Exhibit 10.111

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR BY THE SECURITIES REGULATORY
AUTHORITY OF ANY OTHER JURISDICTION, NOR HAS ANY COMMISSION OR AUTHORITY PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL. THE SHARES MAY NOT BE TRANSFERRED OR RESOLD IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.

 

SUBSCRIPTION AGREEMENT

Series B-1 Preferred Stock

 

VCAMPUS CORPORATION

 

1.             Subscription. VCampus Corporation (the “Company”) is authorized
to issue and sell up to 5,000 shares of its Series B-1 Convertible Preferred
Stock (the “Series B-1 Preferred Stock”), having substantially the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designations of the Series B-1 Preferred Stock in substantially the form
attached hereto as Exhibit A. The undersigned (hereinafter referred to as
“Subscriber”) hereby subscribes for and agrees to purchase the number of shares
of Series B-1 Preferred Stock of VCampus Corporation (the “Company”), par value
$0.01 per share, set forth on the signature page hereto (the “Shares”) in
consideration for payment by the Subscriber of a per Share purchase price of
$1,000 (the “Purchase Price”) pursuant to this Subscription Agreement (the
“Agreement”). The Subscriber herewith tenders the entire amount of such purchase
price by check or wire transfer payable to the order of the Company.

 

The Subscriber acknowledges that at the time of issuance the Common Stock will
not be registered under the Securities Act of 1933 (the “Act”), in reliance upon
an exemption from registration contained in the Act, and that the Company’s
reliance upon such exemption is based, at least partially, on the Subscriber’s
representations and warranties contained in this Subscription Agreement.

 

2.             Acceptance or Rejection of Subscription. Subscriber acknowledges
and agrees that this subscription shall not be effective until accepted in
writing by the Company, and that the Company reserves the right to reject this
subscription in whole or in part. The Company is raising capital through the
sale of up to approximately 5,000 Shares through one or more offerings, although
it reserves the right to sell any number of shares less than the 5,000 Shares
authorized. Subscriptions may be rejected for insufficient documentation or for
such other

 

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reason as the Company may determine, in its sole discretion, to be in the best
interests of the Company. The Company, in its sole discretion, reserves the
right to close this offering at any time. In the event the Subscriber’s
subscription is accepted by the Company, (the “Closing”) Subscriber’s Shares
shall be issued as of the date specified by the Company at the time of
acceptance.

 

3.             Warrants. Subscriber shall receive 10-year warrants, (the
“Warrants”) in substantially the form attached hereto as Exhibit B, to purchase
a number of shares of Common Stock equal to a pro rata portion of 1,000,000
shares (based on an assumed total investment of $2,300,000 for the Series B-1
Preferred Stock). The Warrants shall become exercisable beginning four years
from the date of issuance at an exercise price equal to the then applicable
Conversion Price for the Shares.

 

4.             Registration Rights. The shares of common stock issuable upon
conversion of the Shares purchased hereunder (the “Conversion Shares”), together
with the shares issuable upon exercise of the Warrants (the “Warrant Shares”),
shall have registration rights pursuant to the Registration Rights Agreement
attached hereto as Exhibit C.

 

5.             Subscriber’s Representations and Warranties. Subscriber
represents, warrants, acknowledges and agrees to the following.

 

a.             Subscriber is a resident of the state indicated on the signature
page hereof, is legally competent to execute this Agreement, and:

 

(i)                                     if Subscriber is an individual, has his
or her principal residence in such state and is at least 21 years of age; or

 

(ii)                                  if Subscriber is a corporation,
partnership, trust or other form of business organization, has its principal
office in such state; or

 

(iii)                               if Subscriber is a corporation, partnership,
trust or other form of business organization, Subscriber has not been organized
for the specific purpose of acquiring the Shares.

 

b.             This Agreement is and shall be irrevocable, except that the
Subscriber shall have no obligations hereunder in the event that the
subscription is not accepted by the Company in whole or in part.

 

c.             The Subscriber has read this Agreement carefully and, to the
extent believed necessary, has discussed the representations, warranties and
agreements and the applicable limitations upon the Subscriber’s resale of the
Shares, the Conversion Shares and Warrant Shares with counsel.

 

d.             The Subscriber understands that no federal or state agency has
made any finding or determination regarding the fairness of this offering, or
any recommendation or endorsement of this offering.

 

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e.             The Subscriber is an “accredited investor” as defined in Rule 501
of Regulation D promulgated under the Act. Entities that are accredited
investors under Rule 501 include, among others, certain banks, savings and loan
associations, registered securities broker-dealers, insurance companies,
registered investment companies and trusts. Individuals that are accredited
investors under Rule 501 include, among others, any natural person whose
individual net worth, or joint net worth with that person’s spouse, exceeds $1
million; or who had income in excess of $200,000 in each of the two most recent
years or joint income with that person’s spouse in excess of $300,000 in each of
those years and who has a reasonable expectation of reaching the same income
level in the current year.

 

f.              The Subscriber has received from the Company or others and has
read copies of the Company’s filings with the U.S. Securities and Exchange
Commission (the “SEC”), and has had an adequate opportunity to ask questions of
and receive answers from the Company regarding these documents (the “SEC
Filings”).

 

g.             The Subscriber represents that the Subscriber, if an individual,
has adequate means of providing for his/her current needs and personal and
family contingencies and has no need for liquidity in his/her investment in this
offering.

 

h.             The Subscriber is financially able to bear the economic risk of
this investment, including the ability to afford holding the Shares, the
Conversion Shares, the Warrants and Warrant Shares (collectively, the
“Securities”) for an indefinite period, or to afford a complete loss of its
investment.

 

i.              The Subscriber is purchasing the Securities for the Subscriber’s
own account, and not for the purpose of reselling or otherwise participating,
directly or indirectly, in a distribution of the Securities, and shall not make
any sale, transfer or other disposition of any portion of the Securities
purchased hereby without registration under the Act and any applicable
securities act of any state or unless an exemption from registration is
available under such acts.

 

j.              The Subscriber’s overall commitment to investments that are not
readily marketable is not disproportionate to the Subscriber’s net worth, and
the Subscriber’s investment in the Securities will not cause such overall
commitment to become excessive.

 

k.             The Subscriber understands that an investment in the Securities
is a highly illiquid investment, and that, the Subscriber will have to bear the
economic risk of the investment indefinitely (or at least until such shares may
become registered for resale as provided under this Agreement) because the
Securities have not been registered under the Act and are being issued pursuant
to a private placement exemption under Regulation D, on the grounds that no
public offering is involved. Therefore, the Securities cannot be offered, sold,
transferred, pledged or otherwise disposed of to any person, unless either it is
subsequently registered under the Act and applicable state securities laws or an
exemption from registration is available and the Subscriber obtains a favorable
opinion of the Company’s counsel to that effect.

 

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l.              Prior to registration of the Shares by the Company pursuant to
Section 4 hereof or the availability of another exemption that might be
available to the Subscriber, the Subscriber understands that the provisions of
Rule 144 promulgated under the Act are not available for at least one (1) year
to permit resale of the Securities, and there can be no assurance that the
conditions necessary to permit routine sales of the Securities under Rule 144
will ever be satisfied, and, if Rule 144 should become available, routine sales
made in reliance on its provisions could be made only in limited amounts and in
accordance with the terms and conditions of the Rule. The Subscriber further
understands that in connection with sales for which Rule 144 is not available,
compliance with some other registration exemption will be required, which may
not be available.

 

m.            The Subscriber understands and agrees that stop transfer
instructions will be given to the Company’s transfer agent or the officer in
charge of its stock records and noted on the appropriate records of the Company
to the effect that the Securities may not be transferred out of the Subscriber’s
name unless either the Securities become registered for resale under the Act or
it is established to the satisfaction of counsel for the Company that an
exemption from the registration provisions of the Act and applicable state
securities laws is available therefor. The Subscriber further agrees that there
will be placed on the certificates for the Shares and Warrant Shares, or any
substitutions therefore, a legend stating in substance as follows, that the
Subscriber understands and agrees that the Company may refuse to permit the
transfer of the stock out of its name and that the stock must be held
indefinitely in the absence of compliance with the terms of such legend.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE
CORPORATION RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE
CORPORATION) REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY BE MADE IN
COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS.

 

n.             The Subscriber has been given the opportunity to review the
Company’s SEC Filings, and to ask questions of, and receive answers from,
Company representatives concerning the Company and the terms and conditions of
the offering and to obtain such other information as the Subscriber desires in
order to evaluate an investment in the Securities.

 

o.             The Subscriber did not learn of the investment in the Securities
as a result of any public advertising or general solicitation.

 

6.             Company Representations and Warranties. Except as disclosed in
the Company’s SEC Filings, the Company represents and warrants to the Subscriber
as follows:

 

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a.             Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as now conducted. The
Company is duly qualified and authorized to do business, and is in good standing
as a foreign corporation, in Virginia and in each other jurisdiction where the
nature of its activities and of its properties makes such qualification
necessary, except where a failure to do so would not have a material adverse
effect on the Company.

 

b.             Capitalization. The authorized and outstanding capital of the
Company, as of immediately prior to filing of the Certificate of Designation of
the Series B-1 Preferred Stock, consisted of:  167,586 shares of undesignated
and unissued Preferred Stock, $0.01 par value per share, 5,000 authorized shares
of Series A-1 Preferred Stock, of which 2,342 shares were issued and
outstanding; and 36,000,000 shares of Common Stock, $0.01 par value per share,
9,613,512 of which were issued and outstanding.

 

All of the outstanding shares of Common Stock and Preferred Stock that have been
duly authorized and validly issued are fully paid and nonassessable and were
issued in compliance with all applicable federal and state securities laws. The
Company has duly and validly reserved the Conversion Shares, the Shares and
Warrant Shares for issuance as contemplated hereby. Except as disclosed in the
SEC Filings (including the right of first refusal in favor of the March 2004
investors that does not apply to this financing), there are no outstanding
rights of first refusal, preemptive rights or other rights, options, warrants,
conversion rights or other agreements, either directly or indirectly, for the
purchase or acquisition from the Company of any shares of its capital stock.

 

c.             Authorization. Except to the extent as may be required under
Nasdaq Marketplace Rules to permit conversion in full of the Conversion Shares
and Warrant Shares, all corporate action on the part of the Company and its
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, the performance of all the Company’s obligations
hereunder and thereunder, and the authorization, issuance, sale and delivery of
the Securities has been taken. This Agreement, when executed and delivered by
the Company and the respective other parties thereto, shall constitute a valid
and legally binding obligation of the Company enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors, rules and laws governing specific performance,
injunctive relief and other equitable remedies.

 

d.             Validity of the Shares. The Shares, when issued pursuant to the
terms of this Agreement (and the Conversion Shares and Warrant Shares, when
issued pursuant to the terms of the Certificate of Designations of the Series
B-1 Preferred Stock and pursuant to the Warrants, respectively), will be validly
issued, and fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Securities will be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein.

 

e.             Compliance with Other Instruments. The Company is not in
violation of any provisions of its Certificate of Incorporation or its Bylaws as
amended, or, except as

 

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disclosed in the Company’s SEC Filings, of any provisions of any material
agreement or any judgment, decree or order by which it is bound or any statute,
rule or regulation applicable to the Company. Subject to the compliance with
such filings as may be required to be made with the SEC, the National
Association of Securities Dealers, Inc. (the “NASD”) and certain state
securities commissions and except with respect to shareholder approval that
might be deemed to be required under Nasdaq Marketplace Rules, the execution,
delivery and performance of this agreement and the issuance and sale of the
Shares pursuant hereto, will not result in any such violation or be in conflict
with or constitute a default under any such provisions or result in the creation
of any mortgage, pledge, lien, encumbrance or charge upon any of the properties
or assets of the Company.

 

f.              Governmental Consents. All consents, approvals, orders or
authorization of, or registrations, qualifications, designations, declarations
or filings with, any federal or state governmental authority on the part of the
Company required in connection with the valid execution and delivery of this
agreement, the offer, sale or issuance of the Shares, or the consummation of any
other transaction contemplated hereby, have been obtained (other than post-sale
filings pursuant to applicable state and federal securities law).

 

g.             Accuracy of Reports. The SEC Filings required to be filed by the
Company within the year prior to the date of this Agreement under the Securities
Exchange Act of 1934 have been duly filed, were in substantial compliance with
the requirements of their respective forms, were complete and correct in all
material respects as of the dates at which the information was furnished, and
contained (as of such dates) no untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.

 

h.             Disclosure. No representation or warranty of the Company
contained in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.

 

i.              Financial Statements and Commission Filings; Undisclosed
Liabilities.

 

(1)           Included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2004 (the “2004 10-K”) are true and complete copies of the
audited consolidated balance sheets (the “Balance Sheets”) of the Company as of
December 31, 2003 and 2004, and the related audited statements of income,
changes in stockholders’ equity and cash flows for the years ended December 31,
2002, 2003 and 2004 (the “Financial Statements”), accompanied by the reports of
the Company’s auditors. The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles (“GAAP”),
applied consistently with the past practices of the Company (except as may be
indicated in the notes thereto), and as of their respective dates, fairly
present, in all material respects, the consolidated financial position of the
Company and the results of its operations as of the time and for the periods
indicated therein. The Company keeps proper accounting records in which all
material assets and liabilities and all material transactions of the Company are
recorded in conformity with GAAP.

 

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(2)           As of their respective filing dates, the financial statements of
the Company included in the SEC Filings required to be filed by the Company
within the year prior to the date of this Agreement complied as to form in all
material respects with then applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with GAAP, applied consistently with the past practices of the
Company, and as of their respective dates, fairly presented in all material
respects the financial position of the Company and the results of its operations
as of the time and for the periods indicated therein (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q, and Regulations S-K and S-X of the SEC).

 

(3)           Since December 31, 2004, neither the Company nor any of the
Company’s Subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, absolute, contingent or otherwise, other than
liabilities (i) disclosed in the SEC Filings filed prior to the date of this
Agreement, (ii) adequately provided for in the Balance Sheets or disclosed in
any related notes thereto, (iii) not required under GAAP to be reflected in the
Balance Sheets, or disclosed in any related notes thereto, (iv) incurred in
connection with this Agreement, or (v) incurred in the ordinary course of
business.

 

j.              Litigation. Except as set forth in the Company’s SEC Filings,
there are no claims, actions, suits, investigations or proceedings pending or,
to the Company’s knowledge, threatened proceedings against the Company or its
assets, at law or in equity, by or before any governmental authority, or by or
on behalf of any third party.

 

k.             Investment Company. The Company is not, and following the Closing
of the transactions contemplated hereunder will not be, an “investment company”
within the meaning of that term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC.

 

l.              Listing and Maintenance Requirements Compliance. Except as
disclosed in the Company’s SEC Filings, the Company has not received notice
(written or oral) from any stock exchange or market on which the Common Stock is
listed to the effect that the Company is not in compliance with the continuing
listing or maintenance requirements of the exchange or market.

 

m.            Compliance. The Company is in compliance in all material respects
with all applicable laws (including the Sarbanes-Oxley At of 2002 and the rules
promulgated thereunder) and all orders of, and agreements with, any governmental
authority applicable to the Company or any of its assets. The Company has all
permits, certificates, licenses, approvals and other authorizations required
under applicable laws or necessary in connection with the conduct of its
businesses, except where the failure to have such permits, certificates,
licenses, approvals and other authorizations would not have a material adverse
effect on the Company.

 

n.             No Integrated Offering. The Company has not, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under

 

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circumstances that would require registration of any of the Securities under the
Securities Act of 1933; nor will the Company take any action or steps that would
require registration of the Securities under the Securities Act of 1933 or cause
the offering of the Securities to be integrated with other offerings in a manner
that would require such registration.

 

o.             Material Non-Public Information. Except as disclosed on Schedule
6.o attached hereto, the Company has not disclosed to the Subscriber any
material non-public information that (i) if disclosed, would reasonably be
expected to have a material effect on the price of the Company’s common stock or
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof, but which has not been so
disclosed. The Subscriber acknowledges and agrees that the Company’s disclosure
to him of material non-public information imposes certain restrictions on his
trading in Company securities.

 

p.             Valid Private Placement. Subject to the accuracy as to factual
matters of each Subscriber’s representations in Section 5 of each Purchase
Agreement, the Securities may be issued to the Subscribers pursuant to the
transaction documents without registration under the Securities Act of 1933 or
the securities laws of any state.

 

7.             Assignment. This Agreement is not transferable or assignable by
the Subscriber.

 

8.             Expenses. The Company and the Subscriber shall bear their own
expenses with respect to this Agreement and the transactions contemplated
hereby.

 

9.             Correct Information. All information which the Subscriber has
provided concerning the Subscriber or its financial position and the
Subscriber’s knowledge of financial and business matters is correct and complete
as of the date hereof, and if there should be any material change in such
information prior to the Company’s acceptance of the subscription, the
Subscriber will immediately provide the Company with such information.

 

10.           Miscellaneous. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and may be amended only by a writing executed by all
parties.

 

11.           Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

12.           Form 8-K Filing. On or before the fourth business day following
the Closing, the Company shall file a Current Report or Form 8-K with the SEC
describing the material terms of the transactions contemplated by this
Agreement.

 

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SUBSCRIPTION AGREEMENT SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement
effective on this the         day of March 2006.

 

$

= total payment by Subscriber

 

 

 

= Number of Shares of Series B-1 Preferred Stock purchased

 

 

$1,000.00

= per share purchase price

 

 

 

= Number of Warrants to be issued to Subscriber

 

 

 

 

 

Signature of Subscriber

 

 

 

 

 

 

 

 

Address

Printed or typed name of Subscriber (in

exactly the form in which securities are to

be registered and issued)

 

 

 

Printed or Typed Name and Title of person

signing

 

 

For Company Use Only:

 

ACCEPTED effective on the        day of March 2006 on behalf of VCampus
Corporation for                      Shares of Series B-1 Preferred Stock.

 

By:

 

 

Name:

 

 

Title:

 

 

 

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