EXHIBIT 99.1
PROMISSORY NOTE
---------------
August 29, 2005
Jersey City, New Jersey $2,500,000
FOR VALUE RECEIVED, the undersigned, ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Buyer")
promises to pay CORNELL CAPITAL PARTNERS, LP (the "Lender") at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ or other address as the Lender
shall specify in writing, the principal sum of Two Million Five Hundred Thousand
Dollars ($2,500,000) (the "Principal Amount") and interest at the annual rate of
two percent (2%) on the unpaid balance pursuant to the following terms:
Contemporaneously with the execution and delivery of this Note, the Buyer
and the Lender are entering into a Stock Purchase Agreement (the "Stock Purchase
Agreement") and the Pledge and Escrow Agreement (the "Pledge Agreement")
(collectively, this Note, Stock Purchase Agreement and the Pledge Agreement are
referred to as the "Transaction Documents").
1. Issuance of Note. Pursuant to the Stock Purchase Agreement, the Lender is
selling and the Buyer is purchasing One Billion Two Hundred Fifty Million
(1,250,000,000) shares (the "Celerity Stock") of common stock of Celerity
Systems, Inc., a Delaware corporation ("Celerity"). The Buyer is issuing this
Note in consideration for the sale of shares of the Celerity Stock.
2. Principal and Interest. For value received, the Buyer hereby promises to pay
to the order of the Lender on March 1, 2007 (the "Maturity Date") in lawful
money of the United States of America and in immediately available funds the
principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000),
together with interest on the unpaid principal of this Note.
3. The Lender's Recourse. The Lender's recourse under this Note against the
Buyer shall be limited to Six Hundred Twenty Five Thousand Dollars ($625,000).
This provision shall not prevent or impair the Lender from exercising its rights
under the Pledge Agreement against the collateral pledged thereunder and
applying any proceeds therefrom against all amounts owed hereunder, including
without limitation principal and interest.
4. Conditions to the Lender's Obligations to Close. The obligation of the Lender
hereunder to fund the Closing is subject to the satisfaction, at or before the
Closing, of each of the following conditions, provided that these conditions are
for the Lender's sole benefit and may be waived by the Lender at any time in its
sole discretion:
(a) The Buyer shall have executed this Note, the Stock Purchase
Agreement and the Pledge Agreement, and delivered the same to the
Lender.
(b) The representations and warranties set forth in Stock Purchase
Agreement of the Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing as though
made at that time and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Note, the Stock Purchase Agreement or
the Security Agreement to be performed, satisfied or complied with
by the Buyer at or prior to the Closing.
5. Waiver and Consent. To the fullest extent permitted by law and except as
otherwise provided herein, the Buyer waives demand, presentment, protest, notice
of dishonor, suit against or joinder of any other person, and all other
requirements necessary to charge or hold the Buyer liable with respect to this
Note.
6. Costs, Indemnities and Expenses. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees, court costs and all expenses even if not
taxable as court costs (including, without limitation, all such fees, costs and
expenses incident to appeals), incurred in that action or proceeding, in
addition to any other relief to which such party or parties may be entitled. The
Buyer agrees to pay any documentary stamp taxes, intangible taxes or other taxes
which may now or hereafter apply to this Note or any payment made in respect of
this Note, and the Buyer agrees to indemnify and hold the Lender harmless from
and against any liability, costs, attorneys' fees, penalties, interest or
expenses relating to any such taxes, as and when the same may be incurred.
7. Event of Default. An "Event of Default" shall be deemed to have occurred upon
the occurrence of any of the following: (i) the Buyer should fail for any reason
or for no reason to make any payment of the interest or principal pursuant to
this Note within ten (10) days of the date due as prescribed herein; (ii) the
Buyer shall fail to observe or perform any other covenant, agreement or warranty
contained in, or otherwise commit any material breach or default of any material
provision of this Note or any of the Transaction Documents (as defined herein),
which is not cured within ten (10) days notice of the default; (iii) the Buyer
shall commence, or there shall be commenced against the Buyer under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Buyer commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Buyer or there is commenced against the
Buyer any such bankruptcy, insolvency or other proceeding which remains
undismissed for a period of 61 days; or the Buyer is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Buyer suffers any appointment of any custodian,
private or court appointed receiver or the like for it or any substantial part
of its property which continues undischarged or unstayed for a period of sixty
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one (61) days; or the Buyer makes a general assignment for the benefit of
creditors; or the Buyer shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Buyer shall call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or (iv) a breach by the
Buyer of its obligations, or an event of default, under any of the Transaction
Documents, or any other agreements entered into between the Buyer and the Lender
which is not cured by any applicable cure period set forth therein. Upon an
Event of Default (as defined above), the entire principal balance and accrued
interest outstanding under this Note, and all other obligations of the Buyer
under this Note, shall be immediately due and payable without any action on the
part of the Lender, interest shall accrue on the unpaid principal balance at
twenty four percent (24%) or the highest rate permitted by applicable law, if
lower, and the Lender shall be entitled to seek and institute any and all
remedies available to it.
8. Maximum Interest Rate. In no event shall any agreed to or actual interest
charged, reserved or taken by the Lender as consideration for this Note exceed
the limits imposed by New Jersey law. In the event that the interest provisions
of this Note shall result at any time or for any reason in an effective rate of
interest that exceeds the maximum interest rate permitted by applicable law,
then without further agreement or notice the obligation to be fulfilled shall be
automatically reduced to such limit and all sums received by the Lender in
excess of those lawfully collectible as interest shall be applied against the
principal of this Note immediately upon the Lender's receipt thereof, with the
same force and effect as though the Buyer had specifically designated such extra
sums to be so applied to principal and the Lender had agreed to accept such
extra payment(s) as a premium-free prepayment or prepayments.
9. Secured Nature of the Note. This Note is secured by the Pledge Agreement.
10. Cancellation of Note. Upon the repayment by the Buyer of all of its
obligations hereunder to the Lender, including, without limitation, the
principal amount of this Note, plus accrued but unpaid interest, the
indebtedness evidenced hereby shall be deemed canceled and paid in full. Except
as otherwise required by law or by the provisions of this Note, payments
received by the Lender hereunder shall be applied first against expenses and
indemnities, next against interest accrued on this Note, and next in reduction
of the outstanding principal balance of this Note.
11. Severability. If any provision of this Note is, for any reason, invalid or
unenforceable, the remaining provisions of this Note will nevertheless be valid
and enforceable and will remain in full force and effect. Any provision of this
Note that is held invalid or unenforceable by a court of competent jurisdiction
will be deemed modified to the extent necessary to make it valid and enforceable
and as so modified will remain in full force and effect.
12. Amendment and Waiver. This Note may be amended, or any provision of this
Note may be waived, provided that any such amendment or waiver will be binding
on a party hereto only if such amendment or waiver is set forth in a writing
executed by the parties hereto. The waiver by any such party hereto of a breach
of any provision of this Note shall not operate or be construed as a waiver of
any other breach.
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13. Successors. Except as otherwise provided herein, this Note shall bind and
inure to the benefit of and be enforceable by the parties hereto and their
permitted successors and assigns.
14. Assignment. This Note shall not be directly or indirectly assignable or
delegable by the Buyer. The Lender may assign this Note as long as such
assignment complies with the Securities Act of 1933, as amended.
15. No Strict Construction. The language used in this Note will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party.
16. Further Assurances. Each party hereto will execute all documents and take
such other actions as the other party may reasonably request in order to
consummate the transactions provided for herein and to accomplish the purposes
of this Note.
17. Notices, Consents, etc. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to Buyer: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) trading days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
18. Remedies, Other Obligations, Breaches and Injunctive Relief. The Lender's
remedies provided in this Note shall be cumulative and in addition to all other
remedies available to the Lender under this Note, at law or in equity (including
a decree of specific performance and/or other injunctive relief), no remedy of
the Lender contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit the
Lender's right to pursue actual damages for any failure by the Buyer to comply
with the terms of this Note. No remedy conferred under this Note upon the Lender
is intended to be exclusive of any other remedy available to the Lender,
pursuant to the terms of this Note or otherwise. No single or partial exercise
by the Lender of any right, power or remedy hereunder shall preclude any other
or further exercise thereof. The failure of the Lender to exercise any right or
remedy under this Note or otherwise, or delay in exercising such right or
remedy, shall not operate as a waiver thereof. Every right and remedy of the
Lender under any document executed in connection with this transaction may be
exercised from time to time and as often as may be deemed expedient by the
Lender. The Buyer acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Lender and that the remedy at law for any
such breach may be inadequate. The Buyer therefore agrees that, in the event of
any such breach or threatened breach, the Lender shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach, and
specific performance without the necessity of showing economic loss and without
any bond or other security being required.
19. Governing Law; Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New Jersey, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
Jersey or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New Jersey. Each party hereby
irrevocably submits to the exclusive jurisdiction of the Superior Court of the
State of New Jersey sitting in ▇▇▇▇▇▇ County, New Jersey and the United States
Federal District Court for the District of New Jersey sitting in Newark, New
Jersey, for the adjudication of any dispute hereunder or in connection herewith
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or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
20. No Inconsistent Agreements. None of the parties hereto will hereafter enter
into any agreement, which is inconsistent with the rights granted to the parties
in this Note.
21. Third Parties. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
to this Note and their respective permitted successor and assigns, any rights or
remedies under or by reason of this Note.
22. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR THE LENDER TO LOAN TO THE
BUYER THE MONIES HEREUNDER, THE BUYER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL
OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.
23. Entire Agreement. This Note (including any recitals hereto) set forth the
entire understanding of the parties with respect to the subject matter hereof,
and shall not be modified or affected by any offer, proposal, statement or
representation, oral or written, made by or for any party in connection with the
negotiation of the terms hereof, and may be modified only by instruments signed
by all of the parties hereto.
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IN WITNESS WHEREOF, this Promissory Note is executed by the undersigned as of
the date hereof.
CORNELL CAPITAL PARTNERS, LP.
By: Yorkville Advisors, LLC
Its: General Partner
By:
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Name: ▇▇▇▇ ▇▇▇▇▇▇
Its: Portfolio Manager
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Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇