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 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000, 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/ Xxxxx Xxxx
Xxxxx Xxxx
Its: Executive Vice
President
SOVEREIGN SIGNATURE PAGE
TO
SOVEREIGN WARRANT AGREEMENT
SOVEREIGN CAPITAL
ADVISORS, LLC
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Managing
Director
