-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ANzLpyuq/flqNB8tShlTB50O5cXd/y7r5QfYUvMJYZsfd+P58BQ0VbSWL94hRG7J eWadiN+mQJA8K+Zv8e1tfg== /in/edgar/work/0000016590-00-000007/0000016590-00-000007.txt : 20000713 0000016590-00-000007.hdr.sgml : 20000713 ACCESSION NUMBER: 0000016590-00-000007 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 27 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMBEX CORP CENTRAL INDEX KEY: 0000016590 STANDARD INDUSTRIAL CLASSIFICATION: [3572 ] IRS NUMBER: 042442959 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-06933 FILM NUMBER: 671443 BUSINESS ADDRESS: STREET 1: 360 SECOND AVE CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6178906000 MAIL ADDRESS: STREET 1: 360 SECOND AVE STREET 2: 360 SECOND AVE CITY: WALTHAM STATE: MA ZIP: 02154 FORMER COMPANY: FORMER CONFORMED NAME: CAMBRIDGE MEMORIES INC DATE OF NAME CHANGE: 19801204 10-Q/A 1 0001.txt 10-Q/A QTR ENDED 4/1/2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A Amendment to Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Quarter Ended: April 1, 2000 Commission File Number: 0-6933 CAMBEX CORPORATION (Exact Name of Registrant as Specified in its Charter) Massachusetts 04-2442959 (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 360 Second Avenue, Waltham, Massachusetts 02451 (Address of principal executive offices) (Zip Code) (781) 890-6000 (Registrant's Telephone Number, Including Area Code) Indicate by "X" whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of March 31, 2000 ------------ ----------------------------- Common 9,635,259 shares AMENDMENT NO 1 The undersigned registrant hereby amends its Quarterly Report on Form 10-Q for the quarter ended April 1, 2000 (the "Report"), by (a) adding Part II to the Report concerning "Other Information" immediately following Management's Discussion and Analysis of Financial Condition and Results of Operations and (b) filing certain exhibits to the Report concerning previously reported transactions related to the Company's issuance of Series 1 Bridge Financing Notes, Attached Repricing Warrants and Common Stock Purchase Warrants during the quarter ended April 1, 2000, as follows: Part II. OTHER INFORMATION Item 1. Legal Proceedings The Company is a party to litigation and claims arising in the normal course of its business. Barring unforeseen circumstances, management does not expect the results of these actions to have a material adverse effect on the Company's business or financial condition. Item 2. Change in Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5 Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Index 2.1 Reorganization Plan of the Company dated March 17, 1998. 2.2 Amended Disclosure Statement with respect to Reorganization Plan of the Company dated March 17, 1998. 3.1 Articles of Organization of the Company, as amended (included as Exhibit 1.1 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference). * 3.1.1 Articles of Amendment to Articles of Organization filed with the Massachusetts Secretary of State on December 11, 1987 (included as Exhibit 3.1.1 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1987, and incorporated herein by reference). * 3.1.2 Articles of Amendment to Articles of Organization filed with the Massachusetts Secretary of State on June 9, 1988 (included as Exhibit 3.1.2 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1988, and incorporated herein by reference). * 3.1.3 Articles of Amendment to Articles of Organization filed with the Massachusetts Secretary of State on January 23, 1992 (included as Exhibit 3.1.3 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1993, and incorporated herein by reference). * 3.2 By-Laws of the Company, as amended. 4.1 Registration Rights Agreement among the Company, SovCap Equity Partners, Ltd., Correllus International, Ltd. and Arab Commerce Bank Ltd. (collectively, the "Sovereign Purchasers") dated as of January 18, 2000. 10.1 Employment Agreement between Joseph F. Kruy and the Company, dated as of November 18, 1994. 10.2 Incentive Bonus Plan (included as Exhibit 10.3 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference). * 10.3 1985 Non-Qualified Stock Option Plan (included as Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1985, and incorporated herein by reference). * 10.4 1987 Combination Stock Option Plan (included as Exhibit 10.8 to the Company's Annual Report on Form 10- K for the fiscal year ended August 31, 1987, and incorporated herein by reference). * 10.5 Employee Stock Purchase Plan (included as Exhibit 10.9 to the Company's Annual Report on Form 10- K for the fiscal year ended August 31, 1994, and incorporated herein by reference). * 10.6 2000 Equity Incentive Plan (included as Exhibit 10.12 to the Company's Annual Report on Form 10- K for the fiscal year ended December 31, 1999, and incorporated herein by reference). * 10.7 Series 1 Bridge Note Purchase Agreement among the Company and the Sovereign Purchasers dated as of January 18, 2000. 10.8 Escrow Agreement among the Company, the Sovereign Purchasers and Suntrust Bank, Atlanta dated as of January 6, 2000. 10.9 Placement Agent Agreement between the Company and Sovereign Capital Advisors, LLC ("Sovereign Advisors") dated as of January 18, 2000. 10.10 Guaranty Agreement among Joseph F. Kruy, the Company and the Sovereign Purchasers dated as of January 18, 2000. 10.11 Guaranty Agreement among CyberFin Corporation, the Company and the Sovereign Purchasers dated as of January 18, 2000. 10.12 Stock Pledge Agreement among Joseph F. Kruy, the Company and the Sovereign Purchasers dated as of January 18, 2000. 10.13 Stock Pledge Agreement among CyberFin Corporation, the Company and the Sovereign Purchasers dated as of January 18, 2000. 10.14 Series 1 Bridge Financing Note in favor of SovCap Equity Partners, Ltd. ("SovCap") dated as of January 18, 2000. 10.15 Attached Repricing Warrant in favor of SovCap dated as of January 18, 2000. 10.16 Series 1 Bridge Financing Note in favor of Correllus International, Ltd. ("Correllus") dated as of January 18, 2000. 10.17 Attached Repricing Warrant in favor of Correllus dated as of January 18, 2000. 10.18 Common Stock Purchase Warrant in favor of SovCap dated as of January 18, 2000. 10.19 Common Stock Purchase Warrant in favor of Correllus dated as of January 18, 2000. 10.20 Sovereign Warrant Agreement between the Company and Sovereign Advisors dated as of January 18, 2000. 10.21 Warrant Certificate registered in the name of Sovereign Advisors dated January 18, 2000. 10.22 Series 1 Bridge Financing Note in favor of Arab Commerce Bank Ltd. ("Arab Commerce") dated as of February 9, 2000. 10.23 Attached Repricing Warrant in favor of Arab Commerce dated as of February 9, 2000. 10.24 Common Stock Purchase Warrant in favor of Arab Commerce dated as of February 9, 2000. 10.25 Series 1 Bridge Financing Note in favor of SovCap dated as of February 9, 2000. 10.26 Attached Repricing Warrant in favor of SovCap dated as of February 9, 2000. 10.27 Common Stock Purchase Warrant in favor of SovCap dated as of February 9, 2000. 27 Financial Data Schedule * * Previously filed with the Securities and Exchange Commission (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, hereunto duly authorized. CAMBEX CORPORATION Date: July 11, 2000 By: /s/ Joseph F. Kruy Joseph F. Kruy, President and Chief Executive Officer EX-2.1 2 0002.txt REORGANIZATION PLAN DATED MARCH 17, 1998 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS ) In re: ) Chapter 11 ) CAMBEX CORPORATION, ) Case No. 97- 19640-CJK ) Debtor ) ) REORGANIZATION PLAN (MARCH 17, 1998) OF CAMBEX CORPORATION BROWN, RUDNICK, FREED & GESMER, P.C. Attorneys for Cambex Corporation 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 TABLE OF CONTENTS INTRODUCTION 1 ARTICLE I -- DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME 1 A. SCOPE OF DEFINITIONS 1 B. DEFINITIONS 1 C. RULES OF INTERPRETATION 5 D. COMPUTATION OF TIME 5 ARTICLE II -- CLASSIFICATION OF CLAIMS AND INTERESTS 5 A. INTRODUCTION 5 B. UNCLASSIFIED CLAIMS (NOT ENTITLED TO VOTE ON THE PLAN) 6 1. Administrative Claims 6 2. Priority Tax Claims 6 C. UNIMPAIRED CLASSES OF CLAIMS (NOT ENTITLED TO VOTE ON THE PLAN) 6 1. Class 1: Other Priority Claims 6 2. Class 3: Priority Employee Benefit Plan Claims 6 D. IMPAIRED CLASSES OF CLAIMS (ENTITLED TO VOTE ON THE PLAN) 7 1. Class 2: Secured Claims 7 2. Class 4: All Other General Unsecured Claims 7 E. UNIMPAIRED CLASS OF INTERESTS (NOT ENTITLED TO VOTE ON THE PLAN) 7 1. Class 5: All Stockholder Interests 7 ARTICLE III -- TREATMENT OF CLAIMS AND INTERESTS 7 A. UNCLASSIFIED CLAIMS 7 1. Administrative Claims 7 2. Priority Tax Claims 7 B. UNIMPAIRED CLASSES OF CLAIMS 8 1. Class 1: Other Priority Claims 8 2. Class 3: General Unsecured Claims Less Than or Equal to $500 8 C. IMPAIRED CLASSES OF CLAIMS 8 1. Class 2: Secured Claims 8 2. Class 4: General Unsecured Claims Exceeding $500 9 D. UNIMPAIRED CLASS OF INTERESTS 9 1. Class 5: All Stockholder Interests 9 ARTICLE IV -- MEANS FOR IMPLEMENTATION OF THE PLAN 10 A. REVESTING OF ASSETS 10 B. SUBSTANTIAL CONTRIBUTION COMPENSATION AND EXPENSES BAR DATE 10 C. EXCLUSIVITY PERIOD 10 D. RETAINED LITIGATION 10 E. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS 10 F. LIMITATION ON ISSUANCE OF STOCK OPTIONS . 11 ARTICLE V -- ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY ONE OR MORE CLASSES OF CLAIMS OR INTERESTS 11 A. CLASSES ENTITLED TO VOTE 11 B. CLASS ACCEPTANCE REQUIREMENT 11 C. CRAMDOWN 11 ARTICLE VI -- DESCRIPTION OF SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN 12 A. COMMON STOCK 12 B. REGISTRATION 12 ARTICLE VII -- PROVISIONS GOVERNING DISTRIBUTIONS 12 A. DATE OF DISTRIBUTIONS 12 B. INTEREST ON CLAIMS 12 C. DISBURSING AGENT 12 D. MEANS OF CASH PAYMENT 13 E. DELIVERY OF DISTRIBUTIONS 13 F. NO VOTING BY DISBURSING AGENT 13 ARTICLE VIII -- TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES 13 A. ASSUMED CONTRACTS AND LEASES 13 B. PAYMENTS RELATED TO ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES; BAR TO PRECONFIRMATION DATE CLAIMS 14 C. REJECTED CONTRACTS AND LEASES 14 D. BAR TO REJECTION DAMAGES 14 E. UNIDENTIFIED EXECUTORY CONTRACTS AND UNEXPIRED LEASES 14 ARTICLE IX CONDITIONS PRECEDENT 15 A. CONDITIONS To THE CONFIRMATION DATE 15 B. CONDITIONS To THE CONSUMMATION DATE 15 C. WAIVER OF CONDITIONS To THE CONFIRMATION DATE OR CONSUMMATION DATE 16 ARTICLE X -- PROCEDURES FOR RESOLVING AND TREATING DISPUTED AND CONTINGENT CLAIMS 16 A. NO DISTRIBUTIONS PENDING ALLOWANCE 16 B. DISTRIBUTION RESERVE 16 C. DISTRIBUTIONS AFTER ALLOWANCE 17 ARTICLE XI -- MODIFICATIONS AND AMENDMENTS 17 A. MODIFICATION OF THE PLAN 17 ARTICLE XII -- RETENTION OF JURISDICTION 17 ARTICLE XIV -- MISCELLANEOUS PROVISIONS 18 A. SETOFFS 18 B. WITHHOLDING AND REPORTING REQUIREMENTS 19 C. DISCHARGE OF CAMBEX 19 D. COMMITTEES 19 E. BINDING EFFECT 19 F. REVOCATION, WITHDRAWAL OR NONCONSUMMATION 19 1. Right To Revoke Or Withdraw 19 2. Effect Of Withdrawal, Revocation, Or Nonconsummation 19 G. CHARTER AMENDMENT 20 H. NOTICES 20 I. PREPAYMENT 20 J. TERM OF INJUNCTIONS OR STAYS 20 J. GOVERNING LAW 21 INTRODUCTION Cambex Corporation, debtor-in-possession in the above-captioned Chapter 11 reorganization case ("Cambex"), hereby proposes the following reorganization plan for the resolution of Cambex's outstanding creditor Claims and equity Interests. Reference is made to the Disclosure Statement (as that term is defined herein) for results of operations, projections for future operations, risk factors, a summary and analysis of the Plan, and certain related matters. Pursuant to Section 1125(b) of the Bankruptcy Code, a vote to accept or reject the Plan cannot be solicited from a holder of a Claim or Interest until such time as the Disclosure Statement has been approved by the Bankruptcy Court and distributed to holders of Claims and holders of Interests. All holders of Claims and holders of Interests are encouraged to read the Plan and the Disclosure Statement in their entirety before voting to accept or reject the Plan. ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME A. Scope Of Definitions For purposes of this Plan, except as expressly provided or unless the context otherwise requires, all capitalized terms not otherwise defined shall have the meanings ascribed to them in this Article I of the Plan. Any term used in the Plan that is not defined herein, but is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that term in the Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, such terms shall include the plural as well as the singular number, the feminine gender shall include the masculine, and the masculine gender shall include the feminine. B. Definitions 1. "Administrative Claim" means a Claim for payment of an administrative expense of a kind specified in Section 503(b) of the Bankruptcy Code and entitled to priority pursuant to Section 507(a)(l) of the Bankruptcy Code, including, but not limited to, the actual, necessary costs and expenses, incurred after the Petition Date, of preserving Cambex's Estate and operating the business of Cambex, including wages, salaries, or commissions for services rendered after the commencement of the Chapter 11 Case, Professional Fees, and all fees and charges assessed against the Estate under chapter 123 of title 28, United States Code, and all Allowed Claims that are entitled to be treated as Administrative Claims pursuant to a Final Order of the Bankruptcy Court under Section 546(c)(2)(A) of the Bankruptcy Code. For distribution purposes under the Plan, Administrative Claims shall include Cure payments with respect to executory contracts and unexpired leases to be assumed under the Plan pursuant to Section 365 of the Bankruptcy Code. 2. "Allowed Administrative Claim" means an Allowed Claim that is an Administrative Claim. 3. "Allowed Claim" means a Claim or any portion thereof (a) that has been allowed by a Final Order, (b) either (x) that is Scheduled, other than a Claim that is Scheduled at zero or as disputed, contingent or unliquidated, or (y) for which a proof of claim has been timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, any Final Order of the Bankruptcy Court, or other applicable bankruptcy law, and as to which either (i) no objection to its allowance has been filed within the periods of limitation fixed by the Bankruptcy Code or by any Final Order of the Bankruptcy Court or (ii) any objection to its allowance has been settled or withdrawn, or has been denied by a Final Order, or (c) that is expressly allowed in the Plan. 4. "Allowed Class ... Claim" means an Allowed Claim in the particular Class described. 5. "Allowed Class ... Interest" means an Interest in the particular Class described (a) that has been allowed by a Final Order, (b) for which (i) no objection to its allowance has been filed within the periods of limitation fixed by the Bankruptcy Code or by any Final Order of the Bankruptcy Court or (ii) any objection to its allowance has been settled or withdrawn, or (c) that is expressly allowed in the Plan. 6. "Ballot" means each of the forms that will be distributed with the Disclosure Statement to holders of Claims and holders of Interests in Classes that are impaired under the Plan and entitled to vote under Article V.A. hereof in connection with the solicitation of acceptances of the Plan. 7. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended and codified in Title 11 of the United States Code, 11 U.S.C. l01-l330. 8. "Bankruptcy Court" means the United States Bankruptcy Court for the District of Massachusetts (Eastern Division) or such other court as may have jurisdiction over the Chapter 11 Case. 9. "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal Rules of Civil Procedure, as amended, as applicable to the Chapter 11 Case or proceedings therein, and the Local Rules of the Bankruptcy Court, as applicable to the Chapter 11 Case or proceedings therein as the case may be. 10. "Business Day" means any day, excluding Saturdays, Sundays, and legal holidays, on which national banks are open for business in Boston, Massachusetts. 11. "Cash" means legal tender of the United States. 12. "Cambex" means Cambex Corporation, debtor and debtor-in-possession, prior to the Consummation Date. 13. "Chapter 11 Case" means the Chapter 11 Case of Cambex pending in the Bankruptcy Court and bearing case number 97-19640-CJK. 14. "City" means the City of Poughkeepsie, New York, which holds a prepetition tax lien on certain land in the City of Poughkeepsie that is owned by Cambex. 15. "City Secured Claim" means the Secured Claim of the City. 16. "Claim" means a claim against Cambex, whether or not asserted, as defined in Section 101(5) of the Bankruptcy Code. 17. "Class" means a category of holders of Claims or holders of Interests described in Article II. 18. "Common Stock" means the shares of common stock of Cambex now or in the future authorized under Cambex' articles of organization. 19. "Confirmation Date" means the date on which the Confirmation Order is entered by the Bankruptcy Court. 20. "Confirmation Order" means the order, entered by the Bankruptcy Court, confirming the Plan. 21. "Confirmation Hearing" means the hearing on confirmation of the Plan under Section 1128 of the Bankruptcy Code. 22. "Consummation Date" means the Business Day on which all conditions to the consummation of the Plan set forth in Article IX.B hereof have been satisfied or waived as provided in Article IX.C hereof, as set forth on a certificate to be filed with the Court by the Proponent, provided that the Consummation Date shall be not more than thirty (30) days after the Confirmation Date, unless otherwise authorized by the Bankruptcy Court. 23. "Creditors' Committee" means the Official Committee Of Unsecured Creditors appointed in this Chapter 11 Case on or about October 31, 1997 to represent unsecured creditors of Cambex, as such Committee may be constituted from time to time. 24. "Cure" means the distribution of Cash, or such other property as may be agreed upon by the parties or ordered by the Bankruptcy Court, with respect to the assumption of an executory contract or unexpired lease, pursuant to Section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid monetary obligations, without interest and irrespective of any otherwise applicable penalty rate, or such other amount as may be agreed upon by the parties, under such executory contract or unexpired lease, to the extent such obligations are enforceable under the Bankruptcy Code and applicable bankruptcy law. 25. "Disallowed Claim" means (a) a Claim, or any portion thereof, that has been disallowed by a Final Order, (b) a Claim that is Scheduled at zero or as contingent, disputed, or unliquidated and as to which no proof of claim has been filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or other applicable bankruptcy law, or (c) a Claim that has not been Scheduled and as to which no proof of claim has been filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or other applicable bankruptcy law. 26. "Disbursing Agent" means the Person(s) designated by Cambex to serve as a Disbursing Agent under Article VII of the Plan. Cambex may designate Reorganized Cambex as the Disbursing Agent. The Disbursing Agent shall be deemed to include American Stock Transfer Company in its capacity as the transfer agent, registrar or any similar function for either Cambex or Reorganized Cambex. 27. "Disclosure Statement" means the written disclosure statement(s) that relate to the Plan, as approved by the Bankruptcy Court pursuant to Section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure statement(s) may be amended, modified, or supplemented from time to time. 28. "Disputed Claim" means a Claim, or any portion thereof, that is neither an Allowed Claim nor a Disallowed Claim. 29. "Distribution Reserve" means all Cash, Common Stock, and other property that would have been distributed on or after the Consummation Date to the holders of Disputed Claims, if such Disputed Claims had, in fact, then been allowed (rather than disputed as of the date of such distribution), but which amount is instead held by the Disbursing Agent, pending resolution of such Disputed Claims. 30. "ERISA" means the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1301 et seq., as amended. 31. "Estate" means the estate of Cambex in its Chapter 11 Case, pursuant to Section 541 of the Bankruptcy Code. 32. "Face Amount" means, (a) when used in reference to a Disputed or Disallowed Claim or Interest, the full stated amount or the full stated number of shares asserted by the holder in any proof of Claim or Interest, as the case may be, timely filed with the Bankruptcy Court or otherwise deemed timely filed by any Final Order of the Bankruptcy Court or other applicable bankruptcy law, and (b) when used in reference to an Allowed Claim or Interest, the allowed amount or number of shares of such Claim or Interest, as the case may be. 33. "Final Order" means an order or judgment, the operation or effect of which has not been stayed, reversed, or amended and as to which order or judgment (or any revision, modification, or amendment thereof) the time to appeal or seek review or rehearing has expired and as to which no appeal or petition for review or rehearing was filed or, if filed, remains pending. 34. "Fiscal Year" means, with respect to Cambex, the fiscal year ending December 31 of each year, or such other fiscal year as Cambex may designate. 35. "Interest" means the right of a holder and owner of issued and outstanding shares of Common Stock of Cambex authorized and issued prior to the Confirmation Date and outstanding on the Confirmation Date. 36. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. 37. "Other Priority Claims" means all claims entitled to priority pursuant to Section 507(a) of the Bankruptcy Code other than Priority Tax Claims or Administrative Claims. 38. "Other Secured Claims" means Secured Claims, if any, other than the City Secured Claim. 39. "Person" means an individual, corporation, partnership, joint venture, association, joint stock company, trust, estate, unincorporated organization, or other entity. 40. "Petition Date" means October 10, 1997, the date on which Cambex filed its petition for reorganization commencing the Chapter 11 Case. 41. "Plan" means this reorganization plan proposed by Cambex for the resolution of Cambex's outstanding creditor Claims and equity Interests in this Chapter 11 Case, as such plan may be modified from time to time in accordance with the Bankruptcy Code. 42. "Priority Tax Claim" means a Claim entitled to priority pursuant to Section 507(a)(8) of the Bankruptcy Code. 43. "Professional Fees" means a Claim of a professional, retained in the Chapter 11 Case, pursuant to Sections 327 and 1103 of the Bankruptcy Code or otherwise, for compensation or reimbursement of costs and expenses relating to services incurred prior to and including the Confirmation Date as, when and to the extent any such Claim is approved by a Final Order entered pursuant to Sections 330, 331, 503(b), or 1103 of the Bankruptcy Code. 44. "Proponent" means Cambex. 45. "Pro Rata" means, at any time, the proportion that the Face Amount of a Claim or Interest in a particular Class bears to the aggregate Face Amount of all Claims or Interests, as the case may be (including Disputed Claims or Interests, but excluding Disallowed Claims or Interests), in such Class, unless the Plan provides otherwise. 46. "Reinstated" or "Reinstatement" means leaving unaltered the legal, equitable and contractual rights to which a Claim entitles the holder of such Claim so as to leave such Claim unimpaired in accordance with Section 1124 of the Bankruptcy Code, thereby entitling the holder of such Claim to, but not more than, (a) reinstatement of the original maturity of the obligations on which such Claim is based, and (b) payment of an amount of Cash consisting solely of the sum of(i) matured but unpaid principal installments, without regard to any acceleration of maturity, accruing prior to the Consummation Date, (ii) accrued but unpaid interest as of the Petition Date, (iii) interest on the amount of unpaid principal installments accruing on and after the Petition Date and through the Consummation Date calculated at the simple nondefault interest rate as set forth in any agreement between Cambex and the holder of such Claim, and (iv) reasonable fees, expenses and charges, to the extent such fees, expenses and charges are allowed under the Bankruptcy Code and are provided for in the agreement or agreements on which such Claim is based; provided, however, that any contractual right that does not pertain to the payment when due of principal and interest on the obligation on which such Claim is based, including, but not limited to, financial covenant ratios, negative pledge covenants, covenants or restrictions on merger or consolidation and affirmative covenants regarding corporate existence prohibiting certain transactions or actions contemplated by the Plan, or conditioning such transactions or actions on certain factors, shall not necessarily be reinstated in order to accomplish Reinstatement. 47. "Reorganized Cambex" means Cambex on and after the Consummation Date. 48. "Scheduled" means, with respect to any Claim or Interest, the status and amount, if any, of such Claim or Interest as set forth in the Schedules. 49. "Schedules" means the schedules of assets and liabilities and the statements of financial affairs filed in the Bankruptcy Court by Cambex on or about November 10, 1997, as such schedules or statements have been or may be further amended or supplemented from time to time in accordance with Bankruptcy Rule 1009. 50. "Secured Claim" means a Claim secured by a security interest in or lien upon property of the Estate to the extent of the value, as of the Consummation Date, or such later date as is established by the Bankruptcy Court, of such interest or lien as determined by a Final Order of the Bankruptcy Court pursuant to Section 506 of the Bankruptcy Code or as otherwise agreed upon in writing by Cambex and the holder of such Claim, subject to the effect of an election under Section 1111(b)(2) of the Bankruptcy Code. 51. "Unsecured Claim" means a Claim that is not an Administrative Claim, Priority Tax Claim, Other Priority Claim, or Secured Claim. C. Rules Of Interpretation For purposes of the Plan (a) any reference in the Plan to a contract, instrument, release, indenture, or other agreement or documents being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions, (b) any reference in the Plan to an existing document or exhibit filed or to be filed means such document or exhibit as it may have been or may be amended, modified, or supplemented, (c) unless otherwise specified, all references in the Plan to Sections, Articles, Schedules, and Exhibits are references to Sections, Articles, Schedules, and Exhibits of or to the Plan, (d) the words "herein" and "hereto" refer to the Plan in its entirety rather than to a particular portion of the Plan, and (e) captions and headings to Sections and Articles are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of the Plan, and the rules of construction set forth in Section 102 of the Bankruptcy Code and in the Bankruptcy Rules shall apply. D. Computation Of Time In computing any period of time prescribed or allowed by the Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall apply. ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS A. Introduction All Claims and Interests, except Administrative Claims and Priority Tax Claims, are placed in the Classes set forth below. In accordance with Section 1123(a)(l) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims, as defined below, have not been classified. A Claim or Interest is placed in a particular Class only to the extent that the Claim or Interest falls within the description of that Class, and is classified in other Classes to the extent that any portion of the Claim or Interest falls within the description of such other Classes. A Claim is also placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim is an Allowed Claim in that Class and such Claim has not been paid, released, or otherwise settled prior to the Consummation Date. B. Unclassified Claims (not entitled to vote on the Plan) 1. Administrative Claims 2. Priority Tax Claims C. Unimpaired Classes Of Claims (not entitled to vote on the Plan) 1. Class 1: Other Priority Claims Class 1 consists of Other Priority Claims. 2. Class 3: General Unsecured Claims Less than or Equal to $500 (Convenience Class) Class 3 consists of all Unsecured Claims less than or equal to $500. D. Impaired Classes Of Claims (entitled to vote on the Plan) 1. 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. 2. Class 4: All Other General Unsecured Claims Class 4 consists of all Unsecured Claims exceeding $500 E. Unimpaired Class Of Interests (not entitled to vote on the Plan) 1. Class 5: All Stockholder Interests Class 5 consists of all Interests with respect to Common Stock. ARTICLE III TREATMENT OF CLAIMS AND INTERESTS A. Unclassified Claims 1. Administrative Claims 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 the ordinary course of business in accordance with the terms and conditions of any agreements relating thereto. 2. Priority Tax Claims 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 Cambex or 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 Cambex or 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 1. Class 1: Other Priority Claims 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 1 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. 2. Class 3: General Unsecured Claims Less Than or Equal to $500 On the Consummation Date, or as soon thereafter as practicable, 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 the unpaid amount of such Allowed Class 3 Claim. C. Impaired Classes Of Claims 1. Class 2: Secured Claims a. Class 2.01 City Secured Claim. In full satisfaction, settlement, release, and discharge of and in exchange for the Allowed Class 2.01 Claim and any and all other Claims of the City, secured or unsecured, the City shall be entitled to receive and retain the collateral securing its claim. b. Classes 2.02 et seq. 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 Cambex, (a) retain its liens securing its Allowed Class 2.01 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. 2. Class 4: General Unsecured Claims Exceeding $500 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 as 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 percent of such Allowed Class 4 Claim. 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 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. If the financing obtained by the Debtor in connection with the Plan 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 to Disbursing Agent on Account of Disputed Claims. 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 1. Class 5: All Stockholder Interests Holders of Class 5 Stockholder Interests shall retain their Common Stock. ARTICLE IV MEANS FOR IMPLEMENTATION OF THE PLAN A. Revesting Of Assets All property of Cambex shall vest in Reorganized Cambex free and clear of all liens, encumbrances, Claims and Interests, except as otherwise expressly provided in this 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 fees and expenses. B. Substantial Contribution Compensation And Expenses Bar Date Any person or entity who requests compensation or expense reimbursement for making a substantial contribution in the Chapter 11 Case pursuant to Sections 503(b)(3), (4), and (5) of the Bankruptcy Code must file a request with the clerk of the Bankruptcy Court, on or before 4:00 p.m. Eastern Time on May 8, 1998 or be forever barred from seeking such compensation or expense reimbursement. C. Exclusivity Period Cambex shall retain the exclusive right to amend or modify the Plan and to solicit acceptances of any amendments to or modifications of the Plan, through and until the Consummation Date. D. Retained Litigation In accordance with Section 1123(b)(3) of the Bankruptcy Code, Cambex (and, after the Consummation Date, Reorganized Cambex) shall retain and may enforce all claims, rights of action, suits, and proceedings, whether in law or in equity, whether known or unknown, that Cambex or the Estate may hold against any entity. Cambex or any of its successors may pursue such retained litigation claims in accordance with the best interests of Cambex or its successors who hold such rights of action. E. Effectuating Documents; Further Transactions The President, or any other appropriate officer of Cambex or Reorganized Cambex shall be authorized to execute, deliver, file, or record such contracts, instruments, releases, indenture, and other agreements or documents, and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Clerk or Assistant Clerk of Cambex or Reorganized Cambex, as the case may be, shall be authorized to certify or attest to any of the foregoing actions, if necessary. F. 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. ARTICLE V ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY ONE OR MORE CLASSES OF CLAIMS OR INTERESTS A. Classes Entitled To Vote Each impaired Class shall be entitled to vote to accept or reject the Plan. Any unimpaired Class of Claims shall be deemed to have accepted the Plan and shall not be entitled to vote to accept or reject the Plan. B. Class Acceptance Requirement Under Section 1126(c) of the Bankruptcy Code, an impaired Class of Claims has accepted the Plan if the holders of at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the Allowed Claims of such Class who have voted on the Plan, have voted to accept the Plan. Under Section 1126(d) of the Bankruptcy Code, an impaired Class of Interests has accepted the Plan if the holders of at least two-thirds (2/3) in amount of the Interests of such Class who have voted on the Plan, have voted to accept the Plan. C. Cramdown Cambex hereby requests confirmation of the Reorganized Plan, as it may be modified from time to time, under Section 1129(b) of the Bankruptcy Code, if necessary. ARTICLE VI DESCRIPTION OF SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN A. Common Stock The Common Stock to be issued by Reorganized Cambex under the Plan shall be from the same class of securities as Cambex's presently outstanding Common Stock, the essential terms of which are as follows: Par Value $.10 per share Voting One vote per share Preemptive Rights None Transfer Limitations None B. Registration The Common Stock issued pursuant to the Plan, like the Common Stock already issued and outstanding, upon issuance will be registered under Section 12(g) of the Securities Exchange Act of 1934. ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS A. Date Of Distributions Distributions under the Plan shall be made as provided under the other relevant provisions of the Plan, except as otherwise provided for herein or ordered by the Bankruptcy Court. B. Interest On Claims Unless otherwise specifically provided for in the Plan or Confirmation Order, or required by applicable bankruptcy law, interest shall not accrue on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Petition Date to the date a final distribution is made thereon if and after such Disputed Claim becomes an Allowed Claim. C. Disbursing Agent The Disbursing Agent shall make all distributions required under this Plan (subject to the provisions of Article VI hereof). The Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties unless otherwise ordered by the Bankruptcy Court. If otherwise so ordered, all costs and expenses of procuring any such bond shall be paid by Reorganized Cambex. D. Means Of Cash Payment Cash payments made pursuant to this Plan shall be in U.S. funds, by the means agreed to by the payor and the payee, including by check or wire transfer, or, in the absence of an agreement, such commercially reasonable manner as the payor shall determine in its sole discretion. E. 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. F. No Voting By Disbursing Agent Neither the Disbursing Agent, nor any other party, shall be entitled to vote any shares of the Common Stock held by the Disbursing Agent, whether in the Distribution Reserve or otherwise. In the event that any matter requires approval by the shareholders of Reorganized Cambex prior to the distribution of all shares of Common Stock held by the Disbursing Agent, the shares of Common Stock held by the Disbursing Agent shall be deemed only for voting purposes not to have been issued. ARTICLE VIII 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 hereto as Exhibit A 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 hereto as Exhibit B. B. Payments Related To Assumption Of Executory Contracts And Unexpired Leases; Bar to PreConfirmation 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 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. By Order dated March 19, 1998, the Bankruptcy Court established April 20, 1998, as the deadline for other parties to such contracts and leases to file objections to assumption (and, where applicable, assignment) of such contracts and leases, including any disagreements with Cambex as to whether such contracts or leases are in default, the amount required to Cure, if any, and the adequacy of future performance assurances, and any other objections. Any party who fails to file such an objection timely is and shall be forever barred from objecting to assumption (and, where applicable, assignment), and from asserting any claim arising out of a default prior to the Confirmation Date; provided only that, as to any default acknowledged by Cambex on Exhibit A, Cure shall be made in accordance with the terms set forth on Exhibit A. 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 hereto 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. Bar To Rejection Damages By order dated March 19, 1998, the Bankruptcy Court established April 20, 1998, as the deadline for other parties to executory contracts and unexpired leases which Cambex proposes to reject to file proofs of claims arising from the rejection of such contracts or leases. 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, 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 rejection, pursuant to Section 365 of the Bankruptcy Code. No rejection shall affect the obligations of any party to Cambex under confidentiality covenants executed in favor of Cambex, which covenants shall survive rejection. ARTICLE IX CONDITIONS PRECEDENT A. Conditions To The Confirmation Date The following are conditions precedent to confirmation of the Plan that may be satisfied or waived in accordance with Article IX.C of the Plan: 1. The Bankruptcy Court shall have approved a disclosure statement with respect to the Plan in form and substance reasonably acceptable to the Proponent. 2. The Confirmation Order shall be in form and substance reasonably acceptable to the Proponent. B. 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 Article IX.C of the Plan: 1. The Confirmation Order shall have been entered by the Court and shall not be stayed, suspended, or vacated. 2. The Confirmation Order shall, among other things, provide that: a. The provisions of the Confirmation Order are nonseverable and mutually dependent; b. 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, or any designated 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; c. 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 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; d. 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; e. 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 f. The Bankruptcy Court shall have determined that the Common Stock to be issued under the Plan and distributed by the Disbursing Agent in exchange for Claims against Cambex is 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. 3. The Bankruptcy Court shall have estimated all Disputed Claims for purposes of establishing the Distribution Reserve. 4. 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. C. Waiver Of Conditions To The Confirmation Date Or Consummation Date The conditions set forth in Article IX.A and IX.B of the Plan 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. ARTICLE X PROCEDURES FOR RESOLVING AND TREATING DISPUTED AND CONTINGENT CLAIMS 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 or contingent 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 or contingent, 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 date the Disputed Claim becomes an Allowed Claim, had such Allowed Claim been then allowed. 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 cancelled. ARTICLE XI MODIFICATIONS AND AMENDMENTS A. Modification Of the Plan Cambex may alter, amend, or modify the Plan or any Exhibits thereto under Section 1127(a) of the Bankruptcy Code at any time prior to the Confirmation Date. After the Confirmation Date and prior to substantial consummation of the Plan as defined in Section 1101(2) of the Bankruptcy Code, Cambex may, under Section 1127(b) of the Bankruptcy Code, institute proceedings in the Bankruptcy Court to remedy any defect or omission or reconcile any inconsistencies in the Plan, the disclosure statement approved with respect to the Plan, or the Confirmation Order, and such matters as may be necessary to carry out the purposes and effects of the Plan so long as such proceedings do not adversely affect the treatment of holders of Claims or holders of Interests under the Plan; provided, however, that prior notice of such proceedings shall be served in accordance with the Bankruptcy Rules or order of the Bankruptcy Court. ARTICLE XII RETENTION OF JURISDICTION After the Confirmation Date and until the Chapter 11 Case is closed: 1. The Bankruptcy Court shall retain jurisdiction over the Chapter 11 Case for the following purposes: a. to hear and determine any and all pending or future proceedings for the estimation of or objections to the allowance of Claims relating to events or transactions occurring on or prior to the Consummation Date; b. to consider and act on the compromise and settlement of any Claim against Cambex, or cause of action on behalf of Cambex's Estate provided, however, that there shall be no requirement that Cambex seek Bankruptcy Court approval of any such compromise and settlement; c. to hear and determine all pending or future controversies, suits, and disputes that may arise under the Plan, and controversies arising in connection with the interpretation of the Plan, including any and all schedules, documents, and exhibits hereto, or any documents intended to implement the provisions of the Plan; d. to hear and determine any and all applications for the allowance of compensation and reimbursement of expenses; e. to hear and determine any and all pending applications for rejection or assumption of executory contracts and unexpired leases to which Cambex is a party or with respect to which Cambex may be liable, and to hear and determine, if necessary, or to estimate or liquidate, any and all Claims arising therefrom or from assumption or rejection of executory contracts or unexpired leases pursuant to the Plan or otherwise; f. to consider any modifications of the Plan; g. to correct any defect, cure any omission, or reconcile any inconsistency in the Plan, including any Exhibit thereto, or in any order of the Bankruptcy Court, including the Confirmation Order, as may be necessary, to carry out the purposes and intent of the Plan and to implement and effectuate the Plan; h. to determine such other matters as may be provided for in the Confirmation Order or other orders of the Bankruptcy Court as may be authorized under the provisions of the Bankruptcy Code or any other applicable law; i. to enforce the Plan and all orders, judgments, injunctions, and rulings entered in connection with Cambex's Chapter 11 Case; j. to issue such orders as may be necessary or appropriate in aid of confirmation, and to facilitate consummation, of the Plan; and k. to enter an order closing the Chapter 11 Case. 2. The Bankruptcy Court shall retain and have original, but not exclusive, jurisdiction over the Chapter 11 Case to hear and determine any and all applications, adversary proceedings, and contested and litigated matters pending on the Confirmation Date or thereafter instituted by or on behalf of Reorganized Cambex, including, without limitation, any and all applications for the allowance of compensation and reimbursement of expenses, and any claims by or on behalf of Reorganized Cambex arising under the Bankruptcy Code to avoid any preferences, fraudulent transfers, or other avoidable transfers. ARTICLE XIII MISCELLANEOUS PROVISIONS A. Setoffs Reorganized Cambex may, but shall not be required to, set off against any Claim, and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever that Cambex may have against the holder of such Claim; but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by Cambex of any such claim that Cambex may have against such holder. B. Withholding And Reporting Requirements In connection with the Plan and all instruments issued in connection therewith and distributions thereon, Reorganized Cambex shall comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements. C. Discharge Of Cambex 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 1141(d)(i)(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. D. Committees The Creditors' Committee shall terminate on the Consummation Date. E. Binding Effect The Plan shall be binding upon and inure to the benefit of Cambex, Reorganized Cambex, the holders of Claims, the holders of Interests, and their respective successors and assigns. F. Revocation, Withdrawal Or Nonconsummation 1. Right To Revoke Or Withdraw. The Proponent reserves the right to revoke or withdraw the Plan at any time prior to the Confirmation Date. 2. Effect Of Withdrawal, Revocation, Or Nonconsummation. If the Proponent revokes or withdraws the Plan prior to the Confirmation Date, or if the Confirmation Date or the Consummation Date does not occur, then the Plan, any settlement or compromise effected in the Plan (including the fixing or limiting to an amount certain any Claim or Class of Claims), assumption or rejection of executory contracts or leases affected by the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void. In such event, nothing contained herein, and no acts taken in preparation for consummation of the Plan, shall be deemed to constitute a waiver or release of any Claims by or against Cambex or any other Person, to prejudice in any manner the rights of Cambex or any Person in any further proceedings involving Cambex, or to constitute an admission of any sort by Cambex or any other Person. G. Charter Amendment. The corporate charter of Reorganized Cambex shall be deemed amended as of the Consummation Date to prohibit (a) the issuance of non-voting equity securities; (b) the creation of a class of equity securities having a preference over any other class of equity securities with respect to dividends unless adequate provision is made for the election of directors representing the preferred class in the event of a default in the payment of its dividends, and (c) the creation of any other class of equity securities unless an appropriate distribution of voting power is made among all such classes. H.. Notices Any notice required or permitted to be provided to Cambex under the Plan shall be in writing and served by (a) certified mail, return receipt requested, (b) hand delivery, or (c) overnight delivery service, to be addressed as follows: Cambex Corporation 360 Second Avenue Waltham, MA 02154 Attn: Joseph F. Kruy, President with a copy to: Brown, Rudnick, Freed & Gesmer, P.C. One Financial Center Boston, MA 02111 Attn: Joseph F. Ryan, Esquire I.. Prepayment Unless the Plan or the Confirmation Order otherwise provides, Reorganized Cambex shall have the right to prepay, without penalty, all or any portion of an Allowed Claim at any time; provided, however, that any such prepayment shall not be violative of, or otherwise prejudice, the relative priorities and parities among the Classes of Claims. J. Term Of Injunctions Or Stays Unless otherwise provided in the Plan or the Confirmation Order, all injunctions or stays provided for in the Chapter 11 Case under Section 105 or 362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date, shall remain in full force and effect until the Consummation Date. K. Governing Law Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the Commonwealth of Massachusetts shall govern the construction and implementation of the Plan, any agreements, documents, and instruments executed in connection with the Plan. Dated: As of March 17, 1998 CAMBEX CORPORATION Waltham, Massachusetts By: /s/ Joseph F. Kruy Name: Joseph F. Kruy Title: President and Chief Executive Officer Joseph F. Ryan Steven D. Pohl BROWN, RUDNICK, FREED & GESMER, P.C. Attorneys for Cambex Corporation One Financial Center Boston, MA 02111 617-8564200 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 EX-3.2 4 0004.txt BY-LAWS B Y - L A W S of CAMBEX CORPORATION (formerly known as "Cambridge Memory Systems, Inc.") Section 1. ARTICLES OF ORGANIZATION The name and purposes of the corporation shall be as set forth in the articles of organization. These by- laws, the powers of the corporation and of its directors and stockholders, or of any class of stockholders if there shall be more than one class of stock, and all matters concerning the conduct and regulation of the business and affairs of the corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the articles of organization as from time to time in effect. Section 2. STOCKHOLDERS 2.1. Annual Meeting. The annual meeting of the stockholders shall be held at 2:00 o'clock in the afternoon (unless a different hour is fixed by the president or the board of directors and stated in the notice) on a date in each year to be determined by the board of directors within six months after the end of each fiscal year. If that day be a legal holiday at the place where the meeting is to be held, the meeting shall be held on the next succeeding day not a legal holiday at such place. Purposes for which an annual meeting is to be held, additional to those prescribed by law, by the articles of organization or by these by- laws, may be specified by the president or by the directors. 2.2. Special Meeting in Place of Annual Meeting. If no annual meeting has been held in accordance with the foregoing provisions, a special meeting of the stockholders may be held in place thereof, and any action taken at such special meeting shall have the same force and effect as if taken at the annual meeting, and in such case all references in these by- laws to the annual meeting of the stockholders shall be deemed to refer to such special meeting. Any such special meeting shall be called as provided in Section 2.3. 2.3. Special Meetings. A special meeting of the stockholders may be called at any time by the president or by the directors. Each call of a meeting shall state the place, date, hour and purposes of the meeting. 2.4 Place of Meetings. All meetings of the stockholders shall be held at the principal office of the corporation in Massachusetts or, to the extent permitted by the articles of organization, at such other place within the United States as shall be fixed by the president or the directors. Any adjourned session of any meeting of the stockholders shall be held at the same city or town as the initial session, or within Massachusetts, in either case at the place designated in the vote of adjournment. 2.5. Notice of Meetings. A written notice of each meeting of stockholders, stating the place, date and hour and the purposes of the meeting, shall be given at least seven days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, by law, by the articles of organization or by these by- laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the clerk or an assistant clerk or by an officer designated by the directors. No notice of any meeting of stockholders need be given to a stockholder if a written waiver of notice, executed before or after the meeting by such stockholder or his attorney thereunto duly authorized, is filed with the records of the meeting. 2.6. Quorum of Stockholders. At any meeting of the stockholders, a quorum shall consist of a majority in interest of all stock issued and outstanding and entitled to vote at the meeting; except that if two or more classes or series of stock are entitled to vote as separate classes or series, then in the case of each such class or series a quorum shall consist of a majority in interest of all stock of that class or series issued and outstanding; and except when a larger quorum is required by law, by the articles of organization or by these by-laws. Stock owned directly or indirectly by the corporation, if any, shall not be deemed outstanding for this purpose. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 2.7. Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office, and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the articles of organization or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.8. Voting. Stockholders entitled to vote shall have one vote for each share of stock entitled to vote held by them of record according to the records of the corporation, unless otherwise provided by the articles of organization. The corporation shall not, directly or indirectly, vote any share of its own stock. 2.9. Action by Writing. Any action to be taken by stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action by a writing filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at a meeting. 2.10. Proxies. Stockholders entitled to vote may vote either in person or by proxy in writing dated not more than six months before the meeting named therein, which proxies shall be filed with the clerk or other person responsible to record the proceedings of the meeting before being voted. Unless otherwise specifically limited by their terms, such proxies shall entitle the holders thereof to vote at any adjournment of such meeting but shall not be valid after the final adjournment of such meeting. Section 3. BOARD OF DIRECTORS 3.1. Number. A board of not more than nor less than three directors shall be elected at the annual meeting of the stockholders, by such stockholders as have the right to vote at such election. The number of directors may be increased at any time or from time to time either by the stockholders or by the directors by vote of a majority of the directors then in office. The number of directors may be decreased to any number not less than three at any time or from time to time either by the stockholders or by the directors by a vote of a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation or removal of one or more directors. No director need be a stockholder. 3.2. Tenure. Except as otherwise provided by law, by the articles of organization or by these by-laws, the directors shall hold office until the next annual meeting of the stockholders and until their successors are elected and qualified, or until a director sooner dies, resigns, is removed or becomes disqualified. 3.3. Powers. Except as reserved to the stockholders by law, by the articles of organization or by these by-laws, the business of the corporation shall be managed by the directors who shall have and may exercise all the powers of the corporation. In particular, and without limiting the generality of the foregoing, the directors may at any time issue all or from time to time any part of the unissued capital stock of the corporation from time to time authorized under the articles of organization and may determine, subject to any requirements of law, the consideration for which stock is to be issued and the manner of allocating such consideration between capital and surplus. 3.4. Committees. The directors may, by vote of a majority of the directors then in office, elect from their number an executive committee and other committees and may by vote delegate to any such committee or committees some or all of the powers of the directors except those which by law, by the articles of organization or by these by-laws they are prohibited from delegating. Except as the directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the directors or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the directors. 3.5. Regular Meetings. Regular meetings of the directors may be held without call or notice at such places and at such times as the directors may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of the stockholders. 3.6. Special Meetings. Special meetings of the directors may be held at any time and at any place designated in the call of the meeting, when called by the president or the treasurer or by two or more directors, reasonable notice thereof being given to each director by the secretary or an assistant secretary, or, if there be none, by the clerk or an assistant clerk, or by the officer or one of the directors calling the meeting. 3.7. Notice. It shall be sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.8. Quorum. At any meeting of the directors a majority of the directors then in office shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.9. Action by Vote. When a quorum is present at any meeting, a majority of the directors present may take any action, except when a larger vote is required by law, by the articles of organization or by these by- laws. 3.10. Action by Writing. Any action required or permitted to be taken at any meeting of the directors may be taken without a meeting if a written consent thereto is signed by all the directors and such written consent is filed with the records of the meetings of the directors. Such consent shall be treated for all purposes as a vote at a meeting. Section 4. OFFICERS AND AGENTS 4.1. Enumeration: Qualification. The officers of the corporation shall be a president, a treasurer, a clerk, and such other officers, if any, as the incorporators at their initial meeting, or the directors from time to time, may in their discretion elect or appoint. The corporation may also have such agents, if any, as the incorporators at their initial meeting, or the directors from time to time, may in their discretion appoint. Any officer may be but none need be a director or stockholder. The clerk shall be a resident of Massachusetts unless the corporation has a resident agent appointed for the purpose of service of process. Any two or more offices may be held by the same person. Any officer may be required by the directors to give bond for the faithful performance of his duties to the corporation in such amount and with such sureties as the directors may determine. 4.2. Powers. Subject to law, to the articles of organization and to the other provisions of these by- laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such duties and powers as the directors may from time to time designate. 4.3. Election. The president, the treasurer and the clerk shall be elected annually by the directors at their first meeting following the annual meeting of the stockholders. Other officers, if any, may be elected or appointed by the board of directors at said meeting or at any other time. 4.4. Tenure. Except as otherwise provided by law or by the articles of organization or by these by-laws, the president, the treasurer and the clerk shall hold office until the first meeting of the directors following the next annual meeting of the stockholders and until their respective successors are chosen and qualified, and each other officer shall hold office until the first meeting of the directors following the next annual meeting of the stockholders unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors. 4.5. President and Vice Presidents. The president shall be the chief executive officer of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. The president shall preside at all meetings of the stockholders and of the directors at which he is present, except as otherwise voted by the directors. Any vice presidents shall have such duties and powers as shall be designated from time to time by the directors. 4.6. Treasurer and Assistant Treasurers. Except as the Directors otherwise specify, the treasurer shall be the chief financial and accounting officer of the corporation and shall be in charge of its funds and valuable papers, books of account and accounting records, and shall have such other duties and powers as may be designated from time to time by the directors or by the president. Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the directors. 4.7. Clerk and Assistant Clerks. The clerk shall record all proceedings of the stockholders in a book or series of books to be kept therefor, which book or books shall be kept at the principal office of the corporation or at the office of its transfer agent or of its clerk and shall be open at all reasonable times to the inspection of any stockholder. In the absence of the clerk from any meeting of stockholders, an assistant clerk, or if there be none or he is absent, a temporary clerk chosen at the meeting, shall record the proceedings thereof in the aforesaid book. Unless a transfer agent has been appointed the clerk shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the amount of stock held by each. If no secretary is elected, the clerk shall keep a true record of the proceedings of all meetings of the directors and in his absence from any such meeting an assistant clerk, or if there be none or he is absent, a temporary clerk chosen at the meeting, shall record the proceedings thereof. Any assistant clerk shall have such duties and powers as shall be designated from time to time by the directors. 4.8. Secretary and Assistant Secretaries. If a secretary is elected, he shall keep a true record of the proceedings of all meetings of the directors and in his absence from any such meeting an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the directors. Section 5. RESIGNATIONS AND REMOVALS Any director or officer may resign at any time by delivering his resignation in writing to the president, the treasurer or the clerk or to a meeting of the directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time. A director (including persons elected by directors to fill vacancies in the board) may be removed from office (a) with or without cause by the vote of the holders of a majority of the shares issued and outstanding and entitled to vote in the election of directors, provided that the directors of a class elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of such class, or (b) for cause by vote of a majority of the directors then in office. The directors may remove any officer elected by them with or without cause by the vote of a majority of the directors then in office. A director or officer may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him. No director or officer resigning, and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the corporation) no director or officer removed, shall have any right to any compensation as such director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise; unless in the case of a resignation, the directors, or in the case of a removal, the body acting on the removal, shall in their or its discretion provide for compensation. Section 6. VACANCIES Any vacancy in the board of directors, including a vacancy resulting from the enlargement of the board, may be filled by the stockholders or, in the absence of stockholder action, by the directors by vote of a majority of the directors then in office. If the office of the president or the treasurer or the clerk becomes vacant, the directors may elect a successor by vote of a majority of the directors then in office. If the office of any other officer becomes vacant, the directors may elect or appoint a successor by vote of a majority of the directors present. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the clerk, until his successor is chosen and qualified, or in each case until he sooner dies, resigns, is removed or becomes disqualified. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number. Section 7. CAPITAL STOCK 7.1. Number and Par Value. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue shall be as stated in the articles of organization. 7.2. Fractional Shares. The corporation shall not issue fractional shares of stock but may issue scrip in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon surrender of such scrip aggregating a full share, the terms and conditions and manner of issue of such scrip to be fixed by the directors. 7.3. Stock Certificates. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, be prescribed from time to time by the directors. Such certificate shall be signed by the president or a vice president and by the treasurer or an assistant treasurer. Such signatures may be facsimiles if the certificate is signed by a transfer agent, or by a registrar, other than a director, officer or employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the time of its issue. 7.4. Loss of Certificates. In the case of the alleged loss or destruction or the mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1. Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificates, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the directors or the transfer agent of the corporation may reasonably require. Except as may be otherwise required by law, by the articles of organization or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred in the books of the corporation in accordance with the requirements of these by-laws. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2. Record Date and Closing Transfer Books. The directors may fix in advance a time, which shall not be more than sixty days before the date of any meeting of stockholders or the date for the payment of any dividend or making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution or the right to give such consent or dissent, and in such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the corporation after the record date; or without fixing such record date the directors may for any of such purposes close the transfer books for all or any part of such period. Section 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS The corporation shall, to the extent legally permissible, indemnify each of its directors and officers (including persons who serve at its request as directors, officers or trustees of another organization in which it has any interest, as a shareholder, creditor or otherwise) against all liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees, reasonably incurred by him in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he may be threatened, while in office or thereafter, by reason of his being or having been such a director or officer, except with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation; provided, however, that as to any matter disposed of by a compromise payment by such director or officer, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless such compromise shall be approved as in the best interests of the corporation, after notice that it involves such indemnification: (a) by a disinterested majority of the directors then in office; or (b) by a majority of the disinterested directors then in office, provided that there has been obtained an opinion in writing of independent legal counsel to the effect that such director or officer appears to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation; or (c) by the holders of a majority of the outstanding stock at the time entitled to vote for directors, voting as a single class, exclusive of any stock owned by any interested director or officer. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which any director or officer may be entitled. As used in this Section, the terms "director" and "officer" include their respective heirs, executors and administrators, and an "interested" director or officer is one against whom in such capacity the proceedings in question or another proceeding on the same or similar grounds is then pending. Nothing contained in this Section shall affect any rights to indemnification to which corporate personnel other than directors and officers may be entitled by contract or otherwise under law. Section 10. CORPORATE SEAL The seal of the corporation shall, subject to alteration by the directors, consist of a flat-faced circular die with the word "Massachusetts", together with the name of the corporation and the year of its organization, cut or engraved thereon. Section 11. EXECUTION OF PAPERS Except as the directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the corporation shall be signed by the president or by one of the vice presidents or by the treasurer. Section 12. FISCAL YEAR Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the last day of December of each year. Section 13. AMENDMENTS These by-laws may be altered, amended or repealed at any annual or special meeting of the stockholders called for the purpose, of which the notice shall specify the subject matter of the proposed alteration, amendment or repeal or the sections to be affected thereby, by vote of the stockholders, or if there shall be two or more classes or series of stock entitled to vote on the question, by vote of each such class or series. These by-laws may also be altered, amended or repealed by vote of the majority of the directors then in office, except that the directors shall not take any action which provides for indemnification of directors or affects the powers of directors or officers to contract with the corporation, nor any action to amend this Section 13, and except that the directors shall not take any action unless permitted by law. Any by-law so altered, amended or repealed by the directors may be further altered or amended or reinstated by the stockholders in the above manner. EX-4.1 5 0005.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), is made and entered into as of the 18th day of January, 2000, by and among CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), and the Persons listed on the Purchaser Signature Pages hereto (each of whom is individually referred to as a "Purchaser" and all of whom collectively are referred to as the "Purchasers"). Defined terms used and not otherwise defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement (defined below). BACKGROUND In connection with the consummation of the transactions contemplated by that Series 1 Bridge Note Purchase and Security Agreement (the "Purchase Agreement") of even date herewith by and among the Company and the Purchasers, the Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to issue and sell to the Purchasers from time to time up to $2,000,000 in principal amount of its Series 1 Convertible Bridge Financing Notes (the "Series 1 Bridge Notes") together with Common Stock Purchase Warrants (the "Purchaser Warrants"). Attached to the Series 1 Bridge Notes are Repricing Warrants (the "Repricing Warrants"). Collectively, the Series 1 Bridge Notes, the Purchaser Warrants, and the Repricing Warrants are hereinafter collectively referred to as the "Purchased Securities"). The Series 1 Bridge Notes are convertible into, and the Purchaser Warrants and the Repricing Warrants are exercisable for, shares of the Company's common stock, $.01 par value per share (the "Common Stock"). The Common Stock issuable upon conversion of the Series 1 Bridge Notes is hereinafter referred to as the "Conversion Shares," the Common Stock issuable upon exercise of the Purchaser Warrants is hereinafter referred to as the "Purchaser Warrant Shares," and the Common Stock issuable upon exercise of the Repricing Warrants is hereinafter called the "Repricing Warrant Shares." To induce Purchasers to execute and deliver the Purchase Agreement, the Company has agreed to file a Registration Statement covering the Conversion Shares, the Purchaser Warrant Shares, and the Repricing Warrant Shares, under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws. AGREEMENT For and in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows: Section 1. Definitions. As used in this Agreement, the following capitalized terms are used with the meanings there after ascribed: (a) "Investor" means any Purchaser and any transferee or assignee thereof to whom any Purchaser assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9. (b) "Person" means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof, or a governmental agency. (c) "Register," "registered," and "registration" refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC"). (d) "Registrable Securities" means the Conversion Shares, the Purchaser Warrant Shares, the Repricing Warrant Shares, and shares of Common Stock issuable upon conversion of Warrant Certificates ("Placement Warrant Shares") issued to the Placement Agent pursuant to the Warrant Agreement between the Placement Agent and the Company, and any shares of capital stock issued or issuable with respect to the Purchased Securities, Conversion Shares, the Purchaser Warrant Shares, Repricing Warrant Shares, or the Placement Warrant Shares as a result of any stock split, stock dividend, recapitalization, exchange, or similar event. (e) "Registration Statement" means a registration statement of the Company filed under the 1933 Act. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. Section 2. Registration. (a) Mandatory Registration. The Company shall prepare and file with the SEC a Registration Statement or Registration Statements (as is necessary) on Form S-3 (or, if such form is unavailable for such a registration, on such other form as is available for such a registration, subject to the consent of each Purchaser and the provisions of Section Error! Reference source not found.(e), which consent will not be unreasonably withheld), covering the resale of all of the Registrable Securities, within ninety (90) days after the first to occur of (1) the issuance, sale, and delivery of $2,000,000 in principal amount of, or (2) the date the Company receives written notice from Sovereign Capital Advisors, LLC of termination of further offers of the Series 1 Bridge Notes (the "Filing Deadline"). The Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement(s) also covers such indeterminate number of additional shares of Common Stock as may become issuable (i) upon conversion of the Series 1 Bridge Notes and exercise of the Purchaser Warrants to prevent dilution resulting from stock splits, stock dividends, or similar transactions, and (ii) by reason of the Repricing Warrants in accordance with the terms thereof. Such Registration Statement shall initially register for resale 1,800,000 shares of the Company's Common Stock, representing 1,400,000 shares for Conversion Shares and Repricing Warrant Shares, 300,000 for Purchaser Warrant Shares, and 100,000 shares for Placement Warrant Shares, subject to adjustment as provided in Section Error! Reference source not found.(b) hereof, and such registered shares of Common Stock shall be allocated among the Investors pro rata based on the total number of Registrable Securities issued or issuable as of each date that a Registration Statement, as amended, relating to the resale of the Registrable Securities is declared effective by the SEC. The Company shall use its best efforts to have the Registration Statement declared effective by the SEC within one hundred twenty (120) days after the Filing Deadline (the "Registration Deadline"). The Company shall permit the registration statement to become effective within five (5) business days after receipt of a "no review" notice from the SEC. Such Registration Statement shall be kept current and effective for a period of twelve (12) months from the Closing Date. (b) Underwritten Offering. If any offering pursuant to a Registration Statement pursuant to Section Error! Reference source not found.(a) involves an underwritten offering, the Purchasers shall have the right to select one legal counsel and an investment banker or bankers and manager or managers to administer their interest in the offering, which investment banker or bankers or manager or managers shall be reasonably satisfactory to the Company. (c) Piggy-Back Registrations. If at any time prior to the expiration of the Registration Period (as hereinafter defined) the Company proposes to file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its securities (other than on Form S-4 or Form S- 8 or their then equivalents relating to securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans) the Company shall promptly send to each Investor who is entitled to registration rights under this Section Error! Reference source not found.(c) written notice of the Company's intention to file a Registration Statement and of such Investor's rights under this Section Error! Reference source not found.(c) and, if within twenty (20) days after receipt of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities such Investor requests to be registered, subject to the priorities set forth in Section Error! Reference source not found.(d) below. No right to registration of Registrable Securities under this Section Error! Reference source not found.(c) shall be construed to limit any registration required under Section Error! Reference source not found.(a) hereof. The obligations of the Company under this Section Error! Reference source not found.(c) may be waived by Investors holding a majority of the Registrable Securities. If an offering in connection with which an Investor is entitled to registration under this Section Error! Reference source not found.(c) is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering. (d) Priority in Piggy-Back Registration Rights in connection with Registrations for Company Account. If the registration referred to in Section Error! Reference source not found.(c) is to be an underwritten public offering for the account of the Company and the managing underwriter(s) advise the Company in writing, that in their reasonable good faith opinion, marketing or other factors dictate that a limitation on the number of shares of Common Stock which may be included in the Registration Statement is necessary to facilitate and not adversely affect the proposed offering, then the Company shall include in such registration: (i) first, all securities the Company proposes to sell for its own account, (ii) second, up to the full number of securities proposed to be registered for the account of the holders of securities entitled to inclusion of their securities in the Registration Statement by reason of demand registration rights, and (iii) third, the securities requested to be registered by the Investors and other holders of securities entitled to participate in the registration, drawn from them pro rata based on the number each has requested to be included in such registration. (e) Eligibility for Form S-3. The Company represents, warrants covenants that it has filed and shall file all reports required to be filed by the Company with the SEC in a timely manner so as to obtain and maintain such eligibility for the use of Form S-3. In the event that Form S-3 is not available for sale by the Investors of the Registrable Securities, then (i) the Company, with the consent of each Investor pursuant to Section Error! Reference source not found.(a), shall register the sale of the Registrable Securities on another appropriate form, such as Form SB-2 and (ii) the Company shall undertake to register the Registrable Securities on Form S-3 as soon as such form is available. In the event that Form S-3 is not available to the Company after the Closing Date and prior to the Filing Deadline, then the applicable time period provided for filing in Section 2(a) above shall become "sixty (60)"days instead of "ninety (90)"days. Section 3. Related Obligations. Whenever an Investor has requested that any Registrable Securities be registered pursuant to Section Error! Reference source not found.(c) hereof, or at such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section Error! Reference source not found.(a) hereof, the Company will use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations: (a) The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities (on or prior to the Filing Deadline), for the registration of Registrable Securities pursuant to Section Error! Reference source not found.(a) and use its best efforts to cause such Registration Statement(s) relating to Registrable Securities to become effective as soon as possible after such filing and in any event by the Registration Date, and keep the Registration Statement(s) effective pursuant to Rule 415 at all times until the later of (i) the date as of which the Investors may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on which (A) the Investors shall have sold all the Registrable Securities and (B) none of the Series 1 Bridge Notes are outstanding (the "Registration Period"), which Registration Statement(s) (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. In the event that the Company's Registration Statement is not filed and declared effective on or before the Maturity Date, then the Company agrees to pay to the holder of each Bridge Note a penalty equal to two percent (2%) of the outstanding principal amount then due under each such Bridge Note. In such event, this registration penalty shall become immediately payable by the Company without demand at the sole option of each such Holder, either in cash or by a number of shares of freely tradable Common Stock of the Company equal to the outstanding principal amount then due under each such Bridge Note divided by the average Closing Bid Price of the Company's Common Stock for the five trading days prior to the date such penalty payments are due. Such registration penalties are due at the end of each thirty (30) day period beyond the Maturity Date, pro- rated for partial months, until the Registration Statement becomes effective. (b) The Company shall prepare and file with the SEC such amendments (including post- effective amendments) and supplements to the Registration Statement(s) and the prospectus (es) used in connection with the Registration Statement(s), which prospectus (es) are to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep the Registration Statement(s) effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement(s) until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement(s). In the event the number of shares available under a Registration Statement filed pursuant to this Agreement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within fifteen (15) days after the necessity therefor arises (based on the market price of the Common Stock and other relevant factors on which the Company reasonably elects to rely). The Company shall use its best efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed "insufficient to cover all of the Registrable Securities" if at any time the number of Registrable Securities issued or issuable upon conversion of the Series 1 Bridge Notes together with the number of Registrable Securities issued or issuable upon exercise of the Purchaser Warrants and the Repricing Warrants is greater than the quotient determined by dividing (i) the number of shares of Common Stock available for resale under such Registration Statement by (ii) {1.0}. For purposes of the calculation set forth in the foregoing sentence, any restrictions on the convertibility of the Series 1 Bridge Notes or exercise of the Purchaser Warrants and the Repricing Warrants shall be disregarded and such calculation shall assume that the Series 1 Bridge Notes are then convertible into shares of Common Stock at the then prevailing Conversion Price (as defined in the Series 1 Bridge Notes) and that the Purchaser Warrants and the Repricing Warrants are exercised at the then current exercise price. (c) The Company shall furnish to each Investor whose Registrable Securities are included in the Registration Statement(s) and its legal counsel, without charge, (i) promptly after the same is prepared and filed with the SEC at least one copy of the Registration Statement and any amendment thereto, including financial statements and schedules, all documents incorporated therein by reference, and all exhibits, the prospectus (es) included in such Registration Statement(s) (including each preliminary prospectus) and all correspondence by or on behalf of the Company to the SEC or the staff of the SEC and all correspondence from the SEC or the staff of the SEC to the Company or its representatives, related to such Registration Statement(s), (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request), and (iii) such other documents, including any preliminary prospectus, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor. (d) The Company shall use reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement(s) under such other securities or "blue sky" laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided however, that the Company shall not be required in connection therewith or as a condition thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section Error! Reference source not found.(d) hereof, (B) subject itself to general taxation in any such jurisdiction, or (C) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose. (e) In the event Investors who hold a majority of the Registrable Securities being offered in the offering select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering. (f) As promptly as practicable after becoming aware of such event, the Company shall notify each Investor in writing of the happening of any event, of which the Company has knowledge, as a result of which, the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to each Investor (or such other number of copies as such Investor may reasonably request). The Company shall also promptly notify each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. (g) The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment, and to notify each Investor who holds Registrable Securities being sold (and, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof, or its receipt of actual notice of the initiation, or threatened initiation of any proceeding for such purpose. (h) The Company shall permit each Investor a single firm of counsel or such other counsel as thereafter designated as selling stockholders' counsel by the Investors who hold a majority of the Registrable Securities being sold, to review and comment upon the Registration Statement(s) and all amendments and supplements thereto at least seven (7) days prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement(s) or any amendment or supplement thereto without the prior approval of such counsel, which consent shall not be unreasonably withheld. (i) At the request of the Investors who hold a majority of the Registrable Securities being sold, the Company shall furnish, on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement (i) if required by an underwriter, a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope, and substance as is customarily given in an underwritten public offering, addressed to the underwriters and the Investors. (j) The Company shall make available for inspection by (i) any Investor, (ii) any underwriter participating in any disposition pursuant to a Registration Statement, (iii) one firm of attorneys and one firm of accountants or other agents retained by the Investors, and (iv) one firm of attorneys retained by all such underwriters (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors, and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence provided however, that each Inspector shall hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (A) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (B) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (C) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. (k) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non- appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. (l) The Company shall use its best efforts either to (i) cause all the Registrable Securities covered by a Registration Statement to be listed on each national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, (ii) to secure designation and quotation of all the Registrable Securities covered by the Registration Statement on the NASDAQ National or Small Cap Market, (iii) if, despite the Company's best efforts to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in satisfying the preceding clause (i) or (ii) to secure the inclusion for quotation on the NASDAQ National or Small Cap Market for such Registrable Securities or, (iv) if, despite the Company's best efforts to satisfy the preceding clause (iii), the Company is unsuccessful in satisfying the preceding clause (iii), to secure the inclusion for quotation on the over-the-counter market for such Registrable Securities, and, without limiting the generality of the foregoing, in the case of clause (iii) or (iv), to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section Error! Reference source not found.(1). (m) The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, any managing underwriter or underwriters, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or, if there is no managing underwriter or underwriters, the Investors may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Investors may request. Not later than the date on which any Registration Statement registering the resale of Registrable Securities is declared effective, the Company shall deliver to its transfer agent instructions, accompanied by any reasonably required opinion of counsel, that permit sales of unlegended securities in a timely fashion that complies with then mandated securities settlement procedures for regular way market transactions. (n) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable Securities pursuant to a Registration Statement. (o) The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of such Registration Statement. (p) If requested by the managing underwriters or an Investor, the Company shall immediately incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters and the Investors agree should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters, and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; make all required filings of such prospectus supplement or post- effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by a shareholder or any underwriter of such Registrable Securities. (q) The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities. (r) The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder. Section 4. Obligations of the Investors. (a) At least seven (7) days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor's Registrable Securities included in the Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities, and shall execute such documents in connection with such registration as the Company may reasonably request. (b) Each Investor by such Investor's acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement(s) hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement. (c) In the event Investors holding a majority of the Registrable Securities being registered determine to engage the services of an underwriter, each Investor agrees to enter into and perform such Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor notifies the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement(s). (d) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section Error! Reference source not found.(g) or the first sentence of Error! Reference source not found.(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement(s) covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section Error! Reference source not found.(g) or the first sentence of Error! Reference source not found.(f) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. (e) No Investor may participate in any underwritten registration hereunder unless such Investor (i) agrees to sell such Investor's Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions. Section 5. Expenses of Registration. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings, or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and printing fees, accounting fees, and fees and disbursements of counsel for the Company and fees and disbursements of one counsel for the Investors, shall be borne by the Company. Section 6. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement: (a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless, and defend each Investor who holds such Registrable Securities, the directors, officers, partners, employees, agents, and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), and any underwriter (as defined in the 1933 Act) for the Investors, and the directors and officers of, and each Person, if any, who controls, any such underwriter within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "Claims") incurred in investigating, preparing, or defending any action, claim, suit, inquiry, proceeding, investigation, or appeal taken from the foregoing by or before any court or governmental, administrative, or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject to the restrictions set forth in Section Error! Reference source not found.(d) with respect to the number of legal counsel, the Company shall reimburse the Investors and each such underwriter or controlling person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section Error! Reference source not found.(a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section Error! Reference source not found.(c); (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or mission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section Error! Reference source not found.(c), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. (b) In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section Error! Reference source not found.(a), the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act, or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section Error! Reference source not found.(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided however, that the indemnity agreement contained in this Section Error! Reference source not found.(b) and Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld; provided further however, that the Investor shall be liable under this Section Error! Reference source not found.(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section Error! Reference source not found.(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. (c) The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in any distribution, to the same extent as provided above, with respect to information such persons so furnished in writing expressly for inclusion in the Registration Statement. (d) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Company shall pay reasonable fees for only one separate legal counsel for the Investors, and such legal counsel shall be selected by the Investors holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms, or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. (e) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred. (f) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. Section 7. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation, and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. Section 8. Reports Under The 1934 Act. With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the investors to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company's obligations under Section 7.3 of the Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and (c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act, and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the investors to sell such securities pursuant to Rule 144 without registration. Section 9. Assignment of Registration Rights. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement; (vi) such transferee shall be an "accredited investor" as that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii) in the event the assignment occurs subsequent to the date of effectiveness of the Registration Statement required to be filed pursuant to Section 2(a), the transferee agrees to pay all reasonable expenses of amending or supplementing such Registration Statement to reflect such assignment. Section 10. Amendment of Registration Rights. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who hold two-thirds of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. Section 11. Miscellaneous. (a) A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices, or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice, or election received from the registered owner of such Registrable Securities. (b) Any notices consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days after being sent by U.S. certified mall, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attn: Peter Kruy, Executive Vice President Telephone: (781) 890-6000 Facsimile: (781) 890-2899 with a copy (which shall not constitute notice) to: Ropes & Gray One International Place Boston, Massachusetts 02110 Attention: John E. Beard Tel: (617) 951-7000 Fax: (617) 951-7050 If to a Purchaser, to its address and facsimile number on the Schedule of Purchasers, with copies to such Purchaser's counsel as set forth on the Schedule of Purchasers. Each party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number. (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. (d) This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. (e) This Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties, or undertakings, other than those set forth or referred to herein and therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. (f) Subject to the requirements of Section 9, this Agreement shall inure to the benefit and of and be binding upon the permitted successors and assigns of each of the parties hereto. (g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. (i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. COMPANY SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written. COMPANY: CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President [Purchasers' Signatures on Following Pages] PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT PURCHASER: SovCap Equity Partners, Ltd By: /s/ Barry W. Herman. Name: Barry W. Herman Title: Director Purchaser Name SovCap Equity Partners, Ltd. ("Purchaser") Address and Cumberland House Facsimile Number #27 Cumberland Street P.O.Box CB-13016 Nassau, New Providence The Bahamas 242-356-0037 Principal Amount $1,500,000.00 - Cambex Corporation of Bridge Notes Purchased Purchaser's Legal Balboni Law Group, LLC Counsel Address and 3475 Lenox Road, Suite 990 Facsimile Number Atlanta, GA 30326 404-812-3101 PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT PURCHASER: By: /s/ Jan Telander Name: Jan Telander Title: Director Purchaser Name Correllus International Ltd, c/o EIG ("Purchaser") Address and Edf. Marina Marbella, 6B Facsimile Number Avenida Sever Olhoa 28, 29600 Marbella, Spain Fax: +34-952-858-068 Securities $250,000.00 Series I Bridge Note Purchased US$250,000 Purchase Price Purchaser's Legal Per Ronnstrom Counsel Address and Box 7315 Facsimile Number SE-10390 Stockholm, Sweden Fax: +46-8-796-8223 PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT PURCHASER: By: /s/ A. De Nazareth Name: A. De Nazareth Title: Co. Secretary Purchaser Name Arab Commerce Bank Ltd. ("Purchaser") Address and P.O. Box 309, Grand Cayman, Cayman Islands Facsimile Number London 0171-437-2413 Securities $150,000 Purchased $150,000 Purchase Price Purchaser's Legal Counsel Address and Facsimile Number PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT PURCHASER: SovCap Equity Partners, Ltd By: /s/ Barry W. Herman. Name: Barry W. Herman Title: President Purchaser Name SovCap Equity Partners, Ltd. ("Purchaser") Address and Cumberland House, #27 Cumberland Street Facsimile Number P.O.Box N-10818 Nassau, New Providence The Bahamas 242-356-0037 Purchase Price $100,000.00 Purchaser's Legal Counsel Address and Facsimile Number EX-10.1 6 0006.txt EMPLOYMENT AGREEMENT BETWEEN JOSEPH F. KRUY AND THE COMPANY CAMBEX CORPORATION 360 Second Avenue Waltham, Massachusetts 02451 November 12, 1999 Mr. Joseph F. Kruy 21 Driftwood Lane Weston, Massachusetts 02493 Dear Joe: This letter is to confirm the arrangements agreed to between you and Cambex Corporation (the "Company") relating to your continued employment by the Company. 1. Term of Employment. The Company agrees that it will employ you, and you agree to serve, under the terms of this agreement from the date hereof until December 31, 2002 unless earlier terminated pursuant hereto. 2. Full Time Employment. You are presently Chairman of the Board of Directors and the President and Chief Executive Officer of the Company. You agree to continue to diligently perform the duties, and assume the responsibilities, of those officers and such additional executive and managerial duties and responsibilities (as are consistent with the functions normally performed by a chief executive officer) as shall from time to time be assigned to you by the Board of Directors. Except for illness and reasonable vacations, during the term of this Agreement Period you shall devote all of your working time and attention and your best efforts to the performance of your duties and responsibilities hereunder, provided that nothing herein contained shall be deemed to prevent or limit your right (i) to invest in the securities of any corporation whose securities are publicly owned if your ownership of such securities shall be less than 1% of the issued and outstanding securities of any such corporation, (ii) to make any other passive investments where you are not obligated to or required to, and shall not in fact, devote any managerial efforts, (iii) to participate in charitable, community or educational activities, (iv) to participate in trade or professional organizations or (v) subject to the approval of the Board of Directors (which approval shall not be unreasonably withheld or withdrawn), to hold directorships in public companies, except only that the Board of Directors shall have the right to limit such activities whenever it reasonably believes that the time spent on such activities infringes upon the time required by you for performance of your duties hereunder. You agree to enter into the Employee Agreement relating to inventions and noncompetition to which all other executive and professional employees of the Company are parties. 3. Compensation. (a) Fixed Compensation. As fixed compensation for services rendered hereunder, the Company agrees to pay your minimum base compensation at the rate of $200,000.00 per year, payable according to the Company's regular pay practices, which amount may be increased from time to time by the Board of Directors in its sole discretion. (b) Incentive Bonus. In addition to the fixed compensation provided in subparagraph (a), the Company agrees that pursuant to the Company's Incentive Bonus Plan, as it may be amended from time to time (the "Plan"), you will receive an incentive bonus in an amount equal to four percent of the Company's pretax profit as defined in that Plan for each fiscal year during the term of this Agreement. 4. Termination of Employment. If your employment should terminate prior to December 31, 2002, the following provisions shall govern and you shall not be entitled to any compensation for any reason except as follows: (a) Voluntary Termination or Termination for Cause. If you voluntarily terminate your employment or the Company terminates your employment for cause, you shall be entitled to receive only your fixed compensation provided in paragraph 4(a) to and until the date of termination of your employment plus such portion of your incentive bonus to which you are entitled on such date under the Plan. (b) Termination by the Company other than for Cause. If your employment is terminated by a majority of the Board of Directors of the Company other than for cause, you will be entitled to receive fixed compensation at the then current rate pursuant to paragraph 4(a) until and including December 31, 2002. In addition, you shall be entitled to receive any incentive bonus earned under the Plan during the fiscal year in which your employment is terminated in the full amount which you had been awarded under Par. 3(b) and to be awarded the right to earn incentive bonuses of one-half such amount under the Plan (but not less than two percent of the Company's pretax profits as defined in the Plan) during each fiscal year thereafter through December 31, 2002. (c) Termination by the Company of your Status as Chief Executive Officer. If a majority of the Board of Directors of the Company, without your consent, should designate an person other than you as the Chief Executive Officer of the Company (either directly by conferring that title on another person or indirectly by conferring the powers of the Chief Executive Officer to another person), you will be entitled to resign and to treat that action by the Company as a termination of your employment other than for cause. (d) Mitigation of Damages: Noncompetition. If you should accept employment elsewhere than at the Company during the period following termination of your employment and prior to December 31, 2002, the Company shall be entitled to a credit against amounts otherwise payable to you hereunder for the period after January 1, 2001 in the amount of compensation paid to you from such other employment after January 1, 2001. If you should accept employment from any entity which is directly and significantly in competition with the Company during such period of time, the Company's obligation to make payments to you, other than payments described in subparagraph 4(a), shall cease. (e) Limitation on Right to Damages. Notwithstanding the foregoing, you shall not be entitled to receive any amounts for any period subsequent to termination of your employment if (i) On the effective date of such termination, the assets of the Company are in the hands of a receiver, assignee for the benefit of creditors, trustee in bankruptcy, debtor in possession, or other entity for the benefit of creditors; or (ii) The consolidated net worth of the Company on the effective date of termination is less than the consolidated net worth of the Company shown on the Company's December 31, 1999 balance sheet. 5. Definition of "Cause". For purposes of this agreement, the term "cause" shall mean the following: (a) Your continuing any arrangement or holding any position which conflicts with the interest of or which interferes with your duties owed to the Company for more than thirty days after written notice by the Company to you thereof; (b) Your conviction of a felony; (c) Your deliberate misappropriation of corporate funds; (d) Your refusal to perform assigned duties where such assignment is consistent with your engagement hereunder as an executive officer of the Company and is not a basis for your treating the Company's action as a termination of your employment pursuant to subparagraph 4(c). If the Company asserts that it has cause for your discharge under subparagraph (d) above, the Company will give thirty days' written notice to you specifying the action or inaction on your part which is the basis of the asserted right to terminate and advising you that it is the Company's intention to terminate your employment. Your employment will terminate in accordance with such notice unless within such period of thirty days you shall remedy the cause in respect of which such notice was sent. If during such thirty-day period you notify the Company that you dispute the grounds for discharge or dispute the assertion that admitted action or inaction constitutes a basis for discharge, the dispute shall be submitted to arbitration in the following manner: You shall give written notice to the Company naming an arbitrator and requesting that the Company name an arbitrator within ten days. The two arbitrators thus selected shall select a third, and a decision of any two of the three shall be binding upon the parties. Should the Company fail to appoint an arbitrator within the ten-day period mentioned above, the arbitrator appointed by you will act as sole arbitrator. If the two arbitrators shall be unable to agree upon a third arbitrator within a period of ten days after the appointment of the Company's arbitrator, the selection of an additional arbitrator shall be made by the American Arbitration Association in Boston, Massachusetts. The decision of any two of the three arbitrators shall be binding upon the parties and said decision shall be reduced to a judgment in any court having jurisdiction. The arbitrators will be instructed to conduct their arbitration informally and expeditiously, the arbitration to be completed in all events within thirty days after the appointment of the third arbitrator (or within thirty days after the Company has failed to appoint its arbitrator, as the case may be). Failure of either party to cooperate with the arbitrators will be a basis for the arbitrators to make a finding against the non- cooperating party. Each party shall bear his or its own expenses in connection with such an arbitration except that the expenses of the arbitrators themselves shall be borne in accordance with their award. All matters respecting your employment shall remain in status quo pending the outcome of any dispute which is submitted to arbitration hereunder, and the parties shall, during such arbitration, proceed with the performance of their respective obligations hereunder until final determination is made. If the award of the arbitrators is unfavorable to you, you shall nevertheless have a reasonable period, to be set by them, following the rendering of their award within which to conform to the Company's assignment of duties to you, thereby restoring you to good standing under this Agreement. 6. Merger, etc. This agreement shall be binding upon any successor to the Company in the event that the Company consolidates with any other entity or in the event that the Company is a party to a merger where the Company is not the surviving entity. This agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and you and your heirs, executors and administrators. 7. Notices. All notices required to be given hereunder shall be in writing and shall be considered duly given on two days after the date of deposit in the mail, return receipt requested, if mailed to the address listed below or such other addresses as may be given by either party to the other by notice hereunder: If you: At your address shown in the inside address at the beginning of this letter; If to the Company: Its address as it appears on the letterhead appearing on the first page of this agreement. 8. Massachusetts Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. 9. Waivers. Waiver by the Company of any breach of any provision of this Agreement by you shall not operate or be construed as a waiver of any subsequent breach by you. 10. Entire Agreement. This instrument contains the entire agreement of the parties. This Agreement shall be modified or terminated only by a writing signed by you and the Company. If you accept and agree to the foregoing, please so signify by signing and returning a counterpart of this letter, whereupon this letter will become an agreement between you and the Company as of the date first above written. Very truly yours, CAMBEX CORPORATION By: /s/ Philip C. Hankins Philip C. Hankins Accepted and agreed to: /s/ Joseph F. Kruy Joseph F. Kruy EX-10.7 7 0007.txt SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT among CAMBEX CORPORATION (the "Company") and The Persons Listed On The Signature Pages Hereto (the "Purchasers") Dated as of January 18, 2000 This Series 1 Bridge Note Purchase Agreement provides for the offer, sale, issuance, and delivery of up to $2,000,000 in principal amount of Convertible Series 1 Bridge Financing Notes with attached Repricing Warrants and accompanying Purchaser Warrants. TABLE OF CONTENTS SECTION 1. BRIDGE NOTES. 2 Section 1.1 Authorization, Issuance, and Sale of Notes. 2 Section 1.2 Authorization and Issuance of Warrants. 2 Section 1.3 Form of Payment. 2 Section 1.4 Closing. 3 Section 1.5 Deliveries at Closing. 3 Section 1.6 Deliveries by Guarantors at Closing. 3 SECTION 2. PLEDGED SHARES; APPOINTMENT OF REPRESENTATIVE. 4 Section 2.1 Pledged Shares. 4 Section 2.2 Appointment of Purchaser Representative. 4 Section 2.3 Assurances. 5 Section 2.4 Default and Acceleration Procedures. 5 Section 2.5 Standard of Care of the Representative. 6 SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 7 Section 3.1 Organization and Qualification. 7 Section 3.2Authorization, Enforcement, Compliance with Other Instruments.7 Section 3.3 Capitalization. 9 Section 3.4 Issuance of Securities. 9 Section 3.5 No Conflicts. 9 Section 3.6 SEC Documents; Financial Statements. 10 Section 3.7 Absence of Certain Changes. 11 Section 3.8 Absence of Litigation. 11 Section 3.9 Purchase of Securities. 11 Section 3.10No Undisclosed Events, Liabilities, Developments, or Circumstances. 11 Section 3.11 No General Solicitation. 11 Section 3.12 No Integrated Offering. 11 Section 3.13 Employee Relations. 12 Section 3.14 Intellectual Property Rights. 12 Section 3.15 Environmental Laws. 12 Section 3.16 Title. 12 Section 3.17 Insurance. 13 Section 3.18 Regulatory Permits. 13 Section 3.19 Internal Accounting Controls. 13 Section 3.20 No Materially Adverse Contracts, Etc. 13 Section 3.21 Tax Status. 13 Section 3.22 Certain Transactions. 14 Section 3.23 Dilutive Effect. 14 Section 3.24 Fees and Rights of First Refusal. 14 Section 3.25 Foreign Corrupt Practices Act. 14 Section 3.26 Disclosure. 14 SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. 15 Section 4.1 Organization and Qualification. 15 Section 4.2Authorization, Enforcement, Compliance with Other Instruments.15 SECTION 5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF PURCHASERS 15 Section 5.1 Investment Purpose. 16 Section 5.2 Accredited Investor Status. 16 Section 5.3 Reliance on Exemptions. 16 Section 5.4 Information. 16 Section 5.5 No Governmental Review. 16 Section 5.6 Transfer or Resale. 16 Section 5.7 Legends. 17 Section 5.8 Authorization Enforcement. 17 Section 5.9 Residence. 17 Section 5.10 No Scheme to Evade Registration. 17 Section 5.11 Covenant Not to Trade. 18 SECTION 6. CONDITIONS OF INITIAL CLOSING 18 Section 6.1 Transaction Agreements. 18 Section 6.2 Opinion of Counsel. 18 Section 6.3 Representations and Warranties; No Default. 19 Section 6.4 Delivery of Schedules; Due Diligence. 19 Section 6.5 Purchase and Loan Permitted by Applicable Laws. 19 Section 6.6 No Adverse Litigation. 19 Section 6.7 Approvals and Consents. 19 Section 6.8 No Material Adverse Change. 19 Section 6.9 Proceedings. 19 Section 6.10 Clerk Certificate. 20 Section 6.11 Transfer Agent Instructions. 20 SECTION 7. CONDITIONS TO SUBSEQUENT CLOSINGS 20 Section 7.1 Representations and Warranties; No Default. 20 Section 7.2 No Suspensions. 20 Section 7.3 Opinion of Counsel. 20 Section 7.4 Due Diligence. 21 Section 7.5 Shareholder Approval. 21 Section 7.6 No Material Adverse Change. 21 SECTION 8. AFFIRMATIVE COVENANTS 21 Section 8.1 Financial Information. 21 Section 8.2 Form D. 22 Section 8.3 Reporting Status. 22 Section 8.4 Inspection of Property. 22 Section 8.5 Maintenance of Properties; Insurance. 22 Section 8.6 Reserved. 22 Section 8.7 Expenses. 22 Section 8.8Authorized Shares of Common Stock, Reservation of Shares. 23 Section 8.9 Corporate Existence, Etc. 23 Section 8.10 Transfer Agents. 23 Section 8.11 Shareholder Approval; Proxy. 23 Section 8.12 Transfer Agent Instructions. 23 Section 8.13 Payment of Taxes. 24 Section 8.14 Compliance with Laws, Etc. 24 Section 8.15 Use of Proceeds. 24 Section 8.16 Registration Statement. 24 Section 8.17 Listings. 25 Section 8.18 Indemnification. 25 SECTION 9. NEGATIVE COVENANTS 25 Section 9.2 Restrictions on Debt. 26 Section 9.3 Restrictions on Dividends. 26 Section 9.4 Restrictions on Transactions with Affiliates. 27 Section 9.5 Restrictions on Investments. 27 Section 9.6Restrictions on Sale and Lease-Back Transactions. 27 Section 9.7 Restrictions on Sales of Assets. 28 Section 9.8 Restrictions on Subsidiaries. 28 Section 9.9 Change in Business; Operations. 28 Section 9.10 Exceptions With Consent of Purchasers. 28 SECTION 10. MISCELLANEOUS. 28 Section 10.1 Counterparts. 28 Section 10.2 Headings. 28 Section 10.3 Severability. 29 Section 10.4 Entire Agreement. Amendments. 29 Section 10.5 Notices. 29 Section 10.6 Interest. 29 Section 10.7 Successors and Assigns. 30 Section 10.8 No Third Party Beneficiaries. 30 Section 10.9 Publicity. 30 Section 10.10 Further Assurances. 30 Section 10.11 No Strict Construction. 30 Section 10.12 Governing Law. 30 CROSS-REFERENCE TO DEFINED TERMS Term Page where defined 1933 ACT 1 1934 ACT 9 ADDITIONAL CLOSING 2 ADDITIONAL CLOSING DATE 2 AGREEMENT 1 BRIDGE NOTES 1 BYLAWS 8 CHANGE IN BUSINESS 26 CHARTER 8 CLERK CERTIFICATE 3 CLOSING 2 CLOSING DATE 2 COMMON STOCK 1 COMPANY 1 COMPLIANCE CERTIFICATE 3 CONSENTS 17 CONVERSION SHARES 1 CYBERFIN 13 DEBT 23 DISCLOSURE 7 ENVIRONMENTAL LAWS 11 ESCROW AGENT 2 ESCROW AGREEMENT 3 EXCESS CASH 25 FINANCIAL STATEMENTS 9 FIRST CLOSING 2 FIRST CLOSING DATE 2 GUARANTOR 13 GUARANTORS 13 GUARANTY 3 INDEMNIFIED LIABILITIES 23 INDEMNITEES 23 KRUY 13 MINIMUM AMOUNT 2 NASD 21 OBLIGATIONS 4 PLEDGE AGREEMENTS 13 PLEDGED SECURITIES 1 PREFERRED STOCK 8 PROPORTIONATE 6 PURCHASE PRICE 2 PURCHASED BRIDGE NOTES 2 PURCHASER 1 REGISTRATION PERIOD 20 REGISTRATION RIGHTS AGREEMENT 1 REGULATION D 1 REPRESENTATIVE 4 REPRICING SHARES 1 REPRICING WARRANT 1 RULE 144 15 SEC DOCUMENTS 9 SECURITIES 7 TRANSACTION AGREEMENTS 7 TRANSFER AGENT INSTRUCTIONS 3 WARRANT SHARES 1 WARRANTS 1 SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT THIS SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT (the "Agreement") is made and entered into as of this 18th day of January, 2000, among CAMBEX CORPORATION, a Massachusetts corporation (the "Company") and the persons listed on the Purchaser signature pages attached hereto (each of whom is individually referred to as a "Purchaser" and all of whom collectively are referred to as the "Purchasers"). BACKGROUND The Company has authorized the issuance, sale, and delivery of up to $2,000,000 in original principal amount of the Company's Series 1 Secured Convertible Bridge Notes, in substantially the form attached hereto as Exhibit A (the "Bridge Notes"). The Bridge Notes are convertible into shares of the Company's common stock, par value $.10 (the "Common Stock"). The Common Stock issuable upon conversion of the Bridge Notes is hereinafter referred to as the "Conversion Shares". The Bridge Notes have attached repricing rights evidenced by a warrant in substantially the form of Attachment 1 to the Bridge Notes (the "Repricing Warrant"), exercisable under certain circumstances for additional shares of Common Stock (the "Repricing Shares") at the exercise price of $.10. In connection with the issuance of the Bridge Notes, the Company has authorized the issuance of Purchase Warrants, in substantially the form attached hereto as Exhibit B (the "Warrants") giving a Purchaser the right to purchase Common Stock. Each Purchaser will be issued a Warrant at that Closing exercisable for 15,000 shares of Common Stock for each $100,000 in principal amount of Bridge Notes purchased. The shares of Common Stock issuable upon exercise of the Warrants are hereinafter referred to as the "Warrant Shares." The proceeds of the Bridge Notes will be used to provide the Company with operating capital, repayment of certain limited existing indebtedness of the Company, and capital expenditures. The Bridge Notes are generally secured by 1,709,467 shares of the Company's Common Stock (the "Pledged Securities") owned or held by certain Company officers or corporations controlled by them and pledged as part of their limited guaranty of the Company's Obligations hereunder. Purchasers wish to purchase, upon the terms and conditions stated in this Agreement, up to $2,000,000 in principal amount of the Bridge Notes, with each Purchaser purchasing Bridge Notes in the principal amount set forth on such Purchaser's signature page affixed to this Agreement. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement in substantially the form attached hereto as Exhibit C (the "Registration Rights Agreement") pursuant to which the Company has agreed to provide certain registration rights in respect of the Conversion Shares, the Warrant Shares, and the Repricing Shares under the Securities Act of 1933 ("1933 Act") and the rules and regulations promulgated thereunder, and applicable state securities laws. The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration pursuant to Section 4(2) and Regulation D ("Regulation D"). AGREEMENT For and in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Purchaser hereby agree as follows: SECTION 1. bridge notes. Section 1.1 Authorization, Issuance, and Sale of Notes. The Company has authorized the sale and issuance, in accordance with the terms of this Agreement, of up to $2,000,000 in principal amount of its Bridge Notes at one or more closings. The Company agrees to issue and sell to each Purchaser and each Purchaser agrees to purchase from the Company, at a Closing, a Bridge Note in the principal amount (the "Purchased Bridge Notes") set forth adjacent to the caption "Purchased Bridge Notes" on the signature page to this Agreement of each Purchaser hereto at a purchase price (the "Purchase Price") of 100% of the principal amount of Bridge Notes purchased. Section 1.2 Authorization and Issuance of Warrants. The Company has authorized the issuance and delivery of Warrants exercisable for up to 300,000 shares of Common Stock in connection with the issuance, sale, and delivery of the Bridge Notes. The Company agrees to issue and deliver to each Purchaser a Warrant exercisable in accordance with its terms for 15,000 shares of Common Stock for each $100,000 in principal amount of the Bridge Notes purchased by such Purchaser. Section 1.3 Form of Payment. On or before the Closing Date, each Purchaser shall pay the Purchase Price for the Purchased Bridge Notes to be issued and sold to such Purchaser at the Closing, by wire transfer of immediately available funds to: Bank: SunTrust Bank, Atlanta Center: 008 Account No.: 9088000008 ABA Routing No.: 061000104 Attn: Rebecca Fischer Re: Cambex Corporation- Escrow Account Section 1.4 Closing. All closings of the purchase and sale of the Purchased Bridge Notes shall take place at the offices of Balboni Law Group LLC, 3475 Lenox Road, NE, Suite 990, Atlanta, Georgia 30326, within five (5) business days following the date that $1,000,000 (the "Minimum Amount") is held by SunTrust Bank, Atlanta (the "Escrow Agent"), subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Section 5 below (such closing being called the "First Closing" and such date and time being called the "First Closing Date"). Following the First Closing, the Company anticipates it will continue to offer the Bridge Notes until the offering of the Bridge Notes is terminated or all $2,000,000 in principal amount is purchased. From time to time, one or more additional closings may occur at such time and date as is mutually agreeable between the Purchasers purchasing Bridge Notes at such closing and the Company (each such closing being called an "Additional Closing" and such date and time being called an "Additional Closing Date," and all of such closings are hereinafter referred to individually as a "Closing" and collectively as the "Closings," and each date on which a Closing shall occur is hereinafter referred to as a "Closing Date" and collectively as the "Closing Dates"). Each Closing is expected to take place by exchange of faxed signature pages with originals to follow by overnight delivery. Section 1.5 Deliveries at Closing. At each Closing the Company shall deliver to the Purchasers: (a) the original of this Agreement; (b) Bridge Notes in definitive form with attached Repricing Warrants, registered in the name of each Purchaser, or the designee of such Purchaser, representing the Purchased Bridge Notes purchased by such Purchaser; (c) Warrants in definitive form, registered in the name of each Purchaser, or the designee of such Purchaser; (d) a copy of the Registration Rights Agreement; (e) a copy of the Escrow Agreement in substantially the form of Exhibit D hereto (the "Escrow Agreement"); (f) a Guaranty Agreement (the "Guaranty") executed by the Company and the pledgor of stock representing Pledged Securities as Guarantor thereunder, and an accompanying Stock Pledge Agreement executed by pledgor of stock representing Pledged Securities as pledgor of certain shares or rights to acquire shares of Common Stock of the Company for a particular Closing; (g) stock certificates or evidence of the shares in DTC form representing the Pledged Securities; (h) a copy of the opinion of counsel to the Company, in substantially the form of Exhibit E hereto; (i) a copy of the Irrevocable Transfer Agent Instructions, in substantially the form of Exhibit F hereto, (the "Transfer Agent Instructions"); (j) the Compliance Certificate of the Company (the "Compliance Certificate"); and (k) the Clerk Certificate of the Company (the "Clerk Certificate"). Section 1.6 Deliveries by Guarantors at Closing. At the First Closing the Guarantors shall deliver: (a) to the Purchasers, an executed copy of each of this Agreement and their respective Guaranty Agreement and Stock Pledge Agreement; and (b) to an escrow agent or a brokerage designated by Purchasers pursuant to the Stock Pledge Agreements, original certificates in the names of the Guarantors with attached executed stock powers in blank, or evidence of receipt by such brokerage of DTC shares of the Company representing the Collateral Shares registered with the Company's transfer agent in the name of the Purchasers. SECTION 2. pledged shares; appointment of representative. The provisions of this Section 2 shall remain in effect so long as any of the Bridge Notes shall remain outstanding. Section 2.1 Pledged Shares. In order to secure the obligations of the Company due to the Purchasers (such obligations are sometimes hereinafter referred to as the "Obligations") under the Transaction Agreements (as defined below), Guarantors have pledged pursuant to their respective Guaranty Agreement and Stock Pledge Agreement, effective at the First Closing, a continuing first priority interest in and to the Pledged Shares. Section 2.2 Appointment of Purchaser Representative. Each Purchaser hereto hereby irrevocably appoints SovCap Equity Partners, Ltd., a corporation organized under the laws of the Bahamas and a First Closing Purchaser hereunder, to act as the sole and exclusive agent and representative (the "Representative") of each such Purchaser to act on behalf of such Purchaser and in such Purchaser's name, place, and stead, to (i) exercise all rights of such Purchaser, and (ii) take all action on behalf of Purchaser that may be taken by Purchaser with respect to the collateral under this Agreement, the Bridge Notes, and the other Transaction Agreements. Without limiting the generality of the foregoing: (a) The Representative shall, on behalf of all Purchasers, send all notices which shall or may be given by Purchasers, under the Transaction Agreements, declare Events of Default under this Agreement, the Bridge Notes, and the other Transaction Agreements, accelerate the Bridge Notes, rescind acceleration of the Bridge Notes, and enforce the Bridge Notes, this Agreement, and the other Transaction Agreements. The Representative reserves the right, in its sole discretion, in each instance without prior notice to the Purchasers, (i) to agree to the modification, waiver, or release of any of the terms of any of the Transaction Agreements, including, without limitation, the waiver or release of any of the conditions precedent for the purchase and sale of the Bridge Notes; (ii) to consent to any action or failure to act by the Company; and (iii) to exercise or refrain from exercising any powers, rights, or remedies that the Purchasers have or may have with respect to collateral under the Transaction Agreements; provided however, that the Representative shall not, without obtaining the prior written consent of each Purchaser (which consent shall not be unreasonably withheld or delayed), exercise any of such rights so as to knowingly release or waive any claim against the Company or any other person who may be liable with respect to the Bridge Notes if such action would have a materially adverse effect on the collection of the indebtedness evidenced by the Bridge Notes or the enforcement of the Transaction Agreements. If any Purchaser shall refuse to consent to any amendment, modification, waiver, release, or subordination requiring the written consent of the Purchasers, the Purchasers who consent to such amendment, modification, waiver, release, or subordination may, at their option, at any time thereafter (but shall not be obligated to) purchase the Bridge Note or Bridge Notes held by the non- consenting Purchaser or Purchasers by paying to such non-consenting Purchaser or Purchasers an amount equal to the unpaid principal and accrued but unpaid interest on the Bridge Note held by such non-consenting Purchaser or Purchasers. (b) The Representative shall collect, enforce, and bring any action on the Transaction Agreements and any collateral granted therein in the name of the Representative for the benefit of all Purchasers, in accordance with this Section 2. Section 2.3 Assurances. (a) Each Purchaser hereby authorizes third parties with whom Representative deals in carrying out the responsibilities of Representative hereunder, to rely conclusively on the instructions and decisions of the Representative as to any action taken pursuant to and in accordance with the terms of this Agreement and the other Transaction Agreements without any further or additional approval or authorization from such Purchaser, including without limitation, the execution and delivery of any documents or instruments, or any other actions required to be taken by the Representative under this Agreement and the other Transaction Agreements, and no Purchaser shall have any cause of action against third parties with whom Representative deals in carrying out the responsibilities of Representative hereunder or under the other Transaction Agreements for any action taken by such third parties in reliance upon the instructions or decisions of the Representative; (b) All actions, decisions, and instructions of the Representative shall be conclusive and binding upon all of the Purchasers, and no Purchaser shall have any cause of action against the Representative for any actions taken, decision made or instruction given by the Representative under this Agreement, except for fraud or willful misconduct by Representative acting in such capacity hereunder. Section 2.4 Default and Acceleration Procedures. (a) Each Purchaser acknowledges and agrees that its respective rights in, to, and under the Pledged Shares provided for in the Guaranty Agreements and Stock Pledge Agreements are limited to the Pledged Shares securing the Bridge Notes purchased by each such Purchaser as granted by the Guarantors pursuant to the First Closing. Purchasers and Representative acknowledge and agree that the Pledged Shares shall secure all Bridge Notes issued hereunder on a pro-rata basis and upon a continuing Event of Default Purchasers shall be entitled to a Proportionate Share in the event Representative deems it necessary to take action with respect to the Pledged Shares. (b) The Representative shall give all Purchasers written notice of any Event of Default under the Bridge Notes, this Agreement, or the other Transaction Agreements which, in the judgment of the Representative, adversely affects the respective interests of the Purchasers under any of the Transaction Agreements. In the event of any Event of Default thereunder, the Representative shall pursue any remedies available to Purchasers under the Transaction Agreements which the Representative in its sole discretion shall deem advisable, and Representative may also elect to postpone the pursuit of remedies if in its sole discretion and judgment it is appropriate under the circumstances to do so. (c) In the event proceedings are instituted for a sale under power of sale or a judicial foreclosure of the collateral provided under the Transaction Agreements, the provisions of the Massachusetts UCC, absent written agreement to the contrary, shall govern such proceedings and the actions taken pursuant thereto, as among the Representative and the Purchasers. (d) In the event the Representative acquires title to any of the collateral provided under the Transaction Agreements pursuant to a foreclosure or conveyance in lieu of foreclosure, title shall be taken in a form acceptable to the Representative and shall be held by or on behalf of the Representative for the benefit of only the Purchasers holding Bridge Notes which were secured by such collateral, in their Proportionate Share. The Representative shall manage such collateral in its ordinary course of business and in accordance with its customary practices and procedures for as long as such title is held in whole or in part in the name of or on behalf of the Representative. The Representative shall contemporaneously endeavor to sell such collateral on terms and conditions reasonably acceptable to the Representative. (e) If the Representative receives a payment after acceleration of the Bridge Notes, whether pursuant to a demand for payment or as a result of legal proceedings against the Company, or from any source whatsoever, such payment in respect of the specific Bridge Notes so paid shall be applied in the following order (unless mandated otherwise by the Transaction Agreements or validly by the express terms of such payment): (1) To the expenses incurred in effecting such recovery or in enforcing any right or remedy under the Transaction Agreements, and any other expenses theretofore incurred by the Representative and not previously reimbursed by the Company; (2) To accrued interest, payable by the Company, according to Purchaser's Proportionate Share of such accrued interest in respect of such Bridge Notes; and (3) To the unpaid principal of such Bridge Notes with each Purchaser receiving such Purchaser's Proportionate Share of such principal. (f) The term "Proportionate Share" shall mean the amount of each Purchaser's Bridge Note purchased at a specific Closing divided by the total amount of Bridge Notes issued under and pursuant to this Agreement. Section 2.5 Standard of Care of the Representative. (a) The Representative shall endeavor in good faith to perform all services and duties and exercise all powers hereunder specifically assigned and delegated to the Representative, and the Representative shall perform and exercise, and shall have the right and power to perform and exercise, such other services and powers as are reasonably incidental thereto. The Representative shall not be liable to the Purchasers, however, for any action or failure to act or any error of judgment, negligence, mistake, or oversight by it or any of its agents, officers, employees, or attorneys, with respect to the Transaction Agreements, provided the Representative has acted in good faith and has not been guilty of willful misconduct or gross negligence. Without limiting the generality of the foregoing, the Representative may consult with counsel or other advisors selected by it, and the Representative shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel or other advisors. In performing its obligations hereunder and under the Transaction Agreements, the Representative may rely in good faith on written and telephonic communications received by the Representative without investigating the genuineness thereof or the power and authority of the author of such communications. Each Purchaser acknowledges and agrees that the Representative's duties and obligations under this Agreement are administrative and ministerial in nature, and that the Representative has no fiduciary obligation to the Purchasers. (b) The Representative does not assume, and shall not have, any responsibility or liability, express or implied, for the adequacy, sufficiency, validity, collectability, genuineness, or enforceability of any of the Transaction Agreements, for the financial condition of the Company, for compliance by the Company with the terms and conditions of the Transaction Agreements, or for the accuracy of any financial or other information furnished to the Purchaser by the Representative or by any other party. The Representative shall not be required to ascertain or inquire as to the performance or observance by the Company of any of the terms, conditions, provisions, covenants, or agreements contained in any of the Transaction Agreements or as to the use of the proceeds of the offering of the Bridge Notes or of the existence or possible existence of any Event of Default thereunder. (c) The Representative may accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory, or other business with the Company or any affiliate thereof as if it were not performing the duties specified herein, and may accept fees and other consideration from the Company or affiliate for services in connection with such services, without having to account for the same to the Purchasers." SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. To induce the Purchasers to purchase the Bridge Notes, the Company represents and warrants to each Purchaser, except as referenced on Schedule 1 hereto (the "Disclosure Schedule"), which reference shall set forth the specific section to which the qualification relates and the statement which constitutes the qualification, that: Section 3.1 Organization and Qualification. The Company and its subsidiaries are corporations duly organized, validly existing, and in good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power to own their properties and to carry on their business as now being conducted. Each of the Company and each subsidiary is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries taken as a whole. Section 3.2 Authorization, Enforcement, Compliance with Other Instruments. (a) The Company has the requisite corporate power and authority to enter into and perform each of this Agreement, any and all amendments thereto, the Bridge Notes, the Repricing Warrants, the Warrants, the Registration Rights Agreement, the Escrow Agreement, the individual guaranties and stock pledge agreements of each of Joseph Kruy and Cyberfin Corp., a Massachusetts corporation, on behalf of Peter Kruy, the Transfer Agent Instructions, the Financing Statement, and any related agreements (collectively, the "Transaction Agreements" and individually a "Transaction Agreement"), and to issue the Bridge Notes, the Repricing Warrants, the Warrants, the Conversion Shares, the Repricing Shares, and the Warrant Shares in accordance with the terms hereof and thereof; (b) the execution and delivery by the Company of each of the Transaction Agreements and the consummation by it of the transactions contemplated thereby, including without limitation the issuance of the Bridge Notes, the Warrants, and the Repricing Warrants, the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Bridge Notes and the reservation for issuance and the issuance of the Repricing Shares, and the Warrant Shares, upon exercise of the Repricing Warrants, and the Warrants (the Bridge Notes, the Repricing Warrants, the Warrants, the Conversion Shares, the Repricing Shares, and the Warrant Shares are hereinafter collectively, the "Securities") have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors, or its stockholders; (c) each of the Transaction Agreements have been duly and validly executed and delivered by the Company; and (d) each of the Transaction Agreements constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. Section 3.3 Capitalization. Immediately prior to Closing, the authorized capital stock of the Company consisted of 28,000,000 shares of capital stock, of which 25,000,000 shares are Common Stock, par value $.10, of which 9,545,176 shares were issued and outstanding as of the date of this Agreement, and 3,000,000 shares of preferred stock ("Preferred Stock"), par value $1.00, none of which are issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. Except as described in Section 3.3 of the Disclosure Schedule, no shares of Common Stock or Preferred Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as disclosed in Section 3.3 of the Disclosure Schedule, as of the effective date of this Agreement, (a) there are no outstanding options, warrants, scrip, rights to subscribe to, calls, or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, or contracts, commitments, understandings, or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, (b) there are no outstanding debt securities, and (c) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement). There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities in the manner contemplated by this Agreement. The Company has furnished to the Purchaser true and correct copies of the Company's Articles of Organization, as amended (the "Charter") and the Company's Bylaws, as in effect on the date hereof (the "Bylaws"), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto. Section 3.4 Issuance of Securities. The Bridge Notes have been duly authorized and are free from all taxes, liens, and charges with respect to the issue thereof. The Conversion Shares issuable upon conversion of the Bridge Notes have been duly authorized and reserved for issuance. The Repricing Warrants have been duly authorized and are free from all taxes, liens, and charges with respect to the issuance thereof. The Repricing Shares issuable upon exercise of the Repricing Warrants have been duly authorized and reserved for issuance. The Warrants have been duly authorized and are free from all taxes, liens, and charges with respect to the issuance thereof. The Warrant Shares issuable upon exercise of the Warrants have been duly authorized and reserved for issuance. Upon conversion of the Bridge Notes, the Conversion Shares will, and upon exercise of the Repricing Warrants, and the Warrants, the Repricing Shares, and the Warrant Shares will, be duly and validly issued, fully paid, and nonassessable, and free from all taxes, liens, and charges, with respect to the issuance thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Section 3.5 No Conflicts. Except as disclosed in Section 3.5 of the Disclosure Schedule, the execution, delivery, and performance of the Transaction Agreements by the Company, and the consummation by the Company of the transactions contemplated thereby, will not (a) result in a violation of the Charter or the Bylaws of the Company or (b) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration, or cancellation of, any agreement, indenture, or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment, or decree (including federal and state securities laws and regulations and the rules and regulations of the principal market or exchange on which the Common Stock is traded or listed) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected. Except as described in Section 3.5 of the Disclosure Schedule, neither the Company nor any subsidiary is in violation of any term of, or in default under, its Charter or the Bylaws or their organizational charter or Bylaws, respectively, or any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree, or order or any statute, rule, or regulation applicable to the Company or its subsidiaries. The business of the Company and its subsidiaries is not being conducted in violation of any law, ordinance, or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization, or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver, and perform any of its obligations under or contemplated by the Transaction Agreements in accordance with the terms thereof. Except as disclosed in Section 3.5 of the Disclosure Schedule, all consents, authorizations, orders, filings, and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. Section 3.6 SEC Documents; Financial Statements. Since November 12, 1999, the Company has filed all reports, schedules, forms, statements, and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as the "SEC Documents"). The Company has made available to each Purchaser or its representative true and complete copies of the SEC Documents. The Company (i) is a "reporting issuer" as defined in Rule 902(1) of Regulation S and (ii) has a class of securities registered under Section 12(b) or 12(g) of the 1934 Act or is required to file reports pursuant to Section 15(d) of the 1934 Act, and has filed all the materials required to be filed as reports pursuant to the Exchange Act for the period the Company was required by law to file such material. As of their respective dates, the financial statements of the Company included in the SEC Documents (the "Financial Statements") complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto, or (b) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and present fairly, in all material respects, the financial position of the Company as of the dates thereof, and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Purchaser which is not included in the SEC Documents, including, without limitation, information referred to in Section 3.5 of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. Section 3.7 Absence of Certain Changes. Except as described in Section 3.7 of the Disclosure Schedule, since the date of the most recent audited balance sheet included in the SEC Documents, there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, results of operations, or prospects of the Company or its subsidiaries. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its subsidiaries have any knowledge that its creditors intend to initiate involuntary bankruptcy proceedings. Section 3.8 Absence of Litigation. There is no action, suit, proceeding, inquiry, or investigation before or by any court, public board, government agency, self-regulatory organization, or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company, the Common Stock, or any of the Company's subsidiaries, wherein an unfavorable decision, ruling or finding would (a) have a material adverse effect on the transactions contemplated hereby, (b) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under the Transaction Agreements, or (c) except as expressly set forth in Schedule 3.8 of the Disclosure Schedule, have a material adverse effect on the business, operations, properties, financial condition, or results of operation of the Company and its subsidiaries taken as a whole. Section 3.9 Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Purchasers or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Purchaser's purchase of the Securities. The Company further represents to the Purchaser that the Company's decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives. Section 3.10 No Undisclosed Events, Liabilities, Developments, or Circumstances. No event, liability, development, or circumstance has occurred or exists, or to the knowledge of the Company is contemplated to occur, with respect to the Company or its subsidiaries or their respective business, properties, prospects, operations, or financial condition, which could be material but which has not been publicly announced or disclosed in writing to the Purchaser. Section 3.11 No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Bridge Notes or the Conversion Shares. The Company represents that it has not offered the Bridge Notes or Conversion Shares to the Purchaser in the U.S. or, to the best knowledge of the Company, to any person in the United States or any U.S. person. Section 3.12 No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions. Section 3.13 Employee Relations. Neither the Company nor any of its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its subsidiaries, is any such dispute threatened. None of the Company's or its subsidiaries' employees is a member of a union and the Company and its subsidiaries believe that their relations with their employees are good. Section 3.14 Intellectual Property Rights. The Company and its subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets, and rights necessary to conduct their respective businesses as now conducted. Except as set forth on Section 3.14 of the Disclosure Schedule, none of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets, or other intellectual property rights have expired or terminated, or are expected to expire or terminate in the near future, other than those that would not have a material adverse effect on the Company. The Company and its subsidiaries do not have any knowledge of any infringement by the Company or its subsidiaries of the trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret, or other similar rights of others. Except as set forth on Section 3.14 of the Disclosure Schedule, there is no claim, action, or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret, or other infringement, and the Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality, and value of all of their intellectual properties. Section 3.15 Environmental Laws. The Company and its subsidiaries are (a) in compliance with any and all applicable foreign, federal, state, and local laws and regulations relating to the protection of human health and safety, the environment, or hazardous, toxic substances, wastes, pollutants, or contaminants ("Environmental Laws"), (b) have received all permits, licenses, or other approvals required of them under applicable Environmental Laws to conduct their respective businesses, and (c) are in compliance with all terms and conditions of any such permit, license, or approval. Section 3.16 Title. The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances, and defects except as described in Section 3.16 of the Disclosure Schedule or as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting, and enforceable leases with such exceptions as are not material, and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries. Section 3.17 Insurance. The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks, and in such amounts, as management of the Company believes to be prudent and customary in the businesses in which the Company and its subsidiaries are engaged. Neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial, or otherwise, or the earnings, business, or operations of the Company and its subsidiaries, taken as a whole. Section 3.18 Regulatory Permits. The Company and its subsidiaries possess all certificates, authorizations, and permits issued by the appropriate federal, state, or foreign regulatory authorities necessary to conduct their respective businesses, except to the extent that the failure to possess any such certificate, authorization, and permit would not have a material adverse effect on the Company and its subsidiaries taken as a whole, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization, or permit. Section 3.19 Internal Accounting Controls. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management's general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management's general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Section 3.20 No Materially Adverse Contracts, Etc. Neither the Company nor any of its subsidiaries is subject to any charter, corporate, or other legal restriction, or any judgment, decree, order, rule, or regulation which in the judgment of the Company's officers has, or to the knowledge of the Company is expected in the future to have, a material adverse effect on the business, properties, operations, financial condition, results of operations, or prospects of the Company or its subsidiaries. Neither the Company nor any of its subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has, or to the knowledge of the Company is expected to have, a material adverse effect on the business, properties, operations, financial condition, results of operations, or prospects of the Company or its subsidiaries. Section 3.21 Tax Status. Except as set forth on Section 3.21 of the Disclosure Schedule, the Company and each of its subsidiaries has made or filed all federal and state income and all other tax returns, reports, and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes), and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports, and declarations, except those being contested in good faith, and has set aside on its books amounts deemed reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports, or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim, and except as set forth on Schedule 3.21, there are no open years, examinations in progress or claims against it for federal, state or other taxes (including penalties and interest) for any period or periods prior to the date hereof. Section 3.22 Certain Transactions. Except as set forth on Section 3.22 of the Disclosure Schedule and in the SEC Documents, and except for arm's length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from third parties and other than the grant of stock options disclosed on Section 3.3 of the Disclosure Schedule, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers, and directors), including any contract, agreement, or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director, or such employee or, to the knowledge of the Company, any corporation, partnership, trust, or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, or partner. Section 3.23 Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Bridge Notes will increase in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Bridge Notes in accordance with this Agreement and the Bridge Notes is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company. Section 3.24 Fees and Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents, or other third parties. Section 3.25 Foreign Corrupt Practices Act. The Company has not made, offered, or agreed to offer anything of value to any government official, political party, or candidate for government office nor has it taken any action which would cause the Company to be in violation of the Foreign Corrupt Practices Act of 1977. Section 3.26 Disclosure. Neither this Agreement nor any Schedule or Exhibit hereto, contains an untrue statement of a material fact or omits a material fact necessary to make the statements contained herein or therein not misleading. None of the statements, documents, certificates or other items prepared or supplied by the Company with respect to the transactions contemplated hereby contains an untrue statement of a material fact or omits a material fact necessary to make the statements contained therein not misleading. section 4. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORs. To induce the Purchasers to purchase the Bridge Notes, each of Joseph Kruy ("Kruy"), an individual resident of the Commonwealth of Massachusetts and Cyberfin Corp. ("Cyberfin"), a Massuchetts corporation owned and controlled by Peter Kruy (each of Kruy and Cyberfin sometimes referred to as a "Guarantor" and collectively, the "Guarantors"), the Guarantors represents and warrants the following: Section 4.1 Organization and Qualification. Cyberfin as a Guarantor hereunder is a corporation duly organized, validly existing, and in good standing under the laws of Massachusetts, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. Section 4.2 Authorization, Enforcement, Compliance with Other Instruments. (a) Each Guarantor has the requisite power and authority (corporate and otherwise) to enter into and perform all their respective obligations under each of this Agreement, the Guaranty Agreement, the Pledge Agreement, and any related agreements (collectively, the "Pledge Agreements"); (b) The execution and delivery by the Guarantors of the Pledge Agreements and the consummation by each of them of the transactions contemplated thereby, including without limitation the pledge of the Collateral Shares and their deliver to a third party designated by Purchaser for holding, as part of Guarantor's obligations under the Stock Pledge Agreement, have been duly authorized by each of Kruy and Cyberfin's Board of Directors, and no further authorization, approval, or consent is required by Kruy or by Cyberfin, its Board of Directors, or its stockholders; (c) the Pledge Agreements have been duly and validly executed and delivered by each of the Guarantors; and (d) each of the Pledge Agreements constitutes the legal, valid, and binding obligation of each of the Guarantors enforceable against them in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. SECTION 5. representations, warranties, and covenants of purchasers Each Purchaser represents, warrants, and covenants to the Company, with respect to such Purchaser only that: Section 5.1 Investment Purpose. Purchaser is acquiring the Securities for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided however, that by making the representations herein, Purchaser does not agree to hold any Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Section 5.2 Accredited Investor Status. Purchaser is an "accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D. Section 5.3 Reliance on Exemptions. Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Purchaser's compliance with, the representations, warranties, agreements, acknowledgments, and understandings of Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of Purchaser to acquire such securities. Section 5.4 Information. Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances, and operations of the Company and materials relating to the offer and sale of the Securities, which have been requested by such Purchaser. Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by Purchaser or its advisors, if any, or its representatives shall modify, amend, or affect such Purchaser's right to rely on the Company's representations and warranties contained in Section 3 hereof. Purchaser understands that its investment in the Securities involves a high degree of risk. Purchaser has sought such accounting, legal, and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. Section 5.5 No Governmental Review. Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities. Section 5.6 Transfer or Resale. Purchaser understands that except as provided in the Registration Rights Agreement: (a) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned, or transferred unless; (i) subsequently registered thereunder; (ii) Purchaser shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such securities to be sold, assigned, or transferred may be sold, assigned, or transferred pursuant to an exemption from such registration; or (iii) Purchaser provides the Company with reasonable assurance that such securities can be sold, assigned, or transferred pursuant to Rule 144 or promulgated under the 1933 Act (or a successor rule thereto); (b) any sale of such securities made in reliance on Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144") may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (c) neither the Company nor any other person is under any obligation to register such securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Section 5.7 Legends. Purchaser understands that the certificates or other instruments representing the Bridge Notes and, until such time as the sale of the Conversion Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock certificates representing the Conversion Shares shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such stock certificates): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Bridge Notes and the Conversion Shares, upon which it is stamped, if, unless otherwise required by state securities laws, (a) the sale of the Conversion Shares is registered under the 1933 Act, (b) in connection with a sale transaction, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment, or transfer of the Bridge Notes and the Conversion Shares may be made without registration under the 1933 Act, or (c) such holder provides the Company with reasonable assurances that the Bridge Notes and the Conversion Shares can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold. Section 5.8 Authorization Enforcement. This Agreement has been duly and validly authorized, executed, and delivered on behalf of Purchaser and is a valid and binding agreement of Purchaser enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. Section 5.9 Residence. Purchaser is a resident of that country specified in its address on the Schedule of Purchaser. Section 5.10 No Scheme to Evade Registration. Purchaser represents and warrants to the Company, as to itself only, that the acquisition of the Securities is not a transaction (or any element of a series of transactions) that is part of a plan or scheme by the Purchaser to evade the registration provisions of the 1933 Act and that (a) such Purchaser is an "accredited investor" within the meaning of Rule 501 under the Securities Act; (b) such Purchaser has sufficient knowledge and experience to evaluate the risks and merits of its investment in the Company and it is able financially to bear the risks thereof; (c) such Purchaser has had an opportunity to ask questions of and receive answers from and to discuss the Company's business, management, and financial affairs with the Company's management; (d) the Securities are being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; (e) such Purchaser was not offered nor made aware of the Company's interest in issuing the Bridge Notes by any means of public advertisement or solicitation; (f) in connection with such Purchaser's purchase of the Securities, it has been solely responsible for its own (i) due diligence investigation of the Company and (ii) investment decision, and has not engaged or relied upon any agent or "purchaser representative" to review or analyze the Company's business and affairs or advise Purchaser with respect to the merits of the investment; (g) such Purchaser has full power and authority to execute, deliver, and perform this Agreement; and this Agreement constitutes the legal, valid, and binding obligation of such Purchaser, enforceable against it in accordance with their respective terms; and (h) if such Purchaser proposes to sell the Securities pursuant to Rule 144A under the Securities Act, it will (A) take reasonable steps to obtain the information required by such Rule to establish a reasonable belief that the prospective purchaser is a "qualified institutional buyer" as such term is defined in Rule 144A and (B) advise the prospective purchaser that the Purchaser is relying on the exemption from the registration provisions of the Securities Act available pursuant to Rule 144A. Section 5.11 Covenant Not to Trade. Each Purchaser for itself and on behalf of each affiliate and associate of such Purchaser covenants and agrees, not to purchase, sell, make any short sale of, pledge, grant any option for the purchase or sale of or otherwise trade any Common Stock prior to the conversion of the Bridge Notes (other than a purchase of Common Stock from the Company pursuant to the exercise of the Repricing Warrant or the Warrant), without the prior written consent of the Company. SECTION 6. CONDITIONS OF INITIAL CLOSING The Purchaser's obligation to purchase and pay for the Securities is subject to the satisfaction prior to or at the Closing of the following conditions: Section 6.1 Transaction Agreements. The Company shall have delivered to Purchaser the Transaction Agreements as provided in Section 1.5, above, executed by all the parties thereto. Section 6.2 Opinion of Counsel. Purchaser shall have received from counsel for the Company, an opinion in substantially the form of Exhibit E, addressed to Purchaser, dated the Closing Date. To the extent that the opinion referred to in the preceding sentence is rendered in reliance upon the opinion of any other counsel, Purchaser shall have received a copy of such opinion of such other counsel, dated the Closing Date and addressed to Purchaser, or a letter from such other counsel, dated the Closing Date and addressed to Purchaser, authorizing Purchaser to rely on such other counsel's opinion. Section 6.3 Representations and Warranties; No Default. The representations and warranties of the Company contained in this Agreement and those otherwise made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall be true in all material respects, except to the extent of changes caused by the transactions contemplated herein; provided however, that there shall exist at the time of the Closing and after giving effect to such transactions no Event of Default (as defined in Section 10 of the Bridge Notes). Section 6.4 Delivery of Schedules; Due Diligence. Purchaser shall have received and in its discretion shall be satisfied with the Disclosure Schedules and the results of its due diligence investigations. Section 6.5 Purchase and Loan Permitted by Applicable Laws. The purchase of, and payment for, all the Securities evidenced by or attendant to the Bridge Notes shall not violate any applicable domestic law or governmental regulation (including, without limitation, Section 5 of the Securities Act) and shall not subject Purchaser to any tax, penalty, liability, or other onerous condition under, or pursuant to, any applicable law or governmental regulation or order. Section 6.6 No Adverse Litigation. There shall be no action, suit, investigation, or proceeding, pending or, to the best of Purchaser's or the Company's knowledge, threatened, against or affecting Purchaser, the Company, any of Purchaser's or the Company's properties or rights, or any of Purchaser's or the Company's Affiliates, officers, or directors, by or before any court, arbitrator, or administrative or governmental body which (i) seeks to restrain, enjoin, prevent the consummation of, or otherwise affect the transactions contemplated by this Agreement or (ii) questions the validity or legality of any such transactions, or (iii) seeks to recover damages or obtain other relief in connection with any such transactions, and, to the best of Purchaser's and the Company's knowledge, there shall be no valid basis for any such action, proceeding, or investigation, and Purchaser shall have received a certificate executed by the chief executive officer of the Company, dated the Closing Date, to such effect. Section 6.7 Approvals and Consents. The Company shall have duly received all authorizations, waivers, consents, approvals, licenses, franchises, permits, and certificates (collectively, "Consents") by or of all federal, state, and local governmental authorities and all material consents by or of all other persons necessary or advisable for the issuance of the Bridge Notes, all such consents shall be in full force and effect at the time of Closing, and Purchaser shall have received a certificate executed by the chief executive officer of the Company, dated the Closing Date, to such effect. Section 6.8 No Material Adverse Change. Since November 12, 1999, there shall not have been any material adverse change in the business, condition (financial or other), assets, properties, operations, or prospects of the Company, and Purchaser shall have received a certificate executed by the chief executive officer of the Company, dated the Closing Date, to such effect. Section 6.9 Proceedings. All proceedings taken or to be taken in connection with the transactions contemplated hereby, and all documents incident thereto shall be reasonably satisfactory in form and substance to Purchaser and Purchasers counsel, and Purchaser and Purchasers counsel shall have received all such counterpart originals or certified or other copies of such documents as the Purchaser or Purchasers' counsel may reasonably request. Section 6.10 Clerk Certificate. Purchaser shall have received a Clerk's Certificate from the Clerk or an Assistant Clerk of the Company dated the Closing Date and certifying: (A) that attached thereto is a true and complete copy of the Charter as then in effect, certified or bearing evidence of filing by the Secretary of the Commonwealth of Massachusetts, and (B) a certificate of said Secretary of State, dated as of a recent date as to the due incorporation and good standing of the Company, and listing all documents of the Company on file with said Secretary of State; (C) that attached thereto is a true and complete copy of the Bylaws of the Company as in effect on the date of such certification; (D) that attached thereto is a true and complete copy of all resolutions adopted by the Board of Directors or the shareholders of the Company authorizing the execution, delivery, and performance of Transaction Agreements and the issuance, sale, and delivery of the Securities, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the foregoing agreements and the transactions contemplated thereby; (E) that the Charter has not been amended since the date of the last amendment referred to in the certificate delivered pursuant to clause (A) above; and (F) to the incumbency and specimen signature of each officer of the Company executing all Transaction Agreements and any certificate or instrument furnished pursuant hereto, and a certification by another officer of the Company as to the incumbency and signature of the officer signing the certificate. Section 6.11 Transfer Agent Instructions. The Transfer Agent Instructions, in form and substance satisfactory to the Purchaser, shall have been delivered to and acknowledged in writing by the Company's transfer agent. SECTION 7. CONDITIONS TO SUBSEQUENT CLOSINGS Section 7.1 Representations and Warranties; No Default. The representations and the warranties of the Company contained in this Agreement and those otherwise made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall be true in all material respects, except to the extent of changes caused by the transactions contemplated herein; provided however, that there shall exist no Event of Default under this Agreement or any of the Bridge Notes at the time of the Subsequent Closing. Section 7.2 No Suspensions. There shall be no suspensions of trading in or in delisting (or pending delisting) of the Common Stock. Section 7.3 Opinion of Counsel. Purchaser shall have received from counsel for the Company, an opinion in substantially the form of Exhibit E, addressed to Purchaser, dated as of each Additional Closing Date. To the extent that the opinion referred to in the preceding sentence is rendered in reliance upon the opinion of any other counsel, Purchaser shall have received a copy of such opinion of such other counsel, dated the Additional Closing Date and addressed to Purchaser, or a letter from such other counsel, dated the Additional Closing Date and addressed to Purchaser, authorizing Purchaser to rely on such other counsel's opinion. Section 7.4 Due Diligence. Purchaser shall be satisfied with the results of periodic due diligence investigations including without limitation any supplemental Disclosure Schedules delivered in connection with an Additional Closing and, if so requested by the Representative, shall have received a "comfort" letter from the Company's auditors with respect to the financial statements filed by the Company in its quarterly and annual securities filings. Section 7.5 Shareholder Approval. Company, if required, must obtain shareholder approval on placement so as to address the 20% NASD rule. Section 7.6 No Material Adverse Change. Since date hereof, there shall not have been any material adverse change in the business, condition (financial or other), assets, properties, operations, or prospects of the Company, and Purchaser. SECTION 8. AFFIRMATIVE COVENANTS The Company covenants that from and after the date of this Agreement through the Closing and thereafter so long as any of the Bridge Notes remain outstanding: Section 8.1 Financial Information. The Company shall furnish to Purchaser: (a) within five (5) days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8- K, and any registration statements or amendments filed pursuant to the 1933 Act; (b) within one (1) day after release thereof, copies of all press releases issued by the Company or any of its subsidiaries; (c) copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders; (d) promptly upon any officer of the Company obtaining knowledge (i) of any condition or event which constitutes an Event of Default, (ii) that the holder of any Bridge Notes has given any notice or taken any other action with respect to a claimed Event of Default under this Agreement, (iii) of any condition or event which, in the opinion of management of the Company would have a material adverse effect on the business, condition (financial or other), assets, properties, operations, or prospects of the Company, other than conditions or events applicable to the economy as a whole, (iv) that any person has given any notice to the Company or taken any other action with respect to a claimed Event of Default, or (v) of the institution of any litigation involving claims against the Company, unless such litigation is defended by the insurance carrier without any reservation of rights and is reasonably expected to be fully covered by a creditworthy insurer, in an amount equal to or greater than $250,000 with respect to any single cause of action or of any adverse determination in any litigation involving a potential liability to the Company equal to or greater than $100,000 with respect to any single cause of action, a certificate executed by the chief executive officer of the Company specifying the nature and period of existence of any such condition or event, or specifying the notice given or action taken by such holder or person and the nature of such claimed Event of Default, event or condition, and what action the Company has taken, is taking, or proposes to take with respect thereto; and (e) with reasonable promptness, such other information and data with respect to the Company as Purchaser may reasonably request. Section 8.2 Form D. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for, or obtain exemption for the Securities for, sale to the Purchaser at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States, and shall provide evidence of any such action so taken to the Purchaser on or prior to the Closing Date. Section 8.3 Reporting Status. Until the earlier of (a) the date as of which the Investors (as that term is defined in the Registration Rights Agreement) may sell all of the Conversion Shares without restriction pursuant to Rule l44(k) promulgated under the 1933 Act (or successor thereto), or (b) the date on which (i) the Investors shall have sold all the Conversion Shares and (ii) none of the Bridge Notes is outstanding (the "Registration Period"), the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination. Section 8.4 Inspection of Property. The Company will permit any Person designated by any Purchaser in writing, at Purchaser's expense, to visit and inspect any of the properties of the Company, to examine the books and financial records of the Company and make copies thereof or extracts therefrom and to discuss its affairs, finances, and accounts with its officers and its independent public accountants, all at reasonable times and upon reasonable prior notice to the Company. Section 8.5 Maintenance of Properties; Insurance. The Company will maintain or cause to be maintained in good repair, working order, and condition all properties used or useful in the business of the Company and from time to time will make or cause to be made all appropriate repairs, renewals, and replacements thereof. The Company will maintain or cause to be maintained, with financially sound and reputable insurers (or, as to workers' compensation or similar insurance, in an insurance fund or by self- insurance authorized by the laws of the jurisdiction in question), insurance with respect to their respective properties and businesses against loss or damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar businesses and similarly situated, of such type and in such amounts as are customarily carried under similar circumstances by such other corporations and as are in good faith believed by the Company to be sufficient to prevent the Company from becoming a co-insurer within the terms of the policies in question. Section 8.6 Reserved. Section 8.7 Expenses. The Company and Purchasers shall pay all costs and expenses incurred by such party in connection with the negotiation, investigation, preparation, execution, and delivery of this Agreement, the Bridge Notes, the Escrow Agreement, the Registration Rights Agreement, and other documents executed in connection with the issuance of the Bridge Notes. The costs and expenses of Sovereign Capital, LLC including the fees and expenses of Balboni Law Group, LLC (not to exceed $20,000 in fees and expenses for both Closings) shall be paid for by the Company at each Closing, as indicated on each release notice executed by the Company and submitted to the Escrow Agent. The fee limits of counsel to Sovereign Capital Advisors, LLC cited in this Section 8.7 are subject to the assumption that two Closings are needed to complete the Offering, and further subject in all instances to such counsel providing all transaction documents, agreements, certificates, and the like necessary for the transactions contemplated hereunder, and receiving a reasonable level of comments thereto. However, should such counsel prepare such documents, agreements, and certificates for any Additional Closing and subsequently receive substantial additional comments to such documents, agreements, and certificates (for example, as a result of changes requested by or comments of the Company to any part or structure of the transactions contemplated hereunder), then such hourly limits for any given Additional Closing shall not apply and such counsel shall bill and the Company agrees to pay for all such additional work at such counsel's normal hourly rates then in effect. Section 8.8 Authorized Shares of Common Stock, Reservation of Shares. The Company shall at all times, so long as any of the Bridge Notes are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Bridge Notes, such number of shares of Common Stock equal to or greater than 150% of the number of Conversion Shares issuable upon conversion of the Bridge Notes which are then outstanding or which could be issued at any time under this Agreement. Section 8.9 Corporate Existence, Etc. The Company will at all times preserve and keep in full force and effect its corporate existence, and rights, licenses, and franchises material to its business, and will qualify to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on the business, condition (financial or other), assets, properties, or operations of the Company, taken as a whole. Section 8.10 Transfer Agents. The Company covenants and agrees that, in the event that the Company's agency relationship with the transfer agent should be terminated for any reason prior to a date which is two (2) years after the Closing Date, the Company shall immediately appoint a new transfer agent and shall require that the transfer agent execute and agree to be bound by the terms of the Irrevocable Instructions to Transfer Agent. Section 8.11 Shareholder Approval; Proxy. The Company covenants to submit to its shareholders a proposal for ratification of the issuance of the Bridge Notes and the Conversion Shares, if and as required by the rules of the National Association of Securities Dealers, Inc. (the "NASD") applicable to the transaction. All officers and directors will, upon request of Purchaser, execute a proxy authorizing Purchaser or any designee of Purchaser to vote all shares of Common Stock, the voting of which is controlled by such officer or director, at any meeting (or any adjournment thereof) at which Shareholder action is proposed to ratify the issuance of the Bridge Notes and the Conversion Shares. Section 8.12 Transfer Agent Instructions. The Company shall issue Transfer Agent Instructions to its transfer agent to issue certificates, registered in the name of the Purchaser or its respective nominee(s), for the Conversion Shares, the Repricing Shares, and the Warrant Shares in such amounts as specified from time to time by the Purchaser to the Company upon conversion of the Bridge Notes, except as provided in Section 8.8 herein. Prior to registration of the Conversion Shares under the 1933 Act, all such certificates shall bear the restrictive legend specified in Section 5.7 of this Agreement. The Company warrants that no instruction other than the Transfer Agent Instructions referred to in this Section 8.12, and stop transfer instructions to give effect to Section 5.7 hereof (in the case of the Conversion Shares, prior to registration of such shares under the 1933 Act) will be given by the Company to its transfer agent and that the Bridge Notes and the Conversion Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. Nothing in this Section 8.12 shall affect in any way the Purchaser's obligations and agreement to comply with all applicable securities laws upon resale of the Bridge Notes or Conversion Shares. If the Purchaser provides the Company with an opinion of counsel, reasonably satisfactory in form, and substance to the Company, that registration of a resale by the Purchaser of any of the Bridge Notes or Conversion Shares is not required under the 1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by the Purchaser. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 8.12 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 8.12, that the Purchaser shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. Section 8.13 Payment of Taxes. The Company will pay all taxes, assessments, and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its franchises, business, income, or properties before any penalty or significant interest accrues thereon, and all claims (including, without limitation, claims for labor, services, materials, and supplies) for sums which have become due and payable and which by law have or may become a lien upon any of its properties or assets, provided that no such charge or claim need be paid if such claim is (i) being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, and (ii) the amount of such claim is accrued on the financial statements of the Company or other appropriate provision is made as shall be required by generally accepted accounting principles. Section 8.14 Compliance with Laws, Etc. The Company will comply with the requirements of all applicable laws, rules, regulations, and orders of any court or other governmental authority (including, without limitation, those related to environmental or ERISA compliance), noncompliance with which could materially adversely affect the business, condition (financial or other), assets, property, operations, or prospects of the Company. Section 8.15 Use of Proceeds. The Company will use the proceeds from the sale and issuance of the Bridge Notes as follows: provide the Company with operating capital, repayment of certain limited existing indebtedness of the Company, and capital expenditures. Section 8.16 Registration Statement. The Company shall (a) file a Registration Statement, covering the resale of shares of Common Stock received upon conversion of the Bridge Notes, the Repricing Warrants, and the Warrants to permit the holder(s) thereof to resell from and after the Registration Deadline (as such term is defined therein) in accordance with the Registration Rights Agreement, (b) use its best efforts to have the Registration Statement declared effective in accordance with the Registration Rights Agreement, and (c) keep such Registration Statement current and effective for a period 12 months from the effective date of such Registration Statement in accordance with the Registration Rights Agreement. Section 8.17 Listings. The Company shall promptly secure the listing of the Conversion Shares, the Repricing Shares, and the Warrant Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listings of all Conversion Shares, the Repricing Shares, and the Warrant Shares from time to time issuable under the terms of the Bridge Notes, the Repricing Warrants, the Warrants, and the Registration Rights Agreement. The Company shall maintain the Common Stock's authorization for quotation in the over-the- counter market. The Company shall promptly provide to Purchaser copies of any notices it receives regarding the continued eligibility of the Common Stock for trading in the over-the-counter market. Section 8.18 Indemnification. In consideration of the Purchaser's execution and delivery of this Agreement and acquiring the Securities hereunder and in addition to all of the Company's other obligations under this Agreement, the Company shall defend, protect, indemnify, and hold harmless each Purchaser and each other holder of the Securities and each officer, director, employee, and agent of each Purchaser (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities, and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in any Transaction Agreement or any other certificate, instrument, or document contemplated hereby or thereby, (b) any breach of any covenant, agreement, or obligation of the Company contained in the Transaction Agreements, or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit, or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance, or enforcement of this Agreement or any other instrument, document, or agreement executed pursuant hereto by any of the Indemnitees, any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Bridge Notes, or the status of the Purchaser or holder of the Bridge Notes or the Conversion Shares, as an investor in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. SECTION 9. NEGATIVE COVENANTS The provisions of this Section 9 shall remain in effect so long as any of the Bridge Notes shall remain outstanding. Section 9.1 Definition of Debt. For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean: (a) all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instruments; (b) all indebtedness of others for borrowed money guaranteed in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise; (c) all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable, except for the trade payables previously disclosed by the Company that have remained unpaid for more than ninety days as of the date of this Agreement that have been disclosed in the Company's SEC Documents; (d) all indebtedness secured by any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness; (e) all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other title retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property; (f) all bankers' acceptances and letters of credit; and (g) liabilities in respect of unfunded vested benefits under Plans covered by Title IV of ERISA. Section 9.2 Restrictions on Debt. The Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt without the consent of the Purchasers, except: (a) the Bridge Notes issued pursuant to this Agreement; (b) Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the Company or incurred in the ordinary course of business thereafter; (c) Debt incurred pursuant to the Company's existing line of credit facility with BA Associates originated November 9, 1998, under which the Company may borrow from time to time up a maximum of $650,000, as referenced in Section 3.3(b) of the Disclosure Schedule; (d) Debt incurred in permitted real estate investments; and (e) purchase money security interests not to exceed $250,000 per year. Notwithstanding the foregoing provisions of this Section 9.2, the Company will not create, assume, or incur, or become or at any time be liable in respect of, any Debt for money borrowed, advances made, or goods purchased, if the Purchaser, the Person making such advances, or the vendor of such goods (or any Person who guarantees or becomes surety for all or any part of such Debt or acquires any right or incurs any obligation to become, either immediately or upon the occurrence of some future contingency, the owner of all or any part thereof) shall have any right, by reason of any statute or otherwise, to have any claim in respect of such Debt first satisfied out of the general assets of the Company in priority to the claims of its general creditors. Section 9.3 Restrictions on Dividends. The Company will not (a) pay any dividends, in cash or otherwise, on, (b) make any distributions to holders of, or (c) purchase, redeem, or otherwise acquire any of its outstanding Common Stock or Preferred Stock or set apart assets for a sinking or other analogous fund for the purchase, redemption, retirement, or other acquisition of, any shares of its Common Stock or Preferred Stock; provided however, that the Company may, so long as at the time of and after giving effect thereof no Event of Default has occurred and is continuing: (i) pay dividends on its outstanding Preferred Stock in accordance with the Charter; (ii) with prior written approval of each Purchaser, repurchase shares of its Common Stock issued or to be issued by the Company upon exercise of stock options granted to employees and directors of the Company pursuant to the terms of plans adopted by the Board of Directors of the Company; and (iii) pay cash in lieu of fractional shares of its Common Stock on the exercise of outstanding warrants to purchase its Common Stock, pursuant to the terms of such warrants. Section 9.4 Restrictions on Transactions with Affiliates. The Company will not make any loans or advances to any of its officers, directors, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the ordinary course of business. The Company may increase the salaries executive officer or the remuneration of any director up to an aggregate maximum in all such instances of $100,000, and otherwise will not increase the salary of any executive officer or the remuneration of any director. Section 9.5 Restrictions on Investments. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of, any other company or business, provided however, that the Company may invest its Excess Cash as defined below in: (a) securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition; (b) certificates of deposit or eurodollar certificates of deposit, having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); (c) commercial paper of any Person that is not a subsidiary or an Affiliate of the Company, maturing within one hundred eighty days after the date of acquisition; (d) bank loan participations; and (e) money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); in all cases of such credit quality as a prudent business person would invest in. As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes which has not been invested as described in Section 8.15 hereof. Section 9.6 Restrictions on Sale and Lease-Back Transactions. The Company will not sell or transfer any of its properties to anyone with the intention of taking back a lease of the same property or leasing other property for substantially the same use as the property being sold or transferred; provided however, that (a) the Company may continue and extend its existing leasing arrangements and may lease, under operating leases, any fixtures, equipment, and real estate that do not constitute Pledged Assets in the ordinary course of business of the Company, and (b) the Company may otherwise make real estate investments but only with the consent of the Purchasers as provided for herein. Section 9.7 Restrictions on Sales of Assets. The Company will not sell, transfer, or dispose of any property except for sales of obsolete equipment having a book value at the time of sale of not more than $100,000 in the aggregate in any fiscal year. Section 9.8 Restrictions on Subsidiaries. The Company will not, without the written consent of Purchaser to organize, or transfer any assets to, any Subsidiaries, provided that, if consent of the Purchasers is obtained and any Subsidiaries are organized, or assets transferred, in compliance with this Section 9.8, the Company will not permit such Subsidiaries to enter into any transaction or agreement which would violate any of the provisions of this Section 9 if such provisions were applicable to such Subsidiary. Section 9.9 Change in Business; Operations. The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 10% of the gross revenues of the Company are derived from a business other than the business in which the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in Business"), except any such changes approved in advance in writing by the Representative. The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity. Section 9.10 Exceptions With Consent of Purchasers. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to all Purchasers of Bridge Notes under this Agreement, along with copies of all documentation requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchasers, satisfactorily responding to any Purchaser inquiries about the requested action. The Company may undertake any such requested action otherwise prohibited by this Section 9 only after receiving the advance written consent of Purchasers representing not less than two-thirds (2/3) of all amounts due under Bridge Notes issued hereunder and then outstanding. SECTION 10. Miscellaneous. Section 10.1 Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event any signature page is delivered by facsimile transmission, the party using such means of delivery shall cause four (4) additional original executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof. Section 10.2 Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Section 10.3 Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. Section 10.4 Entire Agreement. Amendments. This Agreement supersedes all other prior oral or written agreements between the Purchaser, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Purchaser makes any representation, warranty, covenant, or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. Section 10.5 Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 With a copy to: Ropes & Gray One International Place Boston, Massachusetts 02110 Attention: John E. Beard Tel: (617) 951-7000 Fax: (617) 951-7050 If to any Purchaser, to its address and facsimile number on the signature page of such Purchaser hereto, with copies to such Purchaser's counsel as set forth on the signature page of such Purchaser hereto. Each party shall provide five- (5) days prior written notice to the other party of any change in address or facsimile number. Section 10.6 Interest. In no event shall the amount of interest due or payable hereunder or under the Bridge Notes exceed the maximum rate of interest allowed by applicable law, and if any such payment is inadvertently made by the Company or is inadvertently received by any holder of Bridge Notes, then such excess sum shall be credited as a payment of principal, unless the applicable holder of a Bridge Notes shall notify the Company in writing that it elects to have such excess sum returned forthwith. It is the express intent hereof that the Company not pay and the holder of the Bridge Notes not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by the Company under applicable law. Section 10.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers. Any Purchaser may assign its rights hereunder without the consent of the Company, provided however, that any such assignment shall not release such Purchaser from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such assignment and assumption. Section 10.8 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Section 10.9 Publicity. The Company and Purchasers shall have the right to approve, before issuance, any press releases or any other public statements with respect to the transactions contemplated hereby; provided however, that the Company shall be entitled, without the prior approval of Purchasers, to make any press release or other public disclosure with respect to such transactions as is required by applicable law and regulations (although the Purchaser shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and shall be provided with a copy thereof). Section 10.10 Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. Section 10.11 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. Section 10.12 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. IN WITNESS WHEREOF, Purchasers and the Company have caused this Series 1 Bridge Note Purchase Agreement to be duly executed as of the date first written above. [Signatures on the following page] COMPANY SIGNATURE PAGE TO SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT COMPANY CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President GUARANTORS SIGNATURE PAGE TO SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT GUARANTORS CYBERFIN CORP. By: /s/ Peter Kruy Peter Kruy, President /s/ Joseph Kruy Joseph Kruy PURCHASER SIGNATURE PAGE (ENTITY) TO SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT PURCHASER Purchaser Name: SovCap Equity Partners, Ltd. By: /s/ Barry W. Herman Name: Barry W.Herman Title: Director Purchaser Name SovCap Equity Partners, Ltd. Address and Facsimile Number Cumberland House #27 Cumberland Street P.O. Box CB - 13016 Nassau, New Providence 242-356-0037 Principal Amount of Bridge Notes $1,500,000.00 - Cambex Corporation Purchased Purchaser's Legal Balboni Law Group, L.L.C. Counsel Address and 3475 Lenox Road, Suite 990 Facsimile Number Atlanta, GA 30326 404-812-3101 PURCHASER SIGNATURE PAGE (ENTITY) TO SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT PURCHASER Purchaser Name: Correllus International Ltd. By: /s/ Jan Telander Name: Jan Telander Title: Director Purchaser Name Correllus International Ltd. Address and Facsimile Number c/o EIG Corporate Finance Services Edificio Marina Marbella, 6B Avenida Sever Olhoa 28, 29600 Marbella, Spain Fax: +34-952-858-068 Principal Amount of Bridge Notes US$ 250,000.00 Purchased Purchaser's Legal Per Ronnstrom Counsel Address and Box 7315 Facsimile Number SE-10390 Stockholm, Sweden Fax: +46-8-796-8223 PURCHASER SIGNATURE PAGE (ENTITY) TO SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT PURCHASER Purchaser Name: Arab Commerce Bank Ltd. By: /s/ A. De Nazareth Name: A. De Nazareth Title: Co. Secretary Purchaser Name Arab Commerce Bank Ltd. Address and Facsimile Number P.O. Box 309 Grand Cayman Cayman Islands 0171 437 2413 (London) Principal Amount of Bridge Notes US$ 150,000.00 Purchased Purchaser's Legal Counsel Address and Facsimile Number PURCHASER SIGNATURE PAGE (ENTITY) TO SERIES 1 BRIDGE NOTE PURCHASE AGREEMENT PURCHASER Purchaser Name: SovCap Equity Partners, Ltd. By: /s/ Barry W. Herman Name: Barry W.Herman Title: President Purchaser Name SovCap Equity Partners, Ltd. Address and Facsimile Number Cumberland House #27 Cumberland Street P.O. Box N-10818 Nassau, New Providence, The Bahamas 242-356-0037 Principal Amount of Bridge Notes $100,000.00 Purchased Purchaser's Legal Counsel Address and Facsimile Number EX-10.8 8 0008.txt ESCROW AGREEMENT ESCROW AGREEMENT THIS ESCROW AGREEMENT (the "Escrow Agreement"), is made and entered into as of January 6, 2000, by and between CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), and the Persons listed on the Purchaser Signature Pages attached hereto (each of whom is individually referred to as a "Purchaser" and all of whom collectively are referred to as the "Purchasers"), and SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as Escrow Agent hereunder ("Escrow Agent"). BACKGROUND The Company has engaged Sovereign Capital Advisors, LLC, a Nevada limited liability company ("Sovereign") to assist it in locating qualified investors to purchase up to $2,000,000 in original principal amount of convertible, secured, Series 1 Bridge Notes of the Company (the "Securities"), pursuant to a Series 1 Bridge Note Purchase and Security Agreement (the "Purchase Agreement"). Pursuant to the Purchase Agreement, Purchasers are required to deliver to Escrow Agent full payment of the purchase price of the Securities purchased at the time such Purchasers execute the Purchase Agreement (the "Escrow Funds"). Escrow Agent shall accept, hold, and disburse the Escrow Funds deposited with Escrow Agent in accordance with the terms of this Escrow Agreement. There is no minimum amount of Escrow Funds which must be held by Escrow Agent before the Escrow Agent may disburse Escrow Funds to the Company pursuant to a Release Notice meeting all of the terms and conditions set forth herein. AGREEMENT For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors, and assigns, hereby agree as follows: Section 1. Definitions. The following terms shall have the following meanings when used herein: "Cash Investment" means the purchase price of the Securities to be purchased by any Purchaser as set forth on the signature page to the Purchase Agreement executed by such Purchaser. "Cash Investment Instrument" means a wire transfer of immediately available funds deposited in the "Cambex Corporation-Escrow Account," in full payment of the purchase price of the Securities to be purchased by any Purchaser as set forth on the signature page to the Purchase Agreement executed by such Purchaser. "Escrow Funds" means the Cash Investments deposited with the Escrow Agent pursuant to this Escrow Agreement. "Release Notice" shall mean a written notification, or written notifications, if more than one, signed by the Company which shall indicate: (a) the name and address, the Securities purchased, and the Cash Investment of each Purchaser, (b) any withdrawal of a subscription by the Purchaser, (c) any other termination, for whatever reason, of a subscription, and (d) a closing statement which identifies the total proceeds from the sale of the Securities, the fees, reimbursable costs, and expenses of Sovereign and counsel to Sovereign, and the instructions for disbursement of the Escrow Fund. Section 2. Appointment of and Acceptance by Escrow Agent. The Company and Purchasers hereby appoint Escrow Agent to serve as Escrow Agent hereunder, and Escrow Agent hereby accepts such appointment in accordance with the terms of this Escrow Agreement. The Company agrees that prior to commencement of the offering to Purchasers, the Company shall request in writing that Escrow Agent shall establish the "Cambex Corporation- Escrow Account," as more particularly described in Section 3(a) hereto (the "Escrow Account") into which the Cash Investment Instruments from Purchasers shall be deposited. Escrow Agent agrees to establish the Escrow Account promptly after such request and after the Escrow Agent shall have received in writing all information reasonably requested from the Company and Sovereign. Escrow Agent is authorized to rely on written communications from Sovereign concerning all matters related to this Escrow Agreement, provided, that Sovereign shall not have the power to waive any conditions or to modify or amend the terms of this Escrow Agreement, without express authorization of the Company or Purchasers and Escrow Agent, as the case may be. Section 3. Deposits into Escrow. (a) All Cash Investment Instruments from Purchasers shall be deposited into the Escrow Account described below: Bank: SunTrust Bank, Atlanta Corporate Trust Department ABA 061000104 Routing No.: Center: 008 Account No.: 9088000008 Attn: Rebecca Fischer Re: Cambex Corporation- Escrow Account ALL ESCROW FUNDS DEPOSITED IN THE ESCROW ACCOUNT SHALL REMAIN THE PROPERTY OF THE PURCHASERS ACCORDING TO THEIR RESPECTIVE INTERESTS AND SHALL NOT BE SUBJECT TO ANY LIEN OR CHARGE BY ESCROW AGENT OR BY JUDGMENT OR CREDITORS' CLAIMS AGAINST THE COMPANY UNTIL RELEASED TO THE COMPANY IN ACCORDANCE WITH SECTION 5 HEREOF. (b) Purchasers will transmit Escrow Funds by wire transfer. Wire transfers are subject to collection requirements of presentment and final payment. Escrow Funds in the Escrow Account cannot be drawn upon or disbursed until such time as final payment has been made and all of the wire transfers are no longer subject to dishonor. Upon receipt, Escrow Agent shall process each Cash Investment Instrument for collection, and the proceeds thereof shall be held as part of the Escrow Funds until disbursed in accordance with Section 5 hereof. If, upon presentment for payment, any Cash Investment Instrument is dishonored, Escrow Agent's sole obligation shall be to notify the Company of such dishonor and to return such Cash Investment Instrument to Purchaser. Notwithstanding the foregoing, if for any reason any Cash Investment Instrument is uncollectible after payment of the Escrow Funds represented thereby has been made by Escrow Agent in accordance with this Escrow Agreement, the Company shall immediately reimburse Escrow Agent upon receipt from Escrow Agent of written notice thereof. (c) All Cash Investment Instruments shall be immediately available Escrow Funds sent by wire transfer to the Escrow Account and Escrow Agent shall not be obligated to accept, or present for payment, any Cash Investment Instrument that is not payable in that manner. Section 4. Other Information to be furnished to Escrow Agent. The Company shall, on the date hereof, provide to Escrow Agent the name, taxpayer identification number, address, and such other information as may be required for withholding and reporting purposes such as either U.S. Treasury Department Form W-9 or another applicable form, e.g., W-8 for each Purchaser. Section 5. Disbursements of Escrow Funds. (a) Release Notice Upon Completion of Offering. Subject to the provisions of Section 13 hereof, Escrow Agent shall disburse the amounts in the Escrow Account as directed in a Release Notice, by wire transfer, promptly after receipt of a Release Notice from Company. Notwithstanding the foregoing Escrow Agent shall not be obligated to disburse the Escrow Funds if Escrow Agent has grounds to believe that (a) Cash Investment Instruments have not been received, deposited with, and collected by the Escrow Agent in an amount at least equal to the amount specified in the Release Notice or (b) the Release Notice is materially incorrect or incomplete. (b) Rejection of any Subscription or Termination of the Offering. No later than fifteen (15) business days after receipt by Escrow Agent of written notice (i) from the Company or Sovereign that the Company intends to reject a Purchaser's subscription, or (ii) from the Company or Sovereign that there will be no closing of the sale of Securities to Purchasers, Escrow Agent shall pay to the applicable Purchasers, by certified or bank check sent by first class mail, the amount of the Cash Investment paid by each Purchaser, without interest or deduction. (c) Expiration of Offering Period. Notwithstanding anything to the contrary contained herein, if Escrow Agent shall not have received a Release Notice for the First Closing on or before January 30, 2000, and a Release Notice for the final closing on or before March 1, 2000, Escrow Agent shall, within fifteen (15) business days after each such date and without any further instruction or direction from Sovereign or the Company, return to each Purchaser, by certified or bank check sent by first class mail, all their respective Cash Investments then held by Escrow Agent. Section 6. Provisions for Benefit of Escrow Agent. (a) Escrow Agent undertakes to perform only such duties as are expressly set forth herein, and no additional duties or obligations shall be implied hereunder. In performing its duties under this Escrow Agreement, or upon the claimed failure to perform any of its duties hereunder, Escrow Agent shall not be liable to anyone for any damages, losses, or expenses which may be incurred as a result of Escrow Agent so acting or failing to so act; provided however, Escrow Agent shall not be relieved from liability for damages arising out of its proven gross negligence or willful misconduct under this Escrow Agreement. Escrow Agent shall in no event incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of legal counsel, which may be counsel to any party hereto, given with respect to any question relating to the duties and responsibilities of Escrow Agent hereunder, or (ii) any action taken or omitted to be taken in reliance upon any in instrument delivered to Escrow Agent and believed by it to be genuine and to have been signed or presented by the proper party or parties. Escrow Agent shall not be bound in any way by any agreement or contract between the Company and Purchaser, whether or not Escrow Agent has knowledge of any such agreement or contract. (b) The Company and Purchasers each warrant to and agree with Escrow Agent that, unless otherwise expressly set forth in this Escrow Agreement, there is no security interest in the Escrow Funds or any part of the Escrow Account; no financing statement under the Uniform Commercial Code of any jurisdiction is on file in any jurisdiction claiming a security interest in or describing, whether specifically or generally, the Escrow Funds or any part of the Escrow Funds; and the Escrow Agent shall have no responsibility at any time to ascertain whether or not any security interest exists in the Escrow Funds or any part of the Escrow Funds or to file any financing statement under the Uniform Commercial Code of any jurisdiction with respect to the Escrow Funds or any part thereof. Section 7. Suspension of Performance or Disbursement Into Court. (a) As an additional consideration for and as an inducement for Escrow Agent to act hereunder, it is understood and agreed that, in the event of any disagreement between the parties to this Escrow Agreement or among them or any other person(s) resulting in adverse claims and demands being made in connection with or for any money or other property involved in or affected by this Escrow Agreement, Escrow Agent shall be entitled to refuse to comply with the demands of such parties, or any of such parties, so long as such disagreement shall continue. In such event, Escrow Agent shall make no delivery or other disposition of the Escrow Funds or any part of such Escrow Funds. Anything herein to the contrary notwithstanding, Escrow Agent shall not be or become liable to such parties or any of them for the failure of Escrow Agent to comply with the conflicting or adverse demands of such parties or any of such parties. Escrow Agent shall be entitled to continue to refrain and refuse to deliver or otherwise dispose of the Escrow Funds or any part thereof or to otherwise act hereunder, as stated above, unless and until: (a) the rights of such parties have been finally settled by binding arbitration or duly adjudicated in a court having jurisdiction of the parties and the Escrow Funds and Escrow Agent shall have received written notice thereof or (b) the parties have reached an agreement resolving their differences and have notified Escrow Agent in writing of such agreement and have provided Escrow Agent with indemnity satisfactory to Escrow Agent pursuant to Section 12 hereof against any liability, claims, or damages resulting from compliance by Escrow Agent with such agreement. (b) In the event of a disagreement between such parties as described above, Escrow Agent shall have the right, in addition to the rights described above and at the option of Escrow Agent, to tender into the registry or custody of any court having jurisdiction, all money and property comprising the Escrow Account and may take such other legal action as may be appropriate or necessary, in the opinion of Escrow Agent or its counsel. Upon such tender, the parties hereto agree that Escrow Agent shall be discharged from all further duties under this Escrow Agreement; provided however, that the filing of any such legal proceedings shall not deprive Escrow Agent of its compensation hereunder earned prior to such filing and discharge of Escrow Agent of its duties hereunder. (c) Escrow Agent shall have no liability to Sovereign, the Company, any Purchaser, or any other person with respect to any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of Escrow Funds held in the Escrow Account or any delay in or with respect to any other action required or requested of Escrow Agent. (d) The parties hereto agree that, in the event any controversy arises under or in connection with this Escrow Agreement or the Escrow Funds, or Escrow Agent is made a party to or intervenes in any litigation pertaining to this Escrow Agreement or the Escrow Funds, to pay to Escrow Agent reasonable compensation for its extraordinary services and to reimburse Escrow Agent for all costs and expenses associated with such controversy or litigation. (e) Escrow Agent shall have no obligation to take any legal action in connection with this Escrow Agreement or towards its enforcement, or to appear in, prosecute, or defend any action or legal proceeding which would or might involve it in any cost, expense, loss, or liability unless security and indemnity, as provided in Section 12 hereof shall be furnished. Section 8. Investment of Escrow Funds. Escrow Agent shall not invest or reinvest the Escrow Funds. The parties to this Escrow Agreement acknowledge that no interest shall accrue or be paid with respect to the Escrow Funds. Section 9. Removal of Escrow Agent. Escrow Agent may be removed, with or without cause, by the Company and all Purchasers, acting jointly, in writing, at any time by the giving of thirty (30) days prior written notice to Escrow Agent. Such removal shall take effect upon the appointment of a successor escrow agent as provided hereinbelow. Upon any such notice of removal, the Company shall appoint a successor escrow agent hereunder, which shall be a commercial bank, trust company, or other financial institution with a combined capital and surplus in excess of $100,000,000. Upon the acceptance in writing of any appointment as Escrow Agent hereunder by a successor escrow agent, such successor escrow agent shall thereupon succeed to, and become vested with, all the rights, powers, privileges, and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from its duties and obligations under this Escrow Agreement. After any retiring Escrow Agent's removal, the provisions of this Escrow Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Escrow Agent under this Escrow Agreement. Section 10. Resignation of Escrow Agent. Escrow Agent may resign at any time from its obligations under this Escrow Agreement by providing written notice to the parties hereto. Such resignation shall be effective on the date set forth in such written notice which shall be no earlier than 20 days after such written notice has been given. In the event no successor escrow agent has been appointed on or prior to the date such resignation is to become effective, Escrow Agent shall be entitled to tender into the custody of a court of competent jurisdiction all assets then held by it hereunder and shall thereupon be relieved of all further duties and obligations under this Escrow Agreement. Escrow Agent shall have no responsibility for the appointment of a successor escrow agent hereunder. After Escrow Agent's resignation the provisions of this Escrow Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was escrow agent under this Escrow Agreement. Section 11. Liability of Escrow Agent. (a) Escrow Agent's sole responsibility shall be for the safekeeping and disbursement of the Escrow Funds in accordance with the terms of this Escrow Agreement. Escrow Agent shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. (b) Escrow Agent shall not be liable for any error of judgment, or for any act done or step taken or omitted by it in good faith, or for any mistake of fact or law, or for anything which it may do or refrain from doing in connection herewith, except for its own gross negligence or willful misconduct. (c) In no event shall Escrow Agent be liable for incidental, indirect, special, consequential, or punitive damages. Escrow Agent shall not be obligated to take any legal action or commence any proceeding in connection with the Escrow Funds or the Escrow Account in which Escrow Funds are deposited or this Escrow Agreement, or to appear in, prosecute, or defend any such legal action or proceeding. Without limiting the generality of the foregoing, Escrow Agent shall not be responsible for or required to enforce any of the terms or conditions of any Purchase Agreement with any Purchaser or any other agreement between the Company, Sovereign, and/or any Purchaser. Escrow Agent shall not be responsible or liable in any manner for the performance by the Company or any Purchaser of their respective obligations under any Purchase Agreement nor shall Escrow Agent be responsible or liable in any manner for the failure of the Company, Sovereign, or any third party (including any Purchaser) to honor any of the provisions of this Escrow Agreement. Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, and shall incur no liability and shall be fully indemnified pursuant to Section 12 hereof from any liability whatsoever in acting in accordance with the opinion or instruction of such counsel. The Company shall promptly pay, upon demand, the reasonable fees and expenses of any such counsel. (d) Escrow Agent is authorized to comply with orders issued or process entered by any court with respect to the Escrow Funds, without determination by the Escrow Agent of such court's jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished, or levied upon under any court order, or in case the payment, assignment, transfer, conveyance, or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment, or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment, or decree without the need for appeal or other action; and if the Escrow Agent complies with any such order, writ, judgment, or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment, or decree may be subsequently reversed, modified, annulled, set aside, or vacated. Section 12. Indemnification of Escrow Agent. The Company and Purchasers jointly and severally agree to indemnify Escrow Agent and it officers, directors, employees, and agents and save Escrow Agent and its officers, directors, employees, and agents harmless from and against any and all Claims (as hereinafter defined) and Losses (as hereinafter defined) which may be incurred by Escrow Agent or any of such officers, directors, employees, or agents as a result of Claims asserted against Escrow Agent or any of such officers, directors, employees, or agents as a result of or in connection with Escrow Agent's capacity as such under this Escrow Agreement by any person or entity. For the purposes hereof the term "Claims" shall mean all claims, lawsuits, causes of action, or other legal actions and proceedings of whatever nature brought against (whether by way of direct action, counterclaim, cross action, or impleader) Escrow Agent or any such officer, director, employee, or agent, even if groundless, false, or fraudulent, so long as the claim, lawsuit, cause of action, or other legal action or proceeding is alleged or determined, directly or indirectly, to arise out of, result from, relate to, or be based upon, in whole or in part: (a) the acts or omissions of the Company or Purchasers, (b) the appointment of Escrow Agent as escrow agent under this Escrow Agreement, or (c) the performance by Escrow Agent of its powers and duties under this Escrow Agreement; and the term "Losses" shall mean losses, costs, damages, expenses, judgments, and liabilities of whatever nature (including, but not limited to, attorneys', accountants', and other professionals' fees, litigation, and court costs and expenses and amounts paid in settlement), directly or indirectly resulting from, arising out of, or relating to one or more Claims. Upon the written request of Escrow Agent or any such officer, director, employee, or agent (each referred to hereinafter as an "Indemnified Party"), the Company and Purchasers jointly and severally agree to assume the investigation and defense of any Claim, including the employment of counsel acceptable to the applicable Indemnified Party and the payment of all expenses related thereto and, notwithstanding any such assumption, the Indemnified Party shall have the right, and the Company and Purchasers jointly and severally agree to pay the cost and expense thereof, to employ separate counsel with respect to any such Claim and participate in the investigation and defense thereof in the event that such Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to such Indemnified Party which are different from or additional to these available to either the Company or Purchasers. The Company and Purchasers hereby agree that the indemnifications and protections afforded Escrow Agent in this section shall survive the termination of the Escrow Agreement or the resignation, removal, or effective resignation of Escrow Agent pursuant to Section 7(b) hereof. Section 13. Compensation to Escrow Agent. The Company agrees to pay Escrow Agent for its ordinary services hereunder, the fees determined in accordance with and payable as specified in the Schedule of Fees set forth in Exhibit A attached hereto and made a part hereof. In addition, the Company agrees to pay to Escrow Agent its expenses incurred in connection with this Escrow Agreement including, but not limited to, the reasonable cost of legal services in the event Escrow Agent reasonably deems it necessary to retain counsel. Such expenses shall be paid to Escrow Agent within 30 days following receipt by the parties hereto of a written statement setting forth such expenses. As security for all fees and expenses of Escrow Agent hereunder and any and all losses, claims, damages, liabilities, and expenses incurred by Escrow Agent in connection with its acceptance of appointment hereunder or with the performance of its obligations under this Escrow Agreement and to secure the obligation of the parties hereto to indemnify Escrow Agent as set forth in Section 12 hereof, Escrow Agent is hereby granted a security interest in and a lien upon the Escrow Funds, which security interest and lien shall be prior to all other security interests, liens, or claims against the Escrow Funds or any part thereof. Section 14. Representations and Warranties. (a) The Company makes the following representations and warranties to Escrow Agent: (i) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the Commonwealth of Massachusetts, and has full power and authority to execute and deliver this Escrow Agreement and to perform its obligations hereunder. (ii) This Escrow Agreement has been duly approved by all necessary corporate action of the Company, including any necessary shareholder approval, has been executed by duly authorized officers of the Company, and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms; provided however, that enforceability is subject to: (a) applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, and similar federal and state laws affecting the rights and remedies of creditors generally, and (b) general principles of equity limiting the availability of equitable remedies (including but not limited to the remedy of specific performance), whether considered in a proceeding at law or in equity. (iii) The execution, delivery, and performance by the Company of this Escrow Agreement will not violate, conflict with, or cause a default under, the certificate of incorporation or bylaws of the Company, any applicable law or regulation, any court order or administrative ruling or decree to which the Company is a party or any of its property is subject, or any agreement, contract, indenture, or other binding arrangement to which the Company is a party or any of its property is subject. (iv) No party other than the parties hereto and the prospective Purchasers have any lien or claim against, or security interest in, the Escrow Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds or any part thereof. (v) The Company hereby acknowledges that the status of Escrow Agent is that of agent only for the limited purposes set forth herein, and hereby represents and covenants that no representation or implication shall be made that the Escrow Agent has investigated the desirability or advisability of investment in the Securities or has approved, endorsed, or passed upon the merits of the investment therein and that the name of the Escrow Agent has not and shall not be used in any manner in connection with the offer or sale of the Securities other than to state that the Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth herein. (vi) All of the representations and warranties of the Company contained herein are true and complete as of the date hereof. (b) Each Purchaser makes the following representations and warranties to Escrow Agent: (i) Purchaser has full power and authority to execute and deliver this Escrow Agreement, the Transaction Documents, and to perform its obligations hereunder. (ii) This Escrow Agreement and the Transaction Documents have been duly approved by all necessary action of Purchaser, including any necessary shareholder approval, has been executed by persons duly authorized by Purchaser, and constitutes a valid and binding agreement of Purchaser, enforceable in accordance with its terms. (iii) The execution, delivery, and performance by Purchaser of this Escrow Agreement will not violate, conflict with, or cause a default under, the organizational or governing documents of Purchaser, any applicable law or regulation, any court order or administrative ruling or decree to which Purchaser is a party or any of its property is subject, or any agreement, contract, indenture, or other binding arrangement to which Purchaser is a party or any of its property is subject. (iv) Purchaser hereby acknowledges that the status of Escrow Agent is that of agent only for the limited purposes set forth herein, and hereby represents and covenants that no representation or implication shall be made that the Escrow Agent has investigated the desirability or advisability of investment in the Securities or has approved, endorsed, or passed upon the merits of the investment therein and that the name of the Escrow Agent has not and shall not be used in any manner in connection with the offer or sale of the Securities other than to state that the Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth herein. (v) All of the representations and warranties of Purchaser contained herein and in the Transaction Documents are true and complete as of the date hereof and will be true and complete at the time of any deposit to or disbursement from the Escrow Account. Section 15. Consent to Jurisdiction and Venue. In the event that the Company and Escrow Agent hereto commence a lawsuit or other proceeding relating to or arising from this Escrow Agreement, the Company and Escrow Agent hereto agree that the United States District Court for the Northern District of Georgia shall have the sole and exclusive jurisdiction over any such proceeding. If such court lacks federal subject matter jurisdiction, the Company and Escrow Agent agree that the Superior Court of Fulton County, Georgia shall have sole and exclusive jurisdiction. Any of these courts shall be proper venue for any such lawsuit or judicial proceeding and the Company and Escrow Agent waive any objection to such venue. The Company and Escrow Agent consent to and agree to submit to the jurisdiction of any of the courts specified herein and agree to accept service or process to vest personal jurisdiction over them in any of these courts. It is the intention of the parties to this Escrow Agreement that the situs of the Escrow Account created by this Escrow Agreement be, and that it be administered in the state in which the principal office of the Escrow Agent is located from time to time acting hereunder. Section 16. Notice. All notices and other communications hereunder shall be in writing and shall be deemed to have been validly served, given, or delivered five (5) days after deposit in the United States mails, by certified mail with return receipt requested and postage prepaid, when delivered personally, one (1) day after delivery to any overnight courier, or when transmitted by facsimile transmission facilities (with machine generated receipt confirmation), and addressed to the party to be notified as follows: If to the Company at: Cambex Corporation 360 Second Avenue Boston, Massachusetts 01254 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 Tax ID #04-442959 If to Sovereign at: Sovereign Capital Advisors, LLC 3340 Peachtree Road, NE Suite 2265 Atlanta, Georgia 30326 Attention: Paul D. Hamm Tel: (404) 814-3737 Fax: (404) 812-3738 If to the Escrow Agent at: SunTrust Bank, Atlanta Corporate Trust Division 25 Park Place 24th Floor Atlanta, GA 30303 Attn: Rebecca Fischer Telephone: (404) 588-7262 Telecopier: (404) 588-7335 If to Purchaser at: The address set forth on the counterpart signature page hereto or to such other address as each party may designate for itself by like notice. Section 17. Amendment Waiver, etc. This Escrow Agreement may be changed, waived, discharged, or terminated only by a writing signed by the Company, Purchasers, and Escrow Agent. No delay or omission by any party in exercising any right with respect hereto shall operate as a waiver. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion. No waiver, modification, amendment, termination, or rescission of this Escrow Agreement shall be effective or binding upon Escrow Agent unless Escrow Agent shall have specifically consented thereto in writing. Section 18. Severability. To the extent any provision of this Escrow Agreement is prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Escrow Agreement. Section 19. Governing Law. This Escrow Agreement shall be construed and interpreted in accordance with the internal laws of the State of Georgia without giving effect to the principles or rules governing conflict of laws. Section 20. Entire Agreement. This Escrow Agreement constitutes the entire agreement among the parties relating to the acceptance, collection, holding, and disbursement of the Escrow Funds and sets forth in their entirety the obligations and duties of the Escrow Agent with respect to the Escrow Funds. Section 21. Binding Effect. All of the terms of this Escrow Agreement, as amended from time to time, shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of the Company, Purchasers, and Escrow Agent. Section 22. Execution in Counterparts. This Escrow Agreement may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement. Section 23. Termination. Upon the first to occur of the disbursement of all amounts in the Escrow Account or deposit of all amounts in the Escrow Account into court pursuant to Section 7 hereof, this Escrow Agreement shall terminate and Escrow Agent shall have no further obligation or liability whatsoever with respect to this Escrow Agreement or the Escrow Funds. IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed under seal as of the date first above written. [Remainder of page intentionally left blank; signatures on following pages] COMPANY SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the Company hereto has caused this Escrow Agreement to be executed under seal as of the date first above written. THE COMPANY: CAMBEX CORPORATION By: /s/ Peter Kruy Name: Peter Kruy Title: Executive V.P. ESCROW AGENT SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the Escrow Agent hereto has caused this Escrow Agreement to be executed under seal as of the date first above written. ESCROW AGENT: SunTrust Bank, Atlanta as Escrow Agent By: /s/ Rebecca Fischer Its: Trust Officer [Purchaser Signature Pages Attached] PURCHASER SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the Purchaser hereto has caused this Escrow Agreement to be executed under seal as of the date first above written. PURCHASER Purchaser Name: SovCap Equity Partners, Ltd. By: /s/ Barry W.Herman Name: Barry W.Herman Title: Director Purchaser Name SovCap Equity Partners, Ltd. ("Purchaser") Address and Cumberland House Facsimile Number #27 Cumberland Street P.O. Box CB - 13016 Nassau, New Providence The Bahamas 242-356-0037 Principal Amount of Bridge Notes $1,500,000.00 - Cambex Corporation Purchased Purchaser's Legal Counsel Address and Balboni Law Group, L.L.C. Facsimile Number 3475 Lenox Road, Suite 990 Atlanta, GA 30326 404-812-3101 PURCHASER SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the Purchaser hereto has caused this Escrow Agreement to be executed under seal as of the date first above written. PURCHASER By: /s/ Jan Telander Name: Jan Telander Title: Director Purchaser Name Correllus International Ltd. ("Purchaser") Address and c/o EIG Corporate Finance Services Facsimile Number Edificio Marina Marbella, 6B Avenida Sever Olhoa 28 29600 Marbella, Spain +34-952-858-068 Securities Purchased Series I Bridge Note Purchase Price US$ 250,000.00 Purchaser's Legal Counsel Address and Per Ronnstrom. Facsimile Number Box 7315 SE-10390 Stockholm, Sweden Fax: +46-8-796-8223 PURCHASER SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the Purchaser hereto has caused this Escrow Agreement to be executed under seal as of the date first above written. PURCHASER Purchaser Name: SovCap Equity Partners, Ltd. By: /s/ Barry W.Herman Name: Barry W.Herman Title: President Purchaser Name SovCap Equity Partners, Ltd. ("Purchaser") Address and Cumberland House Facsimile Number #27 Cumberland Street P.O. Box N-10818 Nassau, New Providence The Bahamas 242-356-0037 Securities Purchased Purchase Price $100,000.00 Purchaser's Legal Counsel Address and Facsimile Number PURCHASER SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the Purchaser hereto has caused this Escrow Agreement to be executed under seal as of the date first above written. PURCHASER By: /s/ A. De Nazareth Name: A. De Nazareth Title: Co. Secretary Purchaser Name Arab Commerce Bank Ltd ("Purchaser") Address and P.O. Box 309 Facsimile Number Grand Cayman Cayman Islands 0171 437 2413 (London) Securities Purchased $150,000.00 Purchase Price $150,000.00 Purchaser's Legal Counsel Address and Facsimile Number EXHIBIT A TO ESCROW AGREEMENT Schedule of Fees Schedule of Fees: Escrow Fee $2,000.00 Wire Transfer Fee 10.00 per wire EX-10.9 9 0009.txt PLACEMENT AGENT AGREEMENT PLACEMENT AGENT AGREEMENT THIS PLACEMENT AGENT AGREEMENT ("Agreement"), made as of the 18th day of January, 2000, by and between CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), and SOVEREIGN CAPITAL ADVISORS, LLC, a Nevada limited liability company (the "Agent"). BACKGROUND The Company proposes to issue and sell its Series 1 Convertible Bridge Notes (the "Securities") resulting in gross proceeds to the Company of up to $2,000,000 (the "Offering"), in a transaction not involving a public offering and without registration under the Securities Act of 1933, as amended (the "Act"), pursuant to exemptions from the registration requirements of the Act under Section 4(2) of the Act and Regulation D promulgated under the Act ("Regulation D"). Agent has offered to assist the Company to structure the Offering and the Securities, and to introduce the Company to prospective investors on a "best efforts basis." The Company desires to secure the services of Agent on the terms and conditions hereinafter set forth. AGREEMENT For and in consideration of the mutual covenants herein, and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree: Section 1. Engagement of Agent. Section 1.1 Appointment. The Company hereby appoints Agent as its exclusive agent in connection with the proposed issuance and sale by the Company of securities resulting in gross proceeds to the Company of up to $2,000,000. Agent, on the basis of the representations and warranties herein contained, and upon and subject to the terms and conditions herein set forth, accepts such appointment. This appointment shall be irrevocable for the period commencing January 1, 2000 and ending January 20, 2000, which period maybe extended by the consent of the Company and Agent (the "Offering Period"). Section 1.2 Compensation. The Company shall pay Agent a finder's fee of ten percent (10%) of the gross proceeds derived from the offer, sale, and issuance of the Securities or any other securities issued by the Company issued by the Company during the Offering Period (the "Gross Proceeds") plus a combined accountable and non- accountable expense allowance of two percent (2%) of the Gross Proceeds. The Company agrees that the amount of such fees and expenses shall be deducted by Escrow Agent from the proceeds of the issuance and sale of the Securities. Section 1.3 Reimbursement of Expenses. The Company agrees to pay the expenses of Agent including the fees and expenses of counsel to Agent for the preparation of the Transaction Agreements in accordance with the Purchase Agreement, and the fees and expenses of the Escrow Agent in accordance with the Escrow Agreement in accordance with the fees provided for therein. The Company agrees that the amount of such fees and expenses shall be deducted by Escrow Agent from the proceeds of the issuance and sale of the Securities. Section 1.4 Limited Role of Agent. Agent has acted only as an advisor to the Company, Agent has advised the Company on the structure of the Offering and Securities, and has identified potential investors. The Company has offered the Securities to the investors and has negotiated directly with the investors in the Offering. Agent will use best efforts to introduce the Company only to "accredited investors" as defined in Regulation D. Wherever possible Agent will introduce the Company to prospective investors who are not "U.S. Persons," as defined in Regulation S. Section 1.5 Right of First Refusal. The Company hereby grants Agent a right of first refusal to act as placement agent for any future private financings of the Company, whether of equity securities, convertible debt securities, or securities or instruments convertible into or exchangeable for debt or equity securities of the Company, or similar transactions. This right of first refusal shall only apply to future financings in which the offering, conversion, or exchange price per share under such future financings is equal to or less than the Conversion Price stated in the Bridge Notes. The duration of Agent's right of first refusal under this Section 1.5 shall be for a period of one (1) year following the final Closing of the Offering. In the event that the Company wishes to undertake a transaction described in this Section 1.5, the Company shall send Agent a written notice of the proposed transaction (whether the transaction is initiated by the Company or is offered to the Company by a third party) in sufficient specificity to allow Agent to understand the proposed transaction clearly. This notice must be delivered to Agent at least twenty days prior to the proposed closing of the transaction. Agent shall have ten days from receipt of that notice to determine whether or not it wishes to exercise its right of first refusal with respect to that transaction. Agent shall notify the Company in writing of its decision to exercise or waive its right of first refusal with respect to the transaction described in the notice. If Agent waives its right of first refusal with respect to a particular transaction, the Company may proceed with that transaction, provided however, that if the terms of the transaction are changed in any material way from the terms set forth in the notice to Agent, Agent's right of first refusal shall commence again. Agent's waiver of its rights of first refusal with respect to any specific transaction shall not act as a waiver of its rights with respect to future transactions within the applicable time period. Section 1.6 Confidentiality. The Company agrees to maintain the confidentiality of all prospective investors identified to the Company by Agent, except as required by applicable law. For a period of two (2) years from the Closing, the Company will not solicit or enter into any financing transaction with such investors without the written consent of Agent and payment to Agent compensation no less than the compensation to be paid to Agent hereunder for raising a like amount. Section 1.7 Remedies. In the event that Company breaches Section 1.5 hereof or Section 1.6 hereof, Agent shall be entitled to receive compensation in respect of the financing giving rise to the breach of this Agreement at the rates set forth in Section 1.2 hereof. Section 2. Conduct of the Offering. Section 2.1 Offering Documents. The Company shall utilize a Series 1 Bridge Note Purchase and Security Agreement (the "Purchase Agreement"), Series 1 Bridge Notes in the form of Exhibit A to the Purchase Agreement (the "Series 1 Bridge Notes"), an Attached Repricing Warrant in the form attached to the Series 1 Bridge Notes attached as Attachment 1, a Common Stock Purchase Warrant in the form of Exhibit B to the Purchase Agreement (the "Purchase Warrant"), a Registration Rights Agreement in the form of Exhibit C to the Purchase Agreement the ("Registration Rights Agreement"), an Escrow Agreement in the form of Exhibit D to the Purchase Agreement (the "Escrow Agreement"), a form of opinion of Company counsel in the form of Exhibit E to the Purchase Agreement (the "Company Opinion"), a Form of Irrevocable Transfer Agent Instructions in the form of Exhibit F to the Purchase Agreement (the "Transfer Agent Instructions"), a certificate of the Company's Secretary (the "Secretary Certificate") and a certificate of the Company's chief executive officer ("Compliance Certificate") (collectively, the Purchase Agreement and all Exhibits thereto, the Secretary Certificate and the Compliance Certificate are herein after referred to as the "Transaction Agreements") in connection with the Offering. The Company and its counsel have reviewed, commented upon, and approved the Transaction Agreements. Section 2.2 Public Information. The Company within a reasonable amount of time prior to any Closing, shall provide each prospective investor with a copy of all information required by Rule 502(b)(2)(ii) of Regulation D promulgated pursuant to the Securities Act (collectively, "SEC Documents"). The SEC Documents have been prepared in conformity with the requirements (to the extent applicable) of the Securities and Exchange Act of 1934, as amended (the "Act") and the rules and regulations ("Rules and Regulations") of the Commission promulgated thereunder. As used in this Agreement, the term "Offering Documents" means collectively the SEC Documents and the Transaction Agreements, and all amendments, exhibits, and supplements thereto, together with any other documents which are provided to Agent by, or approved for Agent's use by, the Company for this Offering. Section 2.3 Accuracy of Offering Documents. The Offering Documents, at the time of delivery to Purchasers, conformed in all material respects with the requirements, to the extent applicable, of the Act and the applicable Rules and Regulations, and did not include any untrue statement of a material fact, or omit to state any material fact required to be stated therein, or necessary, to make the statements therein, in light of the circumstances under which they were made, not misleading. At each Closing, the Offering Documents will contain all statements which are required to be stated therein in accordance with the Act and the Rules and Regulations for the purposes of the proposed Offering, and all statements of material fact contained in the Offering memorandum will be true and correct, and the Offering Documents will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company does not make any representations or warranties as to the information contained in or omitted from the Offering Documents in reliance upon written information furnished on behalf of Agent specifically for use therein. Agent has no responsibility for the contents, accuracy, or adequacy of the Offering Documents, or for the compliance of the Offering Documents, with the requirements of Rule 502(b)(2)(ii) of Regulation D promulgated pursuant to the Securities Act. Section 2.4 Duty to Amend. If, at any time during the Offering, or such longer period as the Offering Documents are required to be delivered under the Act, any event occurs or any event known to the Company relating to or affecting the Company shall occur as a result of which the Offering Documents as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time after the date hereof to amend or supplement the Offering Documents to comply with the Act or the applicable Rules and Regulations, the Company shall forthwith notify Agent thereof and shall prepare such further amendment or supplement to the Offering Documents as may be required and shall furnish and deliver to Agent and to others, whose names and addresses are designated by Agent, all at the cost of the Company, a reasonable number of copies of the amendment or supplement or of the amended or supplemented Offering Documents which, as so amended or supplemented, will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the Offering Documents not misleading in the light of the circumstances when it is delivered to a purchaser or prospective purchaser, and which will comply in all respects with the requirements (to the extent applicable) of the Act and the applicable Rules and Regulations. Section 2.5 Escrow of Funds. Pursuant to the Escrow Agreement, executed by the Company, the person named as escrow agent in the Escrow Agreement (the "Escrow Agent"), and the prospective investors who have executed signature pages to the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement (the "Purchasers"), the purchase price for the Securities to be purchased as reflected on the Purchaser Signature Page to the Purchase Agreement shall be wired to the to the Escrow Agent to be held by the Escrow Agent as provided in the Escrow Agreement. Section 2.6 Approval of Investors. Prior to each closing, the Company shall have the right to approve each Purchaser. If the Company withholds approval of any Purchaser, the purchase price wired to Escrow Agent by such Purchaser shall be returned to such Purchaser along with the Purchaser Signature Pages of such Purchaser to the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement. The right to withhold approval of any Purchaser shall be deemed to have been waived if the Company authorizes the Escrow Agent to disburse funds provided by any Purchaser at any closing. Section 2.7 Delivery of Securities. Securities in such form that, subject to applicable transfer restrictions as described in the Purchase Agreement, they can be negotiated by the holders thereof (issued in such denominations and in such names as the Purchasers of the Securities may request shall be delivered by the Company to the counsel for Placement Agent, with copies made available to Agent for checking at least one (1) full business day prior to the Closing Date, it being understood that the directions from Agent to the Company shall be given at least two (2) full business days prior to the Closing Date. The Securities shall be delivered at the Initial Closing and at each Subsequent Closing. Section 2.8 Initial Closing. The Initial Closing (the "Initial Closing") shall occur at such time as (a) Purchasers have delivered to the Company (care of Balboni Law Group LLC, counsel for Agent) executed Purchaser Signature Pages to each of the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement, (b) the Company has not withheld approval the Purchasers, and (c) all other conditions to the obligation of the Purchasers and the Company to close the transactions contemplated by the Purchase Agreement have been satisfied or waived. Section 2.9 Subsequent Closings. In the event that the Initial Closing shall be for an amount of Securities that is less than the amount of the Offering, the Offering may be continued, and additional Closings may be held (each a "Subsequent Closing") throughout the Offering Period. (a) Purchasers have delivered to the Company (care of Balboni Law Group LLC, counsel for Agent) executed Purchaser Signature Pages to each of the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement, (b) the Company has not withheld approval the Purchasers, and (c) all other conditions to the obligation of the Purchasers and the Company to close the transactions contemplated by the Purchase Agreement have been satisfied or waived. Section 2.10 Disbursements at Closing. At each Closing, the Company shall execute a Release Notice that authorizes the Escrow Agent to pay expenses of the Offering in the amounts specified, and effect a wire transfer of the net proceeds of such Closing to the Company or another entity designated therein by the Company. The authorization of the Company to release the funds held by the Escrow Agent is the Company's authorization to release the executed Transaction Agreements and Securities to the Purchasers. One complete set of executed Transaction Documents will be delivered to the Company. Section 2.11 Time and Place of Closings. The Initial Closing and any Subsequent Closing shall be held at the offices of Balboni Law Group LLC, 3475 Lenox Road, Suite 990, Atlanta, Georgia 30326, at 10:00 a.m. on such dates as are fixed in accordance with Sections 3.4 and 3.5 hereof. The Closing Date may be changed by mutual agreement of Agent and the Company. The Company agrees to rely on faxed signature pages from the Purchasers, without the requirement of obtaining an originally signed version of any of the Transactions Agreements to which a Purchaser is a Party. Section 3. Conditions of Agent's Obligations. Agent's obligations hereunder shall be subject to the accuracy, as of the Closing Date, of the representations and warranties on the part of the Company contained in this Agreement, to the fulfillment of or compliance by the Company with all covenants and conditions hereof, and to the following additional conditions: (a) There shall be no outstanding objection to any Transaction Agreement by the Company or its counsel or any Purchaser or its counsel. (b) The Company shall not have disclosed that the Offering Documents, or any amendment thereof or supplement thereto, contains an untrue statement of fact, which, in the opinion of counsel to Agent, is material, or omits to state a fact, which, in the opinion of such counsel, is material and is required to be stated therein, or is necessary to make the statements therein, under the circumstances in which they were made, not misleading. (c) Between the date hereof and the Closing Date, the Company shall not have sustained any loss on account of fire, explosion, flood, accident, calamity, or any other cause of such character as would materially adversely affect its business or property considered as an entire entity, whether or not such loss is covered by insurance. (d) There shall be no litigation instituted or overtly threatened against the Company, and there shall be no proceeding instituted or threatened against the Company before or by any federal or state commission, regulatory body, or administrative agency, or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision, or finding would materially adversely affect the business, franchises, license, permits, operations, or financial condition or income of the Company considered as an entity. (e) Except as contemplated herein or as set forth in the Offering Documents, during the period subsequent to the most recent financial statements contained in the Offering Documents, if any, and prior to the Closing Date, the Company (i) shall have conducted its business in the usual and ordinary manner as the same is being conducted as of the date hereof and (ii) except in the ordinary course of business, the Company shall not have incurred any liabilities or obligations (direct or contingent) or disposed of any assets, or entered into any material transaction, or suffered or experienced any substantially adverse change in its condition, financial or otherwise. At the Closing Date, the equity account of the Company shall be substantially the same as reflected in the most recent balance sheet contained in the Offering Documents without considering the proceeds from the sale of the Securities other than as may be set forth in the Offering Documents. (f) The authorization of the Securities by the Company and all proceedings and other legal matters incident thereto and to this Agreement shall be reasonably satisfactory in all respects to Agent and its counsel. (g) The Company shall have furnished Agent a copy of the Company opinion with respect to the sufficiency of all corporate proceedings and other legal matters relating to this Agreement as Agent may reasonably require. (h) The Company shall have furnished to Agent the opinion, dated the Initial Closing, addressed to Agent, from counsel to the Company, as required by the Purchase Agreement. (i) The Company shall have furnished to Agent a copy of the Compliance Certificate and the Secretary Certificate each dated as of the Closing Date. Section 4. Representations and Warranties of the Company. For the purpose of inducing Agent to enter into this and perform this Agreement, the Company hereby represents and warrants to and agrees with Agent as follows: Section 4.1 Corporation Condition. The Company's condition is as described in its Offering Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not in the aggregate materially adverse to the Company. The Offering Documents, taken as a whole, present fairly the business and financial position of the Company as of the Closing Date. Section 4.2 No Material Adverse Change. Except as may be reflected in or contemplated by the Offering Documents, subsequent to the dates as of which information is given in the Offering Documents, and prior to the Closing Date, there shall not have been any material adverse change in the condition, financial or otherwise, or in the results of operations of the Company or in its business taken as a whole. Section 4.3 No Defaults. Except as disclosed in the Offering Documents or in writing to Agent, the Company is not in default in any material respect in the performance of any material obligation, agreement, or condition contained in any debenture, note, or other evidence of indebtedness or any indenture or loan agreement of the Company. The execution and delivery of this Agreement, and the consummation of the transactions herein contemplated, and compliance with the terms of this Agreement, will not conflict with, or result in, a breach of any of the terms, conditions, or provisions of, or constitute a default under, the Articles of Organization or by-laws of the Company (in any respect that is material to the Company), any material note, indenture, mortgage, deed of trust, or other agreement or instrument to which the Company is a party or by which the Company or any property of the Company is bound, or to the Company's knowledge, any existing law, order, rule, regulation, writ, injunction, or decree of any government, governmental instrumentality, agency, or body, arbitration tribunal or court, domestic or foreign, having jurisdiction over the Company or any property of the Company. The consent, approval, authorization, or order of any court or governmental instrumentality, agency or body is not required for the consummation of the transactions herein contemplated except such as may be required under the Act or under the blue sky or securities laws of any state or jurisdiction. Section 4.4 Incorporation and Standing. The Company is, and at the Closing Date will be, duly formed and validly existing in good standing as a corporation under the laws of the Commonwealth of Massachusetts and with full power and authority (corporate and other) to own its properties and conduct its business, present and proposed, as described in the Offering Documents; the Company, has full power and authority to enter into this Agreement; and the Company is duly qualified and in good standing as a foreign entity in each jurisdiction in which the failure to so qualify would have a material adverse effect on the Company or its properties. Section 4.5 Legality of Securities. Prior to the Closing Date, the Securities will have been duly and validly authorized and issued, will be valid, binding and enforceable against the Company in accordance with their terms, and will conform in all material respects to the statements with regard thereto contained in the Offering Documents. Section 4.6 Legality of Conversion Shares. The Common Stock into which the Securities are convertible, when converted in accordance with the Securities will be duly and validly issued and outstanding, fully paid, and non-assessable and conform in all material respects to the statements with regard thereto contained in the Offering Documents. Section 4.7 Litigation. Except as set forth in the Offering Documents, there is now, and at the Closing Date there will be, no action, suit, or proceeding before any court or governmental agency, authority or body pending or, to the knowledge of the Company, threatened, which might result in judgments against the Company not adequately covered by insurance or which collectively might result in any material adverse change in the condition (financial or otherwise) or business of the Company or which would materially adversely affect the properties or assets of the Company. Section 4.8 Finders. The Company does not know of any outstanding claims for services in the nature of a finder's fee or origination fees with respect to the sale of the Securities hereunder for which Agent may be responsible, and the Company will indemnify Agent from any liability for such fees by any party who has a claim for such compensation from the Company and for which person Agent is not legally responsible (provided however, that Agent and the Company acknowledge that any finders fees due to Rancho Santa Fe Capital shall be the sole responsibility of Agent). Section 4.9 Tax Returns. The Company has filed all federal and state tax returns which are required to be filed, and has paid all taxes shown on such returns and on all assessments received by it to the extent such taxes have become due. All taxes with respect to which the Company is obligated have been paid or adequate accruals have been set up to cover any such unpaid taxes. Section 4.10 Authority. The execution and delivery by the Company of this Agreement have been duly authorized by all necessary action, and this Agreement is the valid, binding, and legally enforceable obligation of the Company subject to standard qualifications as to the availability of equitable remedies, the effect of bankruptcy and other laws relating to the protection of debtors and public policy opinions promulgated by the Commission with respect to indemnification against liabilities under the Act. Section 4.11 Actions by the Company. The Company will not take any action which will impair the effectiveness of the transactions contemplated by this Agreement. Section 5. Covenants of the Company. The Company covenants and agrees with Agent that: Section 5.1 Restrictions on Amendments. After the date hereof, the Company will not at any time, prepare and distribute any amendment or supplement to the Offering Documents, of which amendment or supplement Agent shall not previously have been advised and Agent and its counsel furnished with a copy within a reasonable time period prior to the proposed adoption thereof, or to which Agent shall have reasonable objected in writing on the ground that it is not in compliance with the Act or the Rules and Regulations (if applicable). Section 5.2 Expenses of Offering. The Company will pay, upon consummation of the Transaction, all costs and expenses incident to the Transaction Agreements, including all expenses incident to the authorization of the Securities, their issue and delivery to the Escrow Agent, any original issue taxes in connection therewith, all transfer taxes, if any, incident to the initial sale of the Securities, the fees and expenses of Agent's and the Company's counsel (except as provided below), and the cost of reproduction and furnishing to Agent copies of the Offering Documents as herein provided and as specifically set forth in Section 8.7 of the Purchase Agreement. Section 5.3 Availability of Information. Prior to the Closing Date, the Company will cooperate with Agent in such investigation as it may make or cause to be made of all of the properties, business, and operations of the Company in connection with the Offering of the Securities. The Company will make available to it in connection therewith such information in its possession as Agent may reasonably request and will make available to Agent such persons as Agent shall deem reasonably necessary and appropriate in order to verify or substantiate any such information so supplied. Section 5.4 Reports and Filings. The Company shall be responsible for making any and all filings required by the blue sky authorities and filings required by the laws of the jurisdictions in which the subscribers who are accepted for purchase of Securities are located, if any. Agent shall assist Company in this respect, but such filings shall be the responsibility of Company. Section 5.5 No Undisclosed Events, Liabilities, Developments, or Circumstances. The Company's condition is as described in its Offering Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not individually or in the aggregate materially adverse to the Company. The Offering Documents, taken as a whole, will present fairly the business and financial position of the Company as of each Closing Date. Section 5.6 No Material Adverse Change. Except as may be reflected in or contemplated by the Offering Documents, subsequent to the dates as of which information is given in the Offering Documents, and prior to each Closing Date, there shall not have been any material adverse change in the condition, financial, or otherwise, or in the results of operations of the Company or in its business taken as a whole. Section 6. Indemnification. Section 6.1 Indemnification of Agent. The Company agrees to indemnify and hold harmless Agent, each person who controls Agent within the meaning of Section 15 of the Act and Agent's employees, accountants, attorneys and agents (the "Agent's Indemnitees") against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Act or any other statute or at common law for any legal or other expenses (including the costs of any investigation and preparation) incurred by them in connection with any litigation, whether or not resulting in any liability, but only insofar as such losses, claims, damages, liabilities, and litigation arise out of or are based upon any untrue statement of material fact contained in the Offering Documents or any amendment or supplement thereto or any application or other document filed in any state or jurisdiction in order to qualify the Securities under the Blue Sky or securities laws thereof, or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein, under the circumstances under which they were made, not misleading, all as of the date of the Offering Documents or of such amendment as the case may be; provided however, that the indemnity agreement contained in this Section 6.1 shall not apply to amount paid in settlement of any such litigation, if such settlements are made without the consent of the Company, nor shall it apply to Agent's Indemnitees in respect to any such losses, claims, damages, or liabilities arising out of or based upon any such untrue statement or alleged untrue statement or any such omission or alleged omission, if such statement or omission was made in reliance upon information furnished in writing to the Company by Agent specifically for use in connection with the preparation of the Offering Documents or any such amendment or supplement thereto or any application or other document filed in any state or jurisdiction in order to qualify the Securities under the Blue Sky or securities law thereof. This indemnity agreement is in addition to any other liability which the Company may otherwise have to Agent's Indemnitees. Agent's Indemnitees agree, within ten (10) days after the receipt by them of written notice of the commencement of any action against them in respect to which indemnity may be sought from the Company under this Section 6.1, to notify the Company in writing of the commencement of such action; provided however, that the failure of Agent's Indemnitees to notify the Company of any such action shall not relieve the Company from any liability which it may have to Agent's Indemnitees on account of the indemnity agreement contained in this Section 6.1, and further shall not relieve the Company from any other liability which it may have to Agent's Indemnitees, and if Agent's Indemnitees shall notify the Company of the commencement thereof, the Company shall be entitled to participate in (and, to the extent that the Company shall wish, to direct) the defense thereof at its own expense, but such defense shall be conducted by counsel of recognized standing and reasonably satisfactory to Agent's Indemnitees, defendant or defendants, in such litigation. The Company agrees to notify Agent's Indemnitees promptly of the commencement of any litigation or proceedings against the Company or any of the Company's officers or directors of which the Company may be advised in connection with the issue and sale of any of the Securities and to furnish to Agent's Indemnitees, at their request, to provide copies of all pleadings therein and to permit the Company's Indemnitees to be observers therein and apprise Agent's Indemnitees of all developments therein, all at the Company's expense. Section 6.2 Indemnification of Company. Agent agrees, in the same manner and to the same extent as set forth in Section 6.1 above, to indemnify and hold harmless the Company, and the Company's and Company's employees, accountants, attorneys, and agents (the "Company's Indemnitees") with respect to (a) any statement in or omission from the Offering Documents or any amendment or supplement thereto or any application or other document filed in any state or jurisdiction in order to qualify the Securities under the Blue Sky or securities laws thereof, or any information furnished pursuant to Section 2.2 hereof, if such statement or omission was made in reliance upon information furnished in writing to the Company by Agent on its behalf specifically for use in connection with the preparation thereof or supplement thereto, or (b) any untrue statement of a material fact made by Agent or its agents not based on statements in the Offering Documents or authorized in writing by the Company, or with respect to any misleading statement made by Agent or its agents resulting from the omission of material facts which misleading statement is not based upon the Offering Documents, or information furnished in writing by the Company or, (c) any breach of any representation, warranty, or covenant made by Agent in this Agreement. Agent's liability hereunder shall be limited to the amount received by it for acting as Agent in connection with the Offerings. Agent shall not be liable for amounts paid in settlement of any such litigation if such settlement was effected without its consent. In case of the commencement of any action in respect of which indemnity may be sought from Agent, the Company's Indemnitees shall have the same obligation to give notice as set forth in Section 6.1 above, subject to the same loss of indemnity in the event such notice is not given, and Agent shall have the same right to participate in (and, to the extent that it shall wish, to direct) the defense of such action at its own expense, but such defense shall be conducted by counsel of recognized standing reasonably satisfactory to the Company. Agent agrees to notify the Company's Indemnitees and, at their request, to provide copies of all pleadings therein and to permit the Company's Indemnitees to be observers therein and apprise them of all the developments therein, all at Agent's expense. Section 7. Termination. Section 7.1 Termination by Agent. This Agreement may be terminated at any time during the Offering Period by Agent by written notice to the Company, if the Company shall have failed or been unable to comply with any of the terms, conditions, or provisions of the Transaction Agreements to be performed, complied with, or fulfilled by the Company within the respective times, if any, herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by Agent in writing. Section 7.2 Termination by Company. This Agreement may be terminated by the Company at the conclusion of the Offering Period by notice to Agent if Agent shall have failed or been unable to comply with any of the terms, conditions, or provisions of this Agreement to be performed, complied with, or fulfilled by Agent within the respective times, if any, herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by the Company in writing. Section 7.3 Termination for Force Majeure Events. This Agreement may be terminated by Agent by notice to the Company at any time, if, in the reasonable, good faith judgment of Agent, payment for and delivery of the Securities is rendered impracticable or inadvisable because: (a) additional material governmental restrictions not in force and effect on the date hereof shall have been imposed upon trading in securities generally; (b) a war or other national calamity shall have occurred; or (c) the condition of the market (either generally or with reference to the sale of the Securities to be offered hereby) or the condition of any matter affecting the Company or any other circumstance is such that it would be undesirable, impracticable or inadvisable, in the judgment of Agent, to proceed with this Agreement or with the Offering. Section 7.4 Termination without Liability. Any termination of this Agreement pursuant to this Section shall be without liability of any character (including, but not limited to, loss of anticipated profits or consequential damages) on the part of any party thereto, except that the Company shall remain obligated to pay the costs and expenses provided to be paid by it specified in Sections 1.3 and 5.2, and the Company and Agent shall be obligated to pay, respectively, all losses, claims, damages, or liabilities, joint or several, under Section 6.1 in the case of the Company and Section 6.2 in the case of Agent. Section 8. Miscellaneous. Section 8.1 Notices. Whenever notice is required by the provisions of this Agreement to be given, such notice shall be in writing, addressed: If to Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 With a copy to: Ropes & Gray One International Place Boston, Massachusetts 02110 Attention: John E. Beard Tel: (617) 951-7000 Fax: (617) 951-7050 If to Agent: Sovereign Capital Advisors, LLC 3340 Peachtree Road, N.E. Suite 2265 Atlanta, Georgia 30326 Attention: Paul Hamm Tel: (404) 814-3737 Fax: (404) 812-3738 With a copy to: Balboni Law Group LLC 3475 Lenox Road Suite 990 Atlanta, Georgia 30326 Attention: Gerardo M. Balboni II, Esq. Tel: (404) 812-3100 Fax: (404) 812-3101 8.2 Benefit. This Agreement is made solely for the benefit of Agent and the Company, their respective officers and directors and any controlling person referred to in Section 15 of the Act and their respective successors and assigns, and no other person may acquire or have any right under or by virtue of this Agreement, including, without limitation, the holders of any Securities. The term "successor" or the term "successors and assigns" as used in this Agreement shall not include any purchasers, as such, of any of the Securities. 8.3 Survival. The respective indemnities, agreements, representations, warranties, covenants and other statements of the Company and Agent, or the officers, directors or controlling persons of the Company and Agent as set forth in or made pursuant to this Agreement and the indemnity agreements of the Company and Agent contained in Section 7 hereof shall survive and remain in full force and effect, regardless of (a) any investigation made by or on behalf of the Company or Agent or any such officer, director or controlling person of the Company or of Agent; (b) delivery of or payment for the Securities; or (c) the Closing Date, and any successor of the Company or Agent or any controlling person, officer or director thereof, as the case may be, shall be entitled to the benefits hereof. 8.4 Governing Law. The validity, interpretation, and construction of this Agreement will be governed by the laws of the Commonwealth of Massachusetts without regard to its principles of conflict of laws. Any dispute or controversy between the parties arising in connection with this Agreement or the subject matter contemplated by this Agreement shall be resolved by arbitration before a three-member panel of the American Arbitration Association in accordance with the commercial arbitration rules of said forum and the Federal Arbitration Act, 9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said arbitrators shall be empowered to award all forms of relief and damaged claimed, including, but not limited to, attorney's fees, expenses of litigation and arbitration, exemplary damages, and prejudgment interest. The parties further agree that any arbitration action or other action between them shall be brought by one party against the other shall be brought in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. 8.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which may be deemed an original and all of which together will constitute one and the same instrument. 8.6 Confidential Information. All confidential financial or business information (except publicly available or freely usable material otherwise obtained from another source) respecting either party will be used solely by the other party in connection with the within transactions, be revealed only to employees or contractors of such other party who are necessary to the conduct of such transactions, and be otherwise held in strict confidence. 8.7 Public Announcements. Prior to the Closing Date, neither party hereto will issue any public announcement concerning the within transactions without the approval of the other party. 8.8 Finders. The parties acknowledge that except as specifically set forth in Section 4.8 hereof, no person has acted as a finder in connection with the transactions contemplated herein and each will agree to indemnify the other with respect to any other claim for a finder's fee in connection with the Offering. 8.9 Recitals. The recitals to this Agreement are a material part hereof, and each recital is incorporated into this Agreement by reference and made apart of this Agreement. IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be executed as of the day and year first above written. [Signatures on the following page] COMPANY SIGNATURE PAGE TO PLACEMENT AGENT AGREEMENT THE COMPANY: CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President AGENT SIGNATURE PAGE TO PLACEMENT AGENT AGREEMENT AGENT: SOVEREIGN CAPITAL ADVISORS, LLC By: Don Odom By: /s/ Paul Hamm Paul Hamm EX-10.10 10 0010.txt GUARANTY AGREEMENT GUARANTY AGREEMENT THIS GUARANTY AGREEMENT ("Guaranty") is given this 18th day of January, 2000, to the persons and entities listed on Schedule 1 hereto by JOSEPH KRUY ("Guarantor") as security for the obligations of Cambex Corporation, a Massachusetts corporation (the "Company") described below. The entities on Schedule 1 are hereinafter collectively referred to as "Purchasers." Defined terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to them in the Purchase Agreement. Background Purchasers have purchased up to an aggregate $2,000,000 in principal amount of the Company's Series 1 Bridge Notes ("Bridge Notes") issued by the Company pursuant to a Series 1 Bridge Note Purchase Agreement of even date herewith (the "Purchase Agreement"). Guarantor is the holder of 979,239 shares of Common Stock of the Company, represented by the copied certificates attached hereto as Exhibit A (collectively the "Pledged Shares;" the Pledged Shares are sometimes collectively referred to as "Pledged Securities"). The execution and delivery of this Agreement was a condition precedent and a material inducement to Purchasers to purchase the Bridge Notes guarantied hereby. Guarantor as the President and Chief Executive Officer and a stockholder of the Company receives a significant benefit from the sale to Purchasers of the Bridge Notes issued by the Company. Guarantor acknowledges that Purchasers would not have purchased the Bridge Notes without the execution and delivery of this Guaranty Agreement. Guarantor acknowledges that because of the direct benefit to the Guarantor from the proceeds of the sale of the Bridge Notes by the Company, the Guarantor agreed to guaranty to the Purchasers the performance of the obligations of the Company as and to the extent set forth herein. Agreement For and in consideration of the execution and delivery of the Purchase Agreement by Purchasers and the purchase by Purchasers of the Bridge Notes, the Guarantor hereby covenants and agrees with the Purchaser as follows: Section 1. Guaranty of Payment. Guarantor hereby unconditionally and irrevocably guarantees to Purchasers the full payment and performance, when due, by acceleration or otherwise, of all past, present, and future indebtedness, liabilities, and obligations of the Company to Purchasers of any kind and description arising in connection with the Purchase Agreement, the Bridge Notes, the Stock Pledge Agreement, and this Guaranty Agreement (collectively, the "Bridge Note Purchase Documents"), whether direct or indirect, absolute or contingent, or due or to become due (collectively, the "Obligations"), it being understood by all the parties hereto that such guaranty of payment is limited to the value of the Pledged Securities at such time any action is taken with respect to the Pledged Securities pursuant to any Event of Default hereunder and that the parties hereto have no other recourse to the property and assets of the Guarantor other than the Pledged Securities. This Guaranty shall only relate to the Obligations and not to any other obligations of the Company which now or hereafter may be held by Purchasers and their respective successors and assigns. The guaranty of Guarantor as set forth in this section is an absolute, continuing, primary, and unconditional guaranty of payment and not of collection. If a claim is ever made upon Purchasers for the repayment or recovery of any amount or amounts received by Purchasers in payment of any of the Obligations and Purchasers repay all or part of such amount by reason of (a) any judgment, decree, or order of any court or administrative body having jurisdiction over Purchasers or any of their property, or (b) any settlement or compromise of any such claim effected by the Purchasers with any such claimant, including the Company, then in such event Guarantor agrees that any such judgment, decree, order, settlement, or compromise shall be binding upon Guarantor as if against the Guarantor and in favor of the Purchasers, notwithstanding any revocation hereof or the cancellation of any promissory note or other instrument evidencing any of the Obligations, and Guarantor shall be and remain obligated to Purchasers hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by Purchasers, such amount to be included in the term "Obligations." This Guaranty may be enforced by Purchasers against Guarantor without the necessity at any time of Purchasers (a) resorting to or exhausting any other security or collateral now or hereafter pledged, assigned, or granted to Purchasers and without the necessity at any time of Purchasers' having recourse against the Company on the Bridge Notes, or (b) exercising any other rights available to them under the Bridge Note Purchase Documents if neither the Company nor Guarantor timely performs the obligations of the Company thereunder. Section 2. Nature of Obligations. Guarantor acknowledges and agrees that no change in the nature or terms of the Obligations or the Bridge Note Purchase Documents (including any novation), whether by operation of law or otherwise, including, without limitation any impairment, modification, change, release, or limitation of the liability of the Company or any co-guarantor by reason of the Company's or any co-guarantor's bankruptcy or insolvency or any subsequent reorganization, merger, or consolidation of the Company or any other change in its composition, nature, personnel, or location shall discharge all or any part of the liabilities and obligations of Guarantor pursuant to this Guaranty. It is the purpose and intent of Guarantor and Purchasers that the covenants, agreements, and all liabilities and obligations of Guarantor hereunder are absolute, unconditional, and irrevocable under any and all circumstances, including, without limitation, the invalidity or unenforceability of any or all of the Bridge Note Purchase Documents. Without limiting the generality of the foregoing, Guarantor agrees that until each and every one of the covenants and agreements of this Guaranty are fully performed, and all of the obligations hereunder are paid, performed, satisfied, and discharged in full, Guarantor's undertakings hereunder and the Pledged Securities shall not be released, in whole or in part, by any action or thing which might, but for this paragraph of this Guaranty, be deemed a legal or equitable discharge of a surety or guarantor, or by reason of any waiver, omission of Purchasers, or their failure to proceed promptly or otherwise, or by reason of any action taken or omitted by Purchasers, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of Guarantor, including, without limitation, the failure of Purchasers to perfect, or to continue the perfection of, any lien or security interest in any security or any delay by Purchasers in perfecting any such lien or security interest, or by reason of any further dealings between the Company and Purchasers, or any other guarantor or surety; and Guarantor hereby expressly waives and surrenders any defense to its liability hereunder based upon, and shall be deemed to have consented to, any of the foregoing acts, omissions, things, agreements, or waivers. Without limiting the generality of the foregoing, Guarantor hereby gives its consent for the Purchaser to do any one or more of the following without in any manner affecting, impairing, limiting, modifying, or releasing any of the obligations of Guarantor under this Agreement and without notice to or consent of Guarantor: (a) exchange, compromise, or surrender the whole or any part of any security now or hereafter held for the Obligations; (b) exchange, extend, or renew the time or place of payment of the Obligations in whole or in part, to a time certain or otherwise whether or not longer than the original period, or withdraw credit or time to pay; (c) extend or change the terms of performance of any other obligations of the Company under the Bridge Note Purchase Documents; (d) modify, amend, or waive any of the provisions of the Bridge Note Purchase Documents; (e) release or grant indulgences to the Company, any co- guarantor, or any party to the Bridge Note Purchase Documents; (f) receive property or other security as collateral for the Obligations; (g) fail to exercise due diligence or omit to enforce any right, power, or privilege under the Bridge Note Purchase Documents; and (h) apply any payment received by Purchasers from the Company of, or on account of, the Obligations, in any manner Purchasers elect. Section 3. Waiver of Rights. Guarantor expressly waives: (a) notice of the execution and delivery of the Bridge Note Purchase Documents and creation of the Obligations; (b) notice of acceptance of this Guaranty by Purchasers and of all extensions of credit to the Company by Purchasers; (c) presentment and demand for payment of any of the Obligations; (d) protest and notice of dishonor or of default or nonpayment to Guarantor or to any other party with respect to the Obligations or with respect to any security therefor; (e) notice of the Purchaser's obtaining, amending, substituting for, releasing, waiving, or modifying any security interest, liens, or encumbrances now or hereafter securing the Obligations, or subordinating, compromising, discharging, or releasing such security interests, liens, or encumbrances by Purchasers and any other notices whatever; (f) demand for payment under this Guaranty; and (g) all rights of subrogation, indemnification, contribution, and reimbursement from the Company, all rights to enforce any remedy Purchasers may have against the Company, and any benefit of, or right to participate in, any collateral or security now or hereinafter held by Purchasers in respect of the Obligations, until the Company shall have paid in full all Bridge Notes issued by the Company pursuant to (i) the Bridge Note Purchase Agreement of even date herewith, as the same may hereafter be amended, extended, or modified. Section 4. Term of Guaranty; Warranties. This Guaranty shall continue in full force and effect until the Obligations are fully paid, performed, and discharged. . The Obligations shall be regarded as discharged for this purpose upon the first to occur of either full and final payment of the Obligations due under or in connection with the Bridge Notes or conversion thereof pursuant to their terms, plus discharge of any expenses payable by Borrower to or for the benefit of Purchasers outstanding at that time. Guarantor warrants and represents to Purchasers that (a) Guarantor will directly benefit from the financial accommodations being extended to the Company by Purchasers; (b) this Guaranty is binding upon and enforceable against Guarantor, in accordance with its terms; (c) the execution and delivery of this Guaranty do not violate or constitute a breach of any agreement to which any Guarantor is a party or of any applicable laws; and (d) there is no litigation, claim, action, or proceeding pending, or, to the best knowledge of Guarantor, threatened against any Guarantor that would materially adversely affect the financial condition of any Guarantor or its ability to fulfill its obligations hereunder. Section 5. Attorneys' Fees and Costs of Collection. If at any time or times hereafter Purchasers employ counsel to pursue collection, to intervene, to sue for enforcement of, or take any other action with respect to the terms hereof or of the Bridge Notes, then in such event, all of the reasonable attorneys' fees and disbursements relating thereto and any other fees and disbursements incurred by or on behalf of the Purchaser, including costs and legal fees in any appeal due to the failure of the Company to pay the Obligations when due and payable, shall be an additional liability of Guarantor to Purchasers, payable on demand. Section 6. Events of Default. The occurrence of any one or more of the following events shall constitute an event of default (an "Event of Default") under this Guaranty: (a) the material failure of a Guarantor to perform, observe, or comply with any of the provisions of this Guaranty, including, without limitation, the payment provisions; (b) the occurrence and continuance of an Event of Default (as defined therein) under any of the Bridge Note Purchase Documents; (c) the receipt by Purchasers of any materially false, inaccurate, or misleading information contained in any financial statement, application, schedule, report, or any other document given by or on behalf of Guarantor in connection with this Guaranty; (d) the entry of any order for relief under any provision of Title 11 of the United States Code (entitled "Bankruptcy"), as amended, or under any similar federal or state statute in any bankruptcy case filed by or against the Guarantor; or (e) the appointment of a receiver or custodian for, the making of a general assignment for the benefit of creditors by, or the insolvency of a Guarantor. Upon the occurrence and during the continuance of an Event of Default under this Guaranty, Purchasers may, at their option, declare an amount equal to any or all of the then unpaid balance of the Obligations (whether then due or not) to be immediately due and payable by Guarantor, and Guarantor shall on demand pay the same to Purchasers in immediately available funds, in lawful money of the United States of America. Section 7. Guaranty Secured. The joint and several obligations of the Guarantor hereunder are secured by a Stock Pledge Agreement of even date herewith among the Company, Guarantor, and Purchasers, and Purchasers are entitled to all of the rights and privileges thereof. Section 8. Cumulative Rights. All rights of Purchasers hereunder or otherwise arising under any of the Bridge Note Purchase Documents are separate and cumulative and may be pursued separately, successively, or concurrently, or not pursued, without affecting or limiting any other right of Purchasers and without affecting or impairing the liability of Guarantor. Section 9. Assignment. Purchasers may, without notice to or consent of Guarantor and subject to restrictions on transfer in the Bridge Note Purchase Agreement, sell, assign, or transfer to any person or persons all or any part of the Obligations, and each such person or persons shall have the right to enforce this Guaranty as fully as Purchasers, provided that the Purchaser shall continue to have the unimpaired right prior and superior to that of any such assignee, transferee, or holder to enforce this Guaranty as to so much of the Obligations that it has not sold, assigned, or transferred. Section 10. Successors and Assigns. This Guaranty shall bind Guarantor and his heirs, executors, administrators, legal representatives, successors, and assigns and shall inure to the benefit of, and be enforceable by, Purchasers and their heirs, executors, administrators, legal representatives, successors and assigns, including, without limitation, each and every person who shall from time to time be or become the holder of any of the Bridge Note Purchase Documents. Section 11. Notices. Notices under this Guaranty shall be given in writing and shall be deemed served at the earlier of (a) receipt, (b) three (3) days after deposit in the United States mail, sent certified or registered mail, return receipt requested, postage prepaid, or (c) upon receipt by facsimile machine, and addressed to the parties at the following addresses, or at such other addresses as the parties shall designate in writing: If to the Guarantor: Peter Kruy c/o Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Tel: (781) 890-6000 Fax: (781) 890-2899 With a copy to: Ropes & Gray One International Place Boston, Massachusetts 02110 Attention: John E. Beard Telephone: (617) 951-7411 Facsimile: (617) 951-7050 If to Purchasers, at the address of each Purchaser on Schedule 1 hereto, under the caption "Purchaser's name and address" with a copy to such Purchaser's legal counsel, at the address set forth adjacent to the address of such Purchaser on Schedule 1 hereto, under the caption "Purchaser's Counsel's name and address". Personal delivery to a party or to any officer, partner, agent, or employee of such party at its address herein shall constitute receipt. Rejection or other refusal to accept or inability to deliver because of changed address of which no notice has been received also shall constitute receipt. Section 12. Amendment. This Guaranty may be terminated, amended, supplemented, waived, released or modified only by an instrument in writing signed by the party against whom the enforcement of the termination, amendment, supplementation, waiver, release, or modification is sought. Section 13. Usury. Notwithstanding any other provisions herein contained, no provision of this Guaranty shall require or permit the collection from Guarantor of interest in excess of the maximum rate or amount that Guarantor may be required or permitted to pay pursuant to any applicable law. Section 14. Governing Law. This Guaranty shall be deemed to be a contract made under, and for all purposes shall be construed and interpreted in accordance with the internal laws of the Commonwealth of Massachusetts without giving effect to the principles or rules governing conflict of laws. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. Section 15. Multiple Counterparts; Pronouns; Captions; Severability. This Guaranty may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute but one and the same document. Captions are for reference only and in no way limit the terms of this Guaranty. Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but invalidation of any one or more of the provisions of this Guaranty shall in no way affect any of the other provisions hereof, which shall remain in full force and effect. IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of the day and year first above written. [Signatures on following pages] COMPANY SIGNATURE PAGE TO GUARANTY AGREEMENT THE COMPANY: CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy [Guarantor signatures on following page] GUARANTOR SIGNATURE PAGE TO GUARANTY AGREEMENT /s/ Joseph Kruy Joseph Kruy SCHEDULE 1 TO GUARANTY AGREEMENT Schedule of Purchasers Purchaser Name and Purchaser's Counsel's Principal Amount Address Name and Address Purchased Purchaser Name Purchaser's Legal $ Address and Counsel Facsimile Number Address and Facsimile Number SovCap Equity $1,600,000 Partners, Ltd. Correllus $250,000 International Ltd. Arab Commerce Bank, $150,000 Ltd. Total $2,000,000 EX-10.11 11 0011.txt GUARANTY AGREEMENT GUARANTY AGREEMENT THIS GUARANTY AGREEMENT ("Guaranty") is given this 18th day of January, 2000, to the persons and entities listed on Schedule 1 hereto by CYBERFIN CORP. ("Guarantor"), a Massachusetts corporation, as security for the obligations of Cambex Corporation, a Massachusetts corporation (the "Company") described below. The entities on Schedule 1 are hereinafter collectively referred to as "Purchasers." Defined terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to them in the Purchase Agreement. Background Purchasers have purchased up to an aggregate $2,000,000 in principal amount of the Company's Series 1 Bridge Notes ("Bridge Notes") issued by the Company pursuant to a Series 1 Bridge Note Purchase Agreement of even date herewith (the "Purchase Agreement"). Guarantor is the holder of 730,228 shares of Common Stock of the Company, represented by the copied certificates attached hereto as Exhibit A (collectively the "Pledged Shares;" the Pledged Shares are sometimes collectively referred to as "Pledged Securities"). The execution and delivery of this Agreement was a condition precedent and a material inducement to Purchasers to purchase the Bridge Notes guarantied hereby. Guarantor (a corporation whose sole shareholder is Executive Vice President and Chief Financial Officer of the Company) as a stockholder of the Company receives a significant benefit from the sale to Purchasers of the Bridge Notes issued by the Company. Guarantor acknowledges that Purchasers would not have purchased the Bridge Notes without the execution and delivery of this Guaranty Agreement. Guarantor acknowledges that because of the direct benefit to the Guarantor from the proceeds of the sale of the Bridge Notes by the Company, the Guarantor agreed to guaranty to the Purchasers the performance of the obligations of the Company as and to the extent set forth herein. Agreement For and in consideration of the execution and delivery of the Purchase Agreement by Purchasers and the purchase by Purchasers of the Bridge Notes, the Guarantor hereby covenants and agrees with the Purchaser as follows: Section 1. Guaranty of Payment. Guarantor hereby unconditionally and irrevocably guarantees to Purchasers the full payment and performance, when due, by acceleration or otherwise, of all past, present, and future indebtedness, liabilities, and obligations of the Company to Purchasers of any kind and description arising in connection with the Purchase Agreement, the Bridge Notes, the Stock Pledge Agreement, and this Guaranty Agreement (collectively, the "Bridge Note Purchase Documents"), whether direct or indirect, absolute or contingent, or due or to become due (collectively, the "Obligations"), it being understood by all the parties hereto that such guaranty of payment is limited to the value of the Pledged Securities at such time any action is taken with respect to the Pledged Securities pursuant to any Event of Default hereunder and that the parties hereto have no other recourse to the property and assets of the Guarantor other than the Pledged Securities. This Guaranty shall only relate to the Obligations and not to any other obligations of the Company which now or hereafter may be held by Purchasers and their respective successors and assigns. The guaranty of Guarantor as set forth in this section is an absolute, continuing, primary, and unconditional guaranty of payment and not of collection. If a claim is ever made upon Purchasers for the repayment or recovery of any amount or amounts received by Purchasers in payment of any of the Obligations and Purchasers repay all or part of such amount by reason of (a) any judgment, decree, or order of any court or administrative body having jurisdiction over Purchasers or any of their property, or (b) any settlement or compromise of any such claim effected by the Purchasers with any such claimant, including the Company, then in such event Guarantor agrees that any such judgment, decree, order, settlement, or compromise shall be binding upon Guarantor as if against the Guarantor and in favor of the Purchasers, notwithstanding any revocation hereof or the cancellation of any promissory note or other instrument evidencing any of the Obligations, and Guarantor shall be and remain obligated to Purchasers hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by Purchasers, such amount to be included in the term "Obligations." This Guaranty may be enforced by Purchasers against Guarantor without the necessity at any time of Purchasers (a) resorting to or exhausting any other security or collateral now or hereafter pledged, assigned, or granted to Purchasers and without the necessity at any time of Purchasers' having recourse against the Company on the Bridge Notes, or (b) exercising any other rights available to them under the Bridge Note Purchase Documents if neither the Company nor Guarantor timely performs the obligations of the Company thereunder. Section 2. Nature of Obligations. Guarantor acknowledges and agrees that no change in the nature or terms of the Obligations or the Bridge Note Purchase Documents (including any novation), whether by operation of law or otherwise, including, without limitation any impairment, modification, change, release, or limitation of the liability of the Company or any co-guarantor by reason of the Company's or any co-guarantor's bankruptcy or insolvency or any subsequent reorganization, merger, or consolidation of the Company or any other change in its composition, nature, personnel, or location shall discharge all or any part of the liabilities and obligations of Guarantor pursuant to this Guaranty. It is the purpose and intent of Guarantor and Purchasers that the covenants, agreements, and all liabilities and obligations of Guarantor hereunder are absolute, unconditional, and irrevocable under any and all circumstances, including, without limitation, the invalidity or unenforceability of any or all of the Bridge Note Purchase Documents. Without limiting the generality of the foregoing, Guarantor agrees that until each and every one of the covenants and agreements of this Guaranty are fully performed, and all of the obligations hereunder are paid, performed, satisfied, and discharged in full, Guarantor's undertakings hereunder and the Pledged Securities shall not be released, in whole or in part, by any action or thing which might, but for this paragraph of this Guaranty, be deemed a legal or equitable discharge of a surety or guarantor, or by reason of any waiver, omission of Purchasers, or their failure to proceed promptly or otherwise, or by reason of any action taken or omitted by Purchasers, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of Guarantor, including, without limitation, the failure of Purchasers to perfect, or to continue the perfection of, any lien or security interest in any security or any delay by Purchasers in perfecting any such lien or security interest, or by reason of any further dealings between the Company and Purchasers, or any other guarantor or surety; and Guarantor hereby expressly waives and surrenders any defense to its liability hereunder based upon, and shall be deemed to have consented to, any of the foregoing acts, omissions, things, agreements, or waivers. Without limiting the generality of the foregoing, Guarantor hereby gives its consent for the Purchaser to do any one or more of the following without in any manner affecting, impairing, limiting, modifying, or releasing any of the obligations of Guarantor under this Agreement and without notice to or consent of Guarantor: (a) exchange, compromise, or surrender the whole or any part of any security now or hereafter held for the Obligations; (b) exchange, extend, or renew the time or place of payment of the Obligations in whole or in part, to a time certain or otherwise whether or not longer than the original period, or withdraw credit or time to pay; (c) extend or change the terms of performance of any other obligations of the Company under the Bridge Note Purchase Documents; (d) modify, amend, or waive any of the provisions of the Bridge Note Purchase Documents; (e) release or grant indulgences to the Company, any co- guarantor, or any party to the Bridge Note Purchase Documents; (f) receive property or other security as collateral for the Obligations; (g) fail to exercise due diligence or omit to enforce any right, power, or privilege under the Bridge Note Purchase Documents; and (h) apply any payment received by Purchasers from the Company of, or on account of, the Obligations, in any manner Purchasers elect. Section 3. Waiver of Rights. Guarantor expressly waives: (a) notice of the execution and delivery of the Bridge Note Purchase Documents and creation of the Obligations; (b) notice of acceptance of this Guaranty by Purchasers and of all extensions of credit to the Company by Purchasers; (c) presentment and demand for payment of any of the Obligations; (d) protest and notice of dishonor or of default or nonpayment to Guarantor or to any other party with respect to the Obligations or with respect to any security therefor; (e) notice of the Purchaser's obtaining, amending, substituting for, releasing, waiving, or modifying any security interest, liens, or encumbrances now or hereafter securing the Obligations, or subordinating, compromising, discharging, or releasing such security interests, liens, or encumbrances by Purchasers and any other notices whatever; (f) demand for payment under this Guaranty; and (g) all rights of subrogation, indemnification, contribution, and reimbursement from the Company, all rights to enforce any remedy Purchasers may have against the Company, and any benefit of, or right to participate in, any collateral or security now or hereinafter held by Purchasers in respect of the Obligations, until the Company shall have paid in full all Bridge Notes issued by the Company pursuant to (i) the Bridge Note Purchase Agreement of even date herewith, as the same may hereafter be amended, extended, or modified. Section 4. Term of Guaranty; Warranties. This Guaranty shall continue in full force and effect until the Obligations are fully paid, performed, and discharged. The Obligations shall be regarded as discharged for this purpose upon the first to occur of either full and final payment of the Obligations due under or in connection with the Bridge Notes or conversion thereof pursuant to their terms, plus discharge of any expenses payable by Borrower to or for the benefit of Purchasers outstanding at that time. Guarantor warrants and represents to Purchasers that (a) Guarantor will directly benefit from the financial accommodations being extended to the Company by Purchasers; (b) this Guaranty is binding upon and enforceable against Guarantor, in accordance with its terms; (c) the execution and delivery of this Guaranty do not violate or constitute a breach of any agreement to which any Guarantor is a party or of any applicable laws; and (d) there is no litigation, claim, action, or proceeding pending, or, to the best knowledge of Guarantor, threatened against any Guarantor that would materially adversely affect the financial condition of any Guarantor or its ability to fulfill its obligations hereunder. Section 5. Attorneys' Fees and Costs of Collection. If at any time or times hereafter Purchasers employ counsel to pursue collection, to intervene, to sue for enforcement of, or take any other action with respect to the terms hereof or of the Bridge Notes, then in such event, all of the reasonable attorneys' fees and disbursements relating thereto and any other fees and disbursements incurred by or on behalf of the Purchaser, including costs and legal fees in any appeal due to the failure of the Company to pay the Obligations when due and payable, shall be an additional liability of Guarantor to Purchasers, payable on demand. Section 6. Events of Default. The occurrence of any one or more of the following events shall constitute an event of default (an "Event of Default") under this Guaranty: (a) the failure of a Guarantor to perform, observe, or comply with any of the provisions of this Guaranty, including, without limitation, the payment provisions; (b) the occurrence and continuance of an Event of Default (as defined therein) under any of the Bridge Note Purchase Documents; (c) the receipt by Purchasers of any materially false, inaccurate, or misleading information contained in any financial statement, application, schedule, report, or any other document given by or on behalf of Guarantor in connection with this Guaranty; (d) the entry of any order for relief under any provision of Title 11 of the United States Code (entitled "Bankruptcy"), as amended, or under any similar federal or state statute in any bankruptcy case filed by or against the Guarantor; or (e) the appointment of a receiver or custodian for, the making of a general assignment for the benefit of creditors by, or the insolvency of a Guarantor. Upon the occurrence and during the continuance of an Event of Default under this Guaranty, Purchasers may, at their option, declare an amount equal to any or all of the then unpaid balance of the Obligations (whether then due or not) to be immediately due and payable by Guarantor, and Guarantor shall on demand pay the same to Purchasers in immediately available funds, in lawful money of the United States of America. Section 7. Guaranty Secured. The joint and several obligations of the Guarantor hereunder are secured by a Stock Pledge Agreement of even date herewith among the Company, Guarantor, and Purchasers, and Purchasers are entitled to all of the rights and privileges thereof. Section 8. Cumulative Rights. All rights of Purchasers hereunder or otherwise arising under any of the Bridge Note Purchase Documents are separate and cumulative and may be pursued separately, successively, or concurrently, or not pursued, without affecting or limiting any other right of Purchasers and without affecting or impairing the liability of Guarantor. Section 9. Assignment. Purchasers may, without notice to or consent of Guarantor and subject to restrictions on transfer in the Bridge Note Purchase Agreement, sell, assign, or transfer to any person or persons all or any part of the Obligations, and each such person or persons shall have the right to enforce this Guaranty as fully as Purchasers, provided that the Purchaser shall continue to have the unimpaired right prior and superior to that of any such assignee, transferee, or holder to enforce this Guaranty as to so much of the Obligations that it has not sold, assigned, or transferred. Section 10. Successors and Assigns. This Guaranty shall bind Guarantor and its legal representatives, successors, and assigns and shall inure to the benefit of, and be enforceable by, Purchasers and their heirs, executors, administrators, legal representatives, successors and assigns, including, without limitation, each and every person who shall from time to time be or become the holder of any of the Bridge Note Purchase Documents. Section 11. Notices. Notices under this Guaranty shall be given in writing and shall be deemed served at the earlier of (a) receipt, (b) three (3) days after deposit in the United States mail, sent certified or registered mail, return receipt requested, postage prepaid, or (c) upon receipt by facsimile machine, and addressed to the parties at the following addresses, or at such other addresses as the parties shall designate in writing: If to the Guarantor: Cyberfin Corporation c/o Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attn: Peter Kruy Tel: (781) 890-6000 Fax: (781) 890-2899 With a copy to: Ropes & Gray One International Place Boston, Massachusetts 02110 Attention: John E. Beard Telephone: (617) 951-7411 Facsimile: (617) 951-7050 If to Purchasers, at the address of each Purchaser on Schedule 1 hereto, under the caption "Purchaser's name and address" with a copy to such Purchaser's legal counsel, at the address set forth adjacent to the address of such Purchaser on Schedule 1 hereto, under the caption "Purchaser's Counsel's name and address". Personal delivery to a party or to any officer, partner, agent, or employee of such party at its address herein shall constitute receipt. Rejection or other refusal to accept or inability to deliver because of changed address of which no notice has been received also shall constitute receipt. Section 12. Amendment. This Guaranty may be terminated, amended, supplemented, waived, released or modified only by an instrument in writing signed by the party against whom the enforcement of the termination, amendment, supplementation, waiver, release, or modification is sought. Section 13. Usury. Notwithstanding any other provisions herein contained, no provision of this Guaranty shall require or permit the collection from Guarantor of interest in excess of the maximum rate or amount that Guarantor may be required or permitted to pay pursuant to any applicable law. Section 14. Governing Law. This Guaranty shall be deemed to be a contract made under, and for all purposes shall be construed and interpreted in accordance with the internal laws of the Commonwealth of Massachusetts without giving effect to the principles or rules governing conflict of laws. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. Section 15. Multiple Counterparts; Pronouns; Captions; Severability. This Guaranty may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute but one and the same document. Captions are for reference only and in no way limit the terms of this Guaranty. Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but invalidation of any one or more of the provisions of this Guaranty shall in no way affect any of the other provisions hereof, which shall remain in full force and effect. IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of the day and year first above written. [Signatures on following pages] COMPANY SIGNATURE PAGE TO GUARANTY AGREEMENT THE COMPANY: CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy [Guarantor signatures on following page] GUARANTOR SIGNATURE PAGE TO GUARANTY AGREEMENT CYBERFIN CORPORATION By: /s/ Peter Kruy Peter Kruy, President SCHEDULE 1 TO GUARANTY AGREEMENT Schedule of Purchasers Purchaser Name and Purchaser's Counsel's Principal Amount Address Name and Address Purchased Purchaser Name Purchaser's Legal $ Counsel Address and Facsimile Number SovCap Equity $1,600,000 Partners, Ltd. Correllus $250,000 International Ltd. Arab Commerce Bank, $150,000 Ltd. Total $2,000,000 EX-10.12 12 0012.txt STOCK PLEDGE AGREEMENT STOCK PLEDGE AGREEMENT This Stock Pledge Agreement (this "Agreement") is made effective as of January 18, 2000, by and among Cambex Corporation, a Delaware corporation ("Cambex"), Joseph Kruy ("Pledging Officer"), a resident of the State of Massachusetts whose address is c/o Cambex Corporation, 360 Second Avenue, Waltham, MA 02451, and is an executive officer of Cambex, Cambex being the borrower under the Series 1 Bridge Note Purchase Agreement dated January 18, 2000 (the "Purchase Agreement"), by and among Cambex and the Purchasers thereunder (in such capacity, the "Borrower"), and the Purchasers as a party to the Purchase Agreement. Defined terms used and not otherwise defined in this Stock Pledge Agreement shall have the meanings ascribed to them in the Purchase Agreement. Background A. Borrower is indebted to Purchasers in the collective sum of $2,000,000, evidenced by one or more Bridge Notes of Borrower for such amount issued by Borrower pursuant to all Closings conducted under the Purchase Agreement, a copy/copies of which are attached hereto as Exhibit A. B. Borrower has agreed to cause certain stock owned by Pledging Officers to be pledged to Purchasers as security for Pledging Officer's limited guaranty of the repayment of the Bridge Notes evidenced by the Guaranty Agreement of even date herewith executed by the Pledging Officer. In consideration of the foregoing premises, Ten Dollars ($10.00) in hand paid, and other legal and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to the following terms intending to be legally bound thereby. 1. Pledge. In consideration of the transactions consummated under the Purchase Agreement pursuant to the Closings, the Pledging Officer hereby pledges and grants to Purchasers of Bridge Notes a first priority security interest in and to the 979,239 common shares of the capital stock of Cambex Corporation (the "Pledged Shares"). 2. Transfer and Possession by Representative. The Pledged Shares shall be delivered at the First Closing, by the delivery of certificate evidencing the Pledged Shares and a blank stock power attached to each such certificate executed by the respective Pledging Officer. The Pledged Shares shall be held by the Representative (as defined in the Purchase Agreement) or its designee as security for the repayment of the Note (which shall not be disposed of except in accordance with the provisions of paragraph 6 of this Agreement) with duly executed stock powers attached. Upon the first to occur of either full and final payment of the Bridge Notes or the conversion thereof pursuant to their terms, the Pledged Shares shall be released from the pledge as provided pursuant to this Agreement and such shares shall be returned to Borrower. The Representative's failure to tender any shares so released from the pledge within fifteen (15) days after final payment or conversion shall render this Agreement null and void, provided that no such termination of this Pledge Agreement shall be effective unless Borrower or Pledging Officer shall have given written notice of such failure and Purchasers shall have had seven (7) days from the later of: (1) the date of the written notice, or (2) the expiration of such fifteen (15) day period to cure the failure to tender such Pledged Shares. In order to induce Representative to serve as escrow agent hereunder, the parties hereby covenant and agree as follows: (1) Representative shall be obligated to perform only such duties as are expressly set forth herein, and shall not be required, in carrying out its duties, to refer to any agreement, instrument, or document. (2) Representative may rely on, and shall be protected in acting or refraining from acting upon, any written notice, instruction, or request furnished to it pursuant to this Agreement and believed by it to be genuine and to have been signed or presented by the proper party or parties. Representative is acting as a depositary only and is not a party to or bound by any agreement or undertaking which may be evidenced by or arise out of any items delivered to it pursuant to this Agreement, and is not responsible or liable in any manner for the sufficiency, correctness, genuineness, or validity of any such items undertakes no responsibility or liability for the form or execution of such items or the identity, authority, title, or rights of any person executing or depositing same. Representative shall not be liable to any of the parties to this Agreement or their respective heirs, successors and assigns for any action taken or omitted to be taken in good faith. (3) In the event of a dispute between any of the parties hereto, sufficient in the discretion of Representative to justify its doing so, Representative shall be entitled to tender into the registry or custody of any court of competent jurisdiction any property held by Representative under the terms of this Agreement, together with such legal proceedings as it deems appropriate, and thereupon to be discharged from all further duties under this Agreement. Any such legal action may be brought in any such court as Representative shall determine to have jurisdiction thereof. (4) Representative shall not earn any fees in connection with its duties pursuant to this Agreement. 3. Voting Right and Dividends. During the term of this pledge, and so long as Borrower is not in default in the performance of any of the terms of this Agreement or the Purchase Agreement or the Bridge Notes, Pledging Officer or its designee shall have the right to vote the Pledged Shares on all corporate questions and receive all dividends or distributions of cash or property distributed in respect of the Pledged Shares. 4. Adjustments. In the event that, during the term of this Agreement, any share dividend, reclassification, readjustment, or other change is declared or made in the capital structure of Cambex, all new, substituted, and additional shares, or other securities, issued by reason of any such change and in connection with the Pledged Shares, such new shares shall be held under the terms of this Agreement in the same manner as the Pledged Shares originally pledged hereunder. 5. Warrants and Rights. In the event that during the term of this Agreement, subscription warrants or any other rights or options shall be issued in connection with the Pledged Shares, such warrants, rights, and options shall be immediately assigned by Pledging Party to Representative, and if exercised by Pledging Party all new shares or other securities so acquired by Pledging Party shall be immediately assigned to the Representative to be held under the terms of this Agreement in the same manner as the Pledged Shares originally pledged hereunder. 6. Default. In the event of a continuing material default by Borrower in the performance of any of the terms of this Agreement or the Purchase Agreement, or under the Bridge Notes, Purchasers shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of Georgia on the effective date of this Agreement, and in this connection, Purchasers may, upon five days' notice to Borrower with a copy to the Representative, sent by certified mail, and without liability for any diminution in price which may have occurred, sell all the Pledged Shares remaining in the possession of the Representative (which shares shall be delivered by the Representative to Purchasers) in such manner and for such price as Purchasers may determine. At any bona fide public sale Purchasers shall be free to purchase all or any part of the Pledged Shares. Out of the proceeds of any sale Purchasers may retain any amount equal to the principal and interest then due on the Bridge Notes plus the amount of all expenses of such sale, and shall pay any balance of such proceeds to Pledging Officer less any other amounts owing by Borrower to Purchasers, such as actual attorneys' fees and costs incurred. In the event that the proceeds of any sale are insufficient to cover the principal and interest of the Bridge Notes plus actual attorneys' fees and costs plus expenses of the sale, Borrower shall remain liable to Purchasers for any deficiency. 7. Indemnity. In consideration of Representative agreeing to serve pursuant to the terms hereof, each of the parties, jointly and severally, agrees to indemnify the Representative for any fees, costs and expenses incurred by it in the course of performing its dutires as Representatie hereunder, and hold the Representative harmless from any liability that may arise from his serving as the Representative hereunder. [Remainder of page intentionally left blank; signatures begin on next page] BORROWER, REPRESENTATIVE, AND PLEDGING OFFICER SIGNATURE PAGE TO STOCK PLEDGE AGREEMENT IN WITNESS WHEREOF, the parties have executed or caused their duly authorized officer to execute this Agreement as of the date first written above. BORROWER: CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President REPRESENTATIVE: SOVCAP EQUITY PARTNERS, LTD. By: /s/ Barry W. Herman Name: Barry W. Herman Title: President Pledging Officer: /s/ Joseph Kruy Joseph Kruy PURCHASER SIGNATURE PAGE (ENTITY) TO STOCK PLEDGE AGREEMENT PURCHASER Purchaser Name: SovCap Equity Partners, Ltd. By: /s/ Barry W. Herman Name: Barry W. Herman Title: President Purchaser Name SovCap Equity Partners, Ltd. Address and Cumberland House, No. 27 Cumberland St. Facsimile Number P.O. Box N-10818 Nassau, New Providence, The Bahamas (242) 356-0037 Principal Amount of Bridge $1,600,000 Notes Purchased Purchaser's Legal Counsel Address and Facsimile Number PURCHASER SIGNATURE PAGE (ENTITY) TO STOCK PLEDGE AGREEMENT PURCHASER Purchaser Name: Correllus International Ltd. By: /s/ Jan Telander Name: Jan Telander Title: Director Purchaser Name Correllus International Ltd. Address and c/o EIG Corporate Financial Services Facsimile Number Edf. Marina Marbella, Avenida Sever Olhoa 28, 29600 Marbella Spain Fax: +34-952-858-068 Principal Amount of Bridge Notes Purchased USD250,000.00 Purchaser's Legal Counsel Per Ronnstrom Address and Box 7315 Facsimile Number SE-10390 Stockholm, Sweden Fax: +46-8-796-8223 PURCHASER SIGNATURE PAGE (ENTITY) TO STOCK PLEDGE AGREEMENT PURCHASER Purchaser Name: Arab Commerce Bank Ltd. By: /s/ A. De Nazareth Name: A. De Nazareth Title: Co. Secretary Purchaser Name Arab Commerce Bank Ltd. Address and P.O. Box 309 Facsimile Number Grand Cayman Cayman Islands 0171 437 2413 (London) Principal Amount of Bridge Notes Purchased $150,000.00 Purchaser's Legal Counsel Address and Facsimile Number EX-10.13 13 0013.txt STOCK PLEDGE AGREEMENT STOCK PLEDGE AGREEMENT This Stock Pledge Agreement (this "Agreement") is made effective as of January 18, 2000, by and among Cambex Corporation, a Massachusetts corporation ("Cambex"), Cyberfin Corp. ("Pledging Party"), a Massachusetts corporation whose address is at 360 Second Avenue, Waltham, MA 02451, and whose President, Peter Kruy, is also an executive officer of Cambex, Cambex being the borrower under the Series 1 Bridge Note Purchase Agreement dated January 18, 2000 (the "Purchase Agreement"), by and among Cambex and the Purchasers thereunder (in such capacity, the "Borrower"), and the Purchasers as a party to the Purchase Agreement. Defined terms used and not otherwise defined in this Stock Pledge Agreement shall have the meanings ascribed to them in the Purchase Agreement. Background A. Borrower is indebted to Purchasers in the collective sum of $2,000,000, evidenced by one or more Bridge Notes of Borrower for such amount issued by Borrower pursuant to all Closings conducted under the Purchase Agreement, a copy/copies of which are attached hereto as Exhibit A. B. Borrower has agreed to cause certain stock owned by Pledging Party to be pledged to Purchasers as security for Pledging Party's limited guaranty of the repayment of the Bridge Notes evidenced by the Guaranty Agreement of even date herewith executed by the Pledging Party. In consideration of the foregoing premises, Ten Dollars ($10.00) in hand paid, and other legal and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to the following terms intending to be legally bound thereby. 1. Pledge. In consideration of the transactions consummated under the Purchase Agreement pursuant to the Closings, the Pledging Party hereby pledges and grants to Purchasers of Bridge Notes a first priority security interest in and to the 979,239 common shares of the capital stock of Cambex Corporation (the "Pledged Shares"). 2. Transfer and Possession by Representative. The Pledged Shares shall be delivered at the First Closing, by the delivery of certificate evidencing the Pledged Shares and a blank stock power attached to each such certificate executed by the respective Pledging Party. The Pledged Shares shall be held by the Representative (as defined in the Purchase Agreement) or its designee as security for the repayment of the Note (which shall not be disposed of except in accordance with the provisions of paragraph 6 of this Agreement) with duly executed stock powers attached. Upon the first to occur of either full and final payment of the Bridge Notes or the conversion thereof pursuant to their terms, the Pledged Shares shall be released from the pledge as provided pursuant to this Agreement and such shares shall be returned to Borrower. The Representative's failure to tender any shares so released from the pledge within fifteen (15) days after final payment or conversion shall render this Agreement null and void, provided that no such termination of this Pledge Agreement shall be effective unless Borrower or Pledging Party shall have given written notice of such failure and Purchasers shall have had seven (7) days from the later of: (1) the date of the written notice, or (2) the expiration of such fifteen (15) day period to cure the failure to tender such Pledged Shares. In order to induce Representative to serve as escrow agent hereunder, the parties hereby covenant and agree as follows: (1) Representative shall be obligated to perform only such duties as are expressly set forth herein, and shall not be required, in carrying out its duties, to refer to any agreement, instrument, or document. (2) Representative may rely on, and shall be protected in acting or refraining from acting upon, any written notice, instruction, or request furnished to it pursuant to this Agreement and believed by it to be genuine and to have been signed or presented by the proper party or parties. Representative is acting as a depositary only and is not a party to or bound by any agreement or undertaking which may be evidenced by or arise out of any items delivered to it pursuant to this Agreement, and is not responsible or liable in any manner for the sufficiency, correctness, genuineness, or validity of any such items undertakes no responsibility or liability for the form or execution of such items or the identity, authority, title, or rights of any person executing or depositing same. Representative shall not be liable to any of the parties to this Agreement or their respective heirs, successors and assigns for any action taken or omitted to be taken in good faith. (3) In the event of a dispute between any of the parties hereto, sufficient in the discretion of Representative to justify its doing so, Representative shall be entitled to tender into the registry or custody of any court of competent jurisdiction any property held by Representative under the terms of this Agreement, together with such legal proceedings as it deems appropriate, and thereupon to be discharged from all further duties under this Agreement. Any such legal action may be brought in any such court as Representative shall determine to have jurisdiction thereof. (4) Representative shall not earn any fees in connection with its duties pursuant to this Agreement. 3. Voting Right and Dividends. During the term of this pledge, and so long as Borrower is not in default in the performance of any of the terms of this Agreement or the Purchase Agreement or the Bridge Notes, Pledging Party or its designee shall have the right to vote the Pledged Shares on all corporate questions and receive all dividends or distributions of cash or property distributed in respect of the Pledged Shares. 4. Adjustments. In the event that, during the term of this Agreement, any share dividend, reclassification, readjustment, or other change is declared or made in the capital structure of Cambex, all new, substituted, and additional shares, or other securities, issued by reason of any such change and in connection with the Pledged Shares, such new shares shall be held under the terms of this Agreement in the same manner as the Pledged Shares originally pledged hereunder. 5. Warrants and Rights. In the event that during the term of this Agreement, subscription warrants or any other rights or options shall be issued in connection with the Pledged Shares, such warrants, rights, and options shall be immediately assigned by Pledging Party to Representative, and if exercised by Pledging Party all new shares or other securities so acquired by Pledging Party shall be immediately assigned to the Representative to be held under the terms of this Agreement in the same manner as the Pledged Shares originally pledged hereunder. 6. Default. In the event of a continuing material default by Borrower in the performance of any of the terms of this Agreement or the Purchase Agreement, or under the Bridge Notes, Purchasers shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of Georgia on the effective date of this Agreement, and in this connection, Purchasers may, upon five days' notice to Borrower with a copy to the Representative, sent by certified mail, and without liability for any diminution in price which may have occurred, sell all the Pledged Shares remaining in the possession of the Representative (which shares shall be delivered by the Representative to Purchasers) in such manner and for such price as Purchasers may determine. At any bona fide public sale Purchasers shall be free to purchase all or any part of the Pledged Shares. Out of the proceeds of any sale Purchasers may retain any amount equal to the principal and interest then due on the Bridge Notes plus the amount of all expenses of such sale, and shall pay any balance of such proceeds to Pledging Party less any other amounts owing by Borrower to Purchasers, such as actual attorneys' fees and costs incurred. In the event that the proceeds of any sale are insufficient to cover the principal and interest of the Bridge Notes plus actual attorneys' fees and costs plus expenses of the sale, Borrower shall remain liable to Purchasers for any deficiency. 7. Indemnity. In consideration of Representative agreeing to serve pursuant to the terms hereof, each of the parties, jointly and severally, agrees to indemnify the Representative for any fees, costs and expenses incurred by it in the course of performing its dutires as Representatie hereunder, and hold the Representative harmless from any liability that may arise from his serving as the Representative hereunder. [Remainder of page intentionally left blank; signatures begin on next page] BORROWER, REPRESENTATIVE, AND PLEDGING OFFICER SIGNATURE PAGE TO STOCK PLEDGE AGREEMENT IN WITNESS WHEREOF, the parties have executed or caused their duly authorized officer to execute this Agreement as of the date first written above. BORROWER: CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President REPRESENTATIVE: SOVCAP EQUITY PARTNERS, LTD. By: /s/ Barry W. Herman Name: Barry W. Herman Title: President Pledging Officer: CyberFin Corporation /s/ Peter Kruy Peter Kruy PURCHASER SIGNATURE PAGE (ENTITY) TO STOCK PLEDGE AGREEMENT PURCHASER Purchaser Name: SovCap Equity Partners, Ltd. By: /s/ Barry W. Herman Name: Barry W. Herman Title: President Purchaser Name SovCap Equity Partners, Ltd. Address and Cumberland House, No. 27 Cumberland St. Facsimile Number P.O. Box N-10818 Nassau, New Providence, The Bahamas (242) 356-0037 Principal Amount of Bridge $1,600,000 Notes Purchased Purchaser's Legal Counsel Address and Facsimile Number PURCHASER SIGNATURE PAGE (ENTITY) TO STOCK PLEDGE AGREEMENT PURCHASER Purchaser Name: Correllus International Ltd. By: /s/ Jan Telander Name: Jan Telander Title: Director Purchaser Name Correllus International Ltd. Address and c/o EIG Corporate Financial Services Facsimile Number Edf. Marina Marbella, Avenida Sever Olhoa 28, 29600 Marbella Spain Fax: +34-952-858-068 Principal Amount of Bridge Notes Purchased USD250,000.00 Purchaser's Legal Counsel Per Ronnstrom Address and Box 7315 Facsimile Number SE-10390 Stockholm, Sweden Fax: +46-8-796-8223 PURCHASER SIGNATURE PAGE (ENTITY) TO STOCK PLEDGE AGREEMENT PURCHASER Purchaser Name: Arab Commerce Bank Ltd. By: /s/ A. De Nazareth Name: A. De Nazareth Title: Co. Secretary Purchaser Name Arab Commerce Bank Ltd. Address and P.O. Box 309 Facsimile Number Grand Cayman Cayman Islands 0171 437 2413 (London) Principal Amount of Bridge Notes Purchased $150,000.00 Purchaser's Legal Counsel Address and Facsimile Number EX-10.14 14 0014.txt SERIES 1 BRIDGE FINANCING NOTE IN FAVOR OF SOVCAP EQUITY PARTNERS, LTD. THIS BRIDGE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. CAMBEX CORPORATION SERIES 1 BRIDGE FINANCING NOTE No. S1BFN-1 $1,500,000.00 January 18, 2000 CAMBEX CORPORATION, a Massachusetts corporation (such corporation, or any successor permitted hereunder, the "Company"), for value received, hereby promises to pay to SOVCAP EQUITY PARTNERS, LTD., a Bahamian corporation or any subsequent holder hereof (such holders, assignees, or any registered assignees, the "Holders"), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS (US $1,500,000.00), and to pay interest on such principal sum, at the rate of eight percent (8%) per annum (the "Note Rate") from the Original Issue Date (as defined below) until the two hundred-tenth (210th) day after the Original Issue Date (the "Maturity Date") and at the rate of twelve percent (12%) per annum (the "Default Rate") after the Maturity Date until payment of all principal, premium, and accrued and unpaid interest has been paid in full. Interest shall be payable on the Maturity Date. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. The date on which this Series 1 Bridge Note shall have first been issued is referred to herein as the "Original Issue Date." Section 1. Description. This Bridge Note is one of a series of Series 1 Bridge Financing Notes that have been authorized by the Company (the "Series 1 Bridge Notes") and are alike except for principal amount and issue date, and are in registered form. This Series 1 Bridge Note is convertible, into shares of the Company's Common Stock, $.10 par value (the "Common Stock"), as provided herein, and, effective upon any such conversion, the Common Stock so issued shall be subject to all terms and conditions and shall enjoy all rights, privileges, and preferences applicable to such Common Stock under the Company's Articles of Organization (the "Articles of Organization"). The shares of the Company's Common Stock issuable upon conversion of this Series 1 Bridge Note (the "Conversion Shares") are entitled to registration rights pursuant to a Registration Rights Agreement between Holder, the Company, and certain other signatories thereto dated January 18,___, 2000 (the "Registration Rights Agreement"). This Series 1 Bridge Note is secured by up to a maximum of 1,737,592 shares of Common Stock of the Company ownedor controlled by certain Company officers, pledged pursuant to the terms of a Stock Pledge Agreement dated January 18, 2000 and pursuant to the terms of a Series 1 Bridge Note Purchase and Security Agreement dated January 18, 2000 (the "Purchase Agreement"), and is otherwise entitled to all of the rights and benefits thereunder. Section 2. Office for Registration and Conversion. The Company shall maintain an office where this Series 1 Bridge Note shall be surrendered or presented for registration of transfers or exchanges and conversions. This office will initially be located at the offices of the Company at360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President. The Company shall keep a register of the Series 1 Bridge Notes and of their transfer and exchange, including the names and addresses of Holders of the Series 1 Bridge Notes. Holder shall give the Company notice of any change in Holder's address to the office indicated in this Section 2. Upon two- (2) business days written request, the Company shall permit Holder or its duly authorized representatives to inspect such register. Upon written notice to Holder, the Company may change the address of the office to be maintained by the Company pursuant to this Section 2 or appoint one or more co-registrars, stock registrars, paying agents, or conversion agents to assist the Company in performing its functions under the Series 1 Bridge Notes. Section 3. Redemption. (a) Mandatory Redemption. If this Series 1 Bridge Note is outstanding on the Maturity Date, this Series 1 Bridge Note shall be due and payable as follows: (i) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is effective with respect to the Conversion Shares, the Company shall give written notice to Holder of its intent to redeem the then outstanding principal amount of this Series 1 Bridge Note, which notice shall state the election of the Company to pay the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. Regardless of the manner in which paid, the redemption price (the "Maturity Date Redemption Price") shall be equal to 120% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date if redemption occurs on the Maturity Date or within four (4) days, thereafter, and if occurring later than four business days after the Maturity Date shall be equal to 125% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date and at the Default Rate after the Maturity Date through and including the date the payment is disbursed (whether by issuance of Conversion Shares or a payment in cash). (ii) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is not effective with respect to the Conversion Shares, Holder may, in addition to all other rights and remedies of Holder hereunder and under the Purchase Agreement, elect to make written demand to the Company to redeem, all or part of the then outstanding principal under this Series 1 Bridge Note. Such demand shall specify Holder's election to accept payment of the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. The Company shall have two (2) business days after its receipt of such demand to confirm its intention to redeem this Series 1 Bridge Note by tendering to Holder either (A) cash or (B) Conversion Shares (as specified in Holder's demand), in the manner contemplated by Section 3(c) hereof. In either case the redemption price shall be equal to the Maturity Date Redemption Price. (iii) The date of any redemption under either subparagraph (i) or (ii) above shall be referred to as a "Redemption Date." (b) Voluntary Redemption. At any time from and after the Original Issue Date up to but not including the Maturity Date, the Company may, at its option, call and redeem this Series 1 Bridge Note, at the redemption price set forth in subparagraph (i), below, plus accrued and unpaid interest on such redeemed amount through and including the Voluntary Redemption Date, as such term is defined below (such redemption being the "Voluntary Redemption"), under and in accordance with the following terms and procedures: (i) The Company at its option prior to the Maturity Date may redeem this Series 1 Bridge Note at the Redemption Price set forth below plus all accrued and unpaid interest on the principal amount through and including the Voluntary Redemption Date (the "Voluntary Redemption Price") as of a Voluntary Redemption Date: Redemption Date Redemption Price Original Issue Date through and 105% including the 60th day after the Original Issue Date 61st day after the Original Issue 110% Date through and including the 120th day after the Original Issue Date 121st day after the Original Issue 115% Date through and including the 180th day after the Original Issue Date 181st day after the Original Issue 120% Date through and including the 214th day after the Original Issue Date 215th day after the Original Issue 125% Date through and including the date of redemption or conversion (ii) At least ten (10) days before a Voluntary Redemption, the Company shall mail a notice of redemption to Holder, stating (A) the redemption date, which shall be a business day in New York, New York (the "Voluntary Redemption Date"), (B) the aggregate principal amount of this Series 1 Bridge Note to be redeemed, (C) the Voluntary Redemption Price, and (D) the name and address of the Person to whom this Series 1 Bridge Note must be presented to receive payment if required pursuant to paragraph (iv) below. Once notice of redemption is mailed and the Company shall have complied with paragraph (iii) below, the Voluntary Redemption Price shall become due and payable on the Voluntary Redemption Date. (iii) On or before the third (3rd) day prior to the Voluntary Redemption Date, the Company shall deposit into a bank trust account for the benefit of the Holder of this Series 1 Bridge Note money sufficient to pay the Redemption Price and all accrued and unpaid interest. (iv) The Company may, at its option, require as a condition to the receipt of a payment pursuant to this Section 3(b) that Holder present the Series 1 Bridge Notes to the Person specified in paragraph (ii) above for surrender. (v) No Voluntary Redemption of this Series 1 Bridge Note can be effected after the 209th day after the Original Issue Date. (c) Conversion into Common Stock in Lieu of Payments. (i) In lieu of payment of cash to Holder pursuant to Section 3(a)(i) hereof and Section 3(b) hereof, if a Registration Statement is in effect with respect to the Conversion Shares the Company may elect to pay all or part of the Maturity Date Redemption Price or the Voluntary Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. (ii) In lieu of cash, pursuant to Section 3(a)(ii) hereof, Holder may require the Company to pay all or part of the Maturity Date Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. The Repricing Warrant shall apply to each share of Common Stock received by Holder pursuant to this Section 3(c). (d) The number of shares of Common Stock issuable in payment of the Maturity Date Redemption Price or the Voluntary Redemption Price is equal to the quotient of the Maturity Date Redemption Price or the Voluntary Redemption Price (as the case may be) divided by $3.79 (the "Conversion Price") {5 day average Closing Bid Price prior to Original Issue Date}. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less-than full share remainder. Section 4. Method of Payment. (a) Interest accruing through and including the Maturity Date shall be computed at the Note Rate. Interest accruing after the Maturity Date shall be computed at the Default Rate. Accrued and unpaid interest shall be due and payable at the time the principal and premium of this Series 1 Bridge Note is paid. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. Interest shall begin to accrue on the Original Issue Date. (b) The Company shall pay interest and principal on this Series 1 Bridge Note (except defaulted interest) to the Person who is the registered Holder of this Series 1 Bridge Note on the day on which the interest or principal payment is due. If the Company defaults in a payment of interest on this Series 1 Bridge Note, it may pay the defaulted interest, to the Person who is the registered Holder of this Series 1 Bridge Note on the date such payment is made. (c) The Company shall pay interest by check payable in money of the United States of America that at the time of payment is legal tender for public and private debts. Payments of interest shall be mailed to Holder's address shown in the register maintained pursuant to Section 2; provided however, that with respect to the final payment of principal and accrued and unpaid interest necessary to pay this Series 1 Bridge Note in full, to receive such payment Holder must surrender this Series 1 Bridge Note for cancellation to the Company or to a paying agent appointed by the Company. Principal and interest shall be considered paid on the date due, and no interest shall accrue thereafter, if there is on deposit on that date, in a bank trust account for the benefit of Holder of this Series 1 Bridge Note, money sufficient to pay the Redemption Price and all accrued and unpaid interest due under this Series 1 Bridge Note. Section 5. Conversion Price and Adjustments. (a) At anytime after the Maturity Date, Holder may convert all or any portion of the Redemption Price and accrued and unpaid interest due on this Series 1 Bridge Note into shares of Common Stock. (b) If Holder elects to convert less than the full Redemption Price of this Series 1 Bridge Note, such conversion shall be permitted only in one hundred (100)-share increments unless the Company has given its contemporaneous consent to conversion of an odd lot. The provisions hereof that apply to conversion of the entire Redemption Price of this Series 1 Bridge Note shall also apply to conversion of a portion of the Redemption Price. Upon surrender of the Series 1 Bridge Note for conversion in part, the Company shall issue new Series 1 Bridge Notes in substantially the same form as this Series 1 Bridge Note, except that the principal amount shall be reduced by the principal amount so converted (exclusive of the redemption premium). (c) The number of shares of Common Stock issuable upon conversion of this Series 1 Bridge Note is equal to the quotient of the Redemption Price of this Series 1 Bridge Note being converted divided by Conversion Price. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less than full share remainder. Accrued and unpaid interest shall be included in computing the number of Conversion Shares issuable upon conversion of this Series 1 Bridge Note. Interest shall cease to accrue on that portion of the Redemption Price converted from and after the Conversion Date. Section 6. Procedures for Conversion, and Issuance of Conversion Shares. (a) Holders' Delivery Requirements. To convert this Series 1 Bridge Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company or its designated Transfer Agent, and (B) surrender to a common carrier for delivery to the Company or the Transfer Agent as soon as practicable following such date, the original Series 1 Bridge Note being converted (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of the Series 1 Bridge Note) and the originally executed Conversion Notice. The date the Company receives theoriginally executed Conversion Notice and this Series 1 Bridge Note is hereinafter the "Conversion Date." (b) Company's Response. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via Facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Company or the Transfer Agent of the Series 1 Bridge Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Company or the Transfer Agent (as applicable) shall, within ten (10) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company. (c) Record Holder. The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Series 1 Bridge Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date. (d) Company's Failure to Timely Convert. If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of this Series 1 Bridge Note to be converted pursuant to a Conversion Notice, a certificate for the number of shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Series 1 Bridge Note, in addition to all other available remedies which such Holder may pursue hereunder and under the Purchase Agreement between the Company and the initial Holder of this Series 1 Bridge Note (including indemnification pursuant to Section 7.18 thereof), the Company shall pay additional damages to Holder on each day after the tenth (10th) business day following the date of receipt by the Company or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the business day following the date of receipt by the Company or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Series 1 Bridge Note, if Holder has otherwise complied with this Section 6. (e) Adjustments to Conversion Price. If any adjustment to the Conversion Price to be made pursuant to Section 7 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after the record date, the Company may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Company delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment. (f) Reservation of Conversion Shares. Until such time as this Series 1 Bridge Note has been fully redeemed, the Company shall reserve out of its authorized but unissued Common Stock enough shares of Common Stock to permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on this Series 1 Bridge Note at any time. All shares of Common Stock issued upon conversion of this Series 1 Bridge Note shall be fully paid and nonassessable. The Company covenants that if any shares of Common Stock, required to be reserved for purposes of conversion of this Series 1 Bridge Note hereunder, require registration with or approval of any governmental authority under any federal or state law or listing upon any national securities exchange before such shares may be issued upon conversion, the Company shall in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered, approved or listed, as the case may be. Section 7. Adjustments to Conversion Price. The Conversion Price shall be subject to adjustment from time to time as follows: (a) If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. (b) Prior to the consummation of any Organic Change (as defined below), the Company will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Series 1 Bridge Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Series 1 Bridge Note had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this Section 7(b) and Sections 6(d) and 6(e) above will thereafter be applicable. The Company will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder, the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Company's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof. Section 8. Notices. The Company shall give the following notices at the times specified: (a) Immediately upon any adjustment of the Conversion Price, the Company will give written notice thereof to Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. (b) The Company will give written notice to Holder, at least twenty (20) days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon the Common Stock, (ii) with respect to any pro rata subscription offer to Holder of Common Stock, or (iii) for determining rights to vote with respect to any Organic Change, dissolution, or liquidation. (c) The Company will also give written notice to Holder at least twenty (20) days prior to the date on which any Organic Change, Major Transaction (as defined below), dissolution, or liquidation will take place. Section 9. Successors to the Company. The Company shall not consolidate or merge with or into, or sell all or substantially all of its assets to, any Person unless: (i) the Person is a corporation; (ii) such Person executes, and mails to Holder a copy of, an instrument by which such Person or an affiliate assumes the due and punctual payment of the principal of and interest on this Series 1 Bridge Note and the performance and observance of all the obligations of the Company under this Series1 Bridge Note; and (iii) immediately after giving effect to the transaction, no Event of Default or event which after notice or lapse of time or both would become an Event of Default shall have occurred. Upon compliance with this Section 9, Successor Corporation shall succeed to and be substituted for the Company under this Series 1 Bridge Note with the same effect as if the Successor Corporation had been named as the Company herein. Nothing in this Series 1 Bridge Note shall prevent any consolidation or merger in which the Company is the surviving corporation, or any acquisition by the Company by purchase or otherwise of all or any part of the assets of any other Person, and no such consolidation, merger, or acquisition shall require compliance with this Section 9. Section 10. Events of Default and Remedies. (a) As used herein, an "Event of Default" occurs if: (i) The Company defaults in the payment of principal and/or interest when the same becomes due and payable and such failure is not cured within ten (10) business days after the Company receives written demand from Holder or the Representative to remedy the same. (ii) the Company fails to comply with any other provision contained in this Series 1 Bridge Note, the Purchase Agreement, the Warrant, the Repricing Warrant, or the Registration Rights Agreement, and such failure is not cured within ten (10) business days after the Company receives written demand from Holder to remedy the same; (iii) the Company defaults in any payment of principal of or interest on any Debt (excluding trade payables) in excess of $100,000 beyond any period of grace provided with respect thereto and the effect of such failure is to cause the holder of such Debt to accelerate the Debt such that such Debt becomes due prior to its stated maturity; (iv) any representation or warranty made in writing by or on behalf of (i) the Company in the Purchase Agreement or in any writing furnished in connection with or pursuant to the Purchase Agreement or in connection with the transactions contemplated by this Agreement, or (ii) the Company in the Registration Rights Agreement, or (iii) the Company in the Escrow Agreement, shall be false in any material respect on the date as of which made; (v) the Company makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; (vi) any order or decree for relief in respect of the Company is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution, or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; (vii) the Company petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidation, or similar official of the Company, or of any substantial part of the assets of the Company, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings relating to the Company under the Bankruptcy Law of any other jurisdiction; (viii) any petition or application described in Section 10(a)(vi) above is filed, or any such proceedings are commenced, against the Company and the Company by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator, or similar official, or approving the petition in any such proceedings, and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; (ix) any order, judgment, or decree is entered in any proceedings against the Company decreeing the dissolution of the Company and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; or (x) a final judgment (not fully covered by insurance) in an amount in excess of $100,000 is rendered against the Company and, within ten (10) business days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within ten (10) days after the expiration of any such stay, such judgment is not discharged. (b) Upon the occurrence of an Event of Default described in subsection (vi), (vii), or (viii) of Section 10(a), the principal of and accrued interest on this Series 1 Bridge Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. If any other Event of Default exists, Holder may, in addition to the exercise of any right, power, or remedy permitted to Holder by law, declare (by written notice or notices to the Company) the entire principal of and all interest accrued on this Series 1 Bridge Note to be due and payable, and this Series 1 Bridge Note shall thereupon become immediately due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Company. Upon such declaration, the Company will immediately pay to Holder of this Series 1 Bridge Note the then outstanding principal of and accrued and unpaid interest on the Series 1 Bridge Notes. If at any time after acceleration of the maturity of the Series 1 Bridge Notes, the Company shall pay all arrears of interest and all payments on account of principal which shall have become due other than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rate specified in the Series 1 Bridge Notes) and all Events of Default (other than nonpayment of principal of or interest on this Series 1 Bridge Note due and payable solely by virtue of acceleration) shall be remedied or waived by Holder by written notice to the Company may rescind and annul the acceleration and its consequences, but such action shall not affect any subsequent Event of Default or impair any right consequent thereon. (c) A delay or omission by the Holder of this Series 1 Bridge Note in exercising any right or remedy arising upon an Event of Default shall not impair such right or remedy or constitute a waiver of or an acquiescence in the Event of Default. (d) If any Event of Default shall occur and be continuing, the Holder of this Series 1 Bridge Note may proceed to protect and enforce their rights under this Agreement and this Series 1 Bridge Note by exercising such remedies as are available to such Holder either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon Holder is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. Section 11. Exchange, Transfer, Replacement or Cancellation. (a) This Series 1 Bridge Note may be exchanged for an equal principal amount of Series 1 Bridge Notes in denominations of US$25,000.00 or in greater multiples of US$5,000.00 upon written request to the Company accompanied by surrender of this Series 1 Bridge Note to the Company or to an agent designated for that purpose. Any Series 1 Bridge Notes issued in exchange for this Series 1 Bridge Note shall be one of this Series 1 Bridge Note referred to in Section 1, and shall be entitled to all the rights thereof. (b) The Series 1 Bridge Notes may not be transferred except upon the conditions specified in this Section 11(b), which conditions are intended to insure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Prior to any proposed transfer of this Series 1 Bridge Note the Holder hereof shall give written notice to the Company of the proposed disposition and shall furnish to the Company a statement of the circumstances surrounding the proposed disposition and an opinion of counsel reasonably satisfactory to the Company to the effect that (i) such disposition will not require registration of such securities under the Securities Act or qualification of such securities under the blue sky or state securities laws of any state in which such qualification would be required, or (ii) appropriate action necessary for compliance with the Securities Act or the blue sky or securities laws of such states has been taken. The Holder hereof shall cause any proposed transferee of such securities to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 11. The Company or any co-registrar appointed by the Company may require the Holder to furnish appropriate endorsements and/or transfer documents, including information regarding any proposed transferee's name, address and social security or taxpayer identification number, and to pay any issue or transfer taxes or fees as may be required by law. The registered Holder of this Series 1 Bridge Note may be treated as its owner for all purposes. (c) If Holder claims this Series 1 Bridge Note has been lost, destroyed, or wrongfully taken, the Company shall issue a replacement Series 1 Bridge Note upon (i) receipt of any indemnity bond or other assurance requested by the Company to protect it from any loss which it may suffer by reason of such replacement or subsequent presentment of the original Series 1 Bridge Note, and (ii) payment of any expenses reasonably incurred by the Company in replacing the Series 1 Bridge Note. Section 12. Amendments and Waivers. This Series 1 Bridge Note may, with the consent of the Company and the Holder be amended or any provision thereof waived. Section 13. Notice. Any notice or communication hereunder shall be in writing and delivered by first-class mail, return receipt requested, to each Holder at its address shown in the register kept by the Company or any co-registrar appointed by the Company and to the Company at the address of its office to be maintained pursuant to Section 2. Failure to mail, or any defect in, a notice or communication to any other Holder of this Series 1 Bridge Note shall not affect its sufficiency with respect to the other Holders. If a notice or communication is mailed to Holder in the manner provided above within the time prescribed, it shall be deemed duly given and effective on the tenth (10th) business day after it was deposited in the mail, whether or not Holder actually receives it. Section 14. No Recourse Against Others. A director, officer, employee, or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under this Series 1 Bridge Note or for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Series 1 Bridge Note by accepting this Series 1 Bridge Note waives and releases all such liability and such waiver and release are part of the consideration for the issue of the Series 1 Bridge Note. Section 15. Governing Law. The Series 1 Bridge Notes shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree thatanyaction brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where against whom the action is brought is principally located, and both parties agree that such counts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. IN WITNESS WHEREOF, the parties have caused this Series 1 Bridge Financing Note to be duly executed under seal as of day and year first above written. [Signatures on the following page] COMPANY SIGNATURE PAGE TO SERIES 1 BRIDGE FINANCING NOTE CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: By: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.15 15 0015.txt ATTACHED REPRICING WARRANT IN FAVOR OF SOVCAP EQUITY PARTNERS, LTD. NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION ATTACHED REPRICING WARRANT Warrant No. SCA/RPW-____ __,000 shares Original Issue Date: January 18, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, _______________ {Purchaser of Bridge Notes} or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, on the Repricing Date but not thereafter, a number of shares of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), determined in accordance with Section 2 hereof, at a price of $.10 per share (the "Exercise Price"). Each share of Common Stock as to which this Repricing Warrant is exercisable is a "Repricing Share" and all such shares are collectively referred to as the "Repricing Shares." This Repricing Warrant shall remain attached to the Series 1 Bridge Financing Note issued to Holder on the Original Issue Date (the "Bridge Note"), until conversion of the Bridge Note, at which time it shall automatically detach. Section 1. Definitions. The following capitalized terms are not defined elsewhere in this Repricing Warrant, and are used herein with the meanings thereafter ascribed: "Average Market Price" means, the greater of (a) arithmetic mean of the Closing Bid Prices of the Common Stock for each trading day in a ninety (90) day period which commences on the Conversion Date or (b) the Repricing Floor. For purposes of this Agreement, the term " Repricing Floor" shall mean the lesser of (x) $1.65 or (y) if the Repricing Event occurs, the average Closing Bid Price of the common stock for the thirty (30) day period immediately prior to the Maturity Date. For purposes of this Repricing Warrant, the "Repricing Event" will occur in the event that the Company suffers a 10% or greater decline in gross revenues per fiscal quarter for two consecutive quarters, beginning with the 1st quarter of 2000 (assuming for this purpose that the Company is on a 12/31 fiscal year). "Closing Bid Price" means, the last closing bid price of the Common Stock on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period); "Conversion Date" means the date of issuance of common stock issued upon Holder converting the Bridge Note. "Conversion Price" means $________, the conversion price of the Bridge Note. "Conversion Shares" means the number of shares of Common Stock issued upon conversion of the Bridge Note that are sold on or before the Expiration Date at a price less than 120% of the Conversion Price. "Expiration Date" means the ninetieth (90th) day after the Conversion Date. "Repricing Date" means the ninety-first (91st) day after the Conversion Date. Section 2. Determination of Number of Repricing Shares. The number of Repricing Shares issuable upon exercise of this Repricing Warrant shall be determined on the Repricing Date. The number of Repricing Shares shall be equal to: the number of Conversion Shares multiplied by a fraction, (a) the numerator of which is the Conversion Price minus the Average Market Price and (b) the denominator of which is the Average Market Price. Holder shall be required to submit copies of trade confirmations establishing the sales price for all Conversion Shares in the event of any exercise of this Warrant under Section 3, below. In the case of a dispute as to the determination of the Average Market Price or the arithmetic calculation of the Exercise Price, the Company shall promptly issue to such Holder(s) the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within three (3) business days of receipt of such holder's Conversion Notice. If such Holder(s) and the Company are unable to agree upon the determination of the Average Market Price or arithmetic calculation of the Exercise Price within two (2) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile (A) the disputed determination of the Average Market Price to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Exercise Price to its independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and such Holders of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. In the event that the Average Market Price is greater than the Conversion Price on the Repricing Date then this Repricing Warrant shall expire and be of no further force and effect. Section 3. Exercise of Warrant; Conversion of Warrant; Election to Pay Cash. (a) This Warrant may, at the option of the Holder, be exercised in whole but not in part on the Repricing Date by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Repricing Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Repricing Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder, be converted into Common Stock in whole but not in part, if and only if the Value of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Repricing Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Repricing Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price minus (B) the then effective Exercise Price divided by (y) the Average Market Price. Any fraction resulting from the calculation of the number of Repricing Shares then issuable in a conversion of this Repricing Warrant shall be truncated. (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of the Exercise Materials or the Conversion Materials, a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and under this Warrant and the Series 1 Bridge Note Purchase Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof, the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. (e) The Company may, in lieu of issuing the Repricing Shares pay Holder an amount equal to the number of Repricing Shares issuable on the Effective Date multiplied by the Average Market Price (the "Payment Amount"). In such event, the Company shall be obligated to deliver the Payment Amount to Holder within ten (10) business days following the Effective Date. If the Company shall fail to deliver the Payment Amount within ten (10) business days after the Effective Date, in addition to all other available remedies which Holder may pursue at law or equity, including indemnification pursuant to Section 7.18 of the Securities Purchase Agreement, the Company shall pay additional damages to Holder on each day after the Effective Date, until the Payment Amount has been paid, an amount equal to 1.0% of the Payment Amount. Such damages shall be computed daily and are due and payable daily. Section 4. Adjustments to Repricing Shares. The number of Repricing Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Repricing Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Repricing Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Repricing Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 5. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 6. Transfer of Securities. (a) This Warrant and the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Repricing Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Repricing Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 7. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (f) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY ATTACHED REPRICING WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.16 16 0016.txt SERIES 1 BRIDGE FINANCING NOTE IN FAVOR OF CORRELLUS INTERNATIONAL, LTD. THIS BRIDGE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. CAMBEX CORPORATION SERIES 1 BRIDGE FINANCING NOTE No. S1BFN-2 $250,000.00 January 18, 2000 CAMBEX CORPORATION, a Massachusetts corporation (such corporation, or any successor permitted hereunder, the "Company"), for value received, hereby promises to pay to CORRELLUS INTERNATIONAL, LTD, a corporation organized under the laws of Spain or any subsequent holder hereof (such holders, assignees, or any registered assignees, the "Holders"), the principal sum of TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS (US $50,000.00), and to pay interest on such principal sum, at the rate of eight percent (8%) per annum (the "Note Rate") from the Original Issue Date (as defined below) until the two hundred-tenth (210th) day after the Original Issue Date (the "Maturity Date") and at the rate of twelve percent (12%) per annum (the "Default Rate") after the Maturity Date until payment of all principal, premium, and accrued and unpaid interest has been paid in full. Interest shall be payable on the Maturity Date. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. The date on which this Series 1 Bridge Note shall have first been issued is referred to herein as the "Original Issue Date." Section 1. Description. This Bridge Note is one of a series of Series 1 Bridge Financing Notes that have been authorized by the Company (the "Series 1 Bridge Notes") and are alike except for principal amount and issue date, and are in registered form. This Series 1 Bridge Note is convertible, into shares of the Company's Common Stock, $.10 par value (the "Common Stock"), as provided herein, and, effective upon any such conversion, the Common Stock so issued shall be subject to all terms and conditions and shall enjoy all rights, privileges, and preferences applicable to such Common Stock under the Company's Articles of Organization (the "Articles of Organization"). The shares of the Company's Common Stock issuable upon conversion of this Series 1 Bridge Note (the "Conversion Shares") are entitled to registration rights pursuant to a Registration Rights Agreement between Holder, the Company, and certain other signatories thereto dated January 18, 2000 (the "Registration Rights Agreement"). This Series 1 Bridge Note is secured by up to a maximum of 1,750,000 shares of Common Stock of the Company owned or controlled by certain Company officers, pledged pursuant to the terms of a Stock Pledge Agreement dated January 18, 2000 and pursuant to the terms of a Series 1 Bridge Note Purchase Agreement dated January 18, 2000 (the "Purchase Agreement"), and is otherwise entitled to all of the rights and benefits thereunder. Section 2. Office for Registration and Conversion. The Company shall maintain an office where this Series 1 Bridge Note shall be surrendered or presented for registration of transfers or exchanges and conversions. This office will initially be located at the offices of the Company at360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President. The Company shall keep a register of the Series 1 Bridge Notes and of their transfer and exchange, including the names and addresses of Holders of the Series 1 Bridge Notes. Holder shall give the Company notice of any change in Holder's address to the office indicated in this Section 2. Upon two- (2) business days written request, the Company shall permit Holder or its duly authorized representatives to inspect such register. Upon written notice to Holder, the Company may change the address of the office to be maintained by the Company pursuant to this Section 2 or appoint one or more co-registrars, stock registrars, paying agents, or conversion agents to assist the Company in performing its functions under the Series 1 Bridge Notes. Section 3. Redemption. (a) Mandatory Redemption. If this Series 1 Bridge Note is outstanding on the Maturity Date, this Series 1 Bridge Note shall be due and payable as follows: (i) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is effective with respect to the Conversion Shares, the Company shall give written notice to Holder of its intent to redeem the then outstanding principal amount of this Series 1 Bridge Note, which notice shall state the election of the Company to pay the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. Regardless of the manner in which paid, the redemption price (the "Maturity Date Redemption Price") shall be equal to 120% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date if redemption occurs on the Maturity Date or within four (4) days, thereafter, and if occurring later than four business days after the Maturity Date shall be equal to 125% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date and at the Default Rate after the Maturity Date through and including the date the payment is disbursed (whether by issuance of Conversion Shares or a payment in cash). (ii) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is not effective with respect to the Conversion Shares, Holder may, in addition to all other rights and remedies of Holder hereunder and under the Purchase Agreement, elect to make written demand to the Company to redeem, all or part of the then outstanding principal under this Series 1 Bridge Note. Such demand shall specify Holder's election to accept payment of the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. The Company shall have two (2) business days after its receipt of such demand to confirm its intention to redeem this Series 1 Bridge Note by tendering to Holder either (A) cash or (B) Conversion Shares (as specified in Holder's demand), in the manner contemplated by Section 3(c) hereof. In either case the redemption price shall be equal to the Maturity Date Redemption Price. (iii) The date of any redemption under either subparagraph (i) or (ii) above shall be referred to as a "Redemption Date." (b) Voluntary Redemption. At any time from and after the Original Issue Date up to but not including the Maturity Date, the Company may, at its option, call and redeem this Series 1 Bridge Note, at the redemption price set forth in subparagraph (i), below, plus accrued and unpaid interest on such redeemed amount through and including the Voluntary Redemption Date, as such term is defined below (such redemption being the "Voluntary Redemption"), under and in accordance with the following terms and procedures: (i) The Company at its option prior to the Maturity Date may redeem this Series 1 Bridge Note at the Redemption Price set forth below plus all accrued and unpaid interest on the principal amount through and including the Voluntary Redemption Date (the "Voluntary Redemption Price") as of a Voluntary Redemption Date: Redemption Date Redemption Price Original Issue Date through and 105% including the 60th day after the Original Issue Date 61st day after the Original Issue 110% Date through and including the 120th day after the Original Issue Date 121st day after the Original Issue 115% Date through and including the 180th day after the Original Issue Date 181st day after the Original Issue 120% Date through and including the 214th day after the Original Issue Date 215th day after the Original Issue 125% Date through and including the date of redemption or conversion (ii) At least ten (10) days before a Voluntary Redemption, the Company shall mail a notice of redemption to Holder, stating (A) the redemption date, which shall be a business day in New York, New York (the "Voluntary Redemption Date"), (B) the aggregate principal amount of this Series 1 Bridge Note to be redeemed, (C) the Voluntary Redemption Price, and (D) the name and address of the Person to whom this Series 1 Bridge Note must be presented to receive payment if required pursuant to paragraph (iv) below. Once notice of redemption is mailed and the Company shall have complied with paragraph (iii) below, the Voluntary Redemption Price shall become due and payable on the Voluntary Redemption Date. (iii) On or before the third (3rd) day prior to the Voluntary Redemption Date, the Company shall deposit into a bank trust account for the benefit of the Holder of this Series 1 Bridge Note money sufficient to pay the Redemption Price and all accrued and unpaid interest. (iv) The Company may, at its option, require as a condition to the receipt of a payment pursuant to this Section 3(b) that Holder present the Series 1 Bridge Notes to the Person specified in paragraph (ii) above for surrender. (v) No Voluntary Redemption of this Series 1 Bridge Note can be effected after the 209th day after the Original Issue Date. (c) Conversion into Common Stock in Lieu of Payments. (i) In lieu of payment of cash to Holder pursuant to Section 3(a)(i) hereof and Section 3(b) hereof, if a Registration Statement is in effect with respect to the Conversion Shares the Company may elect to pay all or part of the Maturity Date Redemption Price or the Voluntary Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. (ii) In lieu of cash, pursuant to Section 3(a)(ii) hereof, Holder may require the Company to pay all or part of the Maturity Date Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. The Repricing Warrant shall apply to each share of Common Stock received by Holder pursuant to this Section 3(c). (d) The number of shares of Common Stock issuable in payment of the Maturity Date Redemption Price or the Voluntary Redemption Price is equal to the quotient of the Maturity Date Redemption Price or the Voluntary Redemption Price (as the case may be) divided by $3.79 (the "Conversion Price") {5 day average Closing Bid Price prior to Original Issue Date}. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less-than full share remainder. Section 4. Method of Payment. (a) Interest accruing through and including the Maturity Date shall be computed at the Note Rate. Interest accruing after the Maturity Date shall be computed at the Default Rate. Accrued and unpaid interest shall be due and payable at the time the principal and premium of this Series 1 Bridge Note is paid. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. Interest shall begin to accrue on the Original Issue Date. (b) The Company shall pay interest and principal on this Series 1 Bridge Note (except defaulted interest) to the Person who is the registered Holder of this Series 1 Bridge Note on the day on which the interest or principal payment is due. If the Company defaults in a payment of interest on this Series 1 Bridge Note, it may pay the defaulted interest, to the Person who is the registered Holder of this Series 1 Bridge Note on the date such payment is made. (c) The Company shall pay interest by check payable in money of the United States of America that at the time of payment is legal tender for public and private debts. Payments of interest shall be mailed to Holder's address shown in the register maintained pursuant to Section 2; provided however, that with respect to the final payment of principal and accrued and unpaid interest necessary to pay this Series 1 Bridge Note in full, to receive such payment Holder must surrender this Series 1 Bridge Note for cancellation to the Company or to a paying agent appointed by the Company. Principal and interest shall be considered paid on the date due, and no interest shall accrue thereafter, if there is on deposit on that date, in a bank trust account for the benefit of Holder of this Series 1 Bridge Note, money sufficient to pay the Redemption Price and all accrued and unpaid interest due under this Series 1 Bridge Note. Section 5. Conversion Price and Adjustments. (a) At anytime after the Maturity Date, Holder may convert all or any portion of the Redemption Price and accrued and unpaid interest due on this Series 1 Bridge Note into shares of Common Stock. (b) If Holder elects to convert less than the full Redemption Price of this Series 1 Bridge Note, such conversion shall be permitted only in one hundred (100)-share increments unless the Company has given its contemporaneous consent to conversion of an odd lot. The provisions hereof that apply to conversion of the entire Redemption Price of this Series 1 Bridge Note shall also apply to conversion of a portion of the Redemption Price. Upon surrender of the Series 1 Bridge Note for conversion in part, the Company shall issue new Series 1 Bridge Notes in substantially the same form as this Series 1 Bridge Note, except that the principal amount shall be reduced by the principal amount so converted (exclusive of the redemption premium). (c) The number of shares of Common Stock issuable upon conversion of this Series 1 Bridge Note is equal to the quotient of the Redemption Price of this Series 1 Bridge Note being converted divided by Conversion Price. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less than full share remainder. Accrued and unpaid interest shall be included in computing the number of Conversion Shares issuable upon conversion of this Series 1 Bridge Note. Interest shall cease to accrue on that portion of the Redemption Price converted from and after the Conversion Date. Section 6. Procedures for Conversion, and Issuance of Conversion Shares. (a) Holders' Delivery Requirements. To convert this Series 1 Bridge Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company or its designated Transfer Agent, and (B) surrender to a common carrier for delivery to the Company or the Transfer Agent as soon as practicable following such date, the original Series 1 Bridge Note being converted (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of the Series 1 Bridge Note) and the originally executed Conversion Notice. The date the Company receives theoriginally executed Conversion Notice and this Series 1 Bridge Note is hereinafter the "Conversion Date." (b) Company's Response. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via Facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Company or the Transfer Agent of the Series 1 Bridge Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Company or the Transfer Agent (as applicable) shall, within ten (10) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company. (c) Record Holder. The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Series 1 Bridge Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date. (d) Company's Failure to Timely Convert. If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of this Series 1 Bridge Note to be converted pursuant to a Conversion Notice, a certificate for the number of shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Series 1 Bridge Note, in addition to all other available remedies which such Holder may pursue hereunder and under the Purchase Agreement between the Company and the initial Holder of this Series 1 Bridge Note (including indemnification pursuant to Section 7.18 thereof), the Company shall pay additional damages to Holder on each day after the tenth (10th) business day following the date of receipt by the Company or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the business day following the date of receipt by the Company or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Series 1 Bridge Note, if Holder has otherwise complied with this Section 6. (e) Adjustments to Conversion Price. If any adjustment to the Conversion Price to be made pursuant to Section 7 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after the record date, the Company may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Company delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment. (f) Reservation of Conversion Shares. Until such time as this Series 1 Bridge Note has been fully redeemed, the Company shall reserve out of its authorized but unissued Common Stock enough shares of Common Stock to permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on this Series 1 Bridge Note at any time. All shares of Common Stock issued upon conversion of this Series 1 Bridge Note shall be fully paid and nonassessable. The Company covenants that if any shares of Common Stock, required to be reserved for purposes of conversion of this Series 1 Bridge Note hereunder, require registration with or approval of any governmental authority under any federal or state law or listing upon any national securities exchange before such shares may be issued upon conversion, the Company shall in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered, approved or listed, as the case may be. Section 7. Adjustments to Conversion Price. The Conversion Price shall be subject to adjustment from time to time as follows: (a) If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. (b) Prior to the consummation of any Organic Change (as defined below), the Company will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Series 1 Bridge Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Series 1 Bridge Note had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this Section 7(b) and Sections 6(d) and 6(e) above will thereafter be applicable. The Company will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder, the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Company's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof. Section 8. Notices. The Company shall give the following notices at the times specified: (a) Immediately upon any adjustment of the Conversion Price, the Company will give written notice thereof to Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. (b) The Company will give written notice to Holder, at least twenty (20) days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon the Common Stock, (ii) with respect to any pro rata subscription offer to Holder of Common Stock, or (iii) for determining rights to vote with respect to any Organic Change, dissolution, or liquidation. (c) The Company will also give written notice to Holder at least twenty (20) days prior to the date on which any Organic Change, Major Transaction (as defined below), dissolution, or liquidation will take place. Section 9. Successors to the Company. The Company shall not consolidate or merge with or into, or sell all or substantially all of its assets to, any Person unless: (i) the Person is a corporation; (ii) such Person executes, and mails to Holder a copy of, an instrument by which such Person or an affiliate assumes the due and punctual payment of the principal of and interest on this Series 1 Bridge Note and the performance and observance of all the obligations of the Company under this Series1 Bridge Note; and (iii) immediately after giving effect to the transaction, no Event of Default or event which after notice or lapse of time or both would become an Event of Default shall have occurred. Upon compliance with this Section 9, Successor Corporation shall succeed to and be substituted for the Company under this Series 1 Bridge Note with the same effect as if the Successor Corporation had been named as the Company herein. Nothing in this Series 1 Bridge Note shall prevent any consolidation or merger in which the Company is the surviving corporation, or any acquisition by the Company by purchase or otherwise of all or any part of the assets of any other Person, and no such consolidation, merger, or acquisition shall require compliance with this Section 9. Section 10. Events of Default and Remedies. (a) As used herein, an "Event of Default" occurs if: (i) The Company defaults in the payment of principal and/or interest when the same becomes due and payable and such failure is not cured within ten (10) business days after the Company receives written demand from Holder or the Representative to remedy the same. (ii) the Company fails to comply with any other provision contained in this Series 1 Bridge Note, the Purchase Agreement, the Warrant, the Repricing Warrant, or the Registration Rights Agreement, and such failure is not cured within ten (10) business days after the Company receives written demand from Holder to remedy the same; (iii) the Company defaults in any payment of principal of or interest on any Debt (excluding trade payables) in excess of $100,000 beyond any period of grace provided with respect thereto and the effect of such failure is to cause the holder of such Debt to accelerate the Debt such that such Debt becomes due prior to its stated maturity; (iv) any representation or warranty made in writing by or on behalf of (i) the Company in the Purchase Agreement or in any writing furnished in connection with or pursuant to the Purchase Agreement or in connection with the transactions contemplated by this Agreement, or (ii) the Company in the Registration Rights Agreement, or (iii) the Company in the Escrow Agreement, shall be false in any material respect on the date as of which made; (v) the Company makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; (vi) any order or decree for relief in respect of the Company is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution, or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; (vii) the Company petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidation, or similar official of the Company, or of any substantial part of the assets of the Company, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings relating to the Company under the Bankruptcy Law of any other jurisdiction; (viii) any petition or application described in Section 10(a)(vi) above is filed, or any such proceedings are commenced, against the Company and the Company by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator, or similar official, or approving the petition in any such proceedings, and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; (ix) any order, judgment, or decree is entered in any proceedings against the Company decreeing the dissolution of the Company and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; or (x) a final judgment (not fully covered by insurance) in an amount in excess of $100,000 is rendered against the Company and, within ten (10) business days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within ten (10) days after the expiration of any such stay, such judgment is not discharged. (b) Upon the occurrence of an Event of Default described in subsection (vi), (vii), or (viii) of Section 10(a), the principal of and accrued interest on this Series 1 Bridge Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. If any other Event of Default exists, Holder may, in addition to the exercise of any right, power, or remedy permitted to Holder by law, declare (by written notice or notices to the Company) the entire principal of and all interest accrued on this Series 1 Bridge Note to be due and payable, and this Series 1 Bridge Note shall thereupon become immediately due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Company. Upon such declaration, the Company will immediately pay to Holder of this Series 1 Bridge Note the then outstanding principal of and accrued and unpaid interest on the Series 1 Bridge Notes. If at any time after acceleration of the maturity of the Series 1 Bridge Notes, the Company shall pay all arrears of interest and all payments on account of principal which shall have become due other than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rate specified in the Series 1 Bridge Notes) and all Events of Default (other than nonpayment of principal of or interest on this Series 1 Bridge Note due and payable solely by virtue of acceleration) shall be remedied or waived by Holder by written notice to the Company may rescind and annul the acceleration and its consequences, but such action shall not affect any subsequent Event of Default or impair any right consequent thereon. (c) A delay or omission by the Holder of this Series 1 Bridge Note in exercising any right or remedy arising upon an Event of Default shall not impair such right or remedy or constitute a waiver of or an acquiescence in the Event of Default. (d) If any Event of Default shall occur and be continuing, the Holder of this Series 1 Bridge Note may proceed to protect and enforce their rights under this Agreement and this Series 1 Bridge Note by exercising such remedies as are available to such Holder either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon Holder is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. Section 11. Exchange, Transfer, Replacement or Cancellation. (a) This Series 1 Bridge Note may be exchanged for an equal principal amount of Series 1 Bridge Notes in denominations of US$25,000.00 or in greater multiples of US$5,000.00 upon written request to the Company accompanied by surrender of this Series 1 Bridge Note to the Company or to an agent designated for that purpose. Any Series 1 Bridge Notes issued in exchange for this Series 1 Bridge Note shall be one of this Series 1 Bridge Note referred to in Section 1, and shall be entitled to all the rights thereof. (b) The Series 1 Bridge Notes may not be transferred except upon the conditions specified in this Section 11(b), which conditions are intended to insure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Prior to any proposed transfer of this Series 1 Bridge Note the Holder hereof shall give written notice to the Company of the proposed disposition and shall furnish to the Company a statement of the circumstances surrounding the proposed disposition and an opinion of counsel reasonably satisfactory to the Company to the effect that (i) such disposition will not require registration of such securities under the Securities Act or qualification of such securities under the blue sky or state securities laws of any state in which such qualification would be required, or (ii) appropriate action necessary for compliance with the Securities Act or the blue sky or securities laws of such states has been taken. The Holder hereof shall cause any proposed transferee of such securities to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 11. The Company or any co-registrar appointed by the Company may require the Holder to furnish appropriate endorsements and/or transfer documents, including information regarding any proposed transferee's name, address and social security or taxpayer identification number, and to pay any issue or transfer taxes or fees as may be required by law. The registered Holder of this Series 1 Bridge Note may be treated as its owner for all purposes. (c) If Holder claims this Series 1 Bridge Note has been lost, destroyed, or wrongfully taken, the Company shall issue a replacement Series 1 Bridge Note upon (i) receipt of any indemnity bond or other assurance requested by the Company to protect it from any loss which it may suffer by reason of such replacement or subsequent presentment of the original Series 1 Bridge Note, and (ii) payment of any expenses reasonably incurred by the Company in replacing the Series 1 Bridge Note. Section 12. Amendments and Waivers. This Series 1 Bridge Note may, with the consent of the Company and the Holder be amended or any provision thereof waived. Section 13. Notice. Any notice or communication hereunder shall be in writing and delivered by first-class mail, return receipt requested, to each Holder at its address shown in the register kept by the Company or any co-registrar appointed by the Company and to the Company at the address of its office to be maintained pursuant to Section 2. Failure to mail, or any defect in, a notice or communication to any other Holder of this Series 1 Bridge Note shall not affect its sufficiency with respect to the other Holders. If a notice or communication is mailed to Holder in the manner provided above within the time prescribed, it shall be deemed duly given and effective on the tenth (10th) business day after it was deposited in the mail, whether or not Holder actually receives it. Section 14. No Recourse Against Others. A director, officer, employee, or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under this Series 1 Bridge Note or for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Series 1 Bridge Note by accepting this Series 1 Bridge Note waives and releases all such liability and such waiver and release are part of the consideration for the issue of the Series 1 Bridge Note. Section 15. Governing Law. The Series 1 Bridge Notes shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that anyaction brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where against whom the action is brought is principally located, and both parties agree that such counts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. IN WITNESS WHEREOF, the parties have caused this Series 1 Bridge Financing Note to be duly executed under seal as of day and year first above written. [Signatures on the following page] COMPANY SIGNATURE PAGE TO SERIES 1 BRIDGE FINANCING NOTE CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: By:/s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.17 17 0017.txt ATTACHED REPRICING WARRANT IN FAVOR OF CORRELLUS NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION ATTACHED REPRICING WARRANT Warrant No. SCA/RPW-2 __,000 shares Original Issue Date: January 18, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, CORRELLUS INTERNATIONAL LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, on the Repricing Date but not thereafter, a number of shares of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), determined in accordance with Section 2 hereof, at a price of $.10 per share (the "Exercise Price"). Each share of Common Stock as to which this Repricing Warrant is exercisable is a "Repricing Share" and all such shares are collectively referred to as the "Repricing Shares." This Repricing Warrant shall remain attached to the Series 1 Bridge Financing Note issued to Holder on the Original Issue Date (the "Bridge Note"), until conversion of the Bridge Note, at which time it shall automatically detach. Section 1. Definitions. The following capitalized terms are not defined elsewhere in this Repricing Warrant, and are used herein with the meanings thereafter ascribed: "Average Market Price" means, the greater of (a) arithmetic mean of the Closing Bid Prices of the Common Stock for each trading day in a ninety (90) day period which commences on the Conversion Date or (b) the Repricing Floor. For purposes of this Agreement, the term " Repricing Floor" shall mean the lesser of (x) $1.65 or (y) if the Repricing Event occurs, the average Closing Bid Price of the common stock for the thirty (30) day period immediately prior to the Maturity Date. For purposes of this Repricing Warrant, the "Repricing Event" will occur in the event that the Company suffers a 10% or greater decline in gross revenues per fiscal quarter for two consecutive quarters, beginning with the 1st quarter of 2000 (assuming for this purpose that the Company is on a 12/31 fiscal year). "Closing Bid Price" means, the last closing bid price of the Common Stock on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period); "Conversion Date" means the date of issuance of common stock issued upon Holder converting the Bridge Note. "Conversion Price" means $________, the conversion price of the Bridge Note. "Conversion Shares" means the number of shares of Common Stock issued upon conversion of the Bridge Note that are sold on or before the Expiration Date at a price less than 120% of the Conversion Price. "Expiration Date" means the ninetieth (90th) day after the Conversion Date. "Repricing Date" means the ninety-first (91st) day after the Conversion Date. Section 2. Determination of Number of Repricing Shares. The number of Repricing Shares issuable upon exercise of this Repricing Warrant shall be determined on the Repricing Date. The number of Repricing Shares shall be equal to: the number of Conversion Shares multiplied by a fraction, (a) the numerator of which is the Conversion Price minus the Average Market Price and (b) the denominator of which is the Average Market Price. Holder shall be required to submit copies of trade confirmations establishing the sales price for all Conversion Shares in the event of any exercise of this Warrant under Section 3, below. In the case of a dispute as to the determination of the Average Market Price or the arithmetic calculation of the Exercise Price, the Company shall promptly issue to such Holder(s) the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within three (3) business days of receipt of such holder's Conversion Notice. If such Holder(s) and the Company are unable to agree upon the determination of the Average Market Price or arithmetic calculation of the Exercise Price within two (2) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile (A) the disputed determination of the Average Market Price to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Exercise Price to its independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and such Holders of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. In the event that the Average Market Price is greater than the Conversion Price on the Repricing Date then this Repricing Warrant shall expire and be of no further force and effect. Section 3. Exercise of Warrant; Conversion of Warrant; Election to Pay Cash. (a) This Warrant may, at the option of the Holder, be exercised in whole but not in part on the Repricing Date by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Repricing Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Repricing Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder, be converted into Common Stock in whole but not in part, if and only if the Value of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Repricing Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Repricing Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price minus (B) the then effective Exercise Price divided by (y) the Average Market Price. Any fraction resulting from the calculation of the number of Repricing Shares then issuable in a conversion of this Repricing Warrant shall be truncated. (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of the Exercise Materials or the Conversion Materials, a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and under this Warrant and the Series 1 Bridge Note Purchase Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof, the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. (e) The Company may, in lieu of issuing the Repricing Shares pay Holder an amount equal to the number of Repricing Shares issuable on the Effective Date multiplied by the Average Market Price (the "Payment Amount"). In such event, the Company shall be obligated to deliver the Payment Amount to Holder within ten (10) business days following the Effective Date. If the Company shall fail to deliver the Payment Amount within ten (10) business days after the Effective Date, in addition to all other available remedies which Holder may pursue at law or equity, including indemnification pursuant to Section 7.18 of the Securities Purchase Agreement, the Company shall pay additional damages to Holder on each day after the Effective Date, until the Payment Amount has been paid, an amount equal to 1.0% of the Payment Amount. Such damages shall be computed daily and are due and payable daily. Section 4. Adjustments to Repricing Shares. The number of Repricing Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Repricing Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Repricing Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Repricing Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 5. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 6. Transfer of Securities. (a) This Warrant and the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Repricing Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Repricing Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 7. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (f) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY ATTACHED REPRICING WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.18 18 0018.txt COMMON STOCK PURCHASE WARRANT IN FAVOR OF SOVCAP NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION COMMON STOCK PURCHASE WARRANT Warrant No. SCA/PW-1 225,000 shares Original Issue Date: January 18, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, SOVCAP EQUITY PARTNERS, LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time or from time to time from the date hereof until 5:00 p.m., Eastern Time, on the fifth (5th) anniversary of the Original Issue Date set forth above, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business (such date is the "Expiration Date"), but not thereafter, to purchase up to TWO HUNDRED TWENTY-FIVE THOUSAND (225,000) shares {equal to 15% of amount of Bridge Notes purchased by Holder} of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), at a price of $4.19 {110% of Closing Bid Price on Original Issue Date} per share (the "Exercise Price"), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a "Warrant Share" and all such shares are collectively referred to as the "Warrant Shares." Section 1. Exercise of Warrant; Conversion of Warrant. (a) This Warrant may, at the option of the Holder, be exercised in whole or in part from time to time by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder and only in accordance with the terms of this Section 1(b), be converted into Common Stock in whole but not in part, if and only if the Average Market Price of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Warrant Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date (as such term is defined in Section 1(c) hereof) minus (B) the then effective Exercise Price divided by (y) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date. As used herein, "Average Market Price" on any particular date (a "Determination Date") means, with respect to one share of Common Stock for any Determination Date, that price which is equal to the arithmetic average of the Closing Bid Prices (as defined below) for the Common Stock for each trading day in a five trading day period ended on the day prior to a Determination Date. As used herein, "Closing Bid Price" means, for any security as of any date, the last closing bid price on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period). Holder may exercise this Warrant under this Section 1(b) only (1) with the consent of the Company or (2) at the sole discretion of Holder if a registration statement with respect to the Warrant Shares is not effective on or before the Maturity Date; (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Warrant Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share, and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is partially exercised, a copy of this Warrant marked "Partially Exercised" together with a new Warrant on the same terms for the unexercised balance of the Warrant Shares, or (z) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the Effective Date a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof (all of which shall be cumulative), the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Warrant Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. Section 2. Adjustments to Warrant Shares. The number of Warrant Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Warrant Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Articles of Organization or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 3. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 4. Transfer of Securities. (a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Warrant Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 5. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (f) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where against whom the action is brought is principally located, and both parties agree that such counts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY COMMON STOCK PURCHASE WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.19 19 0019.txt COMMON STOCK PURCHASE WARRANT IN FAVOR OF CORRELLUS NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION COMMON STOCK PURCHASE WARRANT Warrant No. SCA/PW-2 37,500 shares Original Issue Date: January 18, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, CORRELLUS INTERNATIONAL LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time or from time to time from the date hereof until 5:00 p.m., Eastern Time, on the fifth (5th) anniversary of the Original Issue Date set forth above, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business (such date is the "Expiration Date"), but not thereafter, to purchase up to THIRTY-SEVEN THOUSAND FIVE HUNDRED (37,500) shares {equal to 15% of amount of Bridge Notes purchased by Holder} of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), at a price of $4.19 {110% of Closing Bid Price on Original Issue Date} per share (the "Exercise Price"), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a "Warrant Share" and all such shares are collectively referred to as the "Warrant Shares." Section 1. Exercise of Warrant; Conversion of Warrant. (a) This Warrant may, at the option of the Holder, be exercised in whole or in part from time to time by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder and only in accordance with the terms of this Section 1(b), be converted into Common Stock in whole but not in part, if and only if the Average Market Price of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Warrant Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date (as such term is defined in Section 1(c) hereof) minus (B) the then effective Exercise Price divided by (y) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date. As used herein, "Average Market Price" on any particular date (a "Determination Date") means, with respect to one share of Common Stock for any Determination Date, that price which is equal to the arithmetic average of the Closing Bid Prices (as defined below) for the Common Stock for each trading day in a five trading day period ended on the day prior to a Determination Date. As used herein, "Closing Bid Price" means, for any security as of any date, the last closing bid price on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period). Holder may exercise this Warrant under this Section 1(b) only (1) with the consent of the Company or (2) at the sole discretion of Holder if a registration statement with respect to the Warrant Shares is not effective on or before the Maturity Date; (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Warrant Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share, and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is partially exercised, a copy of this Warrant marked "Partially Exercised" together with a new Warrant on the same terms for the unexercised balance of the Warrant Shares, or (z) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the Effective Date a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof (all of which shall be cumulative), the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Warrant Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. Section 2. Adjustments to Warrant Shares. The number of Warrant Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Warrant Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Articles of Organization or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 3. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 4. Transfer of Securities. (a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Warrant Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 5. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (g) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where against whom the action is brought is principally located, and both parties agree that such counts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY COMMON STOCK PURCHASE WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.20 20 0020.txt SOVEREIGN WARRANT AGREEMENT SOVEREIGN WARRANT AGREEMENT THIS WARRANT AGREEMENT ("Agreement") dated as of January 18, 2000, between CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), and SOVEREIGN CAPITAL ADVISORS, LLC, a Nevada limited liability company (hereinafter referred to as "Sovereign"). Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to them in the Series 1 Bridge Note Purchase and Security Agreement of even date herewith (the "Purchase Agreement") among the Company and the Purchasers thereto. Background The Company has engaged Sovereign to assist the Company in connection with the Company's offering (the "Offering") of up to $2,000,000 in principal amount of Series 1 Bridge Financing Notes, funded through a series of Subsequent Advances (the "Bridge Notes"). The Company expects the Offering to be consummated over a series of closings (each of which is a "Closing"). The Warrant Certificates ("Warrants") issued pursuant to this Agreement are being issued by the Company to Sovereign and/or its designees, in consideration for, the services of Sovereign in connection with the Offering, with one Warrant issued at each of the Closings. Agreement For and in consideration of the premises, the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Issuance of Warrant Certificates. The Company hereby agrees to issue to Sovereign and/or its designees (the "Holders") at each Closing in the Offering, a warrant to purchase a number of shares of Common Stock, par value $.10 per share, of the Company (the "Warrant Shares") equal to five percent (5%) of the principal amount of the Bridge Notes issued at each such Closing, at any time or from time to time during a three (3) year period which commences on the issuance date of each Warrant Certificate issued pursuant hereto and ends 5:00 P.M., Eastern Time, on the third (3rd) anniversary of the issuance date of each such Warrant Certificate issued pursuant hereto (the "Warrant Exercise Term"). The exercise price of the Warrant shall be equal to one hundred ten percent (110%) of the Closing Bid Price at each Closing (the "Exercise Price"). Section 2. Warrant Certificates. The warrant certificates (the "Warrant Certificates") delivered and to be delivered pursuant to this Agreement shall be in the form set forth as Exhibit A, attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions, and other variations as required or permitted by this Agreement. Section 3. Exercise of Warrants. 3.1. Cash Exercise. The Exercise Price may be paid in cash or by check to the order of the Company, or any combination of cash or check, subject to adjustment as provided in Article 7 herein. Upon surrender of the Warrant Certificate to be exercised with the annexed Form of Exercise Notice duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the Company's executive offices currently located at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, the Holder of a Warrant Certificate shall be entitled to receive a certificate or certificates for the Shares so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder hereof, in whole or in part (but not as to fractional shares of the Common Stock) at any time prior to the expiration of the Warrant Exercise Term. In the case of the purchase of less than all the Shares purchasable under any Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Shares purchasable thereunder. The date of issuance of the Common Stock issuable upon exercise of the Warrants shall be the date the Company receives the payment of the Exercise Price, a Warrant Certificate, and the Election to Purchase. 3.2. Cashless Exercise. Subject to the last sentence of this Section 3.2, at any time during the Warrant Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or in part (a "Warrant Exchange"), for a number of Shares determined in accordance with this Section 3.2, by surrendering this Warrant at the principal office of the Company or at the office of its transfer agent, accompanied by a notice stating such Holder's intent to effect such exchange, the number of Shares to be exchanged (the "Total Number") and the date on which the Holder requests that such Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the date specified in the Notice of Exchange or, if later, the date the Notice of Exchange is received by the Company (the "Exchange Date"). Certificates for the Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing the balance of the Shares remaining subject to this Warrant, shall be issued as of the Exchange Date and delivered to the Holder within seven (7) business days following the Exchange Date. In connection with any Warrant Exchange, this Warrant shall represent the right to subscribe for and acquire the number of Shares (rounded to the next highest integer) equal to (a) the Total Number minus (b) the quotient of (i) the Total Number multiplied by the Exercise Price divided by (ii) the current market value of a share of Common Stock. Holder may effect a Warrant Exchange for any Warrant Certificate under this Section 3.2 only (i) with the consent of the Company or (ii) at the sole discretion of the Holder if a registration statement with respect to the Warrant Shares is not effective on or before the Maturity Date of the Bridge Notes delivered at the First Closing. Section 4. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the Shares shall be made forthwith (and in any event within ten business days thereafter) without charge to the Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall be issued in the name of, or in such names as may be directed by, the Holder thereof; provided however, that the Company shall not be required to pay any tax related to income which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to satisfaction of the Company that such tax has been paid. The Warrant Certificates and the certificates representing the Shares shall be executed on behalf of the Company by the manual or facsimile signature of the present or any future Chairman or Vice Chairman of the Board of Directors, Chief Executive Officer, President, or Vice President of the Company under its corporate seal reproduced thereon, attested to by the manual or facsimile signature of the present or any future Secretary or Assistant Secretary of the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer. The Warrant Certificates and, upon exercise of the Warrants in part or in whole and pending effectiveness of the Registration Statement, certificates representing the Shares shall bear a legend substantially similar to the following: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. Section 5. Price. 5.1. Adjusted Exercise Price. The adjusted Exercise Price shall be the price which shall result from time to time from any and all adjustments of the initial Exercise Price specified in Section 3.1 hereof in accordance with the provisions of Article 7 hereof. Section 6. Registration Rights. The Warrants and Warrant Shares have not been registered for purposes of public distribution under the Securities Act of 1933, as amended, but shall be included as Registrable Securities in the Registration Statement to be filed by the Company during the term of this Agreement or while any Warrant Certificate remains unexercised or upon any such exercise any Warrant Shares issued pursuant thereto are issued with restriction as to transfer. Pending filing of a Registration Statement pursuant to the Registration Rights Agreement, the Warrant Shares as Registrable Securities thereunder are entitled to piggy-back registration rights as set forth in Section 2(c) and 2(d) thereof. Section 7. Adjustments of Exercise Price and Number of Shares. 7.1. Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination. 7.2. Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Article 7, the number of Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest full Share by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. 7.3. Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holders shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale, or conveyance as if the Holders were the owners of the shares of Common Stock underlying the Warrants immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of the Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale, or conveyance as if such Holders had exercised the Warrants. 7.4. No Adjustment of Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be made: (a) Upon the issuance or sale of shares of Common Stock upon the exercise of the Warrants; or (b) Upon (i) the issuance of options pursuant to the Company's employee stock option plan in effect on the date hereof or the issuance or sale by the Company of any shares of Common Stock pursuant to the exercise of any such options, or (ii) the issuance or sale by the Company of any shares of Common Stock pursuant to the exercise of any options or warrants previously issued and outstanding on the date hereof; or (c) Upon the issuance of shares of Common Stock pursuant to contractual obligations existing on the date hereof; or (d) If the amount of said adjustment shall be less than 2 cents ($.02) per Share, provided however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least 2 cents ($.02) per Share. 7.5. Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to its shareholders any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Holder or Holders of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities, or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7.7. 7.6. Subscription Rights for Shares of Common Stock or Other Securities. In case the Company or an affiliate of the Company shall at any time after the date hereof and prior to the exercise of all the Warrants issue any rights to subscribe for shares of Common Stock or any other securities of the Company or of such affiliate to all the shareholders of the Company, the Holders of the unexercised Warrants shall be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise of the Warrants, to receive such rights at the time such rights are distributed to the other shareholders of the Company. Section 8. Exchange and Replacement of Warrant Certificates. Each Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof. Section 9. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock. Section 10. Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully paid, nonassessable and not subject to the preemptive rights of any shareholder. As long as the Warrants shall be outstanding, the Company shall use its best efforts to cause all shares of Common Stock issuable upon the exercise of the Warrants to be listed on or quoted on the electronic bulletin board, by NASDAQ or listed on such national securities exchanges as requested by Sovereign. Section 11. Notices to Warrant Holders. Nothing contained in this Agreement shall be construed as conferring upon the Holder or Holders the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur: (a) the Company shall make a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor; or (c) a dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed; then, in any one or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription fights, options or warrants, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, options or warrants, or any proposed dissolution, liquidation, winding up or sale. Section 12. Notices. All notices, requests, consents, and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mall, return receipt requested: (a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or (b) If to the Company, to the address set forth in Section 3 of this Agreement or to such other address as the Company may designate by notice to the Holders. Section 13. Supplements and Amendments. The Company and Sovereign may from time to time supplement or amend this Agreement without the approval of any Holders of Warrant Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and Sovereign may deem necessary or desirable and which the Company and Sovereign deem not to adversely affect the interests of the Holders of Warrant Certificates. Section 14. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder. Section 15. Termination. This Warrant Agreement shall terminate on the date when all Warrants issued pursuant to this Agreement shall have been exercised and all the Shares issuable upon exercise of the Warrants have been resold to the public; provided however, that the provisions of Article 6 shall survive such termination until the fifth (5th) anniversary of the date of issuance of the last warrant issued pursuant to this Agreement. Section 16. Governing Law. This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. Section 17. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company and Sovereign, its assignees and/or designees, and any other registered holder or holders of the Warrant Certificates, Warrants, or the Shares any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and Sovereign, its assignees and/or designees, and any other holder or holders of the Warrant Certificates, Warrants, or the Warrant Shares. Section 18. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. [Signatures on Following Pages] COMPANY SIGNATURE PAGE TO SOVEREIGN WARRANT AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy Its: Executive Vice President SOVEREIGN SIGNATURE PAGE TO SOVEREIGN WARRANT AGREEMENT SOVEREIGN CAPITAL ADVISORS, LLC By: /s/ Paul D. Hamm Name: Paul D. Hamm Title: Managing Director EX-10.21 21 0021.txt WARRANT CERTIFICATE REGISTERED IN THE NAME OF SOVEREIGN ADVISORS THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE ON OR BEFORE 5:00 P.M., EASTERN TIME, January 18, 2003 No. SCA - 1 One Warrant WARRANT CERTIFICATE This Warrant Certificate certifies that SOVEREIGN CAPITAL ADVISORS, LLC ("Sovereign") or registered assigns, is the registered holder of One Warrant to purchase, at any time from January 18, 2000 until 5:00 P.M. Eastern Time on January 18, 2003 ("Expiration Date"), up to 87,500 shares ("Shares") of fully-paid and non-assessable common stock, par value $.10 ("Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), at the Initial Exercise Price, subject to adjustment in certain events (the "Exercise Price"), of $_______ per Share {110% of Closing Bid Price on date of each Closing} upon surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the Warrant Agreement dated as of January ___, 2000 between the Company and Sovereign (the "Warrant Agreement"). Payment of the Exercise Price may be made in cash, or by certified or official bank check in New York Clearing House funds payable to the order of the Company, or any combination of cash or check. No Warrant may be exercised after 5:00 P.M., Eastern Daylight Time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be void. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to in a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. The Warrant Agreement provides that upon the occurrence of certain events, the Exercise Price and/or number of the Company's securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the, request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter, or otherwise impair, the rights of the holder as set forth in the Warrant Agreement. Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of shares of Common Stock shall be issued to the transferees) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax, or other governmental charge imposed in connection therewith. Upon the exercise of less than all of the shares of Common Stock evidenced by this Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. [Signature On Following Page] COMPANY SIGNATURE PAGE TO SOVEREIGN WARRANT AGREEMENT WARRANT CERTIFICATE NO. 1 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated: January 18, 2000 CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy Its: Executive Vice President EX-10.22 22 0022.txt SERIES 1 BRIDGE FINANCING NOTE IN FAVOR OF ARAB COMMERCE BANK LTD. THIS BRIDGE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. CAMBEX CORPORATION SERIES 1 BRIDGE FINANCING NOTE No. S1BFN-3 $150,000.00 February 9, 2000 CAMBEX CORPORATION, a Massachusetts corporation (such corporation, or any successor permitted hereunder, the "Company"), for value received, hereby promises to pay to ARAB COMMERCE BANK LTD., a corporation organized under the laws of the Cayman Islands, or any subsequent holder hereof (such holders, assignees, or any registered assignees, the "Holders"), the principal sum of ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS (US $150,000.00), and to pay interest on such principal sum, at the rate of eight percent (8%) per annum (the "Note Rate") from the Original Issue Date (as defined below) until the two hundred-tenth (210th) day after the Original Issue Date (the "Maturity Date") and at the rate of twelve percent (12%) per annum (the "Default Rate") after the Maturity Date until payment of all principal, premium, and accrued and unpaid interest has been paid in full. Interest shall be payable on the Maturity Date. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. The date on which this Series 1 Bridge Note shall have first been issued is referred to herein as the "Original Issue Date." Section 1. Description. This Bridge Note is one of a series of Series 1 Bridge Financing Notes that have been authorized by the Company (the "Series 1 Bridge Notes") and are alike except for principal amount and issue date, and are in registered form. This Series 1 Bridge Note is convertible, into shares of the Company's Common Stock, $.10 par value (the "Common Stock"), as provided herein, and, effective upon any such conversion, the Common Stock so issued shall be subject to all terms and conditions and shall enjoy all rights, privileges, and preferences applicable to such Common Stock under the Company's Articles of Organization (the "Articles of Organization"). The shares of the Company's Common Stock issuable upon conversion of this Series 1 Bridge Note (the "Conversion Shares") are entitled to registration rights pursuant to a Registration Rights Agreement between Holder, the Company, and certain other signatories thereto dated January 18, 2000 (the "Registration Rights Agreement"). This Series 1 Bridge Note is secured by up to a maximum of 1,750,000 shares of Common Stock of the Company owned or controlled by certain Company officers, pledged pursuant to the terms of a Stock Pledge Agreement dated January 18, 2000 and pursuant to the terms of a Series 1 Bridge Note Purchase Agreement dated January 18, 2000 (the "Purchase Agreement"), and is otherwise entitled to all of the rights and benefits thereunder. Section 2. Office for Registration and Conversion. The Company shall maintain an office where this Series 1 Bridge Note shall be surrendered or presented for registration of transfers or exchanges and conversions. This office will initially be located at the offices of the Company at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President. The Company shall keep a register of the Series 1 Bridge Notes and of their transfer and exchange, including the names and addresses of Holders of the Series 1 Bridge Notes. Holder shall give the Company notice of any change in Holder's address to the office indicated in this Section 2. Upon two- (2) business days written request, the Company shall permit Holder or its duly authorized representatives to inspect such register. Upon written notice to Holder, the Company may change the address of the office to be maintained by the Company pursuant to this Section 2 or appoint one or more co-registrars, stock registrars, paying agents, or conversion agents to assist the Company in performing its functions under the Series 1 Bridge Notes. Section 3. Redemption. (a) Mandatory Redemption. If this Series 1 Bridge Note is outstanding on the Maturity Date, this Series 1 Bridge Note shall be due and payable as follows: (i) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is effective with respect to the Conversion Shares, the Company shall give written notice to Holder of its intent to redeem the then outstanding principal amount of this Series 1 Bridge Note, which notice shall state the election of the Company to pay the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. Regardless of the manner in which paid, the redemption price (the "Maturity Date Redemption Price") shall be equal to 120% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date if redemption occurs on the Maturity Date or within four (4) days, thereafter, and if occurring later than four business days after the Maturity Date shall be equal to 125% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date and at the Default Rate after the Maturity Date through and including the date the payment is disbursed (whether by issuance of Conversion Shares or a payment in cash). (ii) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is not effective with respect to the Conversion Shares, Holder may, in addition to all other rights and remedies of Holder hereunder and under the Purchase Agreement, elect to make written demand to the Company to redeem, all or part of the then outstanding principal under this Series 1 Bridge Note. Such demand shall specify Holder's election to accept payment of the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. The Company shall have two (2) business days after its receipt of such demand to confirm its intention to redeem this Series 1 Bridge Note by tendering to Holder either (A) cash or (B) Conversion Shares (as specified in Holder's demand), in the manner contemplated by Section 3(c) hereof. In either case the redemption price shall be equal to the Maturity Date Redemption Price. (iii) The date of any redemption under either subparagraph (i) or (ii) above shall be referred to as a "Redemption Date." (b) Voluntary Redemption. At any time from and after the Original Issue Date up to but not including the Maturity Date, the Company may, at its option, call and redeem this Series 1 Bridge Note, at the redemption price set forth in subparagraph (i), below, plus accrued and unpaid interest on such redeemed amount through and including the Voluntary Redemption Date, as such term is defined below (such redemption being the "Voluntary Redemption"), under and in accordance with the following terms and procedures: (i) The Company at its option prior to the Maturity Date may redeem this Series 1 Bridge Note at the Redemption Price set forth below plus all accrued and unpaid interest on the principal amount through and including the Voluntary Redemption Date (the "Voluntary Redemption Price") as of a Voluntary Redemption Date: Redemption Date Redemption Price Original Issue Date through and 105% including the 60th day after the Original Issue Date 61st day after the Original Issue 110% Date through and including the 120th day after the Original Issue Date 121st day after the Original Issue 115% Date through and including the 180th day after the Original Issue Date 181st day after the Original Issue 120% Date through and including the 214th day after the Original Issue Date 215th day after the Original Issue 125% Date through and including the date of redemption or conversion (ii) At least ten (10) days before a Voluntary Redemption, the Company shall mail a notice of redemption to Holder, stating (A) the redemption date, which shall be a business day in New York, New York (the "Voluntary Redemption Date"), (B) the aggregate principal amount of this Series 1 Bridge Note to be redeemed, (C) the Voluntary Redemption Price, and (D) the name and address of the Person to whom this Series 1 Bridge Note must be presented to receive payment if required pursuant to paragraph (iv) below. Once notice of redemption is mailed and the Company shall have complied with paragraph (iii) below, the Voluntary Redemption Price shall become due and payable on the Voluntary Redemption Date. (iii) On or before the third (3rd) day prior to the Voluntary Redemption Date, the Company shall deposit into a bank trust account for the benefit of the Holder of this Series 1 Bridge Note money sufficient to pay the Redemption Price and all accrued and unpaid interest. (iv) The Company may, at its option, require as a condition to the receipt of a payment pursuant to this Section 3(b) that Holder present the Series 1 Bridge Notes to the Person specified in paragraph (ii) above for surrender. (v) No Voluntary Redemption of this Series 1 Bridge Note can be effected after the 209th day after the Original Issue Date. (c) Conversion into Common Stock in Lieu of Payments. (i) In lieu of payment of cash to Holder pursuant to Section 3(a)(i) hereof and Section 3(b) hereof, if a Registration Statement is in effect with respect to the Conversion Shares the Company may elect to pay all or part of the Maturity Date Redemption Price or the Voluntary Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. (ii) In lieu of cash, pursuant to Section 3(a)(ii) hereof, Holder may require the Company to pay all or part of the Maturity Date Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. The Repricing Warrant shall apply to each share of Common Stock received by Holder pursuant to this Section 3(c). (d) The number of shares of Common Stock issuable in payment of the Maturity Date Redemption Price or the Voluntary Redemption Price is equal to the quotient of the Maturity Date Redemption Price or the Voluntary Redemption Price (as the case may be) divided by $6.0875 (the "Conversion Price") {5 day average Closing Bid Price prior to Original Issue Date}. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less-than full share remainder. Section 4. Method of Payment. (a) Interest accruing through and including the Maturity Date shall be computed at the Note Rate. Interest accruing after the Maturity Date shall be computed at the Default Rate. Accrued and unpaid interest shall be due and payable at the time the principal and premium of this Series 1 Bridge Note is paid. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. Interest shall begin to accrue on the Original Issue Date. (b) The Company shall pay interest and principal on this Series 1 Bridge Note (except defaulted interest) to the Person who is the registered Holder of this Series 1 Bridge Note on the day on which the interest or principal payment is due. If the Company defaults in a payment of interest on this Series 1 Bridge Note, it may pay the defaulted interest, to the Person who is the registered Holder of this Series 1 Bridge Note on the date such payment is made. (c) The Company shall pay interest by check payable in money of the United States of America that at the time of payment is legal tender for public and private debts. Payments of interest shall be mailed to Holder's address shown in the register maintained pursuant to Section 2; provided however, that with respect to the final payment of principal and accrued and unpaid interest necessary to pay this Series 1 Bridge Note in full, to receive such payment Holder must surrender this Series 1 Bridge Note for cancellation to the Company or to a paying agent appointed by the Company. Principal and interest shall be considered paid on the date due, and no interest shall accrue thereafter, if there is on deposit on that date, in a bank trust account for the benefit of Holder of this Series 1 Bridge Note, money sufficient to pay the Redemption Price and all accrued and unpaid interest due under this Series 1 Bridge Note. Section 5. Conversion Price and Adjustments. (a) At anytime after the Maturity Date, Holder may convert all or any portion of the Redemption Price and accrued and unpaid interest due on this Series 1 Bridge Note into shares of Common Stock. (b) If Holder elects to convert less than the full Redemption Price of this Series 1 Bridge Note, such conversion shall be permitted only in one hundred (100)-share increments unless the Company has given its contemporaneous consent to conversion of an odd lot. The provisions hereof that apply to conversion of the entire Redemption Price of this Series 1 Bridge Note shall also apply to conversion of a portion of the Redemption Price. Upon surrender of the Series 1 Bridge Note for conversion in part, the Company shall issue new Series 1 Bridge Notes in substantially the same form as this Series 1 Bridge Note, except that the principal amount shall be reduced by the principal amount so converted (exclusive of the redemption premium). (c) The number of shares of Common Stock issuable upon conversion of this Series 1 Bridge Note is equal to the quotient of the Redemption Price of this Series 1 Bridge Note being converted divided by Conversion Price. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less than full share remainder. Accrued and unpaid interest shall be included in computing the number of Conversion Shares issuable upon conversion of this Series 1 Bridge Note. Interest shall cease to accrue on that portion of the Redemption Price converted from and after the Conversion Date. Section 6. Procedures for Conversion, and Issuance of Conversion Shares. (a) Holders' Delivery Requirements. To convert this Series 1 Bridge Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company or its designated Transfer Agent, and (B) surrender to a common carrier for delivery to the Company or the Transfer Agent as soon as practicable following such date, the original Series 1 Bridge Note being converted (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of the Series 1 Bridge Note) and the originally executed Conversion Notice. The date the Company receives the originally executed Conversion Notice and this Series 1 Bridge Note is hereinafter the "Conversion Date." (b) Company's Response. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via Facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Company or the Transfer Agent of the Series 1 Bridge Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Company or the Transfer Agent (as applicable) shall, within ten (10) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company. (c) Record Holder. The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Series 1 Bridge Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date. (d) Company's Failure to Timely Convert. If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of this Series 1 Bridge Note to be converted pursuant to a Conversion Notice, a certificate for the number of shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Series 1 Bridge Note, in addition to all other available remedies which such Holder may pursue hereunder and under the Purchase Agreement between the Company and the initial Holder of this Series 1 Bridge Note (including indemnification pursuant to Section 7.18 thereof), the Company shall pay additional damages to Holder on each day after the tenth (10th) business day following the date of receipt by the Company or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the business day following the date of receipt by the Company or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Series 1 Bridge Note, if Holder has otherwise complied with this Section 6. (e) Adjustments to Conversion Price. If any adjustment to the Conversion Price to be made pursuant to Section 7 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after the record date, the Company may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Company delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment. (f) Reservation of Conversion Shares. Until such time as this Series 1 Bridge Note has been fully redeemed, the Company shall reserve out of its authorized but unissued Common Stock enough shares of Common Stock to permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on this Series 1 Bridge Note at any time. All shares of Common Stock issued upon conversion of this Series 1 Bridge Note shall be fully paid and nonassessable. The Company covenants that if any shares of Common Stock, required to be reserved for purposes of conversion of this Series 1 Bridge Note hereunder, require registration with or approval of any governmental authority under any federal or state law or listing upon any national securities exchange before such shares may be issued upon conversion, the Company shall in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered, approved or listed, as the case may be. Section 7. Adjustments to Conversion Price. The Conversion Price shall be subject to adjustment from time to time as follows: (a) If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. (b) Prior to the consummation of any Organic Change (as defined below), the Company will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Series 1 Bridge Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Series 1 Bridge Note had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this Section 7(b) and Sections 6(d) and 6(e) above will thereafter be applicable. The Company will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder, the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Company's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof. Section 8. Notices. The Company shall give the following notices at the times specified: (a) Immediately upon any adjustment of the Conversion Price, the Company will give written notice thereof to Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. (b) The Company will give written notice to Holder, at least twenty (20) days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon the Common Stock, (ii) with respect to any pro rata subscription offer to Holder of Common Stock, or (iii) for determining rights to vote with respect to any Organic Change, dissolution, or liquidation. (c) The Company will also give written notice to Holder at least twenty (20) days prior to the date on which any Organic Change, Major Transaction (as defined below), dissolution, or liquidation will take place. Section 9. Successors to the Company. The Company shall not consolidate or merge with or into, or sell all or substantially all of its assets to, any Person unless: (i) the Person is a corporation; (ii) such Person executes, and mails to Holder a copy of, an instrument by which such Person or an affiliate assumes the due and punctual payment of the principal of and interest on this Series 1 Bridge Note and the performance and observance of all the obligations of the Company under this Series1 Bridge Note; and (iii) immediately after giving effect to the transaction, no Event of Default or event which after notice or lapse of time or both would become an Event of Default shall have occurred. Upon compliance with this Section 9, Successor Corporation shall succeed to and be substituted for the Company under this Series 1 Bridge Note with the same effect as if the Successor Corporation had been named as the Company herein. Nothing in this Series 1 Bridge Note shall prevent any consolidation or merger in which the Company is the surviving corporation, or any acquisition by the Company by purchase or otherwise of all or any part of the assets of any other Person, and no such consolidation, merger, or acquisition shall require compliance with this Section 9. Section 10. Events of Default and Remedies. (a) As used herein, an "Event of Default" occurs if: (i) The Company defaults in the payment of principal and/or interest when the same becomes due and payable and such failure is not cured within ten (10) business days after the Company receives written demand from Holder or the Representative to remedy the same. (ii) the Company fails to comply with any other provision contained in this Series 1 Bridge Note, the Purchase Agreement, the Warrant, the Repricing Warrant, or the Registration Rights Agreement, and such failure is not cured within ten (10) business days after the Company receives written demand from Holder to remedy the same; (iii) the Company defaults in any payment of principal of or interest on any Debt (excluding trade payables) in excess of $100,000 beyond any period of grace provided with respect thereto and the effect of such failure is to cause the holder of such Debt to accelerate the Debt such that such Debt becomes due prior to its stated maturity; (iv) any representation or warranty made in writing by or on behalf of (i) the Company in the Purchase Agreement or in any writing furnished in connection with or pursuant to the Purchase Agreement or in connection with the transactions contemplated by this Agreement, or (ii) the Company in the Registration Rights Agreement, or (iii) the Company in the Escrow Agreement, shall be false in any material respect on the date as of which made; (v) the Company makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; (vi) any order or decree for relief in respect of the Company is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution, or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; (vii) the Company petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidation, or similar official of the Company, or of any substantial part of the assets of the Company, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings relating to the Company under the Bankruptcy Law of any other jurisdiction; (viii) any petition or application described in Section 10(a)(vi) above is filed, or any such proceedings are commenced, against the Company and the Company by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator, or similar official, or approving the petition in any such proceedings, and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; (ix) any order, judgment, or decree is entered in any proceedings against the Company decreeing the dissolution of the Company and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; or (x) a final judgment (not fully covered by insurance) in an amount in excess of $100,000 is rendered against the Company and, within ten (10) business days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within ten (10) days after the expiration of any such stay, such judgment is not discharged. (b) Upon the occurrence of an Event of Default described in subsection (vi), (vii), or (viii) of Section 10(a), the principal of and accrued interest on this Series 1 Bridge Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. If any other Event of Default exists, Holder may, in addition to the exercise of any right, power, or remedy permitted to Holder by law, declare (by written notice or notices to the Company) the entire principal of and all interest accrued on this Series 1 Bridge Note to be due and payable, and this Series 1 Bridge Note shall thereupon become immediately due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Company. Upon such declaration, the Company will immediately pay to Holder of this Series 1 Bridge Note the then outstanding principal of and accrued and unpaid interest on the Series 1 Bridge Notes. If at any time after acceleration of the maturity of the Series 1 Bridge Notes, the Company shall pay all arrears of interest and all payments on account of principal which shall have become due other than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rate specified in the Series 1 Bridge Notes) and all Events of Default (other than nonpayment of principal of or interest on this Series 1 Bridge Note due and payable solely by virtue of acceleration) shall be remedied or waived by Holder by written notice to the Company may rescind and annul the acceleration and its consequences, but such action shall not affect any subsequent Event of Default or impair any right consequent thereon. (c) A delay or omission by the Holder of this Series 1 Bridge Note in exercising any right or remedy arising upon an Event of Default shall not impair such right or remedy or constitute a waiver of or an acquiescence in the Event of Default. (d) If any Event of Default shall occur and be continuing, the Holder of this Series 1 Bridge Note may proceed to protect and enforce their rights under this Agreement and this Series 1 Bridge Note by exercising such remedies as are available to such Holder either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon Holder is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. Section 11. Exchange, Transfer, Replacement or Cancellation. (a) This Series 1 Bridge Note may be exchanged for an equal principal amount of Series 1 Bridge Notes in denominations of US$25,000.00 or in greater multiples of US$5,000.00 upon written request to the Company accompanied by surrender of this Series 1 Bridge Note to the Company or to an agent designated for that purpose. Any Series 1 Bridge Notes issued in exchange for this Series 1 Bridge Note shall be one of this Series 1 Bridge Note referred to in Section 1, and shall be entitled to all the rights thereof. (b) The Series 1 Bridge Notes may not be transferred except upon the conditions specified in this Section 11(b), which conditions are intended to insure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Prior to any proposed transfer of this Series 1 Bridge Note the Holder hereof shall give written notice to the Company of the proposed disposition and shall furnish to the Company a statement of the circumstances surrounding the proposed disposition and an opinion of counsel reasonably satisfactory to the Company to the effect that (i) such disposition will not require registration of such securities under the Securities Act or qualification of such securities under the blue sky or state securities laws of any state in which such qualification would be required, or (ii) appropriate action necessary for compliance with the Securities Act or the blue sky or securities laws of such states has been taken. The Holder hereof shall cause any proposed transferee of such securities to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 11. The Company or any co-registrar appointed by the Company may require the Holder to furnish appropriate endorsements and/or transfer documents, including information regarding any proposed transferee's name, address and social security or taxpayer identification number, and to pay any issue or transfer taxes or fees as may be required by law. The registered Holder of this Series 1 Bridge Note may be treated as its owner for all purposes. (c) If Holder claims this Series 1 Bridge Note has been lost, destroyed, or wrongfully taken, the Company shall issue a replacement Series 1 Bridge Note upon (i) receipt of any indemnity bond or other assurance requested by the Company to protect it from any loss which it may suffer by reason of such replacement or subsequent presentment of the original Series 1 Bridge Note, and (ii) payment of any expenses reasonably incurred by the Company in replacing the Series 1 Bridge Note. Section 12. Amendments and Waivers. This Series 1 Bridge Note may, with the consent of the Company and the Holder be amended or any provision thereof waived. Section 13. Notice. Any notice or communication hereunder shall be in writing and delivered by first-class mail, return receipt requested, to each Holder at its address shown in the register kept by the Company or any co-registrar appointed by the Company and to the Company at the address of its office to be maintained pursuant to Section 2. Failure to mail, or any defect in, a notice or communication to any other Holder of this Series 1 Bridge Note shall not affect its sufficiency with respect to the other Holders. If a notice or communication is mailed to Holder in the manner provided above within the time prescribed, it shall be deemed duly given and effective on the tenth (10th) business day after it was deposited in the mail, whether or not Holder actually receives it. Section 14. No Recourse Against Others. A director, officer, employee, or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under this Series 1 Bridge Note or for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Series 1 Bridge Note by accepting this Series 1 Bridge Note waives and releases all such liability and such waiver and release are part of the consideration for the issue of the Series 1 Bridge Note. Section 15. Governing Law. This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be brought in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. IN WITNESS WHEREOF, the parties have caused this Series 1 Bridge Financing Note to be duly executed under seal as of day and year first above written. [Signatures on the following page] COMPANY SIGNATURE PAGE TO SERIES 1 BRIDGE FINANCING NOTE CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: By: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.23 23 0023.txt ATTACHED REPRICING WARRANT IN FAVOR OF ARAB COMMERCE BANK NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION ATTACHED REPRICING WARRANT Warrant No. SCA/RPW-3 __,000 shares Original Issue Date: February 9, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, ARAB COMMERCE BANK LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, on the Repricing Date but not thereafter, a number of shares of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), determined in accordance with Section 2 hereof, at a price of $.10 per share (the "Exercise Price"). Each share of Common Stock as to which this Repricing Warrant is exercisable is a "Repricing Share" and all such shares are collectively referred to as the "Repricing Shares." This Repricing Warrant shall remain attached to the Series 1 Bridge Financing Note issued to Holder on the Original Issue Date (the "Bridge Note"), until conversion of the Bridge Note, at which time it shall automatically detach. Section 1. Definitions. The following capitalized terms are not defined elsewhere in this Repricing Warrant, and are used herein with the meanings thereafter ascribed: "Average Market Price" means, the greater of (a) arithmetic mean of the Closing Bid Prices of the Common Stock for each trading day in a ninety (90) day period which commences on the Conversion Date or (b) the Repricing Floor. For purposes of this Agreement, the term " Repricing Floor" shall mean the lesser of (x) $1.65 or (y) if the Repricing Event occurs, the average Closing Bid Price of the common stock for the thirty (30) day period immediately prior to the Maturity Date. For purposes of this Repricing Warrant, the "Repricing Event" will occur in the event that the Company suffers a 10% or greater decline in gross revenues per fiscal quarter for two consecutive quarters relative to the 4th quarter of fiscal 1999, beginning with the 1st quarter of 2000 (assuming for this purpose that the Company is on a 12/31 fiscal year). "Closing Bid Price" means, the last closing bid price of the Common Stock on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period); "Conversion Date" means the date of issuance of common stock issued upon any conversion of the Bridge Note. "Conversion Price" means $6.0875, the conversion price of the Bridge Note. "Conversion Shares" means the number of shares of Common Stock issued upon conversion of the Bridge Note that are sold on or before the Expiration Date at a price less than 120% of the Conversion Price. "Expiration Date" means the ninetieth (90th) day after the Conversion Date. "Repricing Date" means the ninety-first (91st) day after the Conversion Date. Section 2. Determination of Number of Repricing Shares. The number of Repricing Shares issuable upon exercise of this Repricing Warrant shall be determined on the Repricing Date. The number of Repricing Shares shall be equal to: the number of Conversion Shares multiplied by a fraction, (a) the numerator of which is the Conversion Price minus the Average Market Price and (b) the denominator of which is the Average Market Price. Holder shall be required to submit copies of trade confirmations establishing the sales price for all Conversion Shares in the event of any exercise of this Warrant under Section 3, below. In the case of a dispute as to the determination of the Average Market Price or the arithmetic calculation of the Exercise Price, the Company shall promptly issue to such Holder(s) the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within three (3) business days of receipt of such holder's Conversion Notice. If such Holder(s) and the Company are unable to agree upon the determination of the Average Market Price or arithmetic calculation of the Exercise Price within two (2) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile (A) the disputed determination of the Average Market Price to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Exercise Price to its independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and such Holders of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. In the event that the Average Market Price is greater than the Conversion Price on the Repricing Date then this Repricing Warrant shall expire and be of no further force and effect. Section 3. Exercise of Warrant; Conversion of Warrant; Election to Pay Cash. (a) This Warrant may, at the option of the Holder, be exercised in whole, but not in part, on the Repricing Date by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Repricing Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Repricing Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder, be converted into Common Stock in whole but not in part, if and only if the Value of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Repricing Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Repricing Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price minus (B) the then effective Exercise Price divided by (y) the Average Market Price. Any fraction resulting from the calculation of the number of Repricing Shares then issuable in a conversion of this Repricing Warrant shall be truncated. (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of the Exercise Materials or the Conversion Materials, a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and under this Warrant and the Series 1 Bridge Note Purchase Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof, the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. (e) The Company may, in lieu of issuing the Repricing Shares pay Holder an amount equal to the number of Repricing Shares issuable on the Effective Date multiplied by the Average Market Price (the "Payment Amount"). In such event, the Company shall be obligated to deliver the Payment Amount to Holder within ten (10) business days following the Effective Date. If the Company shall fail to deliver the Payment Amount within ten (10) business days after the Effective Date, in addition to all other available remedies which Holder may pursue at law or equity, including indemnification pursuant to Section 7.18 of the Securities Purchase Agreement, the Company shall pay additional damages to Holder on each day after the Effective Date, until the Payment Amount has been paid, an amount equal to 1.0% of the Payment Amount. Such damages shall be computed daily and are due and payable daily. Section 4. Adjustments to Repricing Shares. The number of Repricing Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Repricing Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Repricing Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Articles of Organization or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Repricing Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 5. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 6. Transfer of Securities. (a) This Warrant and the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Repricing Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Repricing Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 7. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (f) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY ATTACHED REPRICING WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.24 24 0024.txt COMMON STOCK PURCHASE WARRANT IN FAVOR OF ARAB COMMERCE NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION COMMON STOCK PURCHASE WARRANT Warrant No. SCA/PW-3 22,500 shares Original Issue Date: February 9, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, ARAB COMMERCE BANK LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time or from time to time from the date hereof until 5:00 p.m., Eastern Time, on the fifth (5th) anniversary of the Original Issue Date set forth above, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business (such date is the "Expiration Date"), but not thereafter, to purchase up to TWENTY-TWO THOUSAND FIVE HUNDRED (22,500) shares {equal to 15% of amount of Bridge Notes purchased by Holder} of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), at a price of $7.01 {110% of Closing Bid Price on Original Issue Date} per share (the "Exercise Price"), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a "Warrant Share" and all such shares are collectively referred to as the "Warrant Shares." Section 1. Exercise of Warrant; Conversion of Warrant. (a) This Warrant may, at the option of the Holder, be exercised in whole or in part from time to time by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder and only in accordance with the terms of this Section 1(b), be converted into Common Stock in whole but not in part, if and only if the Average Market Price of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Warrant Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date (as such term is defined in Section 1(c) hereof) minus (B) the then effective Exercise Price divided by (y) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date. As used herein, "Average Market Price" on any particular date (a "Determination Date") means, with respect to one share of Common Stock for any Determination Date, that price which is equal to the arithmetic average of the Closing Bid Prices (as defined below) for the Common Stock for each trading day in a five trading day period ended on the day prior to a Determination Date. As used herein, "Closing Bid Price" means, for any security as of any date, the last closing bid price on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period). Holder may exercise this Warrant under this Section 1(b) only (1) with the consent of the Company or (2) at the sole discretion of Holder if a registration statement with respect to the Warrant Shares is not effective on or before the Maturity Date; (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Warrant Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share, and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is partially exercised, a copy of this Warrant marked "Partially Exercised" together with a new Warrant on the same terms for the unexercised balance of the Warrant Shares, or (z) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the Effective Date a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof (all of which shall be cumulative), the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Warrant Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. Section 2. Adjustments to Warrant Shares. The number of Warrant Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Warrant Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Articles of Organization or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 3. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 4. Transfer of Securities. (a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Warrant Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 5. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (h) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where against whom the action is brought is principally located, and both parties agree that such counts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY COMMON STOCK PURCHASE WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.25 25 0025.txt SERIES 1 BRIDGE FINANCING NOTE IN FAVOR OF SOVCAP THIS BRIDGE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. CAMBEX CORPORATION SERIES 1 BRIDGE FINANCING NOTE No. S1BFN-4 $100,000.00 February 9, 2000 CAMBEX CORPORATION, a Massachusetts corporation (such corporation, or any successor permitted hereunder, the "Company"), for value received, hereby promises to pay to SOVCAP EQUITY PARTNERS, LTD., a Bahamian corporation or any subsequent holder hereof (such holders, assignees, or any registered assignees, the "Holders"), the principal sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS (US $100,000.00), and to pay interest on such principal sum, at the rate of eight percent (8%) per annum (the "Note Rate") from the Original Issue Date (as defined below) until the two hundred-tenth (210th) day after the Original Issue Date (the "Maturity Date") and at the rate of twelve percent (12%) per annum (the "Default Rate") after the Maturity Date until payment of all principal, premium, and accrued and unpaid interest has been paid in full. Interest shall be payable on the Maturity Date. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. The date on which this Series 1 Bridge Note shall have first been issued is referred to herein as the "Original Issue Date." Section 1. Description. This Bridge Note is one of a series of Series 1 Bridge Financing Notes that have been authorized by the Company (the "Series 1 Bridge Notes") and are alike except for principal amount and issue date, and are in registered form. This Series 1 Bridge Note is convertible, into shares of the Company's Common Stock, $.10 par value (the "Common Stock"), as provided herein, and, effective upon any such conversion, the Common Stock so issued shall be subject to all terms and conditions and shall enjoy all rights, privileges, and preferences applicable to such Common Stock under the Company's Articles of Organization (the "Articles of Organization"). The shares of the Company's Common Stock issuable upon conversion of this Series 1 Bridge Note (the "Conversion Shares") are entitled to registration rights pursuant to a Registration Rights Agreement between Holder, the Company, and certain other signatories thereto dated January 18, 2000 (the "Registration Rights Agreement"). This Series 1 Bridge Note is secured by up to a maximum of 1,750,000 shares of Common Stock of the Company owned or controlled by certain Company officers, pledged pursuant to the terms of a Stock Pledge Agreement dated January 18, 2000 and pursuant to the terms of a Series 1 Bridge Note Purchase Agreement dated January 18, 2000 (the "Purchase Agreement"), and is otherwise entitled to all of the rights and benefits thereunder. Section 2. Office for Registration and Conversion. The Company shall maintain an office where this Series 1 Bridge Note shall be surrendered or presented for registration of transfers or exchanges and conversions. This office will initially be located at the offices of the Company at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President. The Company shall keep a register of the Series 1 Bridge Notes and of their transfer and exchange, including the names and addresses of Holders of the Series 1 Bridge Notes. Holder shall give the Company notice of any change in Holder's address to the office indicated in this Section 2. Upon two- (2) business days written request, the Company shall permit Holder or its duly authorized representatives to inspect such register. Upon written notice to Holder, the Company may change the address of the office to be maintained by the Company pursuant to this Section 2 or appoint one or more co-registrars, stock registrars, paying agents, or conversion agents to assist the Company in performing its functions under the Series 1 Bridge Notes. Section 3. Redemption. (a) Mandatory Redemption. If this Series 1 Bridge Note is outstanding on the Maturity Date, this Series 1 Bridge Note shall be due and payable as follows: (i) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is effective with respect to the Conversion Shares, the Company shall give written notice to Holder of its intent to redeem the then outstanding principal amount of this Series 1 Bridge Note, which notice shall state the election of the Company to pay the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. Regardless of the manner in which paid, the redemption price (the "Maturity Date Redemption Price") shall be equal to 120% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date if redemption occurs on the Maturity Date or within four (4) days, thereafter, and if occurring later than four business days after the Maturity Date shall be equal to 125% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date and at the Default Rate after the Maturity Date through and including the date the payment is disbursed (whether by issuance of Conversion Shares or a payment in cash). (ii) if on the Maturity Date or within four (4) business days thereafter a Registration Statement is not effective with respect to the Conversion Shares, Holder may, in addition to all other rights and remedies of Holder hereunder and under the Purchase Agreement, elect to make written demand to the Company to redeem, all or part of the then outstanding principal under this Series 1 Bridge Note. Such demand shall specify Holder's election to accept payment of the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(c) hereof. The Company shall have two (2) business days after its receipt of such demand to confirm its intention to redeem this Series 1 Bridge Note by tendering to Holder either (A) cash or (B) Conversion Shares (as specified in Holder's demand), in the manner contemplated by Section 3(c) hereof. In either case the redemption price shall be equal to the Maturity Date Redemption Price. (iii) The date of any redemption under either subparagraph (i) or (ii) above shall be referred to as a "Redemption Date." (b) Voluntary Redemption. At any time from and after the Original Issue Date up to but not including the Maturity Date, the Company may, at its option, call and redeem this Series 1 Bridge Note, at the redemption price set forth in subparagraph (i), below, plus accrued and unpaid interest on such redeemed amount through and including the Voluntary Redemption Date, as such term is defined below (such redemption being the "Voluntary Redemption"), under and in accordance with the following terms and procedures: (i) The Company at its option prior to the Maturity Date may redeem this Series 1 Bridge Note at the Redemption Price set forth below plus all accrued and unpaid interest on the principal amount through and including the Voluntary Redemption Date (the "Voluntary Redemption Price") as of a Voluntary Redemption Date: Redemption Date Redemption Price Original Issue Date through and 105% including the 60th day after the Original Issue Date 61st day after the Original Issue 110% Date through and including the 120th day after the Original Issue Date 121st day after the Original Issue 115% Date through and including the 180th day after the Original Issue Date 181st day after the Original Issue 120% Date through and including the 214th day after the Original Issue Date 215th day after the Original Issue 125% Date through and including the date of redemption or conversion (ii) At least ten (10) days before a Voluntary Redemption, the Company shall mail a notice of redemption to Holder, stating (A) the redemption date, which shall be a business day in New York, New York (the "Voluntary Redemption Date"), (B) the aggregate principal amount of this Series 1 Bridge Note to be redeemed, (C) the Voluntary Redemption Price, and (D) the name and address of the Person to whom this Series 1 Bridge Note must be presented to receive payment if required pursuant to paragraph (iv) below. Once notice of redemption is mailed and the Company shall have complied with paragraph (iii) below, the Voluntary Redemption Price shall become due and payable on the Voluntary Redemption Date. (iii) On or before the third (3rd) day prior to the Voluntary Redemption Date, the Company shall deposit into a bank trust account for the benefit of the Holder of this Series 1 Bridge Note money sufficient to pay the Redemption Price and all accrued and unpaid interest. (iv) The Company may, at its option, require as a condition to the receipt of a payment pursuant to this Section 3(b) that Holder present the Series 1 Bridge Notes to the Person specified in paragraph (ii) above for surrender. (v) No Voluntary Redemption of this Series 1 Bridge Note can be effected after the 209th day after the Original Issue Date. (c) Conversion into Common Stock in Lieu of Payments. (i) In lieu of payment of cash to Holder pursuant to Section 3(a)(i) hereof and Section 3(b) hereof, if a Registration Statement is in effect with respect to the Conversion Shares the Company may elect to pay all or part of the Maturity Date Redemption Price or the Voluntary Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. (ii) In lieu of cash, pursuant to Section 3(a)(ii) hereof, Holder may require the Company to pay all or part of the Maturity Date Redemption Price in Conversion Shares, under the terms of Section 3(d) hereof. The Repricing Warrant shall apply to each share of Common Stock received by Holder pursuant to this Section 3(c). (d) The number of shares of Common Stock issuable in payment of the Maturity Date Redemption Price or the Voluntary Redemption Price is equal to the quotient of the Maturity Date Redemption Price or the Voluntary Redemption Price (as the case may be) divided by $6.0875 (the "Conversion Price") {5 day average Closing Bid Price prior to Original Issue Date}. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less-than full share remainder. Section 4. Method of Payment. (a) Interest accruing through and including the Maturity Date shall be computed at the Note Rate. Interest accruing after the Maturity Date shall be computed at the Default Rate. Accrued and unpaid interest shall be due and payable at the time the principal and premium of this Series 1 Bridge Note is paid. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. Interest shall begin to accrue on the Original Issue Date. (b) The Company shall pay interest and principal on this Series 1 Bridge Note (except defaulted interest) to the Person who is the registered Holder of this Series 1 Bridge Note on the day on which the interest or principal payment is due. If the Company defaults in a payment of interest on this Series 1 Bridge Note, it may pay the defaulted interest, to the Person who is the registered Holder of this Series 1 Bridge Note on the date such payment is made. (c) The Company shall pay interest by check payable in money of the United States of America that at the time of payment is legal tender for public and private debts. Payments of interest shall be mailed to Holder's address shown in the register maintained pursuant to Section 2; provided however, that with respect to the final payment of principal and accrued and unpaid interest necessary to pay this Series 1 Bridge Note in full, to receive such payment Holder must surrender this Series 1 Bridge Note for cancellation to the Company or to a paying agent appointed by the Company. Principal and interest shall be considered paid on the date due, and no interest shall accrue thereafter, if there is on deposit on that date, in a bank trust account for the benefit of Holder of this Series 1 Bridge Note, money sufficient to pay the Redemption Price and all accrued and unpaid interest due under this Series 1 Bridge Note. Section 5. Conversion Price and Adjustments. (a) At anytime after the Maturity Date, Holder may convert all or any portion of the Redemption Price and accrued and unpaid interest due on this Series 1 Bridge Note into shares of Common Stock. (b) If Holder elects to convert less than the full Redemption Price of this Series 1 Bridge Note, such conversion shall be permitted only in one hundred (100)-share increments unless the Company has given its contemporaneous consent to conversion of an odd lot. The provisions hereof that apply to conversion of the entire Redemption Price of this Series 1 Bridge Note shall also apply to conversion of a portion of the Redemption Price. Upon surrender of the Series 1 Bridge Note for conversion in part, the Company shall issue new Series 1 Bridge Notes in substantially the same form as this Series 1 Bridge Note, except that the principal amount shall be reduced by the principal amount so converted (exclusive of the redemption premium). (c) The number of shares of Common Stock issuable upon conversion of this Series 1 Bridge Note is equal to the quotient of the Redemption Price of this Series 1 Bridge Note being converted divided by Conversion Price. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less than full share remainder. Accrued and unpaid interest shall be included in computing the number of Conversion Shares issuable upon conversion of this Series 1 Bridge Note. Interest shall cease to accrue on that portion of the Redemption Price converted from and after the Conversion Date. Section 6. Procedures for Conversion, and Issuance of Conversion Shares. (a) Holders' Delivery Requirements. To convert this Series 1 Bridge Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company or its designated Transfer Agent, and (B) surrender to a common carrier for delivery to the Company or the Transfer Agent as soon as practicable following such date, the original Series 1 Bridge Note being converted (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of the Series 1 Bridge Note) and the originally executed Conversion Notice. The date the Company receives the originally executed Conversion Notice and this Series 1 Bridge Note is hereinafter the "Conversion Date." (b) Company's Response. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via Facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Company or the Transfer Agent of the Series 1 Bridge Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Company or the Transfer Agent (as applicable) shall, within ten (10) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company. (c) Record Holder. The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Series 1 Bridge Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date. (d) Company's Failure to Timely Convert. If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of this Series 1 Bridge Note to be converted pursuant to a Conversion Notice, a certificate for the number of shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Series 1 Bridge Note, in addition to all other available remedies which such Holder may pursue hereunder and under the Purchase Agreement between the Company and the initial Holder of this Series 1 Bridge Note (including indemnification pursuant to Section 7.18 thereof), the Company shall pay additional damages to Holder on each day after the tenth (10th) business day following the date of receipt by the Company or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the business day following the date of receipt by the Company or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Series 1 Bridge Note, if Holder has otherwise complied with this Section 6. (e) Adjustments to Conversion Price. If any adjustment to the Conversion Price to be made pursuant to Section 7 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after the record date, the Company may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Company delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment. (f) Reservation of Conversion Shares. Until such time as this Series 1 Bridge Note has been fully redeemed, the Company shall reserve out of its authorized but unissued Common Stock enough shares of Common Stock to permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on this Series 1 Bridge Note at any time. All shares of Common Stock issued upon conversion of this Series 1 Bridge Note shall be fully paid and nonassessable. The Company covenants that if any shares of Common Stock, required to be reserved for purposes of conversion of this Series 1 Bridge Note hereunder, require registration with or approval of any governmental authority under any federal or state law or listing upon any national securities exchange before such shares may be issued upon conversion, the Company shall in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered, approved or listed, as the case may be. Section 7. Adjustments to Conversion Price. The Conversion Price shall be subject to adjustment from time to time as follows: (a) If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. (b) Prior to the consummation of any Organic Change (as defined below), the Company will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Series 1 Bridge Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Series 1 Bridge Note had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this Section 7(b) and Sections 6(d) and 6(e) above will thereafter be applicable. The Company will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder, the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Company's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof. Section 8. Notices. The Company shall give the following notices at the times specified: (a) Immediately upon any adjustment of the Conversion Price, the Company will give written notice thereof to Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. (b) The Company will give written notice to Holder, at least twenty (20) days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon the Common Stock, (ii) with respect to any pro rata subscription offer to Holder of Common Stock, or (iii) for determining rights to vote with respect to any Organic Change, dissolution, or liquidation. (c) The Company will also give written notice to Holder at least twenty (20) days prior to the date on which any Organic Change, Major Transaction (as defined below), dissolution, or liquidation will take place. Section 9. Successors to the Company. The Company shall not consolidate or merge with or into, or sell all or substantially all of its assets to, any Person unless: (i) the Person is a corporation; (ii) such Person executes, and mails to Holder a copy of, an instrument by which such Person or an affiliate assumes the due and punctual payment of the principal of and interest on this Series 1 Bridge Note and the performance and observance of all the obligations of the Company under this Series1 Bridge Note; and (iii) immediately after giving effect to the transaction, no Event of Default or event which after notice or lapse of time or both would become an Event of Default shall have occurred. Upon compliance with this Section 9, Successor Corporation shall succeed to and be substituted for the Company under this Series 1 Bridge Note with the same effect as if the Successor Corporation had been named as the Company herein. Nothing in this Series 1 Bridge Note shall prevent any consolidation or merger in which the Company is the surviving corporation, or any acquisition by the Company by purchase or otherwise of all or any part of the assets of any other Person, and no such consolidation, merger, or acquisition shall require compliance with this Section 9. Section 10. Events of Default and Remedies. (a) As used herein, an "Event of Default" occurs if: (i) The Company defaults in the payment of principal and/or interest when the same becomes due and payable and such failure is not cured within ten (10) business days after the Company receives written demand from Holder or the Representative to remedy the same. (ii) the Company fails to comply with any other provision contained in this Series 1 Bridge Note, the Purchase Agreement, the Warrant, the Repricing Warrant, or the Registration Rights Agreement, and such failure is not cured within ten (10) business days after the Company receives written demand from Holder to remedy the same; (iii) the Company defaults in any payment of principal of or interest on any Debt (excluding trade payables) in excess of $100,000 beyond any period of grace provided with respect thereto and the effect of such failure is to cause the holder of such Debt to accelerate the Debt such that such Debt becomes due prior to its stated maturity; (iv) any representation or warranty made in writing by or on behalf of (i) the Company in the Purchase Agreement or in any writing furnished in connection with or pursuant to the Purchase Agreement or in connection with the transactions contemplated by this Agreement, or (ii) the Company in the Registration Rights Agreement, or (iii) the Company in the Escrow Agreement, shall be false in any material respect on the date as of which made; (v) the Company makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; (vi) any order or decree for relief in respect of the Company is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution, or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; (vii) the Company petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidation, or similar official of the Company, or of any substantial part of the assets of the Company, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings relating to the Company under the Bankruptcy Law of any other jurisdiction; (viii) any petition or application described in Section 10(a)(vi) above is filed, or any such proceedings are commenced, against the Company and the Company by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator, or similar official, or approving the petition in any such proceedings, and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; (ix) any order, judgment, or decree is entered in any proceedings against the Company decreeing the dissolution of the Company and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; or (x) a final judgment (not fully covered by insurance) in an amount in excess of $100,000 is rendered against the Company and, within ten (10) business days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within ten (10) days after the expiration of any such stay, such judgment is not discharged. (b) Upon the occurrence of an Event of Default described in subsection (vi), (vii), or (viii) of Section 10(a), the principal of and accrued interest on this Series 1 Bridge Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. If any other Event of Default exists, Holder may, in addition to the exercise of any right, power, or remedy permitted to Holder by law, declare (by written notice or notices to the Company) the entire principal of and all interest accrued on this Series 1 Bridge Note to be due and payable, and this Series 1 Bridge Note shall thereupon become immediately due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Company. Upon such declaration, the Company will immediately pay to Holder of this Series 1 Bridge Note the then outstanding principal of and accrued and unpaid interest on the Series 1 Bridge Notes. If at any time after acceleration of the maturity of the Series 1 Bridge Notes, the Company shall pay all arrears of interest and all payments on account of principal which shall have become due other than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rate specified in the Series 1 Bridge Notes) and all Events of Default (other than nonpayment of principal of or interest on this Series 1 Bridge Note due and payable solely by virtue of acceleration) shall be remedied or waived by Holder by written notice to the Company may rescind and annul the acceleration and its consequences, but such action shall not affect any subsequent Event of Default or impair any right consequent thereon. (c) A delay or omission by the Holder of this Series 1 Bridge Note in exercising any right or remedy arising upon an Event of Default shall not impair such right or remedy or constitute a waiver of or an acquiescence in the Event of Default. (d) If any Event of Default shall occur and be continuing, the Holder of this Series 1 Bridge Note may proceed to protect and enforce their rights under this Agreement and this Series 1 Bridge Note by exercising such remedies as are available to such Holder either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon Holder is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. Section 11. Exchange, Transfer, Replacement or Cancellation. (a) This Series 1 Bridge Note may be exchanged for an equal principal amount of Series 1 Bridge Notes in denominations of US$25,000.00 or in greater multiples of US$5,000.00 upon written request to the Company accompanied by surrender of this Series 1 Bridge Note to the Company or to an agent designated for that purpose. Any Series 1 Bridge Notes issued in exchange for this Series 1 Bridge Note shall be one of this Series 1 Bridge Note referred to in Section 1, and shall be entitled to all the rights thereof. (b) The Series 1 Bridge Notes may not be transferred except upon the conditions specified in this Section 11(b), which conditions are intended to insure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Prior to any proposed transfer of this Series 1 Bridge Note the Holder hereof shall give written notice to the Company of the proposed disposition and shall furnish to the Company a statement of the circumstances surrounding the proposed disposition and an opinion of counsel reasonably satisfactory to the Company to the effect that (i) such disposition will not require registration of such securities under the Securities Act or qualification of such securities under the blue sky or state securities laws of any state in which such qualification would be required, or (ii) appropriate action necessary for compliance with the Securities Act or the blue sky or securities laws of such states has been taken. The Holder hereof shall cause any proposed transferee of such securities to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 11. The Company or any co-registrar appointed by the Company may require the Holder to furnish appropriate endorsements and/or transfer documents, including information regarding any proposed transferee's name, address and social security or taxpayer identification number, and to pay any issue or transfer taxes or fees as may be required by law. The registered Holder of this Series 1 Bridge Note may be treated as its owner for all purposes. (c) If Holder claims this Series 1 Bridge Note has been lost, destroyed, or wrongfully taken, the Company shall issue a replacement Series 1 Bridge Note upon (i) receipt of any indemnity bond or other assurance requested by the Company to protect it from any loss which it may suffer by reason of such replacement or subsequent presentment of the original Series 1 Bridge Note, and (ii) payment of any expenses reasonably incurred by the Company in replacing the Series 1 Bridge Note. Section 12. Amendments and Waivers. This Series 1 Bridge Note may, with the consent of the Company and the Holder be amended or any provision thereof waived. Section 13. Notice. Any notice or communication hereunder shall be in writing and delivered by first-class mail, return receipt requested, to each Holder at its address shown in the register kept by the Company or any co-registrar appointed by the Company and to the Company at the address of its office to be maintained pursuant to Section 2. Failure to mail, or any defect in, a notice or communication to any other Holder of this Series 1 Bridge Note shall not affect its sufficiency with respect to the other Holders. If a notice or communication is mailed to Holder in the manner provided above within the time prescribed, it shall be deemed duly given and effective on the tenth (10th) business day after it was deposited in the mail, whether or not Holder actually receives it. Section 14. No Recourse Against Others. A director, officer, employee, or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under this Series 1 Bridge Note or for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Series 1 Bridge Note by accepting this Series 1 Bridge Note waives and releases all such liability and such waiver and release are part of the consideration for the issue of the Series 1 Bridge Note. Section 15. Governing Law. This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be brought in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. IN WITNESS WHEREOF, the parties have caused this Series 1 Bridge Financing Note to be duly executed under seal as of day and year first above written. [Signatures on the following page] COMPANY SIGNATURE PAGE TO SERIES 1 BRIDGE FINANCING NOTE CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: By: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.26 26 0026.txt ATTACHED REPRICING WARRANT IN FAVOR OF SOVCAP NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION ATTACHED REPRICING WARRANT Warrant No. SCA/RPW-4 __,000 shares Original Issue Date: February 9, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, SOVCAP EQUITY PARTNERS LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, on the Repricing Date but not thereafter, a number of shares of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), determined in accordance with Section 2 hereof, at a price of $.10 per share (the "Exercise Price"). Each share of Common Stock as to which this Repricing Warrant is exercisable is a "Repricing Share" and all such shares are collectively referred to as the "Repricing Shares." This Repricing Warrant shall remain attached to the Series 1 Bridge Financing Note issued to Holder on the Original Issue Date (the "Bridge Note"), until conversion of the Bridge Note, at which time it shall automatically detach. Section 1. Definitions. The following capitalized terms are not defined elsewhere in this Repricing Warrant, and are used herein with the meanings thereafter ascribed: "Average Market Price" means, the greater of (a) arithmetic mean of the Closing Bid Prices of the Common Stock for each trading day in a ninety (90) day period which commences on the Conversion Date or (b) the Repricing Floor. For purposes of this Agreement, the term " Repricing Floor" shall mean the lesser of (x) $1.65 or (y) if the Repricing Event occurs, the average Closing Bid Price of the common stock for the thirty (30) day period immediately prior to the Maturity Date. For purposes of this Repricing Warrant, the "Repricing Event" will occur in the event that the Company suffers a 10% or greater decline in gross revenues per fiscal quarter for two consecutive quarters relative to the 4th quarter of fiscal 1999, beginning with the 1st quarter of 2000 (assuming for this purpose that the Company is on a 12/31 fiscal year). "Closing Bid Price" means, the last closing bid price of the Common Stock on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period); "Conversion Date" means the date of issuance of common stock issued upon any conversion of the Bridge Note. "Conversion Price" means $6.0875, the conversion price of the Bridge Note. "Conversion Shares" means the number of shares of Common Stock issued upon conversion of the Bridge Note that are sold on or before the Expiration Date at a price less than 120% of the Conversion Price. "Expiration Date" means the ninetieth (90th) day after the Conversion Date. "Repricing Date" means the ninety-first (91st) day after the Conversion Date. Section 2. Determination of Number of Repricing Shares. The number of Repricing Shares issuable upon exercise of this Repricing Warrant shall be determined on the Repricing Date. The number of Repricing Shares shall be equal to: the number of Conversion Shares multiplied by a fraction, (a) the numerator of which is the Conversion Price minus the Average Market Price and (b) the denominator of which is the Average Market Price. Holder shall be required to submit copies of trade confirmations establishing the sales price for all Conversion Shares in the event of any exercise of this Warrant under Section 3, below. In the case of a dispute as to the determination of the Average Market Price or the arithmetic calculation of the Exercise Price, the Company shall promptly issue to such Holder(s) the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within three (3) business days of receipt of such holder's Conversion Notice. If such Holder(s) and the Company are unable to agree upon the determination of the Average Market Price or arithmetic calculation of the Exercise Price within two (2) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile (A) the disputed determination of the Average Market Price to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Exercise Price to its independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and such Holders of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. In the event that the Average Market Price is greater than the Conversion Price on the Repricing Date then this Repricing Warrant shall expire and be of no further force and effect. Section 3. Exercise of Warrant; Conversion of Warrant; Election to Pay Cash. (a) This Warrant may, at the option of the Holder, be exercised in whole, but not in part, on the Repricing Date by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Repricing Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Repricing Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder, be converted into Common Stock in whole but not in part, if and only if the Value of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Repricing Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Repricing Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price minus (B) the then effective Exercise Price divided by (y) the Average Market Price. Any fraction resulting from the calculation of the number of Repricing Shares then issuable in a conversion of this Repricing Warrant shall be truncated. (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the date of receipt by the Company or the Transfer Agent of the Exercise Materials or the Conversion Materials, a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and under this Warrant and the Series 1 Bridge Note Purchase Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof, the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. (e) The Company may, in lieu of issuing the Repricing Shares pay Holder an amount equal to the number of Repricing Shares issuable on the Effective Date multiplied by the Average Market Price (the "Payment Amount"). In such event, the Company shall be obligated to deliver the Payment Amount to Holder within ten (10) business days following the Effective Date. If the Company shall fail to deliver the Payment Amount within ten (10) business days after the Effective Date, in addition to all other available remedies which Holder may pursue at law or equity, including indemnification pursuant to Section 7.18 of the Securities Purchase Agreement, the Company shall pay additional damages to Holder on each day after the Effective Date, until the Payment Amount has been paid, an amount equal to 1.0% of the Payment Amount. Such damages shall be computed daily and are due and payable daily. Section 4. Adjustments to Repricing Shares. The number of Repricing Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Repricing Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Repricing Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Articles of Organization or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Repricing Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 5. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 6. Transfer of Securities. (a) This Warrant and the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Repricing Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Repricing Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 7. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (f) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where the party against whom the action is brought is principally located, and both parties agree that such courts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY ATTACHED REPRICING WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] EX-10.27 27 0027.txt COMMON STOCK PURCHASE WARRANT IN FAVOR OF SOVCAP NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. CAMBEX CORPORATION COMMON STOCK PURCHASE WARRANT Warrant No. SCA/PW-4 15,000 shares Original Issue Date: February 9, 2000 THIS CERTIFIES THAT, FOR VALUE RECEIVED, SOVCAP EQUITY PARTNERS LTD. or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time or from time to time from the date hereof until 5:00 p.m., Eastern Time, on the fifth (5th) anniversary of the Original Issue Date set forth above, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business (such date is the "Expiration Date"), but not thereafter, to purchase up to FIFTEEN THOUSAND (15,000) shares {equal to 15% of amount of Bridge Notes purchased by Holder} of the Common Stock, par value $.10 (the "Common Stock"), of CAMBEX CORPORATION, a Massachusetts corporation (the "Company"), at a price of $7.01 {110% of Closing Bid Price on Original Issue Date} per share (the "Exercise Price"), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a "Warrant Share" and all such shares are collectively referred to as the "Warrant Shares." Section 1. Exercise of Warrant; Conversion of Warrant. (a) This Warrant may, at the option of the Holder, be exercised in whole or in part from time to time by delivery to the Company at its office at 360 Second Avenue, Waltham, Massachusetts 02451, Attention: Executive Vice President, or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). (b) This Warrant may, at the option of the Holder and only in accordance with the terms of this Section 1(b), be converted into Common Stock in whole but not in part, if and only if the Average Market Price of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Warrant Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date (as such term is defined in Section 1(c) hereof) minus (B) the then effective Exercise Price divided by (y) the Average Market Price of one share of Common Stock for the five (5) trading day period ended the day prior to the Effective Date. As used herein, "Average Market Price" on any particular date (a "Determination Date") means, with respect to one share of Common Stock for any Determination Date, that price which is equal to the arithmetic average of the Closing Bid Prices (as defined below) for the Common Stock for each trading day in a five trading day period ended on the day prior to a Determination Date. As used herein, "Closing Bid Price" means, for any security as of any date, the last closing bid price on the NASDAQ National Market (the "NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM is not the principal trading market for the Common Stock, the last closing bid price of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period). Holder may exercise this Warrant under this Section 1(b) only (1) with the consent of the Company or (2) at the sole discretion of Holder if a registration statement with respect to the Warrant Shares is not effective on or before the Maturity Date; (c) Upon timely receipt of the Exercise Materials or Conversion Materials (whichever is applicable), the Company shall, as promptly as practicable, and in any event within ten (10) business days after its receipt of the Exercise Materials or Conversion Materials, execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Warrant Shares specified in the Exercise Notice or if Holder delivered a Conversion Notice, the number of shares of Common Stock issuable upon conversion of this Warrant (whichever is applicable), together with cash in lieu of any fraction of a share, and, (x) if the Warrant is exercised in full, a copy of this Warrant marked "Exercised," or (y) if the Warrant is partially exercised, a copy of this Warrant marked "Partially Exercised" together with a new Warrant on the same terms for the unexercised balance of the Warrant Shares, or (z) if the Warrant is converted, a copy of this Warrant marked "Converted." The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice or Conversion Notice. The date on which the Warrant shall be deemed to have been exercised or converted (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise or conversion hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, except that, if the date on which the Exercise Materials or Conversion Materials are received by the Company is a date on which the stock transfer books of the Company are closed, the Effective Date shall be the date the Company receives the Exercise Materials or Conversion Materials, and the date such person shall be deemed to have become the holder of the Common Stock issued upon the exercise or conversion hereof shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto. (d) If the Company shall fail to issue to Holder within ten (10) business days following the Effective Date a certificate for the number of shares of Common Stock to which such holder is entitled upon such holder's exercise or conversion of this Warrant, in addition to all other available remedies which such holder may pursue hereunder and the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement") including indemnification pursuant to Section 7.18 thereof (all of which shall be cumulative), the Company shall pay additional damages to such holder on each day after the Effective Date, an amount equal to 1.0% of the product of (A) the number of Warrant Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed daily and are due and payable daily. Section 2. Adjustments to Warrant Shares. The number of Warrant Shares issuable upon the exercise hereof shall be subject to adjustment as follows: (a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Warrant Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof. (b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.10 per Share. (c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction. (d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged. (e) The Company will not, by amendment of its Articles of Organization or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company (x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non- assessable shares upon the exercise of the Warrant. (f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment. (g) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full. Section 3. No Stockholder Rights. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company. Section 4. Transfer of Securities. (a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant. (b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form: Legend for Warrant Shares or other shares of capital stock: NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER. Section 5. Miscellaneous. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. (c) Notwithstanding any provision herein to the contrary, Holder hereof may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws. (d) This Warrant may be divided into separate Warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein. (e) All notices, requests, demands, and other communications required or permitted under this Warrant and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given, made, and received when personally delivered the day after deposited with a recognized national overnight delivery service prior to its dead-line for receiving packages for next day delivery or upon the fifth day after deposited in the United States registered or certified mail with postage prepaid, return receipt requested, in each case addressed as set forth below: If to the Company: Cambex Corporation 360 Second Avenue Waltham, Massachusetts 02451 Attention: Peter Kruy, Executive Vice President Tel: (781) 890-6000 Fax: (781) 890-2899 If to the Holder hereof, to the address of such Holder appearing on the books of the Company. (i) This Agreement and each Warrant Certificate hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of the choice of law provisions thereof. The parties agree that any action brought by one party against the other shall be in any appropriate state court or any federal Court located in the County where against whom the action is brought is principally located, and both parties agree that such counts shall have exclusive jurisdiction of such case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. [Signatures on the following page] SIGNATURE PAGE TO COMPANY COMMON STOCK PURCHASE WARRANT IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under its corporate seal, and to be dated as of the date first above written. CAMBEX CORPORATION By: /s/ Peter Kruy Peter Kruy, Executive Vice President ATTEST: /s/ Arthur L. Ziskend Secretary/Assistant Secretary [CORPORATE SEAL] -----END PRIVACY-ENHANCED MESSAGE-----