1
EXHIBIT 10.61
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
VCAMPUS CORPORATION
This Warrant (the "Warrant") is issued to XXXXX XXXXXX & CO., INC. or its
permitted assigns ("Holder") by VCampus Corporation, a Delaware corporation (the
"Company"), on May 29, 2001 (the "Warrant Issue Date") for consideration of
$5.00 in the aggregate, receipt of which is hereby acknowledged.
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company up to 157,500 shares of
Common Stock of the Company (the "Warrant Shares") at the Exercise Price
(defined below), subject to adjustment as provided in Section 8 (and subject to
adjustment as provided in Section 5 in the event the Holder elects the "cashless
exercise" procedure in Section 5).
2. Exercise Price. The purchase price for the Shares shall be $1.792 per
Warrant Share [EQUAL TO 100% OF THE FAIR MARKET VALUE OF THE COMPANY'S COMMON
STOCK ON THE DATE HEREOF, BASED ON THE AVERAGE CLOSING SALE PRICE OF THE COMMON
STOCK ON THE NASDAQ SMALLCAP MARKET FOR THE 5 MOST RECENT TRADING DAYS PRIOR TO
THE DATE HEREOF], as adjusted from time to time pursuant to Section 8 hereof
(the "Exercise Price").
3. Exercise Period. This Warrant shall be exercisable commencing
immediately upon issuance and ending at 5:00 p.m. on the earlier of: (a) May 29,
2006; or (b) fifteen (15) days after the Company notifies the Holder in writing
that the average closing sale price of the Company's Common Stock on its
principal market for ten consecutive trading days was a price equal to at least
three (3) times the Exercise Price.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
2
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Warrant Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant pursuant to Section
4, the Holder may elect to receive, without the payment by the Holder of any
additional consideration, Warrant Shares equal to the value of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the Notice of Exercise attached
hereto indicating such election, in which event the Company shall issue to the
holder hereof a number of Warrant Shares computed using the following formula:
Y (A - B)
---------
X = A
Where:X = The number of Warrant Shares to be issued to the Holder
pursuant to this net exercise;
Y = The number of Warrant Shares in respect of which the
net issue election is made;
A = The fair market value of one Warrant Share at the time
the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 5, the fair market value of one Warrant Share as of
a particular date shall be determined as follows: (i) if traded on a securities
exchange or through the Nasdaq National Market or the Nasdaq SmallCap Market,
the value shall be deemed to be the average of the closing sale prices of the
securities on such exchange over the thirty (30) day period ending one day prior
to the net exercise election; (ii) if traded over-the-counter, the value shall
be deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending one day prior to the net
exercise; and (iii) if there is no active public market, the value shall be the
fair market value thereof, as determined in good faith by the Board of Directors
of the Company.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Warrant
Shares so purchased shall be issued as soon as practicable thereafter (with
appropriate restrictive legends, if applicable), and in any event within ten
(10) days of the delivery of the subscription notice.
7. Issuance of Shares. The Company covenants that the Warrant Shares,
when issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
2
3
8. Adjustment of Exercise Price and Kind and Number of Shares. The number
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant (i) subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, (ii)
issue additional shares of its Common Stock or other equity securities as a
dividend with respect to any shares of its Common Stock, or (iii) declare a
cash dividend with respect to any shares of its Common Stock, the number of
shares of Common Stock issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or
stock or cash dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase
price payable per share, but the aggregate purchase price payable for the
total number of Warrant Shares purchasable under this Warrant (as adjusted)
shall remain the same. Any adjustment under this Section 8(a) shall become
effective at the close of business on the date the subdivision or
combination becomes effective, or as of the record date of such dividend,
or in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination, or
stock dividend provided for in Section 8(a) above), then, as a condition of
such reclassification, reorganization, or change, lawful provision shall be
made, and duly executed documents evidencing the same from the Company or
its successor shall be delivered to the Holder, so that the Holder shall
have the right at any time prior to the expiration of this Warrant to
purchase, at a total price equal to that payable upon the exercise of this
Warrant (subject to adjustment of the Exercise Price as provided in Section
8), the kind and amount of shares of stock and other securities and
property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of
Common Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the
Holder so that the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the
purchase price per share payable hereunder, provided the aggregate purchase
price shall remain the same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Exercise Price, the Company shall promptly notify the holder of
such event and of the number of shares of Common Stock or other securities
or property thereafter purchasable upon exercise of this Xxxxxxx.
0
0
(x) Xxxxxxxx of New Warrant. Upon the occurrence of any of the events
listed in this Section 8 that results in an adjustment of the type, number
or exercise price of the securities underlying this Warrant, the Holder
shall have the right to receive a new warrant reflecting such adjustment
upon the Holder tendering this Warrant in exchange. The new warrant shall
otherwise have terms identical to this Warrant.
9. Covenants and Conditions.
(a) No Impairment. Pursuant to the terms and conditions of this
Warrant, Company shall: (i) reserve an appropriate number of shares of
Company's Common Stock to facilitate the issuance of shares to Holder
pursuant to this Warrant, (ii) not amend its articles or take any other
action that would materially impair Company's ability to comply with the
terms of the Warrant or otherwise unfairly impair the rights of the Holder,
and (iii) provide Holder with reasonable notice before Company undertakes
any significant corporate action that would have a material impact upon
Holder's rights under the Warrant or upon the rights of the holders of
Common Stock generally.
(b) Registration Rights. The Holder shall have the same registration
rights with respect to the Warrant Shares as the holders of Registrable
Securities under that certain Registration Rights Agreement dated as of the
date hereof by and between the Company and the Purchasers signatory
thereto.
10. Representations and Warranties. Pursuant to the terms and conditions
of this Warrant, the Company represents and warrants that (i) the Company is
properly organized and structured pursuant to all applicable corporate laws of
the State of Delaware, (ii) the issuance of this Warrant has been duly
authorized by all necessary corporate action of the Company and does not
conflict with the terms any of the bylaws, articles of incorporation or material
agreements of the Company, and (iii) all reports and other information filed
with the United States Securities Exchange Commission were, on the date they
were filed, complete and accurate in all material respects, and do not make any
material misstatement or omit to state any facts that are material to the
operations, financial results or prospects of the Company.
11. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
12. No Stockholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to the shares
of Common Stock issuable on the exercise hereof, including (without limitation)
the right to vote such shares of Common Stock, receive dividends or other
distributions thereon, exercise preemptive rights or be notified of stockholder
meetings, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company. However,
nothing in this Section 12 shall limit the right of the Holder to be provided
the Notices required under this Warrant.
4
5
13. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder. Any waiver or amendment effected
in accordance with this Section shall be binding upon each holder of any shares
of Common Stock purchased under this Warrant at the time outstanding (including
securities into which such shares have been converted), each future holder of
all such Shares, and the Company.
15. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
16. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
17. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
18. Governing Law. This Warrant shall be governed by the laws of the State
of Delaware as applied to agreements among Delaware residents made and to be
performed entirely within the State of Delaware.
5
6
IN WITNESS WHEREOF, VCampus Corporation caused this Warrant to be executed by an
officer thereunto duly authorized.
VCAMPUS CORPORATION
By:
-----------------------------
Name:
-----------------------------
Address: 0000 Xxxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax Number: (000) 000-0000
6
7
NOTICE OF EXERCISE
To:
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Common Stock
of _____________, pursuant to the terms of the
attached Warrant and payment of the Exercise Price
per share required under such Warrant accompanies
this notice;
OR
________ (b) Exercise the attached Warrant for [all of the
shares] [________ of the shares] [cross out
inapplicable phrase] purchasable under the Warrant
pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
-----------------------------------------
Address:
Date:
Name in which shares should be registered:
7
