SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
October 26, 1999
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CELERITY SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-23279 52-2050585
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
122 Perimeter Park Drive
Knoxville, Tennessee 37922
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including
area code: (865) 539-5300
1400 Centerpoint Boulevard
Knoxville, Tennessee 37932
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(Former Address, if changed since last report)
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This Form 8-K contains forward-looking statements. Such statements involve
various risks that may cause actual results to differ materially from those
expressed in such forward looking statements. These risks and uncertainties
include, but are not limited to: Celerity System Inc.'s ("Celerity") history of
losses and need for financing, market demand for Celerity's products, successful
implementation of Celerity's products, competitive factors, the ability to
manage Celerity's growth and the ability to recruit additional personnel and
other risks detailed from time to time in Celerity's filings with the Securities
and Exchange Commission ("Commission"), including but not limited to, those
described under the caption "Description of Business - Risk Factors" in
Celerity's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998, Celerity's Registration Statement on Form S-3 (Registration No. 333-81099)
and Celerity's current reports on Form 8-K filed with the Commission.
Item 5: Other Events
The following disclosure is qualified in its entirety by the terms of the
debentures attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.7.
Celerity has received gross proceeds of $324,980 from a private placement,
the final closing of which occurred on January 6, 2000. Each investor in the
private placement received subordinated convertible debentures with a principal
amount equal to the amount of the investment and with a term of three years.
Certain of the debentures bear interest at four percent per annum and other
debentures bear interest at eight percent per annum. The debentures are
convertible into Celerity's common stock 90 days following closing at a price,
at the option of the holder, equal to either (i) 65% of the average closing bid
price of the common stock for the five trading days immediately preceding
conversion, or (ii) $.75 or $.50 per share. Celerity may redeem the debentures
at a redemption price of 135% of the principal amount, plus accrued interest.
All outstanding principal of, and interest upon, the debentures are subject to
mandatory conversion three years after issuance.
Celerity has agreed to use its best efforts to file a registration
statement with respect to the resale of the common stock underlying the
debentures within 30 days following closing, and its best efforts to assure it
is declared effective within 90 days of closing. Under certain circumstances,
investors may be entitled to liquidated damages.
Pursuant to registration rights agreements, Celerity is required to
maintain the effectiveness of the registration statement with respect to the
shares of common stock underlying the debentures until such shares are freely
tradeable under Rule 144 of the Securities Act of 1933. Celerity has agreed to
bear all expenses relating to the registration of such shares, including all
registration, filing and qualification fees, printer and accounting fees, and
fees and disbursements of counsel for Celerity, except for any underwriting
discounts and commissions. The registration rights agreements also provide that
Celerity will indemnify and hold harmless the investor, any directors or
officers of such investor, any person who controls such investor, any
underwriter of any of the shares underlying the debentures or any person who
controls such underwriter against any losses, claims, damages, liabilities,
expenses or actions or proceedings that arise out of or are based upon certain
statements, omissions or violations of the registration statement, unless any of
the foregoing arise out of information furnished in writing to Celerity by such
persons. To the extent any
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indemnification is prohibited or limited by law, the indemnifying party has
agreed to make the maximum contribution with respect to any amounts for which it
would otherwise be liable, subject to certain exceptions.
The placement agent, May Davis Group, Inc. ("May Davis"), received a fee
of $32,498 plus 250,000 shares of common stock. May Davis has acted as placement
agent for Celerity in previous transactions. The net proceeds of the offering
are to be used for working capital.
Celerity has also received gross proceeds of $619,980 from a private
placement, the final closing of which occurred on March 8, 2000. Each investor
in the private placement received subordinated convertible debentures with a
principal amount equal to the amount of the investment and with a term of three
years. The debentures bear interest at eight percent per annum. The debentures
are convertible into Celerity's common stock 90 days following closing at a
price, at the option of the holder, equal to either (i) 75% of the average
closing bid price of the common stock for the five trading days immediately
preceding conversion, or (ii) $1.50 per share. Celerity may redeem the
debentures at a redemption price of 125% of the principal amount, plus accrued
interest. All outstanding principal of, and interest upon, the debentures are
subject to mandatory conversion three years after issuance.
Celerity has agreed to use its best efforts to file a registration
statement with respect to the resale of the common stock underlying the
debentures within 30 days following closing, and its best efforts to assure it
is declared effective within 90 days of closing. Under certain circumstances,
investors may be entitled to liquidated damages.
Pursuant to registration rights agreements, Celerity is required to
maintain the effectiveness of the registration statement with respect to the
shares of common stock underlying the debentures until such shares are freely
tradeable under Rule 144 of the Securities Act of 1933. Celerity has agreed to
bear all expenses relating to the registration of such shares, including all
registration, filing and qualification fees, printer and accounting fees, and
fees and disbursements of counsel for Celerity, except for any underwriting
discounts and commissions. The registration rights agreements also provide that
Celerity will indemnify and hold harmless the investor, any directors or
officers of such investor, any person who controls such investor, any
underwriter of any of the shares underlying the debentures or any person who
controls such underwriter against any losses, claims, damages, liabilities,
expenses or actions or proceedings that arise out of or are based upon certain
statements, omissions or violations of the registration statement, unless any of
the foregoing arise out of information furnished in writing to Celerity by such
persons. To the extent any indemnification is prohibited or limited by law, the
indemnifying party has agreed to make the maximum contribution with respect to
any amounts for which it would otherwise be liable, subject to certain
exceptions.
Celerity entered into a Placement Agency Agreement with May Davis Group,
Inc. dated as of February 17, 2000. Pursuant to the agreement, the placement
agent received a fee of $61,998. In addition, Celerity has agreed that for a
period of two years from closing, Celerity will not solicit or enter into any
financing transaction with certain clients of May Davis who invested or had been
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offered an opportunity to invest in the offering The net proceeds of the
offering are to be used for working capital.
Item 7: Financial Statements, Pro Forma Financial information and Exhibits.
(c) Exhibits
99.1 Form of 4% Convertible Debenture due 2002, between
Celerity and each of John Bridges, John Faure, Loni
Spurkeland, Robert Dettle, Michael Genta, Lennart
Dallgren.(1)
99.2 Form of 8% Convertible Debenture due 2002, between
Celerity and each of Richard T. Garrett, W. David McCoy,
Dominick Chirarisi, Gilda R. Chirarisi, Joseph C.
Cardella, Carl Hoehner.(1)
99.3 Form of 8% Convertible Debenture due 2003, between
Celerity and John Bolliger.(1)
99.4 Form of Registration Rights Agreement, between Celerity
and each of John Bridges, John Faure, Loni Spurkeland,
Robert Dettle, Michael Genta, Lennart Dallgren.(1)
99.5 Form of Registration Rights Agreement, between Celerity
and each of Richard T. Garrett, W. David McCoy, Dominick
Chirarisi, Gilda R. Chirarisi, Joseph C. Cardella, Carl
Hoehner.(1)
99.6 Form of Registration Rights Agreement, between Celerity
and John Bolliger.(1)
99.7 Form of 8% Convertible Debenture due 2003, between
Celerity and each of Sui Wa Chau, Qinu Guan, Peter
Chenan Chen, K & M Industry Inc., Michael Dahlquist,
Denise and Vernon Koto and Rance Merkel.(2)
99.8 Form of Registration Rights Agreement, between Celerity
and each of Sui Wa Chau, Qinu Guan, Peter Chenan Chen,
K & M Industry Inc., Michael Dahlquist, Denise and
Vernon Koto and Rance Merkel.(2)
99.9 Form of Escrow Agreement, between Celerity and May Davis
Group.(2)
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(1) Incorporated by reference to Celerity's Registration Statement on Form S-3
(Registration No. 333-30418).
(2) Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 23, 2000
CELERITY SYSTEMS, INC.
By: /s/ Kenneth D. Van Meter
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Kenneth D. Van Meter
President and Chief Executive Officer
Exhibit 99.7
DEBENTURE
CELERITY SYSTEMS, INC.
2000 8% Subordinated Convertible Debenture
Due February 17, 2003
No.___________
$_____________
This Debenture is issued by Celerity Systems, Inc., (The "Company") to
____________ (the "Debenture holder") pursuant to exemptions from registration
under the U.S. Securities Act of 1933.
ARTICLE I
1.01 Principal and Interest. The Company, for value received hereby
confers the right upon Debenture holder to convert the sum of ________________
dollars ($______) into the common stock of the Company (the "Common Stock") on
or before February 17, 2003 ("Maturity Date") as set forth herein, and upon the
Maturity Date to pay interest thereon from the date of issue at the rate of
eight percent (8%) per annum. The Company shall pay such interest on the
outstanding principal amount of the Debenture from the date of issue until the
Maturity Date or conversion; the Company shall pay interest only upon the
outstanding balance of the Debenture at the rate of eight percent (8%) per
annum. Interest will be computed based on a 365 day year.
1.02 Reservation of Common Stock. The Company shall reserve and keep
available out of its authorized, but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Debenture, such number of shares
of Common Stock as shall from time to time be sufficient to effect such
conversion, at the Debenture holders option, either, seventy five percent (75%)
of the Bid Price, (Bid Price shall mean on any date the closing bid price (as
reported by Bloomberg L.P.) of the Common Stock on the Principal Market, or if
the Common Stock is not traded on a Principal Market, the highest reported bid
price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc., for the five (5) trading days immediately preceding
such date of the Common Stock, or, at a fixed price of One Dollar and Fifty
cents ($1.50 ) per share.
The Company shall use its best efforts to file a Registration Statement
within thirty (30) days form the Closing Date, furthermore, the Company shall
use its best efforts to assure that the Registration Statement is effective
within ninety (90) days of the Closing Date. In the event that the Registration
Statement is not effective within ninety (90) days the Company will pay damages
to the Debenture holder in the amount of two percent (2%) a month payable in
cash or stock at the Company's option.
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1.03 Right of Redemption. The Company shall have the right to redeem in
part or in full any outstanding Debentures at one hundred and twenty five (125
%) percent of the Principal plus accrued interest.
1.04 Interest Payments. The interest so payable will be paid at the time
of Conversion to the person in whose name this Debenture is registered. At the
time such interest is payable, the Company, in its sole discretion, may elect to
pay interest in cash (via wire transfer or certified funds) or in the form of
Common Stock. If paid in the form of Common Stock, the amount of stock to be
issued will be calculated as follows: the value of the stock shall be the Bid
Price on: (i) the date the interest payment is due; or (ii) if the interest
payment is not made when due, the date the interest payment is made. A number of
shares of Common Stock with a value equal to the amount of interest due shall be
issued. No fractional shares will be issued; therefore, in the event that the
value of the Common Stock per share does not equal the total interest due, the
Company will pay the balance in cash.
1.05 Paying Agent and Registrar. Initially, the Company will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar, or
Company-registrar without notice. The Company may act in any such capacity.
1.06 Subordinated Nature of Debenture. This Debenture and all payments
hereon, including principal or interest, shall be subordinate and junior in
right of payment to all Company Debt (as defined hereinafter), but only to the
extent set forth as follows:
(a) upon the maturity of any Company Debt, or any installment thereof then
due by lapse of time, acceleration or otherwise, all Company Debt then due shall
first be paid in full (or provision made for payment in full thereof) before any
additional payment on account of principal or interest is made on this
Debenture; and
(b) in the event of any insolvency or bankruptcy proceedings affecting the
Company, or any receivership, liquidation, reorganization or other similar
proceedings affecting the Company, and, in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Company, whether
or not involving insolvency or bankruptcy, then the holders of Company Debt
shall be entitled to receive payment in full of all principal of and interest on
all Company Debt before the holder of this Debenture is entitled to receive any
payment on account of principal, interest or premium on this Debenture.
The provisions of the preceding paragraphs are solely for the purpose of
defining the relative rights of the holders of Company Debt on the one hand and
the holder of this Debenture on the other hand and nothing herein shall impair,
as between the Company and the holder of this Debenture, the obligation of the
Company, which is unconditional and absolute, to pay the holder of this
Debenture the principal, interest and premiums hereon in accordance with its
terms, nor shall anything herein prevent the holder of this Debenture from
exercising all remedies otherwise permitted by law or hereunder upon
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default hereunder, subject to the relative rights of the holders of Company Debt
expressed in the preceding paragraphs.
For the purpose of this Notice, the term "Company Debt" shall mean and
include current bank debt and all indebtedness acquired by the Company
subsequent to the date hereof, other than indebtedness to any officer, director
or other person who has beneficial ownership of ten percent (10%) or more of the
Company's issued and outstanding shares of Common Stock.
ARTICLE II
2.01 Amendments and Waiver of Default. The Debenture may be amended with
the consent of the Debenture holder. Without the consent of the Debenture
holder, the Debenture may be amended to cure any ambiguity, defect or
inconsistency, to provide for assumption of the Company obligations to the
Debenture holder or to make any change that does not adversely affect the rights
of the Debenture holder.
ARTICLE III
3.01 Events of Default. An Event of Default is defined as follows: failure
by the Company to pay amounts due hereunder within two (2) days of the Maturity
Date failure by the Company to advise its transfer agent to issue Common Stock
to the Debenture holder within two (2) business days of the Company's receipt of
the Notice of Conversion from Debenture holder; or failure by the Company for
thirty (30) days after notice to it to comply with any of its other agreements
in the Debenture; and events of bankruptcy or insolvency. The Debenture holder
may not enforce the Debenture except as provided herein.
3.02 Successor Corporation. If a successor corporation assumes all the
obligations of this predecessor, Celerity Systems, Inc., the predecessor
corporation will be released from those obligations under the Debenture.
3.03 Waiver and Release. A director, officer, employee or stockholders, as
such, of the Company shall not have any liability for any obligations of the
Company under the Debenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. The Debenture holder, by accepting
a Debenture waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Debenture.
ARTICLE IV
4.01 Rights and Terms of Conversion. This Debenture, in whole or in part,
may be converted at any time beginning ninety (90) days following the date of
closing, into shares of Common Stock at a price equal to the following
Conversion: at the Debenture holders option, either, seventy five percent (75%)
of the average closing Bid
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Price for the five (5) trading days immediately preceding conversion, or, One
Dollar and Fifty cents ($1.50) per share.
In lieu of any fractional share to which the Debenture holder would
otherwise be entitled, the Company will pay the balance in cash.
4.02 Reissuance of Debenture. When the Debenture holder elects to convert
a part of the Debenture, then the Company shall reissue a new Debenture in the
same form as this Debenture to reflect the new principal amount.
4.03 Termination of Conversion Rights. The Debenture holder's right to
convert the Debenture into the Common Stock in accordance with paragraph 4.01
shall terminate on February 17, 2003 and shall be automatically converted on
that date in accordance with the formula set forth in Section 4.01 hereof, and
the appropriate shares of common stock and amount of interest shall be issued to
the Debenture holder.
4.04. Notwithstanding any other provision contained herein, the parties
agree that in no event shall the Company be required to issue (i) an aggregate
number of shares constituting more than 19.99% of the number of shares of Common
Stock outstanding on the date of such issuance or (ii) a number of shares that
would result in a change of control of the Company, unless the shareholders of
the Company approve such issuance of additional Common Shares or NASDAQ waives
the applicable requirements of Market Place Rule 4310(H)(i). The Company agrees
to use commercially reasonable efforts to obtain such approval or waiver on or
prior to the 90th day following the date that more than 19.99% of the Common
Stock would otherwise be issuable pursuant to outstanding Debentures or that an
issuance would otherwise result in a change of control by scheduling a
shareholders meeting as soon as practicable after such date.
ARTICLE V
5.01 Notice. Notices regarding this Debenture shall be sent to the parties
at the following addresses, unless a party notifies the other parties, in
writing, of a change of address:
If to the Company: CELERITY SYSTEMS, INC.
122 Perimeter Park Drive
Knoxville, Tennessee 37933.
Attention: President
If to Debenture holder: ___________________________
5.02 Governing Law. This Debenture shall be deemed to be made under and
shall be construed in accordance with the laws of the Commonwealth of Delaware
without giving effect to the principals of conflict of laws thereof. Each of the
parties
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consents to the jurisdiction of the U.S. District Court sitting in the Southern
District of the State of New York or the state courts of the State of New York
sitting in Manhattan in connection with any dispute arising under this Debenture
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the bringing of any
such proceeding in such jurisdictions.
5.03 Severability. The invalidity of any of the provisions of this
Debenture shall not invalidate or otherwise affect any of the other provisions
of this Debenture, which shall remain in full force and effect.
5.04 Entire Agreement and Amendments. This Debenture represents the entire
agreement between the parties hereto with respect to the subject matter hereof
and there are no representations, warranties or commitments, except as set forth
herein. This Debenture may be amended only by an instrument in writing executed
by the parties hereto.
5.05 Counterparts. This Debenture may be executed in multiple
counterparts, each of which shall be an original, but all of which shall be
deemed to constitute on instrument.
5.06 Assignment. Neither this Debenture nor any rights of the Investor or
the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Debenture shall insure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Debentures purchased or acquired by the Investor hereunder with respect to the
Common Stock held by such person, and (b) upon the prior written consent of the
Company, which consent shall not unreasonably be withheld, the Investor's
interest in this Debenture may be assigned at any time, in whole or in part, to
any other person or entity (including any affiliate of the Investor).
IN WITNESS WHEREOF, with the intent to be legally bound hereby, the
parties hereto have executed this Debenture as of February 17, 2000.
ATTEST:
____________________________
CELERITY SYSTEMS, INC.
________________________________
Kenneth Van Meter
Title: President/CEO
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____________________________
________________________________
Debenture Holder
Exhibit 99.8
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February 17, 2000 between Celerity
Systems, Inc., a Delaware corporation, with executive offices at 122 Perimeter
Park Drive, Knoxville Tennessee 37933 (the "Company") and ________________ (the
"investor").
WITNESSETH
WHEREAS, the Company is offering the (the "Offering") up to $____________
of debentures (the "Debentures") to the Investor: and
WHEREAS, in connection with the sale of the Debentures the Company is
granting to the Investor the right to purchase upon the conversion of Debentures
the number of shares of common stock of the Company, par value $0.001 per share
(the "Common Stock") as shall from time to time be sufficient to effect such
conversion, at the Debenture holders option, either, seventy five percent (75%)
of the Bid Price, (Bid Price shall mean on any date the closing bid price (as
reported by Bloomberg L.P.) of the Common Stock on the Principal Market, or if
the Common Stock is not traded on a Principal Market, the highest reported bid
price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc., for the five (5) trading days immediately preceding
such date of the Common Stock, or, at a fixed price of One Dollar and Fifty
cents ($1.50 ) per share.
NOW THEREFORE, the parties hereto hereby agrees as follows:
I. Definitions
All capitalized terms not hereinafter defined shall have the meanings
ascribed to them in the Line of Credit Agreement.
"Bid Price" shall mean , on any date, the closing bid price (as reported
by Bloomberg L.P.) of the Common Stock on the Principal Market, or if the Common
Stock is not traded on a Principal Market, the highest reported bid price for
the Common Stock, as furnished by the National Association of Securities
Dealers, Inc., for the five trading days immediately preceding such date.
"Commission." United States Securities and Exchange Commission or any
successor regulatory body.
"Common Stock." As defined in the third recital hereof.
"Company." As defined in the Line of Credit Agreement.
"Debentures." As defined in the Line of Credit Agreement.
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"Exchange Act." Securities Exchange Act of 1934, as amended.
"Investor." As defined in the first recital hereof.
"Offering." As defined in the first recital hereof.
"Preferred Stock." As defined in the first recital hereof.
"Registration." A registration effected by preparing and filing a
registration statement or statements or similar documents in compliance with the
Securities Act and the declaration or ordering of effectiveness of such
registration statement or document by the Commissioner; included in such
definition shall be correlative terms "Register" and "Registered".
"Preferred Stock." As defined in the first recital hereof.
"Registration." A registration effected by preparing and filing a
registration statement or statements or similar documents in compliance with the
Securities Act and the declaration or ordering of effectiveness of such
registration statement or document by the Commission; included in such
definition shall be the correlative terms "Register" and "Registered".
"Registrable Securities." The shares of Common Stock issuable upon the
conversion of the Debentures that have not previously been sold pursuant to a
Registration Statement or Rule 144 and that are not eligible for sale under Rule
144(k) (or any successor provision.).
"Registration Statement." The registration statement under the Securities
Act covering the resale of the Registrable Securities.
"Rule 144". Rule 144 under the Securities Act.
"Rule 415." Rule 415 under the Securities Act, or any successor rule
providing for offering securities on a continuous basis.
"Securities Act." As defined in the third recital hereof.
"Violations." As defined in Section 4.01 (a) hereof.
II. Registration Rights.
Section 2.01 Mandatory Registration .
(a) Registration is mandatory :
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(i) On or prior to the issuance of the Debentures pursuant to the Line of
Credit Agreement, the Company shall have caused a Registration Statement
covering the resale of the Registrable Securities issuable upon the conversion
of the Debentures to be declared effective and the Company shall cause the
Registration Statement to remain effective until all of the Registrable
Securities have been sold. The Registration Statement shall cover no less than
the number of shares of Common Stock issuable upon the conversion of all
outstanding Debentures based upon the Bid Price of the Common Stock upon the
date of the initial filing with the SEC.
(ii) In the event that the Registration Statement does not at any time
cover the requisite number of Registrable Securities, as provided in 2.01 (a)
(i), the Company shall prepare and file with the Commission, no later than
thirty (30) days after such date, a Registration Statement covering the number
of shares of Common Stock, as provided in 2.01 (a) (i). If at any time the
number of shares of Common Stock into which the Debentures may be converted
exceeds the aggregate number of shares of Common Stock then registered, the
Company shall, within thirty (30) days after receipt of a written notice from
the Investor, either (a) amend the Registration Statement filed by the Company
pursuant to the preceding sentence, if such Registration Statement has not been
declared effective but the Commission at the time, to register additional shares
of Common Stock into which the Debentures as provided above may be converted, or
(b) if such Registration Statement has been declared effective by the Commission
at that time, file with the Commission an additional Registration Statement to
register such additional shares of Common Stock.
(b) In the event that the Registration Statement referred to in Section
2.01 (a) (i) does not cover the requisite number of Registrable Securities, as
provided in Section 2.01 (a) (i), then the Company shall pay to the Investor an
amount equal to two 2% percent of the principal amount and the accrued interest
on the Debentures (the "Outstanding Amount") for each month or portion thereof
and continuing each amount month thereafter until the date the Registration
Statement is declared effective by the Commission (the "2.01 (a) Payment"). The
2.01 (a) Payment shall be paid in immediately available funds with three (3)
business days after the end of each month. If the Investor elects to have the
2.01 (a) Payment paid in shares of Common Stock, then such amount may be
converted into shares of Common Stock in accordance with the terms of the
Debentures.
Section 2.02 Period of Effectiveness. The Company shall cause the
Registration Statement to become effective under the Securities Act and maintain
such effectiveness for the period terminating on the date on which the Investor
with respect to the Registrable Securities can sell the Registrable Securities
pursuant to Rule 144 under the Securities Act without restriction under Rule
144(e) thereof.
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Section 2.03 Obligations of the Company. The Company Shall:
(a) Cause the Registration Statement to become effective under the
Securities Act and keep the Registration Statement effective under the
Securities Act pursuant to Rule 415 at all times until the date on which the
Investor with respect to the Registrable Securities can sell the Registrable
Securities pursuant to Rule 144 under the Securities Act without restriction
under Rule 144(e) thereof.
(b) Prepare and file with the Commission such amendments (including post
effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective under the Securities Act
at all times until the date on which the Investor can sell the Registrable
Securities pursuant to Rule 144 of the Securities Act without restriction under
Rule 144 (e) thereof, and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by the Registration
Statement.
(c) Furnish promptly to the Investor such numbers of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto, in conformity with the requirements of the Securities Act,
and such other documents as the Investor may reasonably request in order to
facilitate the disposition of Registrable Securities.
(d) Register and qualify the securities covered by the Registration
Statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Investor, and prepare and file in those
jurisdictions such amendments (including post effective amendments) and
supplements and take such other actions as may be necessary to maintain such
registration and qualification in effect at all times until the date on which
the Investor can sell the Registrable Securities pursuant to Rule 144 of the
Securities Act without restriction under Rule 144(e) thereof and to take all
other actions necessary or advisable to enable the disposition of such
securities in such jurisdiction, provided that the Company shall not be required
in connection therewith, or as a condition thereto, to quality to do business or
to file a general consent to service of process in any such state or
jurisdictions or to provide any undertaking or make any change in its charter or
by-laws which the Board of Directors determines to be contrary to the best
interest of the Company and its stockholders.
(e) Notify the Investor, at any time when a prospectus relating to
Registrable Securities covered by the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Company shall promptly amend or supplement the Registration
Statement to correct any such untrue statements or omission.
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(f) Notify the Investor of the issuance by the Commission or any state
securities commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceeding for such purpose. The
Company will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(g) Permit single firm of counsel designated by the holders of a majority
in interest of the Registrable Securities to review the Registration Statement
and all amendments and supplements thereto a reasonable period of time prior to
their filing, and not file any document in a form to which such counsel
reasonably objects.
(h) Make generally available to its security holders as soon as
practicable, but not later than 90 days after the close period covered thereby,
an earnings statement (in form complying with the provisions of Rule 158 under
the Securities Act ) covering a twelve-month period beginning not later that the
first day of the Company's fiscal quarter next following the effective date of
the Registration Statement.
(i) Make available for inspection by the Investor, any underwriters
participating in offering pursuant to the registration, and the counsel,
accountants, or other agents retained by the Investor or any such underwriter,
all pertinent financial and other records, corporate documents, and properties
of the Company, and cause the Company's officers, directors, and employees to
supply all information reasonably requested by the Investor or any such
underwriters in connection with the registration.
(j) If the Common Stock in then listed on a national securities exchange,
cause the Registrable Securities to be listed on such exchange. If the Common
Stock is not then listed on a national securities exchange, facilitate the
reporting of the Registrable Securities on the Nasdaq Bulletin Board, the Nasdaq
SmallCap Market, or the Nasdag National Market, as applicable.
(k) Provide a transfer agent and register, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement under the Securities Act.
(l) Take all actions reasonable necessary to facilitate the timely
preparation and delivery of certificates representing the Registrable Securities
to be sold pursuant to the Registration Statement and to enable such
certificates to be in such denominations and Registered in such names as the
Investor or any Underwriters may reasonably request.
(m) Take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement.
<PAGE>
III. Furnish Information
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement with respect to each Investor that
such Investor shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
the Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably require to effect the
Registration of the Registrable Securities and shall execute such documents in
connection with the registration as the Company may reasonably request.
IV. Indemnification and Contribution
Section 4.01 Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To extent permitted by law, the Company will indemnify and hold
harmless each Investor, the directors, if any, of such Investor, the officers,
if any, of such Investor who signed the Registration Statement, each person, if
any, who controls such Investor, any underwriter (as defined in the Securities
Act) of any of the Registrable Securities and each person, if any, who controls
any such underwriter within the meaning of the Securities Act or the Exchange
Act against any losses, claims, damages, expenses, or liabilities or actions or
proceedings, whether commenced or threatened, in respect thereof that arise out
of, or are based upon, any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material of fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the omission or alleged omissions to
state therein a material of fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made not misleading; or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any state securities law, or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will reimburse the Investor and each such
underwriter or controlling person, promptly as such expenses are incurred, for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding provided however, that the indemnity agreement contained is this
Section 4.01 (a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action or proceeding if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action or proceeding to the extent that it arises
out of, or is based upon, a Violation which occurs in reliance upon, and in
conformity with, written information furnished expressly for use in connection
with such registration by the Investor or any such underwriter or controlling
person, as the case be. Such indemnity shall remain in full force and effect
regardless of any investigation made
<PAGE>
by, or on behalf of, the Investor or any such underwriter or controlling person
shall survive the transfer of the Registrable Securities by the Investor.
(b) To the extent permitted by law, each Investor, severally and not
jointly, will indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement, each person, if
any, who controls the Company within the meaning of the Securities Act or
Exchange Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement, or any of its directors or officers or
any person who controls such holder or underwriter, against any losses, claims,
damages, or liabilities (joint or several) to which any of them may become
subject, under the Securities Act, the Exchange Act, or other federal or state
law, insofar as such losses, claims, damages, or liabilities or actions in
respect thereof arise out of, or are based upon, any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon,
and in conformity with, written information furnished by such Investor expressly
for use in connection with such registration; and such investor will reimburse
any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 4.01(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of such Investor, which consent shall not be unreasonably withheld; and
provided, further that the Investor shall be liable under this paragraph for
only that amount of losses, claims, damages, and liabilities as does not exceed
the proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such registration.
(c) Promptly after receipt by an indemnified party under this Article IV
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Article IV, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of, the defense thereof with counsel reasonably satisfactory to the
indemnified party; provided, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel for the indemnified
party, representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding; notwithstanding the foregoing, the indemnifying
party or parties shall be responsible for only one counsel representing the
indemnified party or parties. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Article IV only to the extent prejudicial to its ability to
defend such action, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to nay
indemnified party otherwise than under this Article IV. The indemnification
required by this Article IV
<PAGE>
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, promptly as such expense, loss, damage, or
liability is incurred.
Section 4.02 Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 4.01 hereof to the extent permitted by
law, provided that (i) no contribution shall be made under circumstances where
the contributor would not have been liable for indemnification under the fault
standards set forth in Section 4.01 hereof, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty or such fraudulent
misrepresentation, and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.
V. Report Under Exchange Act.
With a view to making available to the Investor the benefits of Rule 144
and any other rule or regulation of the Commission that may at any time permit
the Investor to sell securities of the Company to the public without
registration, the Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) Furnish to each Investor, so long as such Investor owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act, and the Exchange Act (at any time after it has become subject to
such reporting requirements), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing the Investor of any rule or regulation of the Commission which permits
the selling of any such securities without registration.
VI. Assignment of Registration Rights.
The right to have the Company register Registrable Securities under the
Securities Act pursuant to this Agreement may be assigned by the Investor to
permitted transferees or assignees of such securities; provided, that such
transferee or assignee, within a reasonable time after such transfer, furnishes
the Company written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; provided, further, that such assignment shall be
<PAGE>
effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act. The term "Investor" as used in this Agreement shall included permitted
assignees.
VII. Expenses of Registration.
All expenses other than the underwriting discounts and commissions
incurred in connection with registration, filings, or qualifications pursuant to
Article II hereof, including, without limitation, all registration, listing,
filing, and qualification fees, printers, accounting fees, fees and
disbursements of counsel for the Company shall be borne by the Company.
VIII. Miscellaneous.
Section 8.01 Further Actions. At any time and from time to time, each
party agrees, at its expense, to take such actions and to execute and deliver
such documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
Section 8.02 Entire Agreement; Modification. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements among them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party
hereto.
Section 8.03 Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing, and, if sent to any
Investor, shall be mailed, delivered, or telexed or telegraphed and confirmed by
letter, to such Investor at the address set forth on the signature page hereof,
or if sent to the Company, shall be mailed, delivered, or telexed or telegraphed
and confirmed by letter, to 122 Perimeter Park Drive, Knoxville, Tennessee
37933. All notices hereunder shall be effective upon receipt by the party to
which it is addressed.
Section 8.04 Waiver. Any waiver by any party of a breach of any term of
this Agreement shall not operate as, or be construed to be, a waiver of any
other breach of that term or of any breach of any other term of this Agreement.
The failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver hereunder must be in writing.
Section 8.05 Binding Effect. The provisions of this Agreement shall be
binding upon, and inure to the benefits of, the parties hereto and their
respective successors and assigns; provided, however, that, except as otherwise
provided herein, no party hereto shall have the right to assign its rights and
obligations hereunder without the prior written consent of the other parties
hereto.
<PAGE>
Section 8.06 No Third-Party Beneficiaries. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement, except as otherwise provided herein.
Section 8.07 Separability. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
Section 8.08 Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
Section 8.09 Counterparts; Governing Law. This Agreement may be executed
in any number of counterparts, each of which shall be deemed as original, but
all of which together shall constitute one and the same instrument. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without giving effect to conflicts of laws. Each of the
parties consents to the jurisdiction of the U.S. District Court sitting in the
Southern District of the State of New York or the state courts of the State of
New York sitting in Manhattan in connection with any dispute arising under this
Debenture and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens to the bringing
of any such proceeding in such jurisdictions.
[REMAINDER OF PAGE LEFT INTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first above written.
COMPANY
CELERITY SYSTEMS, INC.
By: ____________________________________________
Name: Kenneth Van Meter
Title: President/CEO
INVESTOR
____________________________________________
By: ____________________________________________
Exhibit 99.9
ESCROW AGREEMENT
THIS AGREEMENT is made and entered into as of February 17, 2000, by and
among BUTLER GONZALEZ, L.L.P. (the "Escrow Agent"), MAY DAVIS GROUP (the
"Placement Agent" ) and CELERITY SYSTEMS, INC. (the "Company").
RECITALS
The Company proposes to offer for sale to investors through the Placement
Agent up to $_________ of Convertible Debentures (the "Securities") in one
tranche of at least $___________ (the "Minimum") resulting in given proceeds to
the Company of up to $_______________ (the "Proceeds").
The Placement Agent intends to sell the Securities as the Company's agent
on a best efforts all-or-none basis (the "Offering").
The Company and Placement Agent desire to establish an escrow account in
which funds received from subscribers will be deposited pending completion of
the Escrow Period. BUTLER GONZALEZ, L.L.P. agrees to serve as Escrow Agent in
accordance with the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed as
Follows:
1. Establishment of Escrow Account. On or prior to the date of the commencement
of the offering, the parties shall establish an escrow account, which escrow
account shall be entitled, CELERITY SYSTEMS/MAY DAVIS ESCROW ACCOUNT (the
"Escrow Account"). The Placement Agent will instruct subscribers to wire funds
to the account of the Escrow Agent as follows:
Bank: First Union National Bank
ABA /Routing # ______________
Account # ___________________
Reference Sub-Account # 1040A-00, Celerity Systems/May Davis
Account Name: Celerity Systems/May Davis Escrow Account
Only wire transfers shall be accepted.
2. Escrow Period. The Escrow period (the "Escrow Period") shall begin with the
commencement of the Offering and shall terminate upon the earlier to occur of
the following dates:
<PAGE>
A. The date upon which the Escrow Agent confirms that its has received in
the Escrow Account gross proceeds of $______________________ in deposited, funds
(the "Maximum");
B. The expiration of ten (10) days from the date of commencement of the
Offering (unless extended by mutual written agreement between the Company and
the Placement Agent with a copy of such extension to the Escrow Agent); or
C. The date upon which a determination is made by the Company and the
Placement Agent to terminate the offering prior to the sale of the Maximum.
During the Escrow Period, the Company is aware and understands that it is not
entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Company or any other entity, or
be subject to the debts of the Company or any other entity.
3. Deposits into the Escrow Account. The Placement Agent agrees that it
shall promptly deliver all monies received from subscribers for the payment of
the Securities to the Escrow Agent for deposit in the Escrow Account.
4. Disbursements from the Escrow Account. At such time as Escrow Agent has
collected and deposited instruments of payment in the total amount of the
Minimum and any amounts up to the Maximum, Escrow Agent shall notify the Company
and the Placement Agent. The Escrow Agent will continue to hold such funds until
Placement Agent and Company jointly notify Escrow Agent in writing as to the
disbursement of funds pursuant to a closing statement signed by each of the
Placement Agent and the Company (the "Closing Statement"). In disbursing such
funds, Escrow Agent is authorized to rely upon such Closing Statement from
Company and Placement Agent and may accept any signatory from the Company listed
on the signature page to this Agreement and any signature from the Placement
Agent that Escrow Agent already has on file.
In the event the Escrow Agent does not receive the minimum deposits
totaling $200,000 prior to the expiration of the Escrow Period (the "Minimum
Deposits"), the Escrow Agent shall notify the Company and the Placement Agent.
Upon receipt of payment instructions from the Company, the Escrow Agent shall
refund to each subscriber with interest the amount received from each
subscriber, without deduction, penalty, or expense to the subscriber. The
purchase money returned to each subscriber shall be free and clear of arty and
all claims of the Company or any of its creditors.
In the event the Escrow Agent does receive deposits totaling the Minimum
prior to expiration of the Escrow Period, in no event will the Escrow Amount be
released to the Company until such amount is received by the Escrow Agent in
collected funds. For purposes of this Agreement, the term "collected funds"
shall mean all funds received by the Escrow Agent which have cleared normal
banking channels and are in the form of cash.
<PAGE>
5. Collection Procedure. The Escrow Agent is hereby authorized to forward
each wire for collection and, upon collection of the proceeds of each wire
deposit the collected proceeds in the Escrow Account.
Any wires returned unpaid to the Escrow Agent shall be returned to the
Placement Agent. In such cases, the Escrow Agent will promptly notify the
Company for such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check or
wire to the rejected subscriber. If the Company rejects any subscription for
which the Escrow Agent has not yet collected funds but has submitted the
subscriber's wire for collection, the Escrow Agent shall promptly issue a check
or wire the amount of the subscriber's wire to the rejected subscriber after the
Escrow Agent has cleared such funds. If the Escrow Agent has not yet submitted a
rejected subscriber's wire for collection, the Escrow Agent shall promptly remit
the subscriber's wire directly to the subscriber. The Company shall provide
payment instructions to the Escrow Agent.
6. Investment of Escrow Amount. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in money market
instruments.
7. Compensation of Escrow Agent. The Company shall, pay the Escrow Agent a
fee for its escrow services. If it is necessary for the Escrow Agent to return
funds to the subscribers, the Company shall pay to the Escrow Agent an
additional amount sufficient to reimburse it for its fees and actual cost in
disbursing such funds. However, if funds are refunded to subscribers, no such
fee, reimbursement for costs and expenses, indemnification for any damages
incurred by the Escrow Agent, or any monies whatsoever shall be paid out of or
chargeable to the principal amount of funds on deposit in the Escrow Account.
8. General provisions.
(a) (i) Escrow Agent shall not be liable to anyone for any damages, losses, or
expense which they may incur as a result of any act or omission of Escrow Agent,
unless such damages, losses, or expenses are caused by Escrow Agent's willful
misconduct or gross negligence. Accordingly, Escrow Agent shall not incur any
such liability with respect to (i) any action taken or omitted in good faith
upon the advice of Escrow Agent's counsel or counsel for any other party hereto,
given with respect to any question relating to the duties and responsibilities
of Escrow Agent under this Agreement or (ii) any action taken or omitted in
reliance upon any instrument, including execution, or the identity or authority
of any person executing such instrument, its validity and effectiveness, but
also as to the truth and accuracy of any information contained therein which
Escrow Agent shall, in good faith, believe to be genuine, to have been signed by
a proper person or persons and to conform to the provisions of this Escrow
Agreement.
<PAGE>
(ii) Escrow Agent shall not be bound in any way by any contract or agreement
between other parties hereto, whether or not it has knowledge of any such
contract or agreement or of its terms or conditions.
(iii) The parties hereto, jointly and severally, hereby agree to indemnify and,
hold harmless Escrow Agent against any and all costs, losses, claims, damages,
liabilities, expenses, including reasonable costs of investigation, court costs,
and attorney's fees, and disbursements, which may be imposed upon Escrow Agent
in connection with its acceptance of appointment as Escrow Agent hereunder,
including any litigation arising from this Escrow Agreement or involving the
subject matter hereof, and all such costs, expenses and disbursements shall be
deducted from the income (if sufficient) or paid by the parties hereto, except
for matters arising from the gross negligence or willful misconduct of Escrow
Agent.
(iv) As security for such fees and expenses of Escrow Agent and any and all
losses, claims, damages, liabilities and expenses incurred by Escrow Agent in
connection with its acceptance of appointment hereunder, and with performance of
the agreements herein contained, the Escrow Agent is hereby given a lien upon
all assets held by Escrow Agent hereunder, which lien shall be prior to all
other liens upon or claims against such assets, except for claims of subscribers
in the event the Minimum is not raised.
(b) (i) In the event of any disagreement among any of the parties to this
Agreement, or among them or any other person resulting in adverse claims and
demands being made in connection with or from any property involved herein or
affected hereby, Escrow Agent shall be entitled to refuse to comply with any
such claims or demands as long as such disagreement may continue, and in so
refusing, shall make no delivery or other disposition of any property then held
by it under this Escrow Agreement , and in so doing the Escrow Agent shall be
entitled to continue to refrain from acting until (a) the fight of adverse
claimants shall have been finally settled by binding arbitration, or finally
adjudicated in a court assuming and having jurisdiction, of the property
involved herein or affected hereby or (b) all differences shall have been
adjusted by agreement and Escrow Agent shall have been notified in writing of
such agreement signed by the parties hereto.
(ii) In the event of such disagreement (or resignation under the terms of this
Agreement), Escrow Agent may, but need not, tender into the registry or custody
of any court of competent jurisdiction all, money or property in its hands under
the terms of this Agreement, together with such legal proceedings as it deems
appropriate and thereupon to be discharged from all further duties under this
Escrow Agreement. The filing of any such legal proceeding shall not deprive
Escrow Agent of its compensation earned prior to such filing.
(iii) Escrow Agent shall have no obligation to take any legal, action in
connection with this Escrow Agreement or towards its enforcement, or to appear
in, prosecute or defend
<PAGE>
any action or legal proceeding which would or might involve it in any cost,
expense, loss or liability unless security and indemnity shall be furnished.
(c) This Agreement contains the entire understanding between and among the
parties hereto, and shall be binding upon and inure to the benefit of such
parties, and subject to its terms, their respective successors, heirs,
assigns and legal representatives. Any corporation into which Escrow Agent
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which Escrow Agent shall be a party, or any corporation to which
substantially all the corporate trust business of Escrow Agent may be
transferred, shall., subject to the terms of the Escrow Agreement, be
Escrow Agent under this Escrow Agreement without further act.
(d) This Escrow Agreement is being delivered in and shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the principals or rules governing conflicts of
laws.
(e) Notices, requests, demands or other communications required or permitted
under this Escrow Agreement will be in writing and will be deemed given
when actually delivered, received via facsimile notice for which a
confirmation is received, or the third business day after said notice has
been sent by certified mail, postage prepaid, return receipt requested to:
If to Escrow Agent:
Butler Gonzalez
Suite 6
1000 Stuyvesant Ave
Union, New Jersey 07083
If to Placement Agent:
May Davis Group, Inc.
Suite 8735
One World Trade Center
New York, New York 10048
Attn: Mark A. Angelo
Facsimile Number: (212) 775-8166
If to Company:
Celerity Systems, Inc.
122 Perimeter Park Drive
Knoxville, TN 37932
Facsimile: (865) 539-3502
or such other address as a party may specify in writing to other parties
pursuant hereto.
<PAGE>
(f) This Escrow Agreement shall not be modified, revoked, released or
terminated except in writing and signed by parties hereto.
(g) Should, at any time, any attempt be made to modify this Escrow Agreement
in a manner that would increase the duties and responsibilities of Escrow
Agent, or to modify this Escrow Agreement in any matter which Escrow Agent
shall deem undesirable, or at any other time, Escrow Agent may resign by
notifying the parties in writing, by certified mail to their respective
addresses here and above set forth. Until (i) the acceptance by such
successor Escrow Agent as shall be appointment by such parties; or (ii) 60
days following the date upon which notice was mailed, whichever occurs
sooner, Escrow Agent's only remaining obligation shall be to perform its
duties hereunder in accordance with the terms of this Escrow Agreement. If
said 60 days have passed without the acceptance by such successor Escrow
Agent as shall have been appointed by such parties, then the Escrow Agent
may exercise its rights under item 8(c) (ii) of this Agreement.
(h) No Implied Duties. The Escrow Agent undertakes to perform only such duties
as are expressly set forth herein and no additional duties or obligations
shall be implied hereunder. The parties hereby acknowledge that the Escrow
Agency is serving as the Escrow Agent of the offering for the limited
purposes set forth herein, and hereby agree that they will not represent
or imply that the Escrow Agent, by serving as the escrow agent hereunder
or otherwise, has investigated the desirability or advisability of this
investment, or has approved, endorsed or passed upon the merits of this
offering or any related, offering Any breach or violation of this
paragraph (i) shall be grounds for the immediate resignation by the Escrow
Agent. This Escrow Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year above set forth.
ESCROW AGENT:
BUTLER GONZALEZ, LLP
By:
Name: David Gonzalez, Esq.
PLACEMENT AGENT: MAY DAVIS GROUP, INC.
By:
Name:
Title:
COMPANY:
CELERITY SYSTEMS, INC.
By:
Name: Ken Van Meter
Title: President & CEO
