PRIORITY AGREEMENT
THIS
AGREEMENT is made as of the 17th
day of
February, 2006,
BETWEEN:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
an
individual currently residing at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇
|
(hereinafter
referred to as “▇▇▇▇▇▇▇▇”)
|
OF
THE
FIRST PART
-
and
-
|
▇▇▇
▇▇▇▇▇▇▇▇,
an individual residing at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
▇▇▇▇▇▇
|
(hereinafter
referred to as “▇▇▇▇▇▇▇▇”)
OF
THE
SECOND PART
-
and -
|
▇▇▇▇
▇. NOR,
an individual residing at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
▇▇▇▇▇▇
|
(hereinafter
referred to as “Nor”)
OF
THE
THIRD PART
-
and
-
|
▇▇▇▇▇▇
▇▇▇▇▇,
an individual residing at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 50, R.R. ▇, ▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇,
▇▇▇▇▇▇
|
|
(hereinafter
referred to as “Hasal”)
|
OF
THE
FOURTH PART
-
and
-
|
▇▇▇▇▇
▇▇▇▇▇▇,
an individual residing at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
▇▇▇▇▇▇
|
(hereinafter
referred to as “▇▇▇▇▇▇”)
OF
THE
FIFTH PART
-
and -
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
an
individual residing at ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇
(hereinafter
referred to as “▇▇▇▇▇▇▇”)
OF
THE
SIXTH PART
-
and
-
ASTRIS
ENERGI INC.,
a
corporation incorporated under the laws of the Province of Ontario and having
its registered office at ▇▇▇▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(hereinafter
referred to as the “Debtor”)
OF
THE
SEVENTH PART
BACKGROUND:
| A. |
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, Nor, Hasal, Soltys, and ▇▇▇▇▇▇▇ (collectively called the
“Secured
Parties”)
are each creditors
of
the Debtor pursuant to the execution and delivery by the Debtor of
six (6)
individual 10% Secured Promissory Notes, each in favour of one of
the
Secured
Parties and having various original principal amounts but all
of
which are dated the 17th
day of February, 2006 (the “Promissory
Notes”).
|
| B. |
Each
of the Secured Parties is a secured creditor of the Debtor pursuant
to the
execution and delivery by the Debtor of six (6) individual
general security agreements creating a security interest in the property
of the Debtor in favour of one of the Secured Parties (all of such
general
security agreements are collectively referred to as the “Security
Agreements”),
which security interests have
been or will be perfected by the registration by each of the Secured
Parties of financing statements under the Personal
Property Security Act
(Ontario).
|
| C. |
The
Security Agreements together with any other security delivered by
the
Debtor from time to time in addition to or in substitution for the
whole
or any part of such Security Agreements shall be collectively referred
to
as the “Securities”.
|
| D. |
It
is the intent of the parties hereto that all of the Securities shall
rank
equally with each other.
|
| E. |
All
capitalized terms not otherwise defined herein shall have the meaning
given to such terms in the Promissory
Notes.
|
NOW
THEREFORE THIS AGREEMENT WITNESSES THAT in consideration for the respective
covenants and agreements of the parties contained herein and other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by each of the parties) it is agreed as follows:
| 1. |
Each
of the Secured Parties, and the Debtor in each instance, acknowledges
the
existence, validity and enforceability of the Promissory Notes and
the
Securities of the other parties to this Agreement.
|
| 2. |
The
Securities and all indebtedness thereby secured or any portion thereof
shall in all respects rank pari
passu,
equally and ratably between the Secured Parties, to the effect that
all
funds received by any Secured Party from the Debtor and all proceeds
of
realization resulting from any enforcement activity taken by the
Secured
Parties whatsoever, including under any of the Securities, shall
be
distributed among the Secured Parties on a pro
rata
basis, based upon the respective amounts owing to them by the Debtor
at
the time, but until any such enforcement activity is undertaken and
results in a realization, all monies paid under any Promissory Note
shall
be for the sole account of the holder of such Promissory Note.
|
| 3. |
The
equal ranking of the Securities and all indebtedness thereby secured
shall
apply in all events and circumstances regardless of: (i) the date
or dates
or the time or order of creation, execution, delivery, attachment,
registration or perfection of the security interests created by the
Securities; (ii) the date or dates of any loan or loans or advance
or
advances of funds or the Promissory Notes made or in the future to
be made
to the Debtor by any or all of the Secured Parties; (iii) the date
or
dates of any demand for or acceleration of payment of the amounts
secured
by the respective Security Agreements of the Secured Parties or any
of
them; (iv) the date or dates of any default or Events of Default
by the
Debtor under any of the Promissory Notes or the Security Agreements;
(v)
any priority granted by any principle of law or any statue, including
the
Bank
Act
(Canada) or any personal property security, corporation securities
registration or like statute; (vi) the date of commencement of enforcement
proceedings under any of the Promissory Notes or the Security Agreements;
and (vii) the perfection or lack of perfection of the Securities;
and in
the event that any of the Securities is or becomes unperfected, the
party
holding any proceeds realized under perfected security shall hold
such
proceeds in trust to
be distributed in accordance with the provisions of this Agreement.
|
| 4. |
Prior
to making any demand on the Debtor for repayment of any amounts owed
to
him, a Secured Party shall provide all of the other Secured Parties
with
not less than forty-eight (48) hours’ prior written notice of such demand.
In the event that a Secured Party takes any enforcement activity
whatsoever from time to time, whether pursuant to the terms of the
applicable Security Agreements or otherwise, such Secured Party shall,
in
each instance and at the same time, notify all of the other Secured
Parties and provide particulars of any such enforcement activity
and
further provide to all of the other Secured Parties correct and complete
copies of all writings delivered to the Debtor.
|
| 5. |
In
the event that any Secured Party demands repayment of the indebtedness
owing to him by the Debtor and takes possession of any of the Debtor’s
property, assets and/or undertaking (the “Debtor’s
Property”),
whether by himself or by way of a receiver, receiver and manager,
agent or
otherwise (the “Receiver”),
no other Secured Party shall appoint another receiver, receiver and
manager, agent or otherwise or take any steps to enforce against
any of
the Debtor’s Property, provided that the Secured Party or the Receiver, as
the case may be, shall hold all amounts recovered from the Debtor
in trust
to be distributed in accordance with the provisions of this
Agreement.
|
| 6. |
Each
of the Secured Parties covenant and agree that any proceeds arising
from
any form of enforcement activity or realization (whether by him or
by any
Receiver) of any of the security interests created by the Securities,
and
all other proceeds received by the Secured Parties including, without
limitation, insurance or expropriation proceeds, shall be held in
trust
for the benefit of all Secured Parties herein and dealt with in such
a way
as to give effect to the provisions of this Agreement. The Secured
Parties
agree that the priorities established by this Agreement shall extend
to
and include unpaid interest, costs of collection (including legal
fees and
disbursements on a solicitor and his own client basis) and any other
applicable costs in respect
thereof.
|
| 7. |
Nothing
herein contained shall be construed as entitling any of the Secured
Parties to receive any proceeds of realization of any of the Debtor’s
Property in respect of which he does not have any security, or in
respect
of which his security is invalid, unperfected, subordinate or
unenforceable as against third parties. If any person, other than
a
Secured Party, shall have a claim (an “Intervening
Claim”)
to all or any portion of the collateral subject to the Securities,
or to
any proceeds of such collateral, in priority to or on a parity with
one or
more of the Secured Parties (the “Junior
Secured Party(ies)”)
but not in priority to or on a parity with any other Secured Parties
(the
“Senior
Secured Parties”),
then this Agreement shall not apply so as to diminish the rights
(as such
rights would have been but for the Intervening Claim) of the Senior
Secured Parties to such collateral or such proceeds of realization.
In
particular, the provisions of Section 3 herein shall be applied to
require
payment hereunder by the Senior Secured Parties out of any proceeds
of
realization received by him to a Junior Secured Party only to the
extent
that such payment would have been required to be made pursuant to
Section
3 in the event that there had been no Intervening Claim and that
the
amount of such Intervening Claim (or such portion thereof as a Junior
Secured Party would have, in the absence of such Intervening Claim,
been
collectively entitled to receive) was received by a Junior Secured
Party,
as proceeds of realization of the Securities, pro rata in proportion
to
their respective indebtedness.
|
| 8. |
The
parties hereto shall execute and deliver such further and other
instruments, agreements and writings and shall cause such meetings
to be
held, resolutions passed and by-laws enacted, exercise their vote
and
influence, do and perform and cause to be done and performed, such
further
and other acts and things that may be necessary or desirable to give
full
effect to this Agreement and every part of
it.
|
| 9. |
Nothing
contained in this Agreement shall be construed as conferring any
rights
upon the Debtor, or upon any party that is not a party to this
Agreement.
|
| 10. |
| 11. |
If
any provision of this Agreement or its application to any party or
circumstance is restricted, prohibited or unenforceable, such provision
shall be ineffective only to the extent of such restriction, prohibition
or unenforceability without invalidating the remaining provisions
hereof
and without affecting the application of such provision to other
parties
or circumstances.
|
| 12. |
Any
notice or communication to be given hereunder may be effectively
given by
delivering the same at the addresses hereinafter set forth or by
sending
the same by facsimile or prepaid registered mail to the parties at
such
addresses. Any notice so mailed shall be deemed to have been received
on the fifth (5th)
business day next following the mailing thereof provided the postal
service is in operation during such time. Any facsimile notice shall
be deemed to have been received on the business day next following
the
date of transmission. Any party hereto may from time to time notify
the
other parties hereto, in accordance with the provisions hereof, of
any
change of address which thereafter, until changed by like notice,
shall be
the address of such party for all purposes of this Agreement.
|
| 13. |
This
Agreement may be signed in counterparts and delivered by facsimile.
A
facsimile counterpart of this Agreement bearing the signature of
a party
shall be as enforceable as if an originally executed copy of same
had been
signed and delivered by such party.
|
| 14. |
Any
word in this Agreement importing the masculine, feminine or neuter
gender
only includes members of the other gender as applicable, and any
word in
this Agreement defined in or importing the singular number has the
same
meaning when used in the plural number, and vice versa, as
applicable.
|
| 15. |
This
Agreement shall be binding on the Debtor and its successors and shall
be
binding on and enure to the benefit of each of the Secured Parties
and
their respective heirs, executors, estate trustees, legal personal
representatives, and permitted assigns. This Agreement is not assignable
by the Debtor. None
of the Secured Parties shall assign their Securities or this Agreement
without the prior written consent of the other Secured Parties, to
be
granted or not in the sole discretion of each of the other Secured
Parties.
|
[SIGNATURE
PAGE TO FOLLOW]
The
parties have executed this Agreement as of the date first above
written.
| ASTRIS ENERGI INC. | ||
| |
|
|
| By: |
/s/
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, |
||
| Vice-President, Finance | ||
| I have the authority to bind the corporation. | ||
| SIGNED, SEALED AND DELIVERED | ) | |
| in the presence of | ) | |
| ) | ||
|
/s/
witness
|
) | /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
| witness to the signature of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ) | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
| ) | ||
|
/s/
witness
|
) | /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ |
| witness to the signature of ▇▇▇ ▇▇▇▇▇▇▇▇ | ) | ▇▇▇ ▇▇▇▇▇▇▇▇ |
| ) | ||
|
/s/
witness
|
) | /s/ ▇▇▇▇ ▇. Nor |
| witness to the signature of ▇▇▇▇ ▇. Nor | ) | ▇▇▇▇ ▇. Nor |
| ) | ||
|
/s/
witness
|
) | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ |
| witness to the signature of ▇▇▇▇▇▇ ▇▇▇▇▇ | ) | ▇▇▇▇▇▇ ▇▇▇▇▇ |
| ) | ||
|
/s/
witness
|
) | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ |
| witness to the signature of ▇▇▇▇▇ ▇▇▇▇▇▇ | ) | ▇▇▇▇▇ ▇▇▇▇▇▇ |
| ) | ||
|
/s/
witness
|
) | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
| witness to the signature of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ) | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |