of the Common Stock (other than a subdivision
or combination of the outstanding Common Stock and other than a change in the par value of the
Common Stock) or any consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing corporation and that does not
result in any reclassification or change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an entirety or substantially as
an entirety; or
(c) a taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive any other rights.
This notice to Holder shall be given simultaneously with the giving of notice to holders of Common
Stock. Such notice shall specify the record date or the date of closing the stock transfer books,
as the case may be. Failure to provide such notice will not affect the validity of any action
taken in connection with such dividend, distribution or subscription rights, or proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up.
Schedule B
dividend rights to any transferee to whom this Warrant or the Warrant Shares have been
Transferred in contravention of the terms of this Warrant. This Warrant may be divided or
combined, upon request to the Company by the Holder, into a certificate or certificates
representing the right to purchase the same aggregate number of Warrant Shares. If at the time of a
Transfer, a registration statement is not in effect to register the Warrant Shares, the Company may
require the Holder to make such representations, and may place such legends on certificates
representing this Warrant, as may be reasonably required in the opinion of counsel to the Company
to permit a Transfer without such registration.
(a) Construction. Unless the context indicates otherwise, the term “Holder” shall
include any successor transferee or transferees of this Warrant, and the term “Warrant” shall
include any and all warrants outstanding pursuant to this Agreement, including those evidenced by
one or more instruments or certificates issued upon division, exchange, substitution or transfer
pursuant to Section 14.
(b) Restrictions. By receipt of this Warrant, the Holder is making the same
investment representations with respect to the acquisition of this Warrant as the Holder is
required to make upon the exercise of this Warrant and acquisition of the Warrant Shares. The
Company acknowledges that the Holder may transfer some of these securities to accredited investors
in valid private placements exempt from the registration requirements of the 1933 Act, provided
that, if requested by the Company, the Holder shall furnish a legal opinion concerning the Transfer
in form and substance reasonably satisfactory to the Company.
(c) Notices. Unless otherwise provided, any notice required or permitted under this
Warrant shall be given in writing and shall be deemed effectively given upon personal delivery to
the party to be notified or three days following deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be notified (or one (1)
day following timely deposit with a reputable overnight courier with next day delivery
instructions), or upon confirmation of receipt by the sender of any notice by facsimile
transmission, at the address indicated below or at such other address as such party may designate
by ten days’ advance written notice to the other party.
To Holder: |
||||
To the Company:
|
Virco Mfg. Corporation | |||
0000 Xxxxxx’x Xxx | ||||
Xxxxxxxx, XX 00000 | ||||
Attention: CEO |
(d) Governing Law. This Warrant shall be governed by and construed under the laws of
the State of California as applied to agreements among California residents entered into and to be
performed entirely within California.
(e) Severability. If one or more provisions of this Warrant are held to be
unenforceable under applicable law, such provision shall be excluded from this Warrant and the
balance of the Warrant shall be interpreted as if such provision were so excluded and the balance
shall be enforceable in accordance with its terms.
(f) Entire Agreement. This Warrant constitutes the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, whether oral or written, between the parties hereto
with respect to the subject matter hereof.
Schedule B
(g) Binding Effect. This Warrant and the various rights and obligations arising
hereunder shall inure to the benefit of and be binding upon the Company and its successors and
assigns, and Holder and its successors and assigns.
(h) Waiver; Consent. This Warrant may not be changed, amended, terminated, augmented,
rescinded or discharged (other than by performance), in whole or in part, except by a writing
executed by the parties hereto, and no waiver of any of the provisions or conditions of this
Warrant or any of the rights of a party hereto shall be effective or binding unless such waiver
shall be in writing and signed by the party claimed to have given or consented thereto.
(i) Counterparts. This Warrant is being executed in two or more counterparts, each of
which shall constitute an original.
THE COMPANY: | ||||||
VIRCO MFG. CORPORATION | ||||||
By: | ||||||
Its: | Vice President Finance | |||||
THE HOLDER: | ||||||
DATED: August 29, 2006 |
Schedule B
NOTICE OF EXERCISE
To: VIRCO MFG. CORPORATION
1. The
undersigned hereby elects to purchase shares of Common Stock, $.01 par value
per Share (“Warrant Shares”) of Virco Mfg. Corporation, a Delaware corporation (the “Company”)
pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price
pursuant to the terms of the Warrant.
2. Please issue certificates representing the Warrant Shares purchased hereunder in the names
and addresses and in the denominations indicated below.
3. Please issue a new Warrant for the unexercised portion of the attached Warrant, if any, in
the name of the undersigned.
Issuee Information: