Exhibit 4.7
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 30, 1999 between Celerity
Systems, Inc., a Delaware corporation, with executive offices at 1400
Centerpoint Blvd., Knoxville Tennessee 37932 (the "Company") and Richard T.
Garrett (the "investor").
WITNESSETH
WHEREAS, the Company is offering the (the "Offering") up to
$100,000.00 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, sixty five percent (65%) 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 Fifty cents (.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.
"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 :
(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.
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.
(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.
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 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 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 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 1400 Centerpoint Boulevard, Knoxville, Tennessee
37932. 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.
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.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first above written.
COMPANY
CELERITY SYSTEMS, INC.
By: /s/ Kenneth Van Meter
-------------------------------
Name: Kenneth Van Meter
Title:President/CEO
INVESTOR
RICHARD T. GARRETT
By: /s/ Richard T. Garrett
-------------------------------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 30, 1999 between Celerity
Systems, Inc., a Delaware corporation, with executive offices at 1400
Centerpoint Blvd., Knoxville Tennessee 37932 (the "Company") and W. David McCoy
(the "investor").
WITNESSETH
WHEREAS, the Company is offering the (the "Offering") up to $ 30,000.00 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, sixty five percent (65%) 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 Fifty cents (.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.
"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 :
(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.
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.
(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.
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 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 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 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 1400 Centerpoint Boulevard, Knoxville, Tennessee
37932. 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.
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.
IN WITNESS WHEREOF, the parties have executed this instrument as of the day
and year first above written.
COMPANY
CELERITY SYSTEMS, INC.
By: /s/ Kenneth Van Meter
---------------------------
Name: Kenneth Van Meter
Title:President/CEO
INVESTOR
W. DAVID McCOY
By: /s/ W. David McCoy
---------------------------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 30, 1999 between Celerity
Systems, Inc., a Delaware corporation, with executive offices at 1400
Centerpoint Blvd., Knoxville Tennessee 37932 (the "Company") and Dominick
Chirarisi and Gilda R. Chirarisi (the "investor").
WITNESSETH
WHEREAS, the Company is offering the (the "Offering") up to $ 15,000.00 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, sixty five percent (65%) 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 Fifty cents (.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.
"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 :
(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.
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.
(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.
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 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 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 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 1400 Centerpoint Boulevard, Knoxville, Tennessee
37932. 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.
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.
IN WITNESS WHEREOF, the parties have executed this instrument as of the day
and year first above written.
COMPANY
CELERITY SYSTEMS, INC.
By: /s/ Kenneth Van Meter
---------------------------
Name: Kenneth Van Meter
Title:President/CEO
INVESTOR
DOMINICK CHIRARISI
By: /s/ Dominick Chirarisi
---------------------------
GILDA R. CHIRARISI
By: /s/ Gilda R. Chirarisi
---------------------------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 30, 1999 between Celerity
Systems, Inc., a Delaware corporation, with executive offices at 1400
Centerpoint Blvd., Knoxville Tennessee 37932 (the "Company") and Joseph C.
Cardella (the "investor").
WITNESSETH
WHEREAS, the Company is offering the (the "Offering") up to $ 10,000.00
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, sixty five percent (65%) 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 Fifty cents (.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.
"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 :
(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.
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.
(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.
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 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 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 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 1400 Centerpoint Boulevard, Knoxville, Tennessee
37932. 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.
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.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first above written.
COMPANY
CELERITY SYSTEMS, INC.
By: /s/ Kenneth Van Meter
------------------------
Name: Kenneth Van Meter
Title:President/CEO
INVESTOR
JOSEPH C. CARDELLA
By: /s/ Joseph C. Cardella
------------------------
DEBENTURE
CELERITY SYSTEMS, INC.
1999 4% Subordinated Convertible Debenture
Due November 5, 2002
No.0005 $ 10,000.00
This Debenture is issued by Celerity Systems, Inc., (The "Company") to
Michael Genta (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 Ten Thousand
dollars ($ 10,000.00) into the common stock of the Company (the "Common Stock")
on or before November 5, 2002 ("Maturity Date") as set forth herein, and upon
the Maturity Date to pay interest thereon from the date of issue at the rate of
four percent (4%) 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 four percent (4%) 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, sixty five percent (65%) 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 Seventy Five cents (.75 )
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.
Furthermore, the Company has on deposit at the May Davis Group free
trading shares in the name of Dr. Fenton Scruggs. In the event the Registration
Statement is not declared effective within a period of ninety (90) days the
Company and Dr. Fenton Scruggs authorize the May Davis Group to deliver these
free trading shares to the Debenture holder as necessary on an appropriate basis
to honor Conversions.
Additionally, the Company will deposit with the May Davis Group free
trading shares currently held by Glenn West. In the event the Registration
Statement is not declared effective within a period of ninety (90)
days the Company and Glenn West authorize the May Davis Group to deliver these
free trading shares to the Debenture holder as necessary on an appropriate basis
to honor Conversions.
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 thirty five (135
%) 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 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, sixty five percent (65%) of
the average closing Bid Price for the five (5) trading days immediately
preceding conversion, or, Seventy Five cents (.75) 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 November 5, 2002 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.
1400 Centerpoint Blvd.
Knoxville, Tennessee 37932.
Attention: President
If to Debenture holder: MICHAEL GENTA
24-19 23rd Street
Astoria, NY 11102
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 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 October 29, 1999.
ATTEST:
________________________________
CELERITY SYSTEMS, INC.
/s/ Kenneth Van Meter
-------------------------------------
Kenneth Van Meter
Title: President/CEO
MICHAEL GENTA
/s/ Michael Genta
-------------------------------------
Debenture Holder