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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F3qHCIATJKnzCRRwGjyFiPqIhBsgeU8KQmjK6nQfNMFMuYDI3zGnLgQ7Wsg1EbsZ 5rBGiWlyKqLigxI0EZz6TA== 0000950129-06-006137.txt : 20060608 0000950129-06-006137.hdr.sgml : 20060608 20060608172257 ACCESSION NUMBER: 0000950129-06-006137 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060606 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060608 DATE AS OF CHANGE: 20060608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRCO MFG CORPORATION CENTRAL INDEX KEY: 0000751365 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 951613718 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08777 FILM NUMBER: 06894758 BUSINESS ADDRESS: STREET 1: 2027 HARPERS WAY CITY: TORRANCE STATE: CA ZIP: 90501 BUSINESS PHONE: 3105330474 MAIL ADDRESS: STREET 1: P O BOX 44846 CITY: LOS ANGELES STATE: CA ZIP: 90044 8-K 1 v21232e8vk.htm VIRCO MFG. CORPORATION e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 6, 2006

VIRCO MFG. CORPORATION

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation)		001-8777 (Commission File Number)		95-1613718 (IRS Employer Identification No.)


2027 Harpers Way Torrance, California (Address of principal executive offices)		90501 (Zip Code)

Registrant’s telephone number, including area code: (310) 533-0474

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On June 6, 2006, Virco Mfg. Corporation, a Delaware corporation (the “Company”), Wedbush, Inc. and Wedbush Morgan Securities, Inc. (together with Wedbush, Inc., the “Purchasers”), entered into a stock purchase agreement (the “Agreement”). Additionally, on June 6, 2006 the Company entered into warrant agreements with each of the Purchasers (the “Warrant Agreements”).

Pursuant to the Agreement, the Purchasers purchased from the Company shares (the “Shares”) of the Company’s common stock, par value $0.01 (“Common Stock”), yielding gross proceeds to the Company of $5,000,000 at a purchase price per share of $4.66 (the “Per Share Purchase Price”). Pursuant to the Warrant Agreements the Company issued warrants to the Purchasers exercisable for 268,010 shares of Common Stock pursuant to which the Purchasers will have the right to acquire 25% of the underlying shares at an exercise price of 120% of the Per Share Purchase Price during the first three years following the closing of the transaction and at 130% of the Per Share Purchase Price during the fourth and fifth years following the closing of the transaction. The Company has agreed to file a registration statement registering the resale of the Shares as soon as practicable, but in any event no later than 30 days after the closing.

The securities to be issued pursuant to the Agreement and warrant are to be issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), afforded by Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder, as a transaction to accredited investors not involving a public offering.

The foregoing description of the stock purchase and the Agreement is qualified in its entirety by reference to the Agreements attached as Exhibits 10.1, 10.2, and 10.3 and incorporated herein by reference. The Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company.

Item 2.02 Results of Operation and Financial Condition

On June 8, 2006, Virco Mfg. Corporation issued a press release reporting its financial results for the first quarter ended April 30, 2006. The press release is attached hereto as Exhibit 99.1. The information in this Item 2.02 and the exhibit hereto are furnished to, but not filed with, the Securities and Exchange Commission.

Item 3.02 Unregistered Sales of Securities

The information with respect to the sale of unregistered securities required by this Item 3.02 is set forth in Item 1.01 of this current report and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.


Exhibit 10.1		Stock Purchase Agreement, dated as of June 6, 2006, by and among Virco Mfg. Corporation, Wedbush, Inc. and Wedbush Morgan Securities, Inc.

Exhibit 10.2		Warrant Agreement, dated as of June 6, 2006, by and among Virco Mfg. Corporation and Wedbush, Inc.

Exhibit 10.3		Warrant Agreement, dated as of June 6, 2006, by and among Virco Mfg. Corporation and Wedbush Morgan Securities, Inc.

Exhibit 99.1		Press Release dated June 8, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	VIRCO MFG. CORPORATION
	(Registrant)

Date: June 8, 2006	/s/ Robert A. Virtue
	(Signature)

		Name:	Robert A. Virtue
		Title:	Chief Executive Officer and Chairman of the Board of Directors

EXHIBIT INDEX


Exhibit No.		Description
10.1		Stock Purchase Agreement, dated as of June 6, 2006, by and among Virco Mfg. Corporation, Wedbush, Inc. and Wedbush Morgan Securities, Inc.

10.2		Warrant Agreement, dated as of June 6, 2006, by and among Virco Mfg. Corporation and Wedbush, Inc.

10.3		Warrant Agreement, dated as of June 6, 2006, by and among Virco Mfg. Corporation and Wedbush Morgan Securities, Inc.

99.1		Press Release dated June 8, 2006

EX-10.1 2 v21232exv10w1.htm EX-10.1 exv10w1

Exhibit 10.1

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”), is made and entered into as of June 6, 2006, by and between VIRCO MFG. CORPORATION, a Delaware corporation (the “Company”), and the purchasers set forth below (each a “Purchaser” and collectively the “Purchasers”).

1. AGREEMENT TO SELL AND PURCHASE THE SHARES

1.1 PURCHASE AND SALE

Subject to the terms and conditions of this Agreement, the Purchasers hereby agree to purchase, and the Company hereby agrees to sell and issue to the Purchasers, at the Closing (as defined below) such number of Shares of the Company’s Common Stock, par value $.01 per share, as will yield gross proceeds to the Company of Five Million Dollars ($5,000,000) (the “Shares”), with each Purchaser purchasing that number of the Shares as is indicated next to its name on Schedule A.

1.2. DELIVERIES AT CLOSING

(a) Completion of the purchase and sale of the Shares (the “Closing”) shall occur at the offices of Gibson, Dunn & Crutcher LLP, counsel to the Company, at 2029 Century Park East, 40th Floor, Los Angeles, California, at 3:00 p.m. local time on June 6, 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, or in such nominee name(s) as instructed by such Purchaser in writing, representing the number of Shares purchased by such Purchaser, calculated as set forth in Section 2 below, and bearing 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.

(c) At the Closing the Purchasers shall pay to the Company readily available funds in an aggregate amount of Five Million Dollars ($5,000,000) (the “Purchase Price”).

2. CALCULATION OF PER SHARE PURCHASE PRICE AND NUMBER OF SHARES

The purchase price for the Shares deliverable by the Company to the Purchasers at Closing shall be the lower of (a) five dollars ($5.00) per share and (b) the average daily closing price for shares of the Company’s Common Stock on the American Stock Exchange (“Amex”) over the last ten trading days prior to the date of Closing. The number of Shares deliverable at Closing shall be calculated by dividing the Purchase Price by the applicable per share price from the preceding sentence and shall be one million seventy two thousand forty-one (1,072,041) shares.

3. CONDITIONS TO CLOSING

(a) The Company’s obligation to complete the sale of the Shares shall be subject to its receipt on the Closing Date of same-day 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) A stock certificate or certificates representing the Shares in form satisfactory to the Purchasers;

(ii) A warrant certificate in the form attached hereto as Exhibit A (the “Warrant”) 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 120% of the per share purchase price hereunder during the first three (3) years following the Closing Date and at 130% during the fourth (4th) and fifth (5th) years following the Closing Date; and

(iii) A legal opinion in substantially the form attached hereto as Exhibit B.

4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

The Company hereby represents and warrants to the Purchasers as follows:

4.1 ORGANIZATION, STANDING AND QUALIFICATION

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.

4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE

(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.

4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES

(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.

4.4 CAPITALIZATION

(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 May 31, 2006, the issued and outstanding capital stock of the Company consisted of thirteen million one hundred thirty seven two hundred eighty eight (13,137,288) 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.

4.5 FINANCIAL STATEMENTS

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.

4.6 NO MATERIAL CHANGE

Since February 1, 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;

(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.

4.7 USE OF PROCEEDS

The Company intends to use the proceeds from sale of the Shares for working capital and other general corporate purposes.

4.8 NO DEFAULTS

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.

4.9 NO ACTIONS

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.

4.10 CONTRACTS

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.

4.11 ENVIRONMENTAL MATTERS

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.

Exhibit C attached to this Agreement contains a description of an environmental “superfund” case in which the Company has been named as a “de minimus” defendant. This description is provided for informational purposes, inasmuch as the Company has no information which would cause it to believe that the lawsuit could have a material adverse affect on its financial condition.

4.12 LABOR MATTERS

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.

4.13 PROPERTIES

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 Wells 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.

4.14 INTELLECTUAL PROPERTY

(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 mark 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 sue 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.

4.15 PERMITS

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.

4.16 TAXES

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.

4.17 COMPLIANCE

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.

4.18 INSURANCE

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.

4.19 GOVERNMENTAL/ REGULATORY CONSENTS

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.

4.20 SECURITIES AND EXCHANGE COMMISSION FILINGS

(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.

4.21 NO INTEGRATED OFFERING

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.

4.22 NO MANIPULATION OF STOCK

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.

4.23 RELATED PARTY TRANSACTIONS

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.

5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES

Each Purchaser represents, warrants and covenants to the Company as follows:

(a) 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 it deems relevant in making an informed decision to purchase the Shares.

(b) Such Purchaser is acquiring the Shares in the ordinary course of its business and for its own account (except that Wedbush Morgan Securities is acquiring, and will be holding as nominee, its Shares for the account of not more than 30 of its customers) 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.

(c) 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 its own due diligence examination of the Company.

(d) Such Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Securities Act and the rules and regulations promulgated thereunder (the “Rules and Regulations”).

(e) Such Purchaser 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 its purchase of the Shares. Such Purchaser will not, directly or indirectly, carry any short position in the Company’s Common Stock prior to the closing Date and will not make arrangements with any third party to carry any short position.

5.2 DUE EXECUTION, DELIVERY AND PERFORMANCE

(a) 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.

Purchaser is subject, nor will such action result in any violation of the provisions of the charter or bylaws of such Purchaser or, to the knowledge of such Purchaser, any applicable statute, law, rule, regulation or order.

5.3 RESALES OF SHARES

(a) Subject to the right of Wedbush Morgan Securities to transfer its Shares to no more than 30 of its customers (each of whom is an “accredited investor”), 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 separate officer’s 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 acknowledges that there may occasionally be times when the Company determines, in good faith following consultation with its Board of Directors or a committee thereof, that the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement has been declared effective by the SEC, or until such time as the Company has filed an appropriate report with the SEC pursuant to the Exchange Act. Such Purchaser hereby covenants that it will not sell any Shares pursuant to the Prospectus during the period commencing at the time at which the Company gives the Purchasers written notice of the suspension of the use of the Prospectus and ending at the time the Company gives the Purchasers written notice that the Purchasers may thereafter effect sales pursuant to the Prospectus. The Company may, upon written notice to the Purchasers, suspend the use of the Prospectus for up to thirty (30) days and not more than once in any 365-day period based on the reasonable determination of the Company’s Board of Directors that there is a significant business purpose for such determination, such as pending corporate developments, public filings with the SEC or similar events. The Company shall in no event be required to disclose the business purpose for which it has suspended the use of the Prospectus if the Company determines in its good faith judgment that the business purpose should remain confidential. In addition, the Company shall notify the Purchasers (i) of any request by the SEC for an amendment or any supplement to such Registration Statement or any related prospectus, or any other information request by any other governmental agency directly relating to the offering, and (ii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or of any order preventing or suspending the use of any related prospectus or the initiation or threat of any proceeding for that purpose.

(c) Such Purchaser will notify the Company promptly of the sale of any of its 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.

6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

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.

7. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT; INDEMNIFICATION

7.1 FORM D FILING; REGISTRATION OF SHARES

The Company shall:

(a) file in a timely manner a Form D relating to the sale of the Shares under this Agreement pursuant to the SEC’s Regulation D.

(b) as soon as practicable after the Closing Date, but in no event later than the thirtieth (30th) day following the Closing Date, prepare and file with the SEC a Registration Statement on Form S-3 (or, if the Company is ineligible to use Form S-3, then on Form S-1) relating to the sale of the Shares and Warrant Shares by the Purchasers (and any transferees under Section 7.3) from time to time on the Amex (the “Registration Statement”);

(c) provide to the Purchasers (and any transferees under Section 7.3) any information required to permit the sale of the Shares and Warrant Shares under Rule 144A of the Securities Act;

(d) subject to receipt of necessary information from the Purchasers, use its best efforts to cause the Commission to notify the Company of the SEC’s willingness to declare the Registration Statement effective on or before ninety (90) days after the Closing Date;

(e) notify the Purchasers (and any transferees under Section 7.3) promptly upon the Registration Statement, and any post-effective amendment thereto, being declared effective by the SEC;

(f) prepare and file with the SEC such amendments and supplements to the Registration Statement and the Prospectus and take such other action, if any, as may be necessary to keep the Registration Statement effective until the earlier of (i) the date on which the Shares and Warrant Shares may be resold by the Purchasers (and any transferees under Section 7.3) without registration and without regard to any volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar effect or (ii) all of the Shares and Warrant Shares have been sold pursuant to the Registration Statement or Rule 144 under the Securities Act or any other rule of similar effect;

(g) promptly furnish to the Purchasers (and any transferees under Section 7.3) with respect to the Shares and Warrant Shares registered under the Registration Statement such reasonable number of copies of the Prospectus, including any supplements to or amendments of the Prospectus, in order to facilitate the public sale or other disposition of all or any of the Shares and Warrant Shares by the Purchasers (and any transferees under Section 7.3);

(h) during the period when copies of the Prospectus are required to be delivered under the Securities Act or the Exchange Act, file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the rules and regulations promulgated thereunder;

(i) file documents for Blue Sky clearance in any states requiring Blue Sky clearance; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

(j) bear all expenses for the procedures in paragraphs (a) through (i) of this Section 7.1 in connection with registration of the Shares and Warrant Shares.

7.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT

In the event that the Registration Statement is not declared effective by the SEC on or before one hundred and fifty (150) days from the Closing Date, the Company shall pay to the Purchasers (on a pro rata basis) liquidated damages in an aggregate amount equal to $100,000 per month (prorated on a daily basis) until the effective date of the Registration Statement. The Company shall have the option to pay such liquidated damages (a) in cash or (b) in additional shares of its Common Stock with an equivalent value based upon the closing price for the Common Stock on the Amex on the day before delivery of such shares.

7.3 TRANSFER OF SHARES

Each Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a “sale” within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 7.1 or as otherwise permitted by law, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchasers (or any transferees) or its plan of distribution. Notwithstanding any other provision of this Agreement to the contrary, the Company agrees that the Purchasers may transfer any portion of the Shares and Warrant to one or more of any Purchaser’s affiliates or customers,

provided each such transferee is an accredited investor and agrees to be bound by the terms and conditions of this Agreement and Warrant (as applicable). The Company agrees to promptly, or to promptly cause its transfer agent to, record any transfer made in accordance with the foregoing sentence.

7.4 INDEMNIFICATION BY THE COMPANY

The Company agrees to indemnify and hold harmless the Purchasers, each of their directors and officers and the persons, if any, who control any Purchasers within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchasers or such controlling persons may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company, which consent shall not be unreasonably withheld), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the Prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the “Prospectus”), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform its obligations under this Agreement or under applicable law, and will reimburse the Purchasers and each such controlling persons for any legal and other expenses as such expenses are reasonably incurred by the Purchasers or such controlling persons in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement of the Registration Statement or Prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchasers expressly for use in the Registration Statement or the Prospectus, or (ii) the failure of the Purchasers to comply with its covenants and agreements contained this Agreement respecting resale of the Shares, or (iii) the inaccuracy of any representations made by the Purchasers in this Agreement or (iv) any untrue statement or omission of a material fact required to make such statement not misleading in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchasers before the pertinent offer and sale or sales by the Purchasers.

7.5 INDEMNIFICATION BY THE PURCHASER

Each Purchaser agrees to indemnify and hold harmless the Company, each of its directors and officers and the person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors and officers or controlling person may become subject under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchasers, which consent shall not be unreasonably withheld) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure on the part of such Purchaser to comply with the covenants and agreements contained in Sections 5.2 or 7.3 of this Agreement respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement to the Registration Statement or Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Purchaser expressly for use therein; provided, however, that such Purchaser shall not be liable for any such untrue or alleged untrue statement or omission or alleged omission of which such Purchaser has delivered to the Company in writing a

correction before the occurrence of the transaction from which such loss was incurred, and such Purchaser will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors and officers or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

7.6 INDEMNIFICATION PROCEDURE

(a) Promptly after receipt by an indemnified party under Section 7.4 or 7.5 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under Section 7.4 or 7.5, promptly notify the indemnifying party in writing of the claim; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained herein or to the extent it is not prejudiced as a result of such failure.

(b) In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7.4 or 7.5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless:

(i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party representing all of the indemnified parties who are parties to such action) or

(ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

(c) Notwithstanding these indemnification provisions, no Purchaser shall be liable for any indemnification obligation under this Agreement in excess of the amount of the “Difference” (as that term is defined in Section 7.7 below) received by such Purchaser.

7.7 CONTRIBUTION

If the indemnification provided for herein is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect to any losses, claims, damages, liabilities or expenses referred to in this Agreement, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to in this Agreement

(a) in such proportion as is appropriate to reflect the relative benefits received by the Company and each Purchaser from the placement of the Shares; or

(b) if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (a) above but the relative fault of the Company and

each Purchaser in connection with the statements or omissions or inaccuracies in the representations and damages, liabilities or expenses, as well as any other relevant equitable considerations.

The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the “Difference”) between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The relative fault of the Company and each Purchaser shall be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation or warranty relates to information supplied by the Company or by such Purchaser and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth herein, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth herein with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this Section 7.7; provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under Section 7.4 or 7.5 for purposes of indemnification. The Company and the Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7.7 were determined solely by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.7, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

7.8 INFORMATION AVAILABLE

From the date of this Agreement through the date the Registration Statement covering the resale of Shares owned by any Purchaser is no longer effective, the Company will furnish to such Purchaser:

(a) as soon as practicable after available (but in the case of the Company’s Annual Report to Shareholders, within 90 days after the end of each fiscal year of the Company), one copy of

(i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants);

(ii) if not included in substance in the Annual Report to Shareholders, its Annual Report on Form 10-K;

(iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q; and

(iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits); and

(v) upon the request of the Purchaser, a reasonable number of copies of the Prospectus to supply to any other party requiring the Prospectus.

7.9 RULE 144 INFORMATION

Until the earlier of (a) the date on which the Shares may be resold by each Purchaser without registration and without regard to any volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar effect or (b) all of the Shares have been sold pursuant to the Registration Statement or Rule 144 under the Securities Act or any

other rule of similar effect, the Company shall file all reports required to be filed by it under the Securities Act, the Rules and Regulations and the Exchange Act and shall take such further action to the extent required to enable the Purchasers to sell the Shares pursuant to Rule 144 under the Securities Act (as such rule may be amended from time to time).

8. AMERICAN STOCK EXCHANGE LISTING

The Company shall promptly secure the listing of the Shares on the Amex and so long as the Purchasers continue to own any of the Shares, the Company shall maintain such listing of the Shares. The Company has taken no action designed to delist, or which is likely to have the effect of delisting, its Common Stock from the Amex.

9. PARTICIPATION IN FUTURE FINANCING

The Company acknowledges and agrees that the Purchasers shall have the right to participate and purchase up to 50% of any equity financing (including any convertible debt, preferred stock or similar financing) undertaken by the Company with third party investors within one hundred and eighty (180) days following the Closing Date.

10. ADDITIONAL REGISTRATION RIGHTS

(a) For so long as the Purchasers continue to own more than two hundred thousand (200,000) of the Shares, the Company shall notify the Purchasers in writing at least fifteen (15) business days prior to the filing of any registration statement under the Securities Act with respect to a contemplated public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to employee benefit plans or with respect to corporate reorganizations or other transactions under Rule 145 of the Securities Act) and will afford the Purchasers an opportunity to include in such registration statement all or part of the Shares owned at that time by the Purchasers, unless the Company is otherwise prohibited from doing so by applicable law, rule or regulation. Within ten (10) business days after receipt of the above-described notice from the Company, each Purchaser shall notify the Company in writing of the number of Shares, if any, it elects to include in the registration statement.

(b) If the registration statement for which the Company gives notice under this Section 10 is for an underwritten offering, the Company shall so advise the Purchasers. In such event, the right of each Purchaser to elect to have Shares included in a registration pursuant to this Section 10 shall be conditioned upon such Purchaser’s participation in the underwriting and the inclusion of the Shares in the underwriting to the extent provided herein. In such event, such Purchaser shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be offered for sale in the public offering, the number of Shares that may be included in the offering by the Purchasers shall be reduced. No such reduction, however, shall reduce the number of Shares offered by the Purchasers included in the registration below twenty percent (20%) of the total amount of securities included in such registration, unless the Company is required to do so by applicable law, rule or regulation. If any Purchaser disapproves of the terms of any such underwriting, such Purchaser may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least five (5) business days prior to the effective date of the registration statement.

(c) The Company shall have the right to terminate or withdraw any registration of securities initiated by it under this Section 10 prior to the effectiveness of the registration statement whether or not any Purchaser has elected to include Shares in such registration.

(d) All registration, legal and accounting expenses incurred in connection with any registration statement pursuant to this Section 10 shall be borne by the Company. All underwriting and selling expenses incurred in connection with any registration statement pursuant to this Section 10 shall be borne pro rata by all parties selling securities through the registration statement based upon the number of shares so registered.

11. EXPENSES

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. Upon successful consummation of these transactions at the Closing, the Company will pay the reasonable, out of pocket expenses incurred by the Purchasers up to a maximum of $50,000.

12. ENTIRE AGREEMENT

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.

13. NOTICES

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 2027 Harpers Way Torrance, CA 90501 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.

14. MODIFICATION; AMENDMENT

This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Purchasers.

15. HEADINGS

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.

16. SEVERABILITY

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.

17. GOVERNING LAW

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.

18. COUNTERPARTS

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.

IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.



VIRCO MFG. CORPORATION

By:

	Robert A. Virtue
Its:	President, Chief Executive Officer and Chairman


WEDBUSH, INC.		- as to commitment of $2.0 million
1000 Wilshire Boulevard, Suite 830
Los Angeles, CA 90017

By:

	Eric D. Wedbush
Its:	President


WEDBUSH MORGAN SECURITIES, INC.		- as to commitment of $3.0 million
1000 Wilshire Boulevard
Los Angeles, CA 90017

By:

	Edward W. Wedbush
Its:	President

EX-10.2 3 v21232exv10w2.htm EX-10.2 exv10w2

Exhibit 10.2

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, Wedbush, Inc., together with its designees (collectively, 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 one hundred seven thousand two hundred four (107,204) 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”.

1. Exercise Price. The exercise price for the Warrant Shares shall be $5.60 per share during the first three (3) years from the date of this Warrant and $6.06 per share during the two (2) years preceding the Expiration Date. The prevailing exercise price is subject to adjustment pursuant to the terms hereof (such price, as adjusted from time to time, is hereinafter referred to as the “Exercise Price”).

2. Exercise and Payment. This Warrant may be exercised, in whole or in part, from time to time by the Holder prior to the Expiration Date by surrender to the Company, at the principal executive offices of the Company, of this Warrant and the Notice of Exercise attached hereto duly completed and executed by the Holder, together with payment in the amount obtained by multiplying the Exercise Price then in effect by the number of Warrant Shares being purchased as designated in the Notice of Exercise. In no event, however, shall this Warrant be exercised with respect to less than 20,000 Warrant Shares (unless it is exercised for a lesser number representing all of the remaining warrants owned by the Holder). Payment shall be made in readily available, same day funds.

3. Reservation of Shares. The Company shall at all times reserve for issuance and delivery upon exercise of this Warrant such number of shares of its Common Stock from time to time issuable as Warrant Shares. All such Warrant Shares shall be duly authorized, and when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights.

4. 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 certificate or certificates for the number of fully paid and nonassessable Warrant Shares which the Holder shall have requested and paid for pursuant to the Notice of Exercise. If this Warrant is exercised in part, the Company shall deliver to the Holder a new Warrant for the unexercised portion of the Warrant Shares at the time of delivery of the stock certificate or certificates evidencing the Warrant Shares.

5. No Fractional Shares. No fractional Warrant Shares shall be issued upon exercise of this Warrant. If upon any exercise of this Warrant a fraction of a share results, the Company will pay the Holder the difference between the cash value of the fractional share and the portion of the Exercise Price allocable to the fractional share.

6. Charges, Taxes and Expenses. The Company shall pay all transfer taxes or other incidental charges, if any, in connection with the issuance of the Warrant Shares to the Holder.

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.

8. Saturdays, Sundays, Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding weekday that is not a legal holiday.

9. Adjustment of Exercise Price and Number of Shares. The Exercise Price and the number of Warrant Shares purchasable upon exercise of this Warrant shall be subject to adjustment from time to time as follows:

(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.

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.

10. Notice of Adjustments; Notices. Whenever the Exercise Price or number or kind of securities purchasable hereunder is adjusted pursuant to Section 9 hereof, the Company shall execute and deliver to the Holder a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and number of and kind of securities purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first class mail, postage prepaid) to the Holder.

11. Rights As Stockholder; Notice to Holders. Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or to receive notice as a stockholder in respect of any meeting of stockholders for the election of directors of the Company or of any other matter, or any rights whatsoever as stockholders of the Company. The Company shall notify the Holder by registered mail if at any time prior to the expiration or exercise in full of the Warrant, any of the following events occur:

(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.

12. Restricted Securities. The Holder understands, confirms and acknowledges that this Warrant and the Warrant Shares constitute “restricted securities” under the federal securities laws inasmuch as they are, or will be, acquired directly from the Company in transactions not involving a public offering and accordingly may not, under applicable laws and regulations, be resold or transferred without registration under the Securities Act of 1933, as amended (the “1933 Act”) or availability of an applicable exemption from such registration. The Holder further acknowledges that a securities legend substantially similar to that on the first page hereof shall be placed on any Warrant Shares issued to the Holder upon exercise of this Warrant.

13. Certification of Investment Purpose. The Holder covenants and agrees that at any time that this Warrant is exercised, in whole or in part, and as a condition thereto, a written certification of investment intent shall be delivered 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.

15. Miscellaneous.

(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:		Wedbush, Inc. 1000 Wilshire Blvd. Suite 830 Los Angeles, CA 90017 Attention: President


To the Company:		Virco Mfg. Corporation 2027 Harper’s Way Torrance, CA 90501 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.

(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.

IN WITNESS WHEREOF, the parties hereto have executed this Warrant effective as of the date hereof.


	THE COMPANY: VIRCO MFG. CORPORATION
	By:
		Robert A. Virtue
	Its:	President and CEO

	THE HOLDER: WEDBUSH, INC.
	By:
		Eric D. Wedbush
	Its:	President

	DATED: June 6, 2006

EX-10.3 4 v21232exv10w3.htm EX-10.3 exv10w3

Exhibit 10.3

WARRANT AGREEMENT

This certifies that, for good and valuable consideration, receipt of which is hereby acknowledged, Wedbush Morgan Securities, Inc., together with its designees (collectively, 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 one hundred sixty thousand eight hundred six (160,806) 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”.

4. Delivery of Stock Certificates. Promptly following the exercise, in whole or in part, of this Warrant, the Company shall issue in the name of, and deliver to, the Holder a certificate or certificates for the number of fully paid and nonassessable Warrant Shares which the Holder shall have requested and paid for pursuant to the Notice of Exercise. If this Warrant is exercised in part, the Company shall deliver to the Holder a new Warrant for the unexercised portion of the Warrant Shares at the time of delivery of the stock certificate or certificates evidencing the Warrant Shares.

6. Charges, Taxes and Expenses. The Company shall pay all transfer taxes or other incidental charges, if any, in connection with the issuance of the Warrant Shares to the Holder.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or 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.

(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 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

14. Disposition of Warrant and Warrant Shares; Transfer of Warrant. This Warrant and any Warrant Shares purchased hereunder may not be sold, transferred, assigned, pledged or hypothecated (any such action, a “Transfer”) by the Holder except in compliance with this Agreement. The Company shall not be required (i) to transfer on its books this Warrant or any Warrant Shares which have been Transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Warrant or the Warrant Shares or otherwise to accord voting or 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.

15. Miscellaneous.


To Holder:		Wedbush Morgan Securities, Inc. 1000 Wilshire Blvd. Los Angeles, CA 90017 Attention: CEO


To the Company:		Virco Mfg. Corporation 2027 Harper’s Way Torrance, CA 90501 Attention: CEO

(i) Counterparts. This Warrant is being executed in two or more counterparts, each of which shall constitute an original.

IN WITNESS WHEREOF, the parties hereto have executed this Warrant effective as of the date hereof.


	THE COMPANY: VIRCO MFG. CORPORATION
	By:
		Robert A. Virtue
	Its:	President and CEO

	THE HOLDER: WEDBUSH MORGAN SECURITIES, INC.
	By:

	Its:

	DATED: June 6, 2006

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.






	By:


Issuee Information:

EX-99.1 5 v21232exv99w1.htm EX-99.1 exv99w1

Exhibit 99.1


FOR IMMEDIATE RELEASE		Contact:

		Robert A. Virtue, President
		Douglas A. Virtue, Executive Vice President
		Robert E. Dose, Chief Financial Officer
		Virco Mfg. Corporation (310) 533-0474

Virco Announces Improved First Quarter Results and Equity Infusion from WEDBUSH, Inc.

Torrance, California – June 08, 2006 – Virco Mfg. Corporation (AMEX: VIR) today announced improved first quarter results and a $5,000,000 equity infusion from WEDBUSH, Inc. and its affiliates in the following letter to shareholders from Robert A. Virtue, President and CEO:

Operating results continued to improve in the first quarter of 2006. Shipments, incoming orders, and backlog were all modestly higher compared to the same period in 2005. On the strength of significantly better gross margins, our operating loss improved 42%, from ($5,683,000) in 2005 to ($3,267,000) this year. In addition, we are very pleased to announce that WEDBUSH, Inc. and its affiliates have made a $5,000,000 equity investment in our Company. The transaction signed and closed on June 6. A follow-on investment by members of our management team of approximately $300,000, under the same terms, is expected to close within several days.

Here are the operating results for the first quarter:


	Three Months Ended
	04/30/2006			04/30/2005
	(In thousands, except per share data)
Sales	$	34,515		$	33,254
Cost of sales		23,021			23,848

Gross margin		11,494			9,406
Selling, general, & administrative		14,761			15,089

Loss before income taxes		(3,267	)		(5,683	)
Income taxes		—			—

Net loss	$	(3,267	)	$	(5,683	)


Net loss per share	$	(0.25	)	$	(0.43	)
Weighted average shares outstanding-basic (a)		13,137			13,100

(a) Net losses per share were calculated based on basic shares outstanding at April 30, 2006 and 2005, due to the anti-dilutive effect on the inclusion of common stock equivalent shares.


	4/30/2006		04/30/2005
	(In thousands)
Current assets	$	71,681	$	63,272
Non-current assets		61,131		66,091
Current liabilities		41,799		37,438
Non-current liabilities		54,639		48,338
Stockholders’ equity		36,374		43,587

Our emphasis for 2006 continues to be on the restoration of acceptable operating margins and expansion of Equipment for Educators, the integrated market development plan described in our 2005 Annual Report (www.Virco.com). We made progress toward both goals in the first quarter.

Most of the first quarter’s operating improvement was generated by higher gross margins. As the quarter ended gross margins on shipments were continuing to climb, reflecting the migration of higher priced new orders through the backlog. At this early stage of our annual cycle the unshipped backlog is usually higher than actual revenues. It thus provides directional guidance for both revenue and gross margin trends, even though direct extrapolations to net earnings are impossible due to vagaries of freight costs, material, and operating variances.

As of May 31, 2006, the backlog stood at $44,266,000 with a gross margin of 41.4%. This compares to a backlog of $43,090,000 with a gross margin of 36.4% on the same date last year. While we expect gross margins to remain stable at approximately current levels, we remain concerned that freight expense during our summer delivery season may erode net margins somewhat. Nonetheless, it is now clear that last year’s price increase is being reflected in higher gross margins and that overall, the trend is favorable.

A consequence of higher prices has been a slight decline in unit volume, primarily in older commodity product lines. Newer lines such as Zuma ^® continue to gain popularity, leading a shift in product mix towards sophisticated designs and full service project management. We’re also experiencing continued growth in our various resale channels, where rapid delivery across a broad product assortment is proving attractive to wholesalers, direct catalog merchandisers, and full service dealers.

During the recession of the last three years we drew heavily on shareholder equity to compensate for operating losses. Now, as results begin to improve and we look forward to renewed opportunities for growth, we’re excited to announce the addition of WEDBUSH as a significant shareholder. WEDBUSH, Inc. is a leading financial services and investment firm headquartered in Los Angeles, CA. WEDBUSH makes investments in both publicly traded and privately held companies. It maintains a long-term view toward deploying capital to support management’s initiatives for organic growth, acquisitions, or recapitalizations. Their investment at this crucial stage of our market’s recovery will help to facilitate the expansion of Equipment for Educators and other growth initiatives.

The transaction with WEDBUSH was executed and closed on June 6, 2006. Virco issued 1,072,041 shares of common stock at a price of $4.66 per share yielding gross proceeds of approximately $5,000,000. The share price was determined by the average closing price for the ten days prior to execution of the agreement. The transaction included 25% warrant coverage (268,010 warrants) exercisable at $5.60 per share (120% premium) for the first three years and at $6.06 per share (130% premium) for the subsequent two years.

This news release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: new business strategies; the cost and availability of steel and other raw materials; the continuing impact of our Assemble-to-Ship and Equipment for Educators programs on earnings; market demand and acceptance of new products; development of new distribution channels; pricing; and seasonality. Forward-looking statements are based on current expectations and beliefs about future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are out of our control and difficult to forecast. These factors may cause actual results to differ materially from those which are anticipated. Such factors include, but are not limited to: changes in general economic conditions including raw material, energy and freight costs; the seasonality of our markets; the markets for school and office furniture generally; the specific markets and customers with which we conduct our principal business; and the response of competitors to our price increases. See our Annual Report on Form-10K for year ended January 31, 2006, and other materials filed with the Securities and Exchange Commission for a further description of these and other risks and uncertainties applicable to our business. We assume no, and hereby disclaim any, obligation to update any of our forward-looking statements. We nonetheless reserve the right to make such updates from time to time by press release, periodic reports or other methods of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements which are not addressed by such an update remain correct or create an obligation to provide any other updates.

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