Document:

Exhibit 10.112

 

REGISTRATION
RIGHTS AGREEMENT

 

Registration
Rights Agreement, dated effective as of March 22, 2006, by and between VCampus
Corporation, a Delaware corporation (the “Company”), and each of the purchasers
set forth on Schedule A attached hereto (each individually, a “Purchaser” and
collectively, the “Purchasers”).

 

W I T N E S S E T H :

 

WHEREAS,
Company and each Purchaser have entered into a Subscription Agreement dated on
or about the date hereof (the “Purchase Agreement”), pursuant to which the
Company has agreed to issue and sell to the Purchasers, and the Purchasers have
agreed to purchase from the Company shares of Series B-1 Preferred Stock of the
Company (the “Shares”) and Warrants exercisable for common stock of the Company
(the “Warrants”); and

 

WHEREAS,
in order to induce the Purchasers to enter into the Purchase Agreement and to
purchase the Shares and Warrants, the Company has agreed to provide
registration rights with respect thereto;

 

NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter
contained, it is agreed as follows:

 

1.                                       Definitions.  Unless otherwise defined herein,
terms used herein shall have the meaning ascribed to them in the Purchase
Agreement, and the following shall have the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):

 

“Agreement”
shall mean this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be in effect at the
time such reference becomes operative.

 

“Warrant
Shares” shall mean shares of common stock issued upon exercise of the Warrants.

 

“Holder”
shall mean (i) each Purchaser, and (ii) any other Person holding
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement. 

 

“Majority
Holders” shall mean the Holders of a majority of the Registrable Securities.

 

“NASD”
shall mean the National Association of Securities Dealers, Inc., or any
successor corporation thereto.

 

 

“Piggy-back
Registration” shall have the meaning ascribed to it in Section 3.

 

“Registrable
Securities” shall mean the shares of common stock issuable pursuant to the
Purchase Agreement, including the Warrant Shares, the shares of common stock
issuable upon conversion of the Series B-1 Preferred Stock and shares of common
stock which the Purchasers hereafter obtains the right to acquire pursuant to
any dividend, distribution, stock split or similar transaction or rights to the
extent that all of the holders of the common stock received shares of common
stock; provided, however, that the aforementioned shares shall only be treated
as Registrable Securities if and for so long as they have not been sold to or
through a broker or underwriter in a public distribution, or only until the
date on which all of the Registrable Securities can be disposed of in any three
month period pursuant to Rule 144 (or any similar or analogous rule under
the Securities Act of 1933).

 

“Registration
Statement” shall mean a registration statement filed by the Company with the
U.S. Securities and Exchange Commission for a public offering and sale of
securities of the Company (other than a Registration Statement on Form S-4 or
S-8 or any successor form for securities to be offered in a transaction of the
type referred to in Rule 145 under the Securities Act or to employees of
Company pursuant to any employee benefit plan, respectively).

 

“Warrants”
shall mean the warrants to purchase shares of the Company’s common stock issued
to the Purchasers on the date hereof.

 

2.                                       Mandatory Registration / Penalties for Delayed
Effectiveness.  Within 90 days from the date hereof, the
Company shall file a Registration Statement covering the resale of the
Registrable Securities and shall thereafter use its best efforts to effect the
registration under the Securities Act of the Registrable Securities for sale
within 90 days after such filing, all to the extent required to permit the
disposition of the Registrable Securities so registered for a period of up to
two years after the Registrable Shares first become issuable upon conversion or
exercise of the Series B-1 Preferred Stock and the related Warrants.  In addition, if the number of Registrable
Securities increases as a result of an adjustment to the Conversion Price, then
the Company shall be required to file an additional Registration Statement
covering such additional shares (the “Additional Registrable Securities”)
within 15 days of such increase and shall thereafter use its best efforts to
effect the registration within 90 days after such filing.  If (A) the Registration Statement covering
Registrable Securities is not filed within 90 days following the Closing Date
(the “Filing Date”) or is not declared effective by the SEC within 180 days
following the Closing Date, or within 90 days of filing in the case of
Additional Registrable Securities (the “Registration Date”), or (B) except as
may be provided in Section 7(a) below for an allowed Suspension Period, after a
Registration Statement has been declared effective by the SEC, sales cannot be
made pursuant to such Registration Statement for any reason (including without
limitation by reason of a stop order, or the Company’s failure to update the
Registration Statement) but except as excused pursuant to 7(a) below or in the
event the Registrable Securities are not then issuable, then the Company will
pay to the Purchaser, as liquidated damages and not as a penalty, cash in

 

 

the amount of one percent (1%) of the purchase price paid by the
Purchaser for the Shares for each 30 day calendar period during which any of
the events described in (A) or (B) above occurs and is continuing (the “Blackout
Period”).  Each such issuance shall be
made within five (5) days of the end of each month of the Blackout Period until
the termination of the Blackout Period. 
The Blackout Period shall terminate upon the effectiveness of the
applicable Registration Statement in the case of (A) and (B) above.

 

3.                                       Piggy-back Registration.  If the
Company at any time proposes to file a registration statement under the
Securities Act on any form (other than a Registration Statement on Form S-4 or
S-8 or any successor form for securities to be offered in a transaction of the
type referred to in Rule 145 under the Securities Act or to employees of
Company pursuant to any employee benefit plan, respectively) for the general
registration of securities (a “Piggy-back Registration Statement”), it will
give written notice to all Holders at least 15 days before the initial filing
with the SEC of such Piggy-back Registration Statement, which notice shall set
forth the intended method of disposition of the securities proposed to be
registered by Company.  The notice shall
offer to include in such filing the aggregate number of shares of Registrable
Securities as such Holders may request.

 

Each
Holder desiring to have Registrable Securities registered under this
Section 3 shall advise Company in writing within 5 Business Days after the
date of receipt of such offer from Company, setting forth the amount of such
Registrable Securities for which registration is requested.  Company shall thereupon include in such
filing the number of shares of Registrable Securities for which registration is
so requested, subject to the next sentence, and shall use its best efforts to
effect registration under the Securities Act of such shares.  In connection with any registration subject
to this Section 3, which is to be effected in a firm commitment underwriting,
Company will not be required to include Registrable Securities in such
underwriting unless the Holder of such Registrable Securities accepts the terms
and conditions of the underwriting agreement which is agreed upon between
Company and the managing underwriter selected by Company, so long as such
underwriting agreement conforms to industry standards and practices and the
obligations and liabilities imposed on the Holders under such agreement are
customary for the stockholders selling securities in an underwritten
offering.  If the managing underwriter of
a proposed public offering shall advise Company in writing that, in its
opinion, the distribution of the Registrable Securities requested to be
included in the registration concurrently with the securities being registered
by Company would materially and adversely affect the distribution of such
securities by Company, then all selling security holders with piggy-back
registration rights shall reduce the amount of securities each intended to
distribute through such offering on a pro rata basis.  Except as otherwise provided in Section 5,
all expenses of such registration shall be borne by Company.  The Company shall have the right to terminate
or withdraw any Registration Statement initiated under this Section 3 prior to
the effectiveness of such Registration Statement whether or not the Holders
have elected to include Registrable Securities in such Registration Statement.

 

 

4.                                       Registration Procedures. If the Company is required by the provisions of
Section 2 or 3 to use its best efforts to effect the registration of any of its
securities under the Securities Act, Company will, as expeditiously as
possible:

 

(a)                                  prepare
and file with the SEC a Registration Statement with respect to such securities
and use its best efforts to cause such Registration Statement to become and
remain effective for a period of time required for the disposition of such
securities by the holders thereof, but not to exceed two years (or, with
respect to any underwritten offering, such shorter period as the underwriters
need to complete the distribution of the registered offering or, with respect
to a shelf Registration Statement on a form under the Securities Act relating
to the offer and sale of Registrable Securities from time to time in accordance
with Rule 415, such longer period as may be required to dispose of the
Registrable Securities covered by such Registration Statement);

 

(b)                                 prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of all
securities covered by such Registration Statement until the earlier of such
time as all of such securities have been disposed of in a public offering or
the expiration of two years;

 

(c)                                  furnish,
to such selling security holders such number of copies of a summary prospectus
or other prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such selling
security holders may reasonably request;

 

(d)                                 use
its best efforts to register or qualify the securities covered by such
Registration Statement under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as each holder of such
securities shall request (provided, however, that Company shall
not be obligated to qualify as a foreign corporation to do business under the
laws of any jurisdiction in which it is not then qualified or to file any
general consent to service or process), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such Registration
Statement;

 

(e)                                  enter
into customary agreements (including an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities; 

 

(f)                                    otherwise
use its best efforts to comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practicable, but not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering the period of at least
12 months beginning with the first full month after the effective date of such
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act; 

 

 

(g)                                 give
written notice to Holders:

 

(i)                                     when
such Registration Statement or any amendment thereto has been filed with the
SEC and when such Registration Statement or any post-effective amendment
thereto has become effective;

 

(ii)                                  of
any request by the SEC for amendments or supplements to such Registration
Statement or the prospectus included therein or for additional information;

 

(iii)                               of
the issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings for that purpose;

 

(iv)                              of
the receipt by Company or its legal counsel of any notification with respect to
the suspension of the qualification of the common stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and

 

(v)                                 of
the happening of any event that requires Company to make changes in such
Registration Statement or the prospectus in order to make the statements
therein not misleading (which notice shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made);

 

(h)                                 use
its best efforts to prevent the issuance or obtain the withdrawal of any order
suspending the effectiveness of such Registration Statement at the earliest
possible time;

 

(i)                                     furnish
to each Holder, without charge, at least one copy of such Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits (including
those, if any, incorporated by reference);

 

(j)                                     subject
to continued effectiveness of the Registration Statement or availability of an
exemption from registration, to cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing the Registrable
Securities to be sold free of any restrictive legends and in such denominations
and registered in such names as the Holders may reasonably request; and

 

(k)                                  upon
the occurrence of any event contemplated by Section 4(g)(v) above, promptly
prepare a post-effective amendment to such Registration Statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to Holders, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.  If
the

 

 

Company notifies the Holders in accordance with Section 4(g)(v) above
to suspend the use of the prospectus until the requisite changes to the
prospectus have been made, then the Holders shall suspend use of such
prospectus, and the period of effectiveness of such Registration Statement
provided for above shall each be extended by the number of days from and
including the date of the giving of such notice to Holders shall have received
such amended or supplemented prospectus pursuant to this Section 4(k).

 

It
shall be a condition precedent to the obligation of Company to take any action
pursuant to this Agreement in respect of the securities which are to be
registered at the request of any Holder that such Holder shall furnish to
Company such information regarding the securities held by such Holder and the
intended method of disposition thereof as Company shall reasonably request and
as shall be required in connection with the action taken by Company.

 

5.                                       Expenses.  All expenses incurred in
complying with this Agreement, including, without limitation, all registration
and filing fees (including all expenses incident to filing with the NASD),
printing expenses, fees and disbursements of counsel for Company, expenses of
any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdiction
pursuant to Section 4(d), shall be paid by Company, except that:

 

(a)                                  all
such expenses in connection with any amendment or supplement to a Registration
Statement or prospectus required to be filed pursuant to Section 3 which is
filed more than one year after the effective date of such Registration
Statement because any Holder has not effected the disposition of the securities
requested to be registered shall be paid by such Holder; and

 

(b)                                 Company
shall not be liable for any fees, discounts or commissions to any underwriter
or any fees or disbursements of counsel for any underwriter in respect of the
securities sold by such Holder.  

 

6.                                       Indemnification and Contribution.

 

(a)                                  In
the event of any registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, Company shall indemnify and hold
harmless the holder of such Registrable Securities, such holder’s directors and
officers, and each other person (including each underwriter) who participated
in the offering of such Registrable Securities and each other person, if any,
who controls such holder or such participating person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder or any such director or officer or participating
person or controlling person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any alleged untrue

 

 

statement of any material fact contained, on the
effective date thereof, in any Registration Statement under which such
securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or (ii) any alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and shall reimburse such holder or such director, officer or participating
person or controlling person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating person or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any actual or alleged untrue
statement or actual or alleged omission made in such Registration Statement,
preliminary prospectus, prospectus or amendment or supplement in reliance upon
and in conformity with written information furnished to Company by such holder
specifically for use therein or (in the case of any underwritten offering) so
furnished for such purposes by any underwriter. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such director, officer or
participating person or controlling person, and shall survive the transfer of
such securities by such holder.

 

(b)                                 Each
Holder, by acceptance hereof, agrees to indemnify and hold harmless Company,
its directors and officers and each other person, if any, who controls Company
within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which Company or any such director or officer
or any such person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information in writing provided to Company by such Holder specifically for use
in the following documents and contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereto.  Notwithstanding the provisions
of this paragraph (b) or paragraph (c) below, no Holder shall be required to
indemnify any person pursuant to this Section 6 or to contribute pursuant to
paragraph (c) below in an amount in excess of the amount of the aggregate net
proceeds received by such Holder in connection with any such registration under
the Securities Act.

 

(c)                                  If
the indemnification provided for in this Section 6 from the indemnifying party
is unavailable to an indemnified party hereunder in respect of any

 

 

losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations.  The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action.  The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.

 

The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(c) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

 

7.                                       Certain Limitations on Registration Rights. 
Notwithstanding the other provisions of this Agreement:

 

(a)                                  Company
shall have the right to delay the filing or effectiveness of, or by written
notice require the Holders to cease sales of Registrable Securities pursuant
to, a Registration Statement required pursuant to this Agreement during one or
more periods aggregating not more than 60 days in any twelve-month period (such
period or periods, the “Suspension Period”) in the event that (i) Company would,
in accordance with the advice of its counsel, be required to disclose in the
prospectus information not otherwise then required by law to be publicly
disclosed, (ii) in the judgment of Company’s Board of Directors, there is a
reasonable likelihood that such disclosure, or any other action to be taken in
connection with the prospectus, would materially and adversely affect any
existing or prospective material business situation, transaction or negotiation
or otherwise materially and adversely affect Company, or (iii) the Registration
Statement can no longer be used under the Securities Act;

 

 

provided that the period of effectiveness of the
Registration Statement shall be extended by the length of any such Suspension
Period;

 

(b)                                 If
Company suspends the Registration Statement or requires the Holders to cease
sales of the common stock pursuant to paragraph (a) above, Company shall, as
promptly as practicable following the termination of the circumstances which
entitled Company to do so, take such action as may be necessary to reinstate
the effectiveness of the Registration Statement and/or give written notice to
all Holders authorizing them to resume sales pursuant to the Registration
Statement.  If, as a result thereof, the
prospectus included in the Registration Statement has been amended to comply
with the requirements of the Securities Act, Company shall enclose such revised
prospectus with a notice to Holders given pursuant to this paragraph (b), and
the Shareholders shall make no offers or sales of shares pursuant to such
Registration Statement other than by means of such revised prospectus. 

 

8.                                       Restrictions on Sale After Public Offering.  Except
for transfers made in transactions exempt from the registration requirements
under the Securities Act, Company and each Holder hereby agree not to offer,
sell, contract to sell or otherwise dispose of any of their Registrable
Securities within 120 days after the date of any final prospectus relating to
the public offering of common stock, if underwritten, whether by Company or by
any Holders, except pursuant to such prospectus or with the written consent of
the managing underwriter or underwriters for such offering.

 

9.                                       Miscellaneous.

 

(a)                                  Amendments
and Waivers.  Except as otherwise
provided herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departure from the provisions
hereof may not be given without the written consent of the Majority Holders and
the Company.

 

(b)                                 Notice
Generally.  Any notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder to be made pursuant to the provisions of this Agreement shall be
sufficiently given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:

 

(i)                                     If
to any Holder, at its last known address appearing on the books of Company
maintained for such purpose.

 

 

(ii)                                  If
to Company, at

 

VCampus Corporation

Suite 200

1850 Centennial Park
Drive

Reston, VA 20191

Attention:  Chief Financial Officer

Telecopy Number:  (703) 654-7311

 

with a
copy to

 

Maupin Taylor, P.A

3200 Beechleaf Court

Suite 500

Raleigh, NC 27604

Attn:  Kevin A.
Prakke, Esq.

 

or at such other address
as may be substituted by notice given as herein provided.  The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice.  Every notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder shall be
deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback
or three Business Days after the same shall have been deposited in the United
States mail.

 

(c)                                  Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto including any person to whom Registrable Securities are
transferred.

 

(d)                                 Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(e)                                  Governing
Law; Jurisdiction.  This Agreement
shall be governed by, construed and enforced in accordance with the laws of the
State of Delaware without giving effect to the conflict of laws provisions
thereof. 

 

(f)                                    Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

(g)                                 Entire
Agreement.  This Agreement, together
with the Purchase Agreement, the Series A-1 Certificate of Designations and
Warrants, represents the complete agreement and understanding of the parties hereto
in respect of the subject

 

 

matter contained herein and therein. 
This Agreement supersedes all prior agreements and understandings
between the parties with respect to the subject matter hereof.

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date first above written.

 

	
  COMPANY:

  	
  VCAMPUS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:
  Christopher Nelson

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
  PURCHASERS:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						

 

SCHEDULE
A

Schedule
of PurchasersExhibit 10.113

 

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

 

No. W-

Issuance Date: 
March 22, 2006

 

VCAMPUS
CORPORATION

 

PURCHASE WARRANT

 

WARRANT
TO PURCHASE SHARES OF COMMON STOCK

 

This is to certify that, FOR VALUE RECEIVED, [Name of
Purchaser] (“Warrantholder”), is entitled to purchase, subject to the
provisions of this Warrant, from VCampus Corporation, a corporation organized
under the laws of Delaware (“Company”), at any time and from time to time
commencing four years from the Issuance Date (“Exercise Date”), but not later
than 5:00 P.M., Eastern time, on the tenth (10th) anniversary
of the Issuance Date (the “Expiration Date”), a total of [pro rata portion of 1,000,000 shares based on total
of $2.3 million investment] shares (“Warrant Shares”) of Common
Stock, $0.01 par value per share (“Common Stock”), of the Company, at an
exercise price per share equal to the then applicable conversion price of the
Company’s Series B-1 Preferred Stock. The exercise price in effect from time to
time is hereafter called the “Warrant Price”. The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time as described herein.

 

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

 

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

 

Section
2.  Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the
Securities Act of 1933, as amended (“Securities Act”) or an exemption from
registration thereunder. Subject to such restrictions, the Company shall
transfer this Warrant from time to time, upon the books to be maintained by the
Company for that purpose, upon surrender hereof for transfer properly endorsed
or accompanied

 

 

by appropriate instructions for transfer upon any such transfer, and a
new Warrant shall be issued to the transferee and the surrendered Warrant shall
be canceled by the Company.

 

Section
3.  Exercise of Warrant.

 

(a)Subject
to the provisions hereof, the Warrantholder may exercise this Warrant in whole
or in part at any time and from time to time on and after the Exercise Date and
ending on the Expiration Date, upon surrender of the original of this Warrant,
together with delivery of the duly executed Warrant exercise form attached
hereto (the “Exercise Agreement”) (which may be by fax), to the Company during
normal business hours on any business day at the Company’s principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), and upon payment to the Company in cash, by
certified or official bank check or by wire transfer for the account of the
Company of the Warrant Price for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder’s designee, as the record owner of such shares, as
of the close of business on the date on which the completed Exercise Agreement
and original of this Warrant shall have been delivered to the Company (or such
later date as may be specified in the Exercise Agreement). Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall (subject to Section 3(b) below), at its expense, at the time of delivery
of such certificates, deliver to the holder a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised. In lieu of delivering physical certificates representing the shares
of Common Stock issuable upon exercise of this Warrant, provided the Company’s
transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program and such certificates can be issued without
restrictive legends in accordance with applicable securities laws, upon request
of the Warrantholder, the Company shall use commercially reasonable efforts to
cause its transfer agent to electronically transmit such shares issuable upon
exercise to the Warrantholder (or its designee), by crediting the account of
the Warrantholder’s (or such designee’s) prime broker with DTC through its
Deposit Withdrawal Agent Commission system (provided that the same time periods
herein as for stock certificates shall apply).

 

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

 

2

 

	
   

  	
  Net Number =

  	
  (A x B) - (A x
  C)

  	
   

  
	
   

  	
   

  	
  B

  	
   

  

 

For purposes of the foregoing formula:

 

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

 

B= the average of the
Closing Sale Price of the Common Stock over the five Trading Days immediately
preceding the date of the Exercise Notice.

 

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

 

Section
4.  Compliance with the Securities Act of 1933. Neither this
Warrant nor the Common Stock issued upon exercise hereof nor any other security
issued or issuable upon exercise of this Warrant may be offered or sold except
as provided in this Warrant and in conformity with the Securities Act of 1933,
as amended, and then only against receipt of an agreement of such person to
whom such offer of sale is made to comply with the provisions of this Section 4
with respect to any resale or other disposition of such security. The Company
may cause the legend set forth on the first page of this Warrant to be set
forth on each Warrant or similar legend on any security issued or issuable upon
exercise of this Warrant until the Warrant Shares have been registered for
resale under the Registration Rights Agreement or until Rule 144 is available,
unless counsel for the Company is of the opinion as to any such security that
such legend is unnecessary.

 

Section
5.  Payment of Taxes. The Company will pay any documentary
stamp taxes attributable to the initial issuance of Warrant Shares issuable
upon the exercise of the Warrant; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates for Warrant
Shares in a name other than that of the registered holder of this Warrant in
respect of which such shares are issued. The holder shall be responsible for
income taxes due under federal or state law, if any such tax is due.

 

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

 

Section
7.  Reservation of Common Stock. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved, out of the authorized and unissued Common
Stock, a number of shares sufficient to

 

3

 

provide for the exercise of the rights of purchase represented by the
Warrant in full. The Company agrees that all Warrant Shares issued upon
exercise of the Warrant in accordance with its terms shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company.

 

Section
8.  Warrant Price. The Warrant Price, subject to adjustment as
provided in Section 9, shall, if payment is made in cash or by certified check,
be payable in lawful money of the United States of America.

 

Section
9.  Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

 

(a)                                  If
the Company or any of its subsidiaries shall at any time or from time to time
while the Warrant is outstanding, pay a dividend or make a distribution on its
capital stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
into a smaller number of shares or issue by reclassification of its outstanding
shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event. Such
adjustment shall be made successively whenever any event listed above shall
occur.

 

(b)                                 If
any capital reorganization, reclassification of the capital stock of the
Company, consolidation or merger of the Company with another corporation, or
sale, transfer or other disposition of all or substantially all of the Company’s
assets to another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without limitations,
provision for adjustment of the Warrant Price) shall thereafter be applicable,
as nearly equivalent as may be practicable in relation to any shares of stock,
securities or properties thereafter deliverable upon the exercise hereof.

 

4

 

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

 

(d)                                 In
the event of any adjustment pursuant to this Section 9 in the number of Warrant
Shares issuable hereunder upon exercise, the Warrant Price shall be inversely
proportionately increased or decreased, as the case may be, such that the
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same. Similarly, in the event of any adjustment in the Warrant
Price pursuant to this Section 9 (but not for any other reason), the number of
Warrant Shares issuable hereunder upon exercise shall be inversely
proportionately increased or decreased, as the case may be, such that the
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same.

 

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

 

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

 

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

 

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

 

5

 

VCampus
Corporation

1850
Centennial Park Drive

Suite
200

Reston,
VA  20191

Attention:  CFO

 

With a copy to:

 

Maupin Taylor,
P.A.

3200 Beechleaf
Court, Suite 500

Raleigh, North
Carolina 27604

Attn:  Kevin A. Prakke, Esq.

 

or such other address as the Company may specify in
writing by notice to the Warrantholder complying as to delivery with the terms
of this Section 13.

 

Any notice pursuant hereto to be given or made by the
Company to or on the Warrantholder shall be sufficiently given or made if
personally delivered or if sent by an internationally recognized courier
service by overnight or two-day service, to the address set forth on the books
of the Company or, as to each of the Company and the Warrantholder, at such other
address as shall be designated by such party by written notice to the other
party complying as to delivery with the terms of this Section 13.

 

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

 

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

 

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

 

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

 

Section
17.  Assignment, etc. The Warrantholder may assign or transfer
this Warrant to any transferee only with the prior written consent of the
Company. This Warrant shall be binding upon the Company and its successors and shall
inure to the benefit of the Warrantholder and its successors and permitted
assigns.

 

Section 18.  Definitions.
The following words and terms as used in this Warrant shall have the following
meanings:

 

6

 

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

 

(ii)                                  “Closing
Sale Price” means, for any security as of any date, the last closing sale
price for such security on the Principal Market as reported by Nasdaq, or if
the Principal Market begins to operate on an extended hours basis, and does not
designate the closing trade price, then the last trade price at 4:00 p.m., New
York City Time, as reported by Nasdaq, or if the foregoing do not apply, the
last closing trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Nasdaq (or by
Bloomberg if Nasdaq does not report such prices), or, if no last closing trade
price is reported for such security by Nasdaq, the last closing ask price of
such security as reported by Nasdaq, or, if no last closing ask price is
reported for such security by Nasdaq, the average of the highest bid price and
the lowest ask price of any market makers for such security as reported in the “pink
sheets” by the Pink Sheets LLC. If the Closing Sale Price cannot be calculated
for such security on such date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as
determined in good faith by the Company’s Board of Directors.

 

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

 

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

 

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

 

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

 

 

[signature
page follows]

 

7

 

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

 

	
   

  	
  VCAMPUS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Narasimhan P.
  Kannan

  
	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Sign:

  	
   

  	
   

  	
   

  
	
  Print
  Name: Christopher L. Nelson

  	
   

  
						

 

8

 

VCAMPUS
CORPORATION

WARRANT EXERCISE FORM

 

VCampus
Corporation

1850 Centennial Park
Drive

Suite
200

Reston,
VA  20191

Fax:  (703) 654-7319

Attention:  CFO

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name (please print)

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

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