Exhibit 10.115

 

ACQUISITION AND REORGANIZATION AGREEMENT

 

BETWEEN

 

VCAMPUS CORPORATION

 

AND

 

PROSOFT LEARNING CORPORATION AND COMPUTERPREP, INC.

 

 

April 11, 2006

 

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ACQUISITION AND REORGANIZATION AGREEMENT

 

This Acquisition and Reorganization Agreement (the “Agreement”) made this 11th
day of April, 2006, by and between Prosoft Learning Corporation, a Nevada
corporation (“PLC”), and its Subsidiary (as defined herein), ComputerPREP, Inc.,
a Delaware corporation (“CP”), both of whose addresses are 410 N. 44 Street,
Suite 600, Phoenix, Arizona 85008 (PLC and CP, collectively, “Prosoft”), and
VCampus Corporation, a Delaware corporation, whose address is 1850 Centennial
Park Drive, Suite 200, Reston, Virginia 20191 (“VCampus”).

 

WHEREAS, Prosoft plans to file a voluntary petition for reorganization under
Chapter 11 of Title 11 of the United States Code in the immediate future; and

 

WHEREAS, subject to approval by the Bankruptcy Court, VCampus desires to acquire
by itself or through one of its affiliates, all of the newly issued and
outstanding capital stock of Reorganized Prosoft on the Closing Date, as defined
below; and

 

WHEREAS, VCampus and Prosoft desire to enter into this Agreement to set forth
more fully certain terms and conditions of the reorganization of Prosoft (the
“Reorganization”); and

 

WHEREAS, the parties hereto desire to set forth herein certain representations,
warranties and covenants made by each to the other, as an inducement to the
consummation of the Reorganization, and certain additional agreements relating
thereto;

 

NOW, THEREFORE, for valuable consideration, including the mutual
representations, warranties and covenants herein contained, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

DEFINITIONS

 

“Acquired Assets”  has the meaning set forth in Section 1.2 hereof.

 

“Actual Working Capital” has the meaning set forth in Section 2.3 hereof.

 

“Adjusted Current Assets” are current assets defined in GAAP less cash retained
by Prosoft (it being understood that all cash and cash equivalents are retained
by Prosoft but, if the parties negotiate for Reorganized Prosoft to retain any
cash, such included cash will increase Adjusted Current Assets on a
dollar-for-dollar basis) and less 70% of any accounts receivable (as defined by
GAAP) over 90 days old and less 100% of any accounts receivable which to the
knowledge of Prosoft are not collectible or are subject to a defense,
counterclaim or offset. Any accounts receivable excluded from the definition of
Adjusted Current Assets as provided above shall nonetheless be a part of the
assets retained by Reorganized Prosoft and VCampus and/or Reorganized Prosoft
shall be entitled to retain any cash collected thereon without adjustment to the
Working Capital.

 

“Adjusted Current Liabilities” are current liabilities defined by GAAP which
VCampus specifically agrees to retain within Reorganized Prosoft, which shall
specifically exclude the current portion of Prosoft’s long-term liabilities.

 

“Alternative Transaction” has the meaning set forth in Section 3.3.3 hereof.

 

“Amortized Note” has the meaning set forth in Section 2.2.2 hereof.

 

“Auditor” has the meaning set forth in Section 2.3 hereof.

 

“Balloon Note” has the meaning set forth in Section 2.2.2 hereof.

 

“Bankruptcy Code” means Title 11 of the United States Code, sections 101 through
1532.

 

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“Bankruptcy Court” means the United States Bankruptcy Court for the District of
Arizona, with jurisdiction over the Chapter 11 Case.

 

“Breach” has the meaning set forth in Section 2.4 hereof.

 

“Business Day” means any day (other than Saturday or Sunday) upon which
commercial banks in Arizona are open for business.

 

“Chapter 11 Case” means, collectively, the cases under Chapter 11 of the
Bankruptcy Code in which PLC and CP are the debtors and debtors-in-possession
pending before the Bankruptcy Court, including all adversary proceedings in
connection therewith.

 

“Closing” means the completion of the transactions to occur on or shortly after
the Effective Date as provided herein.

 

“Closing Balance Sheet” has the meaning set forth in Section 2.3 hereof.

 

“Closing Date” has the meaning set forth in Section 3.4 hereof.

 

“Confirmation Date” means the date upon which the Bankruptcy Court enters its
order confirming the Plan.

 

“Confirmation Order” means the order of the Bankruptcy Court confirming the Plan
in accordance with the Bankruptcy Code and this Agreement.

 

“Disclosure Statement” means the written disclosure statement that relates to
the Plan, as approved by the Bankruptcy Court pursuant to Section 1125 of the
Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure statement may be
amended, modified or supplemented from time to time.

 

“Distributions” has the meaning set forth in Section 3.2(e) hereof.

 

“Effective Date” means the last to occur of (a) the first Business Day that is
at least eleven (11) days after the Confirmation Date and on which no stay of
the Confirmation Order is in effect and no appeal of the Confirmation Order has
been made, and (b) the Business Day on which all of the conditions set forth in
Article VI of the Plan have been satisfied or waived.

 

“Employee Benefit Plan” means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement, (c) qualified defined benefit retirement plan or
arrangement, or (d) 401K plan.

 

“Estimated Working Capital” has the meaning set forth in Section 2.3 hereof.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended and the
regulations promulgated thereunder.

 

“Excluded Assets” has the meaning set forth in Section 1.2 hereof.

 

“Executory Contracts” has the meaning set forth in Section 1.3 hereof.

 

“Existing Capital Stock” has the meaning set forth in Section 4.1 hereof.

 

“Financial Statements” has the meaning set forth in Section 5.1.6 hereof.

 

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“GAAP” means United States generally accepted accounting principles as used by
the Financial Accounting Standards Board of the American Institute of Certified
Public Accountants, consistently applied and maintained.

 

“Intellectual Property” means all (a) inventions, patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, service marks,
trade dress, logos, trade names, corporate names, website addresses and domain
names, all derivative names relating thereto and registrations and applications
for registration thereof, (c) copyrights and registrations and applications for
registration thereof, (d) mask works and registrations and applications for
registration thereof, (e) computer software, data, documentation, (f) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, e-learning content, copyrightable
works, marketing, and business data, pricing and cost information, business and
marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).

 

“Leases” has the meaning set forth in Section 1.3 hereof.

 

“Liquidating Trust” means the Liquidating Trust of the Chapter 11 Estate of
Prosoft Learning Corporation, as defined in the Plan.

 

“New Common Stock” has the meaning set forth in Section 2.1 hereof.

 

“Ordinary Course of Business” means the ordinary course of business of the
business of Prosoft consistent with past practice (including, without
limitation, with respect to collection of accounts receivable, purchases of
inventory and supplies, repairs and maintenance, payment of accounts payable and
accrued expenses, levels of capital expenditures and operation of cash
management practices generally).

 

“Other Employee Benefit” means any health or other medical plan or insurance,
life insurance, disability insurance or other material fringe benefit that
Prosoft, as of the date of this Agreement, generally makes available to its
employees, other than an Employee Benefit Plan, as further defined in
Section 2.5 and identified on Schedule 2.5.

 

“Personal Property Leases” has the meaning set forth in Section 1.3 hereof.

 

“Petition Date” means the date the Petition Pleadings are filed.

 

“Petition Pleadings” means all Chapter 11 petitions and any and all other
documents necessary to commence the Chapter 11 Case.

 

“Person” means any natural person, business entity, organization or association.

 

“Plan” means the Plan of Reorganization related to the Chapter 11 Case, either
as filed with the Bankruptcy Court or as it may be amended, supplemented or
modified from time to time, including all exhibits and schedules annexed thereto
or referenced therein and/or in the supplement thereto which is filed with the
Bankruptcy Court and which contains exhibits thereto.

 

“Plan Related Documents” means, collectively, the Plan, the Disclosure
Statement, this Agreement, and any other related documents, including the
agreement establishing the Liquidating Trust.

 

“Prosoft” as set forth above means, collectively, PLC and CP. To the extent,
however, that this Agreement uses the term Prosoft in a context applicable to a
point in time following the Closing, Prosoft shall mean the Chapter 11 estates
of PLC and CP and/or the Liquidating Trust, as appropriate.

 

“Purchase Price” has the meaning set forth in Section 2.1 hereof.

 

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“Real Property Leases” has the meaning set forth in Section 1.3 hereof.

 

“Reorganized Prosoft” means Prosoft Learning Corporation, a Nevada corporation,
and all of its existing Subsidiaries on and after the Effective Date.

 

“Retained Liabilities” has the meaning set forth in Section 1.4 hereof.

 

“Secured Note Holders” shall mean DKR SoundShore Oasis Holding Fund Ltd., a
company organized under the laws of Bermuda, DKR SoundShore Strategic Holding
Fund Ltd., a company organized under the laws of Bermuda, and Hunt Capital
Growth Fund II, L.P., a Delaware limited partnership.

 

“Set Off Claim” has the meaning set forth in Section 2.4 hereof.

 

“Subsidiary” means any corporation of which the securities having a majority of
the ordinary voting power in electing directors are, at the time of
determination, owned by Prosoft directly or through another Subsidiary. A list
of the Subsidiaries of Prosoft is attached hereto as Exhibit A.

 

“Tax” means all federal, state, local, or foreign income, gross receipts,
capital stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, stamp, excise, occupation, sales,
use, transfer, value added, alternative minimum, estimated, or other taxes,
including any interest, penalty, or additional charge thereto, whether disputed
or not.

 

“Unassumed Liabilities” has the meaning set forth in Section 1.4 hereof.

 

“Wait List Liabilities” has the meaning set forth in Section 2.3 hereof.

 

“Working Capital” is defined to be Adjusted Current Assets minus Adjusted
Current Liabilities.

 

“Working Capital Surplus” has the meaning set forth in Section 2.3 hereof.

 

In addition to the foregoing definitions, capitalized terms used herein but not
defined herein shall have the respective meanings provided in the Plan.

 

ARTICLE I

 

TERMS OF REORGANIZATION

 

1.1           General. The parties to this Agreement have agreed to the
Reorganization of Prosoft which shall be implemented by Prosoft commencing the
Chapter 11 Case wherein, among other things, VCampus will acquire 100% of the
New Common Stock (as defined below) of Reorganized Prosoft. Specifically,
Prosoft shall file the Petition Pleadings and shall propound a pre-negotiated
Plan, in the form of Exhibit B attached hereto, or in such other form as shall
be mutually agreeable to Prosoft and VCampus.

 

1.2           Acquired Assets. Subject to and upon the terms and conditions set
forth herein, Prosoft and VCampus agree that Reorganized Prosoft shall retain
all the assets of Prosoft, other than the assets specifically excluded as set
forth in Section 1.7 hereof (the “Excluded Assets”), as same shall exist on the
Closing Date, as hereinafter defined (collectively, the “Acquired Assets”),
including but not limited to:

 

1.2.1       (a) All machinery, appliances, equipment, computers and peripherals,
tools, supplies, leasehold improvements, construction in progress, furniture and
fixtures owned by Prosoft, (b) tangible personal property including, but without
limitation, inventories and supplies, (c) account balances and accounts
receivable, (d) originals of all books, records, ledgers, files, documents,
correspondence, customer lists, creative materials, advertising and promotional
materials, causes of action, telephone and fax numbers, e-mail and internet
addresses; and (e) all software and all contents in all computer discs, CD Roms,
DVDs and hard drives.

 

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1.2.2       All goods, materials, work-in-process, inventory and equipment owned
by Prosoft.

 

1.2.3       Customer lists and related information.

 

1.2.4       All of Prosoft’s right, title and interest in and to any other
assets located at its facilities and/or relating to the facilities and the
business conducted thereat.

 

1.2.5       All of Prosoft’s right, title, and interest in and to, the
Intellectual Property, including, but not limited to, the assets listed on
Schedule 1.2.5, including goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions;

 

1.2.6       All cooperative advertising credits and market development funds
(whether accrued or receivable).

 

1.2.7       All licenses, permits, certificates, franchises, consents, waivers,
registrations or other regulatory authorizations issued to Prosoft or any of its
Subsidiaries by state or local governmental authority.

 

1.2.8       All stock or other equity securities of the Subsidiaries and all
corporate records, minute books, corporate seals and related items with respect
to such Subsidiaries, except those Subsidiaries identified on Schedule 1.2.8.

 

1.2.9       All warranties, guaranties, security agreements and other collateral
in respect of the Acquired Assets.

 

1.2.10     All deposits and prepayments received by Prosoft under any of the
Leases and/or Executory Contracts.

 

1.3           Assumed and Assigned Leases and Executory Contracts. Prosoft shall
forthwith take all actions in the Chapter 11 Case necessary to seek an order
from the Bankruptcy Court authorizing it to assume for Reorganized Prosoft all
of Prosoft’s right, title and interest in:

 

(a)         except for those items that are set forth in Schedule 1.3A, all
leases or rental or occupancy agreements of real property under which Prosoft is
lessee or occupant (subject to amendments, the terms of which shall be disclosed
as necessary and appropriate in the Chapter 11 Case) (the “Real Property
Leases”);

 

(b)         except for those items that are set forth in Schedule 1.3B, all
leases of personal property under which Prosoft is lessee (the “Personal
Property Leases” which together with the Real Property Leases shall be referred
to herein as the “Leases”); and

 

(c)         except for those items that are set forth in Schedule 1.3C, all
contracts, agreements, employment agreements, purchase orders and similar
arrangements (the “Executory Contracts”).

 

1.4           Unassumed Liabilities. VCampus and Prosoft agree that the Plan and
Plan Related Documents shall provide for the assignment to and assumption by the
Liquidating Trust of all obligations and liabilities of Prosoft (the “Unassumed
Liabilities”) other than the following obligations and liabilities that shall be
specifically accepted, assumed and retained by Reorganized Prosoft:  (i) those
liabilities and obligations as specifically identified on the Closing Balance
Sheet; (ii) prospective liabilities under the Leases and Executory Contracts as
of the date of the Closing; (iii) any cure amounts due under Section 365 of the
Bankruptcy Code for the Leases and Executory Contracts (iv) obligations of
Prosoft with respect to inventory ordered by Prosoft in the Ordinary Course of
Business, but not yet received by Prosoft as of the date of the Closing; (v) the
current portion of employee compensation, withholdings, and Other Employee
Benefits incurred in the Ordinary Course of Business, including but not limited
to accrued salary and vacation for both contract and at will employees (and
specifically excluding any Employee Benefit Plan liabilities); (vi) the current
portion of liabilities owed to governmental entities for taxes or other similar
obligations and (vii) any Wait-List Liabilities (as defined in Section 2.3(d))
assumed post-Closing

 

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by Reorganized Prosoft pursuant to Section 2.3 (the liabilities and obligations
set forth in Section 1.4(i) through 1.4(vii) shall be referred to collectively
as the “Retained Liabilities”). Prosoft and VCampus anticipate that the Retained
Liabilities, with the exception of those described in subparagraph (ii), above,
will be accounted for as part of the calculation of Working Capital. Set forth
in Schedule 1.4 is a list of the liabilities described in subsections (i) and
(iv), above, and the amounts of such liabilities as of the date represented on
Schedule 1.4, which amounts are subject to change in the Ordinary Course of
Business through the Closing Date.

 

1.5           Taxes and Prorations. Prosoft and VCampus anticipate that all
taxes and prorations will be accounted for as part of the calculation of Working
Capital. For the avoidance of any doubt, except for any Retained Liabilities
that are addressed in the Working Capital calculation, Prosoft shall be
responsible for all ad valorem taxes or assessments relating to the Acquired
Assets for taxable periods up to and including the Closing Date, regardless of
when the same shall become due and payable, and such taxes shall be pro-rated
between Prosoft and VCampus on and as of the Closing Date or within a reasonable
time thereafter. VCampus shall pay directly to the appropriate entity its
pro-rata share. All expense items including but not limited to insurance, rents,
utility charges, and any prepaid agreements shall be prorated between Prosoft
and VCampus as of the Closing Date. The rents for periods prior to Closing for
the Real Property Leases will be prorated as of the Closing Date, and VCampus
shall reimburse Prosoft for VCampus’ pro rata share as to rent paid in advance.
In the case of rent paid in arrears, Prosoft shall pay VCampus for the pro-rated
period up to the Closing. To the extent not paid at Closing, VCampus shall have
the right to offset any amounts which are the responsibility of Prosoft as
provided in Section 2.4.

 

1.6           Expenses. Prosoft and VCampus shall each remain liable for their
own closing expenses, including attorney’s fees.

 

1.7          Excluded Assets. Anything to the contrary in Sections 1.1 through
1.6 notwithstanding, the Acquired Assets retained by Reorganized Prosoft shall
exclude:

 

1.7.1       All cash, bank deposits and/or cash equivalents of Prosoft and its
Subsidiaries (except for any non-U.S. domiciled cash, bank accounts and/or cash
equivalents held by Prosoft or any of its Subsidiaries);

 

1.7.2       Claims for relief under any of the avoiding powers provided for
under Chapter 5 of the Bankruptcy Code and the Notes;

 

1.7.3       Any Employee Benefit Plan of Prosoft;

 

1.7.4       Any leases or contracts specifically set forth on Schedules 1.3A,
1.3B and 1.3C;

 

1.7.5       Any rights of Prosoft under this Agreement;

 

1.7.6       Any stock or other equity securities of the Subsidiaries listed on
Schedule 1.2.8, and all corporate records, minute books, corporate seals and
related items with respect to such Subsidiaries;

 

1.7.7       Any tax attributes of Prosoft; and

 

1.7.8       Any other assets identified and excluded by VCampus at least three
days prior to the Closing.

 

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ARTICLE II

 

PURCHASE PRICE

 

2.1           Purchase Price. Subject to adjustments as provided in Section 2.3,
at Closing and subject to the terms of the Plan, the purchase price due from
VCampus to Prosoft for the acquisition of 100% of the newly issued and
outstanding common stock of Reorganized Prosoft (the “New Common Stock”) shall
be Two Million Three Hundred Thousand and No/100 Dollars ($2,300,000) (the
“Purchase Price”). At the Closing, Reorganized Prosoft shall issue, and VCampus
(or its designated Affiliate) shall receive, the New Common Stock.

 

2.2          Payment. The Purchase Price shall be paid at Closing by VCampus to
Prosoft as follows:

 

2.2.1       $2,000,000 in cash, certified funds or wire transfer at Closing to
the bank account(s) designated by Prosoft; and

 

2.2.2       $300,000 of the Purchase Price shall be paid in the form of two 6%
promissory notes, one due and payable in one balloon payment on July 1, 2007 in
the form of note attached hereto as Exhibit 2.2.2A (the “Balloon Note”) and the
other note due and payable in six equal monthly installments of principal and
interest beginning on January 1, 2007 in the form of note attached hereto as
Exhibit 2.2.2B (the “Amortized Note,” and together with the Balloon Note, the
“Notes”).

 

2.3          Purchase Price Adjustments.

 

(a)  The Purchase Price shall be subject to adjustments, on a dollar-for-dollar
basis, to the extent Prosoft’s Working Capital at Closing is greater or less
than zero. For the avoidance of doubt, any balance sheet liabilities assumed by
Reorganized Prosoft or VCampus hereunder will reduce Working Capital by the
amount of the liabilities assumed. Subject to Bankruptcy Court approval, all
transaction expenses, including all fees and expenses payable to East Wind
Advisors, incurred by Prosoft in connection with the Closing shall be paid out
from either: (1) Prosoft’s cash at or prior to Closing, to the extent available,
with the resulting adjustment to Working Capital; or (2) the cash portion of the
Purchase Price. The Purchase Price shall also be subject to a downward
adjustment of $200,000 to the extent that the PTJ Transaction referenced in
Section 5.1.12.8 hereof is consummated prior to the Closing Date.

 

(b)  Immediately prior to Closing, Prosoft will prepare and deliver to VCampus a
closing balance sheet prepared in accordance with GAAP (the “Closing Balance
Sheet”) that includes its good faith estimate (“Estimated Working Capital”) of
Working Capital at Closing in a manner consistent with this Agreement. The
Closing Balance Sheet must be in sufficient detail for VCampus to reasonably be
able to verify and agree with Prosoft’s calculations. If this Working Capital
number is less than zero, then the cash portion of the Purchase Price will be
reduced by the amount less than zero. If this Working Capital number is greater
than zero, then the cash portion of the Purchase Price will be increased by the
amount greater than zero.

 

(c)  Within 60 calendar days of Closing, VCampus will provide to Prosoft an
audited closing balance sheet calculating the actual Working Capital at Closing
(the “Actual Working Capital”). If Prosoft believes the Actual Working Capital
determined by VCampus is inaccurate, then Prosoft shall within 30 days notify
VCampus of its belief and set forth in reasonable detail the alleged inaccuracy
or the items disputed (including its calculation of the Actual Working Capital).
If Prosoft does not so notify VCampus within the 30-day period, then the Actual
Working Capital number determined by VCampus shall be deemed final and binding
on the parties. If Prosoft does so notify VCampus, then VCampus and Prosoft
shall attempt in good faith to resolve such dispute for 20 days from the notice
date. If the parties are unable to resolve any disputed item during such 20-day
period, such disputed item(s) shall be submitted to a nationally recognized
accounting firm mutually acceptable to the parties (the “Auditor”), which shall
be instructed to arbitrate such disputed item(s) and determine the Actual
Working Capital within 40 days of their engagement by the parties. The
resolution of the disputes by the Auditor so selected shall be set forth in
writing and shall be conclusive and binding upon and non-appealable by the
parties. The Auditor’s fees and expenses shall be the responsibility of the
party whose calculation of the Actual Working Capital number is farthest from
the Actual

 

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Working Capital number as determined by the Auditor. During the period of any
dispute with respect to the Actual Working Capital, VCampus shall provide
Prosoft full access to the books, records and facilities of the business, and
shall cooperate with Prosoft to the extent reasonably requested by Prosoft to
investigate the basis for such dispute.

 

(d)  If Actual Working Capital less the Estimated Working Capital is less than
zero by $5,000 or more, then the principal balance of the Balloon Note will be
immediately reduced by the amount less than zero. If Actual Working Capital less
the Estimated Working Capital is greater than zero by $5,000 or more (a “Working
Capital Surplus”), then such Working Capital Surplus shall be offset, on a
dollar-for-dollar basis, first by VCampus’ assumption of an equal amount of
unassumed Prosoft liabilities (as selected by VCampus from the pre-approved list
of such liabilities designated by VCampus on Schedule 2.3(d) (the “Wait-List
Liabilities”), and to the extent any Working Capital Surplus remains after such
offset, then such remaining surplus shall be applied as an increase to the
principal balance of the Balloon Note. Any adjustment to the principal balance
of the Balloon Note shall be deemed to be an increase or decrease in principal
as of the date of Closing for purposes of calculating interest. Prior to
completion of the post-closing audit, Prosoft shall be free to negotiate
satisfaction and settlement of any Unassumed Liabilities (including any
Wait-List Liabilities not assumed by Reorganized Prosoft or VCampus).

 

(e)  If the absolute value of the difference between Actual Working Capital less
the Estimated Working Capital is $5,000 or less, then no adjustment will be made
to the principal balance of the Balloon Note or otherwise.

 

2.4          VCampus’ Right of Set Off. Notwithstanding any other provision of
this Agreement, if Prosoft shall breach the terms of this Agreement, including
any breach of the representations, warranties and covenants of Prosoft contained
herein (a “Breach”), from and after the Closing the terms of this Section 2.4
shall provide the sole remedy of VCampus. Should a Breach occur, VCampus shall
be entitled to set off and deduct the amount of its damages and expenses
resulting from such Breach (including, without limitation, attorneys fees) from
its financial obligations under the Notes; provided, however, that VCampus must
give Prosoft prior notice of its intent to set off or deduct (a “Set Off
Claim”), which Set Off Claim shall be made, if at all, no later than one-hundred
twenty (120) days after the Closing; and provided further that any set off or
deduction shall be effected first against the Balloon Note, and then against the
latest payment(s) due under the Amortized Note. Should VCampus assert a Set Off
Claim, Prosoft shall notify VCampus within ten (10) Business Days if it disputes
the Set Off Claim. If the parties cannot reach an agreement regarding the
disputed Set Off Claim within thirty (30) days after Prosoft notifies VCampus
that it disputes the Set Off Claim, either party may submit such disputed Set
Off Claim to the Bankruptcy Court for resolution as a contested matter under the
Bankruptcy Code. Should a payment under the Notes that is subject to the
disputed Set Off Claim come due prior to resolution of the disputed Set Off
Claim, VCampus shall make such payment when and as otherwise due into an
interest-bearing escrow account, to be held pending further written agreement
between VCampus and Prosoft, or a final, non-appealable order of the Bankruptcy
Court directing disposition of the payment.

 

2.5          Employment of Prosoft’s Personnel. Set forth on Schedule 2.5 is a
true, correct and complete list of all employees of Prosoft, with their name,
address, title, salary and benefits to which they were entitled to receive from
Prosoft prior to or upon Closing, which list also identifies any employment
agreement applicable to each such employee, and also lists Other Employee
Benefits offered by Prosoft as of the date of this Agreement. Prosoft will use
reasonable efforts to persuade its employees to make themselves available for
continued employment by Reorganized Prosoft. VCampus shall use reasonable
efforts to interview and review said current employees of Prosoft prior to the
Closing Date; provided, however, continued employment of Prosoft’s personnel by
Reorganized Prosoft shall be in the sole discretion of VCampus in the exercise
of its business judgment. It is not the intent of this Section 2.5 to make
Prosoft’s employees third party beneficiaries of this Agreement. It is
understood by the parties, however, that any employee of Prosoft whose
employment is continued by Reorganized Prosoft following the Closing will
receive credit for their time of employment with Prosoft for the purpose of
determining employee benefit eligibility and vesting under any Employee Benefit
Plan of Reorganized Prosoft or VCampus in which such employee is entitled to
participate. Reorganized Prosoft or VCampus shall maintain, or provide
substantially similar substitutes for, the Other Employee Benefits listed on
Schedule 2.5. VCampus covenants that it will have established a 401K plan for
the employees of Reorganized Prosoft on and after the Closing, the terms of
which shall be reasonably equivalent to those available to similarly situated
employees of VCampus.

 

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ARTICLE III

 

BANKRUPTCY COURT APPROVAL; CLOSING

 

3.1          Filings with Bankruptcy Court; Plan of Reorganization. Promptly
after the execution of this Agreement, but in no event later than four
(4) Business Days after the date of this Agreement, Prosoft shall commence the
Chapter 11 Case and file with the Bankruptcy Court the proposed Plan and Plan
Related Documents, including the forms of any and all documents required to be
filed as schedules and exhibits thereto, so as to expedite confirmation of the
Plan. The Plan and the Plan Related Documents, including schedules and exhibits
thereto, shall be in form and substance reasonably satisfactory in all respects
to VCampus.

 

3.2           Actions with Respect to the Plan. Prosoft shall:

 

(a)  Make all filings with applicable governmental authorities as may be
required by applicable law;

 

(b)   File with the Bankruptcy Court the Plan and Plan Related Documents in the
Chapter 11 Case under the Bankruptcy Code, and file the appropriate pleadings to
obtain hearing dates for the approval of the Disclosure Statement and
confirmation of the Plan in each case as promptly as possible;

 

(c)   Request the earliest practicable date for consideration and approval of
the Disclosure Statement, and time for acceptance or rejection of the Plan by
impaired creditors;

 

(d)  Use its reasonable efforts to obtain confirmation of the Plan as promptly
as practicable following the Petition Date, with only such changes or
modifications thereto as are acceptable to VCampus (which such acceptance shall
not be unreasonably withheld), and proceed diligently to obtain the dismissal of
all appeals, applications and motions for reconsideration with respect to the
Disclosure Statement, Plan, the Confirmation Order, and any other order or
ruling affecting the confirmation of the Plan, as promptly as practicable;

 

(e)  Subject to the terms and conditions of the confirmed Plan, use its
reasonable efforts to cause the distributions to be made as contemplated by the
confirmed Plan (the “Distributions”) as promptly as practicable following the
Effective Date;

 

(f)  Request that the Bankruptcy Court approve this Agreement

 

(g)  Use its reasonable efforts to obtain the Bankruptcy Court’s approval of the
provisions of Section 3.3 and 8.10 of this Agreement no later than the time that
the Bankruptcy Court approves the Disclosure Statement and procedures for
solicitation of impaired creditors; provided, however, that the failure of
Prosoft to obtain such approval despite reasonable efforts shall not give rise
to a right of VCampus to terminate this Agreement, or for a termination fee
pursuant to Section 8.10 hereof; and

 

(h)  Consult with VCampus and its counsel on all material aspects of Prosoft’s
participation in the Chapter 11 Case, including the preparation of the Plan and
Plan Related Documents and all other matters described in this Article III.

 

Each of VCampus and Prosoft shall use its reasonable efforts to obtain
confirmation of the Plan in accordance with the Bankruptcy Code and on terms
consistent with this Agreement. Consistent with its fiduciary duty, Prosoft
shall take all necessary and appropriate actions to achieve confirmation of the
Plan.

 

3.3           No Shop; Alternative Transactions.

 

3.3.1           Prosoft agrees that during the period commencing on the date
hereof and ending on the earlier of the Closing Date or the termination of this
Agreement, except as otherwise specifically permitted by Section 3.3.2, neither
Prosoft nor any of its officers, directors, employees, agents, representatives
or affiliates

 

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(including any investment banker or financial advisor retained by Prosoft) will
directly or indirectly solicit or initiate discussions or negotiations with any
Person concerning an Alternative Transaction.

 

3.3.2           Notwithstanding the foregoing, Prosoft and its financial and
legal advisors may furnish information to, or enter into discussions with, any
Person that makes an inquiry or proposal for a Alternative Transaction that was
not solicited by Prosoft from and after the date of this Agreement.

 

3.3.3           For purposes of this Agreement, “Alternative Transaction” means
a proposal for any of the following (other than the transactions contemplated by
this Agreement):  (a) any merger, reorganization, consolidation, share exchange,
recapitalization, business combination, liquidation, dissolution, or other
similar transaction involving, or, any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of, all or any significant portion of the business
or assets or 25% or more of the equity securities, of Prosoft (whether through
bankruptcy or otherwise); (b) any tender offer or exchange offer for 50% or more
of the outstanding shares of capital stock of Prosoft or the filing of a
registration statement under the Securities Act in connection therewith; or
(c) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.

 

3.3.4           Prosoft will notify VCampus as promptly as practicable following
the receipt of any Alternative Transaction. Such notice to VCampus shall be made
orally and in writing, and shall include the identity of the Person proposing
the Alternative Transaction and a general description or summary of the terms of
such Alternative Transaction. To the extent possible, Prosoft shall require that
any non-disclosure agreement it enters into with a Person that has proposed or
may propose an Alternative Transaction allows Prosoft’s compliance with the
requirements of this Section 3.3.4. VCampus agrees that it will, to the extent
necessary to facilitate Prosoft’s compliance with this Section 3.3.4, enter into
such reasonable non-disclosure agreement as may be required by a Person that has
proposed or may propose an Alternative Transaction.

 

3.3.5           Prosoft shall immediately cease and cause to be terminated any
pre-existing discussions with any Person (other than VCampus) that relates to
any Alternative Transaction.

 

3.3.6           Prosoft and VCampus shall issue a joint press release upon the
filing of the Petition Pleadings. Both Prosoft and VCampus shall reasonably
agree upon the content of any such press release.

 

3.4           Closing. The Closing shall occur on or before the date (the
“Closing Date”) that is the earlier of the following:  (i) so long as the
Effective Date has occurred, then on or before three (3) Business Days following
the date upon which the respective conditions to the parties’ obligations to
close under Section 6.1 hereof have been satisfied or waived; or (ii) if such
conditions have been satisfied or waived prior to the Effective Date, then on or
before three (3) Business Days following the Effective Date. All computations,
adjustments, and transfers for the purposes herein shall be effective as of
12:01 a.m. on the Closing Date. Time is of the essence under this Agreement.
Subject to the terms and conditions of this Agreement and the Plan, on the
Closing Date:  (a) VCampus shall provide to Prosoft the Purchase Price for the
New Common Stock to be acquired by VCampus pursuant to Section 2.1 hereof,
(b) VCampus shall receive the New Common Stock from Reorganized Prosoft; and
(c) a notice of effectiveness of the Plan shall be filed and served. After the
Closing, the Distributions shall be made in accordance with the Plan as promptly
as practicable. The Closing shall take place at the offices of VCampus’ counsel
Gallagher & Kennedy, P.A., 2575 E. Camelback Road, Phoenix, Arizona 85016, or by
facsimile and overnight courier for the convenience of the parties.

 

3.5           Closing Documents and Deliveries. At the Closing, and thereafter
if requested by VCampus, Reorganized Prosoft shall deliver to VCampus the
following items:

 

3.5.1        Duly executed certificates evidencing all of the New Common Stock
to be issued to VCampus or its designee pursuant to Section 2.1;

 

3.5.2        The Plan and Confirmation Order, which order shall be certified by
the clerk of the Bankruptcy Court;

 

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3.5.3        A certificate of good standing for Prosoft issued by the
appropriate authority of the State of Nevada no more than thirty (30) days prior
to Closing;

 

3.5.4        A closing certificate signed by the president of Prosoft attesting
that, to the best of his knowledge, information and belief, as of the Closing:
(i) the representations and warranties of Prosoft contained herein continue to
be true and complete in all material respects (or, to the extent any of the same
are not true and complete in any material respect, specifying how the same is
not true and complete); and, (ii) that any covenant of Prosoft contained herein,
that by its terms is to have been performed as of the Closing, has been
performed (or, to the extent any of the same have not been performed in any
material respect, specifying how the same remains unperformed);

 

3.5.5        Resignations of the corporate officers and directors of Prosoft;

 

3.5.6        A list of all the Acquired Assets being retained by Reorganized
Prosoft.

 

3.5.7        Such other documents as may be reasonably requested by VCampus in
connection with the transactions contemplated hereby. However, Prosoft
may retain and use copies of any and all records it deems reasonably necessary
to resolve and complete the Chapter 11 Case.

 

ARTICLE IV

 

EFFECTS OF THE REORGANIZATION

 

4.1           Cancellation of Existing Capital Stock. As of the Closing Date,
any interest in Prosoft represented by any class or series of common or
preferred stock outstanding before the Closing Date (collectively, the “Existing
Capital Stock”), and any warrants, options or other rights to purchase any
Existing Capital Stock shall be cancelled and terminated. The holders of the
Existing Capital Stock (or rights to acquire Existing Capital Stock) shall not
receive any equity or other interest in Reorganized Prosoft and shall not
receive any other consideration in exchange for the Existing Capital Stock (or
rights to acquire Existing Capital Stock).

 

4.2           Certificate of Incorporation and Bylaws. As of the Closing Date
and without any further action by the stockholders or directors of Prosoft or
Reorganized Prosoft, Prosoft’s certificate of incorporation and bylaws shall be
amended and restated in form and substance reasonably satisfactory to VCampus,
the terms of which shall provide for, among other things, the authorization of
all acts necessary to implement the Plan including, without limitation, the
issuance of the New Common Stock.

 

4.3           Public Company Status. Prosoft is currently a public company,
registered under Section 12 of the Exchange Act, and its common stock is
presently traded on the Nasdaq OTC Bulletin Board under the symbol POSO.OB.
Prior to, on or immediately after the Effective Date, Prosoft will take any and
all steps it considers reasonable and necessary to revoke and/or cancel its
prior registration under Section 12 of the Exchange Act. As of the Closing,
Reorganized Prosoft will not be a public company and will not be registered
under Section 12 of the Exchange Act or any other provision of federal or state
securities law.

 

4.4           Substantive Consolidation; Rollup. Pursuant to the Plan and
Confirmation Order, and as of the Closing Date: (i) the assets and liabilities
of PLC and CP shall be substantively consolidated; and,(ii) the stock or equity
securities of CP shall be cancelled and terminated.

 

ARTICLE V

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

5.1           Representations, Warranties and Covenants of Prosoft. In addition
to any warranties, representations and covenants otherwise contained herein,
Prosoft also represents, warrants and covenants to VCampus as of the date
hereof, as applicable, and as of the Closing, as follows (all representations,
warranties and

 

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covenants shall survive Closing, but shall terminate upon the expiration of the
right of VCampus to assert a Set Off Claim pursuant to Section 2.4 hereof):

 

5.1.1       Title. Prosoft owns, and has good and marketable title to, the
Acquired Assets to be retained by Reorganized Prosoft pursuant to this
Agreement, and subject to the terms of the Plan, on the Closing Date Reorganized
Prosoft will have good and marketable title to all of such assets free and clear
of all liens.

 

5.1.2       Leased Assets. Prosoft is the lessee of the Leases. Prosoft is not
in default under any of the Leases, which default cannot and will not be cured
pursuant to Section 365 of the Bankruptcy Code under the Plan, and Prosoft is
not aware of any circumstance or event that, through the passage of time or
otherwise, will constitute a default thereunder following Closing.

 

5.1.3        Intellectual Property.

 

5.1.3.1       To the best of Prosoft’s knowledge, information and belief,
Prosoft has title to or has the right to use pursuant to license, sublicense,
agreement or permission all Intellectual Property necessary for the operation of
the businesses of Prosoft and its Subsidiaries as presently conducted and as
presently proposed to be conducted. Each item of Intellectual Property owned or
used by Prosoft immediately prior to the Closing hereunder will be owned or
available for use by Reorganized Prosoft on identical terms and conditions
immediately subsequent to the Closing hereunder.

 

5.1.3.2       Prosoft has no knowledge that Prosoft or any of its Subsidiaries
has interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property rights of third parties, and none of the
employees with responsibility for Intellectual Property matters of Prosoft or
any of its Subsidiaries has ever received any charge, complaint, claim or notice
alleging any such interference, infringement, misappropriation, or violation. To
the knowledge of Prosoft and employees with responsibility for Intellectual
Property matters of Prosoft, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of Prosoft.

 

5.1.4       Real Property Leases. Prosoft has delivered to VCampus correct and
complete copies of all Real Property Leases, including any amendments thereto,
other than those listed in Schedule 1.3A. With respect to each of the Real
Property Leases other than those listed on Schedule 1.3A, Prosoft warrants that:

 

5.1.4.1       The lease is legal, valid, binding, enforceable and has not been
terminated.

 

5.1.4.2       Subject to satisfying the requirements of the Bankruptcy Code,
including but not limited to Section 365 thereof, the lease will continue to be
legal, valid, binding, enforceable and will not be terminated as of the Closing.

 

5.1.4.3       Neither Prosoft nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold.

 

5.1.4.4       To the best of Prosoft’s knowledge, information and belief, all
facilities leased thereunder have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
operation thereof and have been operated and maintained in accordance with
applicable laws, rules and regulations.

 

5.1.5       No Violations. Prosoft has no knowledge that Prosoft or any of its
Subsidiaries is in violation of any law or regulation, or under any order of any
court or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality wherever located. Prosoft has no
knowledge of any (1) claims, actions, suits or proceedings instituted or filed
and, (2) any claims, actions, suits or proceedings threatened presently or which
in the future may be threatened by any federal, state, municipal or other
governmental department, commission, board, court, bureau, agency or
instrumentality wherever located against or involving Prosoft or any of its
Subsidiaries. The execution and the delivery of this Agreement and the
consummation of the transactions contemplated hereby, will not violate any
statute, regulation, rule, judgment, order, decree, stipulation,

 

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injunction, charge or other restriction of any government, governmental agency,
or court to which Prosoft or any of its Subsidiaries is subject or any provision
of its charter or bylaws. To the best of Prosoft’s knowledge, except for the
Confirmation Order, Prosoft and its Subsidiaries do not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the parties to consummate the
transactions contemplated by this Agreement.

 

5.1.6       Financial Statements. Prosoft has provided VCampus with the
following financial statements (collectively, the “Financial Statements”):
(i) audited balance sheet and statement of income and cash flow as of and for
the fiscal years ended July 31, 2004 and July 31, 2005 for Prosoft (the “Most
Recent Audited Financial Statements”); and (ii) unaudited balance sheet and
statement of income and cash flow (the “Most Recent Financial Statements”) as of
and for the quarters ended October 31, 2005 and January 1, 2006 (the “Most
Recent Unaudited Financial Statement”) and for the monthly periods thereafter to
the Closing (“Monthly Financial Statements”), said Most Recent Unaudited
Financial Statements and Monthly Financial Statements being materially correct,
subject to usual and customary year end adjustments. The Most Recent Audited
Financial Statements have been prepared in accordance with GAAP, fairly present
in all material respects the financial condition, results of operations and cash
flows of Prosoft as of, and for, the periods presented.

 

5.1.7       Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Unaudited Financial Statements, there has not been any material adverse
change in the assets, liabilities, business, financial condition, operations,
results of operations or future prospects of Prosoft or its Subsidiaries, as a
whole.

 

5.1.8       Present Status. Since the Most Recent Monthly Financial Statement,
neither Prosoft nor any of its Subsidiaries has sold or transferred any material
assets except sales from inventory in the ordinary course of business, suffered
any damage, destruction, or loss (whether or not covered by insurance)
materially affecting its properties, business or prospects; waived any rights of
substantial value; nor entered into any transaction other than in the Ordinary
Course of Business.

 

5.1.9        Tax Returns. Prosoft and each of its Subsidiaries has filed all
state, federal and local tax returns that have been required to be filed and
timely paid all taxes required to be paid by it and its Subsidiaries prior to
Closing, including, without limitation, all payroll and employment related
taxes.

 

5.1.10      Customers. Set forth on Schedule 5.1.10 hereto is a true, accurate,
current and complete list of all of Prosoft’s customers and clients for the past
year.

 

5.1.11      Full Disclosure. Neither (a) the Disclosure Statement as initially
filed by Prosoft in the Chapter 11 Case, nor (b) any further or amended
Disclosure Statement, as of the date filed with the Bankruptcy Court, nor
(c) the final Disclosure Statement in the form distributed to creditors of
Prosoft in connection with confirmation of the Plan, as of the date so
distributed and as of the Closing Date, nor (d) this Agreement nor any document
contemplated hereby or thereby or furnished by or on behalf of Prosoft to
VCampus in connection with the negotiation and the sale of the New Common Stock,
as of the date filed and as of the Closing Date, will:

 

(i)  contain any untrue statement of a material fact or will omit to state any
material fact necessary to make the statements contained therein or herein, in
light of the circumstances under which they were made, not misleading, or

 

(ii)  fail to comply with the requirements of Section 1125(e) of the Bankruptcy
Code.

 

5.1.12     Operations Until Closing. Between the date of this Agreement and the
Closing Date, Prosoft shall (and, as applicable, shall cause each of its
Subsidiaries to):

 

5.1.12.1  Operate in the Ordinary Course of Business, including the securing and
providing of funding necessary to sustain operations at the current level. In
the event that Prosoft determines in its reasonable judgment that it does not
have the working capital to continue to operate in the Ordinary Course of
Business, then Prosoft shall immediately notify VCampus of such determination;

 

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5.1.12.2  Use Prosoft’s best efforts to maintain the Acquired Assets in as good
working order and condition as at present, ordinary wear and tear excepted;

 

5.1.12.3  Use Prosoft’s best efforts to preserve Prosoft’s business and preserve
Prosoft’s present relationships with suppliers, customers and others having
business relationships with Prosoft;

 

5.1.12.4  Keep in full force and effect until Closing present insurance policies
or other comparable insurance coverage;

 

5.1.12.5  Cause to be paid when due all taxes, license fees, trade accounts and
costs of expenses of operation and maintenance of the Acquired Assets incurred
through Closing;

 

5.1.12.6  Not, without VCampus’ prior written consent, enter into any material
contracts or obligations (other than normal customer contracts in the Ordinary
Course of Business); provided, however, that Prosoft shall be entitled to
continue ordering inventory in the Ordinary Course of Business;

 

5.1.12.7  Not, without VCampus’ prior written consent, materially modify, amend,
cancel or terminate any of its existing contracts or agreements;

 

5.1.12.8  Not sell, assign, lease or otherwise transfer or dispose of any of the
Acquired Assets except in the Ordinary Course of Business; provided, however,
that VCampus consents to Prosoft’s sale prior to the Closing Date of certain
intellectual property to Prosoft Training Japan, Inc., a Japanese corporation,
as set forth in the “Letter of Intent—Copyright and Licensing Transfer
Agreement” (the “PTJ Transaction”), and subject to the Purchase Price Adjustment
provided therefor in Section 2.3(a).

 

5.1.12.9  Not enter into any employment contracts which are not terminable at
will; and

 

5.1.12.10  Not settle for less than full payment any Retained Liabilities (or
other liabilities arising between the date hereof and the Closing Date, which
VCampus may elect to include as an additional Retained Liability at Closing) in
excess of $2,500 individually or $10,000 in the aggregate, without the prior
written consent of VCampus.

 

5.1.12.11  Not directly or indirectly do or permit to occur any of the
following:  (a) issue, sell, pledge, dispose of or encumber any additional
shares of, or any options, warrants, conversion privileges or rights of any kind
to acquire any shares of, any of the Existing Capital Stock; (b) amend or
propose to amend its certificate of incorporation; (c) split, combine or
reclassify any outstanding shares of Existing Capital Stock, or declare, set
aside or pay any dividend or other distribution payable in cash, stock, property
or otherwise with respect to shares of Existing Capital Stock; (d) redeem,
purchase or acquire or offer to acquire any shares of Existing Capital Stock;
(e) acquire (by merger, exchange, consolidation, acquisition of stock or assets
or otherwise) any corporation, partnership, joint venture or other business
organization or division or material assets thereof; (f) incur any indebtedness
for borrowed money or issue any debt securities, other than debtor-in-possession
financing secured by Prosoft in order to maintain its Ordinary Course of
Business operations; or (g) enter into or propose to enter into, or modify or
propose to modify, any agreement, arrangement or understanding with respect to
any of the foregoing.

 

5.1.12.12  Notification to VCampus. Between the date of this Agreement and the
Closing Date, Prosoft will promptly notify VCampus in writing if Prosoft or one
of its Subsidiaries becomes aware of:  (a) any fact or condition that causes or
constitutes a breach of any of Prosoft’s covenants as of the date of this
Agreement; (b) the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such covenant had such covenant been made as of
the time of occurrence or discovery of such fact or condition, or (c) any event
that would render any representation or warranty of Prosoft contained in this
Agreement, if made on or as of the date of the event or the Closing, untrue or
inaccurate in any material respect.

 

5.1.12.13  Customer Notices. Prosoft and VCampus may prepare a joint notice or
letter to be sent by Prosoft at VCampus’ expenses to each of Prosoft’s customers
of the transaction contemplated herein.

 

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Until Closing, Prosoft is not obligated or required to provide VCampus the name,
address and phone number of any of its customers or clients.

 

5.1.13     Capitalization. Immediately following the Closing, the only shares of
capital stock of Reorganized Prosoft which shall be issued and outstanding or
reserved for issuance shall be the New Common Stock to be issued to VCampus
pursuant to Section 2.1 hereof, which shares, when issued in accordance with
this Agreement and the Plan, shall be duly and validly issued and shall be fully
paid and nonassessable. Immediately following the Closing, there shall not be
any subscriptions, options, warrants, calls, rights, convertible securities or
other agreements or commitments of any character obligating Reorganized Prosoft
to issue, transfer or sell any of its securities, nor will there be any rights
to receive dividends or other distributions with respect to any such securities.
Immediately following the Closing, the only shares of capital stock of the
Subsidiaries which shall be issued and outstanding or reserved for issuance
shall be the shares of capital stock held by Reorganized Prosoft. Immediately
following the Closing, there shall not be any subscriptions, options, warrants,
calls, rights, convertible securities or other agreements or commitments of any
character obligating Reorganized Prosoft or its Subsidiaries to issue, transfer
or sell any of its Subsidiaries securities, nor will there be any rights or
dividends or other distributions with respect to any such securities.

 

5.1.14     Organizational Representations and Warranties of Prosoft. Prosoft
represents and warrants as follows:

 

5.1.14.1  Prosoft is a corporation validly existing and in good standing under
the laws of the State of Nevada and each of its Subsidiaries is a corporation
validly existing and in good standing under the laws of its respective
jurisdiction of organization.

 

5.1.14.2  The execution and delivery of this agreement by Prosoft has been duly
authorized by proper corporate approval and on the Closing Date, Prosoft will
have all necessary power and authority to consummate the transactions provided
herein. The Board of Directors of Prosoft has approved the commencement of the
Chapter 11 Case as provided herein.

 

5.1.14.3  The officers whose signatures are affixed hereto have the necessary
corporate power and authority to bind Prosoft.

 

5.1.15     Access to Records. Pursuant to and under the terms and conditions of
the Non-Disclosure Agreement between Prosoft and VCampus, Prosoft will afford
VCampus access, during normal business hours, to all its businesses operations,
properties, books, files, and records, and will cooperate in VCampus’
examination thereof. No such examination, however, shall constitute a waiver or
relinquishment by VCampus of its right to rely upon Prosoft’s covenants,
representations, and warranties as made herein or pursuant hereto. Until the
Closing, VCampus will hold in confidence all information so obtained, except as
hereinafter provided.

 

5.1.16     Financial Reports. Prosoft’s financial statements filed with the SEC
and provided to VCampus and Prosoft’s Tax Returns for the fiscal years ended
July 31, 2004, copies of which have been furnished to VCampus by Prosoft prior
to the execution of this Agreement, fairly represent the financial position of
Prosoft as of their dates, and as of the date hereof.

 

5.1.17     Environmental Matters. To Prosoft’s knowledge, the properties, assets
and operations of Prosoft and its Subsidiaries are in compliance in all material
respects with all applicable federal, state, local and foreign laws, permits and
licenses relating to public and worker health and safety and to the protection
and clean-up of the natural environment and activities or conditions related
thereto, including, without limitation, those relating to the generation,
handling, disposal, transportation or release of hazardous materials
(“Environmental Laws”), other than any such failure to be in compliance as would
not, singly or in the aggregate, reasonably be expected to have a material
adverse effect on the Purchased Assets or Prosoft’s business. The term
“hazardous materials” shall mean those substances that are regulated by or
form the basis for liabilities under any applicable Environmental Laws. To
Prosoft’s knowledge, Prosoft is not the subject of any federal, state, local or
foreign investigation, and Prosoft has not received any notice or claim relating
to any material liability or remedial action or potential material liability or
remedial action under Environmental Laws.

 

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 5.1.19     Officers and Directors. The corporate officers and directors serving
Prosoft immediately before the Closing Date shall have resigned or be terminated
without cause as of the Closing Date.

 

 5.1.20     ERISA Plans. Except as set forth in Schedule 5.1.20, neither Prosoft
nor any of its Subsidiaries is a party to or participant in any Employee Benefit
Plan and any liabilities of Prosoft under any such plan now or heretofore in
effect are fully funded or otherwise adequately provided for.

 

5.2           Representations and Warranties of VCampus.

 

5.2.1       VCampus is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.

 

5.2.2       The execution and delivery of this agreement by VCampus has been
duly authorized by proper corporate action, and on the Closing Date, VCampus
will have all necessary authority to consummate the transactions provided
herein. The officer(s), whose signatures are affixed hereto, have been duly
authorized by VCampus to execute this Agreement and they have the necessary
corporate power and authority to bind VCampus.

 

5.2.3       Neither the execution and delivery of this Agreement by VCampus nor
the consummation by VCampus of the transactions contemplated hereby,
(i) requires the authorization, consent, or approval of any third person,
including any governmental authority (other than the Bankruptcy Court),
(ii) will conflict with or result in a breach or violation of, or default under,
any material agreement of other material instrument or obligation to which
VCampus is a party or by which any of VCampus’ assets or properties are bound,
or (iii) violate any judgment, order, injunction, decree, rule or regulation
applicable to VCampus or any of VCampus’ assets or properties.

 

5.2.4       As of the execution of this Agreement and until Closing, (i) VCampus
has and will maintain financial capability and good faith intent to fulfill all
of the terms and conditions of this Agreement on a timely basis; (ii) VCampus
can establish adequate assurance of future performance of the Retained
Liabilities and Assumed Contracts, as required by the Bankruptcy Code;
(iii) VCampus’ ability to comply with subsections (i) and (ii) is not subject to
any financing contingency; and (iv) the Agreement is as of the date hereof, and
both this Agreement and the Notes will be as of Closing, valid obligations of
and enforceable against VCampus, subject to bankruptcy laws and similar laws
affecting the rights of creditors generally.

 

5.2.5       As of Closing, Reorganized Prosoft or VCampus shall maintain, or
provide substantially similar substitutes for, the Other Employee Benefits
listed on Schedule 2.5. VCampus also will have established a 401K plan for the
employees of Reorganized Prosoft on and after the Closing, the terms of which
shall be reasonably equivalent to those available to similarly situated
employees of VCampus.

 

5.2.6       As of the date of execution of the Non-Disclosure Agreement between
Prosoft and VCampus through Closing, VCampus has and will continue to comply
with all terms, conditions and restrictions of the Non-Disclosure Agreement.

 

5.2.7       Between the date of this Agreement and the Closing Date, VCampus
will promptly notify Prosoft in writing if VCampus becomes aware of:  (a) any
fact or condition that causes or constitutes a material breach of any of
VCampus’ covenants as of the date of this Agreement; (b) the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a material breach
of any such covenant had such covenant been made as of the time of occurrence or
discovery of such fact or condition, or (c) any event that would render any
representation or warranty of VCampus contained in this Agreement, if made on or
as of the date of the event or the Closing, untrue or inaccurate in any material
respect.

 

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ARTICLE VI

 

CONDITIONS TO OBLIGATION TO CLOSE

 

6.1           Conditions to Obligation to Close.

 

6.1.1       Conditions to Obligation of VCampus. The obligation of VCampus to
consummate the transactions to be performed by it in connection with the Closing
are subject to the following conditions:

 

6.1.1.1  Proceedings Relating to the Chapter 11 Case. As of 90 days following
the Petition Date, (i) the Bankruptcy Court shall have confirmed the Plan
(including any amendments or modifications thereto) which shall be in form and
substance acceptable to VCampus, (ii) the Confirmation Order shall be in
form and substance acceptable to VCampus, (iii) the Confirmation Order shall not
be subject to a stay, (iv) no appeal of the Confirmation Order shall be pending,
and (v) with respect to such Confirmation Order, all appeals periods shall have
expired. Should any of the foregoing not have occurred as of 90 days following
the Petition Date, and so long as the failure of such condition is not due to a
breach of this Agreement by VCampus, VCampus shall have the option, in its sole
discretion, to waive this condition. If VCampus elects to waive this condition,
Prosoft shall continue to exercise its best efforts to satisfy such condition by
such later date as VCampus shall specify. The failure of the foregoing condition
to be met as and when required by this paragraph shall not give rise to a claim
by VCampus to a termination fee under Section 8.10 hereof, so long as the cause
of such failure is or was not reasonably within the control of Prosoft.

 

6.1.1.2   Injunction. There must not be in effect any legal requirement or any
injunction or other order that prohibits or restrains VCampus’ acquisition of
the New Common Stock or the consummation of the Agreement or which had or could
reasonably have a material adverse effect on Reorganized Prosoft or the Acquired
Assets. The purchase of the New Common Stock by VCampus hereunder shall not be
prohibited by any applicable law or regulation, shall not subject VCampus to any
penalty, liability or other condition reasonably unacceptable to VCampus and
shall be permitted by law and regulations of the jurisdictions to which VCampus
is or will at Closing be subject.

 

6.1.1.3   Additional Agreements. Prosoft shall have delivered to VCampus on the
Closing Date the documents and agreements specified in Section 3.5.

 

6.1.1.4   The Reorganization Plan. A Confirmation Order and any other orders by
the Bankruptcy Court necessary to confirm the Plan or implement the Confirmation
Order and approve the Plan Related Documents, any documents related hereto and
the transactions contemplated hereby shall be entered, each of which order or
orders shall be a final order reasonably acceptable in form and substance to
VCampus and its counsel in all material respects, such orders shall not be
subject to any stay, no appeal of such orders shall be pending and all appeals
periods with respect to such orders shall have expired. The Plan Related
Documents and all other documents shall be in the form reasonably approved by
VCampus for filing by Prosoft, with such modifications or amendments as are
consistent with this Agreement and the Plan and are reasonably acceptable in
form and substance to VCampus. The Plan shall provide for the satisfaction or
extinguishment of all claims against Prosoft in a manner reasonably satisfactory
to VCampus.

 

6.1.1.5   Consent of Third Parties. All consents by third parties that are
required to permit the transactions contemplated hereby and by the Plan shall
have been obtained.

 

6.1.1.6  Prosoft’s Representations. The representations and warranties of
Prosoft set forth herein shall be true and correct when made and at and as of
the Closing Date.

 

6.1.1.7  Prosoft’s Covenants. Prosoft shall have performed and complied with all
of its covenants hereunder in all material respects through the Closing. Prosoft
shall not be in default of its obligations under this Agreement or any of the
Plan Related Documents.

 

6.1.1.8  No Disposition of Material Assets. Prosoft and VCampus shall have
reinspected the Acquired Assets and VCampus shall be satisfied that Prosoft has
not sold, assigned, leased or

 

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otherwise transferred or disposed of any material portion of the Acquired Assets
(or assets of Prosoft’s Subsidiaries), except in the Ordinary Course of Business
and that sales of courses and related materials have been substantially
consistent with Prosoft’s prior operations.

 

6.1.1.9  No Material Adverse Changes. There shall not have been any material
adverse change affecting Prosoft or the Acquired Assets or the going concern
value of Prosoft’s business.

 

The foregoing conditions contained in this Section 6.1.1 are intended solely for
the benefit of VCampus. VCampus shall at all times have the right to waive any
condition. All waivers given by VCampus under this Section 6.1.1 shall be in
writing. The waiver by VCampus of any condition shall not relieve any other
party of any liability or obligation with respect to any representation,
warranty, covenant or agreement set forth herein.

 

6.1.2       Conditions to Obligations of Prosoft. The obligations of Prosoft and
Reorganized Prosoft to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:

 

6.1.2.1  VCampus’ Representations. The representations and warranties of VCampus
set forth herein shall be true and correct when made and at and as of the
Closing Date;

 

6.1.2.2  VCampus’ Covenants. VCampus shall have performed and complied with all
of its covenants hereunder in all material respects through the Closing. VCampus
shall have provided the consideration for the New Common Stock to be acquired by
VCampus pursuant to Section 2.1 and Section 2.2.

 

6.1.2.3  Approval by the Bankruptcy Court. A Confirmation Order and any other
orders by the Bankruptcy Court necessary to confirm the Plan and approve this
Agreement, any documents related thereto and the transactions contemplated
hereby shall be entered.

 

The foregoing conditions contained in this Section 6.1.2 are intended solely for
the benefit of Prosoft and Reorganized Prosoft. Prosoft and Reorganized Prosoft
shall at all times have the right to waive any condition. All waivers given by
Prosoft or Reorganized Prosoft under this Section 6.1.2 shall be in writing. The
waiver by Prosoft or Reorganized Prosoft of any condition shall not relieve any
other party of any liability or obligation with respect to any representation,
warranty, covenant or agreement set forth herein.

 

ARTICLE VII

 

ADDITIONAL PROVISIONS

 

7.1           Default.

 

7.1.1       VCampus’ Remedies. In the event that a default under this Agreement
occurs prior to Closing, VCampus must, before taking any other action, give a
written notice to Prosoft of such a default. Prosoft will then have ten
(10) Business Days from receipt of notice in which to cure said default. In
addition to any termination fee, VCampus may, upon default by Prosoft, seek
specific performance and/or any remedy available at law or equity. All remedies
hereunder are cumulative and non-exclusive of any other remedies.

 

7.1.2       Prosoft’s Remedies. In the event all conditions and contingencies
contained herein shall be met and VCampus shall fail to purchase the New Common
Stock as provided herein (other than for a reason as set forth in
Section 8.10.3), Prosoft may seek specific performance and/or any remedy
available at law or equity; provided, however, that in no case shall Prosoft’s
remedies hereunder include an award of monetary damages against VCampus the
amount of which exceeds $2,300,000, less any portion of the Purchase Price that
actually has been paid. All remedies hereunder are cumulative and non-exclusive
of any other remedies.

 

7.2           Continued Inspection.         Subject to the terms, conditions and
restrictions of the existing Non-Disclosure Agreement between Prosoft and
VCampus, VCampus has the right to examine the Acquired Assets,

 

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excluding the customer list, after acceptance of this contract by Prosoft. This
right to examine the Acquired Assets shall continue until Closing. VCampus’
right to examine shall be during normal business hours, or as otherwise arranged
and shall not unreasonably interfere with the operation of Prosoft’s business.
Upon request of VCampus, Prosoft shall provide for VCampus’ review of copies of
all leases, agreements or other documents relating to Prosoft’s business.

 

7.3           Best Efforts. Upon the terms and subject to the conditions herein
provided, each of the parties hereto agrees to use their respective best, good
faith efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties hereto in doing, all
things necessary, proper or advisable under applicable laws and regulations to
ensure that the conditions set forth in this Agreement are satisfied and to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, the parties hereto shall furnish to each other such necessary
information and reasonable assistance, as each may request in connection with
Prosoft’s preparation and filing of the Plan and the Disclosure Statement and
the Related Plan Documents, in form and substance reasonably satisfactory to
VCampus, needed to obtain Bankruptcy Court approval of the transactions
contemplated by this Agreement and shall execute any additional instruments
necessary to consummate the transactions contemplated hereby, whether before or
after the Closing.

 

7.4           Disclosure Supplements. From time to time prior to the Closing,
Prosoft shall supplement the Schedules hereto with respect to any matter
hereafter arising or any information obtained after the date hereof of which, if
existing, occurring or known at or prior to the date of this Agreement, would
have been required to be set forth or described in the Schedules, or which is
necessary to complete or correct any information in such schedule or in any
representation and warranty of Prosoft which has been rendered inaccurate
thereby. For purposes of determining the satisfaction of the conditions set
forth in Section 6.1.1 hereof, no such supplement or amendment shall be
considered.

 

ARTICLE VIII

 

MISCELLANEOUS PROVISIONS

 

8.1           Risk of Loss.        The risk of loss prior to the Closing Date
shall be with Prosoft. In the event a material percentage of Acquired Assets or
a material percentage of operations of Prosoft shall have been damaged adversely
or affected in any material way as a result of any strike, accident or other
casualty or act of God or the public enemy, or any judicial, administrative or
governmental proceeding at such time as Prosoft proposed to close, then VCampus
shall have the options of either (i) prorating the Purchase Price to adjust for
the loss (with consent of Prosoft); or (ii) proceeding to close with an
assignment of any insurance proceeds which may be paid to reflect such loss or
damage, or (iii) terminating this Agreement.

 

8.2           Severability. If any provision of this Agreement is prohibited by
the laws of any jurisdiction as those laws apply to this Agreement, that
provision is ineffective to the extent of such prohibition and/or is modified to
conform with such laws, without invalidating the remaining provisions hereto;
and any such prohibition in any jurisdiction shall not invalidate such provision
in any other jurisdiction.

 

8.3           Choice of Law. This Agreement shall be governed by the internal
laws of the State of Delaware and, to the extent applicable, the Bankruptcy
Code.

 

8.4           Entire Agreement; Modification. This Agreement embodies the entire
agreement and understanding of the parties hereto and supersedes any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein. No modification, alteration, waiver, amendment, change or
supplement hereto shall be binding or effective unless the same is set forth in
writing signed by a duly authorized representative of each party to this
Agreement.

 

8.5           Survival and Binding Agreement. The terms and conditions hereof
shall survive the Closing and shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, personal representatives,
successors and assigns.

 

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

 

8.7           Assignment. Neither party to this Agreement may assign any of its
rights or delegate any of its responsibilities under this Agreement, except that
VCampus may assign this Agreement to any wholly owned Subsidiary of VCampus or
an affiliate of VCampus, or to any person or entity that succeeds to all or
substantially all of the business of VCampus through a purchase of assets,
merger or otherwise.

 

8.8           Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent by personal delivery, by overnight carrier, or
by facsimile transaction, as follows:

 

If to Prosoft:

 

Copy to:

 

 

 

Prosoft LearningCorporation

 

Snell & Wilmer, L.L.P.

410 N. 44th Street, Suite 600

 

One Arizona Center

Phoenix, Arizona 85008

 

400 E. Van Buren

Fax No.: (602) 794-4178

 

Phoenix, AZ 85004-2202

 

 

Steven D. Jerome, Esq.

 

 

Fax No.: (602) 382-6070

 

If to VCampus:

 

Copy to:

 

 

 

VCampus Corporation

 

Maupin Taylor, P.A.

1850 Centennial Park Drive

 

Post Office Box 19764

Suite 200

 

Raleigh, North Carolina 27619-9764

Reston, Virginia 20191

 

Attn: Kevin A. Prakke, Esq.

Attn: Christopher L. Nelson, CFO

 

Fax No.: (919) 981-4300

Fax No.: (703) 654-7319

 

 

 

8.9           Termination. In addition to the rights of the parties to terminate
this Agreement as set forth elsewhere herein, this Agreement may be terminated:

 

8.9.1        At any time prior to the Closing Date, by the mutual agreement of
Prosoft and VCampus.

 

8.9.2        At any time prior to the Closing Date by VCampus, and subject to
the “notice and cure” provisions contained in Section 7.1.2 herein, if Prosoft
is in breach of any of its representations, warranties or covenants set forth
herein.

 

8.9.3        At any time prior to the Closing Date by Prosoft, subject to giving
notice of breach to VCampus and expiration of a 10-business-day cure period, if
VCampus is and remains in breach of any of its representations, warranties or
covenants set forth herein.

 

8.9.4        At any time prior to the Closing Date by VCampus pursuant to
Section 6.1.1.1.

 

8.9.5        By either Prosoft or VCampus, if any of the conditions to such
party’s obligation to consummate the transactions contemplated in this Agreement
shall have become impossible to satisfy, except to the extent that such
impossibility arises out of or results from actions of the party seeking to
terminate pursuant to this Section 8.9.5.

 

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8.9.6        By Prosoft in connection with entering into a definitive agreement
for an Alternative Transaction, provided Prosoft has complied with all
provisions in Section 3.3.

 

No termination pursuant to Sections 8.9.2, 8.9.3, 8.9.4 or 8.9.5 shall relieve
any breaching party of its obligations or liabilities to the non-breaching party
for damages sustained as a result of the breach. Termination of this Agreement
shall not limit VCampus’ right to a termination fee as provided in Section 8.10,
except as limited in Section 6.1.1.1.

 

8.10         Termination Fee.

 

8.10.1      If this Agreement is terminated by Prosoft pursuant to Section 8.9.6
hereof or if a competing plan of reorganization supported by a party other than
VCampus is confirmed by the Bankruptcy Court, and VCampus has not breached any
of its obligations under this Agreement in any respect, then Prosoft shall pay
to VCampus a single termination fee of $69,000, payable upon consummation of the
Alternative Transaction or confirmation of the competing plan, as applicable.

 

8.10.2      Prosoft shall pay, or cause to be paid, to VCampus a single
termination fee in the amount of $69,000, in the event that: (i) Prosoft fails
for any reason which is reasonably within Prosoft’s control, other than a breach
of the Agreement by VCampus, to close the Transaction (subject to the provisions
of Section 6.1.1.1); or (ii) VCampus determines not to close the Transaction
based upon either (x) a material breach of this Agreement by Prosoft that is
reasonably within Prosoft’s control and that has or is reasonably likely to have
a material adverse effect on the Acquired Assets or going concern value of
Prosoft’s business; or (y) the failure of any of the conditions set forth in
Sections 6.1.1.5 (but only to the extent that the lack of consent is of the
Secured Noteholders), and 6.1.1.6 through 6.1.1.8, which failure is reasonably
in Prosoft’s control.

 

8.10.3      If: (i) this Agreement is terminated by Prosoft other than due to a
default by VCampus under this Agreement which is not cured, and (ii) on or
before one-hundred eighty (180) days following the termination of this
Agreement, Prosoft closes an Alternative Transaction with a party other than
VCampus, then, at the time any such Alternative Transaction is consummated,
Prosoft will pay to VCampus, in cash, a termination fee in the amount of $69,000
(unless a termination fee has already been paid to VCampus by Prosoft). The
parties agree that the sums payable pursuant to this Section 8.10.3 shall
constitute reimbursement of expenses incurred in connection with the
contemplated Reorganization and loss of opportunity, and not penalties. The
parties further acknowledge that (a) the amounts of loss or damages likely to be
incurred is incapable or is difficult to precisely estimate, (b) the amounts
specified herein bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by VCampus in
connection with a sale of Prosoft’s business to a third party in the manner
described in this Section 8.10.3, and (c) the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial
counsel and negotiated this Agreement at arms’ length.

 

8.10.4      The termination fee payable pursuant to Section 8.10.1, 8.10.2 or
8.10.3 is only due and payable once and under no circumstances is VCampus
entitled to more than one termination fee whether or not multiple circumstances
giving rise to a termination fee occur under one or more of Section 8.10.1,
8.10.2 or 8.10.3. Any termination fee payable pursuant to Section 8.10.1, 8.10.2
or 8.10.3 shall be paid by Prosoft as reimbursement for VCampus’ costs and
expenses incurred in conjunction with the Reorganization. No termination fee set
forth in this Section 8.10 may be modified or cancelled without the written
consent of both parties or pursuant to formal action by the Bankruptcy Court
expressly modifying the fee.

 

8.11         Construction. Headings in this Agreement are for convenience of
reference only, and are not intended to nor shall they be used to construe the
meaning of operative provisions of this Agreement. The words “herein,” “hereof,”
“hereunder,” and words of similar import refer to this Agreement. Terms defined
or used in the singular form herein are intended to include the plural form. The
terms “includes,” or “including” are not limiting, and should be construed as
though followed by the phrase “by way of illustration and not limitation.”

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

 

 

PROSOFT:

 

 

 

Attest:

 

Prosoft Learning Corporation

 

 

 

By:

 

 

By:

 

 

 

 

Secretary

 

 

 

, President

 

 

 

 

 

COMPUTERPREP:

 

 

 

Attest:

 

By: Prosoft Learning Corporation, its sole
shareholder

 

 

 

By:

 

 

 

 

 

Secretary

 

 

 

 

By:

 

 

 

 

 

 

, President

 

 

 

 

 

VCAMPUS:

 

 

 

Attest:

 

VCampus Corporation

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

Secretary

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

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EXHIBIT 2.2.2A

 

PROMISSORY NOTE

 

Reston, VA

              , 2006

 

$150,000.00

 

FOR VALUE RECEIVED the undersigned VCampus Corporation, a Delaware corporation
(the “Maker”), promises to pay to Prosoft Learning Corporation (“Prosoft”) or
its permitted assigns the principal sum of One Hundred and Fifty Thousand
Dollars ($150,000.00), in immediately available funds, together with simple
interest from the date of issuance, at the rate of six percent (6 %) per annum
on the unpaid balance until paid, both principal and interest payable in lawful
money of the United States of America, at the office of Prosoft, or at such
place as the legal holder hereof may designate in writing. For the sake of
clarity, interest shall be calculated based upon a presumed 360-day year with
each month having 30 days. The entire principal and accrued interest shall be
due and payable in one balloon payment on July 1, 2007.

 

This Note may be prepaid in full or in part at any time without penalty or
premium.

 

Each of the following shall constitute a default under this Note:

 

(a)           the failure of the Maker to make any payments when due on this
Note and such failure continues for more than ten (10) days past the due date.

 

(b)           the failure of the Maker to comply with or to perform, in any
material respect, when due any other term, obligation, covenant or condition
contained in this Note. If any failure, other than a failure to pay money, is
curable, it may be cured (and no default will have occurred) if the Maker after
receiving written notice from the holder demanding cure of such failure:
(i) cures the failure within thirty (30) days; or (ii) if the cure requires more
than thirty (30) days, immediately initiates steps sufficient to cure the
failure and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonable;

 

(c)           this Note, the Reorganization Agreement or any provision thereof
shall, for any reason, not be valid and binding on the Maker, or not be in full
force and effect, or shall be declared to be null and void; the validity or
enforceability of this Note or the Reorganization Agreement shall be contested
by Maker; except with respect to any duly exercised set-off rights of the Maker
hereunder or under the Reorganization Agreement, the Maker shall deny that it
has any or further liability or obligation under this Note or the Reorganization
Agreement; or any default or breach by the Maker in any material respect under
any provision of the Reorganization Agreement shall continue after the
applicable grace or cure period, if any, specified in the Reorganization
Agreement.

 

(d)           the sale of substantially all of the assets or ownership of the
Maker to an unaffiliated third party or a merger or other change of control
transaction in which both:

 

24

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(i) holders of the fully diluted equity of the Maker immediately prior to the
transaction hold less than 50% of the fully diluted equity of the maker as of
immediately after the transaction; and (ii) the Board of Directors of the Maker
immediately prior to the transaction comprise less than 50% of the members of
the Board of Directors of the surviving corporation in the transaction.

 

(e)           the dissolution or termination of the Maker’s existence, the
Maker’s insolvency, appointment of a receiver for any significant part of the
Maker’s property, any assignment by the Maker for the benefit of creditors, any
type of creditor workout with respect to the Maker, or the commencement of any
proceeding under any bankruptcy or insolvency laws against the Maker (which is
not dismissed within 30 days).

 

(f)            (i) the Maker shall fail to pay any other indebtedness of the
Maker when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and the maturity of such indebtedness, but
only if in excess of $1,500,000, has been accelerated; (ii) the Maker shall fail
to perform or observe any term or covenant contained in any agreement or
instrument relating to such indebtedness, when required to be performed or
observed, and such failure shall continue after any applicable grace or cure
period, if any, specified in such agreement or instrument, and would result in
acceleration of the maturity of such indebtedness, but only if in excess of
$1,500,000, unless waived by the lender; or (iii) any such indebtedness, but
only if in excess of $1,500,000, shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or

 

(g)           The Maker shall have any final judgment(s) outstanding against it
for the payment of $1,500,000 or more, and such judgment(s) shall remain
unstayed, in effect, and unpaid for the period of time after which the judgment
holder may cause the creation of liens against or seizure of any of the Maker’s
property.

 

The holder of this Note may declare the entire balance hereunder to be
immediately due and payable upon default (or at such time as the Maker receives
net cash proceeds, determined in accordance with generally accepted accounting
principles, of at least $5,000,000 from the sale of securities of the Maker
pursuant to a financing transaction (or series of integrated transactions)),
whereupon the unpaid capitalized principal balance and any accrued interest
thereupon shall be due and payable without diligence, presentment, demand,
protest, notice of protest or intent to accelerate, notice of acceleration or
notice of any kind, all of which are expressly waived by Maker.

 

The balance due under this Note is subject to automatic adjustment and/or set
off pursuant to terms of Sections 2.3 and 2.4 of the Acquisition and
Reorganization Agreement dated April 11, 2006, by and between the Maker and
Prosoft (the “Reorganization Agreement”).

 

All parties to this Note, including the Maker and any sureties, endorsers, or
guarantors hereby waive protest, presentment, notice of dishonor, and notice of
acceleration of maturity and agree to continue to remain bound for the payment
of principal, interest and all other sums due

 

25

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under this Note notwithstanding any change or changes by way of release,
surrender, exchange, modification or substitution of any security for this Note
or by way of any extension or extensions of time for the payment of principal
and interest; and all such parties waive all and every kind of notice of change
or changes and agree that the same may be made without notice or consent of any
of them.

 

Upon default the holder of this Note may employ an attorney to enforce the
holder’s rights and remedies and the Maker, principal, surety, guarantor and
endorsers of this Note hereby agree to pay to the holder reasonable attorneys’
fees not exceeding a sum equal to fifteen percent (15%) of the outstanding
balance owing on the Note, plus all other reasonable expenses incurred by the
holder in exercising any of the holder’s rights and remedies upon default. The
rights and remedies of the holder as provided in this Note shall be cumulative
and may be pursued singly, successively or together, in the sole discretion of
the holder. The failure to exercise any such right or remedy shall not be a
waiver or release of such rights or remedies or the right to exercise any of
them at another time.

 

This Note is to be governed and construed in accordance with the laws of the
State of Delaware.

 

IN TESTIMONY WHEREOF, the Maker has caused this instrument to be executed in its
corporate name by a duly authorized officer as of the day and year first above
written.

 

 

VCAMPUS CORPORATION

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

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EXHIBIT 2.2.2B

 

PROMISSORY NOTE

 

Reston, VA

                , 2006

 

$150,000.00

 

FOR VALUE RECEIVED the undersigned VCampus Corporation, a Delaware corporation
(the “Maker”), promises to pay to Prosoft Learning Corporation (“Prosoft”) or
its permitted assigns the principal sum of One Hundred and Fifty Thousand
Dollars ($150,000.00), in immediately available funds, together with simple
interest from the date of issuance until December 31, 2006 at the rate of six
percent (6%) per annum, on which date the principal and interest which has
accrued thereon will be capitalized into a new principal amount and the
undersigned promises to pay this new capitalized amount, together with interest
at the rate of six percent (6%) per annum on the unpaid balance from January 1,
2007 until paid, both principal and accrued interest payable in lawful money of
the United States of America, at the office of Prosoft, or at such place as the
legal holder hereof may designate in writing. For the sake of clarity, interest
shall be calculated based upon a presumed 360-day year with each month having 30
days. The entire principal and interest on the capitalized amount shall be due
and payable as follows:

 

In six (6) equal monthly installments of principal and accrued interest with the
first installment due on January 1, 2007 and the remaining installments due and
payable on the first day of each successive month with a final payment due and
payable on June 1, 2007.

 

This Note may be prepaid in full or in part at any time without penalty or
premium.

 

Each of the following shall constitute a default under this Note:

 

(a)           the failure of the Maker to make any payments when due on this
Note and such failure continues for more than ten (10) days past the due date.

 

(b)           the failure of the Maker to comply with or to perform, in any
material respect, when due any other term, obligation, covenant or condition
contained in this Note. If any failure, other than a failure to pay money, is
curable, it may be cured (and no default will have occurred) if the Maker after
receiving written notice from the holder demanding cure of such failure:
(i) cures the failure within thirty (30) days; or (ii) if the cure requires more
than thirty (30) days, immediately initiates steps sufficient to cure the
failure and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonable; and

 

(c)           this Note, the Reorganization Agreement or any provision thereof
shall, for any reason, not be valid and binding on the Maker, or not be in full
force and effect, or shall be declared to be null and void; the validity or
enforceability of this Note or the Reorganization Agreement shall be contested
by Maker; except with respect to any duly exercised set-off rights of the Maker
hereunder or under the Reorganization Agreement, the Maker shall deny that it
has any or further liability or obligation under this Note or the

 

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Reorganization Agreement; or any default or breach by the Maker in any material
respect under any provision of the Reorganization Agreement shall continue after
the applicable grace or cure period, if any, specified in the Reorganization
Agreement.

 

(d)           the sale of substantially all of the assets or ownership of the
Maker to an unaffiliated third party or a merger or other change of control
transaction in which both:  (i) holders of the fully diluted equity of the Maker
immediately prior to the transaction hold less than 50% of the fully diluted
equity of the maker as of immediately after the transaction; and (ii) the Board
of Directors of the Maker immediately prior to the transaction comprise less
than 50% of the members of the Board of Directors of the surviving corporation
in the transaction.

 

(e)           the dissolution or termination of the Maker’s existence, the
Maker’s insolvency, appointment of a receiver for any significant part of the
Maker’s property, any assignment by the Maker for the benefit of creditors, any
type of creditor workout with respect to the Maker, or the commencement of any
proceeding under any bankruptcy or insolvency laws against the Maker (which is
not dismissed within 30 days).

 

(f)            (i) the Maker shall fail to pay any other indebtedness of the
Maker when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and the maturity of such indebtedness, but
only if in excess of $1,500,000, has been accelerated; (ii) the Maker shall fail
to perform or observe any term or covenant contained in any agreement or
instrument relating to such indebtedness, when required to be performed or
observed, and such failure shall continue after any applicable grace or cure
period, if any, specified in such agreement or instrument, and would result in
acceleration of the maturity of such indebtedness, but only if in excess of
$1,500,000, unless waived by the lender; or (iii) any such indebtedness, but
only if in excess of $1,500,000, shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or

 

(g)  The Maker shall have any final judgment(s) outstanding against it for the
payment of $1,500,000 or more, and such judgment(s) shall remain unstayed, in
effect, and unpaid for the period of time after which the judgment holder
may cause the creation of liens against or seizure of any of the Maker’s
property.

 

The holder of this Note may declare the entire balance hereunder to be
immediately due and payable upon default (or at such time as the Maker receives
net cash proceeds, determined in accordance with generally accepted accounting
principles, of at least $5,000,000 from the sale of securities of the Maker
pursuant to a financing transaction (or series of integrated transactions)),
whereupon the unpaid capitalized principal balance and any accrued interest
thereupon shall be due and payable without diligence, presentment, demand,
protest, notice of protest or intent to

 

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accelerate, notice of acceleration or notice of any kind, all of which are
expressly waived by Maker.

 

The balance due under this Note is subject to automatic adjustment and/or set
off pursuant to the terms of Section 2.3 and 2.4 of the Acquisition and
Reorganization Agreement dated April 11, 2006, by and between the Maker and
Prosoft (the “Reorganization Agreement”).

 

All parties to this Note, including the Maker and any sureties, endorsers, or
guarantors hereby waive protest, presentment, notice of dishonor, and notice of
acceleration of maturity and agree to continue to remain bound for the payment
of principal, interest and all other sums due under this Note notwithstanding
any change or changes by way of release, surrender, exchange, modification or
substitution of any security for this Note or by way of any extension or
extensions of time for the payment of principal and interest; and all such
parties waive all and every kind of notice of change or changes and agree that
the same may be made without notice or consent of any of them.

 

Upon default the holder of this Note may employ an attorney to enforce the
holder’s rights and remedies and the Maker, principal, surety, guarantor and
endorsers of this Note hereby agree to pay to the holder reasonable attorneys’
fees not exceeding a sum equal to fifteen percent (15%) of the outstanding
balance owing on the Note, plus all other reasonable expenses incurred by the
holder in exercising any of the holder’s rights and remedies upon default. The
rights and remedies of the holder as provided in this Note shall be cumulative
and may be pursued singly, successively or together, in the sole discretion of
the holder. The failure to exercise any such right or remedy shall not be a
waiver or release of such rights or remedies or the right to exercise any of
them at another time.

 

This Note is to be governed and construed in accordance with the laws of the
State of Delaware.

 

IN TESTIMONY WHEREOF, the Maker has caused this instrument to be executed in its
corporate name by a duly authorized officer as of the day and year first above
written.

 

 

 

VCAMPUS CORPORATION

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

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