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                                                                    EXHIBIT 10.1

AGREEMENT IN PRINCIPLE TO FORM POWERXCELL BATTERIES INC., AN ADVANCED BATTERY
TECHNOLOGY COMPANY

GOALS

1.1      To create a world class battery company (PowerXcell Batteries Inc.) and
         development team with access to international companies using and
         distributing batteries, and focused in the near term on opportunities
         for hybrid electric and mini-hybrid (42 volt) electric vehicle
         applications.

1.2      To develop and commercialize the advanced performance battery
         technology concepts currently under development by Power Technology
         Inc. (PWTC) in conjunction with BC Research (BCR) as soon as possible.

1.3      To finance the company from private placements, strategic partners and
         government incentive programs.

1.4      To add other contingent advanced battery and energy storage system
         technologies presently at the conceptual development stage at BCR.


PREREQUISITES

2.1      To attract and optimise Canadian government funding and tax credits
         etc. PowerXcell will be a Canadian private corporation allowing for
         possible eligibility as a CCPC after financing.

2.2      To attract private venture capital as soon as possible, PWTC's
         technology will be licenced to PowerXcell with as few restrictions as
         possible, and PowerXcell will have the following characteristics:

         (a)      an IP position based on proven concepts which will be
                  satisfied through a licence for PWTC's technology;

         (b)      a strong commercialisation strategy and a clear focus on an
                  emerging market which PowerXcell could dominate in and this
                  will be for hybrid and automotive applications of the future;

         (c)      immediate revenue opportunities which will be through
                  military, marine and other special power applications where
                  the technology will be proven on a batch production basis; and

         (d)      a strong management and technical team with a solid network in
                  the industry and market sectors which will be contributed
                  initially mainly by BCR and PWTC either directly or through
                  contract arrangements;


SCOPE OF AGREEMENT

3.1      The existing PWTC advanced lightweight lead acid battery technology
         will be exclusively and unconditionally licensed to PowerXcell except
         as limited by prior obligations entered into by PWTC or as further
         restricted in Section 5.

3.2      BCR will licence certain battery technologies presently at the concept
         stage to PowerXcell under the same restrictions.

3.3      PowerXcell will be held initially 35% by BCR and 65% by Power
         Technology Canada Inc. (PTC) to satisfy the eligibility requirements of
         Canadian federal technology programs.

3.4      BCR and PTC will ensure that PowerXcell establishes a competent
         management team and Board of Directors capable of commercializing the
         technology successfully. PTC and BCR will initially each nominate a
         Board member for a 5 member board that is structured towards TSX
         compliance, and until such time as the Board decides otherwise, the
         President of PowerXcell shall be a Board member.

3.5      BCR and PTC will develop a viable business plan and marketing strategy
         PowerXcell which will address all available markets including, the
         selection of an initial focus on accessible niche markets plus a larger
         market requiring the advantages of the core technology and other
         technologies offered to PowerXcell by its principals.

3.6      BCR will provide under contract technical support required for current
         PWTC initiatives and also provide technical resources under contract to
         PowerXcell. PowerXcell will have the right to source work outside BCR.

3.7      BCR and PTC will work together with the management of PowerXcell to
         ensure that PowerXcell is adequately financed with the goal of securing
         government and private financing of at least $5 million within 12
         months.

3.8      BCR will provide management and technical resources to assist the
         President of PowerXcell in securing financing. The cost of the
         President and associated support will be the responsibility of BCR
         until such time as PowerXcell has financing in place.

3.9      This Agreement in Principle is subject to the approval of the Board of
         Directors of both parties within 30 days and shall define the terms and
         conditions of the final agreement between the parties changed only as
         agreed, or to the extent that further clarification is required.

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FINANCIAL OBLIGATIONS OF PARTIES

4.1      BCR and PTC will each be responsible for their own costs until
         completion of an initial financing at which time those personnel key to
         PowerXcell operations will be offered employment in PowerXcell and
         other personnel will continue to be involved only through BCR and PTC
         contracts.

4.2      Any financial obligations between BCR and PWTC must be settled prior to
         concluding the final agreement to establish PowerXcell and any
         outstanding balance will be converted to a convertible loan to
         PowerXcell.

TERMS AND CONDITIONS OF PWTC LICENCE

5.1  The licence will be exclusive and royalty-free restricted only
     geographically to North and South America with the right to sub-licence.

5.2  PowerXcell shall have an option to licence for all other geographic areas.

5.3  Should PowerXcell work with PWTC to licence the technology to third parties
     not within the scope of existing licences held by PowerXcell, then
     PowerXcell shall receive 25% of all royalties, licence fees and other
     revenues accruing to PWTC.

5.4  PowerXcell shall pay to PWTC an annual licence fee of $120,000 USD for
     three years, payable in equal monthly installments, except that this
     licence fee shall only be payable to the extent that the working capital of
     PowerXcell exceed $1 million USD. This licence fee shall provide for
     PowerXcell to receive marketing efforts and technical direction from key
     Directors of PWTC.

5.5  Any improvements to the technology, proprietary information or business
     relationships developed or established by PowerXcell (Improvements) shall
     be the exclusive property of PowerXcell except in the case of item 5.3
     whereby PowerXcell benefits from a third party licence and in such case the
     Improvements will be shared jointly. Should any other third party wish to
     exploit any advances made by PowerXcell, negotiations must be made with
     PowerXcell directly.

5.6  PTC and BCR shall have no claim or rights to PowerXcell's technologies
     except via their ownership in PowerXcell.

5.7  Provided that the conditions in Item 4.2 are met, PWTC will receive a
     payment equivalent to $6,000 CAD upon signing of the final agreement.

IN WITNESS WHEREOF of the parties have duly executed this Agreement in Principle
the 30'th day of October, 2002:

For Power Technologies Inc.

/s/ Lee Balak
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Authorized Signatory
LEE BALAK, DIRECTOR


FOR B.C. RESEARCH INC.


/s/ James Hill
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Authorized Signatory
JAMES HILL, PRESIDENT