**Exhibit10.94**

 

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

 

Issuance Date: March 23, 2004

 

**VCAMPUSCORPORATION**

 

**PURCHASEWARRANT**

 

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

 

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

 

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

 

# Section 1.       Registration.  The Company shall maintain books for thetransfer and registration of the Warrant. Upon the initial issuance of the Warrant, the Company shall issue andregister the Warrant in the name of the Warrantholder.

#  

# Section 2.       Transfers.  As provided herein, this Warrant may betransferred only pursuant to a registration statement filed under theSecurities Act of 1933, as amended

 

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# (“Securities Act”) or an exemption from registrationthereunder.  Subject to suchrestrictions, the Company shall transfer this Warrant from time to time, uponthe books to be maintained by the Company for that purpose, upon surrender hereoffor transfer properly endorsed or accompanied by appropriate instructions fortransfer upon any such transfer, and a new Warrant shall be issued to thetransferee and the surrendered Warrant shall be canceled by the Company.

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# Section 3.       (a)Exercise of Warrant.  Subject tothe provisions hereof, the Warrantholder may exercise this Warrant in whole orin part at any time and from time to time on and after the Exercise Date andending on the Expiration Date, upon surrender of the original of this Warrant,together with delivery of the duly executed Warrant exercise form attachedhereto (the “Exercise Agreement”) (which may be by fax), to the Company duringnormal business hours on any business day at the Company’s principal executiveoffices (or such other office or agency of the Company as it may designate bynotice to the holder hereof), and upon payment to the Company in cash, bycertified or official bank check or by wire transfer for the account of theCompany of the Warrant Price for the Warrant Shares specified in the ExerciseAgreement.  The Warrant Shares sopurchased shall be deemed to be issued to the holder hereof or such holder’sdesignee, as the record owner of such shares, as of the close of business onthe date on which the completed Exercise Agreement and original of this Warrantshall have been delivered to the Company (or such later date as may bespecified in the Exercise Agreement). Certificates for the Warrant Shares so purchased, representing theaggregate number of shares specified in the Exercise Agreement, shall be deliveredto the holder hereof within a reasonable time, not exceeding five (5) TradingDays (as defined in the Notes) , after this Warrant shall have been soexercised.  The certificates sodelivered shall be in such denominations as may be requested by the holderhereof and shall be registered in the name of such holder or such other name asshall be designated by such holder.  Ifthis Warrant shall have been exercised only in part, then, unless this Warranthas expired, the Company shall (subject to Section 3(b) below), at its expense,at the time of delivery of such certificates, deliver to the holder a newWarrant representing the number of shares with respect to which this Warrantshall not then have been exercised.  Inlieu of delivering physical certificates representing the shares of CommonStock issuable upon exercise of this Warrant, provided the Company’s transferagent is participating in the Depository Trust Company (“**DTC**”) Fast AutomatedSecurities Transfer (“**FAST**”) program and such certificates can beissued without restrictive legends in accordance with applicable securitieslaws, upon request of the Warrantholder, the Company shall use commerciallyreasonable efforts to cause its transfer agent to electronically transmit suchshares issuable upon exercise to the Warrantholder (or its designee), bycrediting the account of the Warrantholder’s (or such designee’s) prime brokerwith DTC through its Deposit Withdrawal Agent Commission system (provided thatthe same time periods herein as for stock certificates shall apply).

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

 

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

 

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

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

 

For purposes of the foregoing formula:

 

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

 

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

 

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

 

# Section 4.       Compliancewith the Securities Act of 1933. Neither this Warrant nor the Common Stock issued upon exercise hereofnor any other security issued or issuable upon exercise of this Warrant may beoffered or sold except as provided in this Warrant and in conformity with theSecurities Act of 1933, as amended, and then only against receipt of anagreement of such person to whom such offer of sale is made to comply with theprovisions of this Section 4 with respect to any resale or other disposition ofsuch security.  The Company may causethe legend set forth on the first page of this Warrant to be set forth on eachWarrant or similar legend on any security issued or issuable upon exercise ofthis Warrant until the Warrant Shares have been registered for resale under theRegistration Rights Agreement or until Rule 144 is available, unless counselfor the Company is of the opinion as to any such security that such legend isunnecessary.

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# Section 5.       Paymentof Taxes.  The Company will pay anydocumentary stamp taxes attributable to the initial issuance of Warrant Sharesissuable upon the exercise of the Warrant; provided, however, that the Companyshall not be required to pay any tax or taxes which may be payable in respectof any transfer involved in the issuance or delivery of any certificates forWarrant Shares in a name other than that of the registered holder of thisWarrant in respect of which such shares are issued.  The holder shall be responsible for income taxes due underfederal or state law, if any such tax is due.

 

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# Section 6.       Mutilatedor Missing Warrants.  In case thisWarrant shall be mutilated, lost, stolen, or destroyed, the Company shall issuein exchange and substitution of and upon cancellation of the mutilated Warrant,or in lieu of and substitution for the Warrant lost, stolen or destroyed, a newWarrant of like tenor and for the purchase of a like number of Warrant Shares,but only upon receipt of evidence reasonably satisfactory to the Company ofsuch loss, theft or destruction of the Warrant, and with respect to a lost,stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto,if reasonably requested by the Company.

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# Section 7.       Reservationof Common Stock.  The Company herebyrepresents and warrants that there have been reserved, and the Company shall atall applicable times keep reserved, out of the authorized and unissued CommonStock, a number of shares sufficient to provide for the exercise of the rightsof purchase represented by the Warrant in full (without regard to anyrestrictions on beneficial ownership contained herein), and the transfer agentfor the Common Stock, including every subsequent transfer agent for the CommonStock or other shares of the Company’s capital stock issuable upon the exerciseof any of the right of purchase aforesaid (“Transfer Agent”), shall beirrevocably authorized and directed at all times to reserve such number ofauthorized and unissued shares of Common Stock as shall be requisite for suchpurpose.  The Company agrees that allWarrant Shares issued upon exercise of the Warrant in accordance with its termsshall be, at the time of delivery of the certificates for such Warrant Shares,duly authorized, validly issued, fully paid and non-assessable shares of CommonStock of the Company.  The Company willkeep a conformed copy of this Warrant on file with its Transfer Agent.  The Company will supply from time to timethe Transfer Agent with duly executed stock certificates required to honor theoutstanding Warrant.

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# Section 8.       WarrantPrice.  The Warrant Price, subjectto adjustment as provided in Section 9, shall, if payment is made in cash or bycertified check, be payable in lawful money of the United States of America.

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# Section 9.       Adjustmentof Warrant Exercise Price and Number Of Shares.  The Warrant Price and the number of shares of Common Stockissuable upon exercise of this Warrant shall be adjusted from time to time asfollows:

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

 

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b.             EFFECTON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Warrant Price under Section9(a) above, the following shall be applicable:

 

(i)            ISSUANCE OF OPTIONS.  If the Company in any manner grants anyOptions (other than Excluded Issuances) and the lowest price per share forwhich one share of Common Stock is issuable upon the exercise of any suchOption or upon conversion, exchange or exercise of any Convertible Securitiesissuable upon exercise of any such Option is less than the Warrant Price ineffect immediately prior to such Dilutive Issuance, then such share of CommonStock shall be deemed to be outstanding and to have been issued and sold by theCompany at the time of the granting or sale of such Option for such price pershare.  For purposes of this Section 9(b)(i),the “lowest price per share for which one share of Common Stock is issuableupon exercise of any such Option or upon conversion, exchange or exercise ofany Convertible Securities issuable upon exercise of any such Option” shall beequal to the sum of the lowest amounts of consideration (if any) received orreceivable by the Company with respect to any one share of Common Stock uponthe granting or sale of the Option, upon exercise of the Option and uponconversion, exchange or exercise of any Convertible Security issuable uponexercise of such Option.  No furtheradjustment of the Warrant Price shall be made upon the actual issuance of suchCommon Stock or of such Convertible Securities upon the exercise of suchOptions or upon the actual issuance of such Common Stock upon conversion,exchange or exercise of such Convertible Securities.

 

(ii)           ISSUANCE OF CONVERTIBLESECURITIES.  If the Company in anymanner issues or sells any Convertible Securities (other than ExcludedIssuances) and the lowest price per share for which one share of Common Stockis issuable upon such conversion, exchange or exercise thereof is less than theWarrant Price in effect immediately prior to such Dilutive Issuance, then suchshare of Common Stock shall be deemed to be outstanding and to have been issuedand sold by the Company at the time of the issuance or sale of such ConvertibleSecurities for such price per share. For the purposes of this Section 9(b)(ii), the “lowest price per sharefor which one share of Common Stock is issuable upon such conversion, exchangeor exercise” shall be equal to the sum of the lowest amounts of consideration(if any) received or receivable by the Company with respect to one share ofCommon Stock upon the issuance or sale of the Convertible Security and uponconversion, exchange or exercise of such Convertible Security.  No further adjustment of the Warrant Priceshall be made upon the actual issuance of such Common Stock upon conversion,exchange or exercise of such Convertible Securities, and if any such issue orsale of such Convertible Securities is made upon exercise of any Options forwhich adjustment of the Warrant Price had been or are to be made pursuant toother provisions of this Section 9(b), no further adjustment of the Warrant Priceshall be made by reason of such issue or sale. Notwithstanding anything to the contrary herein, in no event shall anadjustment to the Warrant Price be made retroactively with respect to anyportion of the Warrant exercised for Common Stock or otherwise terminated priorto the actual date of the dilutive issuance or change.  In addition, to clarify for purposes of thisSection 9, if an Option or Convertible Security has a price reset or similarprovision that would cause the price to adjust based on a future event orcontingency, then the “lowest price per share for which one share of CommonStock is issuable upon the exercise of any such Option or upon conversion,exchange or exercise of any

 

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

 

(iii)          CHANGE IN OPTION PRICE OR RATE OFCONVERSION.  If the purchase or exerciseprice provided for in any Options, the additional consideration, if any,payable upon the issue, conversion, exchange or exercise of any ConvertibleSecurities, or the rate at which any Convertible Securities are convertibleinto or exchangeable or exercisable for Common Stock changes at any time (otherthan Excluded Issuances, in each case), the Warrant Price in effect at the timeof such change shall be adjusted to the Warrant Price which would have been ineffect at such time had such Options or Convertible Securities provided forsuch changed purchase price, additional consideration or changed conversionrate, as the case may be, at the time initially granted, issued or sold and thenumber of shares of Common Stock acquirable hereunder shall be correspondinglyreadjusted.  For purposes of thisSection 9(b)(iii), if the terms of any Option or Convertible Security that wasoutstanding as of the date of issuance of this Warrant are changed in themanner described in the immediately preceding sentence, then such Option orConvertible Security and the Common Stock deemed issuable upon conversion,exchange or exercise thereof shall be deemed to have been issued as of the dateof such change.  On the expiration ofany Option or Convertible Security not exercised, the applicable Warrant Pricethen in effect shall forthwith be increased to the Warrant Price that wouldhave been in effect at the time of such expiration had such Stock PurchaseRights or Convertible Securities never been issued.  No adjustment shall be made if such adjustment would increase theapplicable Warrant Price by an amount in excess of the adjustment originallymade to the Warrant Price in respect of the issue, sale or grant of theapplicable Option or Convertible Security.

 

c.             CERTAINEVENTS.

 

## (i)            If the Company orany of its subsidiaries shall at any time or from time to time while theWarrant is outstanding, pay a dividend or make a distribution on its capitalstock in shares of Common Stock, subdivide its outstanding shares of CommonStock into a greater number of shares or combine its outstanding shares into asmaller number of shares or issue by reclassification of its outstanding sharesof Common Stock any shares of its capital stock (including any suchreclassification in connection with a consolidation or merger in which theCompany is the continuing corporation), then the number of Warrant Sharespurchasable upon exercise of the Warrant and the Warrant Price in effectimmediately prior to the date upon which such change shall become effective,shall be adjusted by the Company so that the Warrantholder thereafterexercising the Warrant shall be entitled to receive the number of shares ofCommon Stock or other capital stock which the Warrantholder would have receivedif the Warrant had been exercised immediately prior to such event.  Such adjustment shall be made successivelywhenever any event listed above shall occur.

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

 

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Warrantholder shall thereafter have the right topurchase and receive upon the basis and upon the terms and conditions hereinspecified and in lieu of the Warrant Shares immediately theretofore issuableupon exercise of the Warrant, such shares of stock, securities or assets aswould have been issuable or payable with respect to or in exchange for a numberof Warrant Shares equal to the number of Warrant Shares immediately theretoforeissuable upon exercise of the Warrant, had such reorganization,reclassification, consolidation, merger, sale, transfer or other dispositionnot taken place, and in any such case appropriate provision shall be made withrespect to the rights and interests of each Warrantholder to the end that theprovisions hereof (including, without limitations, provision for adjustment ofthe Warrant Price) shall thereafter be applicable, as nearly equivalent as maybe practicable in relation to any shares of stock, securities or propertiesthereafter deliverable upon the exercise hereof.  The Company shall not effect any such consolidation, merger, sale,transfer or other disposition unless prior to or simultaneously with theconsummation thereof the successor corporation (if other than the Company)resulting from such consolidation or merger, or the corporation purchasing orotherwise acquiring such assets or other appropriate corporation or entityshall assume, by written instrument executed and delivered to the Company, theobligation to deliver to the holder of the Warrant such shares of stock,securities or assets as, in accordance with the foregoing provisions, suchholder may be entitled to purchase and the other obligations under thisWarrant.  The provisions of thisparagraph (ii) shall similarly apply to successive reorganizations,reclassifications, consolidations, mergers, sales, transfers or otherdispositions.

 

(iii)          In case the Company shall fix a recorddate for the making of a distribution to all holders of Common Stock (includingany such distribution made in connection with a consolidation or merger inwhich the Company is the continuing corporation) of evidences of indebtednessor assets or subscription rights or warrants, the Warrant Price to be in effectafter such record date shall be determined by multiplying the Warrant Price ineffect immediately prior to such record date by a fraction, the numerator ofwhich shall be the total number of shares of Common Stock outstandingmultiplied by the Closing Price per share of Common Stock (as defined below),less the fair market value (on a per share basis) (as determined by theCompany’s Board of Directors in good faith) of said assets or evidences ofindebtedness so distributed, or of such subscription rights or warrants, andthe denominator of which shall be the total number of shares of Common Stockoutstanding multiplied by such Closing Price per share of Common Stock.  Such adjustment shall be made successivelywhenever such a record date is fixed. “Closing Price” of the Common Stock shall be the closing sale price pershare of the Common Stock as reported by the Principal Market on the TradingDay immediately preceding the date on which such value is beingdetermined.  An adjustment shall becomeeffective immediately after the record date in the case of each dividend ordistribution and immediately after the effective date of each other event whichrequires an adjustment.

 

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

 

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(v)           In the event of any adjustmentpursuant to this Section 9(c) in the number of Warrant Shares issuablehereunder upon exercise, the Warrant Price shall be inversely proportionatelyincreased or decreased, as the case may be, such that the aggregate purchaseprice for Warrant Shares upon full exercise of this Warrant shall remain thesame.  Similarly, in the event of anyadjustment in the Warrant Price, the number of Warrant Shares issuablehereunder upon exercise shall be inversely proportionately increased ordecreased, as the case may be, such that the aggregate purchase price forWarrant Shares upon full exercise of this Warrant shall remain the same.

 

d.               FAILURE TO ACHIEVE MILESTONE.  In the event that following ShareholderApproval, the Milestone (as defined herein) is not achieved, the number ofWarrant Shares shall be increased from[               ]to [a number of shares equal to 50% of the original principal amount ofHolder’s Series A Note or Series B Note, as applicable, divided by $1.38(rounding down to the nearest whole share)] and the Warrant Price shall bereduced from $1.63 to $1.38 subject to adjustment as provided in this Section9, as if such increase in the number of Warrant Shares and decrease in WarrantPrice had taken effect on the Issuance Date.

 

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

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

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Section 12.             Notices to Warrantholder.  Upon the happening of any event requiring anadjustment of the Warrant Price, the Company shall forthwith give writtennotice thereof to the Warrantholder at the address appearing in the records ofthe Company, stating the adjusted Warrant Price and the adjusted number ofWarrant Shares resulting from such event and setting forth in reasonable detailthe method of calculation and the facts upon which such calculation isbased.  In the event of a dispute withrespect to any such calculation, the certificate of the Company’s independentcertified public accountants shall be conclusive evidence of the correctness ofany computation made, absent manifest error. Failure to give such notice to the Warrantholder or any defect thereinshall not affect the legality or validity of the subject adjustment.  At the Warrantholder’s request, the Companyshall deliver to the Warrantholder as of a requested date a notice specifyingthe Warrant Price and the number of Warrant Shares into which this Warrant isexercisable as of such date.

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Section 13.             Identity of Transfer Agent.  The Transfer Agent for the Common Stock isWachovia Bank.  Forthwith upon theappointment of any subsequent transfer agent for the Common Stock or othershares of the Company’s capital stock issuable upon the exercise of the rightsof purchase represented by the Warrant, the Company will fax to theWarrantholder a statement setting forth the name and address of such transferagent.

 

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

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VCampus Corporation

1850 Centennial Park Drive

Suite 200

Reston, VA 20191

Attention:  CEO

 

With a copy to:

 

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, North Carolina 27607

Attn:  Kevin A.Prakke, Esq.

 

or such otheraddress as the Company may specify in writing by notice to the Warrantholdercomplying as to delivery with the terms of this Section 14.

 

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

 

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

 

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

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

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

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

 

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upon exercise pursuant tothe terms hereof shall not exceed a number that, when added to the total numberof shares of Common Stock deemed beneficially owned by such holder at such time(other than by virtue of the ownership of securities or rights to acquiresecurities (including the Notes and Warrant Shares) that have limitations onthe holder’s right to convert, exercise or purchase similar to the limitationset forth herein), together with all shares of Common Stock deemed beneficiallyowned (other than by virtue of the ownership of securities or rights to acquiresecurities that have limitations on the right to convert, exercise or purchasesimilar to the limitation set forth herein) by the Warrantholder’s “affiliates”at such time (as defined in Rule 144 of the Act) (“Aggregation Parties”) thatwould be aggregated for purposes of determining whether a group under Section13(d) of the Securities Exchange Act of 1934, as amended, exists, would exceed9.9% of the total issued and outstanding shares of the Common Stock (the“Restricted Ownership Percentage”), unless, at the time such additional sharesof Common Stock may be acquired by the Holder upon any exercise pursuant to theterms hereof, Holder has already exceeded the Restricted Ownership Percentage.  Each holder shall have the right (x) atany time and from time to time to reduce its Restricted Ownership Percentageimmediately upon notice to the Company and (y) (subject to waiver) at anytime and from time to time, to increase its Restricted Ownership Percentageimmediately in the event of the announcement as pending or planned, of a Changein Control Transaction (as defined in the Notes).

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Section 19.             Replacement Warrants.  The Company agrees that within ten (10)Trading Days after any request from time to time of the Warrantholder, it shalldeliver to such holder a new Warrant in substitution of this Warrant which isidentical in all respects except that the then Warrant Price shall beappropriately specified in the Warrant, and the Warrant shall specify the fixednumber of Warrant Shares into which this Warrant is then exercisable.  Such changes are intended not as amendmentsto the Warrant but only as clarification of the foregoing numbers forconvenience purposes, and such changes shall not affect any provisionsconcerning adjustments to the Warrant Price or number of Warrant Sharescontained herein.

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Section 20.             Absolute Obligation to IssueWarrant Shares.  The Company’sobligations to issue and deliver Warrant Shares in accordance with the terms hereofare absolute and unconditional, irrespective of any action or inaction by theholder hereof to enforce the same, any waiver or consent with respect to anyprovision hereof, the recovery of any judgment against any Person or any actionto enforce the same, or any setoff, counterclaim, recoupment, limitation ortermination, or any breach or alleged breach by the holder hereof or any otherPerson of any obligation to the Company or any violation or alleged violationof law by the holder or any other Person, and irrespective of any othercircumstance which might otherwise limit such obligation of the Company to theholder hereof in connection with the issuance of Warrant Shares.  The Company will at no time close itsshareholder books or records in any manner which interferes with the timelyexercise of this Warrant.

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Section 21.             Assignment, etc.  The Warrantholder may assign or transferthis Warrant to any transferee only with the prior written consent of theCompany, which may not be unreasonably withheld or delayed, provided that theWarrantholder may assign or transfer this Warrant in whole to any of suchWarrantholder’s affiliates that is not a competitor or vendor of the Companywithout the consent of the Company.  TheWarrantholder shall notify the Company of any such assignment or transferpromptly.  This Warrant shall be bindingupon the Company

 

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and its successors andshall inure to the benefit of the Warrantholder and its successors andpermitted assigns.

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

 

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

 

(i)            “Approved Stock Plan” meansany employee benefit plan, stock incentive plan or other similar plan orarrangement which has been approved by the Board of Directors of the Company ora duly authorized committee thereof, pursuant to which the Company’s securitiesmay be issued to any employee, consultant, officer or director for servicesprovided to the Company.

 

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

 

(iii)          “BusinessDay” means any day other than Saturday, Sunday or other day on whichcommercial banks in the City of New York are authorized or required by law toremain closed.

 

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

 

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

 

(v)           “Convertible Securities” meansany stock or securities (other than Options) directly or indirectly convertibleinto or exchangeable or exercisable for Common Stock.

 

(vi)          “Excluded Issuances” meansshares of Common Stock (i) issued or deemed to have been issued by the Companyin connection with an Approved Stock Plan (regardless of the applicableexercise or conversion price), (ii) issued or deemed to have been issued uponexercise of the Warrants, issued upon the issuance or conversion of the Notesor otherwise issued in connection with the transactions contemplated in thePurchase Agreement (including any securities issued or issuable to theCollateral Agent or any of its affiliates in connection with consultingservices to be provided to the Company); (iii) issued upon exercise of Optionsor Convertible Securities which are outstanding on the date immediatelypreceding the Warrant Date, provided that such issuance of shares of CommonStock upon exercise of such Options or Convertible Securities is made pursuantto the terms of such Options or Convertible Securities in effect on the dateimmediately preceding the Warrant Date and such Options or ConvertibleSecurities are not amended after the date immediately preceding the WarrantDate other than with respect to Options originally issued pursuant to anApproved Stock Plan, (iv) issued pursuant to a Strategic Financing; (v) issuedto the public pursuant to an underwritten offering registered pursuant to theSecurities Act (but in all events excluding offerings pursuant to “equitylines” or similar products) or (vi) issued or deemed to be issued by theCompany with the prior approval of the Required Holders.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(iv)          “ShareholderApproval” means the approval of the stockholders of the Company at a dulyconvened meeting of stockholders of the Company, for the issuance of allSecurities as defined in the Purchase Agreement, including the issuance of theWarrants.

 

(xv)         “StrategicFinancing” shall mean the issuance of Common Stock or Options orConvertible Securities of the Company in connection with any acquisition by theCompany, by whatever means, of any business, assets or technologies, or to anystrategic investor, vendor, customer, lease or similar arrangement, the primarypurpose of which is not to raise equity capital.

 

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

 
|   | **VCAMPUS CORPORATION** |
|--------|-------------------------|
|   |                    |
|   |                    |
|   |                    |
|   | By:                     |   |   |
|   | Name:                   |
|   | Title:                  |

 

 

*Attest:*

 
| Sign:       |   |   |
|-------------|--------|--------|
| Print Name: |

 

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**VCAMPUSCORPORATIONWARRANT EXERCISE FORM**

 

VCampus Corporation

1850 Centennial Park Drive

Suite 200

Reston, VA  20191

Fax: (703) 654-7319

Attention: CEO

 

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

 
|    |   |
|---------|--------|
| Name    |   |
|    |   |
| Address |   |
|    |   |
|    |   |

 

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

 

In lieu of delivering physical certificatesrepresenting the Warrant Shares purchasable upon exercise of this Warrant,provided the Company’s transfer agent is participating in the Depository TrustCompany (“DTC”) Fast Automated Securities Transfer (“FAST”) program and aregistration statement covering the resale of the Warrant Shares is theneffective or an exemption from registration is available in the opinion ofCompany counsel, upon request of the Holder, the Company shall use its bestefforts to cause its transfer agent to electronically transmit the WarrantShares issuable upon conversion or exercise to the undersigned, by creditingthe account of the undersigned’s prime broker with DTC through its DepositWithdrawal Agent Commission (“DWAC”) system.

 
| Dated: |                |    | Signature: |   |   |
|--------|---------------------|---------|------------|--------|--------|
|   |                |    |
|   | Name (please print) |
|   |                |    |
|   |                | Address |
|        |                     |         |            |        |        |  |  |  |

 

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