Document:

CERTIFICATE OF DESIGNATIONS,

Exhibit

10.63

 

CERTIFICATE

OF DESIGNATIONS,

 

PREFERENCES

AND RIGHTS OF

 

SERIES

F-1 CONVERTIBLE PREFERRED STOCK

 

OF

 

VCAMPUS

CORPORATION

 

I.              Creation of Series F-1 Convertible Preferred Stock.

 

The undersigned officer of VCampus Corporation, a

Delaware corporation (the “Corporation”), pursuant to the provisions of Section

151 of the General Corporation Law of the State of Delaware, do hereby make

this Certificate of Designations, Preferences and Rights (the “Series F-1

Certificate of Designations”) and do hereby state and certify that pursuant to

the authority expressly vested in the Board of Directors of the Corporation by

the Certificate of Incorporation, as amended, the Board of Directors duly

adopted the following resolutions:

 

RESOLVED, that, pursuant to the Certificate of

Incorporation, as amended, of the Corporation (the “Amended Certificate of

Incorporation”), which authorizes 10,000,000 shares of undesignated preferred

stock, par value $0.01 per share, of which (A) 1,000,000 shares are designated

Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C

Preferred Stock”) 623,339 of which are presently issued and outstanding, (B)

1,200,000 shares are designated Series D Convertible Preferred Stock, par value

$0.01 per share (the “Series D Preferred Stock”), 1,013,809 of which are issued

and outstanding, (C) 3,000,000 shares are designated Series E Convertible

Preferred Stock, par value $0.01 per share (the “Series E Preferred Stock),

550,045 of which are issued and outstanding, and (D) 3,000,000 shares are

designated Series F Convertible Preferred Stock, par value $0.01 per share (the

“Series F Preferred Stock”), 2,642,836 of which are issued and outstanding, the

Board of Directors is authorized, within the limitations and restrictions

stated in the Amended Certificate of Incorporation, to fix by resolution or

resolutions the designation of each series of preferred stock and the powers,

preferences and relative participating, optional, or other special rights, and

qualifications, limitations, and restrictions thereof; and

 

RESOLVED, that the Corporation hereby fixes the

designations and preferences and relative, participating, optional, and other

special rights, and qualifications, limitations, and restrictions of the

preferred stock consisting of One Million Four Hundred Fifty-Eight Thousand

Four Hundred and Thirteen (1,458,413) shares to be designated Series F-1

Convertible Preferred Stock, par value $0.01 per share (the “Series F-1

Preferred Stock”); and

 

RESOLVED, that the Series F-1 Preferred Stock is

hereby authorized on the terms and with the provisions herein set forth:

 

 

II.            Provisions

Relating to the Preferred Stock.

 

1.             Rank.  The Series F-1 Preferred Stock shall, with

respect to dividend rights and with respect to rights upon liquidation, winding

up or dissolution, rank pari passu to the Series C Preferred Stock, the Series

D Preferred Stock, the Series E Preferred Stock and the Series F Preferred

Stock and senior and prior in right to (a) each class of Common Stock of the Corporation,

(b) any series of preferred stock hereafter created (except as may otherwise be

consented to by holders of a majority of the Series F-1 Preferred Stock) and

(c) any other equity interests (including, without limitation, warrants, stock

appreciation rights, phantom stock rights, profit participation rights in debt

instruments or other rights with equity features, calls or options exercisable

for or convertible into such capital stock or equity interests) in the

Corporation that by its terms rank junior to the Series F-1 Preferred Stock

(all of such classes or series of capital stock and other equity interests,

including, without limitation, all classes of Common Stock of the Corporation,

are collectively referred to as “Junior Securities”).

 

2.             Dividends.  (a) The holders of Series F-1 Preferred

Stock shall be entitled to receive, when, as and if declared by the Board of

Directors out of funds legally available for the purpose, dividends payable

either in cash, in property or in shares of capital stock.

 

(b)           So

long as any shares of Series F-1 Preferred Stock are outstanding, the

Corporation will not declare, pay or set apart for payment any dividends

(except dividends payable on the existing classes of Preferred Stock or

dividends payable in Common Stock of the Corporation) or make any other

distribution on or redeem, purchase or otherwise acquire any Junior Securities

and will not permit any Subsidiary or other Affiliate (using funds of the

Corporation or any Subsidiary) to redeem, purchase or otherwise acquire for

value, any Junior Securities. 

Notwithstanding the foregoing provisions of this Section 2(b), the

Corporation or any Subsidiary may (i) make payments in respect of fractional

shares of Junior Securities and (ii) repurchase, redeem or otherwise acquire

for value any Junior Securities from any employee or former employee of the

Corporation or any Subsidiary in connection with the termination of employment

by the Corporation or any Subsidiary or by such employee or former employee,

whether by reason of death, disability, retirement or otherwise.

 

3.             Liquidation.  Upon a change in control pursuant to which

the stockholders of the Corporation immediately prior to such change in control

possess a minority of the voting power of the acquiring entity immediately

following such change in control, liquidation, dissolution or winding up of the

affairs of the Corporation, whether voluntary or involuntary (a “Liquidation

Event”), the holders of the Series F-1 Preferred Stock shall be entitled, pari

passu with the Liquidation Preference payable to the holders of the Series C,

D, E and F Preferred Stock (respectively, the “Series C Liquidation

Preference,” the “Series D Liquidation Preference,” the “Series E Liquidation

Preference” and the “Series F Liquidation Preference”), before any assets of

the Corporation shall be distributed among or paid over to the holders of

Junior Securities, to receive from the assets of the Corporation available for

distribution to stockholders, an amount per share equal to $0.35 as adjusted to

reflect any and all subdivisions (by stock split, stock dividend or otherwise)

or combinations or consolidations (by reclassification or otherwise) of the

Series F-1 Preferred Stock occurring after the Issue Date, plus all declared

but unpaid dividends (the “Series F-1 Liquidation Preference”).  If the assets of the Corporation legally

available for distribution shall be insufficient to permit the payment in

 

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full to the holders of the Series C, D, E, F and F-1 Preferred Stock of

their respective Liquidation Preferences, then the entire assets of the

Corporation legally available for distribution shall be distributed ratably in

accordance with the Series C, D, E, F and F-1 Liquidation Preferences among

such holders.  For purposes of this

Section 3, a Liquidation Event shall be deemed to be occasioned by, and to

include, (i) the Corporation’s sale of all or substantially all of its assets

or capital stock or (ii) any transaction or series or related transactions

(including, without limitation, any reorganization, merger or consolidation)

that will result in the holders of the outstanding voting equity securities of

the Corporation immediately prior to such transaction or series of related

transactions holding securities representing less than forty percent (40%) of

the voting power of the surviving entity immediately following such transaction

or series of related transactions.

 

4.             Voting.  (a) Except as otherwise provided by law or

by subsection 4(b), the holders of the Series F-1 Preferred Stock shall be

entitled to vote on all matters submitted to the stockholders for a vote

together with the holders of the Common Stock voting together as a single

class, with each holder of Common Stock entitled to one vote for each share of

Common Stock held by such holder and each holder of Series F-1 Preferred Stock

entitled to one vote for each share of Series F-1 Preferred Stock held by such

holder on the record date relating to the matter being voted on.

 

(b)           The

holders of the Series F-1 Preferred Stock shall vote as a separate class on the

creation of any new series of preferred stock or the issuance of additional

shares of capital stock of the Corporation that ranks senior to or on a parity

with the Series F-1 Preferred Stock.

 

5.             Conversion

of Series F-1 Preferred Stock into Common Stock.

 

(a)           Conversion

Procedure.

 

(i)            Notwithstanding

any other provision herein, the Corporation shall not be obligated to issue any

shares of Common Stock upon conversion of the Series F-1 Preferred Stock if and

to the extent the issuance of such shares of Common Stock would exceed the

number of shares (the “Exchange Cap”) then permitted to be issued

without violation of the rules or regulations of the Principal Market, except

that such limitation shall not apply in the event that the Corporation obtains

the approval of its stockholders as required by applicable rules and

regulations of the Principal Market for issuances of Common Stock in excess of

the Exchange Cap.  If and to the extent

the Exchange Cap applies, no original purchaser of Series F-1 Preferred Stock

shall be issued, upon conversion of Series F-1 Preferred Stock, shares of

Common Stock in an amount greater than the product of (x) the Exchange Cap

amount multiplied by (y) a fraction, the numerator of which is the number of

shares of Series F-1 Preferred Stock originally issued to such Investor and the

denominator of which is the aggregate amount of all the Series F Preferred

Stock and Series F-1 Preferred Stock issued to the original purchasers of such

securities (the “Cap Allocation Amount”).  In the event that any original holder of Series F-1 Preferred

Stock shall sell or otherwise transfer any of such holder’s Series F-1

Preferred Stock, the transferee shall be allocated a pro rata portion of such

holder’s Cap Allocation Amount.  In the

event that a requested conversion would violate the aforementioned rules, the

Corporation agrees to undertake best efforts to obtain such approval within 180

days of such request for conversion.

 

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(ii)           Subject

to subsection (i) above, at any time, any holder of Series F-1 Preferred Stock

may convert all or any portion of the Series F-1 Preferred Stock held by such

holder into a number of shares of Conversion Stock (as defined in Section 6)

computed by multiplying the number of shares to be converted by the purchase

price thereof and dividing the result by the Conversion Price (as defined in

subsection 5(b)) then in effect.

 

(iii)          Each

conversion of Series F-1 Preferred Stock shall be deemed to have been effected

as of the close of business on the date on which notice of election of such

conversion is delivered to the Corporation by such holder.  Until the certificates representing the

shares of Series F-1 Preferred Stock which are being converted have been

surrendered and new certificates representing shares of the Conversion Stock

shall have been issued by the Corporation, such certificate(s) evidencing the

shares of Series F-1 Preferred Stock being converted shall be evidence of the

issuance of such shares of Conversion Stock. 

At such time as such conversion has been effected, the rights of the

holder of such Series F-1 Preferred Stock as such holder shall cease and the

Person or Persons in whose name or names any certificate or certificates for

shares of Conversion Stock are to be issued upon such conversion shall be

deemed to have become the holder or holders of record of the shares of

Conversion Stock represented thereby.

 

(iv)          Notwithstanding

any other provision hereof, if a conversion of shares is to be made in connection

with a Public Offering (as defined in Section 6), the conversion of such shares

may, at the election of the holder thereof, be conditioned upon the

consummation of the Public Offering, in which case such conversion shall not be

deemed to be effective until the consummation of the Public Offering.

 

(v)           As

soon as practicable after a conversion has been effected in accordance with

clause (ii) above, the Corporation shall deliver to the converting holder:  (A) a certificate or certificates

representing, in the aggregate, the number of shares of Conversion Stock

issuable by reason of such conversion, in the name or names and in such

denomination or denominations as the converting holder has specified; and (B) a

certificate representing any shares which were represented by the certificate

or certificates delivered to the Corporation in connection with such conversion

but which were not converted.

 

(vi)          The

issuance of certificates for shares of Conversion Stock upon conversion of

Series F-1 Preferred Stock shall be made without charge to the holders of such

Series F-1 Preferred Stock for any issuance tax in respect thereof or other

cost incurred by the Corporation in connection with such conversion and the

related issuance of shares of Conversion Stock, except for any transfer or

similar tax payable as a result of issuance of a certificate to other than the

registered holder of the shares being converted.  Upon conversion of any shares of Series F-1 Preferred Stock, the

Corporation shall use its best efforts to take all such actions as are

necessary in order to insure that the Conversion Stock issuable with respect to

such conversion shall be validly issued, fully paid and nonassessable.

 

(vii)         The

Corporation shall not close its books against the transfer of Series F-1

Preferred Stock or of Conversion Stock issued or issuable upon conversion of

Series F-1 Preferred Stock in any manner which interferes with the timely

conversion of Series F-1 Preferred Stock. 

The Corporation shall assist and cooperate with any holder of shares of

Series

 

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F-1 Preferred Stock required to make any governmental filings or obtain

any governmental approval prior to or in connection with any conversion of

shares hereunder (including, without limitation, making any filings reasonably

required to be made by the Corporation).

 

(viii)  No

fractional shares of Conversion Stock or scrip representing fractional shares

shall be issued upon conversion of shares of Series F-1 Preferred Stock.  If more than one share of Series F-1

Preferred Stock shall be surrendered for conversion at one time by the same

record holder, the number of full shares of Conversion Stock issuable upon the

conversion thereof shall be computed on the basis of the aggregate number of

shares of Series F-1 Preferred Stock so surrendered by such record holder.  Instead of any fractional share of

Conversion Stock otherwise issuable upon conversion of any shares of the Series

F-1 Preferred Stock, the Corporation shall pay a cash adjustment in respect of

such fraction in an amount equal to the same fraction of current per share fair

market value of the Conversion Stock as determined in good faith by the Board

of Directors on such basis as it considers appropriate.

 

(ix)  The

Corporation shall use its best efforts at all times to reserve and keep

available out of its authorized but unissued shares of Conversion Stock, solely

for the purpose of issuance upon the conversion of the Series F-1 Preferred

Stock, such number of shares of Conversion Stock as are issuable upon the conversion

of all outstanding Series F-1 Preferred Stock. 

All shares of Conversion Stock which are so issuable shall, when issued,

be duly and validly issued, fully paid and nonassessable and free from all

taxes, liens and charges, other than those created or agreed to by the

holder.  The Corporation shall use its

best efforts to take all such actions as may be necessary to assure that all

such shares of Conversion Stock may be so issued without violation of any

applicable law or governmental regulation or any requirements of any domestic

securities exchange upon which shares of Conversion Stock may be listed (except

for official notice of issuance which shall be immediately delivered by the

Corporation upon each such issuance).

 

(b)           Conversion

Price.

 

(i)            “Conversion

Price” for the Series F-1 Preferred Stock shall initially mean the Initial

Conversion Price described in this Section 5, as the same may be subsequently

adjusted from time to time in accordance with this Section 5.

 

(ii)           The

“Initial Conversion Price” shall be $0.35.

 

(c)           Subdivision

or Combination of Common Stock.  If

the Corporation at any time subdivides (by any stock split, stock dividend,

recapitalization or otherwise) one or more classes of its outstanding shares of

Common Stock into a greater number of shares, or if the Corporation at any time

combines (by reverse stock split or otherwise) one or more classes of its

outstanding shares of Common Stock into a smaller number of shares, the

applicable Conversion Price in effect immediately prior to such subdivision or

combination shall be proportionately adjusted.

 

(d)           Consolidation,

Merger or Sale for Assets.  Any

consolidation, merger, sale of all or substantially all of the Corporation’s

assets to another Person or other transaction which is effected in such a

manner that holders of Common Stock are entitled to receive (either directly

 

5

 

or upon subsequent liquidation) assets other than Conversion Stock

(“Assets”) with respect to or in exchange for Common Stock is referred to

herein as a “Fundamental Change.” Prior to the consummation of any Fundamental

Change, the Corporation shall make appropriate provisions to insure that each

of the holders of Series F-1 Preferred Stock shall thereafter have the right to

acquire and receive, in lieu of or in addition to (as the case may be) the

shares of Conversion Stock immediately theretofore acquirable and receivable

upon the conversion of such holder’s Series F-1 Preferred Stock, such Assets as

such holder would have received in connection with such Fundamental Change if

such holder had converted its Series F-1 Preferred Stock into Conversion Stock

immediately prior to such Fundamental Change. 

The Corporation shall not effect any Fundamental Change, consolidation,

merger or sale unless prior to the consummation thereof, the successor

corporation (if other than the Corporation) resulting from consolidation or

merger or the corporation purchasing such assets assumes by written instrument

the obligation to deliver to each such holder such shares of stock, securities

or assets as, in accordance with the foregoing provisions, such holder may be

entitled to acquire.

 

(e)           Issuances

at Less Than the Conversion Price. 

Upon the issuance or sale by the Corporation of:

 

(i)            Common

Stock for a consideration per share less than any Conversion Price in effect

immediately prior to the time of such issue or sale; or

 

(ii)           any

Stock Purchase Rights (as defined below) where the consideration per share for

which shares of Common Stock may at any time thereafter be issuable upon

exercise thereof (or, in the case of Stock Purchase Rights exercisable for the

purchase of Convertible Securities (as defined below), upon the subsequent

conversion or exchange of such Convertible Securities) shall be less than any

Conversion Price in effect immediately prior to the time of the issue or sale

of such Stock Purchase Rights; or

 

(iii)          any

Convertible Securities where the consideration per share for which shares of

Common Stock may at any time thereafter be issuable pursuant to the terms of

such Convertible Securities shall be less than any Conversion Price in effect

immediately prior to the time of the issue or sale of such Convertible

Securities;

 

other than an issuance of Common Stock pursuant to Sections 5(c)

or 5(f) hereof (any such issuance shall be referred to hereinafter as a

“Dilutive Issuance”), then forthwith upon such issue or sale, such applicable

Conversion Price shall be reduced to the per share selling price in the

Dilutive Issuance.

 

Notwithstanding the foregoing, no Conversion Price shall at such time

be reduced if such reduction would be an amount less than $.01, but any such

amount shall be carried forward and deduction with respect thereto made at the

time of and together with any subsequent reduction that, together with such

amount and any other amount or amounts so carried forward, shall aggregate $.01

or more.

 

For purposes of this Section 5(e), the following

provisions will be applicable:

 

6

 

“Convertible Securities” shall mean evidences

of indebtedness, shares of stock or other securities that are convertible into

or exchangeable for, with or without payment of additional consideration,

shares of Common Stock.

 

“Stock Purchase Rights” shall mean any

warrants, options or other rights to subscribe for, purchase or otherwise

acquire any shares of Common Stock or any Convertible Securities.

 

Convertible Securities and Stock Purchase Rights shall

be deemed outstanding and issued or sold at the time of such issue or sale.

 

Determination of

Consideration.  The “consideration actually received” by the

Corporation for the issuance, sale, grant or assumption of shares of Common

Stock, Stock Purchase Rights or Convertible Securities, irrespective of the

accounting treatment of such consideration, shall be valued as follows:

 

(i)                            Cash Payment.  In the case of cash, the net amount received

by the Corporation after deduction of any accrued interest or dividends and

before deducting any expenses paid or incurred and any underwriting commissions

or concessions paid or allowed by the Corporation in connection with such issue

or sale;

 

(ii)                           Noncash Payment.  In the case of consideration other than

cash, the value of such consideration, which shall not include the value of any

Convertible Securities being converted or exchanged, as determined by the Board

of Directors in good faith, after deducting any accrued interest or dividends;

and

 

(iii)                          Stock Purchase

Rights and Convertible Securities. 

The total consideration, if any, received by the Corporation as

consideration for the issuance of the Stock Purchase Rights or the Convertible

Securities, as the case ma  y be, plus

the minimum aggregate amount of additional consideration, if any, payable to

the Corporation upon the exercise of such Stock Purchase Rights or upon the

conversion or exchange of such Convertible Securities, as the case may be, in

each case after deducting any accrued interest or dividends.

 

Readjustment of

Conversion Price.  In the event of any change in (i) the

consideration, if any, payable upon exercise of any Stock Purchase Rights or

upon the conversion or exchange of any Convertible Securities, or (ii) the rate

at which any Convertible Securities are convertible into or exchangeable for

shares of Common Stock, the applicable Conversion Price as computed upon the

original issue thereof shall forthwith be readjusted to the Conversion Price

that would have been in effect at such time had such Stock Purchase Rights or

Convertible Securities provided for such changed purchase price, consideration

or conversion rate, as the case may be, at the time initially granted, issued

or sold.  On the expiration of any Stock

Purchase Rights not exercised or of any right to convert or exchange under any

Convertible Securities not exercised, the applicable Conversion Price then in

effect shall forthwith be increased to the Conversion Price that would have

been in effect at the time of such expiration had such Stock Purchase Rights or

Convertible Securities never been issued. 

No readjustment of the Conversion Price pursuant to this paragraph shall

(i) increase the

 

7

 

applicable Conversion Price by an amount in excess of the adjustment

originally made to the Conversion Price in respect of the issue, sale or grant

of the applicable Stock Purchase Rights or Convertible Securities, or (ii) require

any adjustment to the amount paid or number of shares of Common Stock received

by any holder of Series F-1 Preferred Stock upon any conversion of any share of

Series F-1 Preferred Stock prior to the date upon which such readjustment to

the Conversion Price shall occur.

 

(f)            Exclusions.  Anything herein to the contrary

notwithstanding, the Corporation shall not be required to make any adjustment

of any Conversion Price of the Series F-1 Preferred Stock in the case of (i)

the issuance or sale of options, or the shares of stock issuable upon exercise

of such options, to directors, officers, employees or consultants of the

Corporation pursuant to stock options or stock purchase plans or agreements,

whether “qualified” for tax purposes or not, pursuant to plans or arrangements

approved by the Board of Directors, (ii) the issuance of Common Stock upon

conversion of shares of existing classes of Preferred Stock (including the

Series F-1 Preferred Stock) or exercise of any warrants or conversion of any convertible

notes offered, sold or issued prior to or connection with the same transaction

as the Series F Preferred Stock or the Series F-1 Preferred Stock, and (iii)

securities issued in consideration for the acquisition whether by merger or

otherwise by the Corporation of all or substantially of the capital stock or

assets of any other entity or business organization, provided such issuance is

approved by holders of a majority of the Series F-1 Preferred Stock.  The issuances or sales described in the

preceding clauses (i), (ii) and (iii) shall be ignored for purposes of

calculating any adjustment to any Conversion Price.

 

(g)           Certain

Events.  If an event not

specifically enumerated in this Section 5 occurs which has substantially the

same economic effect on the Series F-1 Preferred Stock as those specifically

enumerated shall occur, then this Section 5 shall be construed liberally,

mutatis mutandis, in order to give the Series F-1 Preferred Stock the benefit

of the protections provided under this Section 5.  The Corporation’s Board of Directors shall make an appropriate

adjustment in the applicable Conversion Price so as to protect the rights of

the holders of Series F-1 Preferred Stock.

 

(h)           Notices.

 

(i)            Promptly

upon any adjustment of the applicable Conversion Price, the Corporation shall

give written notice thereof to all holders of Series F-1 Preferred Stock,

setting forth in reasonable detail and certifying the calculation of such

adjustment.

 

(ii)           The

Corporation shall give written notice to all holders of Series F-1 Preferred

Stock at least 10 days prior to the date on which the Corporation closes its

books or takes a record (A) with respect to any dividend or distribution upon

Common Stock, (B) with respect to any pro rata subscription offer to holders of

Common Stock, or (C) for determining rights to vote with respect to any

Fundamental Change, dissolution or liquidation.

 

(iii)  The

Corporation shall give written notice to the holders of Series F-1 Preferred

Stock at least twenty (20) days prior to the date on which any Fundamental

Change shall take place, which notice may be one and the same as that required

by (ii) above.

 

8

 

(i)            Automatic

Conversion.  Each share of Series

F-1 Preferred Stock shall automatically be converted into shares of Common Stock

at the then applicable Conversion Price (or upon such other terms as holders of

75% or more of the shares of Series F-1 Preferred Stock may agree) upon the

written consent of the holders of 75% or more of the shares of Series F-1

Preferred Stock.

 

6.             Definitions.  The following terms have the meanings

specified below:

 

(a)           Affiliate.  The term “Affiliate” shall mean (i) any

Person directly or indirectly controlling, controlled by or under direct or

indirect common control with the Corporation (or other specified Person), (ii)

any Person who is a beneficial owner of at least 10% of the then outstanding

voting capital stock (or options, warrants or other securities which, after

giving effect to the exercise thereof, would entitle the holder thereof to hold

at least 10% of the then outstanding voting capital stock) of the Corporation

(or other Specified Person), (iii) any director or executive officer of the

Corporation (or other Specified Person) or Person of which the Corporation (or

other Specified Person) shall, directly or indirectly, either beneficially or

of record, own at least 10% of the then outstanding equity securities of such

Person, and (iv) in the case of Persons specified above who are individuals,

Family Members of such Person; provided, however, that no holder of Preferred

Stock nor any of their designated members of the Board of Directors shall be an

Affiliate of the Corporation for purposes hereof.

 

(b)           Board

of Directors.  The term “Board of

Directors” shall mean the Board of Directors of the Corporation.

 

(c)           Conversion

Stock.  The term “Conversion Stock”

shall mean the shares of Common Stock issuable upon conversion of shares of

Series F-1 Preferred Stock; provided that if there is a change such that the

securities issuable upon conversion of the Series F-1 Preferred Stock are

issued by an entity other than the Corporation or there is a change in the

class of securities so issuable, then the term “Conversion Stock” shall mean

shares of the security issuable upon conversion of the Series F-1 Preferred

Stock if such security is issuable in shares, or shall mean the smallest unit

in which such security is issuable if such security is not issuable in shares.

 

(d)           Family

Members.  The term “Family Members”

shall mean, as applied to any individual, any spouse, child, grandchild,

parent, brother or sister thereof or any spouse of any of the foregoing, and

each trust created for the benefit of one or more of such Persons (other than

any trust administered by an independent trustee) and each custodian of

property of one or more such Persons.

 

(e)           Issue

Date.  The term “Issue Date” shall

mean the date on which the Corporation first issues a share of Series F-1

Preferred Stock.

 

(f)            Person.  The term “Person” shall mean an individual,

corporation, partnership, limited liability company, association, trust, joint

venture or unincorporated organization or any government, governmental

department or any agency or political subdivision thereof.

 

9

 

(g)           “Principal

Market” means the American Stock Exchange, the New York Stock Exchange, the

Nasdaq National Market, or the Nasdaq Smallcap Market, whichever is at the

applicable time the principal trading exchange or market for the Common Stock,

based upon share volume.

 

(h)           Public

Offering.  The term “Public Offering”

shall mean any offering by the Corporation of its equity securities to the

public pursuant to an effective registration statement under the Securities Act

or any comparable statement under any similar federal statute then in force,

other than an offering in connection with an employee benefit plan.

 

(i)            Securities

Act.  The term “Securities Act”

shall mean the Securities Act of 1933, as amended, or any successor federal

statute, and the rules and regulations of the Securities and Exchange

Commission promulgated thereunder, all as the same shall be in effect from time

to time.

 

(j)            Subsidiary.  The term “Subsidiary” shall mean any Person

of which the Corporation shall at the time own, directly or indirectly through

another Subsidiary, 50% or more of the outstanding voting capital stock (or

other shares of beneficial interest with voting rights), or which the

Corporation shall otherwise control.

 

10

 

IN WITNESS WHEREOF, VCampus Corporation has caused

this certificate to be signed by its duly authorized officer as of the 28th day

of March 2002.

 

	

   

  	

  VCAMPUS CORPORATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

   

  
				

 

11CERTIFICATE OF DESIGNATIONS,

Exhibit

10.64

 

CERTIFICATE

OF DESIGNATIONS,

 

PREFERENCES

AND RIGHTS OF

 

SERIES

F-2 CONVERTIBLE PREFERRED STOCK

 

OF

 

VCAMPUS

CORPORATION

 

I.              Creation

of Series F-2 Convertible Preferred Stock.

 

The undersigned officer of VCampus Corporation, a

Delaware corporation (the “Corporation”), pursuant to the provisions of Section

151 of the General Corporation Law of the State of Delaware, do hereby make

this Certificate of Designations, Preferences and Rights (the “Series F-2

Certificate of Designations”) and do hereby state and certify that pursuant to

the authority expressly vested in the Board of Directors of the Corporation by

the Certificate of Incorporation, as amended, the Board of Directors duly

adopted the following resolutions:

 

RESOLVED, that, pursuant to the Certificate of

Incorporation, as amended, of the Corporation (the “Amended Certificate of

Incorporation”), which authorizes 10,000,000 shares of undesignated preferred

stock, par value $0.01 per share, of which:

 

(A)                              1,000,000

shares are designated Series C Convertible Preferred Stock, par value $0.01 per

share (the “Series C Preferred Stock”), 623,339 of which are issued and

outstanding;

 

(B)                                1,200,000

shares are designated Series D Convertible Preferred Stock, par value $0.01 per

share (the “Series D Preferred Stock”), 1,013,809 of which are issued and

outstanding;

 

(C)                                3,000,000

shares are designated Series E Convertible Preferred Stock, par value $0.01 per

share (the “Series E Preferred Stock”), 552,530 of which are issued and

outstanding;

 

(D)                               3,000,000

shares are designated Series F Convertible Preferred Stock, par value $0.01 per

share (the “Series F Preferred Stock”), 2,642,836 of which are issued and

outstanding; and

 

(E)                                 1,458,413

shares are designated Series F-1 Convertible Preferred Stock, par value $0.01

per share (the “Series F-1 Preferred Stock”), all of which are issued and

outstanding;

 

the Board of Directors is authorized, within the

limitations and restrictions stated in the Amended Certificate of

Incorporation, to fix by resolution or resolutions the designation of each

series of preferred stock and the powers, preferences and relative

participating,

 

 

optional, or other special rights, and qualifications,

limitations, and restrictions thereof; and

 

RESOLVED, that the Corporation hereby fixes the

designations and preferences and relative, participating, optional, and other

special rights, and qualifications, limitations, and restrictions of the

preferred stock consisting of 60,000 shares to be designated Series F-2

Convertible Preferred Stock, par value $0.01 per share (the “Series F-2

Preferred Stock”); and

 

RESOLVED, that the Series F-2 Preferred Stock is

hereby authorized on the terms and with the provisions herein set forth:

 

II.            Provisions

Relating to the Preferred Stock.

 

1.             Rank.  The Series F-2 Preferred Stock shall, with

respect to dividend rights and with respect to rights upon liquidation, winding

up or dissolution, rank pari passu to the Series C Preferred Stock, the Series

D Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock

and the Series F-1 Preferred Stock and senior and prior in right to (a) each

class of Common Stock of the Corporation, (b) any series of preferred stock

hereafter created (except as may otherwise be consented to by holders of a majority

of the Series F-2 Preferred Stock) and (c) any other equity interests

(including, without limitation, warrants, stock appreciation rights, phantom

stock rights, profit participation rights in debt instruments or other rights

with equity features, calls or options exercisable for or convertible into such

capital stock or equity interests) in the Corporation that by its terms rank

junior to the Series F-2 Preferred Stock (all of such classes or series of

capital stock and other equity interests, including, without limitation, all

classes of Common Stock of the Corporation, are collectively referred to as

“Junior Securities”).

 

2.             Dividends.  (a) The holders of Series F-2 Preferred

Stock shall be entitled to receive, when, as and if declared by the Board of

Directors out of funds legally available for the purpose, dividends payable

either in cash, in property or in shares of capital stock.

 

(b)           So

long as any shares of Series F-2 Preferred Stock are outstanding, the

Corporation will not declare, pay or set apart for payment any dividends

(except dividends payable on the existing classes of Preferred Stock or

dividends payable in Common Stock of the Corporation) or make any other

distribution on or redeem, purchase or otherwise acquire any Junior Securities

and will not permit any Subsidiary or other Affiliate (using funds of the

Corporation or any Subsidiary) to redeem, purchase or otherwise acquire for

value, any Junior Securities. 

Notwithstanding the foregoing provisions of this Section 2(b), the

Corporation or any Subsidiary may (i) make payments in respect of fractional

shares of Junior Securities and (ii) repurchase, redeem or otherwise acquire

for value any Junior Securities from any employee or former employee of the

Corporation or any Subsidiary in connection with the termination of employment

by the Corporation or any Subsidiary or by such employee or former employee,

whether by reason of death, disability, retirement or otherwise.

 

3.             Liquidation.  Upon a change in control pursuant to which

the stockholders of the Corporation immediately prior to such change in control

possess a minority of the voting power of the acquiring entity immediately

following such change in control, liquidation,

 

2

 

dissolution or winding up of the affairs of the Corporation, whether

voluntary or involuntary (a “Liquidation Event”), the holders of the Series F-2

Preferred Stock shall be entitled, pari passu with the Liquidation Preference

payable to the holders of the Series C, D, E, F and F-1 Preferred Stock

(respectively, the “Series C Liquidation Preference,” the “Series D Liquidation

Preference,” the “Series E Liquidation Preference”, the “Series F Liquidation

Preference” and the “Series F-1 Liquidation Preference”), before any assets of

the Corporation shall be distributed among or paid over to the holders of

Junior Securities, to receive from the assets of the Corporation available for

distribution to stockholders, an amount per share equal to $35.00 as adjusted

to reflect any and all subdivisions (by stock split, stock dividend or

otherwise) or combinations or consolidations (by reclassification or otherwise)

of the Series F-2 Preferred Stock occurring after the Issue Date, plus all

declared but unpaid dividends (the “Series F-2 Liquidation Preference”).  If the assets of the Corporation legally

available for distribution shall be insufficient to permit the payment in full

to the holders of the Series C, D, E, F, F-1 and F-2 Preferred Stock of their

respective Liquidation Preferences, then the entire assets of the Corporation

legally available for distribution shall be distributed ratably in accordance

with the Series C, D, E, F, F-1 and F-2 Liquidation Preferences among such

holders.  For purposes of this Section

3, a Liquidation Event shall be deemed to be occasioned by, and to include, (i)

the Corporation’s sale of all or substantially all of its assets or capital

stock or (ii) any transaction or series or related transactions (including,

without limitation, any reorganization, merger or consolidation) that will

result in the holders of the outstanding voting equity securities of the

Corporation immediately prior to such transaction or series of related

transactions holding securities representing less than forty percent (40%) of

the voting power of the surviving entity immediately following such transaction

or series of related transactions.

 

4.             Voting.  (a) Except as otherwise provided by law or

by subsection 4(b), the holders of the Series F-2 Preferred Stock shall be

entitled to vote on all matters submitted to the stockholders for a vote

together with the holders of the Common Stock voting together as a single

class, with each holder of Common Stock entitled to one vote for each share of

Common Stock held by such holder and each holder of Series F-2 Preferred Stock

entitled to one hundred (100) votes for each share of Series F-2 Preferred

Stock held by such holder on the record date relating to the matter being voted

on.

 

(b)           The

holders of the Series F-2 Preferred Stock shall vote as a separate class on the

creation of any new series of preferred stock or the issuance of additional

shares of capital stock of the Corporation that ranks senior to or on a parity

with the Series F-2 Preferred Stock.

 

5.             Conversion

of Series F-2 Preferred Stock into Common Stock.

 

(a)           Conversion

Procedure.

 

(i)            Notwithstanding

any other provision herein, the Corporation shall not be obligated to issue any

shares of Common Stock upon conversion of the Series F-2 Preferred Stock if and

to the extent the issuance of such shares of Common Stock would exceed the

number of shares (the “Exchange Cap”) then permitted to be issued

without violation of the rules or regulations of the Principal Market, except

that such limitation shall not apply in the event that the Corporation obtains

the approval of its stockholders as required by applicable rules and

regulations of the Principal Market for issuances of Common Stock in excess of

the

 

3

 

Exchange Cap.  If and to the

extent the Exchange Cap applies, no original purchaser of Series F-2 Preferred

Stock shall be issued, upon conversion of Series F-2 Preferred Stock, shares of

Common Stock in an amount greater than the product of (x) the Exchange Cap

amount multiplied by (y) a fraction, the numerator of which is the number of

shares of Series F-2 Preferred Stock originally issued to such Investor

multiplied by one hundred (100) and the denominator of which is the aggregate

amount of all the Series F Preferred Stock, Series F-1 Preferred Stock and

Series F-2 Preferred Stock (multiplied by one hundred (100) in the case of

Series F-2 Preferred Stock) issued to the original purchasers of such

securities (the “Cap Allocation Amount”).  In the event that any original holder of Series F-2 Preferred

Stock shall sell or otherwise transfer any of such holder’s Series F-2

Preferred Stock, the transferee shall be allocated a pro rata portion of such

holder’s Cap Allocation Amount.  In the

event that a requested conversion would violate the aforementioned rules, the

Corporation agrees to undertake best efforts to obtain such approval within 180

days of such request for conversion.

 

(ii)           Subject

to subsection (i) above, at any time, any holder of Series F-2 Preferred Stock

may convert all or any portion of the Series F-2 Preferred Stock held by such

holder into a number of shares of Conversion Stock (as defined in Section 6)

computed by multiplying the number of shares to be converted by the purchase

price thereof and dividing the result by the Conversion Price (as defined in

subsection 5(b)) then in effect.

 

(iii)          Each

conversion of Series F-2 Preferred Stock shall be deemed to have been effected

as of the close of business on the date on which notice of election of such

conversion is delivered to the Corporation by such holder.  Until the certificates representing the

shares of Series F-2 Preferred Stock which are being converted have been

surrendered and new certificates representing shares of the Conversion Stock

shall have been issued by the Corporation, such certificate(s) evidencing the

shares of Series F-2 Preferred Stock being converted shall be evidence of the

issuance of such shares of Conversion Stock. 

At such time as such conversion has been effected, the rights of the

holder of such Series F-2 Preferred Stock as such holder shall cease and the

Person or Persons in whose name or names any certificate or certificates for

shares of Conversion Stock are to be issued upon such conversion shall be

deemed to have become the holder or holders of record of the shares of

Conversion Stock represented thereby.

 

(iv)          Notwithstanding

any other provision hereof, if a conversion of shares is to be made in

connection with a Public Offering (as defined in Section 6), the conversion of

such shares may, at the election of the holder thereof, be conditioned upon the

consummation of the Public Offering, in which case such conversion shall not be

deemed to be effective until the consummation of the Public Offering.

 

(v)           As

soon as practicable after a conversion has been effected in accordance with

clause (ii) above, the Corporation shall deliver to the converting holder:  (A) a certificate or certificates

representing, in the aggregate, the number of shares of Conversion Stock

issuable by reason of such conversion, in the name or names and in such

denomination or denominations as the converting holder has specified; and (B) a

certificate representing any shares which were represented by the certificate

or certificates delivered to the Corporation in connection with such conversion

but which were not converted.

 

4

 

(vi)          The

issuance of certificates for shares of Conversion Stock upon conversion of

Series F-2 Preferred Stock shall be made without charge to the holders of such

Series F-2 Preferred Stock for any issuance tax in respect thereof or other

cost incurred by the Corporation in connection with such conversion and the

related issuance of shares of Conversion Stock, except for any transfer or

similar tax payable as a result of issuance of a certificate to other than the

registered holder of the shares being converted.  Upon conversion of any shares of Series F-2 Preferred Stock, the

Corporation shall use its best efforts to take all such actions as are

necessary in order to insure that the Conversion Stock issuable with respect to

such conversion shall be validly issued, fully paid and nonassessable.

 

(vii)         The

Corporation shall not close its books against the transfer of Series F-2

Preferred Stock or of Conversion Stock issued or issuable upon conversion of

Series F-2 Preferred Stock in any manner which interferes with the timely

conversion of Series F-2 Preferred Stock. 

The Corporation shall assist and cooperate with any holder of shares of

Series F-2 Preferred Stock required to make any governmental filings or obtain

any governmental approval prior to or in connection with any conversion of

shares hereunder (including, without limitation, making any filings reasonably

required to be made by the Corporation).

 

(viii)        No

fractional shares of Conversion Stock or scrip representing fractional shares

shall be issued upon conversion of shares of Series F-2 Preferred Stock.  If more than one share of Series F-2

Preferred Stock shall be surrendered for conversion at one time by the same

record holder, the number of full shares of Conversion Stock issuable upon the

conversion thereof shall be computed on the basis of the aggregate number of

shares of Series F-2 Preferred Stock so surrendered by such record holder.  Instead of any fractional share of

Conversion Stock otherwise issuable upon conversion of any shares of the Series

F-2 Preferred Stock, the Corporation shall pay a cash adjustment in respect of

such fraction in an amount equal to the same fraction of current per share fair

market value of the Conversion Stock as determined in good faith by the Board

of Directors on such basis as it considers appropriate.

 

(ix)           The

Corporation shall use its best efforts at all times to reserve and keep

available out of its authorized but unissued shares of Conversion Stock, solely

for the purpose of issuance upon the conversion of the Series F-2 Preferred

Stock, such number of shares of Conversion Stock as are issuable upon the

conversion of all outstanding Series F-2 Preferred Stock.  All shares of Conversion Stock which are so

issuable shall, when issued, be duly and validly issued, fully paid and

nonassessable and free from all taxes, liens and charges, other than those created

or agreed to by the holder.  The Corporation

shall use its best efforts to take all such actions as may be necessary to

assure that all such shares of Conversion Stock may be so issued without

violation of any applicable law or governmental regulation or any requirements

of any domestic securities exchange upon which shares of Conversion Stock may

be listed (except for official notice of issuance which shall be immediately

delivered by the Corporation upon each such issuance).

 

(b)           Conversion

Price.

 

(i)            “Conversion

Price” for the Series F-2 Preferred Stock shall initially mean the Initial

Conversion Price described in this Section 5, as the same may be subsequently

adjusted from time to time in accordance with this Section 5.

 

5

 

(ii)           The

“Initial Conversion Price” shall be $0.35.

 

(c)           Subdivision

or Combination of Common Stock.  If

the Corporation at any time subdivides (by any stock split, stock dividend,

recapitalization or otherwise) one or more classes of its outstanding shares of

Common Stock into a greater number of shares, or if the Corporation at any time

combines (by reverse stock split or otherwise) one or more classes of its

outstanding shares of Common Stock into a smaller number of shares, the

applicable Conversion Price in effect immediately prior to such subdivision or

combination shall be proportionately adjusted.

 

(d)           Consolidation,

Merger or Sale for Assets.  Any

consolidation, merger, sale of all or substantially all of the Corporation’s

assets to another Person or other transaction which is effected in such a

manner that holders of Common Stock are entitled to receive (either directly or

upon subsequent liquidation) assets other than Conversion Stock (“Assets”) with

respect to or in exchange for Common Stock is referred to herein as a

“Fundamental Change.” Prior to the consummation of any Fundamental Change, the

Corporation shall make appropriate provisions to insure that each of the

holders of Series F-2 Preferred Stock shall thereafter have the right to

acquire and receive, in lieu of or in addition to (as the case may be) the

shares of Conversion Stock immediately theretofore acquirable and receivable

upon the conversion of such holder’s Series F-2 Preferred Stock, such Assets as

such holder would have received in connection with such Fundamental Change if

such holder had converted its Series F-2 Preferred Stock into Conversion Stock

immediately prior to such Fundamental Change. 

The Corporation shall not effect any Fundamental Change, consolidation,

merger or sale unless prior to the consummation thereof, the successor

corporation (if other than the Corporation) resulting from consolidation or

merger or the corporation purchasing such assets assumes by written instrument

the obligation to deliver to each such holder such shares of stock, securities

or assets as, in accordance with the foregoing provisions, such holder may be

entitled to acquire.

 

(e)           Issuances

at Less Than the Conversion Price. 

Upon the issuance or sale by the Corporation of:

 

(i)            Common

Stock for a consideration per share less than any Conversion Price in effect

immediately prior to the time of such issue or sale; or

 

(ii)           any

Stock Purchase Rights (as defined below) where the consideration per share for

which shares of Common Stock may at any time thereafter be issuable upon

exercise thereof (or, in the case of Stock Purchase Rights exercisable for the

purchase of Convertible Securities (as defined below), upon the subsequent

conversion or exchange of such Convertible Securities) shall be less than any

Conversion Price in effect immediately prior to the time of the issue or sale

of such Stock Purchase Rights; or

 

(iii)          any

Convertible Securities where the consideration per share for which shares of

Common Stock may at any time thereafter be issuable pursuant to the terms of

such Convertible Securities shall be less than any Conversion Price in effect

immediately prior to the time of the issue or sale of such Convertible

Securities;

 

6

 

other than an issuance of Common Stock pursuant to Sections 5(c)

or 5(f) hereof (any such issuance shall be referred to hereinafter as a

“Dilutive Issuance”), then forthwith upon such issue or sale, such applicable

Conversion Price shall be reduced to the per share selling price in the

Dilutive Issuance.

 

Notwithstanding the foregoing, no Conversion Price shall at such time

be reduced if such reduction would be an amount less than $.01, but any such

amount shall be carried forward and deduction with respect thereto made at the

time of and together with any subsequent reduction that, together with such

amount and any other amount or amounts so carried forward, shall aggregate $.01

or more.

 

For purposes of this Section 5(e), the following

provisions will be applicable:

 

“Convertible Securities” shall mean evidences

of indebtedness, shares of stock or other securities that are convertible into

or exchangeable for, with or without payment of additional consideration,

shares of Common Stock.

 

“Stock Purchase Rights” shall mean any warrants,

options or other rights to subscribe for, purchase or otherwise acquire any

shares of Common Stock or any Convertible Securities.

 

Convertible Securities and Stock Purchase Rights shall

be deemed outstanding and issued or sold at the time of such issue or sale.

 

Determination of

Consideration.  The

“consideration actually received” by the Corporation for the issuance, sale,

grant or assumption of shares of Common Stock, Stock Purchase Rights or

Convertible Securities, irrespective of the accounting treatment of such

consideration, shall be valued as follows:

 

(i)            Cash Payment.  In the case of cash, the net amount received

by the Corporation after deduction of any accrued interest or dividends and

before deducting any expenses paid or incurred and any underwriting commissions

or concessions paid or allowed by the Corporation in connection with such issue

or sale;

 

(ii)           Noncash Payment.  In the case of consideration other than

cash, the value of such consideration, which shall not include the value of any

Convertible Securities being converted or exchanged, as determined by the Board

of Directors in good faith, after deducting any accrued interest or dividends;

and

 

(iii)          Stock Purchase Rights and

Convertible Securities.  The total

consideration, if any, received by the Corporation as consideration for the

issuance of the Stock Purchase Rights or the Convertible Securities, as the

case may be, plus the minimum aggregate amount of additional consideration, if

any, payable to the Corporation upon the exercise of such Stock Purchase Rights

or upon the conversion or exchange of such Convertible Securities, as the case

may be, in each case after deducting any accrued interest or dividends.

 

7

 

Readjustment of Conversion

Price.  In the event

of any change in (i) the consideration, if any, payable upon exercise of any

Stock Purchase Rights or upon the conversion or exchange of any Convertible

Securities, or (ii) the rate at which any Convertible Securities are convertible

into or exchangeable for shares of Common Stock, the applicable Conversion

Price as computed upon the original issue thereof shall forthwith be readjusted

to the Conversion Price that would have been in effect at such time had such

Stock Purchase Rights or Convertible Securities provided for such changed

purchase price, consideration or conversion rate, as the case may be, at the

time initially granted, issued or sold. 

On the expiration of any Stock Purchase Rights not exercised or of any

right to convert or exchange under any Convertible Securities not exercised,

the applicable Conversion Price then in effect shall forthwith be increased to

the Conversion Price that would have been in effect at the time of such

expiration had such Stock Purchase Rights or Convertible Securities never been

issued.  No readjustment of the

Conversion Price pursuant to this paragraph shall (i) increase the applicable

Conversion Price by an amount in excess of the adjustment originally made to

the Conversion Price in respect of the issue, sale or grant of the applicable

Stock Purchase Rights or Convertible Securities, or (ii) require any adjustment

to the amount paid or number of shares of Common Stock received by any holder

of Series F-2 Preferred Stock upon any conversion of any share of Series F-2

Preferred Stock prior to the date upon which such readjustment to the

Conversion Price shall occur.

 

(f)            Exclusions.  Anything herein to the contrary

notwithstanding, the Corporation shall not be required to make any adjustment

of any Conversion Price of the Series F-2 Preferred Stock in the case of (i)

the issuance or sale of options, or the shares of stock issuable upon exercise

of such options, to directors, officers, employees or consultants of the

Corporation pursuant to stock options or stock purchase plans or agreements,

whether “qualified” for tax purposes or not, pursuant to plans or arrangements

approved by the Board of Directors, (ii) the issuance of Common Stock upon

conversion of shares of existing classes of Preferred Stock (including the

Series F-2 Preferred Stock) or exercise of any warrants or conversion of any

convertible notes offered, sold or issued prior to or connection with the same

transactions as the Series F Preferred Stock, the Series F-1 Preferred Stock or

the Series F-2 Preferred Stock, and (iii) securities issued in consideration

for the acquisition whether by merger or otherwise by the Corporation of all or

substantially of the capital stock or assets of any other entity or business

organization, provided such issuance is approved by holders of a majority of

the Series F-2 Preferred Stock.  The

issuances or sales described in the preceding clauses (i), (ii) and (iii) shall

be ignored for purposes of calculating any adjustment to any Conversion Price.

 

(g)           Certain

Events.  If an event not

specifically enumerated in this Section 5 occurs which has substantially the

same economic effect on the Series F-2 Preferred Stock as those specifically

enumerated shall occur, then this Section 5 shall be construed liberally,

mutatis mutandis, in order to give the Series F-2 Preferred Stock the benefit

of the protections provided under this Section 5.  The Corporation’s Board of Directors shall make an appropriate

adjustment in the applicable Conversion Price so as to protect the rights of

the holders of Series F-2 Preferred Stock.

 

8

 

(h)           Notices.

 

(i)            Promptly

upon any adjustment of the applicable Conversion Price, the Corporation shall

give written notice thereof to all holders of Series F-2 Preferred Stock,

setting forth in reasonable detail and certifying the calculation of such

adjustment.

 

(ii)           The

Corporation shall give written notice to all holders of Series F-2 Preferred

Stock at least 10 days prior to the date on which the Corporation closes its

books or takes a record (A) with respect to any dividend or distribution upon

Common Stock, (B) with respect to any pro rata subscription offer to holders of

Common Stock, or (C) for determining rights to vote with respect to any

Fundamental Change, dissolution or liquidation.

 

(iii)          The

Corporation shall give written notice to the holders of Series F-2 Preferred

Stock at least twenty (20) days prior to the date on which any Fundamental

Change shall take place, which notice may be one and the same as that required

by (ii) above.

 

(i)            Automatic

Conversion.  Each share of Series

F-2 Preferred Stock shall automatically be converted into shares of Common

Stock at the then applicable Conversion Price (or upon such other terms as holders

of 75% or more of the shares of Series F-2 Preferred Stock may agree) upon the

written consent of the holders of 75% or more of the shares of Series F-2

Preferred Stock.

 

6.             Definitions.  The following terms have the meanings

specified below:

 

(a)           Affiliate.  The term “Affiliate” shall mean (i) any

Person directly or indirectly controlling, controlled by or under direct or

indirect common control with the Corporation (or other specified Person), (ii)

any Person who is a beneficial owner of at least 10% of the then outstanding

voting capital stock (or options, warrants or other securities which, after

giving effect to the exercise thereof, would entitle the holder thereof to hold

at least 10% of the then outstanding voting capital stock) of the Corporation

(or other Specified Person), (iii) any director or executive officer of the

Corporation (or other Specified Person) or Person of which the Corporation (or

other Specified Person) shall, directly or indirectly, either beneficially or

of record, own at least 10% of the then outstanding equity securities of such

Person, and (iv) in the case of Persons specified above who are individuals,

Family Members of such Person; provided, however, that no holder of Preferred

Stock nor any of their designated members of the Board of Directors shall be an

Affiliate of the Corporation for purposes hereof.

 

(b)           Board

of Directors.  The term “Board of

Directors” shall mean the Board of Directors of the Corporation.

 

(c)           Conversion

Stock.  The term “Conversion Stock”

shall mean the shares of Common Stock issuable upon conversion of shares of

Series F-2 Preferred Stock; provided that if there is a change such that the

securities issuable upon conversion of the Series F-2 Preferred Stock are

issued by an entity other than the Corporation or there is a change in the

class of securities so issuable, then the term “Conversion Stock” shall mean

shares of the security issuable upon conversion of the Series F-2 Preferred

Stock if such security is issuable in shares,

 

9

 

or shall mean the smallest unit in which such security is issuable if

such security is not issuable in shares.

 

(d)           Family

Members.  The term “Family Members”

shall mean, as applied to any individual, any spouse, child, grandchild,

parent, brother or sister thereof or any spouse of any of the foregoing, and

each trust created for the benefit of one or more of such Persons (other than

any trust administered by an independent trustee) and each custodian of

property of one or more such Persons.

 

(e)           Issue

Date.  The term “Issue Date” shall

mean the date on which the Corporation first issues a share of Series F-2

Preferred Stock.

 

(f)            Person.  The term “Person” shall mean an individual,

corporation, partnership, limited liability company, association, trust, joint

venture or unincorporated organization or any government, governmental

department or any agency or political subdivision thereof.

 

(g)           “Principal

Market” means the American Stock Exchange, the New York Stock Exchange, the

Nasdaq National Market, or the Nasdaq Smallcap Market, whichever is at the

applicable time the principal trading exchange or market for the Common Stock,

based upon share volume.

 

(h)           Public

Offering.  The term “Public

Offering” shall mean any offering by the Corporation of its equity securities

to the public pursuant to an effective registration statement under the

Securities Act or any comparable statement under any similar federal statute

then in force, other than an offering in connection with an employee benefit

plan.

 

(i)            Securities

Act.  The term “Securities Act”

shall mean the Securities Act of 1933, as amended, or any successor federal

statute, and the rules and regulations of the Securities and Exchange

Commission promulgated thereunder, all as the same shall be in effect from time

to time.

 

(j)            Subsidiary.  The term “Subsidiary” shall mean any Person

of which the Corporation shall at the time own, directly or indirectly through

another Subsidiary, 50% or more of the outstanding voting capital stock (or

other shares of beneficial interest with voting rights), or which the

Corporation shall otherwise control.

 

10

 

IN WITNESS WHEREOF, VCampus Corporation has caused

this certificate to be signed by its duly authorized officer as of the          day of                      2002.

 

	

   

  	

  VCAMPUS CORPORATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

   

  
					

 

11

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