SECURITIES EXCHANGE AGREEMENT
SECURITIES EXCHANGE AGREEMENT (the "Agreement"), dated as of June 28, 2002 by
and among Cambex Corporation, a Massachusetts corporation, with headquarters
located at 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"),
and the investor listed on the Schedule of Purchasers attached hereto (the
"Purchaser").
WHEREAS:
A. The Company and the Purchaser are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule
506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act").
B. The Company has authorized the following new series of its preferred
stock, par value $1.00 per share: the Company's Series A Convertible
Preferred Stock ("Preferred Stock") which shall be convertible into shares of
the Company's Common Stock, $.10 par value per share (the "Common Stock") (as
converted, the "Conversion Shares"), in accordance with the terms of the
Company's Certificate of Designations: Rights, Preferences, Privileges and
Restrictions of the Preferred Stock in the form attached hereto as Exhibit A
(the "Certificate of Designations").
C. The Purchaser wishes to exchange a note evidenced by a Loan and Security
Agreements dated November 5, 1999, November 9, 1999, March 30, 2001,
September 4, 2001 with a total principal amount of $275,000, along with all
accrued but unpaid interest (collectively the "Notes") upon the terms and
conditions stated in this Agreement for an aggregate of 27,020 (twenty seven
thousand and twenty) shares of convertible Preferred Stock (the "Preferred
Shares").
D. The location of defined terms in this Agreement is set forth on the Index
of Terms attached hereto.
NOW, THEREFORE, the Company and the Purchaser hereby agree as follows:
1. EXCHANGE OF NOTES INTO SHARES.
a. Exchange of Notes. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall issue to
the Purchaser the respective number of Preferred Shares set forth opposite
the Purchaser's name on the Schedule of Purchasers (the "Closing"). The
Purchase Price (the "Purchase Price") of Preferred Shares shall be $12.50.
On the Closing Date (as defined below), the Company shall deliver to each
Purchaser a stock certificate(s) representing such number of Preferred Shares
which such Purchaser is then receiving (as indicated opposite such
Purchaser's name on the Schedule of Purchasers), duly executed on behalf of
the Company and registered in the name of such Purchaser or its designee (the
"Stock Certificates").
b. Closing Date. The date and time of the Closing (the "Closing Date") shall
be 10:00 a.m. Eastern Standard Time on June 28, 2002, subject to the
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7 below (or such later date as is mutually agreed to by the
Company and the Purchaser).
c. Form of Payment. On the Closing Date, each Purchaser shall deliver to the
Company the Notes in exchange for the Preferred Shares to be issued to such
Purchaser at the Closing.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Each Purchaser represents and warrants with respect to only itself that:
a. Investment Purpose. Such Purchaser (i) is acquiring the Preferred Shares
and (ii) upon conversion of the Preferred Shares, will acquire the Conversion
Shares then issuable (the Preferred Shares and the Conversion Shares,
collectively, are referred to herein as the "Securities") for its own account
for investment only and not with a present 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, such 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.
b. Accredited Investor Status. Such Purchaser is an "accredited investor" as
that term is defined in Rule 501(a)(3) of Regulation D under the 1933 Act.
c. Reliance on Exemptions. Such Purchaser understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and such
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in
order to determine the availability of such exemptions and the eligibility of
such Purchaser to acquire the Securities.
d. Information. Such 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. Such Purchaser and its advisors, if
any, have been afforded the opportunity to ask questions of and receive
answers from the Company. Neither such inquiries nor any other due diligence
investigations conducted by such 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 this Agreement.
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.
e. No Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
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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.
f. Transfer or Resale. Such Purchaser understands that: (i) 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 (A) they are offered, sold, assigned or transferred
pursuant to an effective registration statement under the 1933 Act, (B) such
Purchaser shall have delivered to the Company an opinion of counsel, in a
form and from counsel reasonably acceptable to the Company, 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
(C) such Purchaser provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144");
(ii) any sale of the Securities made in reliance on 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 the 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 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of
the SEC thereunder; and (iii) neither the Company nor any other person is
under any obligation to register the Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. Legends. Purchaser understands that the certificates or other instruments
representing the Preferred Shares and, until such time as the sale of the
Conversion Shares have been registered under the 1933 Act, 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 Preferred Shares 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
Preferred Shares 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 Preferred Shares 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.
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h. Authorization; Enforcement; Validity. Such Purchaser has full power and
authority to enter into and perform in accordance with its and their terms,
this Agreement and each other Transaction Agreement (as defined below). This
Agreement and each of the other Transaction Agreements have been duly and
validly authorized, executed and delivered on behalf of such Purchaser and is
a valid and binding agreement of such Purchaser enforceable against such
Purchaser 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.
i. Residency. Such Purchaser is a resident of that country or state
specified in its address on the Schedule of Purchasers.
j. 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
i. such Purchaser is an "accredited investor" within the meaning of Rule 501
under the Securities Act;
ii. 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;
iii. 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;
iv. 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;
v. such Purchaser was not offered nor made aware of the Company's interest in
issuing the Preferred Shares by any means of public advertisement or
solicitation;
vi. in connection with such Purchaser's purchase of the Securities, it has
been solely responsible for its own (x) due diligence investigation of the
Company and (y) 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;
vii. 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
viii. if such Purchaser proposes to sell the Securities pursuant to Rule 144A
under the Securities Act, it will (x) 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 (y) 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.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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:
a. 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.
b. Authorization, Enforcement, Compliance with Other Instruments.
i. The Company has the requisite corporate power and authority to enter into
and perform each of this Agreement, any and all amendments thereto, and any
related agreements (collectively, the "Transaction Agreements" and
individually a "Transaction Agreement"), and to issue the Securities thereof;
ii. 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 Preferred Shares
and the reservation for issuance and the issuance of the Conversion Shares
issuable upon conversion of the Preferred Shares 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;
iii. each of the Transaction Agreements have been duly and validly executed
and delivered by the Company; and
iv. 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.
c. 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 18,040,351
shares were issued and outstanding as of the date of this Agreement, and
3,000,000 shares of 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(c) of the Disclosure Schedule, no shares
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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(c) of the Disclosure Schedule,
as of the effective date of this Agreement, (i) 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, (ii)
there are no outstanding debt securities, and (iii) 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.
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.
d. Issuance of Securities. The Preferred Shares 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 Preferred
Shares have been duly authorized and reserved for issuance and 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.
e. No Conflicts. Except as disclosed in Section 3(e) 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 (i) result in a violation of the
Charter or the Bylaws of the Company or (ii) 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(e) 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
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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(e) 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.
f. SEC Documents; Financial Statements. Since January 1, 2000, 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(f) 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.
g. Absence of Certain Changes. Except as described in Section 3(g) 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.
7
h. 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 (i) have a material adverse effect on the
transactions contemplated hereby, (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under the Transaction Agreements, or (iii) except as expressly
set forth in Schedule 3(h) 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.
i. 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 Purchaser or any of its 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.
j. 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.
k. 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 0000 Xxx) in connection with the offer or sale of the Securities.
l. 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.
m. 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.
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n. Intellectual Property Rights. The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx 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(n)
of the Disclosure Schedule, none of the Company's trademarks, trade names,
service marks, service xxxx 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 xxxx registrations, trade secret, or other
similar rights of others. Except as set forth on Section 3(n) 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
xxxx 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.
o. Environmental Laws. The Company and its subsidiaries are (i) 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"), (ii) have received all permits,
licenses, or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses, and (iii) are in compliance with
all terms and conditions of any such permit, license, or approval.
p. 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(p) 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.
q. 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
9
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.
r. 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 permits.
s. Internal Accounting Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. 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.
u. Tax Status. 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 there are no open years, examinations in
progress or
10
claims against it for federal, state or other taxes (including penalties and
interest) for any period or periods prior to the date hereof.
v. Certain Transactions. Except as set forth on Section 3(v) 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(c) 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.
w. Dilutive Effect. The Company understands and acknowledges that the number
of Conversion Shares issuable upon conversion of the Preferred Shares will
increase in certain circumstances. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Preferred Shares
in accordance with this Agreement is absolute and unconditional regardless of
the dilutive effect that such issuance may have on the ownership interests of
other stockholders of the Company.
x. 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.
y. 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.
4. COVENANTS AND AGREEMENTS
a. Best Efforts. Each party shall use its best efforts to timely satisfy
each of the conditions to be satisfied by it as provided in Sections 7 and 8
of this Agreement.
b. Reporting Status. Until the later of after (i) the date as of which the
Purchaser may sell all of the Conversion Shares without restriction pursuant
to Rule 144(k) promulgated under the 1933 Act (or successor thereto) and (ii)
the date on which (A) the Purchaser shall have sold all the Conversion Shares
and (B) none of the Preferred Shares is outstanding (the "Reporting Period"),
the Company shall timely 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
11
under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would otherwise permit such termination.
c. Reservation of Shares. The Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than 110% of the number of shares of Common Stock needed to provide for the
issuance of the shares of Common Stock upon conversion of all outstanding
Initial Preferred Shares (without regard to any limitations on conversions).
d. Corporate Existence. So long as a Purchaser beneficially owns any
Preferred Stock, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, except in the
event of a merger or consolidation or sale of all or substantially all of the
Company's assets, (x) where the consideration tendered by the surviving or
successor entity in such transaction consists entirely of cash or (y) where
the surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) such surviving or successor
entity or its parent into whose stock the Preferred Shares will be
convertible or exercisable is a publicly traded corporation.
e. Expenses. Each of the Company and the Purchaser shall pay its respective
costs and expenses incurred by such party in connection with the negotiation,
investigation, preparation, execution, delivery and performance of this
Agreement.
f. Disclosure. From and after the date hereof, the Company will not provide
to any Purchaser any material non-public information which, according to
applicable law, rule or regulation should be disclosed publicly by the
Company but which has not been so disclosed.
g. Compliance with Law. The Company will conduct its business in compliance
with all applicable laws, rules, ordinances and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations the failure to comply with which would have a Material Adverse
Effect.
h. Consent of Purchaser. The Company will obtain the prior written consent
of the Purchaser before undertaking the actions specified below. The Company
may undertake any such requested action only after receiving the advance
written consent of Purchasers representing not less than two-thirds (2/3) of
the outstanding shares of the Series A Preferred Stock.
i. 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;
12
(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.
ii. Creation of New 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 Purchaser, except:
(a) 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;
(b) 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 $1,100,000, as
referenced in Section 3(v) of the Disclosure Schedule;
(c) Debt incurred in permitted real estate investments; and
13
(d) purchase money security interests not to exceed $250,000 per year.
Notwithstanding the foregoing provisions of this Section 4.h.ii the Company
will not, without the consent of the Purchaser, 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.
iii. Dividends.
The Company will not, without the consent of the Purchaser, (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 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; provided however, that the Company may: (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.
iv. Transactions with Affiliates. The Company will not, without the consent
of the Purchaser, 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 of an 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 without the prior consent of the
Purchaser.
v. Investments. Other than as permitted by this Agreement, the Company will
not, without the consent of the Purchaser, 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 in:
14
(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.
vi. Sale and Lease-Back Transactions. The Company will not, without the
consent of the Purchaser, 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
Purchaser as provided for herein.
vii. Sales of Assets. The Company will not, without the consent of the
Purchaser, 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.
viii. Subsidiaries. The Company will not, without the consent of the
Purchaser, organize, or transfer any assets to, any Subsidiaries, provided
that, if consent of the Purchaser is obtained and any Subsidiaries are
organized, or assets transferred, in compliance with this Section 4.h.viii
the Company will not permit such
15
Subsidiaries to enter into any transaction or agreement which would violate
any of the provisions of this Section 4.h if such provisions were applicable
to such Subsidiary.
ix. Change in Business; Operations. The Company will not, without the consent
of the Purchaser, 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
Closing ("Change in Business"), except any such changes approved in advance
in writing by the Purchaser. The business of the Company and its subsidiaries
shall not be conducted in violation of any law, ordinance, or regulation of
any governmental entity.
5. PIGGYBACK REGISTRATION RIGHTS
a. If at any time 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 the Purchaser written notice of the
Company's intention to file a registration statement and of such Purchaser's
rights under this Section 5(a) and, if within twenty (20) days after receipt
of such notice, such Purchaser shall so request in writing, the Company shall
include in such registration statement all or any part of the Conversion
Shares such Purchaser requests to be registered. If an offering in
connection with which the Purchaser is entitled to registration under this
Section 5(a) is an underwritten offering, then such Purchaser whose
Conversion Shares are included in such registration statement shall, unless
otherwise agreed by the Company, offer and sell such Conversion Shares 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.
b. If the registration referred to in Section 5(a) 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 Purchaser 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.
6. TRANSFER AGENT INSTRUCTIONS
16
The Company shall issue Purchaser, and cause any subsequent transfer agent to
issue certificates in the name of each Purchaser or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time
to time by each Purchaser to the Company upon conversion of the Preferred
Shares. Prior to sale of the Conversion Shares and pursuant to an effective
registration statement under the 1933 Act, all such certificates shall bear
the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 6 and stop transfer
instructions to give effect to Section 2(g) hereof (in the case of the
Conversion Shares, prior to the sale of the Conversion Shares pursuant to an
effective registration statement under the 1933 Act) will be given by the
Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement. If an Purchaser provides the Company with
an opinion of counsel, in form reasonably acceptable to the Company, to the
effect that a public sale, assignment or transfer of Securities may be made
without registration under the 1933 Act or the Purchaser provides the Company
with reasonable assurances that the Securities 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, 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 such Purchaser and without any restrictive
legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchaser by violating 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 6 will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 6, that
the Purchaser shall be entitled, in addition to all other available remedies,
to an order and/or 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.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue the Preferred Shares to each
Purchaser at the Closing is subject to the satisfaction, with respect to each
Purchaser at or before the Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion:
a. Such Purchaser shall have executed each of the Transaction Agreements to
which it is a party and delivered the same to the Company.
b. The Certificate of Designations shall have been filed with the Secretary
of the Commonwealth of Massachusetts.
c. Such Purchaser shall have delivered to the Company the Notes in exchange
for the Preferred Shares at the Closing in accordance with Section 1(c)
hereof.
d. The representations and warranties of such Purchaser shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for
17
representations and warranties that speak as of a specific date), and such
Purchaser shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Agreements to be
performed, satisfied or complied with by such Purchaser at or prior to the
Closing Date.
8. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO EXCHANGE.
The obligation of each Purchaser hereunder to exchange the Notes for the
Preferred Shares at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion:
a. The Company shall have executed each of the Transaction Agreements and
delivered the same to such Purchaser.
b. The Certificate of Designations shall have been filed with the Secretary
of the Commonwealth of Massachusetts, and a copy thereof certified by the
Secretary of the Commonwealth of Massachusetts shall have been delivered to
such Purchaser.
c. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied
with the covenants, agreements and conditions required by the Transaction
Agreements to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. Such Purchaser shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Purchaser, including, without limitation, an
update as of the Closing Date regarding the representation contained in
Section 3(c) above.
d. The Company shall have executed and delivered to such Purchaser the
Preferred Stock Certificates (in such denominations as such Purchaser shall
request) for the Initial Preferred Shares being purchased by such Purchaser
at the Closing.
e. The Board of Directors of the Company shall have adopted resolutions
consistent with Section 3(b) above and in a form reasonably acceptable to
such Purchaser (the "Resolutions").
f. As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, 1,200,000 shares of Common Stock.
g. The Company shall have made all filings under all applicable federal and
state securities laws necessary to consummate the issuance of the Securities
pursuant to this Agreement in compliance with such laws.
18
h. The Company shall have delivered to the Purchaser such other documents
relating to the transactions contemplated by the Transaction Agreements as
the Purchaser or their counsel may reasonably request.
9. MISCELLANEOUS
a. Governing Law; Jurisdiction; Jury Trial. 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. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
b. 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; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a
facsimile signature.
c. Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
d. 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.
e. Entire Agreement; Amendments. This Agreement supersedes all other prior
oral or written agreements between each 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 amended or waived other than by an instrument in
writing signed by the Company and the holders of at least 66 2/3% of the
Preferred Shares then outstanding. No such amendment shall be effective to
the extent that it applies to less than all of the holders of the Preferred
Shares then outstanding. No consideration shall be offered or paid to any
person to amend or consent to a waiver or modification of any provision of
any of the Transaction Agreements or the Certificate of Designations unless
the same
19
consideration also is offered to all of the parties to the Transaction
Agreements or holders of Preferred Shares, as the case may be.
f. 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: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation
of transmission is mechanically or electronically generated and kept on file
by the sending party); or (iii) one (1) Business 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
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telephone:(000) 000-0000
Facsimile: (000) 000-0000
Attention: President
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone:(000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
If to a Purchaser, to it at the address and facsimile number set forth on the
Schedule of Purchasers, with copies to such Purchaser's representatives as
set forth on the Schedule of Purchasers, or at such other address and/or
facsimile number and/or to the attention of such other person as the
recipient party has specified by written notice given to each other party
five days prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender's
facsimile machine containing the time, date, recipient facsimile number and
an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence
of personal service,
20
receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
g. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the
prior written consent of the holders of at least 66 2/3% of the Preferred
Shares then outstanding, including by merger or consolidation, except
pursuant to a Change of Control (as defined in Section 3.3 of the Certificate
of Designations) with respect to which the Company is in compliance with
Section 5 of the Certificate of Designations and Section 4(d) of this
Agreement. A Purchaser may assign some or all of its rights hereunder
without the consent of the Company; provided, however, that such transferee
will not be deemed a Purchaser hereunder unless such transferee has acquired
at least 50 shares of Preferred Stock (as adjusted to reflect any stock
splits, reverse stock splits and similar capital events) and such transferee
has agreed in writing in form and substance reasonably satisfactory to the
Company to be bound by the applicable provisions of this Agreement.
Notwithstanding anything to the contrary contained in the Transaction
Agreements, the Purchaser shall be entitled to pledge the Securities in
connection with a bona fide margin account or other loan secured by the
Securities.
h. 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.
i. Survival. Unless this Agreement is terminated under Section 9(l), the
representations and warranties of the Company and the Purchaser contained in
Sections 2 and 3, and the agreements and covenants set forth in Sections 4,
5, 6 and 9, shall survive the Closing. Each Purchaser shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Publicity. The Company and each Purchaser 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 any Purchaser, to
make any press release or other public disclosure with respect to such
transactions as the Company reasonably believes upon consultation with its
outside counsel is required by applicable law and regulations (although each
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).
k. 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.
l. Termination. In the event that the Closing shall not have occurred with
respect to an Purchaser on or before five (5) Business Days from the date
hereof due to the Company's or such
21
Purchaser's failure to satisfy the conditions set forth in Sections 7 and 8
above (and the nonbreaching party's failure to waive such unsatisfied
condition(s)), the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on
such date without liability of any party to any other party.
m. 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.
n. Remedies. Each Purchaser and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Agreements and the
Certificate of Designations and all rights and remedies which such holders
have been granted at any time under any other agreement or contract and all
of the rights which such holders have under any law. Any person having any
rights under any provision of this Agreement shall be entitled to enforce
such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.
[signature page follows]
22
IN WITNESS WHEREOF, the Purchaser and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
CAMBEX CORPORATION
By:/s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: President
PURCHASER:
XXXXXX XXXX
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
00 Xxxxxxxxx Xxxx
Xxxxxx, XX
(000) 000-0000
SCHEDULE OF PURCHASERS
Purchaser Name
Xxxxxx X. Xxxx
Purchaser Address,
Telephone Number
00 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
(000) 000-0000
Principal Amount
and Number of
Shares of Series A
Preferred Shares
$337,754.77
(27,020 shares)
Purchaser's Advisor and
Legal Counsel Address
List of Exhibits
Exhibit A Form of Certificate of Designations
Schedule 1 Disclosure Schedule
