**EXHIBIT      10.18**

**THIS      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED      FOR      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY      SATISFACTORY TO ASTRIS ENERGI INC. THAT SUCH REGISTRATION IS NOT      REQUIRED.**

**CONVERTIBLE      DEBENTURE**

| **Principal                Amount: <Amount>** | **Maturity                Date:**December                10, 2005 |
|-----------------------------------------------------|-------------------------------------------------------------------|

**1.    **
**Promise      to Pay**
**FOR      VALUE RECEIVED**
**ASTRIS      ENERGI INC. **
**Company**
**NBCN      Clearing Inc. ITF 3C-S841-A, <Name>, <Address>**
**Holder**
**<Amount>THOUSAND      DOLLARS **
**Principal      Amount**

**2.    **
**Definitions**
**.      **

**“Business      Day” **

**“Capital      Reorganization”**

**“Charged      Assets”**

**“Common      Shares” **

**“Common      Share Reorganization”**

**“Company”      **

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**“Conversion      Date” **

**“Conversion      Price” **

|   | (a) | in                connection with a forced conversion by the Company under Section                5 hereof: |
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|  | (i) | upon                completion of a financing (the "Equity Financing") and the receipt                by the                Company of conditional approval of the TSXV for the listing of the                Company’s Common Shares thereon, at a conversion price equal to the lesser                of: |
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|  | (a) | the                conversion price described below in (b);                and |
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|   | (b) | the                price at which the Company’s Common Shares are offered in the Equity                Financing; |
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|   | (ii) | in                the event that the Equity Financing includes the issuance of warrants,                the                Company undertakes to issue warrants (the "Warrants") to each Subscriber                for Debentures on the same terms and conditions to those issued pursuant                to the Equity Financing; and |
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|   | (b) | in                connection with a conversion at the option of the Holder under section                6                hereof: |
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|   | (i) | at                the holder’s                option at a 20% discount to the average closing price in the 5 preceding                trading days of the Company’s shares listed on the Nasdaq OTC BB (the                "Exchange") prior to conversion or a 20% discount to the average                closing                price in the 5 preceding trading days of the Company’s shares listed on                the Exchange at the date that this agreement is signed, whichever                is the                lesser. |
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**“Converted      Shares” **

**“Debenture”      **

**“Encumbrance”**

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**“Equity      Financing” **

**“Exchange      Rate”**

**“Event      of Default” **

**“Holder”**
**Name**

**“**
**Intellectual      Property Rights**
**”**

**“Maturity      Date” **

**“NASDAQ      BB”**

**“Official      Body”**

**“Person”      **

**“Permitted      Encumbrances”**

|   | (a) | liens                for taxes, assessments and governmental charges not yet due or, if                due,                the validity of which is being diligently contested in good faith                and by                appropriate proceedings and in respect of which adequate provision                has                been made on the books of the                Company; |
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|   | (b) | mechanics',                workers', repairers' or other like possessory liens in respect of                any                personal property, arising in the ordinary course of business for                amounts                the payment of which is either not yet due or, if due, representing,                in                the aggregate, less than Ten Thousand Dollars ($10,000) or, if greater                than such amount, the validity of which is being contested in good                faith                and by appropriate proceedings and in respect of which adequate provision                has been made on the books of the                Company; |
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|   | (c) | liens                arising out of judgments or awards representing, in the aggregate,                less                than Ten Thousand Dollars ($10,000) or, if greater than such amount,                with                respect to which at any time an appeal or proceeding for review is                being                prosecuted in good faith and by appropriate proceedings and in respect                of                which adequate provision has been made on the books of the Company,                and                with respect to which there shall have been secured a stay of execution                pending such appeal or proceeding for                review; |
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|   | (d) | servitudes,                easements, restrictions, rights-of-way and other similar rights in                real or                immovable property or any interest therein which will not in the                aggregate                materially impair any Encumbrance on such property in favour of the                Holder                or the value or use of such                property; |
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|   |   |   |
|--------|--------|--------|
|   | (e) | the                liens resulting from the deposits of cash or securities in connection                with                contracts, tenders or compensation, surety or appeal bonds or costs                of                litigation when required by law; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | liens                given to a public utility or any municipality or governmental or                other                public authority when required to obtain the services of such utility                or                other authority in connection with the operations of the Company                in the                ordinary course of its business; |
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|   | (g) | purchase                money security interests and capital leases entered into by the Company                in                the ordinary course of business;                and |
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|   | (h) | the                Encumbrances set out on Schedule B or                the continued existence of which have been consented to by the Holder,                including the renewal, extension or refinancing of any such Encumbrance                and of the Debt secured thereby upon the same property provided that                such                Debt and the security therefor are not increased thereby. **[NOTE:                Include existing PPSA registration in favour of Energy                Ventures.]** |
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**“Principal      Amount” **

**“Rights      Offering” **

**“Special      Distribution” **

**“TSXV”**

**3.    **
**Interest**
**.**

|  | (a) | from                the date hereof until the date which is 270 days after the date hereof                or                the Conversion Date, whichever is earlier, interest shall accrue                at an                annual rate of 6% calculated monthly, not in                advance. |
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**4.    **
**Payment**
**.**

|  | (b) | The                Company shall pay in full the Principal Amount outstanding as of                the                Maturity Date, on the Maturity                Date. |
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**5.    **
**Forced      Conversion. **

**2.    **

**3.    **

**6.    **
**Conversion      at Option of Holder**

|  | (a) | This                  Debenture is convertible, in whole, at the option of the Holder,                  including                  any accrued interest, at any time prior to the close of business                  on the                  Business Day immediately preceding the Maturity Date into fully                  paid and                  non-assessable Common Shares of the Company at the                  Conversion Price. |
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|  | (b) | To                  exercise its right to require the conversion of this Debenture                  pursuant to                  section 6 hereof, the Holder shall provide the Company with written                  notice                  specifying the effective date of the conversion, the applicable                  Conversion                  Price                  and the number of Common Shares issuable on the conversion, together                  with                  this Debenture. As soon as practicable after receipt of such notice                  and                  this Debenture, the Company shall issue Common Shares to the Holder                  in                  accordance with section 8 hereof. |
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**7.    **
**Regulatory      Approval. **

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**8.    **
**Issue      of Shares Upon Conversion**

|   | (a) | Issue                of Shares.                Upon conversion of this Debenture in accordance with the terms hereof,                the                Company shall issue to the Holder, or to its written order, certificates                representing such number of Common Shares (the “**Converted                Shares**”)                as are issuable in accordance with the provisions hereof. The Principal                Amount of this Debenture shall be deemed to be repaid in full by                the                issuance of the Converted Shares. |
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|   | (b) | Reservation                of Shares.                The Company shall at all times so long as any portion of this Debenture                remains outstanding ensure that there remains available out of its                authorized but unissued Common Shares, for the purpose of effecting                the                conversion of this Debenture, such number of Common Shares as shall                from                time to time be sufficient to effect the conversion of this Debenture.                The                Company covenants that all Common Shares which shall be issued on                conversion of this Debenture shall be duly and validly issued as                fully                paid and non-assessable shares. As a condition precedent to the taking                of                any action which would result in an adjustment to the Conversion                Price,                the Company shall take any corporate action which may be necessary                in                order that the securities to which the Holder is entitled on the                full                exercise of its conversion rights in accordance with the provisions                hereof                shall be available for such purpose and that such shares may be validly                and legally issued as fully paid and non-assessable                shares. |
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|  | (a) | No                  Requirement to Issue Fractional Shares.                  No fractional Common Share or scrip representing fractional shares                  shall                  be issued upon the conversion of this Debenture. If any fractional                  interest in a Common Share would, except for the provisions of                  this                  Section, be deliverable upon conversion, the Company shall pay                  to                  the                  Holder an                  amount in cash equal (to the nearest cent) to the appropriate fraction                  of                  the Conversion Price. |
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|  | (b) | Fully                  Paid Shares.                  The Company covenants that all Common Shares which shall be issued                  in                  accordance with the terms of this Debenture shall be duly and validly                  issued as fully paid and non-assessable shares. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**9.    **
**Anti-Dilution      Provisions**

|   | (a) | Adjustment                to Conversion Price.                The Conversion Price in effect at any date shall be subject to adjustment                from time to time as follows: |
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|  | (i) | If                  and whenever at any time while any portion of this Debenture remains                  outstanding the Company shall (i) subdivide its then outstanding                  Common                  Shares into a greater number of Common Shares, (ii) consolidate                  its then                  outstanding Common Shares into a lesser number of Common Shares,                  or (iii)                  issue Common Shares (or securities exchangeable for or convertible                  into                  Common Shares) to the holders of all or substantially all of the                  outstanding Common Shares by way of stock dividend (any of such                  events in                  these clauses (i), (ii) and (iii) being called a “**Common                  Share Reorganization**”),                  then the Conversion Price shall be adjusted effective immediately                  on the                  effective date of the event in (i) or (ii) above or the record                  date at                  which the holders of Common Shares are determined for the purposes                  of any                  such dividend or distribution in (iii) above, as the case may be,                  by                  multiplying the Conversion Price in effect immediately prior to                  such                  effective date or record date, as the case may be, by a fraction,                  the                  numerator of which shall be the number of outstanding Common Shares                  on                  such effective date or record date, as the case may be, before                  giving                  effect to such Common Share Reorganization and the denominator                  of which                  shall be the number of outstanding Common Shares after giving effect                  to                  such Common Share Reorganization including, in the case where securities                  exchangeable for or convertible into Common Shares are distributed,                  the                  number of Common Shares that would have been outstanding had such                  securities been exchanged for or converted into Common Shares.                  Such                  adjustment shall be made successively whenever any such effective                  date or                  record date shall occur; and any such issue of Common Shares by                  way of                  stock dividend or other distribution shall be deemed to have been                  made on                  the record date for the stock dividend or other distribution for                  the                  purpose of calculating the number of outstanding Common Shares                  under this                  Section 9. |
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|  | (ii) | If                  and whenever at any time while any portion of this Debenture remains                  outstanding the Company shall fix a record date for the issuance                  of rights                  or warrants to its shareholders entitling the holders thereof to                  subscribe                  for or purchase Common Shares (or securities convertible into Common                  Shares) at a price per share (or having a conversion price per                  share) less                  than the Conversion Price in effect on such record date (any such                  of these                  events being called a “**Rights                  Offering**”),                  the Conversion Price shall be adjusted immediately thereafter so                  that it                  shall equal the price per share at which the Common Shares are                  issued                  under the Rights Offering. |
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|  | (iii) | If                  and whenever at any time while any portion of this Debenture is                  outstanding the Company distributes to all or substantially all                  the                  holders of its outstanding Common Shares of (i) shares of any class                  other                  than Common Shares, (ii) rights, options or warrants to acquire                  Common                  Shares or securities exchangeable for or convertible into Common                  Shares or                  property or other assets of the Company, (iii) evidence of indebtedness,                  or (iv) any property or other assets, if such distribution does                  not                  constitute (a) a dividend paid in the ordinary course, (b) a Common                  Share                  Reorganization, or (c) a Rights Offering (any of such non-excluded                  events                  herein called a “**Special                  Distribution**”),                  the Conversion Price shall be adjusted effective immediately after                  the                  record date at which holders of Common Shares are determined for                  purposes                  of the Special Distribution to be a price determined by multiplying                  the                  Conversion Price in effect on such record date by a fraction, of                  which the                  numerator shall be the number of Common Shares outstanding on such                  record                  date multiplied by the Conversion Price on such record date, less                  the fair                  market value of such shares, rights, options, warrants, evidences                  of                  indebtedness or property or other assets issued or distributed                  (as                  determined conclusively by the auditors of the Company), and of                  which the                  denominator shall be the number of Common Shares outstanding on                  such                  record date multiplied by such Conversion Price; any Common Shares                  owned                  by or held for the account of the Company or any subsidiary thereof                  shall                  be deemed not to be outstanding for the purpose of any such                  computation. |
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|  | (iv) | If                  and whenever at any time while any portion of this Debenture is                  outstanding there is a capital reorganization of the Company or                  a                  reclassification of the Common Shares or other change of the Common                  Shares                  (other than a Common Share Reorganization) or a consolidation or                  an                  amalgamation or merger of the Company with or into any other corporation                  (other than a consolidation, amalgamation or merger which does                  not result                  in a reclassification of the outstanding Common Shares or a change                  of the                  Common Shares into other securities), or a transfer of all or                  substantially all of the undertaking or assets of the Company to                  another                  corporation or other entity in which the holders of Common Shares                  are                  entitled to receive shares or other securities or property (any                  of such                  events being a “**Capital                  Reorganization**”),                  the Holder thereafter shall, upon converting this Debenture, be                  entitled                  to receive, and shall accept, in lieu of the number of Common Shares                  to                  which it was theretofore entitled upon such conversion, the kind                  and                  amount of shares and other securities or property which the Holder                  would                  have been entitled to receive as a result of such Capital Reorganization,                  on the effective date thereof, the Holder had been the registered                  holder                  of the number of Common Shares to which it was theretofore entitled                  upon                  conversion. |
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|  | (v) | There                  will be no adjustment of the Conversion Price in respect of any                  event                  described in clause (i) (ii) or (iii) of this subsection 9(a) if                  the                  Holder is entitled to participate in such event on the same terms                  *mutatis                  mutandis*                  as                  if it had converted its Debenture prior to or on the applicable                  record                  date. |
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|  | (vi) | In                  any case in which this subsection 9(a) shall require that an adjustment                  shall become effective immediately after a record date for an event                  referred to herein, the Company may defer, until the occurrence                  of such                  event, issuing to the Holder in the event this Debenture is converted                  after such record date and before the occurrence of such event                  the                  additional Common Shares issuable upon such conversion by reason                  of the                  adjustment required by such event before giving effect to such                  adjustment;                  provided, however, that the Company shall deliver to the Holder                  an                  appropriate instrument evidencing the Holder’ right to receive such                  additional Common Shares upon the occurrence of the event requiring                  such                  adjustment and the right to receive any distributions made on such                  additional Common Shares declared in favour of holders of record                  of Common                  Shares on and after the Conversion Date or such later date as the                  Holder                  would, but for the provisions of this clause (vi), have become                  the Holder                  of record of such additional Common                  Shares. |
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|  | (vii) | The                  adjustments provided for in this subsection 9(a) are cumulative,                  shall be                  computed to the nearest one tenth of one cent and shall be made                  successively whenever an event referred to therein shall occur,                  provided,                  that, notwithstanding any other provision of this subsection 9(a),                  no                  adjustment of the Conversion Price shall be required unless such                  adjustment would require an increase or decrease of at least 1%                  in the                  Conversion Price then in effect; provided however, that any adjustments                  which by reason of this clause (vii) are not required to be made                  shall be                  carried forward and taken into account in any subsequent                  adjustment. |
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|  | (viii) | No                  adjustment of the Conversion Price shall be made pursuant to this                  subsection 9(a) in respect of the issue from time to time of Common                  Shares                  pursuant to this Debenture or pursuant to any stock option or stock                  purchase plan(s) in force from time to time for officers, employees                  or                  consultants of the Company or shareholders of the Company who exercise                  an                  option to receive substantially equivalent dividends in Common                  Shares in                  lieu of receiving a cash dividend paid in the ordinary course,                  and any                  such issue shall be deemed not to be a Common Share                  Reorganization. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ix) | In                  the event of any question arising with respect to the adjustments                  provided                  in this subsection 9(a), such question shall be conclusively determined                  by                  a firm of chartered accountants acceptable to the Company and the                  Holder.                  Such accountants shall have access to all necessary records of                  the Company                  and such determination shall be binding upon the Company and the                  Holder. |
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|   | (b) | Notice                of Adjustment of Conversion Price, etc..                If there shall be any adjustment as provided in subsection 9(a) above,                the                Company shall forthwith cause written notice thereof to be sent                to                the Holder,                which notice shall be accompanied by a certificate of the President                of the                Company setting forth in reasonable detail the basis of such                adjustment. |
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|  | (c) | Notice                of Certain Events.                In the event that: |
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|  | (x) | the                  Company shall declare on its Common Shares any dividend or make                  any other                  distribution on its Common                  Shares; |
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|  | (xi) | there                  shall be an amalgamation or merger of the Company with or into                  any other                  corporation or a sale, transfer or other disposition of all or                  substantially all of the assets of the Company;                  or |
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|  | (xii) | there                  shall be a voluntary or involuntary dissolution, liquidation or                  winding up                  of the Company; |
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**10.    **
**Representations      and Warranties**

|   | (a) | it                has been continued and is validly subsisting as a corporation under                the                laws of Ontario, and has the power and authority to enter into and                perform                its obligations under this Debenture and to own its property and                carry on                its business as currently                conducted; |
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|   | (b) | the                execution, delivery and performance of this Debenture has been duly                authorized by all requisite corporate action; this Debenture and                all                instruments and agreements delivered pursuant hereto have been duly                executed and delivered by the Company and constitute valid and binding                obligations of the Company enforceable against the Company in accordance                with their terms; |
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|   | (c) | neither                the execution nor delivery of this Debenture or any agreements or                instruments delivered pursuant hereto, the consummation of the                transactions herein and therein contemplated, nor compliance with                the                terms, conditions and provisions hereof or thereof conflicts with                or will                conflict with, or results or will result in any material breach of,                or                constitutes a default under any of the provisions of the constating                documents or by-laws of the Company any law, rule or regulation having                the                force of law applicable to the Company, including applicable securities                laws, rules, policies and regulations or any contract or agreement                binding                upon or to which the Company is a                party; |
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|   | (d) | no                event has occurred which constitutes, or with notice or lapse of                time or                both, would constitute an Event of                Default; |
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|   | (e) | the                execution and delivery of this Debenture by the Company and the                performance by the Company of its obligations hereunder have been                duly                authorized by all necessary corporate action; no consent, approval,                order,                authorization, licence, exemption or designation of or by any Official                Body is required in connection with the execution, delivery and                performance by the Company of its obligations under this Debenture                and no                registration, qualification, designation, declaration of filing with                any                Official Body is or was necessary to enable or empower the Company                to                enter into and to perform its obligations under this Debenture except                such                as have been made or obtained and are in full force and effect, unamended,                on the Closing Date; |
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|   | (f) | the                Company is the sole and beneficial owner of all of the Charged Assets                (except any leased assets) and, where applicable, are duly registered                as                the owner thereof, with a good and marketable title thereto, free                and                clear of all Encumbrances except for Permitted                Encumbrances; |
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|   | (g) | there                are no actions, suits, grievances or proceedings threatened or taken                before or by any Official Body or by any elected or appointed public                official or private person, which challenges the validity or propriety                of                the transactions contemplated under this Debenture or any of the                documents, instruments and agreements executed or delivered in connection                therewith or related thereto which could be reasonably anticipated                to have                a material adverse effect on the business, operations, properties,                assets,                capitalization, financial condition or prospects of the                Company; |
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|   | (h) | the                Company is not in default under any material applicable statute,                rule,                order, decree or regulation of any Official Body having jurisdiction                over                it or any of the Charged Assets;                and |
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|   | (i) | to                the best of the knowledge of the Company, the Company has complied                and is                complying in all material respects with all federal, provincial and                local                laws, rules, regulations, notices, approvals, ordinances and orders                applicable to its business, property, assets and                operations. |
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**11.    **
**Survival      of Representations and Warranties**

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**12.    **
**Affirmative      Covenants**

|   | (a) | do                or cause to be done all things necessary to keep in full force and                effect                its corporate existence and all qualifications to carry on its business                in                each jurisdiction in which it owns property or carries on business                from                time to time; |
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|   | (b) | comply                with all applicable governmental laws, restrictions and regulations                and                orders; |
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|   | (c) | pay                or cause to be paid all taxes, government fees and dues levied, assessed                or imposed upon it and its property or any part thereof, as and when                the                same become due and payable, unless any such taxes, fees, dues, levies,                assessments or imposts are in good faith contested by it; |
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|   | (d) | forthwith                notify the Holder of the occurrence of any Event of Default or any                event                of which it is aware which with notice or lapse of time or both would                constitute an Event of Default; |
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|  | (c) | it                shall continue to make all required filings under the *Securities                Act*                (Alberta) to maintain its reporting issuer status in Alberta;                and |
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|  | (d) | it                shall duly and pay or cause to be paid to the Holder the Principal                Amount                and all other moneys payable on or pursuant to this Debenture on                the                dates, at the places and in the manner set forth herein. |
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**13.    **
**Negative      Covenants**

|   | (a) | Encumbrances,                etc.                -                Create or suffer to exist any Encumbrance to secure or provide for                the                payment of any Debt or any other obligation other than Permitted                Encumbrances; |
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|   | (b) | Mergers,                etc.                -                Enter into any transaction (whether by way of reconstruction,                reorganization, arrangement, consolidation, amalgamation, merger,                joint                venture, transfer, sale, lease or otherwise) whereby any material                part of                the Charged Assets would become the property of any Person other                than the                Company or whereby all or any material part of the undertaking, property                and assets would become the property of any Person other than the                Company                or in the case of any amalgamation involving the Company would become                the                property of any other person other than the Company by virtue of                such                Person's direct or indirect ownership interest in the continuing                Debtor                resulting therefrom; and |
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|  | (c) | Sale                of the Company                -                Enter into any transaction for the Sale of the                Company. |
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**14.**
**Grant      of Mortgages, Charges and Security Interests**

**Security**

|   | (a) | mortgages                and charges (subject to the exceptions as to leaseholds hereinafter                contained) as and by way of a fixed and specific mortgage and charge                to                and in favour of the Holder, and grants to the Holder a security                interest                in, all real and immoveable property (including, by way of sub-lease)                any                leased premises now or hereafter owned or acquired by the Company                and all                buildings erections, improvements, fixtures and plants now or hereafter                owned or acquired by the Holder (whether the same form part of the                realty                or not) and all appurtenances to any of the foregoing; for the purposes                of                this subsection 14.1(a), all references to "real and immoveable property"                shall be read to include any estate or interest in or right with                respect                to real and immoveable property; |
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|   | (b) | mortgages                and charges to the Holder and grants to the Holder a security interest                in,                all its present and future equipment, and all fixtures, plant, machinery,                tools and furniture now or hereafter owned or acquired by                them; |
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|   | (c) | mortgages                and charges to and in favour of the Holder, and grants to the Holder                a                security interest in, all its present and future inventory, including,                without limiting the generality of the foregoing, all raw materials,                goods                in process, finished goods and packaging material and goods acquired                or                held for sale or furnished or to be furnished under contracts of                rental or                service; |
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|   | (d) | grants                to the Holder a security interest in, all its present and future                intangibles, including, without limiting the generality of the foregoing,                all its present and future book debts, accounts and other amounts                receivable, contract rights and choses in action of every kind or                nature                including insurance rights arising from or out of any insurance now                or                hereafter placed on or in respect of the assets referred to in subsections                14.1(a), (b) or (c), goodwill, chattel paper, instruments of title,                investments, money, securities and all Intellectual Property                Rights; |
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|   | (e) | charges                in favour of the Holder as and by way of a floating charge, and grants                to                the Holder a security interest in, its business and undertaking and                all of                its property and assets, real and personal, moveable or immoveable,                of                whatsoever nature and kind, both present and future (other than property                and assets hereby validly assigned or subjected to a specific mortgage,                charge or security interest by this subsections 14.1(a), (b), (c)                or (d)                and subject to the exceptions hereinafter contained); and |
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|   | (f) | assigns,                mortgages and charges to and in favour of the Holder, and grants                to the                Holder a security interest in, the proceeds arising from any of the                assets                referred to in this Section 14.1; |
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|   | (g) | grants                to the Holder a security interest in the right, title and interest                the                Company has to the Intellectual Property                Rights; |
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**Location      of the Charged Assets**

**Exceptions      to Charge**

**15.    **
**Remedies**

|   | (a) | Upon                the occurrence and continuation of an Event of Default which has                not been                remedied, the Holder shall not be required to advance any portion                of the                Loan which has not then been advanced. Upon the occurrence and                continuation of an Event of Default which has not been remedied,                the                Holder may proceed to realize upon the Security granted hereby and                under                the Security and to enforce its rights                by: |
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|  | (i) | entry                or taking into possession of all or any part of the Charged                Assets; |
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|   | (ii) | the                appointment by instrument in writing of a receiver or receivers of                the                Charged Assets or any part thereof (which receiver or receivers may                be any                person or persons, whether an officer or officers or employee or                employees                of the Holder or not, and the Holder may remove any receive or receivers                so appointed and appoint another or others in his or her                stead); |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | (iii) | proceedings                in any court of competent jurisdiction for the appointment of a receiver                or receivers or for the sale of the Charged Assets or any part                thereof; |
|--------|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | any                other action, suit, remedy or proceeding authorized or permitted                hereby or                by law or by equity; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (v) | collecting                any proceeds arising in respect of the Charged                Assets; |
|--|-----|-------------------------------------------------------------------------------------------------|

|   |   | (vi) | collecting,                realizing upon or selling or otherwise dealing with any accounts                of the                Company; or |
|--------|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | preparing                for the disposition of the Charged Assets, whether on the premises                of the                Company or otherwise. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | In                addition, the Holder may file such proofs of claim and other documents                as                may be necessary or advisable in order to have its claim lodged in                any                bankruptcy, winding-up or other judicial proceedings relative to                the                Company. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**16.    **
**Events      of Default and Remedies**

|  | (a) | **Events                  of Default.**                  Any one or more of the following events shall constitute an Event                  of                  Default hereunder: |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (i) | Default                  in Principal -                  If the Company fails to repay the Principal Amount then outstanding                  on the                  Maturity Date. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | Default                  hereunder                  -                  If the Company materially defaults in the performance or observance                  of any                  term, condition or covenant contained in this Debenture and such                  default                  continues for a period of 15 Business Days or more after written                  notice                  thereof has been delivered by the Holder to the                  Company. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iii) | Winding-up,                  etc.                  -                  If an order is made or an effective resolution passed for the winding-up,                  liquidation or dissolution of the                  Company. |
|--|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iv) | Insolvency,                  etc.                  -                  If the Company consents to or makes a general assignment for the                  benefit                  of creditors or makes a proposal under *Bankruptcy                  Act*(Canada),                  the *Companies’                  Creditors Arrangement Act*(Canada)                  or any other bankruptcy, insolvency or analogous laws, or is declared                  bankrupt, or if a liquidator, trustee in bankruptcy, custodian                  or receiver                  and manager or other officer with similar powers is appointed of                  the                  Company or of its property or any part thereof which in the opinion                  of the                  Holder, acting reasonably, is a substantial part thereof and such                  appointment is not being contested in good faith by the                  Company. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | (v) | Encumbrancers                  -                  If an encumbrancer takes possession of the property of the Company                  or any                  part thereof which in the opinion of the Holder, acting reasonably,                  is a                  substantial part thereof, or if a distress or execution or any                  similar                  process is levied or enforced against such property and remains                  unsatisfied for such period as would permit such property or such                  part                  thereof to be sold thereunder, provided that such possession or                  process                  has not been stayed and is not being contested in good faith by                  the                  Company. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (vi) | If                  the Common Shares of the Company are delisted from the NASDAQ BB                  or if the                  Company ceases to be a Reporting Issuer in the Province of Alberta                  or                  another Province in Canada acceptable to the                  Holder. |
|--|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | **Acceleration**.                Upon the occurrence of any one or more of the Events of Default,                all                indebtedness of the Company to the Holder hereunder shall, at the                option                of the Holder, immediately become due and payable without presentment,                demand, protest or other notice of any kind, all of which are expressly                waived by the Company, and all collateral and securities shall thereupon                become enforceable by the Holder or its duly authorized                agent. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (c) | **Remedies                Cumulative**.                The rights and remedies of the Holder hereunder are cumulative and                in                addition to and not in substitution for any rights or remedies provided                by                law. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**17.    **
**Further      Assurances**

**18.    **
**Dealings      by the Holder**
**.      **

**19.    **
**Notices**

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**Name>**

**Address>**

**20.    **
**Successors      and Assigns**

**21.    **
**Governing      Law**

**22.    **
**Currency**
**.**

**23.    **
**Headings**
**.**

**24.    **
**Entire      Agreement**

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**DATED      **

**ASTRIS      ENERGI INC.**

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