Document:

exv4w27

Exhibit 4.27

SHAREHOLDERS AGREEMENT

by and among

FOCUS MEDIA HOLDING LIMITED

JJ MEDIA INVESTMENT HOLDING LIMITED

FRONT LEAD INVESTMENTS LIMITED

LIMIN LI

and

VISIONCHINA MEDIA INC.

as of

January 13, 2011

 

 

TABLE OF CONTENTS 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I CERTAIN DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Defined Terms
	 	 	1	 
	Interpretation and Rules of Construction
	 	 	5	 
	 
	 	 	 	 
	ARTICLE II governance matters
	 	 	5	 
	 
	 	 	 	 
	Board of Directors
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III RESTRICTIONS ON TRANSFER
	 	 	7	 
	 
	 	 	 	 
	Transfer Restrictions on Common Shares
	 	 	7	 
	Permitted Transfers of Common Shares
	 	 	8	 
	Right of First Offer with Respect to Transfers
by the Existing Shareholder, the Controller of the Existing Shareholder
and the Focus Shareholder
	 	 	10	 
	Right of First Offer with Respect to Transfers by the JJ Media Shareholder
	 	 	11	 
	 
	 	 	 	 
	ARTICLE IV TERM AND TERMINATION
	 	 	13	 
	 
	 	 	 	 
	Term
	 	 	13	 
	Termination by Focus Shareholder or JJ Media Shareholder
	 	 	13	 
	Termination by Existing Shareholder, Controller, or the Company
	 	 	14	 
	Defaulting Party
	 	 	14	 
	 
	 	 	 	 
	ARTICLE V GOVERNING LAW; ARBITRATION
	 	 	14	 
	 
	 	 	 	 
	Governing Law
	 	 	14	 
	Arbitration
	 	 	14	 
	 
	 	 	 	 
	ARTICLE VI MISCELLANEOUS
	 	 	15	 
	 
	 	 	 	 
	Entire Agreement; Amendments
	 	 	15	 
	Waiver
	 	 	15	 
	Assignment
	 	 	15	 
	Severability
	 	 	15	 
	Remedies
	 	 	16	 
	Headings
	 	 	16	 
	Notices
	 	 	16	 
	Further Assurances
	 	 	18	 
	Counterparts
	 	 	18	 

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SHAREHOLDERS AGREEMENT 

     THIS SHAREHOLDERS AGREEMENT, dated as of January 13, 2011 (this “Agreement”), is made
by and among VISIONCHINA MEDIA INC., a company organized under the laws of the Cayman Islands (the
“Company”), FOCUS MEDIA HOLDING LIMITED, a company organized under the laws of the Cayman
Islands (the “Focus Shareholder”), JJ MEDIA INVESTMENT HOLDING LIMITED, a company organized
under the laws of the British Virgin Islands (the “JJ Media Shareholder”), FRONT LEAD
INVESTMENTS LIMITED, a company organized under the laws of the British Virgin Islands (the
“Existing Shareholder”), and Limin Li, an individual whose PRC ID no. is 440301610103081
(each a “Party” and collectively the “Parties”).

RECITALS

     WHEREAS, the Focus Shareholder and the Company, among others, have entered into a Securities
Purchase Agreement dated as of December 30, 2010 (the “Securities Purchase Agreement”),
pursuant to which, among other things, the Focus Shareholder will purchase from the Company, and
the Company will issue to the Focus Shareholder, 15,331,305 common shares, par value US$0.0001 per
share, of the Company (the “Common Shares”) at the Closing;

     WHEREAS, the Existing Shareholder owns 16,507,762 Common Shares immediately prior to the
Closing; and

     WHEREAS, it is a condition to the Closing under the Securities Purchase Agreement that the
Parties shall have executed this Agreement.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and
agreements set forth herein, the Parties, intending to be legally bound hereby, agree as follows:

ARTICLE I

CERTAIN DEFINITIONS 

     1.1. Defined Terms. Unless specifically indicated otherwise in this Agreement, the following defined terms
shall have the meanings ascribed thereto in this Article I.

     “Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under
common control with, such specified Person, and with respect to an individual also means any
spouse, parent, child, brother or sister of such Person.

     “Affiliate Transferee” has the meaning set forth in Section 3.2(a).

     “Agreement” means this Shareholders Agreement and the schedules and exhibits hereto,
as the same may be amended, modified, supplemented or restated from time to time in accordance with
the terms hereof.

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     “Articles of Association” means, with respect to the Company, the memorandum and
articles of association of the Company, as amended from time to time.

     “Beneficial Owner” and “Beneficially Own” have the meaning set forth in Rules
13d-3 and 13d-5 of the Exchange Act.

     “Board of Directors” has the meaning set forth in Section 2.1(a).

     “Business Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in Beijing, the PRC, and New York, New York,
USA.

     “Closing” means the Closing as defined under the Securities Purchase Agreement.

     “Common Shares” has the meaning set forth in the Recitals.

     “Company” has the meaning set forth in the preamble to this Agreement.

     “control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”) when used with respect to any Person, means the possession,
directly or indirectly, of the power to cause the direction of management and/or policies of such
Person, whether through the ownership of voting securities, by contract, agency or otherwise;
provided that no Shareholder shall be deemed an Affiliate of any other Shareholder solely
by reason of any investment in the Company. For purposes of this Agreement, the Existing
Shareholder “controlled” by a Controller shall mean the Existing Shareholder whose name is set out
next to the name of that Controller in Schedule 1.

     “Controller” means any Party who controls the Existing Shareholder and includes the
Parties listed in Schedule 1 as “Controllers” and “Controller” means any one of them.

     “Controller Affiliate Transferee” has the meaning set forth in Section 3.2(d).

     “Defaulting Party” has the meaning set forth in Section 4.4.

     “Dispute” has the meaning set forth in Section 5.2.

     “Exchange” means the NASDAQ National Market.

     “Exchange Act” means the United States Securities and Exchange Act of 1934, as
amended, and the rules and regulations issued thereunder.

     “Existing Shareholder” has the meaning set forth in the preamble to this Agreement.

     “Existing Shareholder RFO Exercise Notice” has the meaning set forth in Section
3.4(e).

     “Existing Shareholder RFO Notice” has the meaning set forth in Section 3.4(d).

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     “Existing Shareholder RFO Response Period” has the meaning set forth in Section
3.4(e).

     “Existing Shareholder Right of First Offer” has the meaning set forth in Section
3.4(e).

     “Focus Shareholder” has the meaning set forth in the preamble to this Agreement.

     “Focus Group Shareholder” shall mean any of (i) Focus Shareholder and (ii) each of its
Affiliates that is a Shareholder in accordance with the terms and provisions of this Agreement from
time to time.

     “Focus Nominee” has the meaning set forth in Section 2.1(b).

     “Focus RFO Exercise Notice” has the meaning set forth in Section 3.4(c).

     “Focus RFO Notice” has the meaning set forth in Section 3.4(b).

     “Focus RFO Response Period” has the meaning set forth in Section 3.4(c).

     “Focus Right of First Offer” has the meaning set forth in Section 3.4(c).

     “Governmental Authority” means any national, federal, state, local or foreign or
domestic government or political subdivision thereof, governmental department, commission
(including without limitation the U.S. Securities and Exchange Commission), court, arbitrator,
board, bureau, agency, regulatory authority, instrumentality, tribunal, judicial statutory or
administrative body having jurisdiction over the matter or matters in question.

     “HKIAC” has the meaning set forth in Section 5.2(a).

     “Immediate Family Member” means, with respect to any natural person, (a) such person’s
spouse, parents, grandparents, children, grandchildren and siblings (in each case whether adoptive
or biological), (b) current spouses of such person’s children, grandchildren and siblings (in each
case whether adoptive or biological), and (c) estates, trusts, partnerships and other entities of
which a material portion of the interests are held directly or indirectly by the foregoing.

     “JJ Media Shareholder” has the meaning set forth in the preamble to this Agreement.

     “JJ Media RFO Common Shares” has the meaning set forth in Section 3.4(b).

     “JJ Media RFO Purchase Period” has the meaning set forth in Section 3.4(f).

     “JJ Media Transfer Shares” has the meaning set forth in Section 3.4(g).

     “Law” means any federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including
common law).

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     “Lien” means, with respect to any asset (including any security) any mortgage,
assignment of receivables, debenture, lien, claim, charge (whether fixed or floating), pledge,
title retention, right to acquire, hypothecation, security interest, option, levy, proxy, right of
first refusal, and any other encumbrance or condition whatsoever, but excluding any right of first
offer provided for under this Agreement.

     “Lock Up Period” has the meaning set forth in Section 3.1(a).

     “Party” or “Parties” has the meaning set forth in the preamble to this
Agreement.

     “Permitted Transfer” has the meaning set forth in Section 3.2.

     “Person” means an individual, a partnership, a corporation, an association, a limited
liability company, a joint stock company, a trust, a joint venture, an unincorporated organization,
a group, a Governmental Authority or any other type of entity.

     “PRC” means the People’s Republic of China.

     “RFO Common Shares” has the meaning set forth in Section 3.3(b).

     “RFO Exercise Notice” has the meaning set forth in Section 3.3(c).

     “RFO Notice” has the meaning set forth in Section 3.3(b).

     “RFO Offeror” has the meaning set forth in Section 3.3(a).

     “RFO Purchase Period” has the meaning set forth in Section 3.3(d).

     “RFO Response Period” has the meaning set forth in Section 3.3(c).

     “Right of First Offer” has the meaning set forth in Section 3.3(c).

     “Securities Purchase Agreement” has the meaning set forth in the preamble to this
Agreement.

     “Shareholders” means (i) each Focus Group Shareholder, (ii) the Existing Shareholder
and (iii) each Person who becomes a party to or bound by the provisions of this Agreement in
accordance with its terms.

     “Transfer” shall mean any direct or indirect sale, transfer, gift, assignment, or
other disposition, and “Transferred” shall be construed accordingly.

     “Transfer Period” has the meaning set forth in Section 3.3(e).

     “UNCITRAL Rules” has the meaning set forth in Section 5.2(a).

     “U.S. Dollars” or “US$” means United States dollars, the official currency of
the United States of America.

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     1.2. Interpretation and Rules of Construction. In this Agreement, except to the extent that the context otherwise requires:

     (a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule,
such reference is to an Article or Section of, or a Schedule to, this Agreement unless otherwise
indicated;

     (b) the table of contents and headings for this Agreement are for reference purposes only and
do not affect in any way the meaning or interpretation of this Agreement;

     (c) whenever the words “include,” “includes” or “including” are used in this Agreement, they
are deemed to be followed by the words “without limitation”;

     (d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to any particular provision of this
Agreement;

     (e) all terms defined in this Agreement have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto, unless otherwise defined therein;

     (f) the definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms;

     (g) any Law referred to herein or in any agreement or instrument that is referred to herein
means such Law or statute as from time to time amended, modified or supplemented, including by
succession of comparable successor Laws;

     (h) references to a Person are also to its permitted successors and assigns;

     (i) a rule of construction does not apply to the disadvantage of a party because the party was
responsible for the preparation of this agreement or any part of it; and

     (j) the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

ARTICLE II

GOVERNANCE MATTERS

     2.1. Board of Directors.

     (a) The Existing Shareholder and the Company shall cause to be nominated and exercise their
respective reasonable best efforts to cause to be elected, in each case subject to the Articles of
Association and applicable Law, one appropriately qualified designee of the Focus Shareholder to
the Board of Directors of the Company (the “Board of Directors”) on or before June 30,
2011. Thereafter, for so long as the Focus Shareholder, together with its Affiliates, owns at
least five percent (5%) or more of all of the outstanding Common Shares (counting for such purposes
all Common Shares into or for which the securities of the Company

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owned by the Focus Shareholder and its Affiliates are directly or indirectly convertible or
exercisable), at any election of directors of the Company, the Focus Shareholder shall have the
right to nominate one candidate for election to the Board of Directors. The Company and the
Existing Shareholder shall use their respective reasonable best efforts to cause such person (or
any substitute or replacement designated or nominated by the Focus Shareholder) to be a candidate
recommended by the Board of Directors and elected a Director of the Company, including soliciting
proxies for such person to the same extent it does for any other nominees of its Board of
Directors.

     (b) Any person nominated or designated pursuant to this Section 2.1 shall be a “Focus
Nominee.” Prior to the Focus Nominee being elected to the Board of Directors, the Existing
Shareholders and the Company shall use their respective reasonable best efforts to cause one
designee of the Focus Shareholder to be appointed an observer to attend all meetings of the Board
of Director in a nonvoting capacity. The Company shall provide such observer with copies of all
notices, minutes, consents and other materials that it provides to the Directors at the same time
and in the same manner as provided to the Directors and notify such observer of all regular and
special meetings of any committee of the Board of Directors. For the avoidance of doubt, such
observer shall not be entitled to attend any meeting of any committee of the Board of Directors.

     (c) Notwithstanding anything to the contrary contained herein, if the Focus Nominee resigns,
is removed pursuant to Section 2.1(d) or otherwise, or is unable to continue to serve as a Director
of the Company, the Focus Shareholder may designate a replacement Director and the Existing
Shareholder and the Company shall use their respective reasonable best efforts to cause such person
to be elected a Director, provided however, that in each case, the Focus Shareholder remains
entitled to nominate and designate one Director pursuant to this Section 2.1.

     (d) Any Director of the Company may be removed from the Board of Directors in accordance with
applicable law and the governing documents of the Company; provided, however, that with respect to
the Focus Nominee, neither the Existing Shareholder nor the Company shall take any action to cause
any such removal without the prior written consent of the Focus Shareholder unless such removal is
required by applicable law or such Director is no longer qualified to serve as a Director pursuant
to applicable SEC or regulatory requirements, or a generally applicable policy of the Board of
Directors.

     (e) The Company and the Existing Shareholder shall ensure, to the extent permitted by
applicable law, that any Directors nominated or designated pursuant to this Section 2.1 shall enjoy
the same rights, capacities, entitlements, indemnification rights and compensation as any other
members of the Board of Directors. The Focus Nominee shall be entitled to reimbursement for
documented, reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors (or any committee thereof) to the same extent as other members of the Board of Directors.
The Company shall notify the Focus Nominee of all regular meetings and special meetings of the
Board of Directors and, if the Focus Nominee is a member of any committee thereof, of all regular
and special meetings of such committee. The Company shall provide the Focus Nominee with copies of
all notices, minutes, consents and

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other material that it provides to all other members of the Board of Directors concurrently with such
materials being provided to the other members.

     (f) The Company and the Existing Shareholder shall not take any action that would result in
any amendment to the governing documents of the Company inconsistent with the provisions of this
Section 2.1.

ARTICLE III

RESTRICTIONS ON TRANSFER 

     3.1. Transfer Restrictions on Common Shares.

     (a) For a period of 180 days commencing on the date of Closing (the “Lock Up Period”),
neither the Existing Shareholder nor the Controller of such Existing Shareholder, as the case may
be, shall, directly or indirectly, Transfer or grant or suffer to exist any Lien with respect to
any Common Shares from time to time held, owned or Beneficially Owned by the Existing Shareholder
or the Controller of such Existing Shareholder, as the case may be, or any equity interests in the
Existing Shareholder held, directly or indirectly, by the Controller of such Existing Shareholder
other than the Permitted Transfers set forth in Section 3.2.

     (b) Following the Lock Up Period until the earlier of (i) the fifth anniversary of the date on
which the Lock Up Period expires, and (ii) the date on which the Focus Shareholder, together with
its Affiliates, owns less than five percent (5%) of all of the outstanding Common Shares (counting
for such purposes all Common Shares into or for which the securities of the Company owned by the
Focus Shareholder and its Affiliates are directly or indirectly convertible or exercisable) (the
“Existing Shareholder Restrictive Period”), neither the Existing Shareholder nor the
Controller of the Existing Shareholder shall, directly or indirectly, Transfer or grant or suffer
to exist any Lien with respect to any Common Shares from time to time held, owned or Beneficially
Owned by the Existing Shareholder or the Controller of the Existing Shareholder, as the case may
be, or any equity interests in the Existing Shareholder held, directly or indirectly, by the
Controller of the Existing Shareholder other than Permitted Transfers set forth in Section 3.2 or
Transfers pursuant to Section 3.3.

     (c) Following the date of the Closing until the earlier of (i) the fifth anniversary of the
date on which the Lock Up Period expires, and (ii) the date on which the Existing Shareholder,
together with its Affiliates, owns less than five percent (5%) of all of the outstanding Common
Shares (counting for such purposes all Common Shares into or for which the securities of the
Company owned by the Existing Shareholder and its Affiliates are directly or indirectly convertible
or exercisable) (the “Focus Shareholder Restrictive Period”), the Focus Shareholder may
not, directly or indirectly, Transfer or grant or suffer to exist any Lien with respect to any
Common Shares from time to time held, owned or Beneficially Owned by it other than Permitted
Transfers set forth in Section 3.2 or Transfers pursuant to Section 3.3.

     (d) Following the date of the Closing until the earlier of (i) the fifth anniversary of the
date on which the Lock Up Period expires, and (ii) the date on which each of the Existing
Shareholder, together with its Affiliates, and the Focus Shareholder, together with its Affiliates
owns less than five percent (5%) of all of the outstanding Common Shares

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(counting for such purposes all Common Shares into or for which the securities of the Company
owned by the Existing Shareholder and its Affiliates or the Focus Shareholder and its Affiliates,
as the case may be, are directly or indirectly convertible or exercisable) (the “JJ Media
Shareholder Restrictive Period”), the JJ Media Shareholder may not, directly or indirectly,
Transfer or grant or suffer to exist any Lien with respect to any Common Shares from time to time
held, owned or Beneficially Owned by it other than Permitted Transfers set forth in Section 3.2 or
Transfers pursuant to Section 3.4.

     (e) Any attempt by any of the Focus Shareholder, the JJ Media Shareholder, the Existing
Shareholder and the Controller of such Existing Shareholder to Transfer or grant or suffer to exist
any Lien (by operation of law or otherwise) with respect to any Common Shares or any equity
interests in the Existing Shareholder held, directly or indirectly, by the Controller of the
Existing Shareholder in violation of this ARTICLE III shall be null and void and the Company shall
not give any effect to such attempted Transfer or Lien in the Company’s books and records.

     3.2. Permitted Transfers of Common Shares. Subject to any applicable restrictions on Transfer of Common Shares under the Securities
Purchase Agreement, the following Transfers of Common Shares or equity interests in the Existing
Shareholder held, directly or indirectly, by the Controller of the Existing Shareholder (each a
“Permitted Transfer”) shall be permitted in accordance with the following provisions:

     (a) At any time, the Transfer of Common Shares by any of the Focus Shareholder, the JJ Media
Shareholder and the Existing Shareholder to its Affiliate (such Affiliate, the “Affiliate
Transferee”), provided that:

          (i) such Affiliate Transferee shall become a party to this Agreement and shall be bound by the
terms of this Agreement as the Focus Shareholder, the JJ Media Shareholder or an Existing
Shareholder, as the case may be;

          (ii) the Focus Shareholder, the JJ Media Shareholder or the Existing Shareholder, as the case
may be, and the Affiliate Transferee shall be jointly and severally liable for any breach by either
of them of this Agreement; and

          (iii) prior to ceasing to be an Affiliate of the Focus Shareholder, the JJ Media Shareholder
or the Existing Shareholder, as the case may be, such Affiliate Transferee shall Transfer such
Common Shares back to the Focus Shareholder, the JJ Media Shareholder or the Existing Shareholder,
as the case may be, or to another Affiliate of the Focus Shareholder, the JJ Media Shareholder or
the Existing Shareholder, as the case may be, in a Permitted Transfer;

     (b) Following the Lock Up Period, if applicable, the Transfer of Common Shares pursuant to
Rule 144 of the Securities Exchange Act of 1934, as amended;

     (c) Following the Lock Up Period, if applicable, the Transfer of Common Shares pursuant to a
firm commitment underwritten public offering registered under the Securities Act of 1933, as
amended;

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     (d) At any time, the Transfer of equity interests in the Existing Shareholder held, directly
or indirectly, by the Controller of such Existing Shareholder to its Affiliate or Immediate Family
Member (such Affiliate, the “Controller Affiliate Transferee”), provided that:

          (i) prior written notice has been given to the Focus Shareholder;

          (ii) the Controller of such Existing Shareholder and Controller Affiliate Transferee shall be
jointly and severally liable for any breach by either of them of this Agreement; and

          (iii) prior to ceasing to be an Affiliate or Immediate Family Member of the Controller of such
Existing Shareholder, such Controller Affiliate Transferee shall Transfer such direct or indirect
equity interests in the Existing Shareholder back to the Controller of such Existing Shareholder or
to another Affiliate or Immediate Family Member of the Controller of such Existing Shareholder in a
Permitted Transfer; or

     (e) At any time during the Existing Shareholder Restrictive Period, the Transfer or grant of
any Lien with respect to Common Shares by the Existing Shareholder where the Focus Shareholder has
provided its prior written consent to such Transfer or grant of Lien and a written waiver of all of
its rights under this ARTICLE III with respect to such Transfer or grant of Lien.

     (f) At any time during the Focus Shareholder Restrictive Period, the Transfer or grant of any
Lien with respect to Common Shares by the Focus Shareholder where the Existing Shareholder has
provided its prior written consent to such Transfer or grant of Lien and a written waiver of all of
its rights under this ARTICLE III with respect to such Transfer or grant of Lien.

     (g) At any time during the JJ Media Shareholder Restrictive Period, the Transfer or grant of
any Lien with respect to Common Shares by the JJ Media Shareholder where the Existing Shareholder
or the Focus Shareholder or each of them, to the extent that such Party or Parties shall be
entitled to any rights under Section 3.4, has provided its prior written consent to such Transfer
or grant of Lien and a written waiver of all of its rights under this ARTICLE III with respect to
such Transfer or grant of Lien.

     (h) At any time, the Transfer of Common Shares by any of the Existing Shareholder, the Focus
Shareholder, and the JJ Media Shareholder to any person pursuant to a trading plan under Rule
10b5-1 of the Exchange Act.

     (i) At any time, any Transfer of any equity interest in the Focus Media Holding Limited from
time to time directly or indirectly held, owned or Beneficially Owned by any Person to any other
Person.

     (j) At any time, any Transfer of any equity interest in the JJ Media Investment Holding
Limited from time to time directly or indirectly held, owned or Beneficially Owned by any Person to
any other Person.

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     3.3. Right of First Offer with Respect to Transfers by the Existing Shareholder, the
Controller of the Existing Shareholder and the Focus Shareholder.

     (a) Subject to the lock up obligations under Section 4.1 of the Securities Purchase Agreement,
if any of the Existing Shareholder and the Controller of the Existing Shareholder desires to
Transfer any Common Shares from time to time directly or indirectly held, owned or Beneficially
Owned by the Existing Shareholder or the Controller of such Existing Shareholder, as the case may
be, or any equity interest in the Existing Shareholder held, directly or indirectly, by the
Controller of such Existing Shareholder during the Existing Shareholder Restrictive Period other
than pursuant to any Permitted Transfer, or if the Focus Shareholder desires to Transfer any Common
Shares from time to time directly or indirectly held, owned or Beneficially Owned by it during the
Focus Shareholder Restrictive Period, such Transfer shall be permitted only if the Focus
Shareholder, the Existing Shareholder or the Controller of such Existing Shareholder, as the case
may be (the “RFO Offeror”), fully complies with any applicable restrictions on Transfer of
Common Shares under the Securities Purchase Agreement and the terms of this Section 3.3; provided
that the provisions of this Section 3.3 shall not apply to Permitted Transfers.

     (b) The RFO Offeror shall, prior to the Transfer of any Common Shares to which this Section
3.3 applies, give written notice (“RFO Notice”) to the Focus Shareholder, if the RFO
Offeror is the Existing Shareholder or the Controller of the Existing Shareholder, or to the
Existing Shareholder, if the RFO Offeror is the Focus Shareholder (the Focus Shareholder or the
Existing Shareholder, as the case may be, entitled to receive the RFO Notice, the “RFO
Holder”), setting forth (i) the number of Common Shares proposed to be Transferred (the
“RFO Common Shares”), (ii) the proposed purchase price per RFO Common Share, and payment
and other material terms and conditions and (iii) an irrevocable offer to sell to the RFO Holder
the RFO Common Shares set forth in the RFO Notice at the same price per share and on the same terms
and conditions as set forth therein. For the avoidance of doubt, this Section 3.3 does not
prohibit or restrict in any way the RFO Offeror from discussing, negotiating, or entering into any
discussion or negotiation with any third party for the sale of all or a portion of the Common
Shares held by the RFO Offeror.

     (c) The RFO Holder shall have the right to purchase (the “Right of First Offer”), all,
but not a portion, of the RFO Common Shares by delivering a written notice (the “RFO Exercise
Notice”) of exercise of the Right of First Offer to the RFO Offeror within twenty (20) days
from the date of delivery of the RFO Notice (the “RFO Response Period”), stating therein
all, but not a portion, of the RFO Common Shares shall be purchased, collectively, by the RFO
Holder and/or one or more wholly-owned Affiliates thereof. An RFO Exercise Notice shall be
irrevocable and shall be a valid and legally binding obligation of the RFO Holder to purchase all,
but not a portion, of the RFO Common Shares.

     (d) If the RFO Holder shall have delivered an RFO Exercise Notice to the RFO Offeror within
the RFO Response Period for all the RFO Common Shares, the RFO Offeror shall be bound to sell all
RFO Common Shares to the RFO Holder within thirty (30) days thereafter (the “RFO Purchase
Period”) upon the terms set forth in the RFO Notice; provided, however, that
such period shall be extended following such date as necessary to permit all required approvals,
consents or authorizations from, or filings or registrations with, any

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Governmental Authority in connection with such purchase to be obtained or made, to the extent
prior to the expiration of the RFO Purchase Period reasonably appropriate actions have been taken
by the RFO Offeror to obtain such approvals, consents or authorizations, or make such filings or
registrations.

     (e) If the RFO Holder shall not have completed the purchase of all of the RFO Common Shares
within the RFO Purchase Period, as extended as provided in Section 3.3(d), or has failed to deliver
an RFO Exercise Notice within the RFO Response Period for all of the RFO Common Shares or declined
in writing to exercise the Right of First Offer, then the RFO Offeror shall have the right for one
hundred eighty (180) days thereafter (the “Transfer Period”), to dispose of the RFO Common
Shares in one or more Transfers thereof without being subject to any of the restrictions set forth
in this Article III; provided, however, that (i) such Transfer of the RFO Common Shares is
consummated on terms not more favorable to the purchasers thereof than the terms specified in the
RFO Notice and (ii) the RFO Offeror provides written confirmation to the RFO Holder that such terms
comply with clause (i) hereof prior to the consummation of such sale; and provided further,
that the Transfer Period shall be extended following such date as necessary to permit all required
approvals, consents or authorizations from, or filings or registrations with, any Governmental
Authority in connection with such Transfers to be obtained or made, to the extent prior to the
expiration of the Transfer Period reasonably appropriate actions have been taken by the RFO Offeror
to obtain such approvals, consents or authorizations or make such filings or registrations. If at
the end of the Transfer Period, as extended as provided in this Section 3.3(e), the RFO Offeror has
not completed the Transfer of the RFO Common Shares, the RFO Offeror shall no longer be permitted
to dispose of such RFO Common Shares without again fully complying with the provisions of this
Section 3.3.

     3.4. Right of First Offer with Respect to Transfers by the JJ Media Shareholder.

     (a) Subject to the lock up obligations under Section 4.1 of the Securities Purchase Agreement,
if the JJ Media Shareholder desires to Transfer any Common Shares from time to time directly or
indirectly held, owned, or Beneficially Owned by it during the JJ Media Shareholder Restrictive
Period, such Transfer shall be permitted only if the JJ Media Shareholder fully complies with any
applicable restrictions on Transfer of Common Shares under the Securities Purchase Agreement and
the terms of this Section 3.4; provided that the provisions of this Section 3.4 shall not apply to
Permitted Transfers.

     (b) The JJ Media Shareholder shall, prior to the Transfer of any Common Shares to which this
Section 3.4 applies, give written notice (“Focus RFO Notice”) to the Focus Shareholder so
long as the Focus Shareholder, together with its Affiliates, owns not less than five percent (5%)
of all of the outstanding Common Shares (counting for such purposes all Common Shares into or for
which the securities of the Company owned by the Focus Shareholder and its Affiliates are directly
or indirectly convertible or exercisable), setting forth (i) the number of Common Shares proposed
to be Transferred (the “JJ Media RFO Common Shares”), (ii) the proposed purchase price per
JJ Media RFO Common Share, and payment and other material terms and conditions and (iii) an
irrevocable offer to sell to the Focus Shareholder the JJ Media RFO Common Shares set forth in the
Focus RFO Notice at the same price per share and on the

- 11 -

 

same terms and conditions as set forth therein. For the avoidance of doubt, this Section 3.4
does not prohibit or restrict in any way the JJ Media Shareholder from discussing, negotiating, or
entering into any discussion or negotiation with any third party for the sale of all or a portion
of the Common Shares held by the JJ Media Shareholder.

     (c) The Focus Shareholder shall have the right to purchase (the “Focus Right of First
Offer”), all, but not a portion, of the JJ Media RFO Common Shares by delivering a written
notice (the “Focus RFO Exercise Notice”) of exercise of the Focus Right of First Offer to
the JJ Media Shareholder, within twenty (20) days from the date of delivery of the Focus RFO Notice
(the “Focus RFO Response Period”), stating therein all, but not a portion, of the JJ Media
RFO Common Shares shall be purchased, collectively, by the Focus Shareholder and/or one or more
wholly-owned Affiliates thereof. A Focus RFO Exercise Notice shall be irrevocable and shall be a
valid and legally binding obligation of the Focus Shareholder to purchase all, but not a portion,
of the JJ Media RFO Common Shares.

     (d) If the Focus Shareholder shall not have completed the purchase of all of the JJ Media RFO
Common Shares within the JJ Media RFO Purchase Period (as defined in Section 3.4(f)), as extended
as provided in Section 3.4(f), or has failed to deliver a Focus RFO Exercise Notice within the
Focus RFO Response Period for all of the JJ Media RFO Common Shares or declined in writing to
exercise the Focus Right of First Offer, or is not entitled to the Focus RFO Notice pursuant to
Section 3.4(b), the JJ Media Shareholder shall promptly give written notice (“Existing
Shareholder RFO Notice”) to the Existing Shareholder so long as the Existing Shareholder,
together with its Affiliates, owns not less than five percent (5%) of all of the outstanding Common
Shares (counting for such purposes all Common Shares into or for which the securities of the
Company owned by the Existing Shareholder and its Affiliates are directly or indirectly convertible
or exercisable), setting forth the same information and offer to the Existing Shareholder as those
set forth in the Focus RFO Notice.

     (e) The Existing Shareholder shall have the right to purchase (the “Existing Shareholder
Right of First Offer”), all, but not a portion, of the JJ Media RFO Common Shares by delivering
a written notice (the “Existing Shareholder RFO Exercise Notice”) of exercise of the
Existing Shareholder Right of First Offer to the JJ Media Shareholder within twenty (20) days from
the date of delivery of the Existing Shareholder RFO Notice (the “Existing Shareholder RFO
Response Period”), stating therein all, but not a portion, of the JJ Media RFO Common Shares
shall be purchased, collectively, by the Existing Shareholder and/or one or more wholly-owned
Affiliates thereof. An Existing Shareholder RFO Exercise Notice shall be irrevocable and shall be
a valid and legally binding obligation of the Existing Shareholder to purchase all, but not a
portion, of the JJ Media RFO Common Shares.

     (f) If the Focus Shareholder or the Existing Shareholder, as the case may be, shall have
delivered a Focus RFO Exercise Notice or an Existing Shareholder RFO Exercise Notice, as the case
may be, to the JJ Media Shareholder within the Focus RFO Response Period or the Existing
Shareholder RFO Response Period, as the case may be, for all the JJ Media RFO Common Shares, the JJ
Media Shareholder shall be bound to sell all JJ Media RFO Common Shares to the Focus Shareholder or
the Existing Shareholder, as the case may be, within thirty (30) days thereafter (the “JJ Media
RFO Purchase Period”) upon the terms set forth in the Focus RFO Notice or the Existing
Shareholder RFO Notice; provided, however, that such period shall

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be extended following such date as necessary to permit all required approvals, consents or
authorizations from, or filings or registrations with, any Governmental Authority in connection
with such purchase to be obtained or made, to the extent prior to the expiration of the JJ Media
RFO Purchase Period reasonably appropriate actions have been taken by the JJ Media Shareholder to
obtain such approvals, consents or authorizations, or make such filings or registrations.

     (g) If the Existing Shareholder shall not have completed the purchase of all of the JJ Media
RFO Common Shares within the JJ Media RFO Purchase Period, as extended as provided in Section
3.4(f), or has failed to deliver an Existing Shareholder RFO Exercise Notice within the Existing
Shareholder RFO Response Period for all of the JJ Media RFO Common Shares or declined in writing to
exercise the Existing Shareholder Right of First Offer, then the JJ Media Shareholder shall have
the right for one hundred eighty (180) days thereafter (the “JJ Media Transfer Period”), to
dispose of the JJ Media RFO Common Shares in one or more Transfers thereof without being subject to
any of the restrictions set forth in this Article III; provided, however, that (i) such
Transfer of the JJ Media RFO Common Shares is consummated on terms not more favorable to the
purchasers thereof than the terms specified in the Focus RFO Notice and the Existing Shareholder
RFO Notice and (ii) the JJ Media Shareholder provides written confirmation to the Focus Shareholder
and the Existing Shareholder that such terms comply with clause (i) hereof prior to the
consummation of such sale; and provided further, that the JJ Media Transfer Period shall be
extended following such date as necessary to permit all required approvals, consents or
authorizations from, or filings or registrations with, any Governmental Authority in connection
with such Transfers to be obtained or made, to the extent prior to the expiration of the JJ Media
Transfer Period reasonably appropriate actions have been taken by the JJ Media Shareholder to
obtain such approvals, consents or authorizations or make such filings or registrations. If at the
end of the JJ Media Transfer Period, as extended as provided in this Section 3.4(g), the JJ Media
Shareholder has not completed the Transfer of the JJ Media RFO Common Shares, the JJ Media
Shareholder shall no longer be permitted to dispose of such JJ Media RFO Common Shares without
again fully complying with the provisions of this Section 3.3.

ARTICLE IV

TERM AND TERMINATION 

     4.1. Term. This Agreement shall take effect immediately upon the Closing and shall continue in force
until the earliest of (i) the date on which the Focus Group Shareholders cease to own any Common
Shares, (ii) with respect to the Existing Shareholder, the date on which the Existing Shareholder
and its Affiliates that becomes a Shareholder in accordance with the terms and provisions of this
Agreement from time to time cease to own any Common Shares (iii) the date this Agreement is
terminated in accordance with the provisions of this ARTICLE IV or (iv) the date this Agreement is
terminated by agreement of all of the Parties in writing; provided that unless otherwise agreed in
writing this Agreement will remain in force with respect to any breach or alleged breach of its
terms committed during such period. The Parties agree to make such amendments as are required
under the relevant rules of the Exchange.

     4.2. Termination by Focus Shareholder or JJ Media Shareholder. Each of the Focus Shareholder and the JJ Media Shareholder shall be entitled to terminate
this Agreement

- 13 -

 

with respect to the Existing Shareholder, the Controller of the Existing Shareholder or the
Company by notice in writing if the Existing Shareholder, the Controller of an Existing Shareholder
or the Company becomes a Defaulting Party.

     4.3. Termination by Existing Shareholder, Controller, or the Company. Each of the Existing Shareholders, the Controllers of the Existing Shareholder and the
Company shall be entitled to terminate this Agreement with respect to the Focus Shareholder or the
JJ Media Shareholder, as the case may be, by notice in writing if the Focus Shareholder or the JJ
Media Shareholder, as the case may be, becomes a Defaulting Party.

     4.4. Defaulting Party. For purposes of this Agreement, a party shall become a “Defaulting Party” if any of the
events set out below shall have occurred:

     (a) the Defaulting Party shall commit a material breach of any of its material obligations
under this Agreement and fail to remedy such breach (if capable of remedy) within 60 days after
such material breach; or

     (b) the Defaulting Party shall go into liquidation whether compulsory or voluntary (except for
the purposes of a bona fide reconstruction or amalgamation) or if a petition shall be presented or
an order made for the appointment of an administrator in relation to the Defaulting Party or if a
receiver, administrative receiver, judicial manager, manager or equivalent officer in any
applicable jurisdiction shall be appointed over any part of the assets or undertaking of the
Defaulting Party and such appointment is not revoked within thirty (30) days from the date of such
appointment or if any event analogous to any of the foregoing shall occur in any jurisdiction; or

     (c) if the Defaulting Party shall make a general assignment or any composition or arrangement
with or for the benefit of its creditors or if a receiver and/or judicial manager, trustee,
administrator or equivalent officer in any applicable jurisdiction is appointed in relation to the
Defaulting Party or in relation to the whole or any material part of its properties or assets.

ARTICLE V

GOVERNING LAW; ARBITRATION 

     5.1. Governing Law. This Agreement and any dispute or claim arising out of or in connection with it or its
subject matter shall be governed by, and construed in accordance with, the laws of the State of New
York without regard to principles of conflicts of laws.

     5.2. Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement or its
subject matter (including a dispute regarding the existence, validity, formation, effect,
interpretation, performance or termination of this Agreement) (each a “Dispute”) shall be
finally settled by arbitration.

     (a) The place of arbitration shall be Hong Kong, and the arbitration shall be administered by
the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the United
Nations Commission on International Trade Law then in force (the “UNCITRAL Rules”).

- 14 -

 

     (b) The arbitration shall be decided by a tribunal of three (3) arbitrators, whose appointment
shall be in accordance with the UNCITRAL Rules.

     (c) Arbitration proceedings (including but not limited to any arbitral award rendered) shall
be in English.

     (d) Subject to the agreement of the tribunal, any Dispute(s) which arise subsequent to the
commencement of arbitration of any existing Dispute(s), shall be resolved by the tribunal already
appointed to hear the existing Dispute(s).

     (e) The award of the arbitration tribunal shall be final and conclusive and binding upon the
parties as from the date rendered.

     (f) Judgment upon any award may be entered and enforced in any court having jurisdiction over
a party or any of its assets. For the purpose of the enforcement of an award, the parties
irrevocably and unconditionally submit to the jurisdiction of any competent court and waive any
defenses to such enforcement based on lack of personal jurisdiction or inconvenient forum.

ARTICLE VI

MISCELLANEOUS 

     6.1. Entire Agreement; Amendments. This Agreement constitutes the entire agreement of the Parties with respect to the subject
matter hereof and may be amended, modified or supplemented only by a written instrument duly
executed by all the Parties hereto.

     6.2. Waiver. Any Party may (a) extend the time for the performance of any of the obligations or other
acts of another Party, (b) waive compliance with any of the agreements of the another Party or
conditions to such Party’s obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the Party to be bound thereby. No
waiver of any agreement or obligation granted pursuant to this Section 6.2 or otherwise in
accordance with this Agreement shall be construed as a waiver of any prior or subsequent breach of
such agreement or obligation or any other agreement or obligation. The failure of any Party hereto
to assert any of its rights hereunder shall not constitute a waiver of any of such rights.

     6.3. Assignment. No Party may assign (by operation of law or otherwise) this Agreement or any of its rights,
interests or obligations under this Agreement, in whole or in part, without the prior written
consent of the other Parties, except that assignments of all of the rights, interests and
obligations of the Existing Shareholder or of the Focus Shareholder, as the case may be, under this
Agreement to any transferee of Common Shares in a Transfer pursuant to Sections 3.2(a) and 3.3
shall be permitted. Except as otherwise expressly provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.

     6.4. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any Law or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic

- 15 -

 

or legal substance of the transactions contemplated by this Agreement is not affected in any
manner materially adverse to either Party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the Parties as closely
as possible in an acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent possible.

     6.5. Remedies. In the event of a breach by any Party to this Agreement of its obligations under this
Agreement, any Party injured by such breach, in addition to being entitled to exercise all rights
granted by Law, including recovery of damages and costs (including reasonable attorneys’ fees),
will be entitled to specific performance of its rights under this Agreement. The Parties agree
that the provisions of this Agreement shall be specifically enforceable, it being agreed by the
parties that the remedy at law, including monetary damages, for breach of any such provision will
be inadequate compensation for any loss and that any defense in any action for specific performance
that a remedy at law would be adequate is waived.

     6.6. Headings. The headings used in this Agreement have been inserted for convenience of reference only
and do not define or limit the provisions hereof.

     6.7. Notices. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed duly given, made or received (i) on the date of delivery if delivered
in person or by messenger service, (ii) on the date of confirmation of receipt of transmission by
facsimile (or, the first (1st) Business Day following such receipt if (a) such date of confirmation
is not a Business Day or (b) confirmation of receipt is given after 5:00 p.m., Beijing time) or
(iii) on the date of confirmation of receipt if delivered by an internationally recognized
overnight courier service or registered or certified mail (or, the first (1st) Business Day
following such receipt if (a) such date of confirmation is not a Business Day or (b) confirmation
of receipt is given after 5:00 p.m., Beijing time) to the respective Parties hereto at the
following addresses (or at such other address for a party as shall be specified in a notice given
in accordance with this Section 6.7):

     If to the Focus Shareholder:

Focus Media Holding Limited

28F, No. 369, Zhaofeng World Trade Tower

Jiangsu Road, Shanghai

PRC 200050

Attn:

Facsimile:

- 16 -

 

     with a copy (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP

3119 China World Office 1

1 Jianguomenwai Avenue

Beijing, China 100004

Attn: Douglas Markel, Esq.

Facsimile: (86-10) 5965-2988

     If to the JJ Media Shareholder:

JJ Media Investment Holding Limited

c/o Focus Media Holding Limited

28F, No. 369, Zhaofeng World Trade Tower

Jiangsu Road, Shanghai

PRC 200050

Attn: Jason Nanchun Jiang

Facsimile:

     If to the Existing Shareholder:

VisionChina Media Inc.

1/F Block No.6 Champs Elysees

Nongyuan Road, Futian District

Shenzhen 518040

The People’s Republic of China

Attn: Yingming Lei

Email: leiyingming@visionchina.cn

Facsimile: +86 755 8317-1111 If to Limin Li:

     If to the Company:

VisionChina Media Inc.

1/F Block No.7 Champs Elysees

Nongyuan Road, Futian District

Shenzhen 518040

The People’s Republic of China

Attn: Minghua Zhou

Email: minghua.zhou@visionchina.cn

Facsimile: +86 755 8298-1111

     with copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom

42/F, Edinburgh Tower, The Landmark

15 Queen’s Road Central, Hong Kong

Attn: Julie Gao, Esq.

Facsimile: +(852) 39104850

- 17 -

 

     6.8. Further Assurances. Each Party shall cooperate and shall take such further action and shall execute and deliver
such further documents as may be reasonably requested by any other Party in order to carry out the
provisions and purposes of this Agreement.

     6.9. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one
or more counterparts, and by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original, but all of which taken together shall constitute
one and the same agreement.

[Signatures Begin On Next Page]

- 18 -

 

     IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the
date first above written.

	 	 	 	 	 	 	 

	 	 	FOCUS MEDIA HOLDING LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jason Nanchun Jiang
 

Name: Jason Nanchun Jiang
	 	 
	 

	 	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	JJ MEDIA INVESTMENT HOLDING LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jason Nanchun Jiang
 

Name: Jason Nanchun Jiang
	 	 
	 

	 	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 
	 	 	FRONT LEAD INVESTMENTS LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Limin Li
 

Name: Limin Li
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	LIMIN LI	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Limin Li
 

	 	 
	 
	 	 	 	 	 	 
	 	 	VISIONCHINA MEDIA INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Limin Li
 

Name: Limin Li
	 	 
	 

	 	 	 	Title: Chief Executive Officerexv10w1

Exhibit 10.1

VIRCO MFG. CORPORATION

2011 STOCK INCENTIVE PLAN

1. Purpose

     The purpose of the Virco Mfg. Corporation 2011 Stock Incentive Plan (the “Plan”) is
to advance the interests of Virco Mfg. Corporation (the “Company”) by stimulating the efforts of
employees, officers, non-employee directors and other service providers, in each case who are
selected to be participants, by heightening the desire of such persons to continue working toward
and contributing to the success and progress of the Company. The Plan provides for the grant of
Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and
Restricted Stock Units, any of which may be performance-based, as determined by the Administrator.

2. Definitions

     As used in the Plan, the following terms shall have the meanings set forth below:

     (a) “Administrator” means the Administrator of the Plan in accordance with
Section 16.

     (b) “Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock or Restricted Stock Unit granted to a Participant pursuant to
the provisions of the Plan, any of which the Administrator may structure to qualify in whole or in
part as a Performance Award.

     (c) “Award Agreement” means a written or electronic agreement or other instrument as
may be approved from time to time by the Administrator implementing the grant of each Award. An
Agreement may be in the form of an agreement to be executed by both the Participant and the Company
(or an authorized representative of the Company) or certificates, notices or similar instruments as
approved by the Administrator.

     (d) “Board” means the board of directors of the Company.

     (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rulings and regulations issues thereunder.

     (f) “Company” means Virco Mfg. Corporation, a Delaware corporation.

     (g) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor Act thereto.

     (h) “Fair Market Value” means, as of any given date, the closing sales price on such
date during normal trading hours (or, if there are no reported sales on such date, on the last date
prior to such date on which there were sales) of the Shares on the NASDAQ Stock Exchange or, if not
listed on such exchange, on any other national securities exchange on which the Shares are listed
or on an inter-dealer quotation system, in any case, as reported in such source as the
Administrator shall select. If there is no regular public trading market for the Shares, the Fair
Market Value of the Shares shall be determined by the Administrator in good faith and in compliance
with Section 409A of the Code.

     (i) “Incentive Stock Option” means a stock option that is intended to qualify as an
“incentive stock option” within the meaning of Section 422 of the Code.

     (j) “Nonemployee Director” means each person who is, or is elected to be, a member
of the Board and who is not an employee of the Company or any Subsidiary.

     (k) “Nonqualified Stock Option” means a stock option that is not intended to qualify
as an “incentive stock option” within the meaning of Section 422 of the Code.

     (l) “Option” means an Incentive Stock Option and/or a Nonqualified Stock Option
granted pursuant to Section 6 of the Plan.

     (m) “Participant” means any individual described in Section 3 to whom Awards have
been granted from time to time by the Administrator and any authorized transferee of such
individual.

7

 

     (n) “Performance Award” means an Award, the grant, issuance, retention, vesting or
settlement of which is subject to satisfaction of one or more performance criteria pursuant to
Section 12.

     (o) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as described in
Section 13(d) thereof.

     (p) “Plan” means the Virco Mfg. Corporation 2011 Stock Incentive Plan as set forth
herein and as amended from time to time.

     (q) “Qualifying Performance Criteria” has the meaning set forth in Section 12(b).

     (r) “Restricted Stock” means Shares granted pursuant to Section 8 of the Plan.

     (s) “Restricted Stock Unit” means an Award granted to a Participant pursuant to
Section 8 pursuant to which Shares or cash in lieu thereof may be issued in the future.

     (t) “Share” means a share of the Company’s common stock, $0.01 par value per share
(or such other par value as may be designated by act of the Company’s stockholders), subject to
adjustment as provided in Section 11.

     (u) “Stock Appreciation Right” means a right granted pursuant to Section 7 of the
Plan that entitles the Participant to receive, in cash or Shares or a combination thereof, as
determined by the Administrator, value equal to or otherwise based on the excess of (i) the Fair
Market Value of a specified number of Shares at the time of exercise over (ii) the exercise price
of the right, as established by the Administrator on the date of grant.

     (v) “Subsidiary” means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company where each of the corporations in the unbroken chain
other than the last corporation owns stock possessing at least 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations in the chain, and if
specifically determined by the Administrator in the context other than with respect to Incentive
Stock Options, may include an entity in which the Company has a significant ownership interest or
that is directly or indirectly controlled by the Company.

     (w) “Substitute Awards” means Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, by a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines.

     (x) “Termination of Employment” means ceasing to serve as an employee of the Company
and its Subsidiaries or, with respect to a Nonemployee Director or other service provider, ceasing
to serve as such for the Company, except that with respect to all or any Awards held by a
Participant (i) the Administrator may determine that a leave of absence or employment on a less
than full-time basis is not considered a “Termination of Employment,” (ii) the Administrator may
determine that a transition of employment to service with a partnership, joint venture or
corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a
party is not considered a “Termination of Employment,” (iii) service as a member of the Board shall
constitute continued employment with respect to Awards granted to a Participant while he or she
served as an employee, and (iv) service as an employee of the Company or a Subsidiary shall
constitute continued employment with respect to Awards granted to a Participant while he or she
served as a member of the Board or other service provider. The Administrator shall determine
whether any corporate transaction, such as a sale or spin-off of a division or subsidiary that
employs a Participant, shall be deemed to result in a Termination of Employment with the Company
and its Subsidiaries for purposes of any affected Participant’s Awards, and the Administrator’s
decision shall be final and binding.

3. Eligibility

     Any person who is a current or prospective officer or employee (including any
director who is also an employee, in his or her capacity as such) or other service provider of the
Company or of any Subsidiary shall be eligible for selection by the Administrator for the grant of
Awards hereunder. To the extent provided by Section 5(d), any Nonemployee Director shall be
eligible for the grant of Awards hereunder as determined by the Administrator. Options intending to
qualify as Incentive Stock Options may only be granted to employees of the Company or any
Subsidiary within the meaning of the Code and as selected by the Administrator.

8

 

4. Effective Date and Termination of Plan

     This Plan was adopted by the Board on May 6, 2011 and will become effective upon
approval by the Company’s stockholders (the “Effective Date”), which approval must be obtained
within twelve (12) months of the adoption of this Plan by the Board. The Plan shall remain
available for the grant of Awards until the tenth (10th) anniversary of the date of Board approval
of the Plan. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the
Board may determine. Termination of the Plan will not affect the rights and obligations of the
Participants and the Company arising under Awards theretofore granted and then in effect.

5. Shares Subject to the Plan and to Awards

     (a) Aggregate Limits . The aggregate number of Shares issuable pursuant to all
Awards under this Plan shall not exceed 1,000,000. The aggregate number of Shares available for
grant under this Plan and the number of Shares subject to outstanding Awards shall be subject to
adjustment as provided in Section 11. The Shares issued pursuant to Awards granted under this Plan
may be Shares that are authorized and unissued or Shares that were reacquired by the Company,
including Shares purchased in the open market.

     (b) Issuance of Shares . For purposes of Section 5(a), the aggregate number of
Shares issued under this Plan at any time shall equal only the number of Shares actually issued
upon exercise or settlement of an Award under this Plan. Without limiting the foregoing, Shares
subject to an Award under this Plan shall not again be made available for issuance under this Plan
if such Shares are: (i) Shares that were subject to a stock-settled Stock Appreciation Right and
were not issued upon the net settlement or net exercise of such Stock Appreciation Right,
(ii) Shares used to pay the exercise price of an Option, (iii) Shares delivered to or withheld by
the Company to pay the withholding taxes related to an Award, or (iv) Shares repurchased on the
open market with the proceeds of an Option exercise. In addition, Shares subject to Awards that
have been canceled, expired, forfeited or otherwise not issued under an Award and Shares subject to
Awards settled in cash shall not count as Shares issued under this Plan.

     (c) Tax Code Limits . The aggregate number of Shares subject to Awards granted under
this Plan during any calendar year to any one Participant shall not exceed 100,000, which number
shall be calculated and adjusted pursuant to Section 11 only to the extent that such calculation or
adjustment will not affect the status of any Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code but which number shall not count any tandem SARs (as
defined in Section 7). The aggregate number of Shares that may be issued pursuant to the exercise
of Incentive Stock Options granted under this Plan shall not exceed 1,000,000, which number shall
be calculated and adjusted pursuant to Section 11 only to the extent that such calculation or
adjustment will not affect the status of any option intended to qualify as an Incentive Stock
Option under Section 422 of the Code.

     (d) Director Awards . The aggregate number of Shares subject to Awards granted under
this Plan during any calendar year to any one Nonemployee Director shall not exceed 25,000;
provided, however, that in the calendar year in which a Nonemployee Director first joins the Board
of Directors or is first designated as Chairman of the Board of Directors or Lead Director, the
maximum number of Shares subject to Awards granted to the Participant may be up to two hundred
percent (200%) of the number of Shares set forth in the foregoing limits and the foregoing limits
shall not count any tandem SARs (as defined in Section 7).

     (e) Substitute Awards. Substitute Awards shall not reduce the Shares authorized for
issuance under the Plan or authorized for grant to a Participant in any calendar year.
Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which
the Company or any Subsidiary combines, has Shares available under a pre-existing plan approved by
stockholders and not adopted in contemplation of such acquisition or combination, the Shares
available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may be used for Awards under the
Plan and shall not reduce the Shares authorized for issuance under the Plan; provided that Awards
using such available Shares shall not be made after the date awards or grants could have been made
under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be
made to individuals who were employees, directors or other service providers of such acquired or
combined company before such acquisition or combination.

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6. Options

     (a) Option Awards . Options may be granted at any time and from time to time prior
to the termination of the Plan to Participants as determined by the Administrator. No Participant
shall have any rights as a stockholder with respect to any Shares subject to Option hereunder until
said Shares have been issued. Each Option

shall be evidenced by an Award Agreement. Options granted pursuant to the Plan need not be
identical but each Option must contain and be subject to the terms and conditions set forth below.

     (b) Price . The Administrator will establish the exercise price per Share under each
Option, which in no event will be less than the Fair Market Value of the Shares on the date of
grant; provided, however, that the exercise price per Share with respect to an Option that is
granted in connection with a merger or other acquisition as a substitute or replacement award for
options held by optionees of the acquired entity may be less than 100% of the market price of the
Shares on the date such Option is granted if such exercise price is based on a formula set forth in
the terms of the options held by such optionees or in the terms of the agreement providing for such
merger or other acquisition. The exercise price of any Option may be paid in Shares, cash or a
combination thereof, as determined by the Administrator, including an irrevocable commitment by a
broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery of
previously owned Shares and withholding of Shares otherwise deliverable upon exercise.

     (c) No Repricing without Stockholder Approval . Other than in connection with a
change in the Company’s capitalization (as described in Section 11), at any time when the exercise
price of an Option is above the Fair Market Value of a Share, the Company shall not, without
stockholder approval, (i) reduce the exercise price of such Option, (ii) exchange such Option for
cash, another Award or a new Option or Stock Appreciation Right with a lower exercise or base price
or (iii) otherwise reprice such Option.

     (d) Provisions Applicable to Options . The date on which Options become exercisable
shall be determined at the sole discretion of the Administrator and set forth in an Award
Agreement. The Administrator shall establish the term of each Option, which in no case shall exceed
a period of ten (10) years from the date of grant.

     (e) Termination of Employment. Unless an Option earlier expires upon the expiration
date established pursuant Section 6(d), upon the Participant’s Termination of Employment, his or
her rights to exercise an Option then held shall be determined by the Administrator and set forth
in an Award Agreement.

     (f) Incentive Stock Options . Notwithstanding anything to the contrary in this
Section 6, in the case of the grant of an Option intending to qualify as an Incentive Stock Option:
(i) if the Participant owns stock possessing more than 10 percent of the combined voting power of
all classes of stock of the Company (a “10% Shareholder”), the exercise price of such Option must
be at least 110 percent of the Fair Market Value of the Shares on the date of grant and the Option
must expire within a period of not more than five (5) years from the date of grant, and
(ii) Termination of Employment will occur when the person to whom an Award was granted ceases to be
an employee (as determined in accordance with Section 3401(c) of the Code and the regulations
promulgated thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this
Section 6 to the contrary, Options designated as Incentive Stock Options shall not be eligible for
treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock
Options) to the extent that either (a) the aggregate Fair Market Value of Shares (determined as of
the time of grant) with respect to which such Options are exercisable for the first time by the
Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds
$100,000, taking Options into account in the order in which they were granted, or (b) such Options
otherwise remain exercisable but are not exercised within three (3) months of Termination of
Employment (or such other period of time provided in Section 422 of the Code).

7. Stock Appreciation Rights

     Stock Appreciation Rights may be granted to Participants from time to time either in
tandem with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in
conjunction with other Awards (“freestanding SARs”) and may, but need not, relate to a specific
Option granted under Section 6. The provisions of Stock Appreciation Rights need not be the same
with respect to each grant or each recipient. Any Stock Appreciation Right granted in tandem with
an Award may be granted at the same time such Award is granted or at any time thereafter before
exercise or expiration of such Award. All freestanding SARs shall be granted subject to the same
terms and conditions applicable to Options as set forth in Section 6 and all tandem SARs shall have
the same exercise price, vesting, exercisability, forfeiture and termination provisions as the
Award to which they relate.

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Subject to the provisions of Section 6 and the immediately preceding
sentence, the Administrator may impose such other conditions or restrictions on any Stock
Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in
Shares, cash or a combination thereof, as determined by the Administrator and set forth in the
applicable Award Agreement. Other than in connection with a change in the Company’s capitalization
(as described in Section 11), at any time when the exercise price of a Stock Appreciation Right is
above the Fair Market Value of a Share, the Company shall not, without stockholder approval,
(i) reduce the exercise or base price of such Stock Appreciation Right, (ii) exchange such Stock
Appreciation Right for cash, another Award or a new Option or

Stock Appreciation Right with a lower exercise or base price or (iii) otherwise reprice such Stock
Appreciation Right.

8. Restricted Stock and Restricted Stock Units

     (a) Restricted Stock and Restricted Stock Unit Awards . Restricted Stock and
Restricted Stock Units may be granted at any time and from time to time prior to the termination of
the Plan to Participants as determined by the Administrator. Restricted Stock is an award of
Shares, the grant, issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including continued employment or performance
conditions) and terms as the Administrator deems appropriate. Restricted Stock Units are Awards
denominated in units of Shares under which the issuance of Shares is subject to such conditions
(including continued employment or performance conditions) and terms as the Administrator deems
appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an
Award Agreement. Unless determined otherwise by the Administrator, each Restricted Stock Unit will
be equal to one Share and will entitle a Participant to either the issuance of Shares or payment of
an amount of cash determined with reference to the value of Shares. To the extent determined by the
Administrator, Restricted Stock and Restricted Stock Units may be satisfied or settled in Shares,
cash or a combination thereof. Restricted Stock and Restricted Stock Units granted pursuant to the
Plan need not be identical but each grant of Restricted Stock and Restricted Stock Units must
contain and be subject to the terms and conditions set forth below.

     (b) Contents of Agreement . Each Award Agreement shall contain provisions regarding
(i) the number of Shares or Restricted Stock Units subject to such Award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the means of payment,
(iii) the performance criteria, if any, and level of achievement versus these criteria that shall
determine the number of Shares or Restricted Stock Units granted, issued, retainable and/or vested,
(iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or
Restricted Stock Units as may be determined from time to time by the Administrator, (v) the term of
the performance period, if any, as to which performance will be measured for determining the number
of such Shares or Restricted Stock Units, and (vi) restrictions on the transferability of the
Shares or Restricted Stock Units. Shares issued under a Restricted Stock Award may be issued in the
name of the Participant and held by the Participant or held by the Company, in each case as the
Administrator may provide.

     (c) Vesting and Performance Criteria . The grant, issuance, retention, vesting
and/or settlement of Shares of Restricted Stock and Restricted Stock Units will occur when and in
such installments as the Administrator determines or under criteria the Administrator establishes,
which may include Qualifying Performance Criteria. Notwithstanding anything in this Plan to the
contrary, the performance criteria for any Restricted Stock or Restricted Stock Unit that is
intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of
the Code will be a measure based on one or more Qualifying Performance Criteria selected by the
Administrator and specified when the Award is granted.

     (d) Termination of Employment : Upon the Participant’s Termination of Employment,
his or her rights to unvested Restricted Stock or Restricted Stock Units then held shall be
determined by the Administrator and set forth in an Award Agreement.

     (e) Discretionary Adjustments and Limits . Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to qualify as “performance-based
compensation,” notwithstanding the satisfaction of any performance goals, the number of Shares
granted, issued, retainable and/or vested under an Award of Restricted Stock or Restricted Stock
Units on account of either financial performance or personal performance evaluations may, to the
extent specified in the Award Agreement, be reduced, but not increased, by the Administrator on the
basis of such further considerations as the Administrator shall determine.

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     (f) Voting Rights . Unless otherwise determined by the Administrator, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares during the period of restriction. Participants shall have no voting rights with
respect to Shares underlying Restricted Stock Units unless and until such Shares are reflected as
issued and outstanding Shares on the Company’s stock ledger.

     (g) Dividends and Distributions . Participants in whose name an Award of Restricted
Stock and/or Restricted Stock Units is granted shall be entitled to receive all dividends and other
distributions paid with respect to the Shares underlying such Award, unless determined otherwise by
the Administrator. The Administrator will determine whether any such dividends or distributions
will be automatically reinvested in additional Shares or will be payable in cash; provided that
such additional Shares and/or cash shall subject to the same restrictions and vesting conditions as
the Award with respect to which they were distributed. Notwithstanding anything herein to the

contrary, in no event shall dividends or dividend equivalents be currently payable with respect to
unvested or unearned Performance Awards.

9. Deferral of Gains

     The Administrator may, in an Award Agreement or otherwise, provide for the deferred
delivery of Shares upon settlement, vesting or other events with respect to Restricted Stock or
Restricted Stock Units. Notwithstanding anything herein to the contrary, in no event will any
deferral of the delivery of Shares or any other payment with respect to any Award be allowed if the
Administrator determines, in its sole discretion, that the deferral would result in the imposition
of the additional tax under Section 409A(a)(1)(B) of the Code. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code, unless the Board, at the time
of grant, specifically provides that the Award is not intended to comply with Section 409A of the
Code. The Company shall have no liability to a Participant, or any other party, if an Award that is
intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or
compliant or for any action taken by the Board.

10. Conditions and Restrictions Upon Securities Subject to Awards

     The Administrator may provide that the Shares issued upon exercise of an Option or
Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as the Administrator in its discretion
may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting
or settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for the Shares issued
upon exercise, vesting or settlement of such Award (including the actual or constructive surrender
of Shares already owned by the Participant) or payment of taxes arising in connection with an
Award. Without limiting the foregoing, such restrictions may address the timing and manner of any
resales by the Participant or other subsequent transfers by the Participant of any Shares issued
under an Award, including without limitation (i) restrictions under an insider trading policy or
pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and
manner of sales by Participant and holders of other Company equity compensation arrangements, (iii)
restrictions as to the use of a specified brokerage firm for such resales or other transfers, and
(iv) provisions requiring Shares to be sold on the open market or to the Company in order to
satisfy tax withholding or other obligations.

11. Adjustment of and Changes in the Shares

     The number and kind of Shares available for issuance under this Plan (including
under any Awards then outstanding), and the number and kind of Shares subject to the individual
limits set forth in Section 5 of this Plan, shall be equitably adjusted by the Administrator as it
determines appropriate to reflect any reorganization, reclassification, combination of Shares,
stock split, reverse stock split, spin-off, dividend or distribution of securities, property or
cash (other than regular, quarterly cash dividends), or any other event or transaction that affects
the number or kind of Shares of the Company outstanding. Such adjustment shall be designed to
comply with Sections 409A and 424 of the Code or, except as otherwise expressly provided in Section
5(c) of this Plan, may be designed to treat the Shares available under the Plan and subject to
Awards as if they were all outstanding on the record date for such event or transaction or to
increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount
distributed to the Company’s securityholders. The terms of any outstanding Award shall also be
equitably adjusted by the Administrator as to price, number or kind of Shares subject to such
Award, vesting,

12

 

and other terms to reflect the foregoing events, which adjustments need not be
uniform as between different Awards or different types of Awards.

     In the event there shall be any other change in the number or kind of outstanding
Shares, or any stock or other securities into which such Shares shall have been changed, or for
which it shall have been exchanged, by reason of a change in control, other merger, consolidation
or otherwise, then the Administrator shall, in its sole discretion, determine the appropriate and
equitable adjustment, if any, to be effected.

     No right to purchase fractional Shares shall result from any adjustment in Awards
pursuant to this Section 11. In case of any such adjustment, the Shares subject to the Award shall
be rounded down to the nearest whole share. The Company shall notify Participants holding Awards
subject to any adjustments pursuant to this Section 11 of such adjustment, but (whether or not
notice is given) such adjustment shall be effective and binding for all purposes of the Plan.

     Unless otherwise expressly provided in the Award Agreement or another contract,
including an employment agreement, or under the terms of a transaction constituting a change in
control, the Administrator may provide that any or all of the following shall occur upon a
Participant’s Termination of Employment within twenty-four (24) months following a change in
control: (a) in the case of an Option or Stock Appreciation
Right, the Participant shall
have the ability to exercise any portion of the Option or Stock Appreciation Right not previously
exercisable, (b) in the case of a Performance Award, the Participant shall have the right to
receive a payment equal to the target amount payable or, if greater, a payment based on performance
through a date determined by the Administrator prior to the change in control, and (c) in the case
of outstanding Restricted Stock and/or Restricted Stock Units, all conditions to the grant,
issuance, retention, vesting or transferability of, or any other restrictions applicable to, such
Award shall immediately lapse. Notwithstanding anything herein to the contrary, in the event of a
change in control in which the acquiring or surviving company in the transaction does not assume or
continue outstanding Awards upon the change in control, immediately prior to the change in control,
all Awards that are not assumed or continued shall be treated as follows effective immediately
prior to the change in control: (a) in the case of an Option or Stock Appreciation Right, the
Participant shall have the ability to exercise such Option or Stock Appreciation Right, including
any portion of the Option or Stock Appreciation Right not previously exercisable, (b) in the case
of a Performance Award, the Participant shall have the right to receive a payment equal to the
target amount payable or, if greater, a payment based on performance through a date determined by
the Administrator prior to the change in control, and (c) in the case of outstanding Restricted
Stock and/or Restricted Stock Units, all conditions to the grant, issuance, retention, vesting or
transferability of, or any other restrictions applicable to, such Award shall immediately lapse.

12. Qualifying Performance-Based Compensation

     (a) General . The Administrator may establish performance criteria and level of
achievement versus such criteria that shall determine the number of Shares, units, or cash to be
granted, retained, vested, issued or issuable under or in settlement of or the amount payable
pursuant to an Award, which criteria may be based on Qualifying Performance Criteria or other
standards of financial performance and/or personal performance evaluations. A Performance Award may
be identified as “Performance Share,” “Performance Equity,” “Performance Unit” or other such term
as chosen by the Administrator. In addition, the Administrator may specify that an Award or a
portion of an Award is intended to satisfy the requirements for “performance-based compensation”
under Section 162(m) of the Code, provided that the performance criteria for such Award or portion
of an Award that is intended by the Administrator to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code shall be a measure based on one
or more Qualifying Performance Criteria selected by the Administrator and specified at the time the
Award is granted. The Administrator shall certify the extent to which any Qualifying Performance
Criteria has been satisfied, and the amount payable as a result thereof, prior to payment,
settlement or vesting of any Award that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code. Notwithstanding satisfaction of
any performance goals, the number of Shares issued under or the amount paid under an award may, to
the extent specified in the Award Agreement, be reduced, but not increased, by the Administrator on
the basis of such further considerations as the Administrator in its sole discretion shall
determine.

     (b) Qualifying Performance Criteria . For purposes of this Plan, the term
“Qualifying Performance Criteria” shall mean any one or more of the following performance criteria,
or derivations of such performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or

13

 

Subsidiary, either
individually, alternatively or in any combination, and measured either annually or cumulatively
over a period of years, on an absolute basis or relative to a pre-established target, to previous
years’ results or to a designated comparison group, in each case as specified by the Administrator:
(i) cash flow (before or after dividends), (ii) earning or earnings per share (including earnings
before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity,
(v) total stockholder return, (vi) return on capital or investment (including return on total
capital, return on invested capital, or return on investment), (vii) return on assets or net
assets, (viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to
capital), (xi) revenue, (xii) income or net income, (xiii) operating income or net operating
income, (xiv) operating profit or net operating profit, (xv) operating margin or profit margin,
(xvi) return on operating revenue, (xvii) cash from operations, (xviii) operating ratio,
(xix) operating revenue, (xx) NSR and/or total backlog, (xxi) days sales outstanding,
(xxii) customer service, (xxiii) operational safety, reliability and/or efficiency, and/or
(xxiv) environmental incidents. To the extent consistent with Section 162(m) of the Code, the
Administrator (A) shall appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to eliminate the effects of charges for restructurings, discontinued
operations, extraordinary items and all items of gain, loss or expense determined to be
extraordinary or unusual in nature or related to the acquisition or disposal of a segment of a
business or related to a change in accounting principle all as determined in accordance with
applicable accounting provisions, as well as the cumulative effect of accounting changes, in each
case as determined in accordance with generally accepted accounting principles or identified in the
Company’s financial statements or notes to the financial statements, and (B) may appropriately
adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the
following events that occurs during a performance period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law or other such laws or
provisions affecting reported results, (iv) accruals for reorganization and restructuring programs
and (v) accruals of any amounts for payment under this Plan or any other compensation arrangement
maintained by the Company.

13. Transferability

     Each Award may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated by a Participant other than by will or the laws of descent and distribution, and
each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or
her lifetime. Notwithstanding the foregoing, to the extent permitted by the Administrator, the
person to whom an Award is initially granted (the “Grantee”) may transfer an Award to any “family
member” of the Grantee (as such term is defined in Section 1(a)(5) of the General Instructions to
Form S-8 under the Securities Act of 1933, as amended (“Form S-8”)), to trusts solely for the
benefit of such family members and to partnerships in which such family members and/or trusts are
the only partners; provided that, (i) as a condition thereof, the transferor and the transferee
must execute a written agreement containing such terms as specified by the Administrator, and
(ii) the transfer is pursuant to a gift or a domestic relations order to the extent permitted under
the General Instructions to Form S-8. Except to the extent specified otherwise in the agreement the
Administrator provides for the Grantee and transferee to execute, all vesting, exercisability and
forfeiture provisions that are conditioned on the Grantee’s continued employment or service shall
continue to be determined with reference to the Grantee’s employment or service (and not to the
status of the transferee) after any transfer of an Award pursuant to this Section 13, and the
responsibility to pay any taxes in connection with an Award shall remain with the Grantee
notwithstanding any transfer other than by will or intestate succession.

14. Compliance with Laws and Regulations

     This Plan, the grant, issuance, vesting, exercise and settlement of Awards
hereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards,
shall be subject to all applicable foreign, federal, state and local laws, rules and regulations,
stock exchange rules and regulations, and to such approvals by any governmental or regulatory
agency as may be required. The Company shall not be required to register in a Participant’s name or
deliver any Shares prior to the completion of any registration or qualification of such Shares
under any foreign, federal, state or local law or any ruling or regulation of any government body
which the Administrator shall determine to be necessary or advisable. To the extent the Company is
unable to or the Administrator deems it infeasible to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, the Company and its Subsidiaries shall be
relieved of any liability with respect to the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained. No Option shall be exercisable and no Shares
shall be issued and/or transferable under any other Award unless a registration statement with
respect to the Shares

14

 

underlying such Option is effective and current or the Company has determined
that such registration is unnecessary.

     In the event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Administrator may, in its sole discretion, modify
the provisions of the Plan or of such Award as they pertain to such individual to comply with
applicable foreign law or to recognize differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize the Company’s
obligations with respect to tax equalization for Participants employed outside their home country.

15. Withholding

     To the extent required by applicable federal, state, local or foreign law, a
Participant shall be required to satisfy, in a manner satisfactory to the Company, any withholding
tax obligations that arise by reason of an Option exercise, the vesting of or settlement of an
Award, an election pursuant to Section 83(b) of the Code or otherwise with respect to an Award. To
the extent a Participant makes an election under Section 83(b) of the Code, within ten days of
filing such election with the Internal Revenue Service, the Participant must notify the Company in
writing of such election. The Company and its Subsidiaries shall not be required to issue Shares,
make any payment or to recognize the transfer or disposition of Shares until all withholding tax
obligations are satisfied. The Administrator may provide for or permit these obligations to be
satisfied through the mandatory or elective sale of Shares and/or by having the Company withhold a
portion of the Shares that otherwise would be issued to him or her upon exercise of the Option or
the vesting or settlement of an Award, or by tendering Shares previously acquired. In addition, the
Company shall be entitled to deduct from other compensation payable to each Participant any
withholding tax obligations that arise in connection with an Award or require the Participant to
pay such sums directly to the Company in cash or by check.

16. Administration of the Plan

     (a) Administrator of the Plan . The Plan shall be administered by the Administrator
who shall be the Compensation Committee of the Board or, in the absence of a Compensation
Committee, the Board itself. Any power of the Administrator may also be exercised by the Board,
except to the extent that the grant or exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Securities Exchange Act of 1934 or cause an Award designated as a
Performance Award not to qualify for treatment as performance-based compensation under Section
162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with
action taken by the Administrator, the Board action shall control. The Compensation Committee may
by resolution authorize one or more officers of the Company to perform any or all things that the
Administrator is authorized and empowered to do or perform under the Plan, and for all purposes
under this Plan, such officer or officers shall be treated as the Administrator; provided, however,
that the resolution so authorizing such officer or officers shall specify the total number of
Awards (if any) such officer or officers may award pursuant to such delegated authority. No such
officer shall designate himself or herself as a recipient of any Awards granted under authority
delegated to such officer. In addition, the Compensation Committee may delegate any or all aspects
of the day-to-day administration of the Plan to one or more officers or employees of the Company or
any Subsidiary, and/or to one or more agents.

     (b) Powers of Administrator . Subject to the express provisions of this Plan, the
Administrator shall be authorized and empowered to do all things that it determines to be necessary
or appropriate in connection with the administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms
not otherwise defined herein; (ii) to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to
grant Awards to Participants and determine the terms and conditions thereof, including the number
of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances
under which Awards become exercisable or vested or are forfeited or expire, which terms may but
need not be conditioned upon the passage of time, continued employment, the satisfaction of
performance criteria, the occurrence of certain events, or other factors; (iv) to establish and
verify the extent of satisfaction of any performance goals or other conditions applicable to the
grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to prescribe and
amend the terms of the agreements or other documents evidencing Awards made under this Plan (which
need not be identical) and the terms of or form of any document or notice required to be delivered
to the

15

 

Company by Participants under this Plan; (vi) to determine whether, and the extent to which,
adjustments are required pursuant to Section 11; (vii) to interpret and construe this Plan, any
rules and regulations under this Plan and the terms and conditions of any Award granted hereunder,
and to make exceptions to any such provisions if the Administrator, in good faith, determines that
it is necessary to do so in light of extraordinary circumstances and for the benefit of the
Company; (viii) to approve corrections in the documentation or administration of any Award; and
(ix) to make all other determinations deemed necessary or advisable for the administration of this
Plan. The Administrator may, in its sole and absolute discretion, without amendment to the Plan,
waive or amend the operation of Plan provisions respecting exercise after Termination of Employment
or service to the Company or an affiliate and, except as otherwise provided herein, adjust any of
the terms of any Award.

     (c) Determinations by the Administrator . All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan
and the terms and conditions of or operation of any Award granted hereunder, shall be final and
binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming
rights under the Plan or any Award. The Administrator shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of any officer or
other employee of the Company and such attorneys, consultants and accountants as it may select.

     (d) Subsidiary Awards . In the case of a grant of an Award to any Participant
employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the
Company issuing Shares to the Subsidiary, for such lawful consideration as the Administrator may
determine, upon the condition or understanding that the Subsidiary will transfer the Shares to the
Participant in accordance with the terms of the Award specified by the Administrator pursuant to
the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by
and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator
shall determine.

17. Amendment of the Plan or Awards

     The Board may amend, alter or discontinue this Plan and the Administrator may amend,
or alter any agreement or other document evidencing an Award made under this Plan but, except as
provided pursuant to the provisions of Section 11, no such amendment shall, without the approval of
the stockholders of the Company amend the Plan in any manner requiring stockholder approval by law
or under the NASDAQ listing requirements.

     No amendment or alteration to the Plan or an Award or Award Agreement shall be made
which would impair the rights of the holder of an Award, without such holder’s consent, provided
that no such consent shall be required if the Administrator determines in its sole discretion and
prior to the date of any change in control that such amendment or alteration either is required or
advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to
meet the requirements of or avoid adverse financial accounting consequences under any accounting
standard.

18. No Liability of Company

     The Company and any Subsidiary or affiliate which is in existence or hereafter comes
into existence shall not be liable to a Participant or any other person as to: (i) the non-issuance
or sale of Shares as to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any
Participant or other person due to the receipt, exercise or settlement of any Award granted
hereunder.

19. Non-Exclusivity of Plan

     Neither the adoption of this Plan by the Board nor the submission of this Plan to
the stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board or the Administrator to adopt such other incentive arrangements as either may
deem desirable, including without limitation, an arrangement not intended to qualify under Section
162(m) of the Code, and such arrangements may be either generally applicable or applicable only in
specific cases.

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20. Governing Law

     This Plan and any agreements or other documents hereunder shall be interpreted and
construed in accordance with the laws of the Delaware to the extent not preempted by federal law.
Any reference in this Plan or in the agreement or other document evidencing any Awards to a
provision of law or to a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.

21. No Right to Employment, Reelection or Continued Service

     Nothing in this Plan or an Award Agreement shall interfere with or limit in any way
the right of the Company, its Subsidiaries and/or its affiliates to terminate any Participant’s
employment, service on the Board or service for the Company at any time or for any reason not
prohibited by law, nor shall this Plan or an Award itself confer upon any Participant any right to
continue his or her employment or service for any specified period of time. Neither an Award nor
any benefits arising under this Plan shall constitute an employment contract with the Company, any
Subsidiary and/or its affiliates. Subject to Sections 4 and 18, this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of the Board without
giving rise to any liability on the part of the Company, its Subsidiaries and/or its affiliates.

22. Unfunded Plan

     The Plan is intended to be an unfunded plan. Participants are and shall at all times
be general creditors of the Company with respect to their Awards. If the Administrator or the
Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the
Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the
event of its bankruptcy or insolvency.

23. Section 409A

     It is intended that any Options, Stock Appreciation Rights, and Restricted Stock
issued pursuant to this Plan and any Award Agreement shall not constitute “deferrals of
compensation” within the meaning of Section 409A of the Code and, as a result, shall not be subject
to the requirements of Section 409A of the Code. It is further intended that any Restricted Stock
Units issued pursuant to this Plan and any Award Agreement or other written document establishing
the terms and conditions of the Award (which may or may not constitute “deferrals of compensation,”
depending on the terms of each Award) shall avoid any “plan failures” within the meaning of Section
409A(a)(1) of the Code. The Plan and each Award Agreement or other written document establishing
the terms and conditions of an Award is to be interpreted and administered in a manner consistent
with these intentions. However, no guarantee

or commitment is made that the Plan, any Award Agreement or any other written document establishing
the terms and conditions of an Award shall be administered in accordance with the requirements of
Section 409A of the Code, with respect to amounts that are subject to such requirements, or that
the Plan, any Award Agreement or any other written document establishing the terms and conditions
of an Award shall be administered in a manner that avoids the application of Section 409A of the
Code, with respect to amounts that are not subject to such requirements.

24. Required Delay in Payment on Account of a Separation from Service

     Notwithstanding any other provision in this Plan, any Award Agreement or any other
written document establishing the terms and conditions of an Award, if any Award recipient is a
“specified employee,” as defined in Treasury Regulations Section 1.409A-1(i), as of the date of his
or her “Separation from Service” (as defined in authoritative IRS guidance under Section 409A of
the Code), then, to the extent required by Treasury Regulations Section 1.409A-3(i)(2), any payment
made to the Award recipient on account of his or her Separation from Service shall not be made
before a date that is six months after the date of his or her Separation from Service. The
Administrator may elect any of the methods of applying this rule that are permitted under Treasury
Regulations Section 1.409A-3(i)(2)(ii).

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: business strategies; market demand and product development; order rates; economic
conditions; the educational furniture industry; state and municipal bond funding; cost control
initiatives; 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

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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; state and municipal bond funding; state, local and municipal tax receipts; 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 competitive landscape, including
responses of our competitors to changes in our prices. See our Annual Report on Form 10-K for the
year ended January 31, 2011, 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.

End of filing

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