SHARE ESCROW AGREEMENT
Exhibit
10.6
THIS
SHARE ESCROW AGREEMENT
(the
“Agreement”)
is
made and entered into as of April 10, 2006 (the “Effective
Date”)
by and
among ASTRIS
ENERGI, INC.,
a
corporation organized under the laws of the province of Ontario, Canada (the
“Company”),
CORNELL
CAPITAL PARTNERS, LP,
(“Investor”), and XXXXX
XXXXXXXX,
ESQ.,
as
escrow agent (“Escrow
Agent”).
RECITALS:
WHEREAS,
in
order
to secure the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all of the Company’s obligations (the
“Obligations”)
to the
Investor or any successor to the Investor under this
Agreement, the Securities Purchase Agreement of even date herewith between
the
Company and the Investor (the “Securities
Purchase Agreement”),
the
Convertible Debentures (the “Convertible
Debentures”)
issued
or to be issued by the Company to the Investor, either now or in the future,
up
to a total of One Million Five Hundred Thousand Dollars ($1,500,000) of
principal, plus any interest, costs, fees, and other amounts owed to the
Investor thereunder, the Security Agreement of even date herewith between the
Company and the Investor (the “Security
Agreement”),
and
all other contracts entered into between the parties hereto (collectively,
the
“Transaction
Documents”),
the
Company has agreed to deliver an irrevocable instruction letter to the Company’s
transfer agent in the form attached hereto as Exhibit “A” (the “Instruction
Letter”)
which
authorizes and instructs the company’s transfer agent to issue 34,500,000 shares
of the Company’s common stock (the “Escrow
Shares”).
NOW,
THEREFORE,
in
consideration of the mutual covenants, agreements, warranties, and
representations herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
TERMS
AND CONDITIONS
1. Definitions.
The
following terms shall have the following meanings when used herein:
A. “Event
of
Default” shall be deemed to have occurred under this Agreement upon an Event of
Default under the Transaction Documents.
B. “Written
Direction” shall mean a written direction executed by the Investor directing
Escrow Agent to deliver the Instruction Letter to the Transfer Agent or refrain
from taking any action pursuant to this Agreement.
C. “Escrow
Period” shall begin on the date hereof and shall terminate upon the earlier to
occur of the following dates:
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(i) The
date
upon which the Convertible Debentures are fully converted into shares of the
Company’s common stock;
(ii) The
date
upon which the full payment of all amounts due to the Investor under the
Convertible Debentures is made; or
(iii) The
date
upon which the Company redeems the full amounts outstanding under all of the
Convertible Debentures.
1. Instruction
Letter. The
Company agrees to deliver the Instruction Letter to the Escrow Agent on the
date
hereof to be held in escrow pursuant to this Agreement.
2. Appointment
of and Acceptance by Escrow Agent.
The
Investor and the Company hereby appoint Escrow Agent to serve as Escrow Agent
hereunder. Escrow Agent hereby accepts such appointment.
3. Rights
Relating to the Instruction Letter.
Upon
the occurrence of an Event of Default (as defined in the Convertible
Debentures), the Investor shall deliver the Written Direction to the Escrow
Agent.
4. Remedies.
A. Upon
and
anytime after the occurrence of an Event of Default, the Investor shall have
the
right to provide written notice of such Event of Default (the “Default
Notice”)
to the
Escrow Agent, with a copy to the Company. As soon as practicable after receipt
of the Default Notice, the Escrow Agent shall deliver to the Company’s transfer
agent the Instruction Letter pursuant to which the transfer agent shall issue
the Escrow Shares to the Investor,
provided however,
that
the Investor shall not have the right to acquire such number of Escrow Shares
which would cause the Investor, together with its affiliates, to beneficially
own in excess of 9.99% of the outstanding capital of the Company (unless the
Investor waives such limitation by providing 65 days’ advance written notice).
Upon receipt of the Escrow Shares, the Investor shall have the right to (i)
sell
the Escrow Shares and to apply the proceeds of such sales, net of any selling
commissions, to the Obligations owed to the Investor by the Company under the
Transaction Documents, including, without limitation, outstanding principal,
interest, legal fees, and any other amounts owed to the Investor, and exercise
all other rights and (ii) any and all remedies of a secured party with respect
to such property as may be available under the Uniform Commercial Code as in
effect in the State of New Jersey. To the extent that the net proceeds received
by the Investor are insufficient to satisfy the Obligations in full, the
Investor shall be entitled to a deficiency judgment against the Company for
such
amount. The Investor shall have the absolute right to sell or dispose of the
Shares in any manner it sees fit and shall have no liability to the Company
or
any other party for selling or disposing of such Shares even if other methods
of
sales or dispositions would or allegedly would result in greater proceeds than
the method actually used. The Investor shall return any Escrow Shares released
to it and remaining after the Investor has applied the net proceeds to all
amounts owed to the Investor.
B. Each
right, power and remedy of the Investor provided for in this Agreement or any
other Transaction Document shall be cumulative and concurrent and shall be
in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by the Investor of any one or more of the rights, powers or
remedies provided for in this Agreement or any other Transaction Document or
now
or hereafter existing at law or in equity or by statute or otherwise shall
not
preclude the simultaneous or later exercise by the Investor of all such other
rights, powers or remedies, and no failure or delay on the part of the Investor
to exercise any such right, power or remedy shall operate as a waiver thereof.
No notice to or demand on the Company in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute
a
waiver of any of the rights of the Investor to any other further action in
any
circumstances without demand or notice. The Investor shall have the full power
to enforce or to assign or contract is rights under this Agreement to a third
party.
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5. Demand
Registration Rights.
In
addition to all other remedies available to the Investor, upon an Event of
Default, the Company shall promptly, but in no event more than thirty (30)
days
after the date the Investor receives the Escrow Shares, file a registration
statement to register with the Securities and Exchange Commission the Shares
for
the resale by the Investor. The Company shall cause the registration statement
to remain in effect until all of the Shares have been sold by the Investor.
6. Concerning
the Escrow Agent.
A. The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein and no implied duties or obligations shall be read into this Agreement
against the Escrow Agent.
B. The
Escrow Agent may act in reliance upon any writing or instrument or signature
which it, in good faith, believes to be genuine, may assume the validity and
accuracy of any statement or assertion contained in such a writing or
instrument, and may assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has
been
duly authorized to do so. The Escrow Agent shall not be liable in any manner
for
the sufficiency or correctness as to form, manner, and execution, or validity
of
any instrument deposited in this escrow, nor as to the identity, authority,
or
right of any person executing the same; and its duties hereunder shall be
limited to the safekeeping of such certificates, monies, instruments, or other
document received by it as such escrow holder, and for the disposition of the
same in accordance with the written instruments accepted by it in the
escrow.
C. Investor
and the Company hereby agree, to defend and indemnify the Escrow Agent and
hold
it harmless from any and all claims, liabilities, losses, actions, suits, or
proceedings at law or in equity, or any other expenses, fees, or charges of
any
character or nature which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith, to indemnify the Escrow Agent against any and all expenses, including
attorneys’ fees and costs of defending any action, suit, or proceeding or
resisting any claim (and any costs incurred by the Escrow Agent pursuant to
Sections 6.4 or 6.5 hereof). The Escrow Agent shall be vested with a lien on
all
property deposited hereunder, for indemnification of attorneys’ fees and court
costs regarding any suit, proceeding or otherwise, or any other expenses, fees,
or charges of any character or nature, which may be incurred by the Escrow
Agent
by reason of disputes arising between the makers of this escrow as to the
correct interpretation of this Agreement and instructions given to the Escrow
Agent hereunder, or otherwise, with the right of the Escrow Agent, regardless
of
the instructions aforesaid, to hold said property until and unless said
additional expenses, fees, and charges shall be fully paid. Any fees and costs
charged by the Escrow Agent for serving hereunder shall be paid by the
Company.
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D. If
any of
the parties shall be in disagreement about the interpretation of this Agreement,
or about the rights and obligations, or the propriety of any action contemplated
by the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion
deposit the Pledged Materials with the Clerk of the United States District
Court
of New Jersey, sitting in Newark, New Jersey, and, upon notifying all parties
concerned of such action, all liability on the part of the Escrow Agent shall
fully cease and terminate. The Escrow Agent shall be indemnified by the Company,
the Company and Investor for all costs, including reasonable attorneys’ fees in
connection with the aforesaid proceeding, and shall be fully protected in
suspending all or a part of its activities under this Agreement until a final
decision or other settlement in the proceeding is received.
E. The
Escrow Agent may consult with counsel of its own choice (and the costs of such
counsel shall be paid by the Company and Investor) and shall have full and
complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
The
Escrow Agent shall not be liable for any mistakes of fact or error of judgment,
or for any actions or omissions of any kind, unless caused by its willful
misconduct or gross negligence.
F. The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in
this Agreement. If a successor Escrow Agent is not appointed within this ten
(10) day period, the Escrow Agent may petition a court of competent jurisdiction
to name a successor.
7. Conflict
Waiver.
The
Company hereby acknowledges that the Escrow Agent is general counsel to the
Investor, a partner in the general partner of the Investor, and counsel to
the
Investor in connection with the transactions contemplated and referred herein.
The Company agrees that in the event of any dispute arising in connection with
this Agreement or otherwise in connection with any transaction or agreement
contemplated and referred herein, the Escrow Agent shall be permitted to
continue to represent the Investor and the Company will not seek to disqualify
such counsel and waives any objection Company might have with respect to the
Escrow Agent acting as the Escrow Agent pursuant to this Agreement.
8. Notices.
Unless
otherwise provided herein, all demands, notices, consents, service of process,
requests and other communications hereunder shall be in writing and shall be
delivered in person or by overnight courier service, or mailed by certified
mail, return receipt requested, addressed:
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If
to the Company, to:
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Astris
Energi, Inc.
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0000
Xxxxxx Xxxxx, Xxxx 0
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Xxxxxxxxxxx,
XX X0X 0X0
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Attention: Jiri
Nor
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Telephone:
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Facsimile:
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With
a copy to:
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Ellenoff
Xxxxxxxx & Schole LLP
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000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Attn:
Xxxxx Xxxxxxxx, Esq.
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Telephone: (000)
000-0000
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Facsimile:
(000)
000-0000
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If
to the Investor:
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Cornell
Capital Partners, LP
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000
Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxx
Xxxx, XX 00000
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Attention:
Xxxx
X. Xxxxxx
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Telephone: (000)
000-0000
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Facsimile:
(000)
000-0000
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If
to the Escrow Agent:
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Xxxxx
Xxxxxxxx, Esq.
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000
Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxx
Xxxx, XX 00000
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Telephone: (000)
000-0000
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Facsimile: (000)
000-0000
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Any
such
notice shall be effective (a) when delivered, if delivered by hand delivery
or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
9. Binding
Effect.
All of
the covenants and obligations contained herein shall be binding upon and shall
inure to the benefit of the respective parties, their successors and
assigns.
10. Governing
Law; Venue; Service of Process.
The
validity, interpretation and performance of this Agreement shall be determined
in accordance with the laws of the State of New Jersey applicable to contracts
made and to be performed wholly within that state except to the extent that
Federal law applies. The parties hereto agree that any disputes, claims,
disagreements, lawsuits, actions or controversies of any type or nature
whatsoever that, directly or indirectly, arise from or relate to this Agreement,
including, without limitation, claims relating to the inducement, construction,
performance or termination of this Agreement, shall be brought in the state
superior courts located in Xxxxxx County, New Jersey or Federal district courts
located in Newark, New Jersey, and the parties hereto agree not to challenge
the
selection of that venue in any such proceeding for any reason, including,
without limitation, on the grounds that such venue is an inconvenient forum.
The
parties hereto specifically agree that service of process may be made, and
such
service of process shall be effective if made, pursuant to Section 8
hereto.
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11. Enforcement
Costs.
If any
legal action or other pro-ceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresenta-tion 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 limita-tion, 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.
12. Remedies
Cumulative.
No
remedy herein conferred upon any party is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or here-after existing
at
law, in equity, by statute, or otherwise. No single or partial exercise by
any
party of any right, power or remedy hereunder shall preclude any other or
further exercise thereof.
13. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute the same
instrument.
14. No
Penalties.
No
provision of this Agreement is to be interpreted as a penalty upon any party
to
this Agreement.
15. JURY
TRIAL.
EACH OF
THE INVESTOR AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING OUT OF, UNDER OR IN ANY
WAY
CONNECTED WITH THE DEALINGS BETWEEN INVESTOR AND COMPANY, THIS PLEDGE AND ESCROW
AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS
OF
ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
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IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Pledge and Escrow Agreement as of the
date first above written.
Cornell
Capital Partners, LP
By:
Yorkville
Advisors, LLC
Its: General
Partner
By:
/s/
Xxxx Xxxxxx
Name: Xxxx
Xxxxxx
Title: Portfolio
Manager
Astris
Energi, Inc.
By:
/s/
Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx
X. Xxxxxxx
Title: Chief
Financial Officer
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Escrow
Agent
By:
/s/
Xxxxx Xxxxxxxx
Name: Xxxxx
Xxxxxxxx, Esq.
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