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CELERITY SYSTEMS, INC.
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Maximum Offering: $800,000
This offering consists of not more than $800,000 of Convertible Debentures of
Celerity Systems, Inc.
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SUBSCRIPTION AGREEMENT
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SUBSCRIPTION PROCEDURES
Convertible Debentures of CELERITY SYSTEMS, INC.. (the "Company") are
being offered in an aggregate amount not to exceed $800,000 The Debentures will
be transferable to the extent that any such transfer is permitted by law. This
offering is being made in accordance with the exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended (the "Act") and Rule 506
of Regulation D promulgated under the Act (the "Regulation D Offering").
The Investor Questionnaire is designed to enable the Investor to
demonstrate the minimum legal requirements under federal and state securities
laws to purchase the Debentures. The Signature Page for the Investor
Questionnaire and the Subscription Agreement contain representations relating to
the subscription.
Also included is an Internal Revenue Service Form W-9: "Request for
Taxpayer Identification Number and Certification" for U.S. citizens
or residents of the U.S. for U.S. federal income tax purposes only.
(Foreign investors should consult their tax advisors regarding the
need to complete Internal Revenue Service Form W-9 and any other
forms that may be required).
If you are a foreign person or foreign entity, you may be subject to a
withholding tax equal to 30% of any dividends paid by the Company. In order to
eliminate or reduce such withholding tax you may submit a properly executed
I.R.S. Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United States) or
I.R.S. Form 1001 (Ownership Exemption or Reduced Trade Certificate), claiming
exemption from withholding or eligibility for treaty benefits in the form of a
lower rate of withholding tax on interest or dividends.
Payment must be made by wire transfer as provided below:
Immediately available funds should be sent via wire transfer to the escrow
account stated below and the completed subscription documents should be
forwarded to the Escrow Agent. Your subscription funds will be deposited into a
non-interest bearing escrow account of Xxxxxx X. XxXxxxx, Esq., Escrow Agent, at
First Union Bank of Connecticut, Stamford, Connecticut. In the event of a
termination of the Regulation D Offering or the rejection of this subscription,
all subscription funds will be returned without interest. The wire instructions
are as follows:
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First Union Bank of Connecticut
Executive Office
000 Xxxx Xxxxxx, X. X. Box 700
Stamford, CT 06904-0700
ABA #: 000000000
Swift #: XXXXXX00
Account #: 00000-0000000-0
Xxxx.Xxxx: Xxxxxx X. XxXxxxx, Esq. Trustee Account
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SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
To: Celerity Systems, Inc.
This Subscription Agreement is made between Celerity Systems, Inc.,
("Company" or "Seller") a Delaware corporation, and the undersigned prospective
purchaser ("Purchaser") who is subscribing hereby for the Company's Convertible
Debentures (the "Debentures"). The Debentures being offered will be separately
transferable, to the extent that any such transfer is permitted by law. The
conversion terms of the Debentures are set forth in Section 4. This subscription
is submitted to you in accordance with and subject to the terms and conditions
described in this Subscription Agreement together with any Exhibits thereto,
relating to an offering (the "Offering") of up to $800,000 of Debentures. This
Offering is comprised of an offering of the Debentures to accredited investors
(the "Regulation D Offering") in accordance with the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and
Rule 506 of Regulation D promulgated under the Act ("Regulation D").
1. SUBSCRIPTION.
(a) The undersigned hereby irrevocably subscribes for and agrees to
purchase $________________ of the Company's Debentures. The Debentures shall pay
cumulative interest at the rate of 9% per annum, payable in cash or in freely
trading Common Stock of the Company, at the Company's option, at the time of
each Conversion, with respect to the principal amount of the Debenture being
converted. If paid in Common Stock, the number of shares of the Company's Common
Stock to be received shall be determined by dividing the dollar amount of the
interest by the then applicable Conversion Price, as of the interest payment
date. "Conversion Price" shall mean the lesser of (a) 75% of the 5-day average
closing bid price, as reported by Bloomberg, LP, for the five
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(5) consecutive trading days immediately preceding the Conversion Date (as
hereinafter defined) or (b) four (4) times the 5-day average closing bid price,
as reported by Bloomberg, LP, for the five (5) consecutive trading days
immediately preceding the Closing Date (as hereinafter defined). If the interest
is to be paid in cash, the Company shall make such payment within 5 business
days of the date of conversion. If the interest is to be paid in Common Stock,
said Common Stock shall be delivered to the Purchaser, or per Purchaser's
instructions, within 8 business days of the date of conversion. The Debentures
are subject to automatic conversion at the end of two years from the date of
issuance at which time all Debentures outstanding will be automatically
converted based upon the formula set forth in Section 4(d). The closing shall be
deemed to have occurred on the date the funds are received by the Company or its
designated attorney (the "Closing Date").
(b) Upon receipt by the Company of the requisite payment for the
Debentures being purchased the Debentures so purchased will be forwarded by the
Escrow Agent, Xxxxxx X. XxXxxxx, to the Purchaser and the name of such Purchaser
will be registered on the Debenture transfer books of the Company as the record
owner of such Debentures. The Escrow Agent shall not be liable for any action
taken or omitted by him in good faith and in no event shall the Escrow Agent be
liable or responsible except for the Escrow Agent's own gross negligence or
willful misconduct. The Escrow Agent has made no representations or warranties
in connection with this transaction and has not been involved in the negotiation
of the terms of this Agreement or any matters relative thereto. Seller and
Purchaser each agree to indemnify and hold harmless the Escrow Agent from and
with respect to any suits, claims, actions or liabilities arising in any way out
of this transaction including the obligation to defend any legal action brought
which in any way arises out of or is related to this Agreement except the Escrow
Agent's own gross negligence or willful misconduct. The Escrow Agent is not
rendering securities advice to anyone with respect to this proposed transaction;
nor is the Escrow Agent opining on the compliance of the proposed transaction
under applicable securities law.
2. REPRESENTATIONS AND WARRANTIES.
The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:
(a) The undersigned has been furnished with, and has carefully read the
applicable form of Debenture included herein as Exhibit A and the form of
Registration Rights Agreement annexed hereto as Exhibit B (the "Registration
Rights Agreement"), and is familiar with and understands the terms of the
Offering. With respect to tax and other economic considerations involved in his
investment, the undersigned is not relying on the Company. The undersigned has
carefully considered and has, to the extent the undersigned believes such
5
discussion necessary, discussed with the undersigned's professional legal, tax,
accounting and financial advisors the suitability of an investment in the
Company, by purchasing the Debentures, for the undersigned's particular tax and
financial situation and has determined that the investment being made by the
undersigned is a suitable investment for the undersigned.
(b) The undersigned acknowledges that the Form 10-KSB for the fiscal year
ended December 31, 1997 and Form 10-QSB for the quarters ended March 31, 1998,
June 30, 1998, and September 30, 1998 and the "Risk Factors" in the form annexed
as Exhibit C to this Agreement (the "Disclosure Documents") have been made
available for inspection by the undersigned.
(c) The undersigned has had a reasonable opportunity to ask questions of
and receive answers from a person or persons acting on behalf of the Company
concerning the Offering and all such questions have been answered to the full
satisfaction of the undersigned.
(d) The undersigned will not sell or otherwise transfer the Debentures
without registration under the Act or applicable state securities laws or an
exemption therefrom. The Debentures have not been registered under the Act or
under the securities laws of any states. The Common Stock underlying the
Debentures is to be registered by the Company pursuant to the terms of the
Registration Rights Agreement attached hereto as Exhibit B and incorporated
herein and made a part hereof. Without limiting the right to convert the
Debentures and sell the Common Stock pursuant to the Registration Rights
Agreement, the undersigned represents that the undersigned is purchasing the
Debentures for the undersigned's own account, for investment and not with a view
to resale or distribution except in compliance with the Act. The undersigned has
not offered or sold any portion of the Debentures being acquired nor does the
undersigned have any present intention of dividing the Debentures with others or
of selling, distributing or otherwise disposing of any portion of the Debentures
either currently or after the passage of a fixed or determinable period of time
or upon the occurrence or non-occurrence of any predetermined event or
circumstance in violation of the Act. Except as provided in the Registration
Rights Agreement, the Company has no obligation to register the Common Stock
issuable upon conversion of the Debentures.
(e) The undersigned recognizes that an investment in the Debentures
involves substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has carefully read and considered the
Disclosure Documents.
(f) Legends.
(i) The undersigned acknowledges that each certificate representing
the Debentures unless registered pursuant to the
6
Registration Rights Agreement, shall be stamped or otherwise imprinted
with a legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) IF AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
NOTWITHSTANDING THE FOREGOING, THE COMMON STOCK INTO WHICH THE
SECURITIES EVIDENCED BY THIS CERTIFICATE ARE CONVERTIBLE ARE ALSO
SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN EACH OF THAT CERTAIN
SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT BY AND
BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF EACH IS ON FILE
AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
(ii) The Common Stock issued upon conversion shall contain the
following legend if converted prior to effectiveness of Registration
Statement:
"NO SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER
THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH
SECURITIES IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENT OF SUCH ACT IS THEN IN FACT APPLICABLE TO SUCH
SECURITIES."
(iii) Common Stock issued upon conversion and while the Registration
Statement (pursuant to which shares underlying conversion are registered)
is effective shall not bear any restrictive legend.
(g) If this Subscription Agreement is executed and delivered on
behalf of a corporation, (i) such corporation has the full legal right and power
and
7
all authority and approval required (a) to execute and deliver, or authorize
execution and delivery of, this Subscription Agreement and all other instruments
(including, without limitation, the Registration Rights Agreement) executed and
delivered by or on behalf of such corporation in connection with the purchase of
the Debentures and (b) to purchase and hold the Debentures: (ii) the signature
of the party signing on behalf of such corporation is binding upon such
corporation; and (iii) such corporation has not been formed for the specific
purpose of acquiring the Debentures, unless each beneficial owner of such entity
is qualified as an accredited investor within the meaning of Rule 501(a) of
Regulation D and has submitted information substantiating such individual
qualification.
(h) The undersigned shall indemnify and hold harmless the Company and each
stockholder, executive, employee, representative, affiliate, officer, director,
agent (including Counsel) or control person of the Company, who is or may be a
party or is or may be threatened to be made a party to any threatened, pending
or contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of or arising from any actual or
alleged misrepresentation or misstatement of facts or omission to represent or
state facts made or alleged to have been made by the undersigned to the Company
or omitted or alleged to have been omitted by the undersigned, concerning the
undersigned or the undersigned's subscription for and purchase of the Debentures
or the undersigned's authority to invest or financial position in connection
with the Offering, including, without limitation, any such misrepresentation,
misstatement or omission contained in this Subscription Agreement, the
Questionnaire or any other document submitted by the undersigned, against
losses, liabilities and expenses for which the Company, or any stockholder,
executive, employee, representative, affiliate, officer, director, agent
(including Counsel) or control person of the Company has not otherwise been
reimbursed (including attorneys' fees and disbursements, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by the Company, or
such officer, director stockholder, executive, employee, agent (including
Counsel), representative, affiliate or control person in connection with such
action, suit or proceeding.
(i) The undersigned is not subscribing for the Debentures as a result of,
or pursuant to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting.
(j) The undersigned or the undersigned's representatives, as the case may
be, has such knowledge and experience in financial, tax and business matters so
as to enable the undersigned to utilize the information made available to the
undersigned in connection with the Offering to evaluate the merits and risks of
an investment in the Debentures and to make an informed investment decision with
respect thereto.
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(k) The Purchaser is purchasing the Debentures for its own account for
investment, and not with a view toward the resale or distribution thereof.
Purchaser is neither an underwriter of, nor a dealer in, the Debentures or the
Common Stock issuable upon conversion thereof and is not participating in the
distribution or resale of the Debentures or the Common Stock issuable upon
conversion thereof.
(l) There has never been represented, guaranteed, or warranted to the
undersigned by any broker, the Company, its officers, directors or agents, or
employees or any other person, expressly or by implication (i) the percentage of
profits and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of the Company's operations or an investment in
the Debentures or the Common Stock; and (ii) that the past performance or
experience on the part of the management of the Company, or of any other person,
will in any way result in the profitable operations of the Company.
(m) The Purchaser represents that neither it nor any person controlling,
controlled by or under the common control with it (each, an "affiliate") has
during the 45 days prior to the date hereof engaged in, and agrees that
following the date of this Agreement it will not, and will cause its affiliates
not to engage in any short sales, swaps, purchasing of puts, or other hedging
activities with respect to the Common Stock or any activity that involves the
direct or indirect use of Common Stock to hedge its investment in the Debentures
until the expiration of the two year conversion period of the Debentures.
3. SELLER REPRESENTATIONS.
(a) Concerning the Securities. The issuance, sale and delivery of the
Debentures have been duly authorized by all required corporate action on the
part of Seller, and when issued, sold and delivered in accordance with the terms
hereof and thereof for the consideration expressed herein and therein, will be
duly and validly issued and enforceable in accordance with their terms, subject
to the laws of bankruptcy and creditors' rights generally. At least 200% of the
number of shares of Common Stock issuable upon conversion of all the Debentures
issued pursuant to this Offering on the date of the consummation of the Offering
have been duly and validly reserved for issuance, and upon issuance shall be
duly and validly issued, fully paid, and non-assessable (the "Reserved Shares").
From time to time, the Company shall keep such additional shares of Common Stock
reserved so as to allow for the conversion of all the Debentures issued pursuant
to this offering.
Prior to conversion of all the Debentures, if at anytime the conversion of
all the Debentures outstanding would result in an insufficient number of
authorized shares of Common Stock being available to cover all the conversions,
then in such event, the Company will move to call and hold a shareholder's
meeting within 60 days of such event for the purpose of authorizing additional
shares of Common
9
Stock to facilitate the conversions. In such an event the Company shall
recommend to all shareholders to vote their shares in favor of increasing the
authorized number of shares of Common Stock. Seller represents and warrants that
under no circumstances will it deny or prevent Purchaser's right to convert the
Debentures as permitted under the terms of this Subscription Agreement or the
Registration Rights Agreement. Nothing in this Section shall limit the
obligation of the Company to make the payments set forth in Section 4(h).
Notwithstanding the foregoing, the Company will not issue shares
constituting, together with all other shares issued upon conversion of the
Debentures issued in the Offering, in excess of 19.99% of the outstanding Common
Stock, unless such issuance is approved by the shareholders of the Company.
(b) Authority to Enter Agreement. This Agreement has been duly authorized,
validly executed and delivered on behalf of Seller and is a valid and binding
agreement in accordance with its terms, subject to general principles of equity
and to bankruptcy or other laws affecting the enforcement of creditors' rights
generally.
(c) Non-contravention. The execution and delivery of this Agreement by the
Company, the issuance of the Debentures, and the consummation by the Company of
the other transactions contemplated by this Agreement, and the Debentures do not
and will not conflict with or result in a breach by the Company of any of the
terms or provisions of, or constitute a default under, the (i) certificate of
incorporation or by-laws of the Company, (ii) any indenture, mortgage, deed of
trust, or other material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, other than the
"anti-dilution" provisions of certain Warrants and Warrant agreements made by
the Company (iii) any material existing applicable law, rule, or regulation or
any applicable decree, judgment, or (iv) order of any court, United States
federal or state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or any of its properties or assets,
except such conflict, breach or default which would not have a material adverse
effect on the transactions contemplated herein.
(d) No Default. Except as may be set forth in the Disclosure Documents,
the Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a party or by which it or its property is bound, and neither the execution of,
nor the delivery by the Company of, nor the performance by the Company of its
obligations under, this Agreement or the Debentures, other than the conversion
provision thereof, will conflict with or result in the breach or violation of
any of the terms or provisions of, or constitute a default or result in the
creation or imposition of any lien or charge on any assets or properties of the
Company under, (i) any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or
10
instrument to which the Company is a party or by which it is bound, (ii) any
statute applicable to the Company or its property, (iii) the Certificate of
Incorporation or By-Laws of the Company, (iv) any decree , judgment, order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Company or its properties, or (v) the Company's listing agreement for
its Common Stock.
(e) Pending Litigation. There is (i) no action, suit or proceeding before
or by any court, arbitrator or governmental body now pending or, to the
knowledge of the Company, threatened or contemplated to which the Company or any
of its subsidiaries is or may be a party or to which the business or property of
the Company or any of its subsidiaries is or may be bound or subject, (ii) no
law, statute, rule, regulation, order or ordinance that has been enacted,
adopted or issued by any Governmental Body or adversely affecting the Company or
any of its subsidiaries, (iii) no injunction, restraining order or order of any
nature by a federal, state or foreign court or Governmental Body of competent
jurisdiction to which the Company or any of its subsidiaries is subject issued
that, in the case of clauses (i), (ii) and (iii) above, is reasonably likely,
singly or in the aggregate, to result in a material adverse effect on the
business, condition, (financial or otherwise), operations, earnings,
performance, properties or prospects of the Company, and its subsidiaries taken
as a whole.
(f) Issuance of the Debentures. No action has been taken and no law,
statute, rule, regulation, order or ordinance has been enacted, adopted or
issued by any Governmental Body (other than the rules and regulations
promulgated by the NASD) that prevents the issuance of the Debentures or the
Common Stock issuable upon conversion or exercise thereof; no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the issuance of the
Debentures or the Common Stock issuable upon conversion or exercise thereof or
suspends the sale of the Debentures or the Common Stock issuable upon conversion
thereof in any jurisdiction; and no action, suit or proceeding is pending
against or, to the best knowledge of the Company, threatened against or
affecting, the Company, any of its subsidiaries or, to the best knowledge of the
Company, before any court or arbitrator or any Governmental Body that, if
adversely determined, would prohibit, materially interfere with or adversely
affect the issuance or marketability of the Debentures or the Common Stock
issuable upon conversion or exercise thereof or would be reasonable likely to
render the Subscription Agreement or the Debentures, or any portion thereof,
invalid or unenforceable.
(g) The Company shall indemnify and hold harmless the Purchaser and each
stockholder, executive, employee, representative, affiliate, officer, director
or control person of the Purchaser, who is or may be a party or is or may be
threatened to be made a party to any threatened, pending or contemplated action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of or arising from any actual or alleged misrepresentation or
misstatement of facts or omission to represent or state facts made or alleged to
11
have been made by the Company to the Purchaser or omitted or alleged to have
been omitted by the Company, concerning the Offering, including, without
limitation, any such misrepresentation, misstatement or omission of the Company
contained in this Subscription Agreement, the Questionnaire or any other
document submitted by the Company, against losses, liabilities and expenses for
which the Purchaser, or any stockholder, executive, employee, representative,
affiliate, officer, director or control person of the Purchaser has not
otherwise been reimbursed (including attorneys' fees and disbursements,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Purchaser, or such officer, director, stockholder, executive,
employee, representative, affiliate or control person in connection with such
action, suit or proceeding.
(h) No Change. Other than filings required by the Blue Sky or federal
securities laws and/or NASD rules and regulations, no consent, approval or
authorization of or designation, declaration or filing with any governmental or
other regulatory authority on the part of the Company is required in connection
with the valid execution, delivery and performance of this Agreement. Any
required qualification or notification under applicable federal securities laws
and state Blue Sky laws of the offer, sale and issuance of the Debentures, has
been obtained on or before the date hereof or will have been obtained within the
allowable period thereafter, and a copy thereof will be forwarded to Counsel for
the Purchaser.
(i) True Statements. This Agreement does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements contained herein not misleading in the light of the circumstances
under which such statements are made. There exists no fact or circumstances
which, to the knowledge of the Company, materially and adversely affects the
business, properties or assets, or conditions, financial or otherwise, of the
Company, which has not been set forth in this Subscription Agreement or
disclosed in the Disclosure Documents.
(j) The Purchaser has been advised that the Company has not retained any
independent professionals to review or comment on this Offering or otherwise
protect the interests of the Purchaser. Although the Company has retained its
own counsel, neither such counsel nor any other firm, including Xxxxxx X.
XxXxxxx, Esq., has acted on behalf of the Purchaser, and the Purchaser should
not rely on the Company's legal counsel or Xxxxxx X. XxXxxxx, Esq. with respect
to any matters herein described.
(k) Prior Shares Issued Under Regulation S or Regulation D. In the past
twelve months the Company raised $400,000 and there are no shares of Common
Stock that remain to be issued under any such offering.
12
(l) Current Authorized Shares. As of December 23, 1998 there were
15,000,000 authorized shares of Common Stock of which approximately 5,800,000
shares of Common Stock were deemed issued and outstanding on a fully diluted
basis.
(m) Disclosure Documents. The Disclosure Documents are all the documents
(other than preliminary materials) that the Company has been required to file
with the SEC from March 31, 1998, to the date hereof. As of their respective
dates, and/or dates of amended filings with respect thereto, none of the
Disclosure Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and no material event has occurred since the
Company's initial filing on Form 10-KSB for the fiscal year ended December 31,
1997, which could make any of the disclosures contained therein (as subsequently
amended and restated) misleading. The financial statements of the Company
included in the Disclosure Documents have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the audit adjustments) the
consolidated financial position of the Company and its consolidated subsidiaries
as at the dates thereof and the consolidated results of their operations and
changes in financial position for the periods then ended.
(n) Delivery Instructions. On the Closing Date the Debentures being
purchased hereunder shall be delivered to Xxxxxx X. XxXxxxx, Esq. as Escrow
Agent, who will simultaneously wire to the Company or the Company's counsel the
funds being held in escrow, less a placement fee and escrow fee, at which time
the Escrow Agent shall then have the Debentures delivered to the Purchaser, per
the Purchaser's instructions.
(o) Use of Proceeds. The Company represents that the net proceeds of this
offering will be used for working capital.
(p) The Purchaser has been advised that the Company has entered into an
agreement with May Xxxxx Group, Inc. pursuant to which it will pay a placement
fee of 10% and non-accountable expenses of 2% of the gross proceeds raised in
this Offering and the escrow agent will receive an escrow fee of $7,500, all of
which fees and expenses shall be paid out of the gross proceeds upon closing.
4. TERMS OF CONVERSION.
(a) Debentures. Upon receipt by the Company or its designated attorney of
a facsimile or original of Purchaser's signed Notice of Conversion followed by
receipt of the original Debenture to be converted in whole or in part (within 5
business days as indicated in 4(b) below), the Company shall instruct its
transfer
13
agent to issue one or more Certificates representing that number of shares of
Common Stock into which the Debenture is convertible in accordance with the
provisions regarding conversion set forth in Exhibit D hereto. The Seller's
transfer agent shall act as Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Debenture.
(b) Conversion Procedures. The face amount of each Debenture may be
converted anytime ninety (90) calendar days following the Closing Date. Such
conversion shall be effectuated by surrendering to the Company at its address
for notice pursuant to Article 8 of the Debentures to be converted together with
a facsimile or original of the signed Notice of Conversion which evidences
Purchaser's intention to convert those Debentures indicated. The date on which
the Notice of Conversion is effective ("Conversion Date") shall be deemed to be
the date on which the Purchaser has delivered to the Company at its address for
notice pursuant to Section 10(c) a facsimile or original of the signed Notice of
Conversion. The original Debentures to be converted shall be delivered to the
Company at such address within 3 business days thereafter.
(c) Common Stock to be Issued. Upon the conversion of any Debentures and
upon receipt by the Company of a facsimile or original of Purchaser's signed
Notice of Conversion (see Exhibit D) Seller shall instruct Seller's transfer
agent to issue stock certificates without restrictive legend or stop transfer
instructions, if at that time the Registration Statement is effective (or with
proper restrictive legend if the Registration Statement has not as yet been
declared effective), in the name of Purchaser (or its nominee) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable. The certificates
shall be delivered to the address specified in the Conversion Notice or, if no
such address is specified, to the address set forth in Section 10(c). In no
event shall the Company be liable for non-delivery as a result of Purchaser's
failure to specify a correct or current address. Seller warrants that no
instructions, other than these instructions, have been given or will be given to
the transfer agent and that the Common Stock shall otherwise be freely
transferable on the books and records of Seller, except as may be set forth
herein.
Notwithstanding any other provision contained herein, the parties agree
that in no event shall the Company be required to issue more than 19.99% of the
number of shares of Common Stock outstanding on the date of closing of the
purchase and sale of the Debentures upon the conversion of the Convertible
Debentures, unless the shareholders of the Company approve the issuance of
additional Common Shares or NASDAQ waives the requirement of Market Place Rule
4460(i)(1)(D). 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 is issuable by scheduling a
shareholders meeting as soon as practicable after the Closing Date. For every 30
day period following such 90th day, the Company shall pay 1% liquidated damages
until
14
approval (or waiver) is received. Such damages shall only be payable as long as
more than 19.99% of the outstanding Common Stock is issuable.
The Company acknowledges that its failure to obtain said shareholder
approval within 90 days following the date that more than 19.99% of the Common
Stock is issuable will cause the Purchaser to suffer damages in an amount that
will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision set forth in
this section represents the parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Agreement.
(d) Conversion Rate. Purchaser is entitled, at its option, to convert the
face amount of each Debenture, plus accrued interest on the portion of the
Debenture being converted, anytime beginning ninety (90) calendar days following
the Closing Date, at the Conversion Price as beginning defined in Section 1(a)
hereof. No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded up or
down, as the case may be, to the nearest whole share. The Debentures are subject
to a mandatory, 24 month conversion feature at the end of which all Debentures
outstanding will be automatically converted, upon the terms set forth in this
section ("Mandatory Conversion Date").
(e) Nothing contained in this Subscription Agreement shall be deemed to
establish or require the payment of interest to the Purchaser at a rate in
excess of the maximum rate permitted by governing law. In the event that the
rate of interest required to be paid exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing law and
such excess shall be returned with reasonable promptness by the Purchaser to the
Company.
(f) It shall be the Company's responsibility to take all necessary actions
and to bear all such costs to issue the Certificate for the Common Stock
issuable upon conversion of the Debenture as provided herein, including the
responsibility and cost for delivery of an opinion letter to the transfer agent,
if so required. The person in whose name the certificate of Common Stock is to
be registered shall be treated as a shareholder of record on and after the
conversion date. Upon surrender of any Debentures that are to be converted in
part, the Company shall issue to the Purchaser a new Debenture equal to the
unconverted amount, if so requested in writing by Purchaser.
(g) Within eight (8) business days after receipt of the documentation
referred to above in Section 4(b), the Company shall deliver a certificate in
15
accordance with Section 4(c) for the number of shares of Common Stock issuable
upon the conversion. It shall be the Company's responsibility to take all
necessary actions and to bear all such costs to issue the Common Stock as
provided herein, including the cost for delivery of an opinion letter to the
transfer agent, if so required. The person in whose name the certificate of
Common Stock is to be registered shall be treated as a shareholder of record on
and after the conversion date. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Purchaser a new Debenture
equal to the unconverted amount, if so requested in writing by Purchaser.
In the event the Company does not make delivery of the Common Stock, as
instructed by Purchaser, within 8 business days after delivery of the original
Debenture, then in such event the Company shall pay to Purchaser an amount, in
cash in immediately available funds or shares of Common Stock (calculated on the
basis of the Conversion Rate on such 8th business day) at the rate applicable to
the Conversion Default Payments set forth below until the date of delivery of
the Common Stock.
The Company acknowledges that its failure to deliver the Common Stock
within 8 business days after receipt of the documentation referred to above in
Section 4 (b) will cause the Purchaser to suffer damages in an amount that will
be difficult to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to qualify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Agreement.
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 4(g) is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 4(g) shall not
apply but instead the provisions of Section 4(h) shall apply. In no event shall
the Company be required to make payments under both this Section 4(g) and
Section 4(h) with respect to any failure to issue or deliver certificates
representing Common Stock. The Company shall make any payments incurred under
this Section 4(g) by the fifth (5th) business day of the calendar month
following the calendar month in which such payment was incurred.
(h) The Company shall at all times reserve and have available all Common
Stock necessary to meet conversion of the Debentures by all Purchasers of the
entire amount of Debentures then outstanding. If, at any time Purchaser submits
a Notice of Conversion and the Company does not have sufficient authorized but
unissued shares of Common Stock (or alternative shares of Common Stock as may be
contributed by stockholders) available to effect, in full, a conversion of the
Debentures (a "Conversion Default", the date of
16
such default being referred to herein as the "Conversion Default Date"), the
Company shall issue to the Purchaser all of the shares of Common Stock which are
available, and the Notice of Conversion as to any Debentures requested to be
converted but not converted (the "Unconverted Debentures"), upon Purchaser's
sole option, may be deemed null and void. The Company shall provide notice of
such Conversion Default ("Notice of Conversion Default") to all existing
Purchasers of outstanding Debentures, by facsimile, within three (3) business
day of such default (with the original delivered by overnight or two day
courier), and the Purchaser shall give notice to the Company by facsimile within
five business days of receipt of the original Notice of Conversion Default (with
the original delivered by overnight or two day courier) of its election to
either nullify or confirm the Notice of Conversion.
The Company agrees to pay to all Purchasers of outstanding Debentures
payments for a Conversion Default ("Conversion Default Payments") in the amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Purchaser where N = the
number of days from the Conversion Default Date to the date (the "Authorization
Date") that the Company authorizes a sufficient number of shares of Common Stock
to effect conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Purchaser of outstanding Debentures that
additional shares of Common Stock have been authorized, the Authorization Date
and the amount of Purchaser's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in cash or at the Company's option, in Common
Stock (at the Conversion Rate on the date of the Conversion Default) on or prior
to the fifth business day of the calendar month following the calendar month in
which the Conversion Default occurred and any subsequent calendar month in which
the Conversion Default is continuing.
The Company acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Purchaser to suffer damages in an amount that
will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision set forth in
this section represents the parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Agreement.
(i) Redemption: The Company reserves the right, at its sole option, to
call a mandatory redemption of any percentage of the balance on the Debentures
as follows: In the event the Company exercises such right of redemption up to
and including the 90th calendar day following the Closing Date, it shall pay the
Purchaser, in U.S. currency One Hundred Fifteen (115%) of the face amount of the
Debentures to be redeemed, plus accrued interest. In the event the Company
17
exercises such right of redemption at anytime during the 91st through the 180th
calendar day following the Closing Date it shall pay the Purchaser, in U.S.
currency One Hundred Twenty (120%) of the face amount of the Debentures to be
redeemed, plus accrued interest. In the event the Company exercises such right
of redemption at anytime during the 181st calendar day following the Closing
Date through the expiration of the two year conversion period it shall pay the
Purchaser, in U.S. currency One Hundred Twenty-five (125%) of the face amount of
the Debentures to be redeemed, plus accrued interest. The date by which the
Debentures must be delivered to the Escrow Agent shall not be later than 5
business days following the date the Company notifies the Purchaser by facsimile
of the redemption. The Company shall give the Purchaser at least 5 business
day's notice of its intent to redeem.
5. LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP.
Notwithstanding the provisions hereof or of the Debenture(s), shall the
Purchaser be entitled to convert any Debentures to the extent that, after such
conversion, the sum of (1) the number of shares of Common Stock beneficially
owned by the Purchaser and its affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the unconverted
portion of the Debentures), and (2) the number of shares of Common Stock
issuable upon the conversion of the Debentures with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Purchaser and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Purchaser upon such conversion). For purposes of the proviso to
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such proviso.
The Purchaser further agrees that if the Purchaser transfers or assigns any of
the Debentures to a party who or which would not be considered such an
affiliate, such assignment shall be made subject to the transferee's or
assignee's specific agreement to be bound by the provisions of this Section as
if such transferee or assignee were a signatory to the Subscription Agreement.
6. DELIVERY INSTRUCTIONS.
Prior to or on the Closing Date the Company shall deliver to the Escrow
Agent an opinion letter signed by counsel for the Company and a copy of the
Board Resolution authorizing this Offering. Also, prior to or on the Closing
Date the Company shall deliver to the Escrow Agent a signed Registration Rights
Agreement in the form attached hereto as Exhibit B. The Debentures being
purchased hereunder shall be delivered to Xxxxxx X. XxXxxxx, Esq. as Escrow
Agent, who will hold them in escrow until funds have been wired to the Company
or its Counsel at which time the Escrow Agent shall then have the Debentures
delivered to the Purchaser, per the Purchaser's instructions.
18
7. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the Company as
follows:
FOR ALL SUBSCRIBERS:
(a) This Subscription may be rejected, in whole or in part, by the Company
in its sole and absolute discretion at any time before the date set for closing
unless the Company has given notice of acceptance of the undersigned's
subscription by signing this Subscription Agreement.
(b) No U.S. federal or state agency or any agency of any other
jurisdiction has made any finding or determination as to the fairness of the
terms of the Offering for investment nor any recommendation or endorsement of
the Debentures.
(c) The representations, warranties and agreements of the undersigned and
the Company contained herein and in any other writing delivered in connection
with the transactions contemplated hereby shall be true and correct in all
material respects on and as of the date of the sale of the Debentures, and as of
the date of the conversion and exercise thereof, as if made on and as of such
date and shall survive the execution and delivery of this Subscription Agreement
and the purchase of the Debentures.
(d) IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE DEBENTURES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF ANY
MEMORANDUM OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(e) The Regulation D Offering is intended to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the undersigned
herein and in the Questionnaire.
(f) It is understood that in order not to jeopardize the Offering's exempt
status under Section 4(2) of the Securities Act and Regulation D, any transferee
may, at a minimum, be required to fulfill the investor suitability requirements
thereunder.
19
(g) NEITHER THE DEBENTURES NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF MAY BE TRANSFERRED, RESOLD OR OTHERWISE DISPOSED OF EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, AN
EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
(h) NASAA UNIFORM LEGEND
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933 AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
9. Litigation.
(a) Forum Selection and Consent to Jurisdiction. Any litigation based
thereon, or arising out of, under, or in connection with, this agreement or any
course of conduct, course of dealing, statements (whether oral or written) or
actions of the Company or Holder shall be brought and maintained exclusively in
the courts of the State of New York located in New York City. The Company hereby
expressly and irrevocably submits to the jurisdiction of the state and federal
courts of the State of New York located in New York County for the purpose of
any such litigation as set forth above and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with such litigation. The Company
further irrevocably consents to the service of process by registered mail,
postage prepaid, or by personal service within or without the State of New York.
The Company hereby expressly and irrevocably waives, to the fullest extent
permitted by law, any objection which it may have or hereafter
20
may have to the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought in any
inconvenient forum. To the extent that the Company has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, the Company
hereby irrevocably waives such immunity in respect of its obligations under this
agreement and the other loan documents.
(b) Waiver of Jury Trial. The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the Company.
The Company acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Holder entering into this agreement.
10. MISCELLANEOUS.
(a) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(b) Neither this Subscription Agreement nor any provision hereof shall be
waived, modified, changed, discharged, terminated, revoked or canceled, except
by an instrument in writing signed by the party effecting the same against whom
any change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed: (i) if to the
Company, at Celerity Systems, Inc., 0000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, Attn: Xxxxxxx X. Xxxxxxxx, (p) 000-000-0000, (f) 000-000-0000
with a copy by facsimile and mail to Xxxxxxx X. Xxxx, Esq., Squadron, Xxxxxxxx,
Xxxxxxx & Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 (p) 000-000-0000
(f) 000-000-0000 and (ii) if to the undersigned, at the address for
correspondence set forth in the Questionnaire, or at such other address as may
have been specified by written notice given in accordance with this paragraph
10(c).
(d) This Subscription Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of the State of Delaware, as such
laws are applied by Delaware courts to agreements entered into, and to be
performed in, Delaware by and between residents of Delaware, and shall be
binding upon the undersigned, the undersigned's heirs, estate, legal
21
representatives, successors and assigns and shall inure to the benefit of the
Company, its successors and assigns. If any provision of this Subscription
Agreement is invalid or unenforceable under any applicable statue or rule of
law, then such provisions shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof that may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
(e) This Subscription Agreement, together with Exhibits A, B, C and D
attached hereto and made a part hereof, constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by both parties hereto. In the event of any conflict
between the terms of this Agreement and the Registration Rights Agreement or the
Debenture, as the case may be, the terms of such other documents shall govern.
An executed facsimile copy of the Subscription Agreement shall be effective as
an original.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
22
CELERITY SYSTEMS, INC.
CORPORATION QUESTIONNAIRE
Investor Name: _______________
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned CORPORATION'S Subscription to
purchase the Debentures described in the Subscription Agreement may be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned CORPORATION understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Debentures
is exempt from registration under the Securities Act of 1933, as amended.
Further, the undersigned CORPORATION understands that the offering is required
to be reported to the Securities and Exchange Commission, NASDAQ and to various
state securities and "blue sky" regulators.
IN ADDITION TO SIGNING THE SIGNATURE PAGE, THE UNDERSIGNED CORPORATION
MUST COMPLETE FORM W-9 ATTACHED HERETO.
I. PLEASE CHECK EACH OF THE STATEMENTS BELOW THAT APPLIES TO THE CORPORATION.
|_|
1. The undersigned CORPORATION: (a) has total assets in excess of
$5,000,000; (b) was not formed for the specific purpose of acquiring
the Debentures and (c) has its principal place of business in
___________.
|_|
2. Each of the shareholders of the undersigned CORPORATION is able
to certify that such shareholder meets at least one of the following
three conditions:
(a) the shareholder is a natural person whose individual net
worth* or joint net worth with his or her spouse exceeds
$1,000,000; or
(b) the shareholder is a natural person who had an
individual income* in excess of $200,000 in each of 1996
and 1997 and who reasonably expects an individual income
in excess of $200,000 in 1998; or
23
(c) Each of the shareholders of the undersigned CORPORATION
is able to certify that such shareholder is a natural
person who, together with his or her spouse, has had a
joint income in excess of $300,000 in each of 1996 and
1997 and who reasonably expects a joint income in excess
of $300,000 during 1998; and the undersigned CORPORATION
has its principal place of business in ______________.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, an investor should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Xxxxx retirement plan,
alimony payments and any amount by which income from long-term capital gains has
been reduced in arriving at adjusted gross income.
|_|
3. The undersigned CORPORATION is:
(a) a bank as defined in Section 3(a)(2) of the Securities
Act; or
(b) a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; or
(c) a broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934; or
(d) an insurance company as defined in Section 2(13) of the
Securities Act; or
(e) An investment company registered under the Investment
Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of the Investment Company Act of
1940; or
(f) a small business investment company licensed by the U.S.
Small Business Administration under Section 301 (c) or (d) of
the Small Business Investment Act of 1958; or
(g) a private business development company as defined in
Section 202(a) (22) of the Investment Advisors Act of 1940.
24
II. OTHER CERTIFICATIONS.
By signing the Signature Page, the undersigned certifies the following:
(a) That the CORPORATION'S purchase of the Debentures will be solely for
the CORPORATION'S own account and not for the account of any other person
or entity; and
(b) that the CORPORATION'S name, address of principal place of business,
place of incorporation and taxpayer identification number as set forth in
this Questionnaire are true, correct and complete.
III. GENERAL INFORMATION
(a) PROSPECTIVE PURCHASER (THE CORPORATION)
Name:
Principal Place of Business: __________________________________________________
________________________________________________________________________________
Address for Correspondence (if different): SAME
______________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number:_______________________________________________________________
(Area Code) Number)
Jurisdiction of Incorporation:__________________________________________________
Date of Formation:______________________________________________________________
Taypayer Identification Number:_________________________________________________
Number of Shareholders:_________________________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
CORPORATION.
Name:___________________________________________________________________________
Position or Title:______________________________________________________________
25
CELERITY SYSTEMS, INC.
CORPORATION SIGNATURE PAGE
Your signature on this Corporation Signature Page evidences the agreement
by the Purchaser to be bound by the Questionnaire and the Subscription
Agreement.
1. The undersigned hereby represents that (a) the information contained in
the Questionnaire is complete and accurate and (b) the Purchaser will notify
CELERITY SYSTEMS, INC. immediately if any material change in any of the
information occurs prior to the acceptance of the undersigned Purchaser's
subscription and will promptly send CELERITY SYSTEMS, INC. written confirmation
of such change.
2. The undersigned officer of the Purchaser hereby certifies that he has
read and understands this Subscription Agreement.
3. The undersigned officer of the Purchaser hereby represents and warrants
that he has been duly authorized by all requisite action on the part of the
Corporation to acquire the Debentures and sign this Subscription Agreement on
behalf of _______________ and, further, that ____________________ has all
requisite authority to purchase the Debentures and enter into this Subscription
Agreement.
___________________________________ ________________________________________
Amount of Debentures subscribed for Date
________________________________________
(Purchaser)
By: ________________________________________
(Signature)
Name: ______________________________________
(Please Type or Print)
Title: _____________________________________
(Please Type or Print)
THE DEBENTURES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT.
26
COMPANY ACCEPTANCE PAGE
This Subscription Agreement accepted
and agreed to this ____ day of __________, 1998
CELERITY SYSTEMS, INC.
BY______________________________________
, its CEO duly authorized
27
Exhibit D
NOTICE OF CONVERSION
(To be Executed by the Registered owner in order to Convert
the Debentures
The undersigned hereby irrevocably elects, as of ______________, 199_ to
convert $__________ of Convertible Debentures into Common Stock of CELERITY
SYSTEMS, INC. (the "Company") according to the conditions set forth in the
Subscription Agreement dated December ____, 1998.
Date of Conversion______________________________________________________________
Applicable Conversion Price_____________________________________________________
Number of Shares Issuable upon this conversion__________________________________
Signature_______________________________________________________________________
[Name]
Address_________________________________________________________________________
________________________________________________________________________________
Phone______________________ Fax_______________________________________________
28