EX-2.2 3 0003.txt AMENDED DISCLOSURE STATEMENT WITH RESPECT TO REORGANIZATION PLAN UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS ) In re: ) Chapter 11 ) CAMBEX CORPORATION, ) Case No. 97- 19640-CJK ) Debtor ) ) AMENDED DISCLOSURE STATEMENT WITH RESPECT TO REORGANIZATION PLAN (MARCH 17, 1998) OF CAMBEX CORPORATION BROWN, RUDNICK, FREED & GESMER, P.C. Attorneys for Cambex Debtor-in-Possession One Financial Center Boston, MA 02111 617-856-8200 JOSEPH F. RYAN STEVEN D. POHL FRANK RUDY COOPER DATED: Waltham, Massachusetts March 17, 1998 A SUMMARY OF THE DISCLOSURE STATEMENT IS CONTAINED AT PAGES A THROUGH D IMMEDIATELY AFTER THE TABLE OF CONTENTS. TABLE OF CONTENTS A-I SUMMARY I. INTRODUCTION 1 A. Definitions 1 B. Notice To Holders Of Claims And Holders Of Interests 1 C. Solicitation Package 2 D. Voting Procedures, Ballots, And Voting Deadline 2 E. Confirmation Hearing And Deadline For Objections To Confirmation 3 II. HISTORY OF CAMBEX CORPORATION AND COMMENCEMENT OF THE CASE 4 A. Cambex's Businesses 4 B. Need For Restructuring And Chapter 11 Relief 4 III. THE CHAPTER 11 CASE 4 A. Operations Of Cambex During The Chapter 11 Case 5 B. Parties In Interest 5 1. Cambex And Its Advisors 5 2. The Creditors' Committee And Its Advisors 5 C. Other Significant Events 6 1. Sublease of Waltham Facility 6 D. Bar Dates, Notice Of Bar Dates, And Filing Of Proofs Of Claim 6 IV. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6 A. Results of Operations for the Years Ended December 31, 1997 and December 31, 1996. 7 B. Liquidity and Capital Resources 8 V. CAMBEX'S BUSINESS PLAN 9 A. General 9 B. The Company's Business Strategy 9 C. Products 9 D. Competition 10 E. Management 11 1. Executive Compensation 11 F. Risk Factors 12 1. History of Operating Losses 12 3. Future Funding Needs; Uncertainty of Future Funding 13 4. Competition and Technology Change 13 5. Uncertain Public Market for Common Stock 13 VI. SUMMARY OF THE REORGANIZATION PLAN 13 A. Certain Matters Regarding Organization, Classification, And Treatment Of Claims And Interests 13 1. Organization And Classification 13 2. Treatment Of Claims And Interests 14 B. Directors And Officers 19 C. Revesting Of Assets 19 D. Description Of Securities To Be Issued In Connection With The Plan; Limitation on Stock Options 19 1. New Common Stock 19 2. Limitation on Issuance of Stock Options 19 E. Distributions Under the Plan 20 1. Delivery Of Distributions 20 2. Procedures For Resolving And Treating Disputed And Contingent Claims 20 a. No Distributions Pending Allowance 20 b. Distribution Reserve 21 c. Distributions After Allowance 21 F. Miscellaneous Matters 21 1. Post-Petition Interest 21 2. Substantial Contribution Compensation And Expenses Bar Date 21 3. Treatment Of Executory Contracts And Unexpired Leases 22 a. Assumed Contracts And Leases 22 b. Payments Related To Assumption Of Executory Contracts And Unexpired Leases; Bar to Pre- Confirmation Date Claims 22 c. Rejected Contracts And Leases 22 d. [Intentionally Omitted] 23 e. Unidentified Executory Contracts And Unexpired Leases 23 f. Disputes Relating To Assumption, Assumption And Assignment, And/Or Rejection Of Executory Contracts 23 4. Committees 23 5. Retention Of Jurisdiction 23 6. Discharge 23 7. United States Trustee Fees 23 VII. CERTAIN OTHER FACTORS TO BE CONSIDERED 24 A. General Considerations 24 B. Inherent Uncertainty Of Financial Projections 24 C. Risks Associated With Reorganized Cambex 24 VIII. CERTAIN SECURITIES LAW ASPECTS OF THE PLAN 24 A. General 25 B. Initial Issuance Of Securities Under The Plan 25 C. Resale Of Securities 25 1. Persons Other Than Underwriters Or Dealers. 25 2. Underwriters 25 3. Dealers 27 D. Absence Of Market For Securities 27 1. New Common Stock 27 2. Liquidity 28 IX. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN 28 A. Federal Income Tax Consequences To Cambex 29 1. Cancellation Of Indebtedness 29 2. Utilization Of Net Operating Loss Carryovers 29 3. Alternative Minimum Tax 30 B. Federal Income Tax Consequences To Holders Of Claims 31 1. Class 4 Unsecured Creditors 31 2. Accrued Interest On Allowed Claims 32 3. Market Discount 33 4. Recapture On Later Disposition Of Common Stock 33 5. Other Tax Effects Of Ownership Of Common Stock 33 C. Federal Income Tax Consequences To Holders Of Common Stock 34 X. FEASIBILITY OF THE PLAN AND THE BEST INTERESTS OF CREDITORS 34 A. Feasibility Of The Plan 34 B. Acceptance Of The Plan 35 C. Best Interests Of Holders Of Claims 35 D. Liquidation Analysis 36 E. Application Of The Best Interests Of Creditors And Equity Security Holders Test To The Liquidation Analysis 37 F. Confirmation Without Acceptance Of All Impaired Classes: The "Cramdown" Alternative 37 G. Conditions To Confirmation And/Or Consummation 38 1. Conditions To The Confirmation Date 38 2. Conditions To The Consummation Date 38 H. Waiver Of Conditions To The Confirmation Date Or Consummation Date 40 XI. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN 40 A. Continuation Of The Chapter 11 Case 40 B. Alternative Plans Of Reorganization 40 C. Liquidation Under Chapter 7 41 D. Plan Preferable To Alternatives 41 XII. VOTING REQUIREMENTS 41 A. Parties In Interest Entitled To Vote 42 B. Classes Impaired Under The Plan 43 XIII. CONCLUSION 43 A. Hearing On And Objections To Confirmation 44 1. Confirmation Hearing 44 2. Date Set For Filing Objections To Confirmation 44 B. Recommendation 44 EXHIBIT LIST Exhibit 1 -- Reorganization Plan Exhibit 2 -- Projected Financial Information Exhibit 3 -- 1995 Audited Financial Statements Exhibit 4 -- 1996 Audited Financial Statements Exhibit 5 -- 1997 Unaudited Financial Statements Exhibit 6 -- Liquidation Analysis DISCLOSURE STATEMENT SUMMARY This Summary is intended solely as a summary of matters described herein. For a complete understanding of the Plan ("Plan") you should read the Amended Disclosure Statement ("Disclosure Statement") the Plan, and the exhibits and schedules thereto in their entirety. A copy of the Plan is appended to this Disclosure Statement as Exhibit 1. Capitalized terms used in this Summary are given the meanings ascribed to them in the Disclosure Statement and the Plan. The Reorganization. Cambex Corporation ("Cambex") filed a petition for relief under Chapter 11 of the Bankruptcy Code on October 10, 1997. On February 9, 1998, Cambex filed the Plan and amended the Plan on March 17, 1998. The following Disclosure Statement describes certain aspects of the Plan, Cambex's business plan, and related matters. CAMBEX HAS CONCLUDED THAT THE RECOVERY TO CREDITORS WILL BE MAXIMIZED BY THE CONTINUED OPERATION OF CAMBEX THROUGH APPLICATION OF THE BUSINESS STRATEGY REFLECTED IN THE DISCLOSURE STATEMENT. THE PLAN IS SUPPORTED BY THE CREDITORS' COMMITTEE. THE CREDITORS' COMMITTEE'S SUPPORT IS PREDICATED ON CAMBEX'S ABILITY TO DEMONSTRATE THAT IT HAS OBTAINED THE FINANCING REFERENCED IN SECTION V.F.2 OR HAS OTHERWISE DEMONSTRATED THAT IT CAN SATISFY ITS OBLIGATIONS UNDER THE PLAN. Certain Administrative, Priority, Secured and other Claims will be paid in Cash. Holders of Unsecured Claims have the option of being paid in Cash or a combination of Cash and Common Stock of Cambex. ANY HOLDER OF AN UNSECURED CLAIM WHO DOES NOT SPECIFY EITHER OPTION SHALL BE DEEMED TO HAVE ELECTED THE OPTION TO BE PAID CASH ONLY. Cambex's existing equity security holders will retain their stock. Treatment of Claims and Interests Treatment of Claims and Interests under the Plan shall be as follows: Est. Summary of Treatment Amount Administrative Claims $350,000 (i) Paid in Cash in full on (i) Professional $ 50,000 Consummation Date fees (ii) Paid in ordinary course (ii) $135,000 of business Trade payables and accruals (iii) Paid in Cash in full (iii) on Consummation Date Payments required to Cure executory contracts and unexpired leases to be assumed Priority Tax Claims $ 50,000 (a) Paid in Cash in full on Consummation Date, or (b) deferred Cash Payments, with interest, over no more than six (6) years from Assessment, subject to prepayment in full or part Class 1: Other $ 50,000 (a) Paid in Cash on the Priority Claims Consummation Date or (b) Reinstatement Class 2: Secured Claims (i) (i) deferred cash payments, (i) 2.01 - City $8,000 with interest, over six (6) (ii) 2.02 - (ii) $-0- years, subject to prepayment other in full or in part (ii) at the option of Cambex or Reorganized Cambex: (a) retention of lien in collateral and receipt of deferred Cash payments totaling at least unpaid portion of Claim, of a value, as of the Consummation Date, of at least the value of the holder's interest in the collateral; (b) abandonment of collateral to holder; c) payments or liens amounting to indubitable equivalent of value of holder's interest in collateral; or (d) Reinstatement Class 3: General $15,000 Paid in Cash in full on the Unsecured Claims (estimated Consummation Date Less than or Equal claimants to $500 (Convenience - 75) Class) Class 4: All Other $5,000,000 (i) Option A. Paid in full in General Unsecured (estimated Cash over thirty (30) months Claims claimants starting six (6) months after - 140) Consummation Date at a rate of two and one-half percent (2 1/2%) of Allowed Claim over first six (6) months, three and one- half percent (3 1/2%) over the next twenty-three (23) months and four and one-half percent (4 1/2%) in the last month. (ii) Option B. Paid in Cash eighty percent (80%) of Allowed Claim over thirty (30) months starting six (6) months after Consummation Date at a rate of two percent (2%) over the first six (6) months and two and five-sixths percent (2 5/6%) over the next twenty- four (24) months, plus, for every one dollar ($1.00) of Allowed Claim in excess of the amount payable in Cash (i.e., 20% of the Allowed Claim), two shares of Common Stock of Reorganized Cambex. Class 5: All Stockholder N.A. Stockholders of Cambex will Interests retain their common stock. Cambex Corporation of Waltham, Massachusetts, develops, manufactures and markets a variety of direct access storage products that improve the performance of large and midsize computers by manufacturers such as IBM that are used as enterprise servers by organizations throughout the world. These products include central and expanded memory, controller cache memory, DASD and disk array systems, disk and tape subsystems and related software products. They are used to enhance the performance of IBM, Sun Microsystems, Hewlett-Packard and Windows NT computer platforms. Cambex has invested in the development of disk array products for both the enterprise and client- server storage sector. The result has been the introduction of major product families that seek to take advantage of the $8 billion annual disk array storage market. Cambex's CascadeT memory storage systems generally are faster and have larger capacities (up to 272 gigabytes per string) than products they replace. Cambex's unique DatasequencingT architecture also provides a variety of performance enhancements. They include a three-level cache memory system that enables Cascade units to eliminate a common disk problem, called "RPS misses", that occurs when disk array usage is very high, and a four-path access to the 3990 controller that minimizes resource contention and performance degradation. In addition, Cascade systems offer enhanced environmental capabilities. Cascade products also incorporate ESCON support, record and track-level caching and many significant extended functions such as dual copy, remote dual copy (XRC), PPRC, DASD fast-write and DFSMS data set placement and migration. Cambex's Centurion is a scalable RAID disk array; a data center class product for mission critical applications. Its high-availability features include redundant disks, controllers, power supplies, fans, platform interconnections and airflow and temperature sensing systems eliminating single points of failure. In addition its efficient failover software with large cache memory capacity provides high level performance. Cambex is developing a fiber channel connector capability for its Centurion product family. This will further enhance the Centurion performance and multi- platform interconnect capability. The recent rapid decline in the price of used IBM mainframe memory has for the IBM 9021 computers led Cambex to refocus its development effort on IBM's CMOS parallel enterprise servers, which are rapidly replacing older Model 9021 mainframes. Cambex will continue to supply memory for selected mainframes as well as cache memory for IBM 3990 storage control units. It will also continue to develop new products as the memory storage market undergoes changes. DISCLAIMER ALL CREDITORS ARE ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE PLAN, CERTAIN STATUTORY PROVISIONS, CERTAIN EVENTS IN CAMBEX'S CHAPTER 11 CASE, AND CERTAIN FINANCIAL INFORMATION. ALTHOUGH CAMBEX BELIEVES THAT THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF. FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY CAMBEX'S MANAGEMENT, EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED. CAMBEX IS UNABLE TO WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT ANY INACCURACY OR OMISSION. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND RULE 3016(c) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER APPLICABLE LAW. THIS DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN, OR OTHERWISE PURCHASING, SELLING, OR TRANSFERRING SECURITIES OF CAMBEX CORPORATION OR REORGANIZED CAMBEX SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED. AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION, OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NONBANKRUPTCY PROCEEDING INVOLVING CAMBEX CORPORATION OR REORGANIZED CAMBEX, OR ANY OTHER PARTY, NOR SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE CONSUMMATION DATE AS TO HOLDERS OF CLAIMS AGAINST, OR EQUITY INTERESTS IN, CAMBEX CORPORATION. DISCLOSURE STATEMENT WITH RESPECT TO REORGANIZATION PLAN OF CAMBEX CORPORATION I. INTRODUCTION Cambex Corporation ("Cambex") hereby submits this disclosure statement (the "Disclosure Statement") pursuant to section 1125 of the United States Bankruptcy Code (the "Bankruptcy Code"), for use in the solicitation of votes on the Reorganization Plan (the "Plan") proposed by Cambex, filed with the United States Bankruptcy Court for the District of Massachusetts (the "Bankruptcy Court") on February 9, 1998. This Disclosure Statement sets forth certain information regarding Cambex's pre-petition history, significant events that have occurred during Cambex's Chapter 11 Case, and the anticipated operations of Reorganized Cambex. This Disclosure Statement also describes the Plan, including certain alternatives to the Plan, certain effects of confirmation of the Plan, certain risk factors associated with securities to be issued under the Plan, and the manner in which distributions will be made under the Plan. In addition, this Disclosure Statement discusses the confirmation process and the voting procedures that holders of Claims in impaired Classes must follow for their votes to be counted. FOR A DESCRIPTION OF THE PLAN AND VARIOUS RISK AND OTHER FACTORS PERTAINING TO THE PLAN, PLEASE SEE "SUMMARY OF THE REORGANIZATION PLAN," "COMPANY'S BUSINESS PLAN" (INCLUDING "RISK FACTORS") AND "CERTAIN OTHER FACTORS TO BE CONSIDERED." A. Definitions All terms not defined in this Disclosure Statement have the meanings ascribed to them in the Plan (a copy of which is appended hereto as Exhibit 1). B. Notice To Holders Of Claims And Holders Of Interests This Disclosure Statement is being transmitted to certain holders of Claims against Cambex. The purpose of this Disclosure Statement is to provide adequate information to enable you, as the holder of a Claim against Cambex, to make a reasonably informed decision with respect to the Plan prior to exercising your right to vote to accept or to reject the Plan. On March 17, 1998, the Bankruptcy Court approved this Disclosure Statement as containing information of a kind and in sufficient detail adequate to enable the holders of Claims against Cambex to make an informed judgment with respect to acceptance or rejection of the Plan. THE BANKRUPTCY COURT'S APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE EITHER A GUARANTY OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN OR AN ENDORSEMENT OF THE PLAN BY THE BANKRUPTCY COURT. ALL HOLDERS OF CLAIMS AGAINST CAMBEX ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND ITS EXHIBITS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING TO VOTE EITHER TO ACCEPT OR TO REJECT THE PLAN. This Disclosure Statement contains important information about the Plan, considerations pertinent to acceptance or rejection of the Plan, and developments concerning the Chapter 11 Case. THIS DISCLOSURE STATEMENT IS THE ONLY DOCUMENT AUTHORIZED BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES ON THE PLAN. No solicitation of votes may be made except after distribution of this Disclosure Statement, and no person has been authorized to distribute any information concerning Cambex other than the information contained herein. CERTAIN OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS BY ITS NATURE FORWARD LOOKING AND CONTAINS ESTIMATES, ASSUMPTIONS, AND PROJECTIONS THAT MAY BE MATERIALLY DIFFERENT FROM ACTUAL FUTURE RESULTS. Except with respect to the projections and pro forma opening balance sheet as of the projected Consummation Date as set forth in Exhibit 2 hereto (the "Projections") and except as otherwise specifically stated herein, this Disclosure Statement does not reflect any events that may occur subsequent to the date hereof and that may have a material impact on the information contained in this Disclosure Statement. Cambex and Reorganized Cambex do not intend to update the Projections. Thus, the Projections will not reflect the impact of any subsequent events not already accounted for in the assumptions underlying the Projections. Further, Cambex and Reorganized Cambex do not anticipate that any amendments or supplements to this Disclosure Statement will be distributed to reflect such occurrences. Accordingly, the delivery of this Disclosure Statement shall not under any circumstance imply that the information herein is correct or complete as of any time subsequent to the date hereof. EXCEPT WHERE SPECIFICALLY NOTED, THE FINANCIAL INFORMATION CONTAINED HEREIN HAS NOT BEEN AUDITED BY A CERTIFIED PUBLIC ACCOUNTANT AND HAS NOT BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. C. Solicitation Package Accompanying this Disclosure Statement are copies of(i) the Plan; (ii) the notice of, among other things, the time for submitting Ballots to accept or reject the Plan; the date, time and place of the hearing to consider the confirmation of the Plan and related matters; and the time for filing objections to the confirmation of the Plan (the "Confirmation Hearing Notice"); and (iii) one or more Ballots (and return envelopes) to be used by you in voting to accept or to reject the Plan. FOR HOLDERS OF UNSECURED CLAIMS, THE BALLOT ALSO WILL BE USED TO MAKE THE ELECTION BETWEEN BEING PAID CASH OR A COMBINATION OF CASH AND COMMON STOCK OF CAMBEX. D. Voting Procedures, Ballots, And Voting Deadline After carefully reviewing the Plan, this Disclosure Statement, and the detailed instructions accompanying your Ballot, please indicate your acceptance or rejection of the Plan by voting in favor of or against the Plan on the enclosed Ballot. Please complete and sign your original Ballot (copies will not be accepted) and return it in the envelope provided. HOLDERS OF UNSECURED CLAIMS ALSO SHOULD INCLUDE IN THEIR BALLOT WHICH PAYMENT OPTION THEY ELECT, CASH OR A COMBINATION OF CASH AND COMMON STOCK OF CAMBEX, EVEN IF THEY VOTE TO REJECT THE PLAN. Each Ballot has been coded to reflect the Class of Claims it represents. Accordingly, in voting to accept or reject the Plan, you must use only the coded Ballot or Ballots sent to you with this Disclosure Statement. IN ORDER FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE PROPERLY COMPLETED AS SET FORTH ABOVE AND IN ACCORDANCE WITH THE VOTING INSTRUCTIONS ON THE BALLOT AND RECEIVED NO LATER THAN April 16, 1998 at 4:00 P.M. EASTERN TIME (THE "VOTING DEADLINE") BY THE VOTING (OR BALLOT) AGENT, WHOSE NAME AND ADDRESS APPEARS ON THE FACE OF THE BALLOT. If you have any questions about the procedure for voting your Claim or with respect to the packet of materials that you have received, please contact Cambex at telephone no. (617) 890-6000 (Ext. 299). If you have any questions about the amount of your Claim, please contact Cambex at telephone no. (617) 890- 6000 (Ext. 235). If you wish to obtain, at your own expense, unless otherwise specifically required by Federal Rule of Bankruptcy Procedure 3017(d), an additional copy of the Plan, this Disclosure Statement, and the exhibits to such documents, please contact Brown, Rudnick, Freed & Gesmer, One Financial Center, Boston, MA 02111, Attn: Marnie A. Ratner. FOR FURTHER INFORMATION AND INSTRUCTION ON VOTING TO ACCEPT OR REJECT THE PLAN, SEE "VOTING REQUIREMENTS." E. Confirmation Hearing And Deadline For Objections To Confirmation Pursuant to section 1128(a) of the Bankruptcy Code and Federal Rule of Bankruptcy Procedure 3017(c), the Bankruptcy Court has scheduled the Confirmation Hearing for April 23, 1998 at 10:30 a.m. before the Honorable Carol J. Kenner, United States Bankruptcy Judge, in Court Room 4, 10 Causeway Street, Boston, Massachusetts. The Bankruptcy Court has directed that objections, if any, to confirmation of the Plan be served and filed on or before April 16, 1998 at 4:00 p.m. Eastern Time. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the adjournment date made at the Confirmation Hearing or at any subsequent adjourned Confirmation Hearing. THE PLAN HAS THE SUPPORT OF THE CREDITORS' COMMITTEE. THE CREDITORS' COMMITTEE'S SUPPORT IS PREDICATED ON CAMBEX'S ABILITY TO DEMONSTRATE THAT IT HAS OBTAINED THE FINANCING REFERENCED IN SECTION V.F.2 OR HAS OTHERWISE DEMONSTRATED THAT IT CAN SATISFY ITS OBLIGATIONS UNDER THE PLAN. IN THEIR VIEW, THE TREATMENT OF HOLDERS OF CLAIMS IN IMPAIRED CLASSES UNDER THE PLAN CONTEMPLATES GREATER RECOVERY FOR HOLDERS OF CLAIMS IN IMPAIRED CLASSES ELIGIBLE TO VOTE ON THE PLAN THAN WOULD BE AVAILABLE IN LIQUIDATION. ACCORDINGLY, THEY BELIEVE THAT THE PLAN IS IN THE BEST INTERESTS OF HOLDERS OF CLAIMS IN SUCH IMPAIRED CLASSES AND RECOMMEND THAT ALL HOLDERS OF CLAIMS IN IMPAIRED CLASSES VOTE TO ACCEPT THE PLAN. II. HISTORY OF CAMBEX CORPORATION AND COMMENCEMENT OF THE CASE A. Cambex's Businesses Cambex is a public reporting company engaged in the business of developing, manufacturing and marketing products that enhance the storage capacity and reliability of IBM mainframe computers and client server computers manufactured by IBM and other companies, such as Hewlett Packard and Sun Microsystems. As of October 10, 1997, Cambex employed approximately 36 people, primarily at its principal facility in Waltham, Massachusetts, which it leases. Cambex's audited financial statements for the years ending December 31, 1995 and 1996, respectively, are annexed hereto as Exhibits 3 and 4, respectively and Cambex's unaudited financial statements for the year ending December 31, 1997 are annexed hereto as Exhibit 5. B. Need For Restructuring And Chapter 11 Relief Cambex's primary business is the creation of additional memory and storage systems for IBM mainframe computers and client server computers manufactured by IBM and others. The market for such memory systems does not mature until twelve to eighteen months after the prospective customer has purchased and utilized much of the storage capacity of its mainframe computer. As IBM creates new models of computers, the requirements for additional memory subsides until such time as the market for new memory for the new computer matures. As a result, the market for Cambex's products runs in cycles that lag behind the creation of each new computer. With the recent introduction of a new IBM mainframe series, Cambex experienced a significant decline in sales of its principal memory storage product. As a result of Cambex's decline in sales and resulting inability to timely pay its vendors and other creditors, some creditors commenced collection actions and sought to attach Cambex's bank accounts. Cambex commenced this proceeding in order to stay those creditor actions and to provide for a forum to reorganize. II. THE CHAPTER 11 CASE Following commencement of the Chapter 11 Case, all actions and proceedings against Cambex and all acts to obtain any property of Cambex's Estate were automatically stayed under section 362 of the Bankruptcy Code. This relief gave Cambex an opportunity to assess and reorganize its business. Described below are some of the important measures taken by Cambex during the Chapter 11 Case. A. Operations Of Cambex During The Chapter 11 Case Since the commencement of this Chapter 11 case, Cambex has further reduced its operating expenses, subleased part of its facilities and aggressively refocused its business strategy to concentrate on multiplatform shared storage solutions. The first model of the advanced cross enterprise storage became beta site ready and the development of the fiber channel open system storage product has progressed on plan. Cambex's field service and customer support operations continued uninterrupted. Rebuilding Cambex's sales force has begun and it is expected to accelerate. Cambex is aggressively pursuing partnerships and establishing reseller channels. B. Parties In Interest The parties described below have been major parties in interest in the Chapter 11 Case to date. 1. Cambex And Its Advisors. During the course of the Chapter 1 I Case, Cambex has managed its properties and operated its business as debtor-in-possession. Cambex is the Plan Proponent. Cambex has retained Brown, Rudnick, Freed & Gesmer as Chapter 11 counsel. Cambex has consulted with its counsel on all aspects of its business, financial restructuring, and operations as a debtor-in-possession in the Chapter 11 Case. 2. The Creditors' Committee And Its Advisors The Creditors' Committee represents general unsecured creditors of Cambex. The Creditors' Committee is comprised of the following creditors holding general unsecured claims: Carlo Gavazzi, Inc., Arthur Andersen, LLP, Vitesse Semiconductor Corporation, Hitachi Data Systems, Boston Edison Company, Digital Equipment Inc., EMC Corporation, CIT GroupEquipment Financing, Inc., and Hillside Associates. Gregory Mazmanian of EMC Corporation serves as chair of the Creditors' Committee. Goulston & Storrs, P.C. are the attorneys for the Creditors' Committee and Price Waterhouse is the Creditors' Committee's financial advisor. The Creditors' Committee has reviewed Cambex's operations during the pendency of the Chapter 11 Case and has examined the measures taken by Cambex to reorganize its business as set forth above. The Creditors' Committee has also monitored the proceedings before the Bankruptcy Court and, where appropriate, has advocated the interests of Cambex's creditors by supporting certain motions made by Cambex. The Creditors' Committee supports the Plan. The Creditors' Committee's support is predicated on Cambex's ability to demonstrate that it has obtained the financing referenced in section V.F.2 or has otherwise demonstrated that it can satisfy its obligations under the Plan. C. Other Significant Events 1. Sublease of Waltham Facility On January 16, 1998 Cambex entered into a Sublease Agreement with a third party pursuant to which Cambex sublet approximately 20,000 square feet in its leased Waltham facility (which is approximately 30% of Cambex's total leased space at the Waltham facility). Under the Sublease Agreement, Cambex's subtenant will pay rent at a rate substantially in excess of the rent payable by Cambex under its primary lease for this space. Accordingly, the Sublease Agreement relieves Cambex of the economic burdens associated with 30% of the leased facility, and further provides Cambex additional revenue based upon a rental rate in the sublease in excess of the rent under the primary lease. By order dated January 30, 1998, the Court approved the Sublease Agreement. D. Bar Dates, Notice Of Bar Dates, And Filing Of Proofs Of Claim By order dated December 29, 1997 (the "Bar Date Order"), the Bankruptcy Court, pursuant to Bankruptcy Rule 3003(c) (3), fixed February 2, 1998 (April 8, 1998 for governmental entities) as the final date for filing certain proofs of Claim in the Chapter 11 Case (the "Bar Date"). The Bar Date Order also approved, pursuant to Bankruptcy Rule 2002 (a)(8), the form of notice of the Bar Date to be mailed to creditors and other parties in interest. Cambex complied with the Bar Date Order by serving notice of the Bar Date as required. Proofs of claim aggregating in excess of $5.7 million have been filed in the Chapter 11 Case. Based upon Cambex's preliminary evaluation of such proofs of claim, Cambex estimates that approximately $5,000,000 may ultimately be allowed as Unsecured Claims under Class 4. The balance of the Claims are principally Priority Tax Claims (approximately $50,000) and Class 1 Other Priority Claims (approximately $50,000). Cambex intends to file its objections to Disputed Claims prior to the Confirmation Date. The aggregate amount of Claims likely to be filed arising from rejection of executory contracts and unexpired leases is unknown. The process of Cambex's evaluation of, objection to, and resolution of proofs of claim may continue after the Confirmation Date, and Cambex cannot estimate accurately the amount of Claims that will become Allowed Claims. The Plan provides for a Distribution Reserve with respect to Disputed Claims, as more particularly described in Section VI.E of this Disclosure Statement. IV. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cambex has prepared unaudited financial statements for the year ended December 31, 1997 and management's discussion and analysis compares these results with the audited results for the year ended December 31, 1996. A. Results of Operations for the Years Ended December 31, 1997 and December 31, 1996. Revenues Total revenues were $9,762,000 and $22,917,000 in 1997 and 1996, respectively. Cambex's revenues for the mainframe memory products for the IBM ES/902l declined significantly in 1997. Historically, Cambex's mainframe memory revenues have been cyclical, dependent on the technological changes initiated by IBM. During 1997, IBM introduced a new CMOS mainframe processor, and as a result, customers reduced their purchases of incremental memory for the ES/9021 machines. The demand for additional memory usually lags the introduction of new generations of mainframes by twelve to eighteen months. Cambex had planned to balance the decline in mainframe memory revenues by selling mainframe and client/server disk storage products. Initial shipments of Cambex's mainframe disk storage product (Cascade) experienced operating problems, which required additional time to resolve. These problems were corrected by the end of 1997. Costs and Expenses Cambex has reduced its general level of expenses since 1994 as a result of decreasing annual revenues. The total number of employees at the end of each of the years 1994, 1995 1996 and 1997 was 160, 140, 80, and 34, respectively. These staff reductions have impacted all functional areas and should be considered when analyzing comparative financial statements. Cost of Sales as a percentage of revenues was 96% and 75% in 1997 and 1996, respectively. The major reason for the increased cost of sales percentage is the decrease in total revenues and the resulting effect of fixed overhead costs. Inventory write-downs in 1997 and 1996 were approximately $2,700,000 and $3,000,000, respectively. Their effect on the cost of sales percentage was 28% and 13% in 1997 and 1996, respectively. Research and development expenses represented 24% ($2,371,000) and 15% ($3,433,000) in 1997 and 1996, respectively. The decrease in total expenses is due mainly to reduced staffing. Sales, general and administrative expenses were $4,713,000 and $8,985,000 in 1997 and 1996, respectively. The reduction in expenses is due primarily to lower staffing levels. Other Income and Expense Cambex recognized a net expense of $1,822,000 in 1996, which was entirely due to amortization of a technology license and marketing agreement that was acquired in 1992. The amortization was over a five year period, ending in 1996. Cambex recognized a net expense of $339,000 in 1997, of which approximately $200,000 relates to accrued professional services in conjunction with the Chapter 11 services. Cambex recorded $244,000 in interest expense in 1996, which was related to a revolving credit agreement with a bank. The entire balance of the outstanding loan was repaid in February 1997. Income Taxes Cambex recorded no income tax provision or credit in 1997 and a $200,000 net credit in 1996. Net Income (Loss) Cambex incurred a net loss of $7,038,000, or $.78 per share, in 1997 and a net loss of $8,632,000, or $.96 per share, in 1996. B. Liquidity and Capital Resources Cambex's ability to fund its long term operations is dependent on several factors, including the formulation and confirmation of a viable reorganization plan and Cambex's ability to achieve the revenues set forth in the Projections attached to this Disclosure Statement as Exhibit 2 and attract additional funding through private financing. There can be no assurance that adequate operating funds will be generated from operations or that additional funding can be obtained on acceptable terms. Operating activities generated $1,534,000 of cash in 1997, which was due to a refund of federal income tax of approximately $2,300,000. The 1997 net loss of $7,038,000 included non-cash depreciation and amortization of $648,000. In 1996, $1,358,000 was generated from operations and the net loss of $8,632,000 included non-cash depreciation and amortization of $1,500,000. In 1997, Cambex reduced inventory by $4,622,000, of which, $2,700,000 was due to write-downs. Accounts receivable decreased by $655,000 in 1997. Accounts payable increased by $820,000 in 1997 and accrued expenses decreased by $404,000. During 1997, Cambex used $1,775,000 in financing activities, which was repayment under the revolving credit agreement. At December 31, 1997 and 1996, Cambex had cash and cash equivalents totaling $425,000 and $616,000 respectively. At December 31, 1997, Cambex had negative working capital of $3,606,000, whereas it had positive working capital of $3,l59,000 at December 31, 1996. In the event the Plan is confirmed by the Bankruptcy Court, continuation of Cambex's storage business after reorganization is dependent upon the success of future operations and Cambex's ability to meet obligations as they become due. The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. As a result of the reorganization proceedings, Cambex may have to sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in the financial statements. The financial statements do not give effect to adjustments to the carrying value of assets, or amount and reclassification of liabilities that might be necessary as a consequence of these bankruptcy proceedings. The appropriateness of using going concern accounting is dependent upon, among other things, confirmation of a plan of reorganization, success of future operations and the ability of Cambex to generate sufficient cash from operations and financing sources to meet its obligations. There can be no assurance that any of these events will occur. V. CAMBEX'S BUSINESS PLAN A. General Cambex develops, manufactures and markets a variety of direct access storage products for large and midsize computers offered by IBM and IBM compatible manufacturers as well as other server manufacturers, such as Sun Microsystems, Hewlett Packard and Windows NT platforms suppliers. These products include central and expanded memories, cache memories for disk controllers and RAID disk array subsystems to improve the performance of enterprise and client servers. B. Cambex's Business Strategy Cambex has been a long-standing supplier of memories for IBM large-scale mainframe computers. After a five-year downturn, the mainframe market is experiencing an emerging revival as the mainframes are increasingly used as enterprise servers. At the same time, the UNIX and Windows NT based server markets continue their rapid growth. Cambex's business strategy is based on the coexistence of the mainframe and open systems (MVS and UNIX - Windows NT) markets. Cambex intends to take advantage of the growing market for computer storage which is being fueled by vast appetites for storage to support the year 2000 problem, the migration to data sharing and the focus on data warehousing. The products presently offered and short- term product plans described below indicate the increased emphasis on high-availability multiplatform RAID disk array products enhanced by value-added software solutions. C. Products Cambex offers a full range of direct access storage solutions to satisfy the needs of the customer. The specific products providing these solutions are: 1. Add-in Memories. The STOR/9000 memories for the IBM 9672 CMOS and the E5/9000 Model 9021 mainframe computers, Cache Memories for the IBM 3990 Model 3 and Model 6 and the IBM 9390 Disk Controllers increase computer performance and productivity in a cost effective way. Although the mainframe computer market had been in a steep decline between 1992 and 1997, a resurgence began to occur in 1997 with the introduction of the cost-effective IBM 9672 CMOS Mainframe Computers. These mainframes are increasingly used as main enterprise servers for client server networks. The memory market typically lags the mainframe processor market by about 18 months, since users have sufficient capacity of memory available for their initial applications with the installation of the central processor. As the user applications increase, needs arise for additional memory. Cambex expects the CMOS memory market to emerge in 1998. 2. Mainframe or Enterprise Server Disk Storage Products. Cambex offers RAID (Redundant Array of Inexpensive Disks) Storage Arrays which attach to IBM or IBM compatible mainframes or servers. Cambex's newest Cascade XE cross- enterprise storage can be shared between mainframe (MVS, VM) and open systems (UNIX and Windows NT) applications under user control. Cambex believes that the Cascade XE is an ideal solution for the Year 2000 Testing Problem since it protects the customer's investment due to its migratability to open systems storage with high degree of scalability. The Cascade RAID products enable users to fully utilize all disk controller and software options features provided by IBM while taking advantage of the product's multiplatform capability. 3. Open Systems Disk Arrays. Cambex's Centurion is a scalable RAID disk array; a data center class product for mission critical applications. Its high-availability features include redundant disks, controllers, power supplies, fans, platform interconnections and airflow and temperature sensing systems eliminating single points of failure. In addition its efficient failover software with large cache memory capacity provides high level performance. 4. Cambex's proprietary Centurion Storage Manager. The Centurion Storage Manager is a GUI application which enables the Centurion disk arrays to be configured and reconfigured rapidly for changing workloads on heterogeneous platforms. The motif-based graphical Storage Manager also lets users schedule batch jobs, monitor storage and then operations such as triple-level fault indication, and initiate dual simultaneous controller paths, or active-active controller mode. The Centurion Storage Manager is currently available on SUN Solaris and IBM AIX platforms and is expected to be available for Windows NT in the near future. Cambex expects to have Fiber Channel interface for the Centurion products in the second half of 1998. This fiber channel capability will further enhance the performance and multiplatform interconnectivity of the Cambex disk array product family. D. Competition Competition in the direct access storage market is intense. Many of Cambex's competitors are much larger and have significantly greater resources to develop products and provide the necessary sales coverage to gain market acceptance. In the memory field, Cambex competes with IBM and computer brokers and certain leasing companies who offer used IBM memory to users of mainframe computers. In the mainframe and cross enterprise disk storage market, Cambex competes with EMC Corporation, IBM, Hitachi and Amdahl Corporation. In the open system RAID disk array market, the major competition are the suppliers of open system servers, in addition to EMC, Data General, Digital Equipment, MTI Technology, Storage Computer and a number of other firms for various applications. E. Management 1. Executive Compensation The following table provides certain summary information concerning compensation paid or accrued by Cambex to or on behalf of Cambex's Chief Executive Officer and each of the other executive officers of Cambex (determined as of the end of the last fiscal year) for the fiscal years ended December 31, 1997, December 31, 1996 and August 31, 1995. Summary Compensation Table Annual Compensation Commissions Salary Salary and Incentive Name and Position Year Paid Deferred(1) Bonuses Joseph F. Kruy 1997 $ 136,270 $ 63,730 $ - Chairman, President and CEO 1996 $ 200,000 $ - $ - 1995 $ 195,385 $ - $ 8,962 Sheldon M. Schenkler 1997 $ 96,091 $ 13,909 $ - Vice President of Finance and 1996 $ 110,000 $ - $ - Chief Financial Officer 1995 $ 110,000 $ - $ 1,680 Long Term Compensation Awards All Other Name and Position Year Options (#) Compensation (2) 1997 - - Joseph F. Kruy 1996 - $ 3,854 Chairman, President and CEO 1995 - $ 2,250 Sheldon M. Schenkler 1997 - Vice President of Finance and 1996 10,000 $ 3,237 Chief Financial Officer 1995 - $ 1,832 (1) Salary Deferred is a prepetition obligation of the Debtor and will be paid as an unsecured claim pursuant to the Plan (and to the extent applicable, a portion may be treated as a priority claim under Section 507(a)(3)). (2) Cambex contribution in Cambex Common Stock on officer's behalf to Cambex's 401(k) Plan. 2. Security Ownership of Certain Beneficial Owners and Management (#) Shares of Common Stock Beneficially Owned Name as of December 31, 1997 Percent of Class Joseph F. Kruy 1,404,940(1) 15.43% Philip C. Hankins 106,358 1.17% C.V. Ramamoorthy 99,156 1.09% Robert Spain 0 0% Sheldon M. Schenkler 10,900(2) 0.11% All directors and executive officers as a 1,621,354(3) 17.80% group (5 persons) (1) Includes 56,250 shares owned by Mr. Kruy as co- trustee for his wife and children. Excludes 960,194 shares held by CyberFin Corporation, which is owned by Mr. Kruy's son. Mr. Kruy disclaims any beneficial interest in such shares. (2) Excludes 31,100 shares as to which options are exercisable currently or within 60 days, of which none are in-the-money options. (3) Directors and officers have shared investment power with respect to 56,250 shares and sole voting power with respect to 1,565,104 shares. 3. Director Compensation Directors who are not employed by Cambex receive an annual fee of $ 10,000 and a fee of $1,000 for each meeting of the Board attended. F. Risk Factors In addition to the other information in this Disclosure Statement, the following factors should be considered carefully in evaluating the securities proposed to be issued under the Plan as described in this Disclosure Statement. 1. History of Operating Losses Cambex experienced significant operating losses in 1995, 1996 and 1997. As set forth in the Projections attached to this Disclosure Statement as Exhibit 2, Cambex expects to be profitable in 1998. Cambex's ability to achieve profitable operations is dependent in large part on Cambex's ability to successfully market its memory systems for the most recent generation of IBM mainframe computers and to continue to penetrate its disk storage markets, now occupied by larger and financially stronger competitors. 2. Future Funding Needs; Uncertainty of Future Funding Cambex will require additional funds in order to continue operations after it emerges from Chapter 11. Cambex intends to seek such additional funding through either equity or debt financing. Presently, Cambex is in negotiation with potential sources of such financing. There can be no assurance, however, that additional financing will be available from any of these sources, or if available, will be available on acceptable terms. 3. Competition and Technology Change Competition in the memory field and the disk storage market is intense and is subject to significant technological change. Many of Cambex's competitors are much larger and have significantly greater resources to develop products and provide the necessary sales coverage to gain market acceptance. There can be no assurance that Cambex's competitors will not succeed in developing technologies and products that are more effective than any of which are now being sold or developed by Cambex or which would render Cambex's technology and products obsolete and not competitive. 4. Uncertain Public Market for Common Stock Due to Cambex's failure to satisfy the minimum listing requirements, Cambex's common stock was delisted by the National Association of Securities Dealers ("NASD") from trading on the Nasdaq National Market in July 1997. Since that time, there has been only sporadic trading in the "pink sheets" over-the- counter market and the Nasdaq OTC Bulletin Board, with low average daily volume. Cambex may apply for re- listing of the Common Stock on the Nasdaq National Market as soon as practicable after such time that Cambex satisfies the listing requirements. There can be no assurance that Cambex ever will satisfy the listing requirements or that an active trading market ever will `develop after confirmation of the Plan, or that any or a significant number of brokerage firms will make a market in Cambex's shares. See "Certain Securities Law Aspects of the Plan." VI. SUMMARY OF THE REORGANIZATION PLAN THIS SECTION PROVIDES A SUMMARY OF THE CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS, AND IMPLEMENTATION OF THE PLAN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, WHICH IS APPENDED TO THIS DISCLOSURE STATEMENT AS EXHIBIT 1, AND TO THE OTHER EXHIBITS ATTACHED THERETO. A. Certain Matters Regarding Organization, Classification, And Treatment Of Claims And Interests 1. Organization And Classification All Claims and Interests, except Administrative Claims and Priority Tax Claims, are placed in Classes as follows: (a) Unimpaired Classes Of Claims (not entitled to vote on the Plan) (i) Class 1: Other Priority Claims Class 1 consists of all Priority Employee Claims. (ii) Class 3: General Unsecured Claims Less Than or Equal to $500 Class 3 consists of all General Unsecured Claims less than or equal to $500. (b) Impaired Classes Of Claims (entitled to vote on the Plan) (i) Class 2: Secured Claims Class 2 consists of all Secured Claims, including the City Secured Claim and other Secured Claims, if any. Each holder of a Class 2 Secured Claim shall be treated as a separate class for all purposes under the Plan. (iii) Class 4: All Other General Unsecured Claims,. Class 4 consists of all General Unsecured Claims over $500. (c) Unimpaired Class Of Interests (not entitled to vote on the Plan) Class 5: All Interests Class 5 consists of all Common Stock Interests. 2. Treatment Of Claims And Interests a. Unclassified Claims (i) Administrative Claims Administrative Claims include (i) fees owed to professionals in the Chapter 11 Case (estimated to be approximately $350,000); (ii) wages, salaries and commissions, debt incurred in the ordinary course of business, and taxes owing, for any period after the commencement of the Chapter 11 Case (estimated to be approximately $50,000); and (iii) payments required to Cure executory contracts and unexpired leases to be assumed (estimated to be $135,000). On the Consummation Date, or as soon thereafter as practicable, a holder of an Allowed Administrative Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Administrative Claim, (a) Cash equal to the unpaid portion of such Allowed Administrative Claim, or (b) such other treatment as to which CAMBEX or REORGANIZED CAMBEX and such holder shall have agreed upon in writing; provided, however, that Allowed Administrative Claims with respect to liabilities incurred by CAMBEX in the ordinary course of its business during the Chapter 11 Case shall be paid by REORGANIZED CAMBEX in accordance with the terms and conditions of any agreements relating thereto. There may be disputes concerning the applicable Cure amount with respect to executory contracts or unexpired leases to be assumed (or assumed and assigned) under the Plan. The Court has established a bar date for filing objections to assumption (or assumption and assignment) of such leases and contracts, including any disputes as to applicable Cure amounts. Assumption or assumption and assignment of contracts and leases will require payment of Cure amounts, as determined by the Bankruptcy Court, where a dispute exists. (ii) Priority Tax Claims CAMBEX believes that the total amount of Allowed Priority Tax Claims will not exceed $50,000. On the Consummation Date, or as soon thereafter as practicable, a holder of an Allowed Priority Tax Claim shall be entitled to receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Priority Tax Claim, either, at the option of REORGANIZED CAMBEX, (a) Cash equal to the unpaid portion of such Allowed Priority Tax Claim, or (b) deferred Cash payments in an aggregate principal amount equal to the unpaid portion of such Allowed Priority Tax Claim plus interest thereon at a rate to be determined by the Bankruptcy Court from the Consummation Date through the date of payment thereof, or (c) such other treatment as to which REORGANIZED CAMBEX and such holder shall have agreed upon in writing. If deferred Cash payments are made to a holder of an Allowed Priority Tax Claim, payments of principal shall be made in annual installments, each such installment amount being equal to ten percent (10%) of such Allowed Priority Tax Claim plus accrued and unpaid interest with the first payment to be due on the Consummation Date or as soon thereafter as practicable, and subsequent payments to be due on the anniversary of the first payment date or as soon thereafter as is practicable; provided, however, that any installments remaining unpaid on the date that is six (6) years after the date of assessment of the tax that is the basis for the Allowed Priority Tax Claim shall be paid on the first Business Day following such date, together with any accrued and unpaid interest to the date of payment; and provided, further, that REORGANIZED CAMBEX reserves the right to pay any Allowed Priority Tax Claim, or any remaining balance of any Allowed Priority Tax Claim, in full at any time on or after the Consummation Date without premium or penalty; and provided, further, that no holder of an Allowed Priority Tax Claim shall be entitled to any payments on account of any pre- Consummation Date interest accrued on or penalty arising after the Petition Date with respect to or in connection with such Allowed Priority Tax Claim. b. Unimpaired Classes Of Claims (i) Class 1 : Other Priority Claims Other Priority Claims include Claims other than Administrative Claims and Priority Tax Claims entitled to priority under Section 507(a) of the Bankruptcy Code. Such Claims include up to $4,000 of wage and salary (including vacation and severance) Claims of employees earned within ninety (90) days before the Petition Date. CAMBEX estimates that the total amount of Allowed Other Priority Claims, that have not previously been paid pursuant to order of the Bankruptcy Court, will not exceed $50,000. On the Consummation Date, or as soon thereafter as practicable, a holder of an Allowed Class 1 Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 1 Claim (a) Cash equal to the unpaid amount of such Allowed Class I Claim, or (b) such other treatment as to which CAMBEX or REORGANIZED CAMBEX and such holder shall have agreed upon in writing; or (c) at the option of REORGANIZED CAMBEX, such Claims shall be Reinstated. (ii) Class 3: General Unsecured Claims Less Than Or Equal to $500 CAMBEX estimates that the total amount of Allowed Class 3 General Unsecured Claims is $15,000. A holder of an Allowed Class 3 Claim shall receive, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 3 Claim, Cash payments totaling 100% of its Allowed Class 3 Claims on the Consummation Date, or as soon thereafter as practicable. c. Impaired Classes Of Claims (i) Class 2: Secured Claims Class 2.01 City Secured Claim The City purports to be the holder of a lien for unpaid real estate taxes on certain undeveloped land in the City of Poughkeepsie, New York. As of the Petition Date, the unpaid real estate taxes were approximately $6,500. Approximately $3,000 has accrued unpaid since the Petition Date. In full satisfaction, settlement, release, and discharge of and in exchange for its Allowed Class 2.01 Claim and any and all other Claims of the City, secured or unsecured, the City shall receive deferred Cash payments over three (3) years, in equal quarterly installments of principal, plus accrued and unpaid interest from the Consummation Date through the date of payment thereof, with the first payment to be due on the Consummation Date or as soon thereafter as practicable, and subsequent payments to be due each quarter thereafter. The City shall retain the collateral securing its claim. Classes 2.02 et seq. Other Secured Claims CAMBEX does not believe that there are any Other Secured Claims. Each Other Secured Claim, if any, shall be classified as a subclass under Class 2 (which for all purposes, including voting, under the Plan shall be considered a separate class). On the Consummation Date, or as soon thereafter as practicable, the holder of an Allowed Class 2.02 Claim, in full satisfaction, settlement, release and discharge of and in exchange for such Allowed Class 2.02 Claim, shall, in the sole discretion of REORGANIZED CAMBEX, (a) retain its liens in the collateral securing the holder's Allowed Class 2.02 Claim and receive deferred Cash payments totaling at least the unpaid portion of such Allowed Class 2.02 Claim, of a value, as of the Consummation Date, equal to the value of such holder's interest in the Estate's interest in the collateral securing the Class 2.02 Claim, (b) upon abandonment by REORGANIZED CAMBEX receive and retain the collateral securing the Class 2.02 Claim, (c) receive payments or liens amounting to the indubitable equivalent of the value of such holder's interest in the Estate's interest in the collateral securing the Class 2.02 Claim, (d) be Reinstated, or (e) receive such other treatment as CAMBEX and such holder shall have agreed upon in writing as announced at or prior to the Confirmation Hearing. (ii) Class 4: General Unsecured Claims Exceeding $500 Class 4 Claims filed or deemed filed, including Disputed Claims, amount to approximately $5.5 million in the aggregate. CAMBEX believes that certain of these Claims are invalid or overstated, and intends to file an objection to such Disputed Claims. There may also be additional Claims filed as a result of the rejection of executory contracts and unexpired leases to be rejected under the Plan. The aggregate amount of such additional rejection Claims is unknown. CAMBEX believes that the aggregate amount of Claims that will be Allowed Class 4 Claims is not more than $5 million. A holder of a Class 4 Claim (Allowed or Disputed), in full satisfaction, settlement, release, and discharge of and in exchange for such Class 4 Claim (to the extent such claim is or becomes an Allowed Class 4 Claim), may elect, at the time such holder casts its ballot, treatment under either Class 4 Option A or Class 4 Option B, as described below. ANY HOLDER OF A CLASS 4 CLAIM WHO DOES NOT MAKE SUCH AN ELECTION SHALL BE DEEMED TO HAVE ELECTED CLASS 4 OPTION A. a. Class 4 Option A. A holder electing treatment under Class 4 Option A shall receive Cash payments totaling 100% of such Allowed Class 4 Claim, without interest, in thirty (30) consecutive monthly payments, with the first such payment to be made on the date six months after the Consummation Date, and succeeding payments on the same day of each month thereafter until paid. The first six (6) payments shall be equal to two and one-half (2.5%) percent of such Allowed Class 4 Claim; the next twenty- three (23) payments shall be equal to three and one- half (3.5%) percent of such Allowed Class 4 Claim; and the last payment shall be equal to four and one-half (4.5%) percent of such Allowed Class 4 Claim. See discussion at the end of the next paragraph as to the benefits and risks to holders of Unsecured Claims of Class 4 Option A and Class 4 Option B. b. Class 4 Option B. A holder electing treatment under Class 4 Option B shall receive (i) Cash payments equal to 80% of such Allowed Class 4 Claim on the terms described below (the "Cash Portion"); and (ii) two shares of Cambex Common Stock for every one dollar ($1.00) of such Allowed Class 4 Claim in excess of the Cash Portion (i.e., 20% of the Allowed Class 4 Claim) (the "Stock Portion"). The Cash Portion shall be paid, without interest, in thirty (30) consecutive monthly payments, with the first such payment to be made on the date six (6) months after the Consummation Date, and succeeding payments on the same day of each month thereafter until paid. The first six (6) payments shall be equal to two percent (2%) of such Allowed Class 4 Claim; and the next twenty-four (24) payments shall be equal to 2 5/6% of such Allowed Class 4 Claim. The Stock Portion shall be issued on the Consummation Date, or as soon as practicable thereafter. A holder that elects Class 4 Option A will be paid 100% of its Allowed Class 4 Claim, without interest. A holder that elects Class 4 Option B, on the other hand, will not receive Cash payments from Cambex for the full amount of its Allowed Class 4 Claim, but will receive Cash payments equal to 80% of its Allowed Class 4 Claim, without interest, and Cambex stock. There is no certainty that holders that elect to receive Cambex stock ever will receive any more of their Allowed Class 4 Claim on account of the Cambex stock. However, if Cambex succeeds, holders that elect Class 4 Option B may, by virtue of holding Cambex Common Stock, participate in that success. In making the election, holders of Class 4 Claims should carefully review Section V.E.4 (Uncertain Public Market for Common Stock) and VIII.D (Absence of Market for Securities). If the exit financing for the Debtor is to be equity financing, each holder electing Class 4 Option B will be given the opportunity to change its election to Class 4 Option A after receiving a description of the terms of the equity financing. Those terms shall be distributed to holders electing Class 4 Option B by Federal Express on the day following entry of the order confirming the Plan, and such holders will have a period of fourteen (14) calendar days after receipt thereof to change their election to Class 4 Option A. The form of disclosure of the terms of the equity financing shall be filed by the Debtor no later than April 20, 1998 at 12:00 p.m. and any issues as to the adequacy thereof shall be heard at the Confirmation Hearing. c. Issuance of Common Stock; On the Consummation Date shares of Common Stock shall be issued to the Disbursing Agent and held in the Distribution Reserve in accordance with Article X of the Plan, for the benefit of the holders of Disputed Class 4 Claims, in sufficient number to satisfy the requirements of Class 4 Option B with respect to such Disputed Claims. d. Unimpaired Class Of Interests Class 5: Common Stock Interests Holders of Common Stock Interests shall retain their Common Stock. B. Directors And Officers The current board of directors of CAMBEX, made up of the following individuals, shall continue to serve as the board of directors of REORGANIZED CAMBEX: Philip C. Hankins Joseph F. Kruy Dr. C. V. Ramamoorthy Dr. Robert Spain The executive officers of REORGANIZED CAMBEX shall be: Joseph F. Kruy Edward Hughes Sheldon Schenkler Arthur Ziskend C. Revesting Of Assets All property of CAMBEX transferred or to be transferred to REORGANIZED CAMBEX pursuant to the Plan shall vest in REORGANIZED CAMBEX free and clear of all liens, encumbrances, Claims and Interests, except as otherwise expressly provided in the Plan or the Confirmation Order. Thereafter, REORGANIZED CAMBEX may operate its business and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. Without limiting the foregoing, REORGANIZED CAMBEX may, without application to or approval by the Bankruptcy Court, pay fees that are incurred after the Confirmation Date for professional services and expenses. D. Description Of Securities To Be Issued In Connection With The Plan; Limitation on Stock Options 1. Common Stock The principal terms of the Common Stock to be issued by REORGANIZED CAMBEX under the Plan shall be as follows: Par Value $.10 per share Voting One vote per share Preemptive Rights None Transfer Limitations None 2. Limitation on Issuance of Stock Options Until such time as holders of Allowed Class 4 Claims that have elected treatment under Class 4 Option B have been paid in Cash an amount equal to fifty percent (50%) of their Allowed Class 4 Claims, the following limitations shall apply to the issuance of stock options to officers, directors and employees of Reorganized Cambex: (i) Reorganized Cambex may issue stock options exercisable for no more than 1,000,000 shares of Common Stock, and (ii) the stock options must be exercisable at a price which is not less than the greater of(a) $.50 per share of Common Stock and (b) the market value per share of the Common Stock at the time of the issuance of the options; provided, however, that notwithstanding the foregoing limitation, Reorganized Cambex may issue stock options exercisable for no more than 500,000 shares (in addition to the 1,000,000 shares described in the foregoing limitation) without any price limitation, provided further that no stock options with respect to such 500,000 shares may be issued to Joseph F. Kruy, the President of Cambex (or any Person that he owns or controls). None of the foregoing limitations shall apply after holders of Allowed Class 4 Claims electing treatment under Class 4 Option B have received cash equal to fifty percent (50%) of their Allowed Class 4 Claims. E. Distributions Under the Plan 1. Delivery Of Distributions Distributions to holders of Allowed Claims shall be made by the Disbursing Agent (a) at the addresses set forth on the proofs of claim filed by such holders (or at the last known addresses of such holders if no proof of claim is filed or if CAMBEX or REORGANIZED CAMBEX has been notified of a change of address), (b) at the addresses set forth in any written notices of address changes delivered to the Disbursing Agent after the date of any related proof of claim, or (c) at the addresses reflected in the Schedules if no proof of claim has been filed and the Disbursing Agent has not received a written notice of a change of address. If any holder's distribution is returned as undeliverable, no further distributions to such holder shall be made unless and until the Disbursing Agent is notified of such holder's then current address, at which time all missed distributions shall be made to such holder without interest. Amounts in respect of undeliverable distributions made through the Disbursing Agent shall be returned to REORGANIZED CAMBEX until such distributions are claimed. All claims for undeliverable distributions shall be made on or before the second anniversary of the date of such distribution. After such two-year period with respect to any distribution, all property then unclaimed shall revert to REORGANIZED CAMBEX and the claim of any holder or successor to such holder with respect to such property shall be discharged and forever barred notwithstanding any federal or state escheat laws to the contrary. 2. Procedures For Resolving And Treating Disputed And Contingent Claims And Interests a. No Distributions Pending Allowance Notwithstanding any other provision of the Plan, no payments or distributions shall be made with respect to all or any portion of a Disputed Claim unless and until all objections to such Disputed Claim have been settled or withdrawn or have been determined by Final Order, provided, however, where an objection is made only to a portion of a Claim and no timely objection is made to the balance of such Claim, such undisputed balance shall be treated as an Allowed Claim for purposes of distribution. b. Distribution Reserve The Disbursing Agent shall withhold the Distribution Reserve from the Cash and other property to be distributed under the Plan. As to any Disputed Claim, upon a request for estimation by CAMBEX OR REORGANIZED CAMBEX, the Bankruptcy Court shall determine what amount is sufficient to include in the Distribution Reserve. CAMBEX shall request estimation for every Disputed Claim that is unliquidated and the estimated amount of such Claims shall be used to compute the Distribution Reserve. If CAMBEX elects not to request such an estimation from the Bankruptcy Court with respect to a Disputed Claim that is liquidated, the Distribution Reserve shall be computed based upon the Face Amount of such Claim. The Disbursing Agent shall also place in the Distribution Reserve any dividends, payments, or other distributions made on account of, as well as any obligations arising from, the property withheld as the Distribution Reserve under this Section, to the extent that such property continues to be withheld as Distribution Reserve at the time such distributions are made or such obligations arise. For purposes of establishing the Distribution Reserve, disputed Cure amounts shall constitute Disputed Claims. c. Distributions After Allowance Payments and distributions from the Distribution Reserve to each holder of a Disputed Claim, to the extent that all or part of such Claim ultimately becomes an Allowed Claim shall be made in accordance with the provisions of the Plan governing the class of Claims to which the respective holder belongs. Promptly after the date that the order or judgment of the Bankruptcy Court allowing all or part of such Claim becomes a Final Order, the Disbursing Agent shall distribute to the holder of such Claim any Cash and other property in the Distribution Reserve that would have been distributed on or before the Disputed Claim became an Allowed Claim had such Allowed Claim been then allowed. The trading price of shares of Common Stock distributed after the Consummation Date may be higher or lower than the trading price of shares of Common Stock distributed on the Consummation Date. After a Final Order has been entered, or other final resolution has been reached, with respect to each and every Disputed Claim, (i) any Cash held in the Distribution Reserve shall become property of REORGANIZED CAMBEX, and (ii) any Common Stock shall be canceled. F. Miscellaneous Matters 1. Post-Petition Interest Unless otherwise provided for in the Plan or Confirmation Order, no holder of a Claim will be entitled to interest accruing on or after the Petition Date on account of such Claim. 2. Substantial Contribution Compensation And Expenses Bar Date Any Person or entity who intends to request compensation or expense reimbursement for making a substantial contribution in the Chapter 11 Case pursuant to sections 503(b)(3), (4) or (5) of the Bankruptcy Code must file a request with the clerk of the Bankruptcy Court on or before May 8, 1998 at 4:00 p.m. Eastern Time, or be forever barred from seeking such compensation or reimbursement. Payment of professionals' fees and expenses which are incurred prior to the Confirmation Date will be subject to approval by the Bankruptcy Court. 3. Treatment Of Executory Contracts And Unexpired Leases a. Assumed Contracts And Leases All executory contracts and unexpired leases specifically listed on the schedule of assumed contracts and leases attached as Exhibit A to the Plan shall be deemed automatically assumed as of the Consummation Date. The Confirmation Order shall constitute an order of the Bankruptcy Court approving such assumptions, pursuant to section 365 of the Bankruptcy Code. Each executory contract and unexpired lease that is assumed and relates to the use or occupancy of real property shall include (a) all modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affect such executory contract or unexpired lease and (b) all executory contracts or unexpired leases appurtenant to the premises, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, powers, uses, usufructs, reciprocal easement agreements, vaults, tunnel or bridge agreements or franchises, and any other interests in real estate or rights in rem related to such premises, unless any of the foregoing agreements have been rejected pursuant to a Final Order of the Bankruptcy Court or is listed on the schedule of rejected contracts and leases attached as Exhibit B to the Plan. b. Payments Related To Assumption Of Executory Contracts And Unexpired Leases; Bar to Pre- Confirmation Date Claims Any monetary amounts by which each executory contract and unexpired lease to be assumed under the Plan may be in default shall be satisfied, under section 365(b)(l) of the Bankruptcy Code by Cure. Exhibit A to the Plan sets forth as to each executory contract and unexpired lease whether such contract or lease is, in CAMBEX's opinion, in default, and the amount, if any, required to Cure. Any dispute regarding (i) whether or not an executory contract or unexpired lease is in default; (ii) the nature or the amount of any Cure, (iii) the ability of REORGANIZED CAMBEX to provide "adequate assurance of future performance" (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (iv) any other matter pertaining to assumption (and, where applicable, assignment) shall be heard and determined by the Bankruptcy Court, and, except to the extent determination of a particular dispute is deferred with the consent of CAMBEX, all such disputes shall be determined no later than the Confirmation Date, and the Confirmation Order shall constitute an order determining all such disputes. c. Rejected Contracts And Leases All executory contracts and unexpired leases specifically listed on the schedule of rejected contracts and leases attached to the Plan as Exhibit B shall be deemed automatically rejected as of the Consummation Date. The Confirmation Order shall constitute an order of the Bankruptcy Court approving such rejections, pursuant to section 365 of the Bankruptcy Code. d. [Intentionally Omitted] e. Unidentified Executory Contracts And Unexpired Leases Any executory contract or unexpired lease of CAMBEX which is not specifically listed on either Exhibit A or B to the Plan, shall be deemed to be automatically rejected as of the Consummation Date. The Confirmation Order shall constitute an order of the Bankruptcy Court approving such rejections, pursuant to section 365 of the Bankruptcy Code. f. Disputes Relating To Assumption, Assumption And Assignment, And/Or Rejection Of Executory Contracts Court approval of assumption (or assumption and assignment) of unexpired leases and executory contracts, as proposed by CAMBEX under the Plan is a condition to the Consummation of the Plan. It is more particularly described in Section X.G of the Disclosure Statement. 4. Committees The Creditors Committee shall terminate on the Consummation Date. 5. Retention Of Jurisdiction As more fully set forth in the Plan, the Bankruptcy Court will retain jurisdiction as necessary after the Confirmation Date. 6. Discharge All property distributed under the Plan shall be in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims of any nature whatsoever against CAMBEX and REORGANIZED CAMBEX and/or any of their assets or properties, and, except as otherwise provided herein or in the Confirmation Order, and upon the Confirmation Date, CAMBEX and REORGANIZED CAMBEX shall be deemed discharged and released under Section 1l4l(d)(l)(A) of the Bankruptcy Code from any and all debts. The Confirmation Order shall be a judicial determination of discharge of all liabilities of CAMBEX and REORGANIZED CAMBEX, subject to the occurrence of the Consummation Date. 7. United States Trustee Fees The Debtor is current on its quarterly fee payments owed to the United States Trustee. VII. CERTAIN OTHER FACTORS TO BE CONSIDERED The holder of a Claim against in Cambex should carefully consider the following factors before deciding whether to vote to accept or to reject the Plan. A. General Considerations The formulation of a reorganization plan is the principal purpose of a Chapter 11 case. The Plan sets forth the means for satisfying the holders of Claims against Cambex. Continuation of Cambex's business and operations under the proposed Plan also avoids the potentially adverse impact of a liquidation on Cambex employees, and many of its customers, trade vendors, suppliers of goods and services, and lessors. B. Inherent Uncertainty Of Financial Projections The Projections set forth in Exhibit 2 include condensed statements of income, balance sheets and cash flows covering the period ending December 31, 2000. The information reflected for 1995 through 1997 represents actual results for Cambex. The projected information for 1998-2000 is for Reorganized Cambex. The Projections also include a pro forma balance sheet for Reorganized Cambex as of March 31, 1998, which Cambex expects to be close to the projected Consummation Date. These Projections are based on numerous assumptions that are an integral part of the projections, including confirmation and consummation of the Plan in accordance with its terms, the anticipated future performance of Reorganized Cambex, successful product development and sales efforts by Reorganized Cambex, future product prices and margins, industry performance, general business and economic conditions, and other matters, many of which are beyond the control of Reorganized Cambex and some or all of which may not materialize. In addition, unanticipated events and circumstances occurring subsequent to the date that this Disclosure Statement was approved by the Bankruptcy Court may affect the actual financial results of Reorganized Cambex's operations. These variations may be material. Because the actual results achieved throughout the periods covered by the projections may vary from the projected results, the projections should not be relied upon as a guaranty, representation, or other assurance of the actual results that will occur. C. Risks Associated With Reorganized Cambex Holders who will receive securities of Reorganized Cambex pursuant to the Plan should carefully read Section V of this Disclosure Statement, including the Risk Factors described in Section V.F. VIII. CERTAIN SECURITIES LAW ASPECTS OF THE PLAN THE ISSUANCE OF THE COMMON STOCK UNDER THE PLAN RAISES CERTAIN SECURITIES LAWS ISSUES UNDER THE BANKRUPTCY CODE AND FEDERAL AND STATE SECURITIES LAWS WHICH ARE DISCUSSED IN THIS SECTION. THIS SECTION SHOULD NOT BE CONSIDERED APPLICABLE TO ALL SITUATIONS OR ALL CREDITORS RECEIVING COMMON STOCK UNDER THE PLAN. CREDITORS SHOULD CONSULT THEIR OWN LEGAL COUNSEL. A. General Section 1145 of the Bankruptcy Code creates an exemption from the registration and licensing requirements of the Securities Act of 1933 (the "Securities Act") and the corresponding provisions of the state securities laws (together with the Securities Act, the "Securities Laws") for the issuance and certain resales of the securities issued in connection with a Chapter 11 plan. B. Initial Issuance Of Securities Under The Plan Section 1145(a) of the Bankruptcy Code provides that the securities registration and qualification requirements of federal and state securities laws do not apply to the offer or sale of stock, warrants or other securities by a debtor, if the offer or sale occurs under a plan of reorganization and the securities are transferred in exchange for a claim against or interest in a debtor. For holders of Allowed Class 4 Claims that elect Class 4 Option B treatment, CAMBEX and REORGANIZED CAMBEX believe that issuance of Common Stock by REORGANIZED CAMBEX to such holders will be exempt from securities law registration and qualification requirements pursuant to Section 1145(a) since issuance of the Common Stock will be solely in exchange for a portion of such holders' Allowed Class 4 Claim. C. Resale Of Securities 1. Persons Other Than Underwriters Or Dealers. The Common Stock received pursuant to the Plan will not be deemed to be "restricted securities" and may be freely sold or transferred by the recipients, unless those recipients are "underwriters" or "dealers" as described below. 2. Underwriters. Resales and subsequent transactions by "underwriters" in securities of REORGANIZED CAMBEX issued pursuant to the Plan are subject to the requirement that they be registered under the Securities Laws or that they be transferred pursuant to an available exemption. Unlike the general definition of that term under the Securities Laws, for the purposes of Section 1145(b)(l), the term "underwriter" includes only: a. Persons who have purchased Claims against, Interests in or Administrative Claims against CAMBEX with a view to distribution of any security received in the Plan for such Claims or Interests (sometimes referred to as "Accumulators"); b. Persons who offer to sell securities issued under the Plan for the holders thereof (sometimes referred to as "Distributors"); c. Persons who offer to buy securities issued under the Plan from the holders where such offer to buy is (i) with a view to distribution and (ii) under certain agreements made in connection with the Plan, the consummation of the Plan or the issuance of securities under the Plan (sometimes referred to as "Syndicators"); and d. Persons who, after the Consummation Date are in control of REORGANIZED CAMBEX, i.e., who have the power, directly or indirectly, to control its management and policies (sometimes referred to as "Affiliates"). Further, Section 1145(b)(1) permits resales by Accumulators, Distributors or Syndicators in "ordinary trading transactions". Based upon prior Securities and Exchange Commission ("SEC") no-action letters, CAMBEX and REORGANIZED CAMBEX believe that a transaction generally will be considered an "ordinary trading transaction" if it is made on an exchange or in the over-the-counter market at a time when REORGANIZED CAMBEX is a reporting company under the Securities Exchange Act of 1934 (the "Exchange Act") and does not involve any of the following factors: (a) (i) concerted action by recipients of securities issued under the Plan in connection with the sale of such securities, or (ii) concerted action by Distributors on behalf of one or more such recipients in connection with such sales or (iii) both; (b) informational documents concerning the offering of the securities prepared or used to assist in the resale of such securities, other than the Disclosure Statement and any supplements thereto, and documents filed with the SEC by REORGANIZED CAMBEX pursuant to the Exchange Act; or (c) special compensation to brokers and dealers in connection with the sale of such securities designed as a special incentive to the resale of such securities (other than the compensation that would be paid pursuant to arms-length negotiations between a seller and a broker or dealer, each acting unilaterally, not greater than the compensation that would be paid for a routine similar-sized sale of similar securities of a similar issuer). However, the views of the SEC have not been sought in this particular case and, therefore, CAMBEX and REORGANIZED CAMBEX can give no assurance regarding the current position of the SEC on ordinary trading transactions. It is possible that resale transactions which include one or more of the above factors could constitute an "ordinary trading transaction," but that determination would have to be carefully made on a case- by-case basis, and counsel to CAMBEX and REORGANIZED CAMBEX have not sought any advice from the staff of the SEC with respect to such transactions. Persons deemed to be underwriters (including Affiliates, as well as Accumulators, Distributors and Syndicators) also may be able to sell securities without registration subject to the provisions of Rule 144 under the Securities Act, which would permit the public sale of securities received pursuant to the Plan by statutory underwriters, subject to volume limitations and certain other conditions. However, resale under Rule 144 will not be possible until REORGANIZED CAMBEX is current in its reporting under the Exchange Act See Part D below. The legislative history of Section 1145 of the Bankruptcy Code suggests that a creditor with at least 20% of the securities of a company could be deemed a controlling person, and thus an Affiliate. In addition, the SEC historically has taken the position that officers, directors and beneficial owners of 10% or more of the outstanding stock of an issuer will be presumed to be Affiliates of that issuer. Therefore, they would be underwriters for purposes of Section 1145(b)(l) described above. 3. Dealers. "Dealers" are persons who engage either all or part of their time, directly or indirectly, as agents, brokers or principals, in the business of offering, buying, selling or otherwise dealing or trading in securities. Section 4(3) of the Securities Act will exempt transactions in the securities issued to the holders of Claims under the Plan by Dealers taking place more than 40 days after the Consummation Date. Within the 40-day period after the Consummation Date, transactions by Dealers who are stockbrokers are exempt from the Securities Act pursuant to Section 1145(a)(4) of the Bankruptcy Code, as long as the stockbrokers deliver a copy of this Disclosure Statement (and supplements hereto, if any, as ordered by the Bankruptcy Court) at or before the time of the transactions. CAMBEX AND REORGANIZED CAMBEX HAVE NOT SOUGHT A "NO- ACTION" LETTER FROM THE SEC OR ANY STATE SECURITIES COMMISSION WITH RESPECT TO ANY MATTER DISCUSSED HEREIN. BECAUSE OF THE SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR HOLDER MAY BE AN UNDERWRITER, NEITHER CAMBEX NOR REORGANIZED CAMBEX MAKES ANY REPRESENTATION CONCERNING THE ABILITY OF ANY PERSON TO DISPOSE OF THE SECURITIES TO BE DISTRIBUTED UNDER THE PLAN. EACH RECIPIENT OF SECURITIES UNDER THE PLAN SHOULD CONSULT ITS OWN LEGAL ADVISOR AS TO WHETHER RESALES OF SUCH RECIPIENT'S SECURITIES ARE LAWFUL UNDER FEDERAL AND STATE SECURITIES LAWS. D. Absence Of Market For Securities 1. Common Stock The Common Stock of CAMBEX was listed on the Nasdaq National Market until it was delisted in July 1997 due to CAMBEX's failure to meet the minimum listing requirements (including, for example, minimum market capitalization and minimum net worth requirement). REORGANIZED CAMBEX may apply for re- listing of the Common Stock on the Nasdaq National Market as soon as practicable after such time that REORGANIZED CAMBEX satisfies the listing requirements. There can be no guaranty, however, that REORGANIZED CAMBEX will ever satisfy the listing requirements. Further, there can be no assurance that a listing application will be approved, or that the Common Stock will be listed on an exchange or the Nasdaq National Market or admitted for trading on any other over the counter market. The Common Stock of REORGANIZED CAMBEX will continue to be registered under Section 12(g) of the Exchange Act and will remain subject to the periodic reporting requirements of that statute, including the filing of Forms 10-K, l0-Q, etc. 2. Liquidity Many of the recipients of Common Stock under the Plan may prefer to liquidate their investment rather than hold such securities on a long-term basis. Accordingly, the market for Common Stock may be volatile, at least for an initial period after the Consummation Date, and indeed may be depressed for a period of time until the market has had time to absorb these sales and to observe the post-Consummation Date performance of REORGANIZED CAMBEX. Other factors, such as the likelihood that REORGANIZED CAMBEX will not declare dividends for the foreseeable future, may further depress the market for Common Stock. In addition, REORGANIZED CAMBEX has not attempted to make an estimate of the price at which the Common Stock may trade in the market in connection with the development of the Plan. No assurance can be given as to the market price that will prevail following the Consummation Date. IX. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN The following is a general summary of certain federal income tax consequences of the Plan for Cambex, its creditors and its equity security holders. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular creditor or equity security holder in light of its personal investment circumstances or to certain creditors or equity security holders subject to special treatment under the federal income tax laws (for example, tax- exempt organizations, foreign corporations, or individuals who are not citizens or residents of the United States) or to Cambex, and does not discuss any aspects of state, local, or foreign taxation. This summary is based upon the laws, regulations, and decisions in effect on the date hereof and upon proposed regulations, all of which are subject to change (possibly with retroactive effect) by legislation, administrative action, or judicial decision. No opinion of counsel will be rendered with respect to the tax consequences of the consummation of the Plan to Cambex, Cambex's equity security holders or Cambex's creditors under the Plan. In addition, no ruling will be sought from the Internal Revenue Service ("IRS") regarding the tax effects of the consummation of the Plan. Finally, Congress is currently considering a number of changes to the Internal Revenue Code of 1986, as amended (the "Tax Code"), some of which could change the tax consequences of the Plan, and which may apply retroactively even if enacted after consummation of the Plan. It is impossible at this time to predict what, if any, amendments to the Tax Code may be enacted and whether such amendments will be made applicable to the Plan. FOR THE FOREGOING REASONS, CREDITORS AND EQUITY SECURITY HOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES (FOREIGN, FEDERAL, STATE, AND LOCAL) TO THEM OF THE PLAN. A. Federal Income Tax Consequences To Cambex 1. Cancellation Of Indebtedness Under the Tax Code, a taxpayer generally must include in gross income the amount of any COD income realized during the taxable year, except to the extent payment of such indebtedness would have resulted in a tax deduction. Section 108 of the Tax Code provides, however, that when, as in this case, the COD income occurs in a case under the Bankruptcy Code, gross income does not include any amount that otherwise would be included in gross income by reason of the cancellation of indebtedness. Instead COD income will generally be applied to reduce certain tax attributes of the taxpayer, including NOL carryovers. Under the Plan, holders of Administrative Claims, Priority Tax Claims, Other Priority Claims, Secured Claims and General Unsecured claims less than or equal to $500 generally will be paid (in Cash or by means of setoff), except as otherwise provided in the Plan, the full amount of their Allowed Claims on or after the Consummation Date or will have such Claims reinstated pursuant to their original terms. Claims that are paid in full on the Consummation Date or that are reinstated should not result in any COD income. The payment to the holders of an Allowed Class 4 Claim of (i) Cash in the amount of such claim, but payable over time, or (ii) if the holder so elects, Cash in the amount of 80% of the claim plus Common Stock, could result in COD income to the extent that the present value of the payments of Cash and (if applicable) the fair market value of the Common Stock issued in satisfaction of such claim is less than the amount of the Claim. However, Cambex does not expect to incur any substantial tax liability because any such taxable income should be largely offset by its existing net operating losses and tax credit carry forwards ("Tax Attributes"). 2. Utilization Of Net Operating Loss Carryovers (a) Amount And Limitation On Use Of Net Operating Loss Carryovers Cambex has filed federal income tax returns reflecting NOL carryovers of approximately $5.4 million as of the end of its taxable year ended December 31, 1997, which will expire through its taxable years ending December 31, 2012. Reorganized Cambex will continue to possess its Tax Attributes, including unused NOL carryforwards, after the issuance of Common Stock pursuant to the Plan. The balance of this discussion will therefore deal with the ability of Reorganized Cambex to utilize the NOL carryforward of Cambex after consummation of the Plan. Section 382 (in conjunction with section 383) of the Tax Code generally restricts a corporation's utilization of its tax attributes by limiting the amount of income earned by the corporation after a change in its ownership that may be offset by tax attributes that arose prior to the change (the "Section 382 Limitation"). In general, the Section 382 Limitation applies where more than 50 percentage points of the ownership of the stock of a corporation has changed within a three year period (an "Ownership Change"). The process for determination of whether such a change has occurred is very complex; however, based on currently available information, Cambex believes that an Ownership Change will not occur as the result of the consummation of the Plan. However, the consummation of the Plan, coupled with other sales, redemptions or exchanges of Common Stock that have occurred in the past and those that may occur in the future, could result in an Ownership Change at some later date. In general, when the Section 382 Limitation applies, a corporation's utilization of its pre- Ownership Change date tax attributes (including certain amounts that otherwise would be allowable as deductions during the five year period beginning on the ownership change date (the "Change Date") that are attributable to pre-Change Date periods) for taxable periods following the Change Date is limited to an annual amount of tax attributes equal to the product of (i) the value of the corporation immediately before the ownership change (for this purpose, the value of the corporation is generally the fair market value of the corporation's stock on the Change Date, including preferred stock) multiplied by (ii) the long-term tax- exempt rate (as announced each month by the Treasury Department) on the Change Date, plus (iii) any unused portion of the Section 382 Limitation from prior years. This limitation is also increased by the amount of any net unrealized built-in gain on the Change Date that is recognized in subsequent taxable years. Furthermore, certain losses recognized by Reorganized Cambex after the Change Date may be subject to the Section 382 Limitation. (f) Other Considerations Section 269 of the Tax Code grants the IRS the power to disallow any deduction, credit, or allowance (including the utilization of tax attributes) when a corporation undertakes certain transactions for the principal purpose of avoiding or evading federal income taxes. Application of section 269 of the Tax Code depends upon an evaluation of the facts and circumstances, and Cambex believes that utilization of its Tax Attributes by Reorganized Cambex will not be affected by section 269 of the Tax Code, although the IRS and the courts could adopt a different view. 3. Alternative Minimum Tax For purposes of computing Reorganized Cambex's regular tax liability, all of the taxable income recognized in a taxable year generally may be offset by the carryover of Tax Attributes (to the extent permitted under, among other sections, sections 269, 382, and 383 of the Tax Code). Although all of Reorganized Cambex's regular tax liability for a particular year may be reduced to zero by virtue of its Tax Attributes, Reorganized Cambex in any particular year may be subject to the alternative minimum tax ("AMT"). The AMT imposes a tax equal to the amount by which 20% of a corporation's alternative minimum taxable income ("AMTI") exceeds the corporation's regular tax liability. AMTI is calculated pursuant to specific rules in the Tax Code that eliminate or limit the availability of certain tax deductions and other beneficial allowances but which include as income certain amounts not generally included in computing regular tax liability, but do not include COD income excluded under section 108 of the Tax Code. Of particular importance to Reorganized Cambex is that in calculating AMTI, only 90% of a corporation's AMTI may be offset by net operating losses. Thus, in any year for which Reorganized Cambex may be subject to the AMT, it may not totally eliminate all tax liability on recognized income through the use of net operating losses. Any AMTI would generally be taxable at an effective rate of 2% (i.e., 10 percent of the 20 percent AMT tax rate), assuming the applicability of the Tax Attributes to all taxable income for the year. B. Federal Income Tax Consequences To Holders Of Claims 1. Class 4 Unsecured Creditors The issuance of deferred Cash or deferred Cash and Common Stock to holders of Allowed Class 4 Unsecured Claims pursuant to the Plan will constitute an exchange for federal income tax purposes. The federal income tax consequences to holders of Class 4 Unsecured Claims of such exchange will depend on whether any given Allowed Class 4 Unsecured Claim constitutes a "security." The term "security" is not defined in the Tax Code or applicable regulations and has not been clearly defined by court decisions. The determination of whether an instrument constitutes a "security" for federal income tax purposes is based on all the facts and circumstances of the case. Factors generally considered in determining whether an obligation represents a security include (i) the term of the instrument, (ii) whether the instrument is secured, (iii) the degree of subordination of the instrument, (iv) the ratio of debt to equity of the issuer, (v) the riskiness of the business of the issuer, and (vi) negotiability of the instrument. This determination will be made on a case- by-case basis. Generally, trade accounts payable are not "securities." (a) If Class 4 Unsecured Claims Are Not Securities Generally, a holder of an Allowed Class 4 Unsecured Claim that is not a "security" will realize gain or loss on the exchange in an amount equal to the difference between (i) the "amount realized" in respect of such Claim and (ii) the creditor's tax basis is his existing claim (other than any claim in respect of accrued interest). The "amount realized" will be equal to the present value of the Cash plus the aggregate fair market value of the Common Stock received. Subject to the market discount rule discussed below (see "Market Discount"), any gain or loss recognized on the exchange will be capital gain or loss if the Allowed Claims were capital assets in the hands of a holder, and such gain or loss will be long-term capital gain or loss if such holder's holding period for the Claim surrendered exceeds one year at the time of the exchange. The basis of the Common Stock in the hands of such a creditor will be its fair market value on the date of the exchange. The right to receive a series of deferred payments of Cash will be treated as a new obligation issued by Cambex. The basis of such obligation will be the present value of the deferred payments using the "applicable federal rate" as the discount rate. The deferred payment obligation will be treated as issued with original issue discount. Such original issue discount will be included in the taxable income of the holder (and deductible by Reorganized Cambex) on an economic accrual basis over the term of the obligation. (b) If Class 4 Unsecured Claims Are Securities An exchange of securities in corporation for stock of that corporation generally qualifies as a "recapitalization" and therefore a "reorganization" within the meaning of section 368(a)(1)(E) of the Tax Code. If section 368(a)(1)(E) of the Tax Code applies to the exchange of Common Stock and Cash for Class 4 Unsecured Claims for holders that elect Class 4 Option B treatment, with respect to those Allowed Class 4 Unsecured Claims that constitute securities and are held as capital assets on the date of the exchange, the exchange of such Claims for Common Stock and Cash would result in taxable income to the exchanging creditor in an amount equal to the lesser of (i) the excess of the amount of Cash (if any) and the present value of any deferred payment obligations) plus the aggregate fair market value of the Common Stock received in exchange for such securities over their basis in the hands of the holder, or (ii) the amount of Cash (if any). No loss would be allowed. Whether such gain would be taxable as capital gain, rather than ordinary income, is determined separately for each individual creditor and would depend on the relative shareholdings of the creditor before and after the transaction, whether Reorganized Cambex had current or accumulated earnings and profits as of the taxable year of the exchange, and whether the holder is deemed to hold Common Stock of any other person under attribution rules provided by the Tax Code. Creditors holding Class 4 Claims as capital assets should consult their personal tax advisors in order to determine whether the character of any gain recognized on the exchange is capital or ordinary. If section 368(a)(1)(E) of the Tax Code applies, the basis of the Common Stock received in exchange for a Class 4 Unsecured Claim would be the same as the basis of the Class 4 Unsecured Claim surrendered (other than as attributable to interest), increased by the gain recognized by the creditor and decreased by the amount of Cash (or the present value of any deferred payment obligation) received by the creditor. The holding period of the Common Stock would include the holding period of the Claim surrendered in the exchange. The treatment of the receipt of a deferred payment obligation would be the same as described above in the case of claims that are not securities. 2. Accrued Interest On Allowed Claims A holder of an Allowed Class 4 Unsecured Claim who previously included in income accrued but unpaid interest attributable to its Claim should recognize an ordinary loss to the extent such previously included accrued interest exceeds the amount of consideration received by the creditor that is attributable to accrued interest for federal income tax purposes. To the extent that a portion of the consideration received by a holder of an Allowed Class 4 Unsecured Claim which has not previously included in its income accrued but unpaid interest attributable to its Claim is treated for Federal income tax purposes as attributable to such interest, such creditor will recognize ordinary income in the amount of such interest, whether or not the creditor realizes an overall gain or loss upon the surrender of its Claim and whether or not such gain or loss is recognized. Notwithstanding the general discussion above, the tax basis of a holder of an Allowed Class 4 Unsecured Claim in Common Stock treated as received in satisfaction of accrued interest on such Claim, if any, should be equal to the amount of interest income treated as satisfied by the receipt of such consideration. Additionally, a creditor's holding period in the consideration received as interest income should begin on the day following the date on which such consideration is distributed. 3. Market Discount The Internal Revenue Code generally requires holders of "market discount bonds" to treat as interest income any gain recognized on the disposition of such bonds to the extent of the market discount accrued during the holder's period of ownership. A "market discount bond" is a debt obligation purchased at a market discount, subject to certain exceptions, including a de minimis exception. For this purpose, a purchase at a market discount includes a purchase after the original issue at a price below the stated redemption price at maturity. The amount of market discount on a bond generally equals the excess of (i) the stated redemption price at maturity of a debt obligation (or, in the case of a debt instrument issued with original issue discount, its "revised issue price") over (ii) the tax basis in the hands of the holder immediately after the bond's acquisition. The accrued market discount generally equals a ratable portion of the bond's market discount, based on the number of days the taxpayer has held the bond at the time of such disposition, as a percentage of the number of days from the date the taxpayer acquired the bond to its date of maturity. Also, holders of market discount bonds are required, under certain circumstances, to defer the deduction of all or a portion of the interest on any indebtedness incurred or maintained to acquire or carry market discount bonds. Neither the rule treating accrued market discount as ordinary income on a disposition nor the rule deferring interest deductions applies if the holder of a "market discount bond" elects to include the accrued market discount in income currently. If a creditor's receipt of Cash (if any) plus Common Stock in exchange for his Allowed Claim pursuant to the Plan qualifies under Section 368(a)(1)(E) of the Tax Code, the accrued market discount treated as interest income is limited to the amount of any gain the creditor recognizes as a result of the exchange. To the extent that the amount of market discount that accrued prior to the recapitalization exceeds the gain recognized, such excess will be allocated to the Common Stock received in the recapitalization. Upon a subsequent disposition of such Common Stock, any realized gain will be treated as ordinary income or interest income, respectively, to the extent of the allocable portion of the accrued market discount not recognized at the time of the recapitalization. 4. Recapture On Later Disposition Of Common Stock A recipient of Cash (if any) plus Common Stock in exchange for an Allowed Unsecured Claim who recognizes gain on the disposition of such Common Stock may recognize ordinary income equal to the amount of any bad debt deductions taken with respect to such Claim, increased by any loss and decreased by any gain, recognized upon the exchange of the Claim for Cash (if any) plus Common Stock. 5. Other Tax Effects Of Ownership Of Common Stock Cash dividends paid on the Common Stock will be taxable as ordinary income to the holder to the extent of the current or accumulated earnings and profits ("E&P") of Reorganized Cambex. Cash dividends in excess of current or accumulated E&P will first be treated as return of basis and then as gain from the sale of the Common Stock. The sale or exchange of the Common Stock, other than a nonrecognition transaction, will give rise to taxable gain or loss equal to the difference between the tax basis of the Common Stock and the amount received in exchange therefor. Assuming that the Common Stock is a capital asset on the date of the sale or exchange, such gain or loss will be capital gain or loss, and will be long or short term gain or loss depending on whether the Common Stock has been held for more than one year. C. Federal Income Tax Consequences To Holders Of Common Stock The consummation of the Plan will not be a taxable event for the current Cambex shareholders and the consummation of the Plan will have no tax consequences to them in their capacity as shareholders. X. FEASIBILITY OF THE PLAN AND THE BEST INTERESTS OF CREDITORS A. Feasibility Of The Plan In connection with confirmation of the Plan, the Bankruptcy Court will have to determine that the Plan is feasible pursuant to section 1129(a)(l 1) of the Bankruptcy Code, which means that the confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of REORGANIZED CAMBEX. To support its belief in the feasibility of the Plan, CAMBEX has prepared financial Projections for January 1, 1998 through December 31, 2000, as set forth in Exhibit 2 attached to this Disclosure Statement. The Projections include a pro forma balance sheet as of March 31, 1998, which Cambex expects to be close to the projected Consummation Date, after giving effect to the transactions contemplated to take place as of the Consummation Date. The Projections indicate that Cambex will incur losses and have negative cash flow through the first three quarters of 1998. At that time, the Projections indicated that revenues from Cambex's mainframe memory products will have reached a level to sustain operations. The Projections indicate that after making all cash payments estimated to be required under the Plan on account of Allowed Claims, and before taking into account any cash to be raised through equity financing, Cambex will be able to meet its obligations and maintain operations using cash on hand as of the Consummation Date, together with short term debt or equity financing of approximately $500,000. Cambex is currently negotiating with several sources for short- term debt or equity financing. In the event the Debtor secures equity financing, the equity interests of existing Cambex stockholders and of unsecured creditors that elect Class 4 Option B treatment may be diluted. (See Section VI.A.2.c.(ii)b. "Class 4 Option B" for description of rights of holders electing Class 4 Option B to change election). Accordingly, Cambex believes that the Plan complies with the financial feasibility standard of Section 1l29(a)(l 1) of the Bankruptcy Code. Although Cambex believes it will secure such financing, there are no assurances that the financing will be secured. Many of the assumptions upon which the projections are based are subject to uncertainties outside the control of Cambex. Some assumptions inevitably will not materialize, and events and circumstances occurring after the date on which the projections were prepared may be different from those assumed or may be unanticipated, and may adversely affect Cambex's financial results. Therefore, the actual results may vary from the projected results and the variations may be material and adverse. See "Certain Factors To Be Considered" for a discussion of certain risk factors that may affect financial feasibility of the Plan. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OR THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION REGARDING PROJECTIONS. FURTHERMORE, THE PROJECTIONS HAVE NOT BEEN AUDITED BY CAMBEX'S INDEPENDENT CERTIFIED ACCOUNTANTS. ALTHOUGH PRESENTED WITH NUMERICAL SPECIFICITY, THE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS, SOME OF WHICH HAVE NOT BEEN ACHIEVED TO DATE AND WHICH MAY NOT BE REALIZED IN THE FUTURE, AND ARE SUBJECT TO SIGNIFICANT PRODUCT, BUSINESS, ECONOMIC, AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF REORGANIZED CAMBEX. CONSEQUENTLY, THE PROJECTIONS SHOULD NOT BE REGARDED AS A REPRESENTATION OR WARRANTY BY CAMBEX OR REORGANIZED CAMBEX, OR ANY OTHER PERSON, THAT THE PROJECTIONS WILL BE REALIZED. ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE PRESENTED IN THE PROJECTIONS. B. Acceptance Of The Plan As a condition to confirmation, the Bankruptcy Code requires that each Class of impaired Claims vote to accept the Plan, except under certain circumstances. Section 1126(c) of the Bankruptcy Code defines acceptance of the Plan by a Class of impaired Claims as acceptance by holders of at least two-thirds in dollar amount and more than one-half in number of Claims in that Class but for that purpose counts only those who actually vote to accept or to reject the Plan. Thus, a Class of Claims will have voted to accept the Plan only if two-thirds in amount and a majority in number actually voting cast their Ballots in favor of acceptance. Holders of Claims who fail to vote are not counted as either accepting or rejecting the Plan. C. Best Interests Of Holders Of Claims As noted above, even if the Plan is accepted by each Class of holders of Claims, the Bankruptcy Code requires the Bankruptcy Court to determine that the Plan is in the best interests of all holders of Claims that are impaired by the Plan and that have not accepted the Plan. The "best interests" test, as set forth in section 1l29(a)(7) of the Bankruptcy Code, requires the Bankruptcy Court to find either that all members of an impaired Class of Claims have accepted the Plan or that the Plan will provide a member who has not accepted the Plan with a recovery of property of a value, as of the Consummation Date, that is not less than the amount that such holder would recover if CAMBEX were liquidated under Chapter 7 of the Bankruptcy Code. To calculate the probable distribution to members of each impaired Class of holders of Claims if CAMBEX were liquidated under Chapter 7, the Bankruptcy Court must first determine the dollar amount that would be generated from CAMBEX's assets if the Chapter 11 Case were converted to a case under Chapter 7 of the Bankruptcy Code. This "liquidation value" would consist primarily of the proceeds from a forced sale of CAMBEX's assets by a Chapter 7 trustee. The amount of liquidation value available to holders of Unsecured Claims would be reduced by, first, the Claims of secured creditors to the extent of the value of their collateral, and, second, by the costs and expenses of liquidation, as well as by other Administrative Claims and costs of both the Chapter 7 case and the Chapter 11 Case, and third, by Priority Tax Claims and Other Priority Claims. Administrative Claims under Chapter 7 of the Bankruptcy Code would include the compensation of the trustee, as well as of counsel and other professionals retained by the trustee, asset disposition expenses, all unpaid expenses incurred by CAMBEX in the Chapter 11 Case (such as compensation of attorneys, financial advisors, and accountants) that are allowed in the Chapter 7 case, litigation costs, and claims arising from the operations of CAMBEX during the pendency of the Chapter 11 Case. The liquidation itself would trigger payment of certain Administrative Claims and Priority Tax Claims that otherwise would be due in the ordinary course of business. Administrative Claims, Priority Tax Claims and Other Priority Claims would be paid in full from the liquidation proceeds before the balance would be made available to pay Unsecured Claims or to make any distribution in respect of equity Interests. The liquidation would also prompt the rejection of a large number of executory contracts and unexpired leases and thereby create a significantly greater amount of Unsecured Claims to share in the proceeds available for distribution on account of Unsecured Claims. Once the court ascertains the recoveries in liquidation of secured creditors and administrative and priority claimants, it must determine the probable distribution to general unsecured creditors and equity security holders from the remaining available proceeds in liquidation. If such probable distribution has a value greater than the distributions to be received by such creditors and equity security holders under the Plan, then the Plan is not in the best interests of creditors and equity security holders. Since the Plan provides for the payment in full, over time, to holders of Unsecured Claims, CAMBEX believes that each member of each Class of impaired Claims will receive more under the Plan than would be received if CAMBEX were liquidated. Similarly, since holders of equity Interests are not impaired as they are retaining their stock, CAMBEX believes that the holders of equity Interests will receive more under the Plan than they would receive if CAMBEX were liquidated. D. Liquidation Analysis CAMBEX believes that the Plan meets the best interests of creditors and equity security holders test of section 1129(a)(7) of the Bankruptcy Code. CAMBEX believes that the members of each impaired Class will receive more under the Plan than they would in a liquidation. The liquidation analysis prepared by CAMBEX is attached as Exhibit 6 to this Disclosure Statement (the "Liquidation Analysis"). CAMBEX believes that any liquidation analysis is speculative. To the extent that confirmation of the Plan requires the establishment of hypothetical amounts for the value of CAMBEX and the amount of funds available to pay Claims or Interests, the Bankruptcy Court will determine those amounts at the Confirmation Hearing. The Liquidation Analysis necessarily contains an estimate of the amount of Claims which would ultimately become Allowed Claims if CAMBEX were liquidated under Chapter 7. This estimate is based solely upon CAMBEX's review of Claims filed and CAMBEX's books and records, and includes estimates for Claims arising from the rejection of unexpired leases and executory contracts that CAMBEX believes would occur in a liquidation, but not under the Plan. Projecting the amount of rejection Claims that would be allowed in a liquidation is highly speculative. However, CAMBEX believes that it does not have many executory contracts or leases that would result in significant rejection damages in a Chapter 7 liquidation that are different than the claims CAMBEX expects will be filed in the Chapter 11 case or are to be rejected under the Plan. Most of CAMBEX's contracts were terminated (or in default) prior to the Petition Date or were rejected during the Chapter 11 case. The only significant lease which CAMBEX intends to assume and that would result in a large rejection claim in a Chapter 7 liquidation is the lease for its Waltham facility. No order or finding has been entered by the Bankruptcy Court estimating or otherwise fixing the amount of Claims at the projected amounts of Allowed Claims set forth in the Liquidation Analysis. The estimate of the amount of Allowed Claims set forth in the Liquidation Analysis is for purposes of considering the value of any distribution to be made on account of Allowed Claims or Allowed Interests in a liquidation. As it is anticipated that most of the leases and contracts giving rise to such rejection Claims in a liquidation will be assumed under the Plan, the estimate of Allowed Claims in the Liquidation Analysis should not be relied on for determining the value of any distribution to be made on account of Allowed Claims or Allowed Interests under the Plan. E. Application Of The Best Interests Of Creditors And Equity Security Holders Test To The Liquidation Analysis Under the Plan, holders of Allowed Class 3 Claims (Unsecured Claims less than or equal to $500) shall receive Cash distributions totaling 100% of their Allowed Class 3 Claims. Under the Plan, holders of Allowed Class 4 Claims (Unsecured Claims greater than $500) shall receive Cash Distributions totaling 100% of their Allowed Class 4 Claims or, at their election, Cash Distributions totaling 80% of their Allowed Class 4 Claims plus two shares of Common Stock for each dollar of Allowed Class 4 Claim in excess of the 80% paid in Cash, as more particularly described in Section VI.A.2. CAMBEX estimates that in a liquidation holders of Allowed Claims in Classes 3 and 4 would receive only 13% of their Allowed Claims. Accordingly, such holders will receive significantly more under the Plan on account of their Allowed Claims than they would receive in a liquidation of CAMBEX. In a liquidation, holders of the Common Stock Interests would receive no distributions on account of their Interests. Under the Plan, by contrast, holders of Class S Interests will retain their Common Stock. F. Confirmation Without Acceptance Of All Impaired Classes: The "Cramdown" Alternative Section 1129(b) of the Bankruptcy Code provides that the Plan can be confirmed even if the Plan is not accepted by all impaired Classes, as long as at least one impaired Class of Claims has accepted it. The Bankruptcy Court may confirm the Plan at the request of CAMBEX if the Plan "does not discriminate unfairly" and is "fair and equitable" as to each impaired Class that has not accepted the Plan. The Plan does not discriminate unfairly within the meaning of the Bankruptcy Code if a dissenting Class is treated equally with respect to other Classes of equal rank. The Plan is fair and equitable as to a Class of Secured Claims that rejects the Plan if the Plan provides (a) (i) that the holders of Claims included in the rejecting Class retain the liens securing those Claims whether the property subject to those liens is retained by CAMBEX or transferred to another entity, to the extent of the allowed amount of such Claims and (ii) that each holder of a Claim of such Class receive on account of that Claim deferred Cash payments totaling at least the allowed amount of that Claim, of a value, as of the Consummation Date, of at least the value of the holder's interest in the Estate's interest in such property; (b) for the sale, subject to section 363(k) of the Bankruptcy Code, of any property that is subject to the liens securing the Claims included in the rejecting Class, free and clear of the liens, with the liens to attach to the proceeds of the sale, and the treatment of the liens on proceeds under clause (a) or (c) of this paragraph; or (c) for the realization by such holders of the indubitable equivalent of such Claims. The Plan is fair and equitable as to a Class of unsecured Claims which rejects the Plan if the Plan provides (a) for each holder of a Claim included in the rejecting Class to receive or retain on account of that Claim property that has a value, as of the Consummation Date, equal to the allowed amount of such Claim; or (b) that the holder of any Claim or Interest that is junior to the Claims of such Class will not receive or retain on account of such junior Claim or Interest any property at all. G. Conditions To Confirmation And/Or Consummation 1. Conditions To The Confirmation Date The following are conditions precedent to confirmation of the Plan that may be satisfied or waived in accordance with Section IX.C of the Plan: (a) The Bankruptcy Court shall have approved a disclosure statement with respect to the Plan in form and substance reasonably acceptable to the Proponent. (b) The Confirmation Order shall be in form and substance reasonably acceptable to the Proponent. 2. Conditions To The Consummation Date The following are conditions precedent to the occurrence of the Consummation Date, each of which may be satisfied or waived in accordance with Section IX.C of the Plan: (a) The Confirmation Order shall have been entered by the Court and shall not be stayed, suspended, or vacated. (b) The Confirmation Order shall, among other things, provide that: (i) The provisions of the Confirmation Order are nonseverable and mutually dependent; (ii) The Court shall approve the assumption or the assumption and assignment, as the case may be, of all executory contracts and unexpired leases proposed to be assumed or assumed and assigned by CAMBEX on the terms provided in the Plan, or substantially similar thereto, and all executory contracts or unexpired leases assumed (or assumed and assigned) by CAMBEX during the Chapter 11 Case or under the Plan and so designated by CAMBEX shall remain in full force and effect for the benefit of REORGANIZED CAMBEX, as assignee and transferee as the case may be, notwithstanding any provision in such contract or lease (including those described in sections 365(b)(2) and (f) of the Bankruptcy Code) that prohibits such assignment or transfer or that enables or requires termination of such contract or lease; (iii) The transfers of property by CAMBEX to REORGANIZED CAMBEX (i) are or shall be legal, valid, and effective transfers of property, (ii) vest or shall vest REORGANIZED CAMBEX with good title to such property free and clear of all liens, charges, Claims, encumbrances, or Interests, except as expressly provided in the Plan or Confirmation Order, (iii) do not and shall not constitute avoidable transfers under the Bankruptcy Code or under applicable bankruptcy or nonbankruptcy law, and (iv) do not and shall not subject or REORGANIZED CAMBEX to any liability by reason of such transfer under the Bankruptcy Code or under applicable nonbankruptcy law, including, without limitation, any laws affecting successor or transferee liability; (iv) Except as expressly provided in the Plan, CAMBEX shall be discharged effective upon the Confirmation Date from any "debt" (as that term is defined in section 101(12) of the Bankruptcy Code), and CAMBEX's liability in respect thereof is extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable, or known or unknown, or that arose from any agreement of CAMBEX that has either been assumed or rejected in the Chapter 11 Case or pursuant to the Plan, or obligation of CAMBEX incurred before the Confirmation Date, or from any conduct of CAMBEX prior to the Confirmation Date, or that otherwise arose before the Confirmation Date, including, without limitation, all interest, if any, on any such debts, whether such interest accrued before or after the Petition Date; (v) The Plan does not provide for the liquidation of all or substantially all of the property of CAMBEX and its confirmation is not likely to be followed by the liquidation of REORGANIZED CAMBEX or the need for further financial reorganization; and (vi) The Bankruptcy Court shall have determined that the Common Stock issued under the Plan and distributed by the Disbursing Agent in exchange for Claims against CAMBEX are exempt from registration under the Securities Act of 1933 pursuant to section 1145 of the Bankruptcy Code, except to the extent that holders of any such securities are "underwriters," as that term is defined in section 1145 of the Bankruptcy Code. (c) The Bankruptcy Court shall have estimated all Disputed Claims for purposes of establishing the Distribution Reserve. (d) No request for revocation of the Confirmation Order under section 1144 of the Bankruptcy Code shall have been made, or, if made, shall remain pending. H. Waiver Of Conditions To The Confirmation Date Or Consummation Date The conditions above may be waived by CAMBEX, without notice or a hearing. The failure to satisfy or waive any condition to the Confirmation Date or Consummation Date may be asserted by CAMBEX regardless of the circumstances giving rise to the failure of such condition to be satisfied (including any action or inaction by CAMBEX). The failure of CAMBEX to exercise any of the foregoing rights shall not be deemed a waiver of any other rights, and each such right shall be deemed an ongoing right, which may be asserted at any time. XI. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN Cambex believes that the Plan affords holders of Claims and holders of Interests the potential for the greatest realization on Cambex assets and, therefore, is in the best interests of such holders. If the Plan is not confirmed, however, the theoretical alternatives include (a) continuation of the pending Chapter 11 Case; (b) an alternative plan or plans of reorganization; or (c) liquidation of Cambex under Chapter 7 of the Bankruptcy Code. A. Continuation Of The Chapter 11 Case If it remains in Chapter 11, Cambex could continue to operate its businesses and manage its properties as debtor-in-possession, but it would remain subject to the restrictions imposed by the Bankruptcy Code. It is not clear whether Cambex could survive as a going concern in a protracted Chapter 11 case. Cambex could have difficulty sustaining the high costs, and the erosion of customer confidence, which may be caused if Cambex remained a Chapter 11 debtor in possession. Ultimately, Cambex (or other parties in interest) could propose another plan or liquidate under Chapter 7. B. Alternative Plans Of Reorganization If the Plan is not confirmed, Cambex or, if the Bankruptcy Court did not grant further extensions of Cambex's exclusive period in which to file a plan and solicit acceptance thereof, any other party in interest in the Chapter 11 Case could propose a different plan or plans. Such plans might involve either a reorganization and continuation of Cambex's business or an orderly liquidation of its assets, or a combination of both. No parties have sought to file an alternative plan. C. Liquidation Under Chapter 7 If no plan is confirmed, Cambex's Chapter 11 Case may be converted to a case under Chapter 7 of the Bankruptcy Code. In a Chapter 7 case, a trustee or trustees would be appointed to liquidate the assets of Cambex. It is impossible to predict precisely how the proceeds of the liquidation would be distributed to the respective holders of Claims against or Interests in Cambex. Cambex believes that in liquidation under Chapter 7, before creditors received any distribution, additional administrative expenses involved in the appointment of a trustee and attorneys, accountants and other professionals to assist the trustee would cause a substantial diminution in the value of the Estate. In addition, liquidation would result in the rejection of executory contracts and unexpired leases giving rise to substantial rejection damages Claims that would significantly increase the amount of Allowed Claims, thereby reducing the distribution available to each unsecured creditor. Cambex's liquidation analysis is premised upon a liquidation in a Chapter 7 case and is attached as Exhibit 6 to this Disclosure Statement. In the analysis, Cambex has taken into account the nature, status, and underlying value of its assets, the ultimate realizable value of its assets in liquidation, and the extent to which such assets are subject to liens and security interests. The analysis also reflects the effect of additional Administrative Claims that would likely be incurred in connection with the liquidation and the substantial increase in the amount of general unsecured Claims that would arise from the rejection of unexpired leases and unexpired contracts in Chapter 7. D. Plan Preferable To Alternatives Cambex's continued operation of its business is preferable to a liquidation since it will enable Cambex to take advantage of its expertise and take advantage of market opportunities that will allow it to pay creditors more than they would receive in a liquidation. XII. VOTING REQUIREMENTS On March 17, 1998, the Bankruptcy Court entered an order, among other things, setting voting procedures and scheduling the hearing on confirmation of the Plan. A copy of the notice of the Confirmation Hearing is enclosed with this Disclosure Statement. The notice of the Confirmation Hearing sets forth, among other things, voting deadlines and objection deadlines. The notice of Confirmation Hearing and the instructions attached to the Ballot should be read in connection with this section of this Disclosure Statement If you have any questions about the procedure for voting your Claim or the packet of materials you received, please contact Cambex at telephone no. (781) 890-6000 (ext 299). If you have any questions about the amount of your Claim, please contact Cambex at telephone no. (781) 890-6000 (ext. 235). If you wish to obtain an additional copy of the Plan, this Disclosure Statement, and the exhibits to such documents, at your own expense, unless otherwise specifically required by Bankruptcy Rule 3017(d), please contact Brown, Rudnick, Freed & Gesmer, One Financial Center, Boston, MA 02111, Attn: Marnie A. Ratner. The Bankruptcy Court may confirm the Plan only if it determines that the Plan complies with the technical requirements of Chapter 11 of the Bankruptcy Code and that the disclosures of Cambex concerning the Plan have been adequate and have included information concerning all payments made or promised by Cambex in connection with the Plan and the Chapter 11 Case. In addition, the Bankruptcy Court must determine that the Plan has been proposed in good faith and not by any means forbidden by law, and under Bankruptcy Rule 3020(b)(2), it may do so without receiving evidence if no objection is timely filed. In particular, the Bankruptcy Code requires the Bankruptcy Court to find, among other things, that (i) the Plan has been accepted by the requisite votes of all Classes of impaired Claims unless approval will be sought under section 1129(b) of the Bankruptcy Code in light of the dissent of one or more such Classes, (ii) the Plan is "feasible," which means that there is a reasonable probability that Reorganized Cambex will be able to perform its obligations under the Plan and continue to operate its business without further financial reorganization or liquidation, and (iii) the Plan is in the "best interests" of all holders of Claims or Interests, which means that such holders will receive at least as much under the Plan as they would receive in a liquidation under Chapter 7 of the Bankruptcy Code. The Bankruptcy Court must find that all conditions mentioned above are met before it can confirm the Plan. Thus, even if all the Classes of impaired Claims against Cambex accept the Plan by the requisite votes, the Bankruptcy Court must make an independent finding that the Plan conforms to the requirements of the Bankruptcy Code, that the Plan is feasible, and that the Plan is in the best interests of the holders of Claims against, and Interests in, Cambex. These statutory conditions to confirmation are discussed above. UNLESS THE BALLOT OR MASTER BALLOT BEING FURNISHED IS TIMELY SUBMITTED TO THE VOTING AGENT ON OR PRIOR TO THE VOTING DEADLINE TOGETHER WITH ANY OTHER DOCUMENTS REQUIRED BY SUCH BALLOT, CAMBEX MAY, IN ITS SOLE DISCRETION, REJECT SUCH BALLOT AS INVALID AND, THEREFORE, DECLINE TO COUNT IT AS AN ACCEPTANCE OR REJECTION OF THE PLAN. A. Parties In Interest Entitled To Vote Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be "impaired" under a plan unless (i) the plan leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder thereof, or (ii) notwithstanding any legal right to an accelerated payment of such claim or interest, the plan cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default. In general, a holder of a claim or interest may vote to accept or to reject a plan if (i) the claim or interest is "allowed," which means generally that no party in interest has objected to such claims or interest, and (ii) the claim or interest is impaired by the Plan. If the holder of an impaired claim or interest will not receive any distribution under the Plan in respect of such claim or interest, the Bankruptcy Court deems such holder to have rejected the plan. If the claim or interest is not impaired, the Bankruptcy Court deems the holder of such claim or interest to have accepted the Plan and the Plan Proponent need not solicit such holder's vote. The holder of a Claim against Cambex that is "impaired" under the Plan is entitled to vote to accept or reject the Plan if (i) the Plan provides a distribution in respect of such Claim, and (ii) (a) the Claim has been scheduled by Cambex (and such claim is not scheduled as disputed, contingent, unliquidated, or scheduled in the amount of zero), or (b) it has filed a proof of claim on or before the bar date applicable to such holder, pursuant to sections 502(a) and 1126(a) of the Bankruptcy Code and Bankruptcy Rules 3003 and 3018. Any Claim as to which an objection has been timely filed and has not been withdrawn or dismissed is not entitled to vote, unless the Bankruptcy Court, pursuant to Bankruptcy Rule 3018(a), upon application of the holder of the Claim with respect to which there has been an objection filed, temporarily allows the Claim in an amount that the Bankruptcy Court deems proper for the purpose of voting on the Plan. A vote may be disregarded if the Bankruptcy Court determines, pursuant to section 1126(e) of the Bankruptcy Code, that it was not solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code. The Bankruptcy Court order scheduling the Confirmation Hearing also sets forth assumptions and procedures for tabulating Ballots that are not completed fully or correctly. B. Classes Impaired Under The Plan The following classes of Claims and Interests are impaired under the Plan: Class 2 Secured Claims and Class 4 General Unsecured Claims Greater than $500. Class 1 Priority Claims, Class 3 General Unsecured Claims Less Than or Equal to $500, and Class 5 Stockholder Interests are not impaired under the Plan, are deemed under section 1126 to have accepted the Plan, and their votes to accept or to reject the Plan will not be solicited. Acceptances of the Plan are being solicited only from those who hold Claims in an impaired Class whose members will receive a distribution under the Plan. XIII. CONCLUSION This Disclosure Statement was approved by the Bankruptcy Court after notice and a hearing. The Bankruptcy Court has determined that this Disclosure Statement contains information adequate to permit holders of Claims and holders of Interests to make an informed judgment about the Plan. Such approval, however, does not mean that the Bankruptcy Court recommends either acceptance or rejection of the Plan. A. Hearing On And Objections To Confirmation 1. Confirmation Hearing The hearing on confirmation of the Plan has been scheduled for April 23, 1998 at 10:30 a.m., Eastern Time, Courtroom 4, United States Bankruptcy Court, 10 Causeway Street, Boston, Massachusetts. Such hearing may be adjourned from time to time by announcing such adjournment in open court at the Confirmation Hearing, all without further notice to parties in interest, and the Plan may be modified by Cambex pursuant to section 1127 of the Bankruptcy Code prior to, during, or as a result of that hearing, without further notice to parties in interest. 2. Date Set For Filing Objections To Confirmation The time by which all objections to confirmation of the Plan must be filed with the Bankruptcy Court and received by the parties listed in the Confirmation Hearing Notice has been set for April 16, 1998, at 4:00 p.m., Eastern Time. A copy of that Notice has been transmitted with this Disclosure Statement. B. Recommendation Cambex has concluded that the continued operation of Cambex's business by Reorganized Cambex, consistent with the terms of the Plan, provides greater value to Cambex's creditors and equity security holders than other alternatives, including liquidation of Cambex's assets. CAMBEX BELIEVES THAT CONFIRMATION OF THE PLAN IS IN THE BEST INTERESTS OF CAMBEX, ITS CREDITORS, ITS EQUITY SECURITY HOLDERS, AND ITS ESTATE, AND ACCORDINGLY RECOMMENDS THAT HOLDERS OF CLAIMS VOTE TO ACCEPT THE PLAN. The Plan provides for a full payout to creditors, the retention of stock by equity security holders, and preserves the jobs of Cambex employees. Cambex believes that any alternative to confirmation of the Plan, such as liquidation or attempts by another party in interest to file a plan, could result in significant delays, litigation, and costs, as well as the loss of jobs by most Cambex employees. Moreover, Cambex believes that Cambex's creditors and equity security holders will receive greater recoveries under the Plan than those that would be achieved in liquidation. FOR THESE REASONS, CAMBEX URGES YOU TO RETURN YOUR BALLOT ACCEPTING THE PLAN. Dated: As of March 17,1998 CAMBEX CORPORATION Waltham, Massachusetts Debtor-in-Possession By: /s/ Joseph F. Kruy Name: Joseph F. Kruy Title: President and Chief Executive Officer BROWN, RUDNICK, FREED & GESMER, P.C. Attorneys for Cambex, Debtor-in-Possession One Financial Center Boston, MA 02111 617-856-8200 By: /s/ Joseph F. Ryan Joseph F. Ryan Steven D. Pohl