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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 11, 2000
VCampus Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
000-21421 54-1290319
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(Commission file Number) (IRS Employer ID Number)
8251 Greensboro Drive, Suite 500, McLean, VA 22101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 893-7800
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NA
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On January 13, 2000, the Registrant issued a press release stating as
follows:
January 13, 2000, McLean, Va.--VCampus Corporation, a leading applications
service provider of web-based training, today announced that Mastech
Corporation, through its eVentures business unit, has made a strategic
investment in VCampus. Mastech Corporation (NASDAQ: MAST) , a leader in
providing e-business and information technology services worldwide to customers
such as GE, Sprint and Sony. Mastech and VCampus also intend to form a strategic
partnership through which Mastech will promote VCampus as a platform for hosting
corporate virtual campuses to its 1000 global customers. Mastech operates
facilities worldwide and employs over 5000 professionals.
Mastech purchased approximately 1.136 million VCampus common shares directly
from the company at a 20% premium over the average closing price for a 15-day
trailing period. The price was fixed at $3.62 on January 3, 2000, the date on
which both companies reached an agreement in principle. In addition, VCampus
granted Mastech warrants to purchase an additional 450,000 shares of VCampus
Common Stock during the next twelve months at exercise prices between $4.34 and
$6.125 per share depending on the market price of the stock on the exercise
date.
Nat Kannan, Chairman and CEO of VCampus Corporation, commented, "Mastech is a
major global player in e-Business and has targeted e-Learning as a strategic
growth area. We are delighted that they have selected VCampus and our full
service approach to providing Enterprise-wide learning to major corporations.
Mastech's endorsement and partnership offers to accelerate our growth into
global corporate customers. We believe this is a major milestone for us and
solves a huge marketing obstacle. Mastech will help us offer the VCampus
Enterprise Class solution to all of their 1000 customers. We expect this will
reduce our sales lead time and allow us to grow more rapidly."
Mr. Kannan added, "Basically, the traditional ERP implementations at major
corporations have not adequately addressed the e-learning needs of employees,
customers, and suppliers. VCampus has one of the most tested and proven
solutions for this market. Now with Mastech as a partner, we can go after this
market aggressively. Also, Mastech has an experienced professional staff to
support VCampus as we bid on large enterprise-level virtual campus
implementation projects."
"This agreement boosts our marketing and financial capabilities. The investment
helps us provide the capital to improve our balance sheet and expand to further
our goal of establishing VCampus as the clear business leader of distance
learning." Kannan also said the partnership leverages the strengths of both
companies. "For Mastech, VCampus provides a hosting platform for their corporate
network solutions; for VCampus, Mastech offers access to large corporations and
global institutions." Kannan continued, "This deal is a company maker."
Founded in 1986, Mastech is a worldwide provider of IT services and solutions to
large and medium-sized companies and employs highly skilled IT professionals.
"Rapidly changing technologies and skills call for professional training
programs hosted and delivered online,"
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continued Kannan. "VCampus is now poised to meet the growing demands of this
market and to expand our course offerings over the next few months."
According to Ajmal Noorani, Vice President of Mastech eVentures, web-based
education is fast becoming the preferred learning environment in the new
economy, as traditional methods require too much time and money.
"eLearning is a highly-functional and efficient offering in the Internet age,"
Noorani said. "We recognize its benefits and are pleased to be able to now offer
our global clients a complete solution from VCampus for their organizational
training needs. Mastech has been a forerunner of web-based learning for our
employees--through Mastech Virtual University--and it has enabled us to offer
training to employees around the world at a fraction of the cost of traditional
methods.
Noorani added that the VCampus approach--from course development to course
delivery and administration, all hosted offsite--is a true horizontal ASP
(Application Service Provider) model.
About Mastech Corporation
Mastech Corporation (NASDAQ:MAST) is a worldwide provider of high value
information technology services including eBusiness solutions, enterprise
solutions implementation, applications development, applications management, and
software modernization services, on a time and materials and/or a fixed
time/fixed price basis, with offshore delivery options. With a staff of over
5,500 employees, Mastech delivers its services to more than 900 clients through
36 offices in North America, Europe, Asia, Australia and Africa. For more
information, email [email protected]
With the exception of the historical information contained in the release, the
matters described herein contain forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve a number of risks and
uncertainties including but not limited to difficulties in managing rapid growth
(including future capital needs), development of its target market, risks
associated with acquisitions, and economic, competitive, governmental and
technological factors outside the control of the Company. For more information
regarding these risks and uncertainties see the Company's Registration Statement
on Form S-1 and other SEC filings, copies of which are available upon request
from the Company.
Item 7. Exhibits
(c) Exhibits.
10.47 Stock Purchase Agreement dated as of January 11, 2000, by and
among the Registrant and Mastech Corporation.
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10.48 Registration Rights Agreement dated as of January 11, 2000 by
and among the Registrant and Mastech Corporation.
10.49 Warrant issued to Mastech Corporation, dated as of January 11,
2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VCAMPUS CORPORATION
Date: January 13, 2000 /s/ Narasimhan P. Kannan
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Narasimhan P. Kannan
Chief Executive Officer
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REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of January 11, 2000, by and
between VCampus Corporation, a Delaware corporation ("Company"), and Mastech
Corporation, a Pennsylvania corporation, through its Mastech eVentures business
unit ("Purchaser").
W I T N E S S E T H:
WHEREAS, Company and Purchaser have entered into that certain Stock
Purchase Agreement, dated as of January 10, 2000 (the "Purchase Agreement"),
pursuant to which Company has agreed to issue and sell to Purchaser, and
Purchaser has agreed to purchase from Company, through its Mastech eVentures
business unit, shares of Common Stock of the Company and a Warrant exercisable
for Common Stock of the Company; and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement and to purchase, through its Mastech eVentures business unit, the
shares of Common Stock of the Company and the Warrant exercisable for Common
Stock of the Company, 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 Warrant.
"Holder" shall mean (i) the 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.
"Incidental Registration" shall have the meaning ascribed to it in
Section 3.
"Majority Holders" shall mean the Holders of a majority of the
Registrable Securities.
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"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Registrable Securities" shall mean the shares of Common Stock issued
pursuant to the Purchase Agreement, the Warrant Shares, shares of Common Stock
hereafter acquired by Purchaser, and shares of Common Stock which Purchaser
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 shares of Common Stock or Warrant 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).
2. Required Registration. Subject to the terms of this Section 2
and Section 5, after receipt of a written request from the holders of
Registrable Securities requesting that Company effect a registration under the
Securities Act covering at least 30% of the Registrable Securities then
outstanding, and specifying the intended method or method of disposition
thereof, Company shall promptly notify all Holders in writing of the receipt of
such request and each such Holder, in lieu of exercising its rights under
Section 3 may elect (by written notice sent to Company within ten (10) Business
Days from the date of such Holder's receipt of the aforementioned Company's
notice) to have Registrable Securities included in such registration thereof
pursuant this Section 2. Thereupon Company shall, as expeditiously as possible,
use its best efforts to effect the registration under the Securities Act of all
shares of Registrable Securities which Company has been so requested to register
by such Holders for sale, all to the extent required to permit the disposition
(in accordance with the intended method or methods thereof, as aforesaid) of the
Registrable Securities so registered; provided, however, that Company shall not
be required to effect more than one (1) registration per year of Registrable
Securities pursuant to this Section 2 and a total of five (5) registrations of
Registrable Securities pursuant to this Section 2 during the term of this
Agreement (excluding a Registration Statement on Form S-3 (or other comparable
or successor short form) registering the offer and sale of Registrable
Securities in one distribution or from time to time in the manner contemplated
by Rule 415 of the Securities Act (a "Shelf Registration Statement")). During
the two-year period following the date of this Agreement, the Company will be
permitted to satisfy its obligations under this Section 2 by filing a Shelf
Registration Statement. Following the second anniversary of the date of this
Agreement or in the event that the Company does not qualify to use Form S-3 for
the
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offer and sale of Registrable Securities during the two year period following
the date of this Agreement, the Holders may require the Company to register
Registrable Securities on any applicable form including Form S-1 (or its
successor form). The Company shall not be required to file a Registration
Statement at a time when a Shelf Registration Statement covering Registrable
Securities is then in effect.
3. Incidental Registration. If Company at any time proposes to
file on its behalf 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 (an
"Incidental Registration Statement"), it will give written notice to all Holders
at least 15 days before the initial filing with the SEC of such Incidental
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 10 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 incidental 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.
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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 120 days (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, in the case of an Incidental Registration Statement filed pursuant to
Section 3, the earlier of such time as all of such securities have been disposed
of in a public offering or the expiration of 120 days, or in the case of a
Registration Statement filed pursuant to Section 2, such time as is set forth in
Section 4(a);
(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) furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such shares of
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through
underwriters, on the date that the Registration Statement with respect to such
shares of Registrable Securities becomes effective, (1) an opinion, dated such
date, of the independent counsel representing Company for the purposes of such
registration, addressed to the underwriters, if any, and if such Registrable
Securities are
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not being sold through underwriters, then to the Holders making such request, in
customary form and covering matters of the type customarily covered in such
legal opinions; and (2) a comfort letter dated such date, from the independent
certified public accountants of Company, addressed to the underwriters, if any,
and if such Registrable Securities are not being sold through underwriters, then
to the Holder making such request and, if such accountants refuse to deliver
such letter to such Holder, then to Company, in a customary form and covering
matters of the type customarily covered by such comfort letters and as the
underwriters or such Holder shall reasonably request. Such opinion of counsel
shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as the Holders of a
majority of the Registrable Securities being registered may reasonably request.
Such letter from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five Business Days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
the Holders of a majority of the Registrable Securities being so registered may
reasonably request;
(f) 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;
(g) 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;
(h) 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 posteffecive 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
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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);
(i) 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;
(j) 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);
(k) 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 request a reasonable period of time
prior to sales of the Registrable Securities;
(l) upon the occurrence of any event contemplated by Section
4(h)(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(h)(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(l);
(m) (i) make reasonably available for inspection by the
Holders, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
the Holders or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and (ii) cause the
Company's officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with the registration; provided that the
foregoing inspection and information gathering shall be coordinated on behalf of
the
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Purchaser by Purchaser and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in Section 4; and
(n) in connection with any underwritten offering, make
appropriate officers of Company reasonably available to the selling security
holders for meetings with prospective purchasers of the Registrable Securities
and prepare and present to potential investors customary "road show" material in
a manner consistent with other new issuances of securities similar to the
Registrable Securities, in connection with any proposed sale of the Registrable
Securities in an aggregate offering of at least $10 million.
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, the reasonable fees and expenses
of one counsel for the selling security holders (selected by those holding a
majority of the shares being registered), 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 (including costs associated with
including shares of Company Common Stock held by other parties, other than
employees or directors of the Company, who have registration rights of the type
described in Section 3 hereof) in connection with a Registration Statement filed
prior to the first anniversary of the date of this Agreement pursuant to Section
2 shall be paid by the selling Holders; provided that the Holders shall not be
required to pay aggregate expenses in excess of $50,000; and
(b) 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 180 days 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
(c) 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.
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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)
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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 Section 2 hereof 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
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period of effectiveness of the Registration Statement pursuant to Section 2
shall be extended by the length of any such Suspension Period;
(b) Notwithstanding Section 7(b) hereof, Company agrees that
it shall not impose a Suspension Period during the 30-day period following the
date on which the Registration Statement is first declared effective by the SEC
(the "30-day Period") as a result of any activity initiated by Company, or in
response to any proposal, unless Company's Board of Directors determines in good
faith that it is required to impose a Suspension Period by law during such
30-day Period. To the extent Company imposes a Suspension Period during such
30-day Period as a result of such determination by Company's Board of Directors,
Company shall not, for such additional number of consecutive days following the
termination of such Suspension Period, impose an additional Suspension Period,
so as to provide the Holders with a total of 30 days without a Suspension
Period; and
(c) 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 (c), 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. Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Registrable Securities to be registered
pursuant to Section 2 in an underwritten public offering shall be of recognized
national standing selected by the holders of a majority of the shares being so
registered, and shall be reasonably acceptable to Company.
9. Restrictions on Sale After Public Offering. Except for
transfers made in transactions exempt from the registration requirements under
the Securities Act (other than Rule 144 thereunder), 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.
10. Miscellaneous.
(a) No Inconsistent Agreements. From and after the date of
this Agreement, the Company shall not, without the prior written consent of the
Majority
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<PAGE> 11
Holders, enter into any agreement with any holder or prospective holder of any
securities of the Company which would grant such holder or prospective holder of
any securities of the Company the right to require the Company to initiate any
registration of any securities of the Company (i) that is inconsistent with or
superior to the rights of the Holders of Registrable Shares provided in this
Agreement or (ii) that would require the exclusion of Registrable Shares held by
the Holders from such a registration beyond any such exclusion contemplated by
this Agreement. This Paragraph 10(a) shall not limit the right of the Company to
enter into any agreements with any holder or prospective holder of any
securities of the Company giving such holder or prospective holder the right to
require the Company, upon any registration of any of its securities, to include,
among the securities which the Company is then registering, securities owned by
such holder if such rights are subordinate to the rights of a Holder of
Registrable Shares.
(b) Remedies. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(c) 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.
(d) 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.
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<PAGE> 12
(ii) If to Company, at
VCampus Corporation
Suite 500
8251 Greensboro Drive
McLean, Virginia 22102
Attention: Nat Kannan, CEO
Telecopy Number: (703) 893-1905
with a copy to
Wyrick Robbins Yates & Ponton LLP
Suite 300
4101 Lake Boone Trail
Raleigh, NC 27607
Attn: Larry E. Robbins
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.
(e) 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.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law; Jurisdiction. This Agreement shall be
governed by, construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to the conflict of laws
provisions thereof. Each of the parties hereby submits to personal jurisdiction
and waives any objection as to venue in the County of Allegheny, Commonwealth of
Pennsylvania . Service of process on the parties in any action arising out of or
relating to this Agreement shall be effective if mailed to the parties in
accordance with Section 10(d) hereof. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights
hereunder.
(h) 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,
12
<PAGE> 13
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.
(i) Entire Agreement. This Agreement, together with the
Purchase Agreement and Warrant, 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]
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
VCAMPUS CORPORATION
By:
---------------------------------
Name:
Title:
MASTECH CORPORATION
By:
---------------------------------
Name:
Title:
14
<PAGE> 15
SCHEDULE I
1. The Company has entered into agreements granting registration rights to
all of the parties under its currently effective Registration Statement
on Form S-1.
2. The Company granted incidental registration rights to each of BH Capital
Investments, L.P. and Excalibur Limited Partnership with respect to a
total of 55,000 shares of Common Stock issuable upon exercise of
warrants.
15
<PAGE> 1
WARRANT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND THIS WARRANT AND
SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
THEREFOR OR AN APPLICABLE EXEMPTION FROM REGISTRATION THEREFROM
UNDER SAID ACT AND SUCH LAWS.
VCAMPUS CORPORATION
Warrant for the Purchase of Shares
of Common Stock
FOR VALUE RECEIVED and subject to the terms and conditions contained
herein, VCampus Corporation, a Delaware corporation (the "Company"), hereby
certifies that for value received Mastech Corporation, a Pennsylvania
corporation, through its business unit Mastech eVentures, or its permitted
assigns, is entitled to purchase from the Company at any time or from time to
time during the Exercise Period (as defined below) any or all of the Warrant
Shares (as defined below) for the Exercise Price (as defined below). The
Exercise Price shall not be subject to adjustment, except as set forth in
paragraph 3 hereof.
1. Definitions.
As used in this Warrant, the following terms have the respective
meanings set forth below:
"BUSINESS DAY" means any day that is not a Saturday, a Sunday
or a legal holiday in Pittsburgh, Pennsylvania.
"CAPITAL STOCK" means any and all shares, interests,
participations, or other equivalents (however designated) of capital stock, or
any and all equivalent ownership interests.
"COMMON STOCK" means the common stock of the Company, $.01 par
value per share, and any Capital Stock into which such common stock may be
changed on or after the Issue Date and any class or series of Capital Stock of
the Company (regardless of how denominated), that has the right (subject to any
prior rights of any other class or series of stock) to participate in any
distribution of the assets or earnings of the Company without effective or
practical limit as to per share amount and shall also include shares of common
stock of any successor or acquiring corporation referred to in paragraph 3 (c)
received by or distributed to the holders of such Capital Stock in the
circumstances contemplated by paragraph 3(c).
<PAGE> 2
"CURRENT MARKET PRICE," as of any date with respect to any security,
means the daily market price of such security for the previous Business Day. The
daily market price for each such Business Day shall be (i) the last sale price
on such day on the principal stock exchange or NASDAQ SmallCap Market System
("NASDAQ/SCS") on which such Common Stock is then listed or admitted to trading,
(ii) if no sale takes place on such day on any exchange or NASDAQ/SCS, the
average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange or NASDAQ/SCS, (iii) if the Common Stock
is not then listed or admitted to trading on any stock exchange or on the
NASDAQ-SCS, the average of the last reported closing bid and asked prices on
such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged
in the business of reporting such prices, as furnished by any similar firm then
engaged in such business, or (v) if there is no such firm, as furnished by any
member of the National Association of Securities Dealers ("NASD") selected
mutually by the Purchaser and Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD, one of which shall be
selected by the Purchaser and one of which shall be selected by the Company.
"EXERCISE DATE" means the date on which the Holder exercises this
Warrant, in whole or in part.
"EXERCISE PERIOD" means the period commencing on the Issue Date and
ending at 5:00 p.m., Eastern standard time, on the Termination Date.
"EXERCISE PRICE" means the Current Market Price for each Warrant
Share plus 20% of such Current Market Price; provided further, however, and
notwithstanding the foregoing: (i) the Exercise Price shall never exceed $6.125
per Warrant Share; and (ii) the Exercise Price shall never be less than $4.344
per Share ($4.344 determined based upon an approximately 44% premium to the
average closing price of the Common Stock for the 15 trading days ended January
3, 2000).
"HOLDER" means Mastech Corporation or any permitted transferee of
this Warrant.
"ISSUE DATE" means the date upon which this Warrant is originally
issued.
"MERGER TRIGGERING EVENT" has the meaning assigned to that term in
paragraph 3(c).
"PERSON" means any individual, sole proprietorship, partnership,
corporation, limited liability company, joint venture, trust, association,
institution, public benefit corporation, governmental agency or other entity and
the heirs, executors, administrators, legal representatives, successors and
assigns of such Person, as the context may require.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of January 11, 2000, between the Company and Mastech
Corporation
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<PAGE> 3
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and the regulations promulgated thereunder.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated
as of January 11, 2000, between the Company and Mastech Corporation.
"TERMINATION DATE" means the first anniversary of the Issue Date;
provided, however, that if, on such date, the Company is then required, pursuant
to an effective request therefor by the Holder, to effect, or is in the process
of effecting, a registration under the Securities Act for an underwritten public
offering in which Warrant Shares are, pursuant to the Registration Rights
Agreement, entitled to be included, or if the Company is in default of any
obligations created by this Warrant, the Stock Purchase Agreement or by the
Registration Rights Agreement, the Termination Date shall be deemed to be, and
the right to exercise this Warrant and purchase Warrant Shares shall expire at
5:00 p.m., Eastern standard time, on, the 30th day following the date on which
such registration shall have become effective (but in no event later than 180
days beyond the date this Warrant otherwise would have expired) or on the 30th
day following the date all of such defaults have been cured, as the case may be;
and provided, further, that if an approval or waiver is required to be obtained
from a governmental authority (or a filing with a governmental authority and/or
expiration of a period of time following such filing) in order for an exercise
of this Warrant, in whole or in part, or the issuance of any or all of the
Warrant Shares upon such exercise, to comply with applicable law (including,
without limitation, the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976,
as amended) and the Holder delivers to the Company on or prior to the last date
with respect to which this Warrant can be exercised with respect to such Warrant
Shares a written notification of the Holder's intent to exercise this Warrant
and evidence reasonably satisfactory to the Company that the Holder has made all
filings required to be made by the Holder to obtain such approval or waiver or
to satisfy any other filing requirements, and a request that the Company make
all filings required to be made by the Company to obtain such approval or waiver
or to satisfy any other filing requirements, and the Holder thereafter
diligently continues to attempt to obtain such approval or waiver and/or
expiration of waiting period, then the Termination Date shall be deemed to be,
and the last date on which this Warrant can be exercised with respect to such
Warrant Shares shall be extended through, the date five Business Days after the
date on which a final ruling is made with respect to the filing(s) requesting
such approval or waiver or the expiration of such waiting period, as the case
may be. The Company agrees to provide reasonable assistance to, and cooperate
with, the Holder in making such filings required to be made by the Holder, and
the Company shall make all filings required to be made by the Company, for
obtaining such approvals or waivers or to satisfy any other filing requirements,
as are necessary for the exercise of this Warrant by the Holder not to
constitute a violation of any other law or regulation.
"TRANSACTION CONSIDERATION" has the meaning assigned in paragraph
3(c).
"WARRANT CONSIDERATION AMOUNT" has the meaning specified in Section
2(b) hereof.
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<PAGE> 4
"WARRANT SHARES" means any of the shares of Common Stock issuable
upon exercise of this Warrant. The number of Warrant Shares shall initially be
450,000 shares of Common Stock, subject to adjustment on or after the Issue Date
pursuant only to the provisions of paragraph 3 of this Warrant.
2. Exercise of Warrant.
(a) This Warrant may be exercised during the Exercise Period in
accordance with the vesting schedule set forth on Schedule A attached
hereto, by the Holder by the surrender of this Warrant (with the
subscription duly executed) at the address set forth in paragraph 11(a)
hereof, together with proper payment of the Exercise Price.
Notwithstanding the foregoing, this Warrant shall become fully vested and
immediately exercisable in the event of: (i) a Merger Triggering Event; or
(ii) upon the breach of any covenant or obligation in this Warrant, the
Stock Purchase Agreement or the Registration Rights Agreement if such
breach is not cured within 30 days of notice of such breach delivered to
the Company. Payment for the Warrant Shares to be purchased shall be made
by wire transfer or certified or official bank check payable to the order
of the Company. If this Warrant is exercised in part, this Warrant must be
exercised for a whole number of shares of Common Stock, and the Holder is
entitled to receive a new Warrant covering the number of Warrant Shares in
respect of which this Warrant has not been exercised. Upon such surrender
of this Warrant, the Company will issue a certificate or certificates in
the name of the Holder for the number of shares of Common Stock to which
the Holder shall be entitled. The Company shall not be required to issue a
fractional share of Common Stock upon any exercise of this Warrant, but
the Company shall pay an amount in cash equal to the Current Market Price
for one Warrant Share on the date the Warrant is exercised, multiplied by
the fraction of a Warrant Share that would be issuable on the exercise of
this Warrant.
(b) In the event any Holder elects upon exercise to surrender
this Warrant for payment of the applicable Exercise Price for the shares
being purchased, this Warrant shall be surrendered and canceled. To the
extent any Holder elects to pay all or part of the Exercise Price by
surrendering this Warrant to the Company, the number of purchasable shares
under this Warrant required to be surrendered as payment for the Exercise
Price (the "Warrant Consideration Amount") shall be equal to that number
obtained by dividing (i) that amount of the aggregate Exercise Price that
any Holder elects by written notice to the Company to pay by the
application of this Warrant (such notice setting forth, in addition, the
required reduction in the number of shares purchasable by this Warrant as
calculated and shown in sufficient detail in accordance with the
immediately succeeding clause), by (ii) the Exercise Price per share on
the date of exercise.
(c) In the event of any exercise of the rights represented by
this Warrant, (i) certificates for the shares of Warrant Shares so
purchased shall be dated the date of such exercise and delivered to the
Holder hereof within a reasonable time, not exceeding five Business Days
after such exercise, and the Holder hereof shall be deemed for all
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<PAGE> 5
purposes to be the Holder of the shares of Warrant Shares so purchased as
of the date of such exercise, and (ii) unless this Warrant has expired, a
new Warrant representing the number of shares equal to (A) the number of
shares purchasable under this Warrant less (B) the sum of (1) the number
of shares of Warrant Shares purchased upon exercise and (2) the Warrant
Consideration Amount, if any, shall be issued to the Holder hereof within
such time.
3. Certain Adjustments. The Exercise Price and the kind and number of
shares of Common Stock issuable upon exercise of this Warrant shall be subject
to adjustment as set forth below in this paragraph 3. The Company shall give the
registered Holder notice of any event described below which requires an
adjustment pursuant to this paragraph 3 in accordance with the provisions of
paragraph 4.
(a) Stock Dividends, Subdivisions and Combinations. If at any
time the Company shall:
(i) fix a record date for the purpose of determining the
holders of its Common Stock entitled to receive a dividend payable
in, or other distribution of, additional shares of Common Stock;
(ii) subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock;
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock; or
(iv) issue any shares of its capital stock or other
securities by reclassification of the Common Stock (other than
pursuant to paragraph 3(c) below); then the Exercise Price shall be
proportionately decreased in the case of such a dividend or
distribution of additional shares of Common Stock or such a
subdivision, or proportionately increased in the case of such a
combination, or the kind of capital stock or other securities of the
Company which may be purchased shall be adjusted in the case of such
a reclassification of the Common Stock, each on the record date for
such dividend or distribution or effective date of such subdivision,
combination or reclassification, as the case may be, such that the
Holder shall be entitled to receive, upon exercise of this Warrant,
the aggregate number and kind of shares of Common Stock which, if
this Warrant had been fully exercised immediately prior to such
date, it would have owned upon such exercise and been entitled to
receive by virtue of such dividend, distribution, subdivision,
combination or reclassification.
(b) Certain Other Dividends and Distributions. If at any time the
Company shall fix a record date for the purpose of determining the holders
of its Common Stock entitled to receive any dividend or other distribution
(including any such distribution made in connection with a consolidation
or merger, but excluding any distribution referred to in subparagraph (a)
above) of:
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<PAGE> 6
(i) any evidences of indebtedness, any shares of its
capital stock (including Convertible Securities but excluding Common
Stock) or any other securities or property of any nature whatsoever
(including cash but excluding normal cash dividends or cash
distributions permitted under applicable law so long as in each case
such cash is payable solely out of earnings or earned surplus of the
Company); or
(ii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its
capital stock (including Convertible Securities) or any other of its
securities or its property of any nature whatsoever;
then the Exercise Price shall be adjusted to equal the Exercise
Price in effect prior to such distribution or dividend multiplied by
a fraction, (A) the numerator of which shall be (1) the Current
Market Price per share of the Common Stock on such record date minus
(2) the amount allocable to one share of Common Stock of the fair
value of any and all such evidences of indebtedness, shares of
stock, other securities or property or warrants or other
subscription or purchase rights so distributable (as determined in
good faith by the Board of Directors of the Company and, unless
waived by the Holder, supported by an opinion from an investment
banking firm of nationally recognized standing approved by the
Holder, which approval shall not be unreasonably withheld), and (B)
the denominator of which shall be such Current Market Price per
share of Common Stock on such record date. Such adjustments shall be
made whenever such a record date is fixed. A reclassification of the
Common Stock (other than a change in par value, or from par value to
no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed
a distribution by the Company to the holders of its Common Stock of
such shares of such other class of stock within the meaning of this
subparagraph (b) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common
Stock as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of
subparagraph (a). The Company shall give to the Holder of this
Warrant not less than twenty (20) days' prior notice of any record
date referred to in this subparagraph (b) in accordance with the
provisions of paragraph 4.
(c) Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc.
(i) In case the Company after the date hereof (A) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger,
or (B) shall permit any other Person to consolidate with or merge
into the Company and the Company shall be the continuing or
surviving Person but, in connection with such consolidation or
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<PAGE> 7
merger, the Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other
property, or (C) shall transfer all or substantially all of its
properties or assets to any other Person or (D) shall effect a
capital reorganization or reclassification of the Common Stock
(other than a capital reorganization or reclassification for which
adjustment in the Exercise Price is provided in subparagraph 3(a) or
subparagraph 3(b)), then, and in the case of each such transaction,
proper provision shall be made so that, upon the basis and the terms
and in the manner provided in this Warrant, the Holder of this
Warrant shall be entitled (x) upon the exercise hereof at any time
after the consummation of such transaction, to the extent this
Warrant is not exercised prior to such transaction, or is redeemed
in connection with such transaction, to receive at the Exercise
Price in effect at the time immediately prior to the consummation of
such transaction in lieu of the Common Stock issuable upon such
exercise of this Warrant prior to such transaction the stock and
other securities, cash and property to which such Holder would have
been entitled upon the consummation of such transaction if such
Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments (subsequent to
such corporate action) as nearly equivalent as possible to the
adjustments provided for in this paragraph 3 or (y) to sell this
Warrant (or, at such Holder's election, a portion thereof) to the
Person continuing after or surviving such event specified in clauses
(A) through (D) above, or to the Company (if the Company is the
continuing or surviving Person) at a sales price equal to the amount
of cash, property and/or the number of shares of Common Stock or
other securities to which a holder of the number of shares of Common
Stock which would otherwise have been delivered upon the exercise of
this Warrant or the portion hereof redeemed would have been entitled
upon the effective date or closing of any such event specified in
clauses (A) through (D) above (the "Event Consideration"), less the
amount or portion of such Event Consideration having a fair value
equal to the aggregate Exercise Price applicable to this Warrant or
the portion hereof so sold.
(ii) Notwithstanding anything contained in this Warrant to
the contrary, the Company will not effect any of the transactions
described in clauses (A) through (D) of the above subparagraph (i)
unless, prior to the consummation thereof, the surviving Person (if
other than the Company) in any merger or consolidation described in
such clauses, each Person which is to acquire the Company's assets
in any transaction described in clause (c) above, and each Person
(other than the Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this Warrant as
provided herein, shall assume, by written instrument delivered to,
and reasonably satisfactory to, the Holder of this Warrant, (A) the
obligations of the Company under this Warrant (and if the Company
shall survive the consummation of such transaction, such assumption
shall be in addition to, and, if requested by the Holder, shall not
release the Company from, any continuing obligations of the Company
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of stock, securities, cash or, property as, in
accordance with the foregoing provisions of this paragraph (c), such
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<PAGE> 8
Holder shall be entitled to receive, and such Person shall have
similarly delivered to such Holder an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to such
Holder, stating that this Warrant shall thereafter continue in full
force and effect and the terms hereof (including, without
limitation, all of the provisions of this paragraph 3) shall be
applicable to the stock, securities, cash or property which such
Person may be required to deliver upon any exercise of this Warrant
or the exercise of any rights pursuant hereto.
(iii) In case any of the transactions described in clauses
(A) through (D) of subparagraph (i) shall be proposed to be effected
(any such transaction a "Merger Triggering Event"), the Holder of
this Warrant may, and the Company agrees that as a condition to the
consummation of any such Merger Triggering Event, the Company shall
secure the right of such Holder to, sell this Warrant (or, at such
Holder's election, a portion thereof) to the Person continuing after
or surviving such Merger Triggering Event, or the Company (if the
Company is the continuing or surviving Person), simultaneously with,
the effective date or closing of such Merger Triggering Event, at a
sale price equal to the amount of cash, property and/or the number
of shares of Common Stock or other securities to which a holder of
the number of shares of Common Stock which would otherwise have been
deliverable upon the exercise of this Warrant or the portion hereof
redeemed would have been entitled upon the effective date or closing
of such Merger Triggering Event (the "Transaction Consideration"),
less the amount or portion of such Transaction Consideration having
a fair value equal to the aggregate Exercise Price applicable to
this Warrant or the portion hereof so sold. In the event that the
Holder of this Warrant exercises its rights under this subparagraph
(iii) to sell this Warrant (or a portion thereof) simultaneously
with the effective date or closing of any such Merger Triggering
Event, the Company shall not effect any such Merger Triggering Event
unless upon or prior to the consummation thereof such amounts of
cash, property, Common Stock, or other securities are delivered to
the Holder of this Warrant. Not less than twenty (20) days' prior
notice of any Merger Triggering Event shall be given to the Holder
of this Warrant in accordance with paragraph 4.
(d) Adjustment of Number of Warrant Shares. Upon each adjustment
of the Exercise Price, as the case may be, pursuant to subparagraph (a) or
(b) of this paragraph 3, this Warrant shall be deemed to evidence the
right to purchase, at the adjusted Exercise Price, that number of shares
of Common Stock obtained by multiplying the number of shares of Common
Stock covered by this Warrant immediately prior to such adjustment by the
Exercise Price in effect prior to such adjustment and dividing the product
so obtained by the Exercise Price in effect after such adjustment. If the
Company shall be in default under any provision of this Warrant so that
shares issued at the Exercise Price adjusted in accordance with the terms
of this Warrant would not be validly issued, the adjustment of number of
shares provided for in the foregoing sentence shall nonetheless be made,
and the Holder of this Warrant shall be entitled to purchase such greater
number of shares at the lowest price at which such shares may then be
validly issued under
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<PAGE> 9
applicable law. Such exercise shall not constitute a waiver of any claim
arising against the Company by reason of its default under this Warrant.
(e) When Adjustments to Be Made. No adjustment in the Exercise
Price shall be required by this paragraph 3 if such adjustment either by
itself or with other adjustments not previously made would require an
increase or decrease of less than 1% in such price. Any adjustment
representing a change of less than such minimum amount which is postponed
shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this paragraph 3 and not previously
made, would result in a minimum adjustment. Notwithstanding the foregoing,
any adjustment carried forward shall be made no later than ten Business
Days prior to the Termination Date. All calculations under this
subparagraph (e) shall be made to the nearest cent. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(f) Fractional Interests. In computing adjustments under this
paragraph 3, fractional interests in Common Stock shall be taken into
account to the nearest whole share.
(g) When Adjustments Not Required. If the Company shall fix a
record date for the purpose of determining the holders of its Common Stock
entitled to receive a dividend or distribution and shall, thereafter and
before the distribution to stockholders thereof, legally abandon its plan
to pay or deliver such dividend or distribution, then thereafter no
adjustment shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall be rescinded
and annulled.
(h) Certain Limitations. Subject to the provisions of paragraph
6, there shall be no adjustment of the Exercise Price hereunder to the
extent that such adjustment would cause the Exercise Price to be less than
the par value per share of the Common Stock, which par value shall not at
any time while this Warrant is outstanding exceed $.01.
(i) Other Action Affecting Common Stock. In case after the date
hereof the Company shall take any action affecting its Common Stock, other
than an action described in any of the foregoing subparagraphs (a) through
(h) of this paragraph 3, inclusive, and the failure to make any adjustment
would not fairly protect the purchase rights represented by this Warrant
in accordance with the essential intent and principle of this paragraph 3,
then the Exercise Price and/or the number of Warrant Shares shall be
adjusted in such manner and at such time as the Board of Directors of the
Company may in good faith determine to be equitable in the circumstances.
4. Notices.
(a) Notices of Adjustments. Whenever the Exercise Price or the
number of Warrant Shares shall be adjusted pursuant to paragraph 3, the
Company shall forthwith deliver to the Holder a certificate prepared by
the Company, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was
- 9 -
<PAGE> 10
calculated (including a description of the basis on which the Board of
Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights), specifying the number of Warrant
Shares then issuable hereunder, the Exercise Price after giving effect to
such adjustment and (to the extent applicable) describing the number and
kind of any other shares of stock for which the Warrant is exercisable. In
the event that the Holder shall disagree with any such adjustment or with
the terms of any new agreement to be entered into pursuant to paragraph
3(c), it shall notify the Company thereof and any disagreement shall be
resolved by an investment banking firm of nationally recognized standing
mutually agreeable to the Company and the Holder, or if the Company and
the Holder are unable to agree upon an investment banking firm, an
investment banking firm selected by an investment banking firm chosen by
the Company and an investment banking firm chosen by the Holder.
(b) Notices of Corporate Action. In the event of any of the
following:
(i) any taking by the Company of a record of the holders
of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, which dividend,
distribution or other right affects the rights of the Holder, or
(ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any
other party or any transfer of all or substantially all the assets
of the Company to any other party, or
(iii) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
The Company will mail to the Holder a notice specifying (A) the date or expected
date on which any such record is to be taken for the purpose of such dividend,
distribution or right and the amount and character of any such dividend,
distribution or right and (B) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or other securities) shall be entitled to exchange their shares of Common
Stock (or other securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least twenty (20) days prior to the date herein specified, in the case
of any date referred to in the foregoing subdivision (A), and at least twenty
(20) days prior to the date therein specified, in the case of the date referred
to in the foregoing subdivision (B).
5. Reservation of Warrant Shares. The Company agrees that, upon
commencement of the Exercise Period and at all times prior to the Termination
Date, the Company will at all
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<PAGE> 11
times have authorized and in reserve, and will keep available, solely for
issuance or delivery upon the exercise of this Warrant, the shares of the Common
Stock and other securities and properties as from time to time shall be
receivable upon the exercise of this Warrant, free and clear of all restrictions
on sale or transfer and free and clear of all preemptive rights. The Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of the Holders hereof against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock, free and clear of any
liens, claims, encumbrances and restrictions (other than as provided herein)
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
6. Fully Paid Stock; Taxes. The shares of Common Stock represented by
each and every certificate for Warrant Shares delivered on the exercise of this
Warrant and the payment of the Exercise Price set forth herein shall, at the
time of such delivery, be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive rights, and the Company will take
all such actions as may be necessary to assure that the par value or stated
value, if any, per share of the Common Stock is at all times equal to or less
than the then Exercise Price. If the Exercise Price is at any time less than the
par value of the Warrant Shares or if the Warrant at any time is exercisable by
its delivery alone and without payment of any additional consideration, the
Company also covenants and agrees to cause to be taken such action (whether by
decreasing the par value of the Warrant Shares, the conversion of the Warrant
Shares from par value to no par value, or otherwise) as will permit the exercise
of this Warrant without any additional payment by the Holder hereof (other than
payment of the Exercise Price, if any, and applicable transfer taxes, if any)
and the issuance of the Warrant Shares, which Warrant Shares, upon such
issuance, will be fully paid and non-assessable. The Company further covenants
and agrees that it will pay, when due and payable, any and all federal and state
stamp, original issue or similar taxes which may be payable in respect of the
issuance of any Warrant Shares or certificate therefor and that the Warrant
Shares will be otherwise free from all taxes, liens and charges with respect to
issuance.
7. Transferability. Upon execution and delivery of an assignment
instrument substantially in the form attached hereto, an assignee shall be a
party to this Agreement and shall have the rights and obligations of the Holder,
to the extent of such assignment, and the Holder shall be released from its
obligations hereunder to a corresponding extent. Upon the consummation of any
assignment permitted pursuant to this paragraph, the Holder and the Company
shall make appropriate arrangements, so that, if required, new Warrants shall be
issued
- 11 -
<PAGE> 12
to the Holder and the assignee. The Holder shall give the Company prior written
notice of the date that any such assignment shall become effective, which date
shall be no less than ten days after the date such notice is given.
8. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity or bond reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of the like
date, tenor and denomination.
9. Holder Not Shareholder. This Warrant does not confer upon the Holder
any right to vote or to consent to or receive notice as a shareholder of the
Company, as such, in respect of any matters whatsoever, or any other rights or
liabilities as a shareholder, prior to the exercise hereof.
10. Surrender. The Holder may at any time surrender all or a portion of
this Warrant for cancellation by transmitting same to the Company at its address
set forth herein accompanied by a written notice setting forth the Holder's
intention to surrender this Warrant (or such portion) for cancellation and upon
such transmittal by the Holder, this Warrant (or such portion) shall become null
and void and of no further force and effect.
11. Notices. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant 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, addressed as
follows:
(a) in the case of the Company, to:
VCampus Corporation
8251 Greensboro Drive, Suite 500
McLean, Virginia 22101
Attention: Nat Kannan
with a copy to:
Wyrick Robbins Yates & Ponton LLP
Suite 300
4101 Lake Boone Trail
Raleigh, North Carolina 27607
Attention: Larry E. Robbins
(b) in the case of the Holder, to:
Mastech Corporation
1004 McKee Road
- 12 -
<PAGE> 13
Oakdale, Pennsylvania 15071
Attention: Ajmal Noorani
with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, Pennsylvania 15219-1410
Attention: Carl A. Cohen, Esq. and James J.
Barnes, 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, 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, or three Business Days after the same shall have been
deposited in the United States mail. Failure or delay in delivering copies of
any notice, demand, request, approval, declaration, delivery or other
communication to the person designated above to receive a copy shall in no way
adversely affect the effectiveness of such notice, demand, request, approval,
declaration, delivery or other communication.
12. Miscellaneous.
(a) Remedies. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be
adequate. Accordingly, it is agreed that the Holder shall be entitled to
an injunction, restraining order or other equitable relief to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United
States or any state thereof. Such remedies shall be cumulative and
nonexclusive and shall be in addition to any other rights and remedies the
parties may have under this Agreement.
(b) No Inconsistent Agreements. The Company will not on or after
the date of this Warrant enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Holder in
this Warrant, otherwise conflicts with the provisions hereof or would be
violated by the performance of the Company's obligations hereunder. The
Company represents and warrants that, except as set forth on Schedule B,
the rights granted to the Holder hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the holders of the
Company's securities under any such agreements.
- 13 -
<PAGE> 14
(c) Successors and Assigns. Subject to the provisions of
paragraph 7 hereof, this Warrant shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.
(d) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be affected or
impaired thereby.
(e) Amendments and Waivers. The provisions of this Warrant,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given without the consent of both the Company and the
Holder.
(f) Headings. The headings of this Warrant have been inserted as
a matter of convenience and shall not affect the construction hereof.
(g) Applicable Law. This Warrant shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
Each party hereto agrees to submit to the nonexclusive jurisdiction of the
courts in the City of Pittsburgh in the Commonwealth of Pennsylvania in
any action or proceeding arising out of or relating to this Agreement.
(h) Registration Provisions. Except as provided in the
Registration Rights Agreement, the Company is not required under the terms
hereof to register any securities issued pursuant hereto, and the
subsequent transfer of any shares issued pursuant hereto may require
registration under the Securities Act as well as under applicable state
laws. In the event the shares issued upon the exercise of this Warrant are
not registered, the Holder acknowledges that any stock certificate
evidencing shares acquired on exercise of this Warrant shall contain a
legend restricting transferability substantially as follows:
THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED AND/OR
QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE
SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS APPLICABLE. THEREFORE, NO SALE OR TRANSFER OF THIS
SECURITY SHALL BE VALID, AND THE ISSUER SHALL NOT BE REQUIRED TO
GIVE ANY EFFECT TO ANY SUCH TRANSACTION, UNLESS (A) SUCH TRANSACTION
SHALL HAVE BEEN REGISTERED UNDER THE ACT AND QUALIFIED OR APPROVED
UNDER APPROPRIATE STATE SECURITIES LAWS, OR (B) THE ISSUER SHALL
HAVE FIRST RECEIVED AN OPINION OF COUNSEL
- 14 -
<PAGE> 15
REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION, QUALIFICATION
OR APPROVAL IS NOT REQUIRED.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 15 -
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by its Chief Executive Officer thereunto duly authorized.
Dated: January , 2000
--
VCAMPUS CORPORATION
By:
--------------------------------------
Name: Narasimhan P. Kannan
Title: Chief Executive Officer
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<PAGE> 17
SUBSCRIPTION
The undersigned, __________________, pursuant to the provisions of
the foregoing Warrant, hereby agrees to subscribe for and purchase _______
shares of the Common Stock of VCampus Corporation, covered by said Warrant, and
makes payment therefor in full at the price per share provided by said Warrant.
Dated:
---------------------------------------------
(Signature)
---------------------------------------------
(Address)
ASSIGNMENT
FOR VALUE RECEIVED, __________________, hereby sells, assigns and
transfers unto ____________________ the foregoing Warrant and all rights
evidenced thereby and does irrevocably constitute and appoint
_______________________, attorney, to transfer said Warrant on the books of
VCampus Corporation.
Dated:
---------------------------------------------
(Signature)
---------------------------------------------
(Address)
<PAGE> 18
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, ____________________ hereby assigns and transfers
unto _______________________ the right to purchase [ ] shares of the Common
Stock of VCampus Corporation by the foregoing Warrant and the rights evidenced
thereby, and does irrevocably constitute and appoint _______________________,
attorney, to transfer said Warrant on the books of VCampus Corporation.
Dated:
----------------------
---------------------------------------------
(Signature)
---------------------------------------------
(Address)
<PAGE> 19
SCHEDULE A
The Warrant shall vest in accordance with the following schedule:
(a) 150,000 shares of Common Stock shall vest upon the two (2)
month anniversary date of this Warrant;
(b) 150,000 shares of Common Stock shall vest upon the four (4)
month anniversary date of this Warrant;
(c) 150,000 shares of Common Stock shall vest upon the six (6)
month anniversary date of this Warrant.
<PAGE> 1
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
dated as of January 11, 2000
by and between
VCAMPUS CORPORATION
AND
MASTECH CORPORATION
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
STOCK PURCHASE AGREEMENT
SECTION PAGE
1. DEFINITIONS............................................................1
2. ISSUANCE, SALE AND PURCHASE OF SECURITIES..............................7
2.1 Issuance and Sale................................................7
2.2 Closing..........................................................7
2.3 Indemnity........................................................8
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES.............................8
3.1 Investment Intention.............................................8
3.2 Accredited Investor..............................................9
3.3 Corporate Existence..............................................9
3.4 Corporate Power; Authorization; Enforceable Obligations..........9
4. COMPANY'S REPRESENTATIONS AND WARRANTIES...............................9
4.1 Authorized and Outstanding Shares of Capital Stock...............9
4.2 Authorization and Issuance of Common Stock, Warrant and Warrant
Shares..........................................................10
4.3 Securities Laws.................................................10
4.4 Corporate Existence; Compliance with Law........................10
4.5 Subsidiaries....................................................11
4.6 Corporate Power; Authorization; Enforceable Obligations.........11
4.7 Financial Statements............................................12
4.8 Ownership of Property...........................................12
4.9 Material Contracts..............................................13
4.10 Environmental Protection........................................13
4.11 Labor Matters...................................................14
4.12 Other Ventures..................................................14
4.13 Taxes...........................................................14
4.14 No Litigation...................................................15
4.15 Brokers.........................................................15
4.16 Patents, Trademarks, Copyrights and Licenses....................15
4.17 No Material Adverse Effect......................................16
4.18 ERISA...........................................................16
4.19 SEC Documents...................................................18
4.20 Ordinary Course of Business.....................................18
4.21 Insurance.......................................................18
4.22 Minute Books....................................................18
4.23 Year 2000 Compliance............................................19
4.24 Full Disclosure.................................................19
4.25 Certain Agreements..............................................19
4.26 Anti-Takeover Provisions Inapplicable...........................19
- i -
<PAGE> 3
5. COVENANTS OF THE COMPANY..............................................20
5.1 Affirmative Covenants...........................................20
5.2 Negative Covenants..............................................22
6. CONDITIONS TO CLOSING.................................................22
6.1 Conditions to the Purchaser's Obligation to Purchase............22
6.2 Conditions to Company's Obligation to Sell......................23
7. COVENANTS OF THE PURCHASER............................................24
7.1 Limitation on Ownership of Voting Stock.........................24
7.2 Voting Trust, etc...............................................24
7.3 Solicitation of Proxies.........................................24
7.4 Acquisition Proposal............................................24
7.5 Confidential Information........................................24
7.6 Limitation on Covenants of Purchaser............................25
8. COMPANY RIGHT OF FIRST REFUSAL........................................25
8.1 Right of First Refusal..........................................26
8.2 Tender Offer Sale...............................................26
8.3 Assignment of Rights............................................27
8.4 Acquisition Proposal............................................27
9. MISCELLANEOUS.........................................................27
9.1 Complete Agreement; Modification of Agreement...................27
9.2 Fees and Expenses...............................................28
9.3 No Waiver by Purchaser..........................................28
9.4 Remedies........................................................29
9.5 Waiver of Jury Trial............................................29
9.6 Severability....................................................29
9.7 Binding Effect; Benefits........................................29
9.8 Conflict of Terms...............................................29
9.9 Governing Law...................................................29
9.10 Notices.........................................................30
9.11 Survival........................................................31
9.12 Section and Other Headings......................................31
9.13 Counterparts....................................................31
9.14 Publicity.......................................................31
- ii -
<PAGE> 4
SCHEDULES
Schedule 2.1 - Number of Shares of Common Stock
Schedule 4.1 Stocks and Warrants
Schedule 4.5 - Subsidiaries
Schedule 4.7 - Financial Statements; Other Obligations
Schedule 4.9 - Material Contracts and Indebtedness
Schedule 4.10 - Environmental Matters
Schedule 4.12 - Other Ventures
Schedule 4.13 - Taxes
Schedule 4.14 - Litigation
Schedule 4.15 - Brokers
Schedule 4.18 - ERISA
Schedule 4.26 - Employment Agreements
Schedule 5.2(a) Affiliate Transactions
EXHIBITS
Exhibit A Registration Rights Agreement
Exhibit B Warrant
Exhibit C Opinion of Company Counsel
- iii -
<PAGE> 5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of January 11, 2000, by and
between VCampus Corporation, a Delaware corporation ("Company"), and Mastech
Corporation, a Pennsylvania corporation, through its Mastech eVentures business
unit ("Purchaser").
W I T N E S S E T H :
WHEREAS, Company has agreed to issue and sell to Purchaser, and
Purchaser has agreed to purchase from Company through its Mastech eVentures
business unit, upon the terms and conditions hereinafter provided, the number of
shares of Common Stock (as defined herein) of Company set forth on Schedule 2.1
and the Warrant (as defined herein) pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and intending to be legally bound hereby, it is agreed as
follows:
1. DEFINITIONS.
"Acquisition Proposal" shall mean the initiation or occurrence of
any of the following without the consent or affirmative support of the Company's
Board of Directors: (i) a tender or exchange offer, merger, consolidation or
similar transaction involving a Change in Control of the Company; (ii) the sale,
lease or other disposition directly or indirectly by merger, consolidation, or
share exchange of assets of the Company representing substantially all of the
consolidated assets of the Company; and, (iii) a transaction in which any Person
other than Mastech Corporation or any Subsidiary of Mastech Corporation shall
acquire beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), or the right to acquire beneficial ownership or any "group" (as
such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 30% or
more of the outstanding Common Stock of the Company.
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person, (iii) each of such Person's officers, directors, joint
venturers and partners, (iv) any trust or beneficiary of a trust of which such
Person is the sole trustee or (v) any lineal descendants, ancestors, spouse or
former spouses (as part of a marital dissolution) of such Person (or any trust
for the benefit of such Person). For the purpose of this definition, "control"
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Stock Purchase Agreement including all
amendments, modifications and supplements hereto and any appendices, exhibits
and schedules
<PAGE> 6
hereto or thereto, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"Balance Sheet" shall have the meaning set forth in Section
4.7(a) hereof.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the
Commonwealth of Pennsylvania.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) Company's or any of its Subsidiaries'
employees, payroll, income or gross receipts, (ii) Company's or any of its
Subsidiaries' ownership or use of any of its assets, or (iii) any other aspect
of Company's or any of the Subsidiaries' business.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2
hereof.
"Closing Price" shall mean, in respect of any share of Common Stock
on any date herein specified which is a Business Day, (i) the last sale price on
such day on the NASDAQ SmallCap Market System ("NASDAQ/SCS") or (ii) if no sale
takes place on such day on NASDAQ/SCS, the average of the last reported closing
bid and asked prices on such day as officially quoted on NASDAQ/SCS.
"COBRA" shall have the meaning set forth in Section 4.18(m)
hereof.
"Common Stock" shall mean the common stock, $.01 par value per
share, of Company.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous fifteen (15) consecutive Business Days. The daily market price for
each such Business Day shall be (i) the last sale price on such day on
NASDAQ/SCS, (ii) if no sale takes place on such day on NASDAQ/SCS, the average
of the last reported closing bid and asked prices on such day as officially
quoted on NASDAQ/SCS.
"DOJ" shall mean the Antitrust Division of the Department of
Justice of the United States.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the
- 2 -
<PAGE> 7
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. Section 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. Section 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
Section 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. Section 740 et
seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. Section
1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
Section 651 et seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42
U.S.C. Section 300f et seq.), and any and all regulations promulgated
thereunder, and all analogous state and local counterparts or equivalents and
any transfer of ownership notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including, without limitation, any thereof arising under any
Environmental Law, permit, order or agreement with any Governmental Authority)
and which relate to any health or safety condition regulated under any
Environmental Law or in connection with any other environmental matter or Spill
or the presence of a Hazardous Substance or threatened Spill of any Hazardous
Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any trade or
business (whether or not incorporated) under common control with Company and
which, together with Company, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding Purchaser and
each other person which would not be an ERISA Affiliate if Purchaser did not own
any issued and outstanding shares of Stock of Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to in
Section 4.7(a) hereof.
"Fiscal Quarter" shall mean each three month period of Company
ending on March 31, June 30, September 30, and December 31. Subsequent changes
of the fiscal year of Company shall not change the term "Fiscal Quarter," unless
the Purchaser shall consent in writing to such changes which consent shall not
be withheld unreasonably.
"Fiscal Year" shall mean the twelve month period ending December 31.
Subsequent changes of the fiscal year of Company shall not change the term
"Fiscal Year,"
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unless the Purchaser shall consent in writing to such changes which consent
shall not be withheld unreasonably.
"FTC" shall mean the Federal Trade Commission of the United
States.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, except that for
purposes of the covenants contained in Section 5.1(b) hereof, GAAP shall be as
in effect on the date of the most recent Financials and shall be applied in a
manner consistent therewith.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substance" shall have the meaning set forth in Section
4.10 hereof.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, preemptive right, assignment, deposit arrangement, lien, charge,
claim, security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest as to assets owned by the relevant Person under
the Uniform Commercial Code or comparable law of any jurisdiction).
"Mastech Corporation" shall mean Mastech Corporation, a Pennsylvania
corporation, or any successor corporation thereto.
"Material Adverse Effect" shall mean a material adverse effect on
the business, assets, operations, or financial condition or results of
operations of Company and its Subsidiaries, if any, taken as a whole.
"Material Contracts" means (i) all of Company's and its
Subsidiaries' material contracts that would be required to be filed with the SEC
pursuant to item 601(b)(10) of Regulation S-K of the Securities Act, (ii) all
agreements, leases or other instruments to which Company or any of its
Subsidiaries is a party or by which Company, its Subsidiaries or its properties
are bound, which involve payments by or to Company or its Subsidiaries of more
than $5,000,000, (iii) all of Company's and its Subsidiaries' loan agreements,
bank lines of credit agreements, indentures, mortgages, deeds of trust, pledge
and security agreements, factoring agreements, conditional sales contracts,
letters of credit, guarantees or other debt instruments involving commitments of
more than $5,000,000, (iv) all non-competition and similar agreements to which
Company is a party which restrict Company's ability to engage in certain
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<PAGE> 9
businesses, (v) all contracts for the employment of any executive officer of
Company or its Subsidiaries, and (vi) all collective bargaining, union and
similar labor contracts of Company or its Subsidiaries.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Company, any of its Subsidiaries or
any ERISA Affiliate is making, is obligated to make, has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.
"Obligations" shall mean all amounts owing by Company to Purchaser
and any of its assignees pursuant hereto, including, without limitation, all
fees, expenses, attorneys' fees and any other sum chargeable to Company under
any of the Transaction Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall have the meaning set forth in Section
4.18(a) hereof.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, any instrumentality, division, agency, body or department
thereof).
"Plan" shall have the meaning set forth in Section 4.18(a) hereof.
"Prohibited Transaction" shall mean any prohibited transaction as
defined in Section 4975 of the IRC or Section 406 of ERISA for which neither an
individual nor a class exemption has been issued by the United States Department
of Labor.
"Purchaser" shall have the meaning set forth in the first
paragraph of this Agreement.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement by and between Company and Purchaser, substantially in the form
attached hereto as Exhibit A, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Reportable Event" shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan.
"SEC" shall mean the U.S. Securities and Exchange Commission, or
any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
"Spill" shall have the meaning set forth in Section 4.10 hereof.
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<PAGE> 10
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.
"Tender Date" shall have the meaning set forth in Section
8.2(a) hereof.
"Tender Notice" shall have the meaning set forth in Section
8.2(a) hereof.
"Transaction Documents" shall mean this Agreement, the Warrant
and the Registration Rights Agreement.
"Transfer Notice" shall have the meaning set forth in Section
8.1(a) hereof.
"Transfer Price" shall have the meaning set forth in Section
8.1(a) hereof.
"Voting Stock" means the Common Stock, Preferred Stock and any other
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than securities having such power
only upon the happening of a contingency).
"Warrant" shall mean the Warrant exercisable for shares of Common
Stock in the form attached as Exhibit B hereto.
"Warrant Shares" shall mean those shares of Common Stock issued upon
exercise of the Warrant.
"Welfare Plan" shall mean any welfare plan, as defined in Section
3(1) of ERISA, which is maintained or contributed to by Company, any of its
Subsidiaries or any ERISA Affiliate.
"Withdrawal Liability" means, at any time, the aggregate amount of
the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in
contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
"Year 2000 Compliant" shall have the meaning set forth in Section
4.24 hereof.
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<PAGE> 11
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. The words "includes" or
"including" and other words of similar import shall mean "including, without
limitation," unless the context expressly otherwise requires.
2. ISSUANCE, SALE AND PURCHASE OF SECURITIES.
2.1 Issuance and Sale.
Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this Agreement, Company agrees to
issue and sell to Purchaser and Purchaser agrees to purchase from Company on the
Closing Date, the number of shares of Common Stock set forth on Schedule 2.1 and
the Warrant for the aggregate consideration of $4,113,235.86 (the "Purchase
Price"), such Purchase Price being the sum of the Current Market Price of the
Common Stock set forth on Schedule 2.1 as of January 3, 2000, plus a number
equal to twenty percent (20%) of such sum.
2.2 Closing.
The closing of the transfer and delivery of the Common Stock and
Warrant, and the receipt of the Purchase Price by the Company (the "Closing"),
will take place on the date hereof (the "Closing Date") at 10:00 a.m. at the
offices of Buchanan Ingersoll Professional Corporation, One Oxford Centre, 301
Grant Street, 20th Floor, Pittsburgh, PA 15219-1410 or at such other time or
place, or on such other date not later than January 31, 2000, as the parties may
mutually agree upon.
On the Closing Date, Company shall transfer and deliver to Purchaser
the Common Stock and Warrant against delivery by Purchaser of the Purchase Price
therefor by wire transfer of funds to the account of Company.
The certificate or certificates for the Common Stock and Warrant
shall be subject to a legend restricting transfer under the Securities Act and
referring to restrictions on transfer and rights of first refusal herein, such
legend to be substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS
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<PAGE> 12
AMENDED. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AS TO THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, INCLUDING ANY SALE, PLEDGE OR OTHER
HYPOTHECATION, AND RIGHTS OF FIRST REFUSAL IN THE EVENT THAT THE
SHARES ARE BEING SOLD AS PART OF A BLOCK OF SHARES OR A SERIES OF
SALES OF SHARES INVOLVING MORE THAN 10% OF THE COMPANY'S OUTSTANDING
COMMON STOCK IN ANY 3 MONTH PERIOD, AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND MASTECH CORPORATION, A COPY OF WHICH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY
AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.
2.3 Indemnity.
Company shall indemnify and hold Purchaser and each of its officers,
directors and Affiliates harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
reasonable attorneys' fees and disbursements, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by Purchaser or
such other indemnified person as the result of Purchaser having entered into
this Agreement or any of the other Transaction Documents relating to or arising
out of any untrue representation, breach of warranty or failure to perform any
covenants or agreement by Company contained herein or in any Transaction
Document, including arising out of any Environmental Law applicable to Company
or its Subsidiaries or otherwise relating to or arising out of the transactions
contemplated hereby; provided, however, that Company shall not be liable for
such indemnification to such indemnified Person to the extent that any such
suit, action, proceeding, claim, damage, loss, liability or expense results from
such indemnified Person's gross negligence or willful misconduct.
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Purchaser makes the following representations and warranties to Company,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing hereunder:
3.1 Investment Intention.
Purchaser is purchasing the Common Stock and Warrant for its own
account, for investment purposes and not with a view to the distribution
thereof. Purchaser will not, directly
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<PAGE> 13
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of the Common Stock, Warrant or Warrant Shares (or solicit any offers to
buy, purchase, or otherwise acquire any of the Common Stock, Warrant or Warrant
Shares), except in compliance with the Securities Act.
3.2 Accredited Investor.
Purchaser is an "accredited investor" (as that term is defined in
Rule 501 of Regulation D under the Securities Act) and by reason of its business
and financial experience, it has such knowledge, sophistication and experience
in business and financial matters as to be capable of evaluating the merits and
risks of the prospective investment, is able to bear the economic risk of such
investment and is able to afford a complete loss of such investment.
3.3 Corporate Existence.
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Pennsylvania.
3.4 Corporate Power; Authorization; Enforceable Obligations.
The execution, delivery and performance by Purchaser of this
Agreement and the other Transaction Documents to be executed by it: (i) are
within Purchaser's corporate power; (ii) have been duly authorized by all
necessary corporate action; (iii) are not in contravention of any provision of
Purchaser's certificate of incorporation or by-laws; and (iv) will not violate
any law or regulation, or any order or decree of any court or governmental
instrumentality binding on Purchaser. This Agreement and the other Transaction
Documents to which Purchaser is a party have each been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligations
of Purchaser, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
4. COMPANY'S REPRESENTATIONS AND WARRANTIES.
Except as set forth in the Schedule of Exceptions delivered herewith (the
"Schedule"), Company makes the following representations and warranties to
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
4.1 Authorized and Outstanding Shares of Capital Stock.
As of December 31, 1999, the authorized capital stock of Company
consisted of: (i) 36,000,000 shares of Common Stock, $.01 par value per share,
of which 5,684,110 shares were issued and outstanding, (ii) 3,000,000 shares of
Series E Convertible Preferred stock, $0.01 par value per share, 214,396 of
which are issued and outstanding; (iii) 1,200,000 shares of Series D Convertible
Preferred Stock, $0.01 par value per share, 1,073,370 of which are issued and
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<PAGE> 14
outstanding; (iv) 1,000,000 shares of Series C Convertible Preferred Stock,
$0.01 par value per share, 623,339 shares of which are issued and outstanding;
and (v) 4,800,000 shares of undesignated Preferred Stock, $0.01 par value per
share, none of which are issued and outstanding. All of such issued and
outstanding shares are validly issued, fully paid and non-assessable. There is
no existing option, warrant, call, commitment or other agreement to which
Company is a party requiring, and there are no convertible securities of Company
outstanding which upon conversion would require, the issuance of any additional
shares of Stock of Company or other securities convertible into shares of equity
securities of Company, and (ii) there are no agreements to which Company is a
party with respect to the voting or transfer of the Stock of Company. There are
no stockholders' preemptive rights or rights of first refusal or other similar
rights with respect to the issuance of Stock by Company. True and correct copies
of the certificate of incorporation and by-laws of Company have been delivered
to Purchaser.
4.2 Authorization and Issuance of Common Stock, Warrant and Warrant
Shares.
The issuance of the Common Stock and Warrant have been duly
authorized by all necessary corporate action on the part of Company and, upon
delivery to Purchaser of the Common Stock against payment in accordance with the
terms hereof, the Common Stock will have been validly issued, fully paid and
non-assessable, and free and clear of all pledges, liens, encumbrances and
preemptive rights. The issuance of shares of Common Stock upon exercise of the
Warrant has been duly authorized by all necessary corporate action on the part
of Company and, when issued upon exercise of the Warrant against payment in
accordance with the terms thereof, such Common Stock will have been validly
issued and fully paid and non-assessable. Company has duly reserved 450,000
shares of Common Stock for issuance pursuant to the terms of the Warrant.
4.3 Securities Laws.
Assuming the accuracy of the investment representations contained in
Sections 3.1 and 3.2, the offer, issuance, sale and delivery of the Common
Stock, Warrant and Warrant Shares, as provided in this Agreement, are exempt
from the registration requirements of the Securities Act and all applicable
state securities laws, and are otherwise in compliance with such laws. Neither
Company nor any Person acting on its behalf has taken or will take any action
(including any offering of any securities of Company under circumstances which
would require the integration of such offering with the offering of the Common
Stock, Warrant and Warrant Shares under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance or
sale of the Common Stock, Warrant and Warrant Shares, to the registration
requirements of Section 5 of the Securities Act.
4.4 Corporate Existence; Compliance with Law.
Company and each of its Subsidiaries, if any, (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware in the case of Company and as set forth on Schedule 4.5 in the
case of its Subsidiaries; (ii) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification (except
for jurisdictions in which such failure to so qualify or to be in good standing
would not have a
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<PAGE> 15
Material Adverse Effect); (iii) has the requisite corporate power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease, and to conduct
its business as now being conducted; (iv) has, or has applied for, all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct, except where the failure to obtain such approval or
authorization would not result in a Material Adverse Effect; (v) is in
compliance with its certificate or articles of incorporation and by-laws; and
(vi) is in compliance with all applicable provisions of law, except for such
non-compliance which would not have a Material Adverse Effect.
4.5 Subsidiaries.
There currently exist no Subsidiaries of Company other than as set
forth on Schedule 4.5 hereto, which sets forth such Subsidiaries, together with
their respective jurisdictions of organization. All of the outstanding capital
Stock of each such Subsidiary is owned by Company. There are no options,
warrants, rights to purchase or similar rights covering capital Stock for any
such Subsidiary.
4.6 Corporate Power; Authorization; Enforceable Obligations.
The execution, delivery and performance by Company of this
Agreement, the other Transaction Documents to which it is a party and all
instruments and documents to be delivered by Company, the issuance and sale of
the Common Stock, Warrant and Warrant Shares and the consummation of the other
transactions contemplated by any of the foregoing: (i) are within Company's
corporate power and authority; (ii) have been duly authorized by all necessary
or proper corporate action; (iii) are not in contravention of any provision of
Company's certificate of incorporation or by-laws; (iv) will not violate any law
or regulation, or any order or decree of any court or governmental
instrumentality to which the Company or its business is subject to; (v) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Company or any of its
Subsidiaries is a party or by which Company, any of its Subsidiaries or any of
their property is bound; (vi) will not result in the creation or imposition of
any Lien upon any of the property of Company or any of its Subsidiaries; and
(vii) do not require the consent or approval of, or any filing with, any
Governmental Authority or any other Person (except (A) for those filings
required by the Registration Rights Agreement and (B) to the extent previously
obtained or made). At or prior to the Closing Date, each of this Agreement and
the other Transaction Documents shall have been duly executed and delivered by
Company and each shall then constitute a legal, valid and binding obligation of
Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
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<PAGE> 16
4.7 Financial Statements.
(a) The audited consolidated balance sheet of Company as at
December 31, 1998, and the related consolidated statements of income and cash
flows for the year then ended, with the opinion thereon of Ernst & Young LLP,
and the unaudited consolidated balance sheet of Company as at September 30, 1999
(the "Balance Sheet") and the related unaudited consolidated statements of
income, and cash flows for the nine months then ended, copies of which have
previously been delivered to Purchaser, have been, except as noted therein,
prepared in conformity with GAAP consistently applied throughout the periods
involved and present fairly in all material respects the consolidated financial
position of Company as at the dates thereof, and the consolidated results of its
operations and cash flows for the periods then ended, subject, in the case of
the interim financial statements, to normal year-end audit adjustments and any
other adjustments described therein.
(b) Except as set forth on Schedule 4.7, neither Company nor any
of its Subsidiaries has any material obligations, contingent or otherwise,
including liabilities for Charges, long-term leases or unusual forward or
long-term commitments which are not reflected in the Balance Sheet, other than
those incurred since December 31, 1998, in the ordinary course of business.
(c) Except as set forth on Schedule 4.7, no dividends or other
distributions have been declared, paid or made upon any shares of capital Stock
of Company, nor have any shares of capital Stock of Company been redeemed,
retired, purchased or otherwise acquired for value by Company since December 31,
1998.
4.8 Ownership of Property.
Neither the Company nor any of its Subsidiaries owns any real
property. Each of Company and its Subsidiaries has valid and marketable
leasehold interests in each of its leases, good and marketable title to, or
valid leasehold interests in, all of its other properties and assets. Each of
such leases is valid and enforceable in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)) and is in
full force and effect except to the extent that such lack of validity or
enforceability would not have a Material Adverse Effect. None of Company, any of
its Subsidiaries nor, to its knowledge, any other party to any such lease is in
default of its obligations thereunder or has delivered or received any notice of
default under any such lease, nor has any event occurred which, with the giving
of notice, the passage of time or both, would constitute a default under any
such lease except to the extent that such default would not reasonably be
expected to have a Material Adverse Effect. Neither Company nor any of its
Subsidiaries is obligated under or a party to, any option, right of first
refusal, or any other contractual right to purchase, acquire, sell, assign or
dispose of any material real property owned or leased by Company or such
Subsidiary.
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<PAGE> 17
4.9 Material Contracts.
Schedule 4.9 contains a true, correct and complete list and
description of all Material Contracts (other than those Material Contracts which
have been filed as an exhibit to the Company SEC Documents). Each Material
Contract is a valid and binding agreement of Company or its Subsidiaries (as the
case may be) enforceable against Company or such Subsidiary in accordance with
its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity)), and neither Company nor any of its Subsidiaries has any knowledge
that any Material Contract is not a valid and binding agreement against the
other parties thereto. Company and each of its Subsidiaries has fulfilled all
material obligations required pursuant to the Material Contract to have been
performed by Company or such Subsidiary on its part. Except as set forth in
Schedule 4.9, neither Company nor any of its Subsidiaries is in default or
breach, nor to Company's or such Subsidiary's knowledge is any third party in
default or breach, under or with respect to any Material Contract.
4.10 Environmental Protection.
(a) Except as set forth on Schedule 4.10, to Company's and its
Subsidiaries' knowledge, all real property owned, leased or otherwise operated
by Company and its Subsidiaries (each, a "Facility") is free of contamination
from any substance, waste or material (i) currently identified to be toxic or
hazardous pursuant to, or which may result in liability under, any Environmental
Law or (ii) within the definition of a substance which is toxic or hazardous
under any Environmental Law, including any asbestos, pcb, radioactive substance,
methane, volatile hydrocarbons, industrial solvents, oil or petroleum or
chemical liquids or solids, liquid or gaseous products, or any other material or
substance which has in the past or could at any time in the future cause or
constitute a health, safety, or environmental hazard to any Person or property
or result in any Environmental Liabilities and Costs ("Hazardous Substance") of
more than $100,000 or which, in either case, could have a Material Adverse
Effect. Except as set forth on Schedule 4.10, neither Company nor any of its
Subsidiaries has caused or suffered to occur any release, spill, migration,
leakage, discharge, spillage, uncontrolled loss, seepage, or filtration of
Hazard Substances at or from the Facility (a "Spill") which could result in
Environmental Liabilities and Costs in excess of $100,000.
(b) Company and each Subsidiary has generated, treated, stored
and disposed of any Hazardous Substances in full compliance with applicable
Environmental Laws, except for such non-compliances which would not reasonably
be expected to have a Material Adverse Effect.
(c) Company and each Subsidiary has obtained, or has applied for,
and is in full compliance with and in good standing under all permits required
under Environmental Laws (except for such failures which would not reasonably be
expected to have a Material Adverse Effect) and neither Company nor any of its
Subsidiaries has any knowledge of any proceedings to substantially modify or to
revoke any such permit.
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<PAGE> 18
(d) Except as set forth on Schedule 4.10, there are no
investigations, proceedings or litigation pending or, to Company's or its
Subsidiaries' knowledge, threatened affecting or against Company, any of its
Subsidiaries or the Facilities relating to Environmental Laws or Hazardous
Substances.
(e) Except for communications in connection with the matters
listed on Schedule 4.10, neither Company nor any of its Subsidiaries has
received any communication or notice (including requests for information)
indicating the potential of Environmental Liabilities and Costs against Company
or its Subsidiaries.
4.11 Labor Matters.
(a) There are no strikes or other labor disputes against Company
or any of its Subsidiaries pending or, to Company's or its Subsidiaries'
knowledge, threatened. To the Company's knowledge, hours worked by and payment
made to employees of Company and its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable law dealing with such
matters. All payments due from Company and each of its Subsidiaries on account
of employee health and welfare insurance have been paid or accrued as a
liability on the books of Company or such Subsidiary. There is no organizing
activity involving Company or any of its Subsidiaries pending or, to Company's
or its Subsidiaries' knowledge, threatened by any labor union or group of
employees. There are no representation proceedings pending or, to Company's or
its Subsidiaries' knowledge, threatened with the National Labor Relations Board,
and no labor organization or group of employees of Company or its Subsidiaries
has made a pending demand for recognition. There are no complaints or charges
against Company or any of its Subsidiaries pending or, to Company's or its
Subsidiaries' knowledge, threatened to be filed with any federal, state, local
or foreign court, governmental agency or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by Company or any of its Subsidiaries of any individual.
(b) Neither Company nor any of its Subsidiaries is, or during the
five years preceding the date hereof was, a party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of Company or its Subsidiaries.
4.12 Other Ventures.
Except as set forth on Schedule 4.12 or as disclosed in the
Company's SEC Documents, neither Company nor any of its Subsidiaries is engaged
in any joint venture or partnership with any other Person.
4.13 Taxes.
Except as set forth on Schedule 4.13, all federal, state, local and
foreign tax returns, reports and statements required to be filed by Company and
its Subsidiaries have been timely filed with the appropriate Governmental
Authority and all such returns, reports and statements are true, correct and
complete in all material respects. All Charges and other impositions due and
payable for the periods covered by such returns, reports and statements have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added
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<PAGE> 19
thereto for nonpayment thereof, or any such fine, penalty, interest, late charge
or loss has been paid. Proper and accurate amounts have been withheld by Company
and its Subsidiaries from its employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective governmental agencies. Neither Company nor
any of its Subsidiaries has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges. No
tax audits or other administrative or judicial proceedings are pending or
threatened with regard to any Charges for which Company or any Subsidiary may be
liable and no assessment of Charges is proposed against the Company or any
Subsidiary. Neither Company nor any of its Subsidiaries has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4)). None of the property owned by Company or any of its
Subsidiaries is property which such company is required to treat as being owned
by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of IRC Section 168(h). Neither Company nor any of its
Subsidiaries has agreed or has been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise. Neither
Company nor any of its Subsidiaries has any obligation under any written tax
sharing agreement.
4.14 No Litigation.
Except as disclosed on Schedule 4.14, no action, claim or proceeding
is now pending or, to the knowledge of Company or its Subsidiaries, threatened
against Company or any of its Subsidiaries, at law, in equity or otherwise,
before any court, board, commission, agency or instrumentality of any federal,
state, or local government or of any agency or subdivision thereof, or before
any arbitrator or panel of arbitrators which would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.15 Brokers.
Except as set forth on Schedule 4.15, no broker or finder acting on
behalf of Company or any of its Subsidiaries brought about the consummation of
the transactions contemplated pursuant to this Agreement and neither Company nor
any of its Subsidiaries has any obligation to any Person in respect of any
finder's or brokerage fees (or any similar obligation) in connection with the
transactions contemplated by this Agreement. Company is solely responsible for
the payment of all such finder's or brokerage fees.
4.16 Patents, Trademarks, Copyrights and Licenses.
Company and each of its Subsidiaries owns all licenses, patents,
patent applications, copyrights, service marks, trademarks and registrations and
applications for registration thereof, and trade names necessary to continue to
conduct its business as heretofore conducted by it and now being conducted by
it. To Company's knowledge, Company and each of its Subsidiaries conducts its
businesses without infringement or claim of infringement of any
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<PAGE> 20
license, patent, copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others except where the same would not
reasonably be expected to have a Material Adverse Effect. To Company's
knowledge, there is no infringement by others of any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual property
right of Company or any of its Subsidiaries, except where the same would not
reasonably be expected to have a Material Adverse Effect.
4.17 No Material Adverse Effect.
Except as disclosed in the Company SEC Documents, no event has
occurred since September 30, 1999, which has had or could be reasonably expected
to have a Material Adverse Effect, other than events or circumstances which
relate exclusively to (i) changes in trends in the online courseware industry
and (ii) general economic conditions in the United States as a whole.
4.18 ERISA.
(a) Schedule 4.18 sets forth: (i) all "employee benefit plans",
as defined in Section 3(3) of ERISA, and describes any other material employee
benefit arrangements (the "Plans") maintained by Company and any of its
Subsidiaries or to which Company or any its Subsidiaries contributed or is
obligated to contribute thereunder, and (ii) all "employee pension plans", as
defined in Section 3(2) of ERISA (the "Pension Plans"), maintained by Company,
any of its Subsidiaries or any of its ERISA Affiliates to which Company, any of
its Subsidiaries or any of its ERISA Affiliates contributed or is obligated to
contribute thereunder.
(b) Purchaser will not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability from any
such Multiemployer Plan under Section 4201 of ERISA which it would not have had
if it had not purchased the Note from Company at the Closing in accordance with
the terms of this Agreement.
(c) The Pension Plans intended to be qualified under Section 401
of the IRC are so qualified and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the IRC, and nothing
has occurred with respect to the operation of the Pension Plans which could
cause the loss of such qualification or exemption or the imposition of any
liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to the terms of
the Plans (without regard to any waivers granted under Section 412 of the IRC)
to any funds or trusts established thereunder or in connection therewith have
been made by the due date thereof (including any valid extension) and no
accumulated funding deficiencies exist in any of the Pension Plans.
(e) There is no "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA in any of the respective Pension Plans.
Each of the respective Pension Plans are fully funded in accordance with the
actuarial assumptions used by the PBGC to determine the level of funding
required in the event of the termination of the Pension Plan and all benefit
liabilities do not exceed the assets of such Pension Plans.
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<PAGE> 21
(f) There has been no "reportable event" as that term is defined
in Section 4043 of ERISA and the regulations thereunder with respect to the
Pension Plans which would require the giving of notice, or any event requiring
disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA.
(g) There is no material violation of ERISA with respect to the
filing of applicable reports, documents, and notices regarding the Plans with
the Secretary of Labor and the Secretary of the Treasury or the furnishing of
such documents to the participants or beneficiaries of the Plans.
(h) True, correct and complete copies of the following documents,
with respect to each of the Plans, have been made available or delivered to
Purchaser by Company: (A) any plans and related trust documents, and amendments
thereto, (B) the most recent Forms 5500 (including any schedules thereto) and
the most recent actuarial valuation report, if any, (C) the last IRS
determination letter, and (D) summary plan descriptions .
(i) There are no pending actions, claims or lawsuits which have
been asserted or instituted against the Plans, the assets of any of the trusts
under such Plans or the Plan sponsor or the Plan administrator, or against any
fiduciary of the Plans with respect to the operation of such Plans (other than
routine benefit claims), nor does Company or any of its Subsidiaries have
knowledge of facts which could form the basis for any such claim or lawsuit.
(j) All amendments and actions required to bring the Plans into
conformity in all material respects with all of the applicable provisions of
ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(k) The Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA (including rules
and regulations thereunder) and other applicable Federal and state law, and
neither Company nor any of its Subsidiaries or "party in interest" or
"disqualified person" with respect to the Plans has engaged in a "prohibited
transaction" within the meaning of Section 4975 of the IRC or Section 406 of
ERISA.
(l) None of Company, any of its Subsidiaries or any ERISA
Affiliate has terminated any Pension Plan, or incurred any outstanding liability
under Section 4062 of ERISA to the PBGC, or to a trustee appointed under Section
4042 of ERISA.
(m) None of Company, any of its Subsidiaries or any ERISA
Affiliate maintains retired life and retired health insurance plans which are
Welfare Plans and which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant except as may be required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA")
and at the expense of the participant or the participant's beneficiary. Company,
all of its Subsidiaries and all ERISA Affiliates which maintain a Welfare Plan
have complied with the notice and continuation requirements of COBRA and the
regulations thereunder.
(n) None of Company, any of its Subsidiaries or any ERISA
Affiliate has contributed or been obligated to contribute to a Multiemployer
Plan as of the Closing.
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<PAGE> 22
(o) None of Company, any of its Subsidiaries or any ERISA
Affiliate has withdrawn in a complete or partial withdrawal from any
Multiemployer Plan prior to the Closing Date, nor has any of them incurred any
liability due to the termination or reorganization of a Multiemployer Plan.
(p) None of Company, any of its Subsidiaries, any ERISA Affiliate
or any organization to which Company is a successor or parent corporation,
within the meaning of Section 4069(b) of ERISA, has engaged in any transaction,
within the meaning of Section 4069 of ERISA.
4.19 SEC Documents.
Company has made available to Purchaser a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Company with the SEC since January 1, 1999 and prior to the date of
this Agreement (the "Company SEC Documents"), which are all the documents (other
than preliminary material) that Company was required to file with the SEC since
such date. As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Documents, and on their respective
filing dates none of the Company SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.20 Ordinary Course of Business.
Except as set forth on Schedule 4.7 or in response to the events
described therein, since January 1, 1998, Company and each of its Subsidiaries
has conducted its operations only in the ordinary course of business consistent
with past practice.
4.21 Insurance.
There are in full force and effect for the benefit of Company and
its Subsidiaries insurance policies and bonds providing adequate coverage from
reputable and financially sound insurers in amounts sufficient to insure the
assets and risks of Company and its Subsidiaries in accordance with prudent
business practice in the industry of Company and Subsidiaries. No notice has
been given or claim made and to the knowledge of Company, no grounds exist, to
cancel or void any such policies or bonds or to reduce the coverage provided
thereby.
4.22 Minute Books.
The minute books of Company for the period commencing January 1,
1998 through December 31, 1999, as previously made available to Purchaser,
accurately reflect, in all material respects, all formal corporate action of the
stockholders and Board of Directors of Company during such period.
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<PAGE> 23
4.23 Year 2000 Compliance.
Each system comprised of software, hardware, databases or embedded
control systems (microprocessor controlled or controlled by any robotic or other
device) (collectively, a "System") that constitutes any material part of, or is
used in connection with the use, operation or enjoyment of, any material
tangible or intangible asset or real property of Company or any of its
Subsidiaries has not been materially adversely affected by the advent of the
year 2000, the advent of the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century ("Year
2000 Compliant") in a manner that could reasonably be expected to have a
Material Adverse Effect. Company has no reason to believe that it or any of its
Subsidiaries may incur material expenses arising from or relating to the failure
of any of their Systems as a result of the advent of the year 2000, the advent
of the twenty-first century or the transition from the twentieth century through
the year 2000 and into the twenty-first century. Each material system of Company
and its Subsidiaries is able to accurately process date data, including, but not
limited to, calculating, comparing and sequencing from, into and between the
twentieth century (through year 1999), the year 2000 and the twenty-first
century, including leap year calculations.
4.24 Full Disclosure.
No information contained in this Agreement or any other Transaction
Document contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which made.
4.25 Certain Agreements.
Except as set forth in Schedule 4.26, neither the Company nor any
Subsidiary is a party to any oral or written employment agreement or plan,
including any employment agreement, severance agreement, stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which shall be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the other Transaction Documents or the value
of any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the Transaction Documents. No
holder of any option to purchase shares of Company Common Stock, or shares of
Company Common Stock granted in connection with the performance of services for
the Company or any Subsidiary, is or will be entitled to receive cash from the
Company or any subsidiary in lieu of or in exchange for such option or shares as
a result of the transactions contemplated by this Agreement or the other
Transaction Documents.
4.26 Anti-Takeover Provisions Inapplicable.
The execution and consummation of the transactions contemplated by
the Transaction Documents will not trigger any anti-takeover, poison pill or
similar provisions contained within the certificate or articles of incorporation
or bylaws of Company or any of its Subsidiaries, nor any applicable provision
under the Delaware General Corporate Law relating to transactions with
interested stockholders or a sale or merger of the Company.
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<PAGE> 24
5. COVENANTS OF THE COMPANY.
5.1 Affirmative Covenants.
Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Purchaser has given its
prior written consent) so long as Purchaser (and/or any Affiliate) shall hold in
the aggregate more than 5% of the outstanding Common Stock:
(a) Preservation of Existence, Etc. Company and each of its
Subsidiaries shall maintain its corporate existence and its license or
qualification and its good standing in the state of its incorporation and in
each other jurisdiction in which its ownership or lease of property or the
nature of its businesses makes such license or qualification necessary (except
for such other jurisdictions in which such failure to be so licensed or
qualified individually and in the aggregate would not result in a Material
Adverse Effect).
(b) Accounting System; Reporting Requirements. Company on a
consolidated basis will maintain a system of accounting established and
administered in accordance with GAAP. Further, Company will:
(i) promptly deliver to Purchaser, but in no event later
than twenty (20) days after the mailing or filing thereof, copies of (A) all
reports, notices and proxy statements sent by Company to its shareholders, and
(B) all regular and periodic reports and definitive proxy materials (including
Forms 10-K, 10-Q and 8-K) filed by Company with any securities exchange or the
Federal Securities and Exchange Commission; and
(ii) promptly deliver to Purchaser, but in no event later
than twenty (20) days after Company receives the same, copies of any management
letters addressed to Company by its independent certified public accountant.
(c) Maintenance of Insurance. Company shall insure, and shall
cause its Subsidiaries to insure, their respective properties and assets against
loss or damage in such amounts as similar properties and assets are insured by
prudent companies in similar circumstances carrying on similar businesses, and
with reputable and financially sound insurers, including self-insurance to the
extent customary, except where the failure to have such coverage would not,
individually or in the aggregate, have a Materially Adverse Effect.
(d) Maintenance of Properties and Leases. Company and its
Subsidiaries shall maintain in good repair, working order and condition
(ordinary wear and tear excepted) in accordance with the general practice of
other businesses of similar character and size, all of those properties useful
or necessary to their respective businesses, and from time to time, Company will
make or cause to be made all appropriate repairs, renewals or replacements
thereof.
(e) Maintenance of Permits and Franchises. Company and its
Subsidiaries shall maintain in full force and effect all franchises, permits and
other authorizations necessary for the ownership and operation of their
respective properties and business if the failure so to maintain the same,
individually or in the aggregate, would constitute a Material Adverse Effect.
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<PAGE> 25
(f) Keeping of Records and Books of Account. Company and its
Subsidiaries, shall maintain and keep proper books of record and account which
enable Company to issue financial statements in accordance with GAAP and as
otherwise required by applicable laws of any Governmental Authority having
jurisdiction over Company and its Subsidiaries, and in which full, true and
correct entries shall be made in all material respects of all their respective
dealings and business and financial affairs.
(g) Plans. Company shall, and shall cause each ERISA Affiliate
to, comply with ERISA, the IRC and other applicable Laws applicable to Plans
except where such failure, alone or in conjunction with any other failure, would
not result in a Material Adverse Effect. Without limiting the generality of the
foregoing, Company shall cause all of its Plans and all Plans maintained by any
ERISA Affiliate to be funded in accordance with the minimum funding requirements
of ERISA and shall make, and cause each ERISA Affiliate to make, in a timely
manner, all contributions due to Plans and Multiemployer Plans.
(h) Compliance with Laws. Company and its Subsidiaries shall
comply with all applicable laws (including Environmental laws) in all material
respects, and shall obtain and comply in all material respects with and maintain
any and all licenses, approvals, registrations or permits required by
Environmental Laws, provided that they shall not be deemed to be a violation of
this section if any failure to comply with any law would not result in fines,
penalties, other similar liabilities or injunctive relief which in the aggregate
would reasonably be expected to have a Material Adverse Effect. Company and its
Subsidiaries shall conduct and complete in all respects all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all respects with all
lawful orders and directives of all Governmental Authorities respecting
Environmental Laws, except to the extent that the same are being contested in
good faith by appropriate and lawful proceedings diligently conducted and for
which such reserves or other appropriate provisions, if any, required by GAAP
shall have been made, and except to the extent that the same would not
reasonably be expected to have a Material Adverse Effect.
(i) Use of Proceeds. Company will use the proceeds of the
Purchase Price for the Common Stock and Warrant (and the exercise price for the
Warrant Shares) for Working Capital and general corporate purposes, which shall
always be for lawful purposes only and such uses shall not contravene any
applicable law or any other provision hereof.
(j) Maintenance of Exchange Listing. The Company shall undertake
best efforts to maintain its listing on the NASDAQ SmallCap Market System.
Promptly after the issuance of the shares of Common Stock and Warrant Shares,
Company shall secure the designation, listing and quotation of such Common Stock
on the NASDAQ SmallCap Market System, and shall undertake best efforts to
maintain such designation, listing and quotation.
(k) Board of Directors. The Board of Directors (or the Nominating
Committee thereof) of the Company shall nominate a representative selected by
Purchaser (or an Affiliate) for election by the shareholders of the Company to
the Board of Directors; provided, however, that such representative has such
experience and knowledge to be acceptable to the Board of Directors (or the
Nominating Committee thereof). It is expressly agreed that any executive
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<PAGE> 26
officer of Mastech Corporation shall be presumed to have such knowledge and
experience to serve on the Board of Directors of the Company.
5.2 Negative Covenants.
Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Purchaser has given its
prior written consent) so long as the Purchaser (and/or an Affiliate) shall hold
at least 5% of the outstanding Common Stock:
(a) Affiliate Transactions. Except as set forth on Schedule
5.2(a), neither Company nor any Subsidiary of Company shall enter into or carry
out any material transaction (including purchasing property or services or
selling property or services) with an Affiliate which is not a Subsidiary unless
such transaction is not otherwise prohibited by this Agreement, is entered into
upon fair and reasonable arm's length terms and conditions in accordance with
all applicable law.
(b) Change in Organizational Documents. Company shall not, and
shall not permit any of its Subsidiaries to, amend in any material respect its
certificate or articles of incorporation without providing at least ten (10)
calendar days' prior written notice to Purchaser and, in the event such change
would cause the Common Stock to have rights which are different from the rights
of other publicly traded common stock of Company, without obtaining the prior
written consent of Purchaser.
(c) Sales of Securities to Competitors. Until the earlier to
occur of (i) Purchaser (and/or any Affiliate thereof) owns in the aggregate less
than 15% of the outstanding Common Stock of the Company or (ii) the seventh
anniversary of the Closing Date, the Company shall not, and shall not permit any
of its Subsidiaries to, knowingly issue or sell any securities of the Company or
any of its Subsidiaries to a Person who is a direct "Competitor" (as defined
below) of Mastech Corporation or any of its Subsidiaries (except in connection
with an underwritten public offering; provided, however, such Competitor shall
not acquire more than 5% of the outstanding securities of the Company). For
purposes of this Agreement, a Competitor shall have the meaning ascribed to it
in that certain letter agreement by and between the Company and Purchaser dated
as of the date of this Agreement.
6. CONDITIONS TO CLOSING.
6.1 Conditions to the Purchaser's Obligation to Purchase.
The obligation of the Purchaser to purchase the Common Stock
hereunder is subject to the fulfillment by the Company to the Purchaser's
satisfaction, on the Closing Date, of each of the following conditions, any of
which may be waived in whole or in part by the Purchaser in writing:
(a) Favorable opinions of Wyrick Robbins Yates & Ponton LLP,
counsel to Company, substantially in the form attached hereto as Exhibit C,
shall be delivered to the Purchaser.
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<PAGE> 27
(b) Resolutions of the board of directors of Company, certified
by the Secretary or Assistant Secretary of Company, as of the Closing Date, duly
adopted and in full force and effect on such date, authorizing (i) the
consummation of each of the transactions contemplated by this Agreement and (ii)
specific officers to execute and deliver this Agreement and each other
Transaction Document to which it is a party, shall be delivered to the
Purchaser.
(c) Governmental certificates, dated the most recent practicable
date prior to the Closing Date, with telephonic updates where available, showing
that Company is organized and in good standing in the State of Delaware, shall
be delivered to the Purchaser.
(d) A copy of the certificate of incorporation and all amendments
thereto of Company, certified as of a recent date by the Secretary of State of
the State of Delaware, and copies of Company's by-laws, certified by the
Secretary or Assistant Secretary of Company as true and correct as of the
Closing Date, shall be delivered to the Purchaser.
(e) The Registration Rights Agreement shall be duly executed by
the parties thereto.
(f) The Company shall issue and deliver the Warrant to the
Purchaser.
(g) Certificates of the Secretary or an Assistant Secretary of
Company, dated the Closing Date, as to the incumbency and signatures of the
officers of Company executing this Agreement, each other Transaction Document to
which it is a party and any other certificate or other document to be delivered
pursuant hereto or thereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary, shall be delivered to the Purchaser.
(h) A Certificate of the President, Senior Vice President or CEO
of Company, dated the Closing Date, stating that all of the representations and
warranties of Company contained herein or in the other Transaction Documents are
true and correct on and as of the Closing Date and that no breach of any
covenant contained in Article V has occurred or would result from the Closing
hereunder shall be delivered to the Purchaser.
(i) The Company shall make a wire transfer of all reasonable fees
and expenses of Mastech Corporation's outside counsel, Buchanan Ingersoll
Professional Corporation.
6.2 Conditions to Company's Obligation to Sell.
The obligation of the Company to issue and sell hereunder is subject
to the fulfillment by the Purchaser to the Company's satisfaction, on the
Closing Date, of each of the following conditions, any of which may be waived in
whole or in part by the Company in writing:
(a) The Registration Rights Agreement shall be duly executed by
the parties thereto; and
(b) A Certificate of the President or CEO of Purchaser, dated the
Closing Date, stating that all representations and warranties of Purchaser
contained herein or in the other
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<PAGE> 28
Transaction Documents are true and correct on and as of the Closing Date and
that no breach of any covenant contained in Article VII has occurred or would
result from the Closing hereunder shall be delivered to the Company.
7. COVENANTS OF THE PURCHASER.
Purchaser covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Company has given its prior
written consent) so long as Purchaser (and/or any Affiliate) shall hold in the
aggregate 5% or more of the outstanding Common Stock:
7.1 Limitation on Ownership of Voting Stock.
The Purchaser shall not (and shall not permit any Affiliate to
directly or indirectly) acquire beneficial ownership of any Voting Stock, any
securities convertible into or exchangeable for Voting Stock, or any other
rights to acquire Voting Stock (except, in any case, by way of the Warrant, a
negotiated transaction between the Purchaser and the Company, or stock dividends
or other distributions or offerings made available to holders of any Voting
Stock generally) or authorize or make a tender, exchange or other offer, without
the written consent of the Company, if the effect of such acquisition would be
to increase the Voting Power of all Voting Stock then owned by the Purchaser or
which it has a right to acquire to more than an additional 5% of the outstanding
Common Stock of the Company within any 12-month period.
7.2 Voting Trust, etc.
The Purchaser shall not deposit any shares of Voting Stock in a
voting trust or, except as otherwise provided herein, subject any Voting Stock
to any arrangement or agreement with respect to the voting of such Voting Stock
unless such voting trust, arrangement or agreement involves solely Mastech
Corporation and/or any of its Affiliates.
7.3 Solicitation of Proxies.
Without the Company's prior written consent, the Purchaser shall not
solicit proxies with respect to any Voting Stock, and shall not become a
"participant" in any "election contest" (as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act relating to the election of directors
of the Company).
7.4 Acquisition Proposal.
The Purchaser (and its Affiliates) agrees not to individually or
together with any third Person initiate an Acquisition Proposal.
7.5 Confidential Information.
The Company from time to time may disclose to the Purchaser pursuant
to this Agreement certain confidential technical and nontechnical business
information ("Confidential Information"). Notwithstanding any other provision of
this Agreement, including provisions
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<PAGE> 29
regarding the termination of this Agreement or particular terms of this
Agreement, the Purchaser shall not disclose such Confidential Information to
third parties until the earliest of (i) the date upon which such information
ceases to be Confidential Information through no fault of the Purchaser, (ii)
the date such information is required to be disclosed by law or a court of
competent jurisdiction, or (iii) the fifth anniversary of the date of disclosure
by the Company to the Purchaser. In the event that the Purchaser or any of its
representatives is requested or required to disclose any of the Confidential
Information referred to above, the Purchaser will provide the Company with
prompt notice of such request or requirement so that the Company (if it so
desires) may seek a protective order. The Purchaser further acknowledges and
understands that any information so obtained which may be considered "inside"
non-public information will not be utilized by the Purchaser in connection with
purchases and/or sales of the Company's securities except in compliance with
applicable state and federal securities laws. Confidential Information shall not
include information that (A) was previously known to the receiving party prior
to disclosure thereof by the other party, (B) is independently developed without
the use of such Confidential Information, (C) at the time of disclosure to the
receiving party is, or thereafter becomes, generally available to the public
other than as a result of a disclosure by the receiving party or its
representatives in violation of this Section 7.5, or (D) becomes available to
the receiving party on a non-confidential basis from a third party provided that
such third party is not bound by an obligation of confidentiality to the
Company.
7.6 Limitation on Covenants of Purchaser.
Notwithstanding anything to the contrary contained within this
Article 7 or this Agreement, Sections 7.1, 7.2, 7.3 and 7.4 shall be of no
further force and effect in the event of the earlier of:
(a) an Acquisition Proposal (but only for so long as the
Acquisition Proposal is being pursued and is ultimately consummated; if the
Acquisition Proposal is terminated or abandoned for any reason, Sections 7.1,
7.2, 7.3 and 7.4 shall be reinstated in full force and effect; provided that the
Company: (i) reimburses the Purchaser and any of its Affiliates for the actual
costs incurred by such party with respect to any actions taken by such party in
making a competing Acquisition Proposal; and (ii) if requested by Purchaser,
purchases from the Purchaser or any of its Affiliates any shares of Common Stock
purchased by such Person in excess of the limit imposed by Section 7.1 that were
purchased while the initial Acquisition Proposal was pending. The per share
purchase price for shares purchased pursuant to 7.6(a)(ii) shall be equal to the
per share purchase price paid by the Purchaser or its Affiliates for such shares
of Company Common Stock);
(b) a breach of Section 5.2(c); or
(c) the seventh anniversary of the Closing Date.
8. COMPANY RIGHT OF FIRST REFUSAL.
From the date hereof and for a three-year period thereafter:
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8.1 Right of First Refusal.
Prior to making any private sale or transfer of more than 10% of the
outstanding Common Stock of the Company in any three-month period to a party who
is not an Affiliate of Mastech Corporation, the Purchaser shall give the Company
the opportunity to purchase such Common Stock in the following manner:
(a) The Purchaser shall give notice (the "Transfer Notice") to
the Company in writing of such intention specifying the approximate number of
the proposed purchasers or transferees, the amount of Common Stock proposed to
be sold or transferred, the proposed price per share therefor (the "Transfer
Price") and the other material terms upon which such disposition is proposed to
be made.
(b) The Company shall have the right, exercisable by written
notice given by the Company to the Purchaser within three (3) Business Days
after receipt of such Transfer Notice, to purchase all but not part of the
Common Stock specified in such Transfer Notice for cash per share equal to the
Transfer Price.
(c) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Common Stock with respect to which
such right has been exercised shall take place within thirty (30) calendar days
after the Company receives notice, which period of time shall be extended if
necessary in order to comply with applicable securities laws and regulations.
Upon exercise of its right of first refusal, the Company and the Purchaser shall
be legally obligated to consummate the purchase contemplated thereby and shall
use their best efforts to secure any approvals required in connection therewith.
(d) If the Company does not exercise its right of first refusal
hereunder within the time specified for such exercise, the Purchaser shall be
free, during the period of ninety (90) calendar days following the expiration of
such time for exercise, to sell the Common Stock specified in such Transfer
Notice. The Purchaser's transferee shall acquire such Common Stock free from any
of the provisions of this Agreement; however, such Common Stock shall be subject
to any restrictions imposed under applicable securities laws.
8.2 Tender Offer Sale.
Prior to making any sale or exchange of Common Stock in response to
a tender or exchange offer, the Purchaser shall give the Company the opportunity
to purchase all, but not less than all, of the Purchaser's Common Stock in the
following manner:
(a) The Purchaser shall give notice (the "Tender Notice") to the
Company in writing of such intention no later than ten (10) calendar days prior
to the latest time by which Common Stock must be tendered in order to be
accepted pursuant to such offer or to qualify for any proration applicable to
such offer (the "Tender Date"). For purposes hereof, a tender offer to purchase
Common Stock shall be deemed to be an offer at the price specified therein,
without regard to any provisions thereof with respect to proration or conditions
to the offeror's obligation to purchase (assuming such conditions are not
impossible of performance when the offer is made, without giving effect to the
Company's right of first refusal).
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(b) If the Tender Notice is given, the Company shall have the
right, exercisable by giving notice to the Purchaser at least two (2) Business
Days prior to the Tender Date, to purchase all, but not less than all, of the
Common Stock owned by the Purchaser for cash. If the Company exercises such
right by giving such notice, the closing of the purchase of such Voting Stock
shall take place not later than one Business Day prior to the Tender Date;
provided, however, that if the purchase price specified in the tender offer
includes any property other than cash, the value of any property included in the
purchase price shall be jointly determined by a nationally recognized investment
banking firm selected by each party or, in the event such firms are unable to
agree, a third nationally recognized investment banking firm to be selected by
such two firms. For this purpose:
(i) If the Company does not exercise such right by giving
such notice or fails to complete the purchase, then the Purchaser shall be free
to accept the tender offer with respect to which the Tender Notice was given, to
which Section 8.1 shall have no application, force or effect.
(ii) If the Company does not purchase the shares, the
Company will provide such assurance as the tender offeror shall reasonably
request to provide the tender offeror with certificates for the Purchaser's
shares without legends referring to this Agreement.
8.3 Assignment of Rights.
In the event that the Company elects to exercise a right of first
refusal under this Section 8, the Company may specify, prior to closing such
purchase and upon not less than three Business Days prior notice to the
Purchaser, another person as its designee to purchase the Common Stock to which
such notice relates.
8.4 Acquisition Proposal.
Notwithstanding anything to the contrary contained in this Article 8
of this Agreement, Section 8.1 shall be suspended during the occurrence of an
Acquisition Proposal and shall have no further force or effect following
consummation of the transaction giving rise to the Acquisition Proposal.
9. MISCELLANEOUS.
9.1 Complete Agreement; Modification of Agreement.
(a) The Transaction Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and may not be
modified, altered or amended except as provided therein.
(b) No amendment or waiver of any provision of this Agreement or
any other Transaction Document, nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Purchaser, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
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9.2 Fees and Expenses.
Company shall pay all reasonable out-of-pocket expenses of Purchaser
in connection with the preparation of the Transaction Documents and the
transactions contemplated thereby, including all reasonable legal expenses. If,
at any time or times Purchaser shall employ counsel or other advisors for advice
or other representation or shall incur reasonable legal or other costs and
expenses in connection with:
(i) any amendment, modification or waiver, or consent with
respect to, any of the Transaction Documents;
(ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Purchaser, Company, any Subsidiary of Company or any
other Person) relating to any of the Transaction Documents or any other
agreements to be executed or delivered in connection herewith (except for such
actions in which the Company is the prevailing party); or
(iii) any attempt to enforce any rights of Purchaser against
Company, any Subsidiary of Company or any other Person, that may be obligated to
Purchaser by virtue of any of the Transaction Documents;
then, and in any such event, the reasonable attorneys' and other parties' fees
arising from such services, including those of any appellate proceedings, and
all expenses, costs, charges and other fees incurred by such counsel and others
in any way or respect arising in connection with or relating to any of the
events or actions described in this Section shall be payable, on demand, by
Company to Purchaser and shall be additional Obligations under this Agreement
and the other Transaction Documents. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' and investment bankers' fees, costs and
expenses; court costs and expenses; photocopying and duplicating expenses; court
reporter fees, costs and expenses; long distance telephone charges; air express
charges; telegram charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal services.
9.3 No Waiver by Purchaser.
Purchaser's failure, at any time or times, to require strict
performance by Company of any provision of this Agreement and any of the other
Transaction Documents shall not waive, affect or diminish any right of Purchaser
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by Purchaser shall not suspend, waive or affect any other breach by
Company under this Agreement and any of the other Transaction Documents whether
the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of Company contained in this Agreement or any of the other
Transaction Documents and no breach by Company under this Agreement and no
breach by Company under any of the other Transaction Documents shall be deemed
to have been suspended or waived by Purchaser, unless such suspension or waiver
is by an instrument in writing signed by an officer of Purchaser and directed to
Company specifying such suspension or waiver.
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9.4 Remedies.
Purchaser's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Purchaser may
have under any other agreement, including the other Transaction Documents, by
operation of law or otherwise.
9.5 Waiver of Jury Trial.
The parties hereto waive all right to trial by jury in any action or
proceeding to enforce or defend any rights under the Transaction Documents.
9.6 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.
9.7 Binding Effect; Benefits.
This Agreement and the other Transaction Documents shall be binding
upon, and inure to the benefit of, the successors of Company and Purchaser and
the assigns, transferees and endorsees of Purchaser, including all provisions
with respect to Change of Control of Company.
9.8 Conflict of Terms.
Except as otherwise provided in this Agreement or any of the other
Transaction Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Transaction Documents, the
provision contained in this Agreement shall govern and control.
9.9 Governing Law.
This Agreement and the Obligations arising hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
Commonwealth of Pennsylvania applicable to contracts made and performed in such
state, without regard to the principles thereof regarding conflict of laws, and
any applicable laws of the United States of America. Purchaser and Company agree
to submit to personal jurisdiction and to waive any objection as to venue in the
federal or Pennsylvania State courts located in the County of Allegheny,
Commonwealth of Pennsylvania. Service of process on Purchaser or Company in any
action arising out of or relating to any of the Transaction Documents shall be
effective if mailed to such party at the address listed in Section 9.10 hereof.
Nothing herein shall preclude Purchaser or Company from bringing suit or taking
other legal action in any other jurisdiction.
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<PAGE> 34
9.10 Notices.
Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or serve upon another
any such communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and either shall be delivered in person with receipt acknowledged or by
registered or certified mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback addressed as follows:
If to Company:
VCampus Corporation
8251 Greensboro Drive, Suite 500
McLean, VA 22101
Attn: Nat Kannan, CEO
Telecopy Number: (703) 893-1905
with a copy to:
Wyrick Robbins Yates & Ponton LLP
Suite 300
4101 Lake Boone Trail
Raleigh, NC 27607
Attn: Larry E. Robbins
If to Purchaser:
Mastech Corporation
1004 McKee Road
Oakdale, Pennsylvania 15071
Attn: Ajmal Noorani
Telecopy Number: (412) 787-9225
with a copy to:
Buchanan Ingersoll
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, Pennsylvania 15219
Attn: Carl Cohen, Esq. and James Barnes, Esq.
Telecopy Number: (412) 562-1041
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 or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally
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<PAGE> 35
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been deposited
with the United States mail. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other communication
to the Persons designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
9.11 Survival.
The representations, warranties and covenants of Company in this
Agreement shall survive the execution, delivery and acceptance hereof by the
parties hereto and the closing of the transactions described herein or related
hereto.
9.12 Section and Other Headings.
The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
9.13 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
9.14 Publicity.
Neither Purchaser nor Company shall issue any press release or make
any public disclosure regarding the transactions contemplated hereby unless such
press release or public disclosure is approved by the other party in advance.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby as each may be
advised by counsel is legally necessary or advisable, and may make such
disclosure as it is advised by its counsel is required by law, subject to
advance consultation with Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Company and Purchaser have executed this Stock
Purchase Agreement as of the day and year first above written.
VCAMPUS CORPORATION
By:
----------------------------------------
Name:
Title:
Purchaser:
MASTECH CORPORATION
By:
----------------------------------------
Name:
Title:
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