Green Shelters Innovations Ltd.,
48, Themistokli Dervi,
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Dated : April 13, 2007
Astris Energi Inc.
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Dear Gentlemen:
This binding letter of intent sets forth the basic terms and conditions
of the acquisition (the "Acquisition") by Green Shelter Innovations Ltd., a
corporation organized under the laws of the Republic of Cyprus (the "Buyer"),
from Astris Energi Inc., a corporation organized under the laws of the province
of Ontario, Canada (the "Seller"), of substantially all the assets relating to
the Seller's business (the "Business").
1. Purchase of Assets. At the closing of the Acquisition (the "Closing"),
the Buyer will purchase all or substantially all of the assets
and properties used or usable in or arising out of the Business, including
but not limited to real property, fixtures, equipment, furniture, tooling,
finished goods, in process inventory, raw materials, accounts receivable,
patents, trademarks, copyrights, customer lists, contract rights, all claims
and causes of action whether known or unknown and all other tangible and
intangible assets and properties used or usable in or arising out of the
Business, in Buyer's sole discretion (the "Acquired Assets"). With respect
to residual tax losses attributable to the Seller or the Business, when
and/or if monetized by the Seller, 50 percent of proceeds thereof will
belong to the Seller and 50% of the proceeds will belong to the Buyer. The
Seller agrees to take such actions as are required to give effect to the
foregoing sentence. The Seller shall consult with the Buyer and keep the
Buyer fully apprised of all developments with respect thereto. The Buyer shall
be entitled to copies of all documents, agreements and correspondence in
connection with the monetization of the tax losses.
2. Assumed and Excluded Liabilities. The Buyer will assume the
liabilities of the Sellers solely related to the Acquired Assets arising after
the Closing.
3. Consideration. At the Closing, as payment for the Acquired
Assets, the Buyer will (a) pay to the Seller US$3,064,373 ("Cash Purchase
Price"), (b) give the Seller an option to redeem (for nominal consideration
of US$1) 4,248,750 shares of common stock of Seller, issued to Buyer on March
16, 2007 at US$0.08 per share and all other shares of common stock of Seller
issued to Buyer prior to Closing including, for greater certainty all shares
of common stock issued by Seller to Buyer upon conversion of the Debentures (as
hereinafter defined), and (c) cancel, without additional consideration, all of
the secured convertible debentures issued by Seller and held by Buyer which
have an aggregate outstanding principal amount of US$1.7 Million (the
"Debentures").
The parties acknowledge that Buyer does not hold, and therefore can not agree
to cancel, the CA$20,000 debenture of Seller which is held by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
of Vancouver, Canada. The Buyer warrants that it has the rights to bind and
will bind its wholly owned subsidiary, Acme Global Inc., to its obligations set
forth in this Section 3.
4. Additional Consideration. Upon the Closing, the Buyer will deposit
CA$185,000 into the trust account of a solicitor, chosen by both the Buyer
and the Seller, to be held and released subject to the terms and conditions of
an escrow agreement consistent with the provisions of this letter of intent.
The solicitor will remain an independent third party throughout the period
during which the funds are deposited with them. At no point will such
solicitors represent either the Buyer, the Seller or any of their affiliates,
directors, officers, or employees in connection with the Acquisition or
otherwise. Pursuant to the escrow agreement, CA$100,000 of said funds shall
be used as a legal contingency fund for a period of 12 months after the
Closing for any litigation instituted against the directors of the Seller,
CA$60,000 will be used to prepay a one-year term of director's and officer's
liability insurance for the Seller and the balance of up to CA$25,000 will
be available to be used for the Seller's legal costs for this transaction
once the Seller has incurred CA$75,000 of such costs and evidence thereof has
been provided to the Buyer.
5. Certain Closing Matters. At the Closing, the Seller will convey
the Acquired Assets to the Buyer, free and clear of all security interests,
liens and any other encumbrances.
6. Conditions Precedent.
(a) The obligations of the parties to consummate the Acquisition
are subject to the following conditions:
(i) negotiation and execution of definitive documentation on terms as
materially outlined in this letter of intent (the "Definitive
Documents")which terms shall be satisfactory to the Seller and the
Buyer and their respective solicitors, each acting reasonably and
in good faith, which shall include representations, agreements,
covenants, conditions and indemnities customary for negotiated
corporate acquisitions of this type; and
(ii) completion of all necessary governmental filings, receipt of all
necessary governmental approvals and expiration or termination
of all applicable governmental waiting periods.
(b) The obligations of the Buyer to consummate the Acquisition are
subject to the following conditions:
(i) approval by the board of directors of the Seller and by the
shareholders of the Seller pursuant to a duly called special
meeting of the shareholders (the "Shareholder Approval");
(ii) receipt by the Seller (and receipt by the Buyer of a copy) of an
executed acknowledgment and agreement, in the form attached
as Exhibit A, by each holder of an outstanding warrant for
securities of the Seller;
(iii) receipt of all waivers and consents required from third parties for
Seller to consummate the Acquisition on terms satisfactory to the
Buyer;
(iv) no material adverse change shall have occurred to Seller's business
since the date of this letter of intent; and
(v) key personnel as determined by Buyer, acting reasonably and in good
faith, shall have executed an employment agreement with Buyer.
7. Secured Convertible Promissory Note for Operating Costs.
(a) The Buyer shall loan to the Seller such amounts necessary for the
Seller to fund operating costs (based on historical amounts) at a monthly
amount of US$150,000 or such greater amounts if Buyer and Seller agree,
pursuant to the terms of a secured convertible promissory note which shall be
secured by a lien on the assets of the Seller (the "Note"). Buyer's obligation
to deliver any amounts by loan in accordance with this Section 7 shall be
conditional upon the delivery to Buyer of (i) the Note, duly executed by
Seller, and (ii) voting and support agreements duly executed by Jiri Nor,
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Persons of each of them, pursuant to which each shall agree, among other things,
to vote all of their shares of common stock of Seller in favor of the
Acquisition (collectively, the "Voting Agreements"). Delivery of the Note,
the Voting Agreements and the first monthly installment thereunder shall occur
no sooner than eleven (11) days following the date upon which the Buyer files
an amended Schedule 13D with the U.S. Securities and Exchange Commission (the
"SEC"), which in no event shall be later than fifteen (15) days following the
date of this letter of intent; provided, however, that if Buyer receives any
comments or other inquiries from the SEC, then no amounts shall be disbursed
until such comments or inquiries are satisfactorily resolved with the SEC;
provided, further, that no amounts shall be disbursed if Buyer is prohibited
by law. Costs associated with preparation of filings required to secure the
Note shall be borne by the Buyer. Subsequent monthly installments on the Note
shall be paid on the first day of each month thereafter beginning on the first
day of May 2007 (provided that delivery of such amounts at such time would
not violate any law to which the Buyer is subject) until the earliest to occur
of (a) the Closing Date; (b) July 31, 2007; (c) the termination of this letter
of intent due to Seller's breach of its obligations under this letter of
intent; or (d) the consummation of, or the execution of a binding agreement
relating to, a Third Party Acquisition (defined below) by the Seller or the
shareholders of the Seller. The monthly amounts may be increased as necessary
if the Buyer and Seller agree on such specific increases. The parties shall
agree upon the terms of the Note, which shall include customary terms and
conditions, but in any case, the Note shall become immediately due and
payable, upon the first to occur of (i) termination of this letter of intent,
for any reason other than pursuant to paragraph 12(c), (ii) July 31, 2007,
if the Acquisition is not consummated on or prior to such date, (iii) a
breach by Seller of any of its obligations under this letter of intent or
the Note, (iv) failure to obtain Shareholder Approval, and (v) the
consummation of, or the execution of a binding agreement relating
to, a Third Party Acquisition by the Seller or the shareholders of the Seller
(the date of the first to occur, the "Maturity Date"). At Seller's option,
at the Maturity Date, the Note may be converted into shares of the Seller's
common stock at the conversion price of the lesser of (A) $.05 per share or
(B) ninety percent (90%) of the lowest daily volume weighted average price
of the Seller's common stock during the ten (10) trading days immediately
preceding the Maturity Date as quoted by Bloomberg, LP. During the term of
the Note, the Seller will not be permitted to make or incur any expenditures
equal to or greater than $5,000 without the prior written consent of the Buyer.
Such loan shall be forgiven if the Closing occurs on or prior to July 31, 2007.
(b) For purposes of this letter of intent:
(i) "Related Person" means: (A) each other member of such
individual's Family (as defined below); (B) any person (as defined below)
that is directly or indirectly controlled by such individual or one or more
members of such individual's Family; (C) any person in which such individual
or members of such individual's Family hold (individually or in the aggregate)
a Material Interest (as defined below); and (D) any person with respect to
which such individual or one or more members of such individual's Family
serves as a director, officer, partner, member, manager, executor, or trustee
(or in a similar capacity);
(ii) "Family" means with respect to a particular individual: (A) the
individual, (B) the individual's spouse and former spouses, (C) any other
natural person who is related to the individual or the individual's spouse
or former spouses within the second degree, and (d) any other natural person
who resides with such individual;
(iii) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of voting securities or other voting interests representing
at least ten percent (10%) of the outstanding voting power of a person or
equity securities or other equity interests representing at least ten percent
(10%) of the outstanding equity securities or equity interests in a person; and
(iv) "person" means any individual, corporation (including any nonprofit
corporation), general, limited or limited liability partnership, limited
liability company, joint venture, estate, trust, association, organization or
other entity.
8. Amendment to the Terms of the Debentures. By execution of this
letter of intent, Seller consents and agrees that the Debentures shall be
amended to waive the conversion notice period of 65 days required thereunder,
if Shareholder Approval is not obtained for whatever reason or if the
shareholders of Seller consummate a Third Party Acquisition or enter into a
binding agreement therefor. Once a determination has been made that Shareholder
Approval has not been obtained, Buyer may immediately convert (or convert at
anytime thereafter) the Debentures upon delivery of written notice to the
Company of such conversion. Seller agrees to take such actions and execute
such other documents as are required or appropriate (in Buyer's sole
discretion) to give effect to such waiver and/or amendments, at such time
as Buyer requests. Notwithstanding the foregoing, the Definitive Documents
shall include covenants by Buyer and Seller that until August 1, 2007, that
they shall do all things necessary or desirable to facilitate the completion
of the Acquisition and all related transactions contemplated hereby or by the
Definitive Documents including, without limitation, Buyer exercising all voting
rights in respect of shares of Common Stock of Seller held by Buyer in favour
of the Acquisition and not soliciting or accepting any proxies from other
holders of securities of Seller directing Buyer to vote against the Acquisition.
9. Other Terms; Closing Date. The Definitive Documents will contain
the terms set forth herein, including, that upon the successful consummation
of the Acquisition, the Debentures will be cancelled without further
consideration. The Definitive Documents would also provide that the Closing
shall occur no later than July 31, 2007.
10. Publicity. Neither the Buyer nor the Seller will make any
public announcement concerning this letter of intent, the discussions
between the Buyer and the Seller or any other matter relating to the
proposed Acquisition, provided, however, that, after consultation with
the other party, either party may make disclosure if such party is advised
by its counsel that such disclosure is required by applicable law or stock
exchange listing agreement. Except as permitted by the preceding sentence,
neither the Seller, the Buyer nor any of their respective affiliates,
directors, officers, employees, counsel, accountants, financial advisors or
other agents, will disclose the existence or terms of this letter of intent
or that the Seller and the Buyer are holding discussions to any person other
than the respective legal, accounting and financial advisors of the Seller
or the Buyer who have a need to know such information solely for the purpose
of assisting such party in connection with the proposed Acquisition.
11. Access to Information. The Seller will continue to (a) allow
the Buyer and its representatives, counsel, accountants, financial advisors
and consultants to have full access to the offices, properties and facilities
of the Seller, the books, records, financial statements, tax returns and
other relevant information pertaining to the Business and the Acquired Assets,
and the officers, directors, employees, attorneys, accountants and financial
advisors of the Seller; and (b) furnish to the Buyer such additional financial
and operating data and other information regarding the operations, assets,
liabilities, financial condition and prospects of the Business as the Buyer
may from time to time request. The Buyer will maintain any non-public
information that it so obtains in accordance with the terms of the
Confidentiality Agreement between the Buyer and the Seller dated
April 4, 2006.
12. Termination. This letter of intent shall automatically
terminate upon the execution of Definitive Documents, or earlier:
(a) by the mutual written consent of the Seller and the Buyer;
(b) by the Seller or the Buyer if the Definitive Documents have
not been executed prior to June 1, 2007, each acting reasonably and in good
faith;
(c) by the Seller, if Buyer has breached any of its obligations
hereunder; or
(d) by the Buyer, if Seller has breached any of its obligations
hereunder.
If this letter of intent is terminated pursuant to Sections 12(a),
(b), (c) or (d), then the Voting Agreements shall also automatically terminate.
Upon termination of this letter of intent by Seller pursuant to Section 12(b)
or by Buyer under Section 12(d), Seller consents and agrees that at the
Buyer's option, the Debentures shall be amended to waive the conversion notice
period of 65 days required thereunder.
13. Break-up Fee.
Any "Break-Up Fee" paid hereunder shall be used in part to reimburse
the recipient party for lost opportunity costs and transaction expenses
incurred in connection with the Acquisition. For the purposes of this letter
of intent the "Break-Up Fee" shall be an amount that is equal to the aggregate
amount previously advanced by the Buyer to the Seller pursuant to the Note as
of the date that such Break-Up Fee becomes due.
(a) Seller shall pay to Buyer the Break-Up Fee if (i) Seller breaches
any of its obligations under this letter of intent; (ii) if Seller or
shareholders of Seller consummate a Third Party Acquisition or enter into
a binding agreement therefor; or (iii) if Shareholder Approval is not obtained,
which shall, in each case, be the Buyer's sole and exclusive remedy except as
otherwise expressly provided herein; provided however, if Seller or
shareholders of Seller consummate a Third Party Acquisition or enter into a
binding agreement therefor or Seller otherwise breaches any of its obligations
under Section 16,then notwithstanding the first paragraph of this Section 13,
the Break-Up Fee due to Buyer by Seller under this Section 13(a) shall be an
amount equal to the greater of (i) the "Break Up Fee" as defined in the
first paragraph of this Section 13(a) and (ii) $500,000. The Note shall
remain due and payable to Buyer in accordance with its terms, notwithstanding
any payment due or made by Seller under this Section 13(a).
(b) Buyer shall pay to Seller the Break-Up Fee if Buyer breaches any
of its obligations under this letter of intent which shall be the Seller's
sole and exclusive remedy for such breach except as otherwise expressly
provided herein. Payment by Buyer to Seller of the Break-Up Fee pursuant to
this Section 13(b) shall be satisfied by Buyer's forgiveness of all or part
of the Note equal to the Break-Up Fee amount owed by Buyer under this
Section 13(b).
14. Expenses. Except as outlined in this letter of intent, whether
or not the Closing occurs, each of the Seller and the Buyer will bear its
own expenses incurred in connection with the investigation, negotiation,
documentation and/or the Closing of the Acquisition, including all fees
and disbursements of each party's respective counsel, accountants, financial
advisors, finders, and consultants.
15. Broker's Fees. Each of the Seller and the Buyer agrees to
indemnify the other party against any claim for commissions or brokerage,
finder's or similar fees by any person engaged by, or who alleges that it
was engaged by, the indemnifying party in connection with the transactions
contemplated by this letter of intent. The Buyer acknowledges the Seller's
existing relationship with Ardour Capital, and further acknowledges that
the Seller is obligated to pay US$25,000 to Ardour Capital upon Closing,
and that Seller will so pay.
16. Exclusivity. In order to induce the Buyer to proceed with the
investigation and negotiation of the proposed Acquisition, the Seller agrees
that between the date of execution of this letter of intent and 12:01 a.m.,
EDT, August 1, 2007 (the "Exclusivity Period") the Seller will not, and it
will not permit any of the Seller's affiliates to, directly or indirectly,
through any director, officer, employee, attorney, financial advisor or
any other agent, take any action to solicit, initiate, seek or encourage
any inquiry, proposal or offer from, furnish any information to, or
participate in any discussions or negotiations with, any person (other
than the Buyer or an affiliate thereof that the Buyer designates) regarding
any acquisition of the Seller, any merger or consolidation with or involving
the Seller, or any acquisition of all or any portion of the stock of the
Seller (including without limitation, by tender
offer) or the assets of the Seller (any such transaction being hereinafter
referred to as a "Third Party Acquisition"). The Seller agrees that it will,
and will cause all affiliates of the Seller, immediately to terminate any
such discussions or negotiations (other than negotiations with the Buyer or an
affiliate thereof that the Buyer designates) in progress as of the date of
this letter and that in no event will the Seller or any affiliate of the
Seller accept or enter into an agreement concerning any Third Party Acquisition
during the Exclusivity Period. In addition, during the Exclusivity Period,
the Seller will not, directly or indirectly, through any director, officer,
employee, attorney, financial advisor or any other agent, initiate or continue
to participate in any negotiations or discussions with any person relating to
an acquisition of, joint venture with, or investment in, any business. The
Seller will notify the Buyer immediately after receipt by the Seller or any
affiliate of the Seller (or any of their respective directors, officers,
employees, attorneys, financial advisors or other agents) of any proposal for,
or inquiry respecting, any potential Third Party Acquisition or any request for
nonpublic information in connection with such a proposal or inquiry, or for
access to the properties, books or records of the Seller by any person. Such
notice to the Buyer will indicate in reasonable detail the identity of the
person making, and the terms of, the proposal or inquiry. The Seller will be
responsible for any breach of the provisions of this Section 16 by any
affiliate of the Seller or any of the respective directors, officers,
employees, attorneys, financial advisors or other agents of the Seller or any
such affiliate. The foregoing provisions of this Section 16 shall not be
deemed to prevent the Seller's board of directors from taking such actions
as are required to comply with their fiduciary duties to the Seller or its
shareholders under applicable law; provided however, that the Seller's board
of directors shall only be permitted to take such actions are as required
to comply with such fiduciary duties, as determined in good faith by a
majority of the Seller's board of directors in accordance with written
advice from outside legal counsel. The Seller shall provide a copy of such
written advice of outside legal counsel to the Buyer prior to taking any such
actions.
17. Miscellaneous. This letter of intent (a) shall be governed by,
and construed in accordance with, the internal laws of the State of New York
without regard to the conflicts of laws principles of such state; (b) may
not be amended or terminated nor may compliance with any provision of this
letter of intent be waived except pursuant to a written agreement signed by
the Buyer and the Seller; (c) may be signed in counterparts, each of which
shall constitute one and the same instrument; and (d) shall terminate if the
parties shall not have executed the Definitive Documents on or before July 31,
2007. The captions used in this letter of intent are for convenience only
and shall not affect the interpretation of this letter.
18. Warrants. Seller hereby agrees that within ten (10) days of the
execution date hereof, to deliver to the Buyer documents representing the
warrants held by the Buyer the terms of which are the same as the terms of the
warrants held by Cornell Capital Partners, LP; provided, however, such warrants
shall contain a provision which waives the sixty-five (65) day notice period
for the waiver of the restriction on exercise in the case that Buyer or its
affiliates hold greater than 4.99% of the outstanding shares of common stock of
the Seller, if Shareholder Approval is not obtained or if the shareholders of
Seller consummate a Third Party Acquisition or enter into a binding agreement
therefor.
19. Effect of Termination. In the event, the Closing does not
take place on or before July 31, 2007 or by its terms this letter of intent
terminates earlier, the Buyer shall retain all rights against the Seller
that Buyer may otherwise have, including pursuant to the Debentures (which
Debentures shall be enforceable as amended hereby, (including without
limitation the waiver by the Seller of the 65 days notice period for
conversion)) and pursuant to the Note.
20. Status of this Letter. This letter of intent is intended to be
legally binding on the parties hereto.
[Remainder of page left blank.]
If the foregoing correctly sets forth your understanding, please sign and
return to us one copy of this letter. This letter of intent will expire if we
do not receive a signed copy from you by 5:00 p.m. EDT, on Friday, April 13,
2007.
Green Shelter Innovations Ltd.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
Accepted and agreed:
Astris Energi Inc.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:Vice President of Finance
Date: April 13, 2007
