Exhibit 99.7
DEBENTURE
CELERITY SYSTEMS, INC.
2000 8% Subordinated Convertible Debenture
Due February 17, 2003
No.___________
$_____________
This Debenture is issued by Celerity Systems, Inc., (The "Company") to
____________ (the "Debenture holder") pursuant to exemptions from registration
under the U.S. Securities Act of 1933.
ARTICLE I
1.01 Principal and Interest. The Company, for value received hereby
confers the right upon Debenture holder to convert the sum of ________________
dollars ($______) into the common stock of the Company (the "Common Stock") on
or before February 17, 2003 ("Maturity Date") as set forth herein, and upon the
Maturity Date to pay interest thereon from the date of issue at the rate of
eight percent (8%) per annum. The Company shall pay such interest on the
outstanding principal amount of the Debenture from the date of issue until the
Maturity Date or conversion; the Company shall pay interest only upon the
outstanding balance of the Debenture at the rate of eight percent (8%) per
annum. Interest will be computed based on a 365 day year.
1.02 Reservation of Common Stock. The Company shall reserve and keep
available out of its authorized, but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Debenture, such number of shares
of Common Stock as shall from time to time be sufficient to effect such
conversion, at the Debenture holders option, either, seventy five percent (75%)
of the Bid Price, (Bid Price shall mean on any date the closing bid price (as
reported by Bloomberg L.P.) of the Common Stock on the Principal Market, or if
the Common Stock is not traded on a Principal Market, the highest reported bid
price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc., for the five (5) trading days immediately preceding
such date of the Common Stock, or, at a fixed price of One Dollar and Fifty
cents ($1.50 ) per share.
The Company shall use its best efforts to file a Registration Statement
within thirty (30) days form the Closing Date, furthermore, the Company shall
use its best efforts to assure that the Registration Statement is effective
within ninety (90) days of the Closing Date. In the event that the Registration
Statement is not effective within ninety (90) days the Company will pay damages
to the Debenture holder in the amount of two percent (2%) a month payable in
cash or stock at the Company's option.
1.03 Right of Redemption. The Company shall have the right to redeem in
part or in full any outstanding Debentures at one hundred and twenty five (125
%) percent of the Principal plus accrued interest.
1.04 Interest Payments. The interest so payable will be paid at the time
of Conversion to the person in whose name this Debenture is registered. At the
time such interest is payable, the Company, in its sole discretion, may elect to
pay interest in cash (via wire transfer or certified funds) or in the form of
Common Stock. If paid in the form of Common Stock, the amount of stock to be
issued will be calculated as follows: the value of the stock shall be the Bid
Price on: (i) the date the interest payment is due; or (ii) if the interest
payment is not made when due, the date the interest payment is made. A number of
shares of Common Stock with a value equal to the amount of interest due shall be
issued. No fractional shares will be issued; therefore, in the event that the
value of the Common Stock per share does not equal the total interest due, the
Company will pay the balance in cash.
1.05 Paying Agent and Registrar. Initially, the Company will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar, or
Company-registrar without notice. The Company may act in any such capacity.
1.06 Subordinated Nature of Debenture. This Debenture and all payments
hereon, including principal or interest, shall be subordinate and junior in
right of payment to all Company Debt (as defined hereinafter), but only to the
extent set forth as follows:
(a) upon the maturity of any Company Debt, or any installment thereof then
due by lapse of time, acceleration or otherwise, all Company Debt then due shall
first be paid in full (or provision made for payment in full thereof) before any
additional payment on account of principal or interest is made on this
Debenture; and
(b) in the event of any insolvency or bankruptcy proceedings affecting the
Company, or any receivership, liquidation, reorganization or other similar
proceedings affecting the Company, and, in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Company, whether
or not involving insolvency or bankruptcy, then the holders of Company Debt
shall be entitled to receive payment in full of all principal of and interest on
all Company Debt before the holder of this Debenture is entitled to receive any
payment on account of principal, interest or premium on this Debenture.
The provisions of the preceding paragraphs are solely for the purpose of
defining the relative rights of the holders of Company Debt on the one hand and
the holder of this Debenture on the other hand and nothing herein shall impair,
as between the Company and the holder of this Debenture, the obligation of the
Company, which is unconditional and absolute, to pay the holder of this
Debenture the principal, interest and premiums hereon in accordance with its
terms, nor shall anything herein prevent the holder of this Debenture from
exercising all remedies otherwise permitted by law or hereunder upon
default hereunder, subject to the relative rights of the holders of Company Debt
expressed in the preceding paragraphs.
For the purpose of this Notice, the term "Company Debt" shall mean and
include current bank debt and all indebtedness acquired by the Company
subsequent to the date hereof, other than indebtedness to any officer, director
or other person who has beneficial ownership of ten percent (10%) or more of the
Company's issued and outstanding shares of Common Stock.
ARTICLE II
2.01 Amendments and Waiver of Default. The Debenture may be amended with
the consent of the Debenture holder. Without the consent of the Debenture
holder, the Debenture may be amended to cure any ambiguity, defect or
inconsistency, to provide for assumption of the Company obligations to the
Debenture holder or to make any change that does not adversely affect the rights
of the Debenture holder.
ARTICLE III
3.01 Events of Default. An Event of Default is defined as follows: failure
by the Company to pay amounts due hereunder within two (2) days of the Maturity
Date failure by the Company to advise its transfer agent to issue Common Stock
to the Debenture holder within two (2) business days of the Company's receipt of
the Notice of Conversion from Debenture holder; or failure by the Company for
thirty (30) days after notice to it to comply with any of its other agreements
in the Debenture; and events of bankruptcy or insolvency. The Debenture holder
may not enforce the Debenture except as provided herein.
3.02 Successor Corporation. If a successor corporation assumes all the
obligations of this predecessor, Celerity Systems, Inc., the predecessor
corporation will be released from those obligations under the Debenture.
3.03 Waiver and Release. A director, officer, employee or stockholders, as
such, of the Company shall not have any liability for any obligations of the
Company under the Debenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. The Debenture holder, by accepting
a Debenture waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Debenture.
ARTICLE IV
4.01 Rights and Terms of Conversion. This Debenture, in whole or in part,
may be converted at any time beginning ninety (90) days following the date of
closing, into shares of Common Stock at a price equal to the following
Conversion: at the Debenture holders option, either, seventy five percent (75%)
of the average closing Bid
Price for the five (5) trading days immediately preceding conversion, or, One
Dollar and Fifty cents ($1.50) per share.
In lieu of any fractional share to which the Debenture holder would
otherwise be entitled, the Company will pay the balance in cash.
4.02 Reissuance of Debenture. When the Debenture holder elects to convert
a part of the Debenture, then the Company shall reissue a new Debenture in the
same form as this Debenture to reflect the new principal amount.
4.03 Termination of Conversion Rights. The Debenture holder's right to
convert the Debenture into the Common Stock in accordance with paragraph 4.01
shall terminate on February 17, 2003 and shall be automatically converted on
that date in accordance with the formula set forth in Section 4.01 hereof, and
the appropriate shares of common stock and amount of interest shall be issued to
the Debenture holder.
4.04. Notwithstanding any other provision contained herein, the parties
agree that in no event shall the Company be required to issue (i) an aggregate
number of shares constituting more than 19.99% of the number of shares of Common
Stock outstanding on the date of such issuance or (ii) a number of shares that
would result in a change of control of the Company, unless the shareholders of
the Company approve such issuance of additional Common Shares or NASDAQ waives
the applicable requirements of Market Place Rule 4310(H)(i). The Company agrees
to use commercially reasonable efforts to obtain such approval or waiver on or
prior to the 90th day following the date that more than 19.99% of the Common
Stock would otherwise be issuable pursuant to outstanding Debentures or that an
issuance would otherwise result in a change of control by scheduling a
shareholders meeting as soon as practicable after such date.
ARTICLE V
5.01 Notice. Notices regarding this Debenture shall be sent to the parties
at the following addresses, unless a party notifies the other parties, in
writing, of a change of address:
If to the Company: CELERITY SYSTEMS, INC.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000.
Attention: President
If to Debenture holder: ___________________________
5.02 Governing Law. This Debenture shall be deemed to be made under and
shall be construed in accordance with the laws of the Commonwealth of Delaware
without giving effect to the principals of conflict of laws thereof. Each of the
parties
consents to the jurisdiction of the U.S. District Court sitting in the Southern
District of the State of New York or the state courts of the State of New York
sitting in Manhattan in connection with any dispute arising under this Debenture
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the bringing of any
such proceeding in such jurisdictions.
5.03 Severability. The invalidity of any of the provisions of this
Debenture shall not invalidate or otherwise affect any of the other provisions
of this Debenture, which shall remain in full force and effect.
5.04 Entire Agreement and Amendments. This Debenture represents the entire
agreement between the parties hereto with respect to the subject matter hereof
and there are no representations, warranties or commitments, except as set forth
herein. This Debenture may be amended only by an instrument in writing executed
by the parties hereto.
5.05 Counterparts. This Debenture may be executed in multiple
counterparts, each of which shall be an original, but all of which shall be
deemed to constitute on instrument.
5.06 Assignment. Neither this Debenture nor any rights of the Investor or
the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Debenture shall insure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Debentures purchased or acquired by the Investor hereunder with respect to the
Common Stock held by such person, and (b) upon the prior written consent of the
Company, which consent shall not unreasonably be withheld, the Investor's
interest in this Debenture may be assigned at any time, in whole or in part, to
any other person or entity (including any affiliate of the Investor).
IN WITNESS WHEREOF, with the intent to be legally bound hereby, the
parties hereto have executed this Debenture as of February 17, 2000.
ATTEST:
____________________________
CELERITY SYSTEMS, INC.
________________________________
Xxxxxxx Xxx Xxxxx
Title: President/CEO
____________________________
________________________________
Debenture Holder
