Exhibit 10.94

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS.  THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

Issuance Date: March 23, 2004

 

VCAMPUS CORPORATION

 

PURCHASE WARRANT

 

WARRANT (“WARRANT”) TO PURCHASE SHARES OF
COMMON STOCK, $0.01 PAR VALUE PER SHARE

 

This is to certify that, FOR VALUE RECEIVED,
                                      (“Warrantholder”), is entitled to
purchase, subject to the provisions of this Warrant, from VCampus Corporation, a
corporation organized under the laws of Delaware (“Company”), at any time and
from time to time commencing six months from the Issuance Date, or on the date
of Shareholder Approval, whichever shall first occur (“Exercise Date”), but not
later than 5:00 P.M., Eastern time, on the fifth (5th) anniversary of the
Issuance Date (“Expiration Date”), a total of [                ]shares (“Warrant
Shares”) of Common Stock, $0.01 par value (“Common Stock”) of the Company, at an
initial exercise price per share equal to the Market Price as of the Issuance
Date.  The exercise price in effect from time to time is hereafter called the
“Warrant Price”.  Immediately following the date of Shareholder Approval, the
Warrant Price shall thereafter be $1.63 (subject to adjustment as provided
herein as if the Warrant Price had been $1.63 on the Issuance Date).  The number
of Warrant Shares purchasable upon exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time as described herein.

 

This Warrant has been issued pursuant to the terms of the Purchase Agreement
(“Purchase Agreement”) dated on or about the date hereof between the Company and
the Warrantholder.  Capitalized terms used herein and not defined shall have the
meaning specified in the Purchase Agreement.

 

SECTION 1.       REGISTRATION.  THE COMPANY SHALL MAINTAIN BOOKS FOR THE
TRANSFER AND REGISTRATION OF THE WARRANT.  UPON THE INITIAL ISSUANCE OF THE
WARRANT, THE COMPANY SHALL ISSUE AND REGISTER THE WARRANT IN THE NAME OF THE
WARRANTHOLDER.

 

SECTION 2.       TRANSFERS.  AS PROVIDED HEREIN, THIS WARRANT MAY BE TRANSFERRED
ONLY PURSUANT TO A REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF
1933, AS AMENDED

 

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(“SECURITIES ACT”) OR AN EXEMPTION FROM REGISTRATION THEREUNDER.  SUBJECT TO
SUCH RESTRICTIONS, THE COMPANY SHALL TRANSFER THIS WARRANT FROM TIME TO TIME,
UPON THE BOOKS TO BE MAINTAINED BY THE COMPANY FOR THAT PURPOSE, UPON SURRENDER
HEREOF FOR TRANSFER PROPERLY ENDORSED OR ACCOMPANIED BY APPROPRIATE INSTRUCTIONS
FOR TRANSFER UPON ANY SUCH TRANSFER, AND A NEW WARRANT SHALL BE ISSUED TO THE
TRANSFEREE AND THE SURRENDERED WARRANT SHALL BE CANCELED BY THE COMPANY.

 

SECTION 3.       (A) EXERCISE OF WARRANT.  SUBJECT TO THE PROVISIONS HEREOF, THE
WARRANTHOLDER MAY EXERCISE THIS WARRANT IN WHOLE OR IN PART AT ANY TIME AND FROM
TIME TO TIME ON AND AFTER THE EXERCISE DATE AND ENDING ON THE EXPIRATION DATE,
UPON SURRENDER OF THE ORIGINAL OF THIS WARRANT, TOGETHER WITH DELIVERY OF THE
DULY EXECUTED WARRANT EXERCISE FORM ATTACHED HERETO (THE “EXERCISE AGREEMENT”)
(WHICH MAY BE BY FAX), TO THE COMPANY DURING NORMAL BUSINESS HOURS ON ANY
BUSINESS DAY AT THE COMPANY’S PRINCIPAL EXECUTIVE OFFICES (OR SUCH OTHER OFFICE
OR AGENCY OF THE COMPANY AS IT MAY DESIGNATE BY NOTICE TO THE HOLDER HEREOF),
AND UPON PAYMENT TO THE COMPANY IN CASH, BY CERTIFIED OR OFFICIAL BANK CHECK OR
BY WIRE TRANSFER FOR THE ACCOUNT OF THE COMPANY OF THE WARRANT PRICE FOR THE
WARRANT SHARES SPECIFIED IN THE EXERCISE AGREEMENT.  THE WARRANT SHARES SO
PURCHASED SHALL BE DEEMED TO BE ISSUED TO THE HOLDER HEREOF OR SUCH HOLDER’S
DESIGNEE, AS THE RECORD OWNER OF SUCH SHARES, AS OF THE CLOSE OF BUSINESS ON THE
DATE ON WHICH THE COMPLETED EXERCISE AGREEMENT AND ORIGINAL OF THIS WARRANT
SHALL HAVE BEEN DELIVERED TO THE COMPANY (OR SUCH LATER DATE AS MAY BE SPECIFIED
IN THE EXERCISE AGREEMENT).  CERTIFICATES FOR THE WARRANT SHARES SO PURCHASED,
REPRESENTING THE AGGREGATE NUMBER OF SHARES SPECIFIED IN THE EXERCISE AGREEMENT,
SHALL BE DELIVERED TO THE HOLDER HEREOF WITHIN A REASONABLE TIME, NOT EXCEEDING
FIVE (5) TRADING DAYS (AS DEFINED IN THE NOTES) , AFTER THIS WARRANT SHALL HAVE
BEEN SO EXERCISED.  THE CERTIFICATES SO DELIVERED SHALL BE IN SUCH DENOMINATIONS
AS MAY BE REQUESTED BY THE HOLDER HEREOF AND SHALL BE REGISTERED IN THE NAME OF
SUCH HOLDER OR SUCH OTHER NAME AS SHALL BE DESIGNATED BY SUCH HOLDER.  IF THIS
WARRANT SHALL HAVE BEEN EXERCISED ONLY IN PART, THEN, UNLESS THIS WARRANT HAS
EXPIRED, THE COMPANY SHALL (SUBJECT TO SECTION 3(B) BELOW), AT ITS EXPENSE, AT
THE TIME OF DELIVERY OF SUCH CERTIFICATES, DELIVER TO THE HOLDER A NEW WARRANT
REPRESENTING THE NUMBER OF SHARES WITH RESPECT TO WHICH THIS WARRANT SHALL NOT
THEN HAVE BEEN EXERCISED.  IN LIEU OF DELIVERING PHYSICAL CERTIFICATES
REPRESENTING THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT,
PROVIDED THE COMPANY’S TRANSFER AGENT IS PARTICIPATING IN THE DEPOSITORY TRUST
COMPANY (“DTC”) FAST AUTOMATED SECURITIES TRANSFER (“FAST”) PROGRAM AND SUCH
CERTIFICATES CAN BE ISSUED WITHOUT RESTRICTIVE LEGENDS IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS, UPON REQUEST OF THE WARRANTHOLDER, THE COMPANY SHALL
USE COMMERCIALLY REASONABLE EFFORTS TO CAUSE ITS TRANSFER AGENT TO
ELECTRONICALLY TRANSMIT SUCH SHARES ISSUABLE UPON EXERCISE TO THE WARRANTHOLDER
(OR ITS DESIGNEE), BY CREDITING THE ACCOUNT OF THE WARRANTHOLDER’S (OR SUCH
DESIGNEE’S) PRIME BROKER WITH DTC THROUGH ITS DEPOSIT WITHDRAWAL AGENT
COMMISSION SYSTEM (PROVIDED THAT THE SAME TIME PERIODS HEREIN AS FOR STOCK
CERTIFICATES SHALL APPLY).

 

(b) If the Company shall fail for any reason or for no reason (other than by
reason of a failure, breach or omission on the part of the Holder) to issue to
the Holder within five (5) Trading Days after the warrant has been exercised, a
certificate for the number of shares of Common Stock to which the Holder is
entitled or to credit the Holder’s designee’s balance account with DTC, in
accordance with Section 3(a) hereof, for such number of shares of Common Stock
to which the holder is entitled upon the Holder’s exercise of this Warrant, the
Company shall, in addition to any other remedies under this Warrant or otherwise
available to such holder, pay as additional damages in cash to such Holder on
each day such exercise is not

 

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timely effected an amount equal to 2.5% multiplied by the product of (I) the sum
of the number of shares of Common Stock not issued to the holder and to which
such holder is entitled and (II) the excess of the Closing Sale Price of the
Common Stock as of the Trading Day preceding exercise over the Warrant Exercise
Price then in effect.

 

(c) the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the Warrant Price for the Warrant Shares specified in the Exercise Agreement,
elect instead to receive upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

 

 

---------------------

 

 

B

 

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= the Closing Sale Price of the Common Stock on the Trading Day immediately
preceding the date of the Exercise Notice.

 

C= the Warrant Exercise Price then in effect for the applicable Warrant Shares
at the time of such exercise.

 

SECTION 4.       COMPLIANCE WITH THE SECURITIES ACT OF 1933.  NEITHER THIS
WARRANT NOR THE COMMON STOCK ISSUED UPON EXERCISE HEREOF NOR ANY OTHER SECURITY
ISSUED OR ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE OFFERED OR SOLD EXCEPT
AS PROVIDED IN THIS WARRANT AND IN CONFORMITY WITH THE SECURITIES ACT OF 1933,
AS AMENDED, AND THEN ONLY AGAINST RECEIPT OF AN AGREEMENT OF SUCH PERSON TO WHOM
SUCH OFFER OF SALE IS MADE TO COMPLY WITH THE PROVISIONS OF THIS SECTION 4 WITH
RESPECT TO ANY RESALE OR OTHER DISPOSITION OF SUCH SECURITY.  THE COMPANY MAY
CAUSE THE LEGEND SET FORTH ON THE FIRST PAGE OF THIS WARRANT TO BE SET FORTH ON
EACH WARRANT OR SIMILAR LEGEND ON ANY SECURITY ISSUED OR ISSUABLE UPON EXERCISE
OF THIS WARRANT UNTIL THE WARRANT SHARES HAVE BEEN REGISTERED FOR RESALE UNDER
THE REGISTRATION RIGHTS AGREEMENT OR UNTIL RULE 144 IS AVAILABLE, UNLESS COUNSEL
FOR THE COMPANY IS OF THE OPINION AS TO ANY SUCH SECURITY THAT SUCH LEGEND IS
UNNECESSARY.

 

SECTION 5.       PAYMENT OF TAXES.  THE COMPANY WILL PAY ANY DOCUMENTARY STAMP
TAXES ATTRIBUTABLE TO THE INITIAL ISSUANCE OF WARRANT SHARES ISSUABLE UPON THE
EXERCISE OF THE WARRANT; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE
REQUIRED TO PAY ANY TAX OR TAXES WHICH MAY BE PAYABLE IN RESPECT OF ANY TRANSFER
INVOLVED IN THE ISSUANCE OR DELIVERY OF ANY CERTIFICATES FOR WARRANT SHARES IN A
NAME OTHER THAN THAT OF THE REGISTERED HOLDER OF THIS WARRANT IN RESPECT OF
WHICH SUCH SHARES ARE ISSUED.  THE HOLDER SHALL BE RESPONSIBLE FOR INCOME TAXES
DUE UNDER FEDERAL OR STATE LAW, IF ANY SUCH TAX IS DUE.

 

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SECTION 6.       MUTILATED OR MISSING WARRANTS.  IN CASE THIS WARRANT SHALL BE
MUTILATED, LOST, STOLEN, OR DESTROYED, THE COMPANY SHALL ISSUE IN EXCHANGE AND
SUBSTITUTION OF AND UPON CANCELLATION OF THE MUTILATED WARRANT, OR IN LIEU OF
AND SUBSTITUTION FOR THE WARRANT LOST, STOLEN OR DESTROYED, A NEW WARRANT OF
LIKE TENOR AND FOR THE PURCHASE OF A LIKE NUMBER OF WARRANT SHARES, BUT ONLY
UPON RECEIPT OF EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY OF SUCH LOSS,
THEFT OR DESTRUCTION OF THE WARRANT, AND WITH RESPECT TO A LOST, STOLEN OR
DESTROYED WARRANT, REASONABLE INDEMNITY OR BOND WITH RESPECT THERETO, IF
REASONABLY REQUESTED BY THE COMPANY.

 

SECTION 7.       RESERVATION OF COMMON STOCK.  THE COMPANY HEREBY REPRESENTS AND
WARRANTS THAT THERE HAVE BEEN RESERVED, AND THE COMPANY SHALL AT ALL APPLICABLE
TIMES KEEP RESERVED, OUT OF THE AUTHORIZED AND UNISSUED COMMON STOCK, A NUMBER
OF SHARES SUFFICIENT TO PROVIDE FOR THE EXERCISE OF THE RIGHTS OF PURCHASE
REPRESENTED BY THE WARRANT IN FULL (WITHOUT REGARD TO ANY RESTRICTIONS ON
BENEFICIAL OWNERSHIP CONTAINED HEREIN), AND THE TRANSFER AGENT FOR THE COMMON
STOCK, INCLUDING EVERY SUBSEQUENT TRANSFER AGENT FOR THE COMMON STOCK OR OTHER
SHARES OF THE COMPANY’S CAPITAL STOCK ISSUABLE UPON THE EXERCISE OF ANY OF THE
RIGHT OF PURCHASE AFORESAID (“TRANSFER AGENT”), SHALL BE IRREVOCABLY AUTHORIZED
AND DIRECTED AT ALL TIMES TO RESERVE SUCH NUMBER OF AUTHORIZED AND UNISSUED
SHARES OF COMMON STOCK AS SHALL BE REQUISITE FOR SUCH PURPOSE.  THE COMPANY
AGREES THAT ALL WARRANT SHARES ISSUED UPON EXERCISE OF THE WARRANT IN ACCORDANCE
WITH ITS TERMS SHALL BE, AT THE TIME OF DELIVERY OF THE CERTIFICATES FOR SUCH
WARRANT SHARES, DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NON-ASSESSABLE
SHARES OF COMMON STOCK OF THE COMPANY.  THE COMPANY WILL KEEP A CONFORMED COPY
OF THIS WARRANT ON FILE WITH ITS TRANSFER AGENT.  THE COMPANY WILL SUPPLY FROM
TIME TO TIME THE TRANSFER AGENT WITH DULY EXECUTED STOCK CERTIFICATES REQUIRED
TO HONOR THE OUTSTANDING WARRANT.

 

SECTION 8.       WARRANT PRICE.  THE WARRANT PRICE, SUBJECT TO ADJUSTMENT AS
PROVIDED IN SECTION 9, SHALL, IF PAYMENT IS MADE IN CASH OR BY CERTIFIED CHECK,
BE PAYABLE IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA.

 

SECTION 9.       ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES.  THE
WARRANT PRICE AND THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT SHALL BE ADJUSTED FROM TIME TO TIME AS FOLLOWS:

 

a.             ADJUSTMENT OF WARRANT PRICE.  If and whenever on or after the
Issuance Date and ending 24 months thereafter, the Company issues or sells, or
is deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but with the exception of Excluded Issuances) for a
consideration per share (the “New Issuance Price”) less than the Warrant Price
in effect immediately prior to such issuance or sale (each such sale or
issuance, a “Dilutive Issuance”, then concurrent with such issue or sale, the
Warrant Price then in effect shall be reduced to a price (subject to Section
9(b)) equal to the New Issuance Price.   This Section 9(a) and Section 9(b)
below shall have no force or effect until the date of Shareholder Approval, as
of which date the Warrant Price shall be adjusted as if this Section 9(a) and
Section  9(b) below had been effective as of the Issuance Date.

 

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b.             EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS.  For purposes
of determining the adjusted Warrant Price under Section 9(a) above, the
following shall be applicable:

 

(i)            ISSUANCE OF OPTIONS.  If the Company in any manner grants any
Options (other than Excluded Issuances) and the lowest price per share for which
one share of Common Stock is issuable upon the exercise of any such Option or
upon conversion, exchange or exercise of any Convertible Securities issuable
upon exercise of any such Option is less than the Warrant Price in effect
immediately prior to such Dilutive Issuance, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per
share.  For purposes of this Section 9(b)(i), the “lowest price per share for
which one share of Common Stock is issuable upon exercise of any such Option or
upon conversion, exchange or exercise of any Convertible Securities issuable
upon exercise of any such Option” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale of the
Option, upon exercise of the Option and upon conversion, exchange or exercise of
any Convertible Security issuable upon exercise of such Option.  No further
adjustment of the Warrant Price shall be made upon the actual issuance of such
Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such Common Stock upon conversion, exchange or
exercise of such Convertible Securities.

 

(ii)           ISSUANCE OF CONVERTIBLE SECURITIES.  If the Company in any manner
issues or sells any Convertible Securities (other than Excluded Issuances) and
the lowest price per share for which one share of Common Stock is issuable upon
such conversion, exchange or exercise thereof is less than the Warrant Price in
effect immediately prior to such Dilutive Issuance, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share.  For the purposes of this Section 9(b)(ii), the “lowest
price per share for which one share of Common Stock is issuable upon such
conversion, exchange or exercise” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exchange or exercise of such
Convertible Security.  No further adjustment of the Warrant Price shall be made
upon the actual issuance of such Common Stock upon conversion, exchange or
exercise of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment
of the Warrant Price had been or are to be made pursuant to other provisions of
this Section 9(b), no further adjustment of the Warrant Price shall be made by
reason of such issue or sale.  Notwithstanding anything to the contrary herein,
in no event shall an adjustment to the Warrant Price be made retroactively with
respect to any portion of the Warrant exercised for Common Stock or otherwise
terminated prior to the actual date of the dilutive issuance or change.  In
addition, to clarify for purposes of this Section 9, if an Option or Convertible
Security has a price reset or similar provision that would cause the price to
adjust based on a future event or contingency, then the “lowest price per share
for which one share of Common Stock is issuable upon the exercise of any such
Option or upon conversion, exchange or exercise of any

 

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Convertible Securities issuable upon exercise of such Option” shall not be such
reset price unless and until the happening of such event or contingency that
actually gives effect to the reset.

 

(iii)          CHANGE IN OPTION PRICE OR RATE OF CONVERSION.  If the purchase or
exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exchange or exercise of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable or exercisable for Common Stock changes at any time (other than
Excluded Issuances, in each case), the Warrant Price in effect at the time of
such change shall be adjusted to the Warrant Price which would have been in
effect at such time had such Options or Convertible Securities provided for such
changed purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold and the number of
shares of Common Stock acquirable hereunder shall be correspondingly
readjusted.  For purposes of this Section 9(b)(iii), if the terms of any Option
or Convertible Security that was outstanding as of the date of issuance of this
Warrant are changed in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the Common Stock deemed
issuable upon conversion, exchange or exercise thereof shall be deemed to have
been issued as of the date of such change.  On the expiration of any Option or
Convertible Security not exercised, the applicable Warrant Price then in effect
shall forthwith be increased to the Warrant Price that would have been in effect
at the time of such expiration had such Stock Purchase Rights or Convertible
Securities never been issued.  No adjustment shall be made if such adjustment
would increase the applicable Warrant Price by an amount in excess of the
adjustment originally made to the Warrant Price in respect of the issue, sale or
grant of the applicable Option or Convertible Security.

 

c.             CERTAIN EVENTS.

 

(I)            IF THE COMPANY OR ANY OF ITS SUBSIDIARIES SHALL AT ANY TIME OR
FROM TIME TO TIME WHILE THE WARRANT IS OUTSTANDING, PAY A DIVIDEND OR MAKE A
DISTRIBUTION ON ITS CAPITAL STOCK IN SHARES OF COMMON STOCK, SUBDIVIDE ITS
OUTSTANDING SHARES OF COMMON STOCK INTO A GREATER NUMBER OF SHARES OR COMBINE
ITS OUTSTANDING SHARES INTO A SMALLER NUMBER OF SHARES OR ISSUE BY
RECLASSIFICATION OF ITS OUTSTANDING SHARES OF COMMON STOCK ANY SHARES OF ITS
CAPITAL STOCK (INCLUDING ANY SUCH RECLASSIFICATION IN CONNECTION WITH A
CONSOLIDATION OR MERGER IN WHICH THE COMPANY IS THE CONTINUING CORPORATION),
THEN THE NUMBER OF WARRANT SHARES PURCHASABLE UPON EXERCISE OF THE WARRANT AND
THE WARRANT PRICE IN EFFECT IMMEDIATELY PRIOR TO THE DATE UPON WHICH SUCH CHANGE
SHALL BECOME EFFECTIVE, SHALL BE ADJUSTED BY THE COMPANY SO THAT THE
WARRANTHOLDER THEREAFTER EXERCISING THE WARRANT SHALL BE ENTITLED TO RECEIVE THE
NUMBER OF SHARES OF COMMON STOCK OR OTHER CAPITAL STOCK WHICH THE WARRANTHOLDER
WOULD HAVE RECEIVED IF THE WARRANT HAD BEEN EXERCISED IMMEDIATELY PRIOR TO SUCH
EVENT.  SUCH ADJUSTMENT SHALL BE MADE SUCCESSIVELY WHENEVER ANY EVENT LISTED
ABOVE SHALL OCCUR.

 

(ii)           If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company’s assets to another corporation shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each

 

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Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitations, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
hereof.  The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of the Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase and the other obligations under this
Warrant.  The provisions of this paragraph (ii) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.

 

(iii)          In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets or subscription
rights or warrants, the Warrant Price to be in effect after such record date
shall be determined by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the total
number of shares of Common Stock outstanding multiplied by the Closing Price per
share of Common Stock (as defined below), less the fair market value (on a per
share basis) (as determined by the Company’s Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such Closing Price
per share of Common Stock.  Such adjustment shall be made successively whenever
such a record date is fixed.  “Closing Price” of the Common Stock shall be the
closing sale price per share of the Common Stock as reported by the Principal
Market on the Trading Day immediately preceding the date on which such value is
being determined.  An adjustment shall become effective immediately after the
record date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.

 

(iv)          In the event that, as a result of an adjustment made pursuant to
Section 9(c), the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.

 

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(v)           In the event of any adjustment pursuant to this Section 9(c) in
the number of Warrant Shares issuable hereunder upon exercise, the Warrant Price
shall be inversely proportionately increased or decreased, as the case may be,
such that the aggregate purchase price for Warrant Shares upon full exercise of
this Warrant shall remain the same.  Similarly, in the event of any adjustment
in the Warrant Price, the number of Warrant Shares issuable hereunder upon
exercise shall be inversely proportionately increased or decreased, as the case
may be, such that the aggregate purchase price for Warrant Shares upon full
exercise of this Warrant shall remain the same.

 

d.               FAILURE TO ACHIEVE MILESTONE.  In the event that following
Shareholder Approval, the Milestone (as defined herein) is not achieved, the
number of Warrant Shares shall be increased from [               ] to [a number
of shares equal to 50% of the original principal amount of Holder’s Series A
Note or Series B Note, as applicable, divided by $1.38 (rounding down to the
nearest whole share)] and the Warrant Price shall be reduced from $1.63 to $1.38
subject to adjustment as provided in this Section 9, as if such increase in the
number of Warrant Shares and decrease in Warrant Price had taken effect on the
Issuance Date.

 

Section 10.             Fractional Interest. The Company shall not be required
to issue fractions of Warrant Shares upon the exercise of the Warrant.   If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions thereof), the
Company shall round such calculation to the nearest whole number and disregard
the fraction.

 

Section 11.             Benefits.  Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.

 

Section 12.             Notices to Warrantholder.  Upon the happening of any
event requiring an adjustment of the Warrant Price, the Company shall forthwith
give written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.  In the event of a dispute with respect to any such
calculation, the certificate of the Company’s independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error.  Failure to give such notice to the Warrantholder
or any defect therein shall not affect the legality or validity of the subject
adjustment.  At the Warrantholder’s request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.

 

Section 13.             Identity of Transfer Agent.  The Transfer Agent for the
Common Stock is Wachovia Bank.  Forthwith upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company’s capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant, the Company will fax to the Warrantholder a statement setting forth the
name and address of such transfer agent.

 

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Section 14.             Notices.  Any notice pursuant hereto to be given or made
by the Warrantholder to or on the Company shall be sufficiently given or made if
delivered personally or by facsimile or if sent by an internationally recognized
courier, addressed as follows:

 

VCampus Corporation

1850 Centennial Park Drive

Suite 200

Reston, VA  20191

Attention:  CEO

 

With a copy to:

 

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, North Carolina 27607

Attn:  Kevin A. Prakke, Esq.

 

or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.

 

Any notice pursuant hereto to be given or made by the Company to or on the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 14.

 

All such notices, requests, demands, directions and other communications shall,
when sent by courier, be effective two (2) days after delivery to such courier
as provided and addressed as aforesaid.  All faxes shall be effective upon
receipt.

 

Section 15.             Registration Rights.  The initial holder of this Warrant
is entitled to the benefit of certain registration rights in respect of the
Warrant Shares as provided in the Registration Rights Agreement.

 

Section 16.             Successors.  All the covenants and provisions hereof by
or for the benefit of the Warrantholder shall bind and inure to the benefit of
its respective successors and assigns hereunder.

 

Section 17.             Governing Law.  This Warrant shall be deemed to be a
contract made under the laws of the State of New York, without giving effect to
its conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.

 

Section 18.             9.9% Limitations. Notwithstanding anything to the
contrary contained herein, the number of shares of Common Stock that may be
acquired by the holder

 

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upon exercise pursuant to the terms hereof shall not exceed a number that, when
added to the total number of shares of Common Stock deemed beneficially owned by
such holder at such time (other than by virtue of the ownership of securities or
rights to acquire securities (including the Notes and Warrant Shares) that have
limitations on the holder’s right to convert, exercise or purchase similar to
the limitation set forth herein), together with all shares of Common Stock
deemed beneficially owned (other than by virtue of the ownership of securities
or rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) by the
Warrantholder’s “affiliates” at such time (as defined in Rule 144 of the Act)
(“Aggregation Parties”) that would be aggregated for purposes of determining
whether a group under Section 13(d) of the Securities Exchange Act of 1934, as
amended, exists, would exceed 9.9% of the total issued and outstanding shares of
the Common Stock (the “Restricted Ownership Percentage”), unless, at the time
such additional shares of Common Stock may be acquired by the Holder upon any
exercise pursuant to the terms hereof, Holder has already exceeded the
Restricted Ownership Percentage.  Each holder shall have the right (x) at any
time and from time to time to reduce its Restricted Ownership Percentage
immediately upon notice to the Company and (y) (subject to waiver) at any time
and from time to time, to increase its Restricted Ownership Percentage
immediately in the event of the announcement as pending or planned, of a Change
in Control Transaction (as defined in the Notes).

 

Section 19.             Replacement Warrants.  The Company agrees that within
ten (10) Trading Days after any request from time to time of the Warrantholder,
it shall deliver to such holder a new Warrant in substitution of this Warrant
which is identical in all respects except that the then Warrant Price shall be
appropriately specified in the Warrant, and the Warrant shall specify the fixed
number of Warrant Shares into which this Warrant is then exercisable.  Such
changes are intended not as amendments to the Warrant but only as clarification
of the foregoing numbers for convenience purposes, and such changes shall not
affect any provisions concerning adjustments to the Warrant Price or number of
Warrant Shares contained herein.

 

Section 20.             Absolute Obligation to Issue Warrant Shares.  The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the holder hereof to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the holder hereof
or any other Person of any obligation to the Company or any violation or alleged
violation of law by the holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to
the holder hereof in connection with the issuance of Warrant Shares.  The
Company will at no time close its shareholder books or records in any manner
which interferes with the timely exercise of this Warrant.

 

Section 21.             Assignment, etc.  The Warrantholder may assign or
transfer this Warrant to any transferee only with the prior written consent of
the Company, which may not be unreasonably withheld or delayed, provided that
the Warrantholder may assign or transfer this Warrant in whole to any of such
Warrantholder’s affiliates that is not a competitor or vendor of the Company
without the consent of the Company.  The Warrantholder shall notify the Company
of any such assignment or transfer promptly.  This Warrant shall be binding upon
the Company

 

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and its successors and shall inure to the benefit of the Warrantholder and its
successors and permitted assigns.

 

Section 22.   Judicial Proceedings.  Any legal action, suit or proceeding
brought against the Company with respect to this Warrant may be brought in any
federal court of the Southern District of New York or any state court located in
New York County, State of New York, and by execution and delivery of this
Warrant, the Company hereby irrevocably and unconditionally waives any claim (by
way of motion, as a defense or otherwise) of improper venue, that it is not
subject personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Warrant or the subject matter may not be
enforced in or by such court.  The Company hereby irrevocably and
unconditionally consents to the service of process of any of the aforementioned
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, at its address set forth or
provided for in Section 14, such service to become effective 10 days after such
mailing.  Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this Section.  The Company irrevocably submits to the
exclusive jurisdiction of the aforementioned courts in such action, suit or
proceeding.

 

Section 23.  DEFINITIONS:  The following words and terms as used in this Warrant
shall have the following meanings:

 

(i)            “Approved Stock Plan” means any employee benefit plan, stock
incentive plan or other similar plan or arrangement which has been approved by
the Board of Directors of the Company or a duly authorized committee thereof,
pursuant to which the Company’s securities may be issued to any employee,
consultant, officer or director for services provided to the Company.

 

(ii)           “Bloomberg” means Bloomberg Financial Markets or any other
similar financial reporting service as may be selected from time to time by the
Company and the holders of the Warrants representing not less than 50% of the
shares of Common Stock issuable upon exercise of all Warrants issued on the
Original Issuance Date then outstanding.

 

(iii)          “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required
by law to remain closed.

 

(iv)          “Closing Sale Price” means, for any security as of any date, the
last closing trade price for such security on the Principal Market as reported
by Bloomberg, or if the Principal Market begins to operate on an extended hours
basis, and does not designate the closing trade price, then the last trade price
at 4:00 p.m., New York City Time, as reported by Bloomberg, or if the foregoing
do not apply, the last closing trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no last closing trade price is reported for such
security by Bloomberg, the last closing ask price of such security as reported
by Bloomberg, or, if no last closing ask price is

 

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reported for such security by Bloomberg, the average of the highest bid price
and the lowest ask price of any market makers for such security as reported in
the “pink sheets” by the Pink Sheets LLC.  If the Closing Sale Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Sale Price of such security on such date shall be the fair market value
as mutually determined by the Company and the holders of the Warrants
representing at least 60% of the shares of Common Stock obtainable upon exercise
of all Warrants issued on the Original Issuance Date then outstanding.  If the
Company and the holders of the Warrants are unable to agree upon the fair market
value of the Common Stock, then such dispute shall be resolved by good faith
efforts of the parties followed by binding third party valuation paid for
equally by the parties.  All such determinations shall be appropriately adjusted
for any stock dividend, stock split or other similar transaction during such
period.  All fees and expenses of such determinations shall be borne solely by
the Company.

 

(v)           “Convertible Securities” means any stock or securities (other than
Options) directly or indirectly convertible into or exchangeable or exercisable
for Common Stock.

 

(vi)          “Excluded Issuances” means shares of Common Stock (i) issued or
deemed to have been issued by the Company in connection with an Approved Stock
Plan (regardless of the applicable exercise or conversion price), (ii) issued or
deemed to have been issued upon exercise of the Warrants, issued upon the
issuance or conversion of the Notes or otherwise issued in connection with the
transactions contemplated in the Purchase Agreement (including any securities
issued or issuable to the Collateral Agent or any of its affiliates in
connection with consulting services to be provided to the Company); (iii) issued
upon exercise of Options or Convertible Securities which are outstanding on the
date immediately preceding the Warrant Date, provided that such issuance of
shares of Common Stock upon exercise of such Options or Convertible Securities
is made pursuant to the terms of such Options or Convertible Securities in
effect on the date immediately preceding the Warrant Date and such Options or
Convertible Securities are not amended after the date immediately preceding the
Warrant Date other than with respect to Options originally issued pursuant to an
Approved Stock Plan, (iv) issued pursuant to a Strategic Financing; (v) issued
to the public pursuant to an underwritten offering registered pursuant to the
Securities Act (but in all events excluding offerings pursuant to “equity lines”
or similar products) or (vi) issued or deemed to be issued by the Company with
the prior approval of the Required Holders.

 

(vii)         “Issuance Date” means the date on which this Warrant is issued to
the Warrantholder as is set forth on the first page of the Warrant.

 

(viii)        “Market Price” shall equal the average closing price of the Common
Stock as reported on a Principal Market for the five (5) Trading Days
immediately preceding the date of determination of such Market Price or if not
reported on any Principal Market, the Market Price shall equal the Conversion
Price.

 

(ix)           “Milestone” means the execution on or before September 30, 2004,
of definitive agreements between the Company and at least six new “Premier
Partners” for the co-publishing of content which will be hosted by the Company,
each of which agreements is

 

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expected, based upon the good faith projections of the Company and the Premier
Partner, to ramp up to an annual rate of $500,000 of revenue for the Company by
September 1, 2005.  A Premier Partner shall mean a company that provides a
credential or test, which can be ported on line, to a membership or number of
corporate enterprise employees, greater than 5,000 in a growing global market.

 

(x)            “Option” means any rights, warrants or options to subscribe for
or purchase or otherwise acquire Common Stock or Convertible Securities.

 

(xi)           “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

 

(xii)          “Principal Market” means the principal securities exchange or
trading market on which the Common Stock is traded.

 

(xiii)         “Securities Act” means the Securities Act of 1933, as amended.

 

(iv)          “Shareholder Approval” means the approval of the stockholders of
the Company at a duly convened meeting of stockholders of the Company, for the
issuance of all Securities as defined in the Purchase Agreement, including the
issuance of the Warrants.

 

(xv)         “Strategic Financing” shall mean the issuance of Common Stock or
Options or Convertible Securities of the Company in connection with any
acquisition by the Company, by whatever means, of any business, assets or
technologies, or to any strategic investor, vendor, customer, lease or similar
arrangement, the primary purpose of which is not to raise equity capital.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
of the date first written above.

 

 

VCAMPUS CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

Attest:

 

Sign:

 

 

Print Name:

 

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VCAMPUS CORPORATION
WARRANT EXERCISE FORM

 

VCampus Corporation

1850 Centennial Park Drive

Suite 200

Reston, VA  20191

Fax:  (703) 654-7319

Attention:  CEO

 

This undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant (“Warrant”) for, and to purchase thereunder
                                shares of Common Stock (“Warrant Shares”)
provided for therein, and requests that certificates for the Warrant Shares be
issued as follows:

 

 

 

Name

 

 

 

Address

 

 

 

 

 

 

and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares.

 

In lieu of delivering physical certificates representing the Warrant Shares
purchasable upon exercise of this Warrant, provided the Company’s transfer agent
is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program and a registration statement covering the
resale of the Warrant Shares is then effective or an exemption from registration
is available in the opinion of Company counsel, upon request of the Holder, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned’s prime broker with DTC
through its Deposit Withdrawal Agent Commission (“DWAC”) system.

 

Dated:

 

 

Signature:

 

 

 

 

 

 

Name (please print)

 

 

 

 

 

Address

 

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