Document:

EX 10.14

    EXHIBIT
      10.14

     

    AGREEMENT

    

    

    

    

    

    among

     

    

    ASTRIS
      ENERGI INC.

     

    

     

    AND

     

    

     

    MACNOR
      CORPORATION

     

    

     

    AND

     

    

     

    2062540
      ONTARIO INC.

     

    

     

    

     

    

     

    

     

    JANUARY
      20,
      2005

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

    THIS
      AGREEMENT made effective
      as of the second day of January 2005
      among ASTRIS
      ENERGI INC., a
      corporation incorporated under the laws of Ontario (“AEI”),
      and MACNOR
      CORPORATION,
      a
      corporation incorporated under the laws of Ontario (“Macnor”)
      and 2062540
      Ontario Inc.,
      a
      corporation incorporated under the laws of Ontario (“Holdco”).

     

    WITNESSETH
      that the parties have agreed as follows:

     

    
      	1.	
              Definitions

            

    

     

    As
      used
      in this agreement:

     

    “AEI
      Shares”
      means
      5,000,000 treasury
      shares in the capital of AEI to be issued at
      a
      price of $0.39 per share for
      an
      aggregate consideration of $1,955,000;

     

    “AEI
      Technology”
      means
      the fuel cell technology developed by AEI;

     

    “AEI
      Warrants”
      means
5,000,000
      warrants
      to purchase common
      shares of AEI having
      the
      attributes set out in Schedule A;

     

    “Applicable
      Law” with
      respect to any Person or property, means all laws, including Canadian and Czech
      Republic laws, treaties, statutes, ordinances, judgments, decrees, injunctions,
      writs, awards and orders of any Governmental Authority or arbitrator (to the
      extent such Person or property is subject to the jurisdiction of such
      Governmental Authority or arbitrator) and rules, regulations, policies and
      guidelines (having the force of law), directives, interpretations, licenses,
      exemptions and permits of any Governmental Authority, in each case applicable
      to
      such Person or property within the jurisdiction of such Government
      Authority;

     

    “Authorizations”
      means
      all authorizations, consents, waivers, exceptions, permits, entitlements,
      licenses, orders, decrees, approvals, exemptions, certifications, development
      permits, authorities to construct, licenses or permits to operate, environmental
      approvals and other authorizations from, and all registrations, filings or
      declarations with or notices to, any Governmental Authority that relate to
      or
      concern in any way or are required for the operation of the business, whether
      now existing or hereafter created;

     

    “Business
      Day”.
      means a
      day which is not a Saturday, Sunday or holiday in the City of Toronto, Province
      of Ontario;

     

    “Claims”
      means
      liabilities, losses, obligations, damages, penalties, claims (including claims
      involving liability in tort, strict or otherwise), actions, suits, judgments,
      costs, expenses and disbursements, whether or not any of the foregoing shall
      be
      founded or unfounded (including reasonable fees and out-of-pocket expenses
      of
      counsel);

     

    “Closing”
      means
      the completion of the purchase of the Purchased Shares represented by Instalment
      Receipts to the public pursuant to the Offering; 

     

    “Date
      of Closing”
      means
      the date on which Closing occurs; and “Time of Closing” means the time on the
      Date of Closing at which Closing occurs;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Counsel”
      means a
      barrister or solicitor or firm of barrister and solicitors or other lawyers
      in
      an appropriate jurisdiction retained by any Party.;

     

    “CVS”
      means
      Corporate Valuation Services Limited;

     

    “Escrow
      Agreement”
      means
      the escrow
      requirements and agreement in Schedule B attached;

     

    “Fairness
      Opinion”
      means
      the fairness opinion dated January 14, 2005 issued by CVS opining as to the
      fairness of the Transaction;

     

    “GAAP”
      means
      accounting principles generally accepted in Canada including those
      recommendations set forth in the “CICA Handbook” published by the Canadian
      Institute of Chartered Accountants, as amended from time to tune, which are
      applicable to the circumstances as of the date of determination;

     

    “Governmental
      Authority”
      means
      the Government of Canada or the Czech Republic or a political subdivision
      thereof and any court or other entity exercising executive, legislative,
      judicial, regulatory or administrative functions of or pertaining to government
      in Canada or the Czech Republic or political subdivision thereof, and any
      corporation or other entity owned or controlled, through share ownership or
      otherwise, by any of the foregoing;

     

     “Interim
      Period” means
      the
      period between the date of this Agreement and the Closing Date;

     

    “Misrepresentation”
      means
      with respect to any statement, representation or warranty, any untruth of any
      material statement therein or omission to state any matter necessary to make
      any
      material statement therein
      not
      misleading in light of the circumstances.;

     

    “MOU”
      means
      the Memorandum of Understanding dated September 16, 2004 which is superseded
      by
      this Agreement;

     

    “Person”
      means
      any individual, partnership, corporation, trust, company, Governmental Authority
      or any other entity.;

     

    “Shareholder
      Approval”
      means
      approval of the Transaction which was
      obtained
      at a
      meeting of shareholders on October 22, 2004;

     

    “SRO”
      means
      Astris s.r.o., a corporation incorporated and existing under the laws of the
      Czech Republic;

     

    “SRO
      Business”
      means
      the business carried on by SRO at the date hereof;

     

    “SRO
      Financial Statements”
      means
      the unaudited financial statements of SRO for each
      of
the
      years
      ended
      December
      31, 2002 and
      December
      31, 2003 and the unaudited financial statements of SRO for the nine
      months
      ended September
      30,
      2004;

     

    “Tax”
      means
      any and all fees (including, without limitation, documentation,
      recording, license and registration fees), taxes (including, without limitation,
      income, capital, gross receipts, sales, use, property (personal and real,
      tangible and intangible), excise and stamp taxes), levies, imports, duties,
      charges, assessments or withholdings of any nature whatsoever, general or
      special, ordinary or extraordinary, together with any and all penalties, fines,
      additions to tax and interest thereon.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    “Transaction”
      means
      the transaction provided for in this agreement whereby SRO will become a
      wholly-owned subsidiary of AEI;

     

    “Purchased
      Shares” means
      all
      the issued and outstanding shares of Holdco which at the Date of Closing will
      be
      the beneficial owner of the 70% of the issued and outstanding share capital
      of
      SRO not currently owned by AEI;

     

    “Valuation
      Report”
      means
      the valuation report of SRO as of June 30, 2004 dated August 9, 2004 provided
      to
      the Special Committee of the board of directors of AEI by CVS.

     

    
      
        	2.	
                Purpose

              

      

       

    

    At
      the
      date hereof, SRO is owned as to 70% by Macnor (which holds its interest through
      Holdco) and as to 30% by AEI. The transfer of SRO to complete the Transaction
      shall be satisfied by sale and transfer of all of the Purchased Shares from
      Macnor to AEI. The parties have agreed that, to accommodate the future
      development and financing of AEI’s business, SRO should become a wholly-owned
      subsidiary of AEI with each having access to the other’s technology.
      Accordingly, AEI, through a Special Committee of its Board commissioned the
      Valuation Report to assist it in determining the value of SRO for purposes
      of
      consummating the share acquisition by a negotiation between the directors of
      AEI
      other than Jiri K. Nor acting on behalf of AEI, and Jiri K. Nor acting on behalf
      of Macnor. The
      parties
      entered into the MOU, which subsequently received Shareholder Approval on
      October 22, 2004. As contemplated by the MOU, the
      parties
      are entering into this Agreement to provide for the basis on which SRO will
      become wholly owned by AEI.

     

    
      	3.	
              Sale
                and Purchase

            

    

     

    At
      the
      time of Closing Macnor shall sell and AEI shall purchase the Purchased Shares
      for a purchase price of
      $2,209,000 to be paid in the form
      of the
      AEI Shares and the AEI Warrants and otherwise on the terms and conditions
      contained in this Agreement.
      The AEI
      Shares, the AEI Warrants and the shares issuable on the exercise of the AEI
      Warrants will be subject to the Escrow Requirements.

     

    
      
        	4.	
                Macnor
                  Representations and
                  Warranties

              

      

    

     

    Macnor
      hereby represents and warrants to AEI as follows, it being understood and agreed
      that AEI is relying on such representations and warranties to induce it to
      enter
      into this Agreement:

    
      
         

        
          
            	
                  	(a)	
                    Macnor,
                      Holdco and SRO are each validly subsisting corporations under
                      the laws of
                      their respective jurisdictions of incorporation and SRO is
                      duly registered
                      to carry on business in each jurisdiction where the failure
                      to be so
                      registered could reasonably be expected to have a material
                      adverse effect
                      on its business, properties or condition (financial or
                      otherwise);

                  

          

        

         

         

        
          
             

          

          
            -3-

            
              

            

          

          
             

          

        

         

        
          
            	
                  	(b)	
                    Macnor,
                      Holdco and SRO each has all requisite power and authority to
                      conduct its
                      business as is presently being conducted and to execute, deliver
                      and
                      perform this Agreement and any documents to which it is or
                      is to be a
                      party; 

                  

          

        

         

        
          
            	
                  	(c)	
                    the
                      execution, delivery and performance by Macnor and Holdco of
                      this Agreement
                      have been duly authorized by all necessary corporate action
                      and will
                      require approval at a meeting of shareholders of SRO and subsequent
                      registration by the Court of Commerce in Czech
                      Republic;

                  

          

        

         

        
          
            	
                  	(d)	
                    this
                      Agreement has been duly executed and delivered by Macnor and
                      Holdco and
                      constitutes their legal, valid and binding obligation, enforceable
                      against
                      them in accordance with its terms, except as such enforceability
                      may be
                      affected by bankruptcy, insolvency, arrangement, moratorium
                      or other laws
                      affecting the enforcement of creditors' rights generally and
                      the fact that
                      the availability of equitable remedies may be limited by equitable
                      principles of general
                      application;

                  

          

        

         

        
          
            	
                  	(e)	
                    subject
                      to clause (c), the execution and delivery by both parties of
                      this
                      Agreement and the performance by them of their obligations
                      hereunder do
                      not require any authorization under any Applicable Law or approvals,
                      consents or waivers of third parties and are not inconsistent
                      with and do
                      not contravene any provision of or constitute a default under
                      (i) their
                      constating documents or by-laws, as applicable; (ii) any judgement,
                      injunction, decree or order applicable to them or any of their
                      properties;
                      (iii) any Applicable Law or authorization applicable to it
                      or any of its
                      properties; or (iv) any indenture, mortgage, contract or other
                      instrument
                      to which they are a party or by which their or their property
                      may be bound
                      or affected;

                  

          

        

         

        
          
            	
                  	(f)	
                    to
                      the best of its knowledge there
                      is no action, suit, investigation or proceeding pending (or,
                      to their
                      knowledge, threatened) against SRO before any Governmental
                      Authority
                      which, individually or in the aggregate, if determined adversely
                      to its
                      interests, could reasonably be expected to adversely affect
                      the
                      consummation of the transactions contemplated hereby to which
                      it is a
                      party or the performance by it of its obligations hereunder
                      or thereunder,
                      nor is it in default with respect to any order of any Governmental
                      Authority which default could reasonably be expected to adversely
                      affect
                      the consummation of the transactions contemplated hereby to
                      which it is a
                      party or the performance by it of its obligations hereunder
                      or
                      thereunder;

                  

          

        

         

        
          
            	
                  	(g)	
                    to
                      the best of its knowledge the description of the SRO Business
                      and all
                      other information with respect to SRO contained in the Valuation
                      Report,
                      taken together with the SRO Financial Statements, constitutes
                      full, true
                      and plain disclosure of all material facts relating to the
                      SRO Business
                      and SRO and does not contain any material Misrepresentation
                      with respect
                      to the SRO Business or SRO;

                  

          

        

         

        
          
            	
                  	(h)	
                    Macnor
                      is the registered owner of the Purchased Shares and will transfer
                      and
                      convey good and marketable title to the Purchased Shares to
                      AEI at the
                      Time of Closing free and clear of any liens, charges, security
                      interests
                      or other adverse claims or encumbrances of any nature
                      whatsoever;

                  

          

        

         

         

        
          
             

          

          
            -4-

            
              

            

          

          
             

          

        

         

        
          
            	
                  	(i)	
                    no
                      Person has any agreement or option or any right or privilege
                      capable of
                      becoming an agreement or option for the purchase of the Purchased
                      Shares
                      or to the best of its knowledge for the purchase, subscription
                      or issuance
                      of any securities of SRO;

                  

          

        

         

        
          
            	
                  	(j)	
                    the
                      SRO Financial Statements as of June 30, 2004 provided to prepare
                      the
                      Valuation Report have not been amended prior to the date
                      hereof;

                  

          

        

         

        
          
            	
                  	(k)	
                    other
                      than capital expenditures subsequent to September
                      30, 2004,
                      to its knowledge:

                  

          

        

         

        
          
            	
                  	(i)	
                    there
                      has not been any material change (financial or otherwise) in
                      the business,
                      affairs, operations, assets, liabilities (contingent or otherwise),
                      capital or prospects of SRO;
                      and

                  

          

        

         

        
          
            	
                  	(ii)	
                    SRO
                      has carried on, and will continue to carry on the SRO Business
                      in the
                      ordinary course;

                  

          

        

         

        
          
            	
                  	(l)	
                    to
                      the best of its knowledge SRO has no material liabilities,
                      contingent or
                      otherwise other than as disclosed in the SRO Financial Statements
                      as at
                      September 30, 2004 or as otherwise disclosed in writing to
                      AEI;

                  

          

        

         

        
          
            	
                  	(m)	
                    to
                      the best of its knowledge there is no action, suit, investigation
                      or
                      proceeding pending (or, to their knowledge, threatened) against
                      SRO before
                      any Governmental Authority which, individually or in the aggregate,
                      if
                      determined adversely to the interest of SRO, could reasonably
                      be expected
                      to adversely affect the condition, financial or otherwise,
                      of the SRO
                      Business or the financial results or condition of SRO;
                      and

                  

          

        

         

        
          
            	
                  	(n)	
                    Macnor
                      is not a non-resident of Canada for the purposes of the Income
                      Tax Act Canada
                      and regulations made
                      thereunder.

                  

          

        

         

        
          
            	
                  	(o)	
                    At
                      the Closing Time, Holdco will have no assets except the Purchased
                      Shares
                      and will have no liabilities.

                  

          

        

         

        
          
            	5.	
                    AEI
                      Representations and
                      Warranties

                  

          

        

         

        AEI
          represents and warrants to Macnor as follows, it being understood and agreed
          that Macnor is relying on such representations and warranties to induce
          them to
          enter into this Agreement:

         

        
          
            	
                  	(a)	
                    AEI
                      is a validly subsisting corporation under the laws of its jurisdiction
                      of
                      incorporation and is duly registered to carry on business in
                      each
                      jurisdiction where the failure to be so registered could reasonably
                      be
                      expected to have a material adverse effect on its business,
                      properties or
                      condition (financial or
                      otherwise);

                  

          

        

         

         

        
          
             

          

          
            -5-

            
              

            

          

          
             

          

        

         

        
          
            	
                  	(b)	
                    AEI
                      has all requisite power and authority to conduct its business
                      as is
                      presently being conducted and to execute, deliver and perform
                      this
                      Agreement and any documents to which it is or is to be a party;
                      

                  

          

        

         

        
          
            	
                  	(c)	
                    the
                      execution, delivery and performance by AEI of this Agreement
                      have been
                      duly authorized by all necessary corporate action, and do not
                      require any
                      consents or approvals other than those which have already been
                      obtained or
                      as disclosed in this
                      Agreement;

                  

          

        

         

        
          
            	
                  	(d)	
                    this
                      Agreement has been duly executed and delivered by AEI and constitutes
                      its
                      legal, valid and binding obligation, enforceable against it
                      in accordance
                      with its terms, except as such enforceability may be affected
                      by
                      bankruptcy, insolvency, arrangement, moratorium or other laws
                      affecting
                      the enforcement of creditors' rights generally and the fact
                      that the
                      availability of equitable remedies may be limited by equitable
                      principles
                      of general application;

                  

          

        

         

        
          
            	
                  	(e)	
                    the
                      execution and delivery by it of this Agreement and the performance
                      by it
                      of its obligations hereunder do not require any authorization
                      under any
                      Applicable Law or approvals, consents or waivers of third parties
                      and are
                      not inconsistent with and do not contravene any provision of
                      or constitute
                      a default under (i) its constating documents or by-laws, as
                      applicable;
                      (ii) any judgement, injunction, decree or order applicable
                      to it or any of
                      its properties; (iii) any Applicable Law or authorization applicable
                      to it
                      or any of its properties; or (iv) any indenture, mortgage,
                      contract or
                      other instrument to which either of them is a party or by which
                      they or
                      their property may be bound or affected;
                      and

                  

          

        

         

        
          
            	
                  	(f)	
                    the
                      AEI Shares and the AEI Warrants will, at their date of issue,
                      be validly
                      issued securities of AEI.

                  

          

        

         

        
          
            	6.	
                    Survival
                      

                  

          

        

         

        The
          representations and warranties of the parties contained in this Agreement
          or any
          agreement, certificate or other document delivered pursuant hereto shall
          survive
          the Closing and shall continue in full force and effect for a period of
          12
          months, provided that no action may be brought for any Misrepresentation
          contained herein after 12 months from the Closing.

         

        
          
            	7.	
                    Further
                      Assurances

                  

          

        

         

        Each
          party shall (i) do or cause to be done and execute or cause to be executed
          all
          such things and documents as may be necessary or advisable in connection
          with
          the implementation of the transactions contemplated by this Agreement;
          (ii) take
          all such actions as may be necessary or desirable in order to obtain any
          Governmental Authority which may be required in connection with the consummation
          of the transactions contemplated by this Agreement; and (iii) with reasonable
          promptness notify each of the other parties hereto and their counsel of
          the
          occurrence of any fact or event which may reasonably be expected to hinder
          or
          prevent the consummation of the transactions contemplated hereby.

         

        
          
             

          

          
            -6-

            
              

            

          

          
             

          

        

         

        
          
            	8.	
                    Indemnity
                      and Escrow Agreement

                  

          

        

         

        Macnor
          hereby indemnifies and saves harmless AEI for any damages suffered by AEI
          as a
          result of a material breach by Macnor of its representations and warranties
          contained in Section 4 of this Agreement, on the following basis:

         

        
          
            	
                  	(a)	
                    A
                      claim for damages by AEI under this Section 8 must be delivered
                      to Macnor
                      and proven to the satisfaction of Macnor, acting
                      reasonably;

                  

          

        

         

        
          
            	
                  	(b)	
                    In
                      the event a claim is properly made by AEI under this Section
                      8, then the
                      amount of the claim shall be paid to AEI by the release of
                      the equivalent
                      amount of the 2,500,000 AEI Shares (the "Escrowed
                      Shares")
                      deposited into escrow under the terms of the Escrow Agreement
                      attached
                      hereto as Schedule "B". The number of Escrowed Shares required
                      to pay such
                      claim to AEI shall be
                      in
                      an amount equal to the damages
                      based on the 5-day average closing AEI share price at the time
                      of the
                      claim being made;

                  

          

        

         

        
          
            	
                  	(c)	
                    In
                      no event may the amount paid by Macnor in satisfaction of any
                      amounts
                      owing to AEI under this Section 8 exceed the Escrowed
                      Shares;

                  

          

        

         

        
          
            	
                  	(d)	
                    No
                      claim may be made by AEI under this Section 8 unless such claim
                      has been
                      received by Macnor prior to January 2, 2006 (the "Escrow
                      Termination").
                      Any claim received after the Escrow Termination will be null
                      and void and
                      of no further force or effect; and

                  

          

        

         

        
          
            	
                  	(e)	
                    All
                      Escrowed Shares remaining on the Escrow Termination shall be
                      released to
                      Macnor, and the indemnity provided under this Section 8 will
                      thereafter
                      terminate.

                  

          

        

         

        AEI
          hereby indemnifies and saves harmless Macnor for any damages suffered by
          Macnor
          as a result of a material breach by AEI of its representations and warranties
          contained in Section 4 of this Agreement, on the following basis:

         

        
          
            	
                  	(a)	
                    A
                      claim for damages by Macnor under this Section 8 must be delivered
                      to AEI
                      and proven to the satisfaction of AEI, acting
                      reasonably;

                  

          

        

         

        
          
            	
                  	(b)	
                    In
                      the event a claim is properly made by Macnor under this Section
                      8, then
                      the amount of the claim shall be paid to Macnor in AEI shares
                      to be issued
                      from treasury, with the amount of AEI Shares issued to Macnor
                      to be of
                      equivalent value to the claim, calculated based on the 5-day
                      average
                      closing AEI share price at the time of the claim being
                      made;

                  

          

        

         

        
          
            	
                  	(c)	
                    In
                      no event may the amount paid by AEI in satisfaction of any
                      amounts owing
                      to Macnor under this Section 8 exceed 2,500,000 AEI shares;
                      and

                  

          

        

         

        
          
            	
                  	(d)	
                    No
                      claim may be made by Macnor under this Section 8 unless such
                      claim has
                      been received by AEI prior to January 2, 2006. Any claim received
                      after
                      January 2, 2006 will be null and void and of no further force
                      or
                      effect.

                  

          

        

         

         

        
          
             

          

          
            -7-

            
              

            

          

          
             

          

        

         

        
          
            	9.	
                    Conditions
                      Precedent

                  

          

        

         

        
          
            	
                  	(a)	
                    Conditions
                      Precedent - AEI

                  

          

        

         

        The
          obligations of the Purchaser to complete the transactions contemplated
          hereby
          are additionally subject to the fulfilment, or waiver by it, on or before
          the
          Time of Closing of each of the following conditions, which the parties
          acknowledge are for the exclusive benefit of the Purchaser and may be waived
          by
          it at any time:

         

        
          
            	
                  	(i)	
                    there
                      shall have been obtained, from all appropriate governmental
                      or
                      administrative bodies, such licences, permits, consents, approvals,
                      certificates, registrations and authorizations as are required
                      to be
                      obtained by the Vendor to permit the consummation of the Transaction
                      and
                      the consummation of the Transaction shall not violate or contravene
                      any
                      injunction, decree or order of any Governmental
                      Authority;

                  

          

        

         

        
          
            	
                  	(ii)	
                    Macnor
                      shall have given or obtained all required notices, consents
                      and approvals
                      required to be obtained from or given to any third parties
                      in order to
                      consummate the Transaction;
                      and

                  

          

        

         

        
          
            	
                  	(iii)	
                    all
                      representations and warranties of Macnor contained herein shall
                      be
                      accurate in all material respects as at the Time of Closing
                      and AEI shall
                      have received a certificate of Macnor to that effect signed
                      by
                      Macnor.

                  

          

        

         

        
          
            	
                  	(b)	
                    Conditions
                      Precedent - Macnor 

                  

          

        

         

        The
          obligation of the Vendor to consummate the transactions contemplated hereby
          are
          conditional upon the fulfilment, or waiver by them, at or before the Time
          of
          Closing of each of the following conditions precedent which the parties
          acknowledge are for the exclusive benefit of the Vendor and may be waived
          by it
          at any time:

         

        
          
            	
                  	(i)	
                    there
                      shall have been obtained, from all appropriate governmental
                      or
                      administrative bodies, such licences, permits, consents, approvals,
                      certificates, registrations and authorizations as are required
                      to be
                      obtained by AEI to permit the consummation of the Transaction
                      and the
                      consummation of the Transaction shall not violate or contravene
                      any
                      injunction, decree or order of any Governmental
                      Authority;

                  

          

        

         

        
          
            	
                  	(ii)	
                    the
                      Purchaser shall have given or obtained all required notices,
                      consents and
                      approvals required to be obtained from or given to any third
                      parties in
                      order to consummate the Transaction;

                  

          

        

         

        
          
            	
                  	(iii)	
                    all
                      representations and warranties of AEI contained herein shall
                      be accurate
                      in all material respects as at the Time of Closing and Macnor
                      shall have
                      received a certificate of AEI to that effect signed on behalf
                      of AEI by an
                      officer thereof; and

                  

          

        

         

        
          
            	
                  	(iv)	
                    any
                      regulatory or stock exchange approval for listing of the AEI
                      Shares or the
                      common shares of AEI underlying the AEI
                      Warrants.

                  

          

        

         

         

        
          
             

          

          
            -8-

            
              

            

          

          
             

          

        

         

        
          
            	10.	
                    Closing

                  

          

        

         

        The
          sale
          and purchase of the Purchased Shares shall be completed at the office of
          WeirFoulds LLP, Suite 1600, 130 King Street West at 2:00 PM on January
          27, 2005,
          at which time and place:

         

        
          
            	
                  	(a)	
                    Macnor
                      shall table for delivery to AEI assignments whereby good and
                      marketable
                      title to the Purchased Shares free of encumbrance shall be
                      transferred to
                      AEI, subject to approval and execution of the transaction by
                      the
                      shareholders meeting of SRO and participation of AEI in it
                      as outlined in
                      4 (c);

                  

          

        

         

        
          	 	
                  (b)

                	
                  Macnor
                    shall
                    table for delivery to AEI a certificate attesting to the continued
                    truth
                    and validity of their representations and warranties contained
                    in this
                    Agreement;

                

        

         

        
          	 	
                  (c)

                	
                  Macnor
                    shall table for delivery to AEI a release of all claims against
                    SRO;

                

        

         

        
          	 	
                  (d)

                	
                  Macnor
                    shall
                    undertake to provide any
                    required approvals or consents of the government of the Czech
                    Republic to
                    the completion of the Transaction if
                    any;

                

        

         

        
          	 	
                  (e)

                	
                  AEI
                    shall table for delivery to Macnor certificates representing
                    the AEI
                    Shares and the AEI Warrants;

                

        

         

        
          	 	
                  (f)

                	
                  AEI
                    shall table evidence
                    that Shareholder
                    Approval
                    is
                    still in effect,
                    and that the Fairness Opinion is still in force unamended;
                    

                

        

         

        
          	 	
                  (g)

                	
                  AEI
                    shall table for delivery to Macnor a certificate attesting to
                    the
                    continued truth and validity of their representations and warranties
                    contained in this Agreement;

                

        

         

        
          	 	
                  (h)

                	
                  there
                    shall be tabled an opinion of Czech counsel on such matters related
                    to SRO
                    and the Transaction as AEI may reasonably
                    request;

                

        

         

        
          	 	
                  (i)

                	
                  Macnor
                    shall deliver the Escrow Agreement, along with the 2,500,000
                    AEI Shares to
                    be deposited thereunder, duly endorsed in blank for transfer;
                    and

                

        

         

        
          	 	
                  (j)

                	
                  there
                    shall be tabled, executed and delivered such other documents
                    as may be
                    appropriate or necessary for the completion of the
                    Transaction.

                

        

         

        All
          of
          such documents shall be in such form as the parties and their counsel may
          determine to be appropriate; all deliveries shall be deemed to have been
          made
          concurrently; and the Transaction shall be deemed to have been completed
          only
          when all deliveries shall have been made as provided above.

         

        
          
             

          

          
            -9-

            
              

            

          

          
             

          

        

         

        
          
            	11.	
                    Termination

                  

          

        

         

        This
          Agreement may be terminated:

         

        
          
            	
                  	(a)	
                    at
                      any time by agreement between the
                      parties;

                  

          

        

         

        
          
            	
                  	(b)	
                    by
                      AEI in the event of (i) bankruptcy, insolvency or similar event
                      affecting
                      Macnor, or (ii) Macnor being in breach of any of its obligations
                      which is
                      not remedied within five days of notice of such default or
                      which is not
                      capable of being remedied;

                  

          

        

         

        
          
            	
                  	(c)	
                    by
                      Macnor and Holdco in the event of (i) bankruptcy, insolvency
                      or similar
                      event affecting AEI, or (ii) AEI being in breach of any of
                      its obligations
                      which is not remedied within five days of notice of such default
                      or which
                      is not capable of being
                      remedied.

                  

          

        

         

        
          
            	12.	
                    General
                      and Miscellaneous

                  

          

        

         

        
          
            	
                  	(a)	
                    Any
                      notice or other communication required or permitted to be given
                      hereunder
                      shall be in writing and shall be effectively given if personally
                      delivered
                      or sent by telecopy transmission to the relevant party at the
                      following
                      address:

                  

          

        

         

        
          
            
              	
                    	(i)	
                      if
                        to AEI:

                    

            

          

        

         

        2175-6
          Dunwin Drive

        Mississauga,
          Ontario

        L5L
          1X2

         

        Attention: 
          Anthony
          Durkacz, Vice President of Finance

        Facsimile:
          (905)
          608-8222

         

        
          
            	
                  	(ii)	
                    if
                      to Macnor:

                  

          

        

        

        318
          Pinehurst Drive

        Oakville,
          Ontario

        L6J
          4X5

         

        Attention:
          President

        Facsimile:
          (905) 844-4522

         

        
          
            	
                  	(iii)	
                    if
                      to Holdco:

                  

          

        

        

        P.O.Box
          480, 130 King Street West

        Toronto,
          Ontario

        M5X
          1J5

        Attention:
          President

        Facsimile:
          (416) 365-1876

         

        
          
             

          

          
            -10-

            
              

            

          

          
             

          

        

         

        
          
            	
                  	(iv)	
                    or
                      to such other address or in care of such other Persons as a
                      party may from
                      time to time advise to each other party hereto by notice in
                      writing. The
                      date of receipt of any such notice of communication if delivered
                      or sent
                      by facsimile during normal business hours on a Business Day
                      at the place
                      of receipt shall be deemed to be the date of delivery thereof,
                      or if
                      delivered or sent by telecopy after normal business hours on
                      a Business
                      Day or on a day other than a Business Day, the date of receipt
                      shall be
                      deemed to be the next Business
                      Day.

                  

          

        

         

        
          
            	
                  	(b)	
                    Waiver
                      - No
                      failure on the part of any party in exercising any right or
                      remedy
                      hereunder shall operate as a waiver thereof, nor shall any
                      single or
                      partial exercise of any such right or remedy preclude any further
                      or other
                      exercise thereof, and no failure on the part of a party to
                      complain of any
                      act or failure to act of another party or to declare another
                      party in
                      default, irrespective of how long such failure continues, shall
                      constitute
                      a waiver by such first mentioned party of its rights hereunder.
                      No waiver
                      of any provision of this Agreement, including this Section,
                      shall be
                      effective otherwise than by an instrument in writing dated
                      subsequent to
                      the date hereof executed by the party entitled to give such
                      waiver or its
                      duly authorized representatives. No consent or waiver, expressed
                      or
                      implied, by a party to or of any breach of default by another
                      party in the
                      performance of such other party of its obligations hereunder
                      shall be
                      deemed or construed to be a consent or waiver to or of any
                      other breach or
                      default in the performance by such other party of the same
                      or any other
                      obligations of such other party
                      hereunder.

                  

          

        

         

        
          
            	
                  	(c)	
                    Amendments
                      -
                      No variation or amendment of any provision of this Agreement,
                      including
                      this Section, shall be effective otherwise than by an instrument
                      in
                      writing dated subsequent to the date hereof executed by all
                      parties
                      hereto, or their duly authorized representatives. Notwithstanding
                      anything
                      to the contrary herein.

                  

          

        

         

        
          
            	
                  	(d)	
                    Successors
                      and Assigns - All
                      of the terms and provisions of this Agreement shall be binding
                      upon the
                      parties and their respective successors and shall enure to
                      the benefit of
                      and be enforceable by the parties and their respective successors,
                      provided that none of the parties may assign any of their respective
                      rights hereunder without the consent of the other
                      parties.

                  

          

        

         

        
          
            	
                  	(e)	
                    Rights
                      and Parties Independent
                      -
                      The rights available to the parties under this Agreement and
                      at law shall
                      be deemed to be several and not dependent on each other and
                      each such
                      right accordingly shall be construed as complete in itself
                      and not by
                      reference to any other such right. Any one or more and/or any
                      combination
                      of such rights may be exercised by a party from time to time
                      and no such
                      exercise shall exhaust the rights or preclude another party
                      from
                      exercising any one or more of such rights or combination thereof
                      from time
                      to time thereafter or
                      simultaneously.

                  

          

        

         

        
          
            	
                  	(f)	
                    Currency
                      - All
                      amounts herein are expressed in Canadian
                      currency.

                  

          

        

         

        
          
            	
                  	(g)	
                    Time
                      of Essence - Time
                      is of the essence of this
                      Agreement.

                  

          

        

         

         

        
          
             

          

          
            -11-

            
              

            

          

          
             

          

        

         

        
          
            	
                  	(h)	
                    Governing
                      Law - This
                      Agreement shall in all respects be governed by and construed
                      in accordance
                      with the laws in force in the Province of Ontario and the laws
                      of Canada
                      in force in the Province of Ontario. There shall be no application
                      of any
                      conflict of laws or rules which would result in the laws of
                      any other
                      jurisdiction applying to this Agreement or the construction
                      or
                      interpretation hereof.

                  

          

        

         

        
          
            	
                  	(i)	
                    Attornment
                      - The
                      parties hereto hereby:

                  

          

        

         

        
          
            	
                  	(i)	
                    irrevocably
                      submit and attorn to the non-exclusive jurisdiction of the
                      Courts of the
                      Province of Ontario for all actions, suits or proceedings arising
                      out of
                      or in connection with this Agreement or the transactions contemplated
                      hereby;

                  

          

        

         

        
          
            	
                  	(ii)	
                    waive
                      all right to object to jurisdiction in any action, suit or
                      proceeding
                      relative to this Agreement which they may now or hereafter
                      have by reason
                      of domicile or otherwise;

                  

          

        

         

        
          
            	
                  	(iii)	
                    waive
                      any objection to the laying of venue in such Courts of any
                      such action,
                      suit or proceeding;

                  

          

        

         

        
          
            	
                  	(iv)	
                    waive
                      and agree not to plead or claim that any such action, suit
                      or proceeding
                      has been brought in an inconvenient forum;
                      and

                  

          

        

         

        
          
            	
                  	(v)	
                    waive
                      any right they may have to, or to apply for, trial by jury
                      in connection
                      with any matter arising out of or in connection with this Agreement
                      or the
                      transactions contemplated
                      hereby.

                  

          

        

         

        
          
            	
                  	(j)	
                    Severability
                      - If
                      any provision of this Agreement or portion thereof, or the
                      application
                      thereof to any Person or circumstances shall, to any extent,
                      be invalid or
                      unenforceable in any jurisdiction, the remainder of this Agreement
                      or the
                      application of such provision or portion thereof to any other
                      Person or
                      circumstances or in any other jurisdiction shall not be affected
                      thereby
                      and each provision of this Agreement shall be valid and enforceable
                      to the
                      fullest extent permitted by
                      law.

                  

          

        

         

        
          
            	
                  	(k)	
                    Third
                      Party Rights - This
                      Agreement is not intended to and does not create any rights
                      in favour of
                      any Person other than the parties hereto who hold such rights
                      for their
                      own behalf and they have not indicated and will not indicate
                      to the
                      contrary to any Person.

                  

          

        

         

        
          
            	
                  	(l)	
                    Counterparts
                      and Formal Date - This
                      Agreement may be executed in several counterparts, each of
                      which when so
                      executed shall be deemed to be an original and such counterparts
                      together
                      shall constitute one and the same instrument and, notwithstanding
                      the date
                      of execution, shall be deemed to bear date as of the date written
                      at the
                      beginning of this Agreement.

                  

          

        

         

         

        
          
             

          

          
            -12-

            
              

            

          

          
             

          

        

         

        IN
          WITNESS WHEREOF the parties have executed this Agreement as of the day
          and year
          first above written.

        

        
          	
                  ASTRIS
                    ENERGI INC.

                
	 	 
	
                  Per:

                	
                  /s/
                    Anthony Durkacz

                
	
                  Name:

                	
                  Anthony
                    Durkacz

                
	
                  Title:

                	
                  Vice
                    President of Finance

                
	 
                  
	
                
	
                  MACNOR
                    INC.

                
	 	 
	
                  Per:

                	
                  /s/
                    Jiri K. Nor

                
	
                  Name:

                	
                  Jiri
                    K. Nor

                
	
                  Title:

                	
                  President
                    

                
	 
	 
	
                  2062540
                    ONTARIO INC.

                
	 
	
                  Per:

                	
                  /s/
                    Jiri K. Nor

                
	
                  Name:

                	
                  Jiri
                    K. Nor

                
	
                  Title:

                	
                  President
                    

                

        

         

         

        
          
             

          

          
            -13-

            
              

            

          

          
             

          

        

        SCHEDULE
          A

         

        AEI
          Warrants

         

        
          	
                  No.
                    of Warrants

                	 	
                  Exercise
                    Price

                	 	
                  Purchase
                    Price Allocation

                	 
	
                  2,000,000
                    “A” Warrants

                	 	
                  $

                	
                  0.90

                	 	
                  $

                	
                  124,000

                	 
	
                  2,000,000
                    “B” Warrants

                	 	
                  $

                	
                  1.10

                	 	
                  $

                	
                  94,000

                	 
	
                  1,000,000
                    “C” Warrants

                	 	
                  $

                	
                  1.30

                	 	
                  $

                	
                  36,000

                	 
	 	 	 	 	 	
                  $

                	
                  254,000

                	 

        

         

         

        Each
          Warrant will carry the right to purchase
          one AEI common share at the indicated Exercise Price for the period commencing
          on the Closing
          Date and ending on the third
          anniversary
          of the Closing Date.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        SCHEDULE
          B

         

        ESCROW
          REQUIREMENTS

         

        The
          AEI
          Shares and AEI Warrants will be tabled at Closing, registered as directed
          by
          Macnor.

         

        50%
          of
          AEI Shares (2,500,000 Shares) and 0% of AEI Warrants (0 Warrants) will
          be held
          in escrow after Closing by AEI's counsel for the benefit of Macnor, subject
          to
          release described below.

         

        The
          2,500,000 AEI Share will be released from Escrow on January 2, 2006 unless
          there
          has been a material misrepresentation or material breach of warranty by
          Macnor
          under the Agreement, resulting in damages suffered by AEI.

         

        In
          the
          case of material misrepresentation or material breach of warranty by Macnor
          before the expiry of the 12-month Escrow Period, the 2,500,000 AEI Shares
          or
          portion thereof will be returned to AEI in an amount equal to the
          damages suffered
          by AEI from Macnor's material breach, with the number of AEI Shares calculated
          based
          on
          the 5-day average closing AEI share price at the time of the claim being
          made.

         

        The
          limit
          of liability of Macnor will be limited to those 2,500,000 AEI Shares held
          in
          Escrow during the 12-month Escrow Period. No liability will exist in addition
          to
          those shares held in Escrow or after the expiry of the Escrow
          Period.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        ESCROW
          AGREEMENT

        

        THIS
          ESCROW AGREEMENT
          made as
          of the 27th day of January, 2005.

        

        AMONG:

        

        ASTRIS
          ENERGI INC.,
          a
          corporation organized pursuant to the laws of the Province of
          Ontario

        

        (hereinafter
          called "AEI")

        

        OF
          THE FIRST PART

        -
          and
          -

        

        MACNOR
          CORPORATION,
          a
          corporation organized pursuant to the laws of the Province of
          Ontario

        

        (hereinafter
          called "Macnor")

        

        OF
          THE SECOND PART

        -
          and
          -

        

        2062540
          ONTARIO
          INC.,
          a
          corporation organized pursuant to the laws of the Province of
          Ontario

        

        (hereinafter
          called "Holdco")

         

        OF
          THE THIRD PART

        -
          and
          -

        

        Rogers,
          Campbell, Mickleborough, having an office in the City of Toronto, in the
          Province of Ontario

        

        (hereinafter
          called the "Escrow
          Agent")

        

        OF
          THE FOURTH PART

        

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        

        WHEREAS:

        

        
          	
                  A.

                	
                  AEI,
                    Macnor and Holdco have entered into a share purchase agreement
                    (the
                    "Purchase
                    Agreement")
                    dated January 20, 2005 for the sale by Macnor through Holdco
                    of the
                    remaining 70% of the issued and outstanding shares of Astris
                    s.r.o.
                    ("SRO")
                    not owned by AEI;

                

        

        

        
          	
                  B.

                	
                  All
                    words and phrases defined in the Purchase Agreement and used
                    in this
                    Escrow Agreement but not otherwise defined shall have the meaning
                    herein
                    as therein;

                

        

        

        
          	
                  C.

                	
                  Pursuant
                    to the terms of the Purchase Agreement, Macnor has agreed to
                    indemnify AEI
                    (the "Indemnity")
                    for any breach of its representations or warranties as contained
                    in the
                    Purchase Agreement, for a period ending on January 2, 2006 (the
                    "Escrow
                    Period"),
                    which indemnity shall be capped at a value equal to 2,500,000
                    AEI shares
                    received by Macnor from AEI on Closing (the "Escrowed
                    Shares"),
                    which Escrowed Shares shall be released to AEI to the extent
                    and for any
                    amount owing under the Indemnity, provided such amount may never
                    exceed
                    the Escrowed Shares;

                

        

        

        
          	
                  D.

                	
                  Macnor
                    and Holdco have agreed to direct that the Escrowed Shares be
                    deposited and held by the Escrow Agent in accordance with and
                    pursuant to
                    the terms of this Escrow Agreement pending existence of and verification
                    of the veracity of any claims under the Indemnity, failing which
                    the
                    Escrowed Shares shall be released at the end of the Escrow Period
                    to
                    Macnor.

                

        

        

        NOW
          THEREFORE THIS AGREEMENT WITNESSETH
          that in
          consideration of the premises and the agreements herein contained, it is
          mutually declared, covenanted and agreed by and among the parties as
          follows:

         

        ARTICLE
          1

        INTERPRETATION

         

        1.1    Definitions.
          In this
          Escrow Agreement, unless the context otherwise requires, all words and
          phrases
          defined in the Purchase Agreement and used in this Escrow Agreement have
          the
          same meaning in this Escrow Agreement as in the Purchase Agreement and,
          in
          addition:

         

        "Escrow
          Agreement"
          means
          this Agreement;

         

        "Escrowed
          Shares"
          means
          the 2,500,000 AEI shares as described in Recital C above;

         

        "Escrow
          Amount Release Certificate"
          means
          the form of certificate annexed hereto as Appendix "A"; and

         

        "Termination
          Date"
          means
          the earlier of (i) the date on which the Escrowed Shares have been fully
          released from escrow to AEI to satisfy any claim under the Indemnity; and
          (ii)
          January 2, 2006.

        

        1.2    Headings.
          The
          division of this Escrow Agreement into Articles and Sections and the insertion
          of headings are for convenience of reference only and shall not affect
          the
          construction or interpretation of this Escrow Agreement. The terms "this
          agreement", "this Escrow Agreement", "hereof', "hereunder" and similar
          expressions refer to this Escrow Agreement and not to any particular Article,
          Section or other portion hereof and include any agreement supplemental
          hereto
          and any schedules annexed hereto. Unless something in the subject matter
          or
          context is inconsistent therewith, references herein to Articles, Sections
          and
          paragraphs are to Articles, Sections and paragraphs of this Escrow
          Agreement.

         

        
          
             

          

          
            -2-

            
              

            

          

          
             

          

        

         

        1.3    Number
          and Gender.
          Words
          importing the singular number only shall include the plural and vice versa,
          words importing the masculine gender shall include the feminine and neuter
          genders and vice versa, and words importing persons shall include individuals,
          partnerships, associations, trusts, unincorporated organizations and
          corporations and vice versa.

         

        1.4    Governing
          Law.
          This
          Escrow Agreement shall be governed by and construed in accordance with
          the laws
          of Ontario and the laws of Canada applicable therein.

         

        1.5    Severability.
          In the
          event that one or more of the provisions contained in this Escrow Agreement
          shall be invalid, illegal or unenforceable in any respect under any applicable
          law, the validity, legality or enforceability of the remaining provisions
          hereof
          shall not be affected or impaired thereby. Each of the provisions of this
          Escrow
          Agreement is hereby declared to be separate and distinct.

         

        1.6    Appendices.
          The
          following is the Appendix annexed hereto and incorporated by reference
          and
          deemed to be part hereof:

         

        Appendix
          "A" - Escrow Amount Release Certificate

         

        The
          Appendix attached hereto is incorporated herein by reference as fully as
          though
          contained in the body hereof. Wherever a term or condition, expressed or
          implied, of any such Appendix conflicts or is at variance with any term
          or
          condition of this Escrow Agreement, such term or condition of this Escrow
          Agreement shall prevail.

        

        ARTICLE
          2

        ESCROW
          AGENT

         

        2.1    Appointment
          of Escrow Agent.
          The
          Escrow Agent is hereby appointed by AEI, Macnor and Holdco as
          escrow
          agent and custodian for the receipt and holding of the Escrowed Shares
          in
          accordance with the terms of this Escrow Agreement and the Escrow Agent,
          by its
          execution and delivery of this Escrow Agreement, accepts such appointment
          and
          agrees to act as escrow agent hereunder and to hold the Escrowed Shares
          received
          by it hereunder in accordance with the terms and conditions set forth in
          this
          Agreement.

         

        2.2    Escrow
          Agent’s Fees and Expenses
          AEI
          shall be solely liable to pay to the Escrow Agent (i) its fees for acting
          hereunder as Escrow Agent; and (ii) the Escrow Agent’s out-of-pocket expenses,
          including without limitation reasonable legal fees and disbursements incurred
          as
          a result of consulting independent counsel, if necessary, as to its obligations
          hereunder, and all applicable taxes thereon. The fees for the Escrow Agent
          acting hereunder shall be $1,500 CDN, plus applicable Goods and Services
          Tax.

         

        
          
             

          

          
            -3-

            
              

            

          

          
             

          

        

         

        2.3    Disclosure
          by Escrow Agent
          AEI,
          Macnor and Holdco acknowledge that the Escrow Agent has acted as counsel
          to AEI
          and Macnor in the past and may, in the future, act as counsel to AEI and
          Macnor.
          AEI, Macnor and Holdco further acknowledge their desire for the Escrow
          Agent to
          act in such capacity notwithstanding the disclosures set out in the first
          sentence of this Section 2.3. AEI, Macnor and Holdco agree that in the
          event of
          a dispute under this Agreement, the Escrow Agent shall have the right to
          deposit
          the Escrowed Shares into a court of competent jurisdiction or the Ontario
          Superior Court of Justice until such dispute is resolved to the satisfaction
          of
          such court. AEI, Macnor and Holdco further agree that the execution and
          delivery
          and performance by the Escrow Agent hereunder shall not prevent the Escrow
          Agent
          from continuing to act as counsel to AEI and Macnor in the future.

         

        ARTICLE
          3

        DELIVERY
          AND DEPOSIT OF THE ESCROWED SHARES

         

        3.1    Delivery
          of the Escrowed Shares.
          The
          parties acknowledge and agree that the Escrowed Shares have been delivered
          by
          Macnor to the Escrow Agent, duly endorsed in blank for transfer concurrent
          with
          the execution of this Escrow Agreement by the parties hereto, to be held
          or
          dealt with in accordance with the terms hereof.

         

        ARTICLE
          4

        RELEASE
          OF ESCROWED SHARES

         

        4.1    Receipt
          of Notice of Claim under the Indemnity.
          The
          Escrowed Shares shall be held by the Escrow Agent in escrow under the conditions
          set out herein until such time as AEI has produced evidence satisfactory
          to
          Macnor, acting reasonably and in good faith, verifying the veracity and
          accuracy
          of any claim made under the Indemnity and, based on such evidence, Macnor
          and
          Holdco, acting reasonably and in good faith, agree to make such payment
          to AEI
          under the Indemnity as may be required having regard to the terms of the
          Purchase Agreement and to deliver an Escrow Amount Release Certificate
          duly
          executed by Macnor and Holdco, upon receipt of which the Escrow Agent shall
          forthwith deliver and release to AEI the number of Escrowed Shares set
          out in
          the said Escrow Amount Release Certificate, as at the date of the said
          Certificate, as expressly authorized and directed therein.

         

        4.2    Automatic
          Release.
          If the
          Escrowed Shares, or any part thereof, (collectively, the "Remaining
          Balance"),
          has
          not been otherwise released by the Escrow Agent pursuant to Section 4.1
          by 5:00
          p.m. on the Termination Date, then the Escrow Agent shall at 12:00 noon
          on the
          following Business Day release and deliver the Remaining Balance to Macnor
          and
          thereby be forever released from any and all obligations or liabilities
          in
          respect thereof.

         

        4.3    Greater
          Certainty.
          For
          greater certainty, notwithstanding any other provision hereof, the parties
          acknowledge and agree that the Escrow Agent shall not be required under
          any
          circumstances whatsoever to release and deliver any amount of Escrowed
          Shares
          hereunder above and beyond the Escrowed Shares and no provision hereof
          shall be
          given a contrary intention, interpretation or effect.

         

        
          
             

          

          
            -4-

            
              

            

          

          
             

          

        

         

        ARTICLE
          5

        LIABILITY
          AND INDEMNITY

         

        5.1    Liability
          of the Escrow Agent.
          Subject
          to the provisions of this Escrow Agreement, the Escrowed Shares, while
          in the
          custody of the Escrow Agent, shall be and remain at the sole risk and
          responsibility of the Escrow Agent. The Escrow Agent shall be liable to
          Macnor
          and Holdco for
          any
          loss of the Escrowed Shares.

         

        5.2    Indemnity
          in Favour of the Escrow Agent.
          Macnor
          and Holdco jointly
          and severally hereby covenant and agree to indemnify the Escrow Agent and
          hold
          it harmless from and against any and all costs, expenses, claims (including
          those from third parties), demands and judgments, and any loss, liability
          or
          expense arising therefrom, including the costs and expenses incurred by
          the
          Escrow Agent in defending itself against any claim, demand or liability
          incurred
          by it and arising from the carrying out by the Escrow Agent of its obligations
          hereunder except for such claims, demands, judgments, losses, liabilities
          or
          expenses that are attributable to the gross negligence by the Escrow Agent,
          its
          agents or employees, or to acts or omissions taken by the Escrow Agent,
          its
          agents or employees, in bad faith or pursuant to wilful misconduct.

         

        5.3    Limitations
          on Duties and Liabilities

         

        	(a)  	
                The
                  Escrow Agent shall have no duties except those which are expressly
                  set
                  forth herein and shall not be bound by any notice of a claim or
                  a demand
                  with respect thereto or any waiver, modification, amendment, termination
                  or rescission of this Agreement unless received by it in writing
                  and
                  signed by all of the parties hereto other than the Escrow Agent
                  (or, in
                  the case of a waiver, the party so waiving) and in a form satisfactory
                  to
                  the Escrow Agent. No implied duties or obligations of the Escrow
                  Agent
                  shall be read into this Agreement. Moreover, the Escrow Agent shall
                  not at
                  any time be required to deal with any securities regulatory authority,
                  securities exchange, transfer agent, or any other comparable entity
                  with
                  respect to the Escrowed Shares. 

              

         

        	(b)  	
                The
                  Escrow Agent shall not be bound in any way by, or have a duty to
                  inquire
                  into, any agreement or contract between the parties hereto (whether
                  or not
                  the Escrow Agent has any knowledge thereof), and the duties and
                  responsibilities of the Escrow Agent shall be limited to those
                  expressly
                  set forth herein. Nothing herein contained shall impose any obligation
                  on
                  the Escrow Agent to see to or require evidence of the registration
                  or
                  filing or recording (or renewal thereof) of this Escrow Agreement,
                  or any
                  instrument ancillary or supplemental thereto, or to procure any
                  further,
                  other, or additional instrument or further assurance.
                  

              

         

         

        
          
             

          

          
            -5-

            
              

            

          

          
             

          

        

        

        	(c)  	
                The
                  Escrow Agent shall comply with such notices or instructions as
                  are
                  provided for in this Escrow Agreement and orders or processes of
                  any court
                  having jurisdiction. If any part or all of the Escrowed Shares
                  held in
                  escrow by the Escrow Agent is at any time attached or seized under
                  any
                  court order or in case any judicial order, judgment or decree shall
                  be
                  made affecting this Escrow Agreement or any part hereof, then,
                  in such
                  event, the Escrow Agent is authorized to rely upon and comply with
                  such
                  order, judgment or decree. The Escrow Agent is not bound to inquire
                  into
                  the authority of any persons signing any instructions, directions
                  or
                  orders hereunder.

              

         

        	(d)  	
                The
                  Escrow Agent may employ such counsel of its choosing as it may
                  deem
                  necessary for the proper discharge of its duties
                  hereunder.

              

         

        	(e)  	
                The
                  Escrow Agent shall not be liable for any act or omission to act
                  hereunder
                  if taken or omitted by it in good faith. The Escrow Agent shall
                  also be
                  fully protected in relying upon any written notice, demand, certificate
                  or
                  document which it considers, in good faith, to be
                  genuine.

              

         

        	(f)  	
                In
                  the event of any conflicting demands or claims with respect to
                  the subject
                  matter of this Escrow Agreement, including, without limitation,
                  release of
                  the Escrowed Shares or any portion thereof, the Escrow Agent shall
                  have
                  the right to discontinue all further acts until such conflicts
                  are
                  resolved, and the further right to commence or defend any action
                  or
                  proceeding for the determination of such conflict, including, without
                  limitation of the foregoing, a suit or action in interpleader.
                  In the
                  event that the Escrow Agent should commence any action to determine
                  any
                  such conflict between the parties, including but not limited to
                  an action
                  in the nature of an interpleader, the Escrow Agent shall, upon
                  delivery of
                  the Escrowed Shares to a court of competent jurisdiction, be ipso
                  facto
                  released and discharged from any and all duties and obligations
                  imposed
                  upon the Escrow Agent hereunder with respect to the subject matter
                  of such
                  action. Notwithstanding the foregoing, the Escrow Agent shall provide
                  Macnor and Holdco fifteen (15) days written notice prior to commencing
                  any
                  such action and during that period shall act reasonably and in
                  good faith
                  in facilitating a resolution of any such conflict between the
                  parties.

              

         

        	(g)  	
                Each
                  party hereto (other than the Escrow Agent) waives any claims or
                  demands
                  against the Escrow Agent and its principals with respect to all
                  acts taken
                  by the Escrow Agent in conformance with this Escrow Agreement.
                  The Escrow
                  Agent shall have no duty to take any action other than as specifically
                  provided for in this Escrow Agreement, and shall have no liability
                  for any
                  non-action if such action has been restrained by any order of any
                  court or
                  administrative agency or if, in its sole discretion, it determines
                  that
                  any such action would violate any law or governmental
                  regulation.

              

         

         

        
          
             

          

          
            -6-

            
              

            

          

          
             

          

        

         

        	(h)  	
                The
                  Escrow Agent may, in relation to its obligations hereunder, act
                  on the
                  opinion, advice or information obtained from any lawyer or other
                  expert,
                  whether retained by the Escrow Agent, Macnor or Holdco, but shall
                  not be
                  bound to act upon such opinion, advice or information and shall
                  not be
                  held responsible for any loss occasioned for so acting or not so
                  acting,
                  as the case may be, except if such loss results from the gross
                  negligence
                  or wilful misconduct of the Escrow Agent, and the Escrow Agent
                  may employ
                  such agents as may be necessary to properly discharge its duties
                  and may
                  pay any reasonable monies required for legal or other advice as
                  aforesaid.

              

         

        	(i)  	
                In
                  the exercise of its rights and duties hereunder, the Escrow Agent
                  shall
                  not be in any way responsible for the consequence of any breach
                  on the
                  part of a party hereto of any of their respective covenants herein
                  contained or of any acts of the agents or servants of any of
                  them.

              

         

        	(j)  	
                The
                  Escrow Agent may resign its agency and be discharged from all duties
                  and
                  obligations hereunder by giving to AEI and Macnor thirty (30) days’ prior
                  written notice of its resignation, or such shorter period as such
                  parties
                  shall accept as sufficient. If the Escrow Agent resigns its agency
                  in
                  accordance herewith, AEI and Macnor shall have the right and obligation
                  to
                  appoint a succeeding escrow agent who, upon accepting such appointment,
                  shall assume all of the obligations and responsibilities and shall
                  be
                  entitled to enjoy the benefits and rights of the Escrow Agent hereunder.
                  If a successor escrow agent is appointed as herein provided, the
                  Escrow
                  Agent shall deliver to such successor all of the Escrowed Shares
                  then in
                  its possession upon payment of its fees.

              

         

        ARTICLE
          6

        MISCELLANEOUS

         

        6.1    Notices.
          All
          payments and communications which may be or are required to be given by
          either
          party to the other herein shall (in the absence of any specific provision
          to the
          contrary) be in writing and, in the case of payments delivered or sent
          by
          prepaid registered mail and, in the case of communications, delivered or
          sent by
          prepaid registered mail or by facsimile transmission (provided sender obtains
          evidence or verification of transmission receipt) to the parties at their
          following respective addresses:

         

        
          
             

          

          
            -7-

            
              

            

          

          
             

          

        

         

        
          	
                	(a)	
                  if
                    to AEI:

                

        

         

        2175-6
          Dunwin Drive

        Mississauga,
          Ontario

        L5L
          1X2

        Attention
          Anthony
          Durkacz, Vice President of Finance

        Facsimile:
          (905)
          608-8222

         

        
          	
                	(b)	
                  if
                    to Macnor:

                

        

         

        318
          Pinehurst Drive

        Oakville,
          Ontario

        L6J
          4X5

        Attention:
          President

        Facsimile:
          (905) 844-4522

         

        
          	
                	(c)	
                  if
                    to Holdco:

                

        

         

        P.O.Box
          480, 130 King Street West

        Toronto,
          Ontario

        M5X
          1J5

        Attention:
          President

        Facsimile:
          (416) 365-1876

         

        
          	
                	(d)	
                  if
                    to Escrow Agent:

                

        

         

        Rogers,
          Campbell, Mickleborough

        Lawyers
          à
          Trade-Mark Agents

        350
          Bay
          Street

        11th
          Floor

        Toronto,
          Ontario

        M5H
          2S6

         

        Attention:
          Mark D. Mickleborough

        Facsimile:
          (416) 366-2860

         

        and
          if
          any such payment or communication is sent by prepaid registered mail, it
          shall,
          subject to the following sentence, be conclusively deemed to have been
          received
          on the third Business Day following the mailing thereof and, if delivered
          or so
          telecopied, it shall be conclusively deemed to have been received at the
          time of
          delivery or transmission. Notwithstanding the foregoing provisions with
          respect
          to mailing, in the event that it may be reasonably anticipated that, due
          to any
          strike, lock-out or similar event involving an interruption in postal service,
          any payment or communication will not be received by the addressee by no
          later
          than the third Business Day following the mailing thereof, then the mailing
          of
          any such payment or communication as aforesaid shall not be an effective
          means
          of sending the same but rather any payment must then be sent by delivery,
          and
          any communication by delivery or facsimile transmission. Either party may
          from
          time to time change its address hereinbefore set forth by notice to the
          other of
          them in accordance with this Section.

         

        
          
             

          

          
            -8-

            
              

            

          

          
             

          

        

         

        6.2    Successors
          and Assigns.
          Except
          as otherwise provided, this Escrow Agreement shall enure to the benefit
          of and
          shall be binding upon the parties hereto and their respective successors
          and
          assigns.

         

        6.3    Assignability.
          This
          Agreement and the rights and obligations thereunder are not assignable
          by any
          party without the prior written consent of each of the other parties
          hereof.

         

        6.4    Counterparts.
          This
          Escrow Agreement may be executed in several counterparts, each of which
          shall be
          deemed to be an original and together shall constitute one and the same
          instrument.

         

        6.5    Entire
          Agreement.
          This
          Agreement constitutes the whole and entire agreement between the parties
          hereto
          with respect to the subject matter hereof.

         

        6.6    Further
          Assurances.
          Each
          party hereto agrees from time to time, subsequent to the date hereof, to
          execute
          and deliver, or cause to be executed and delivered to the others such
          instruments or further assurances as may in the reasonable opinion of any
          of
          them be necessary or desirable to give effect to the provisions of this
          Agreement.

         

        6.7    If
          Date Falls on a Weekend or a Holiday
          If
          either the date or the last day of a period of time for taking any action
          under
          this Escrow Agreement falls on a Saturday, Sunday or a legal holiday in
          the
          Province of Ontario, such date or the last day of such period of time shall
          be
          automatically extended to the next day which is not a Saturday, Sunday,
          or a
          legal holiday in the Province of Ontario with the same force and effect
          as if
          such extended date or time period was the original date or time period
          for
          taking such action.

         

        
          
             

          

          
            -9-

            
              

            

          

          
             

          

        

         

        IN
          WITNESS WHEREOF
          the
          parties have executed this Escrow Agreement on the date first above
          written.

        

        ASTRIS
          ENERGI INC.

         

        Per:/s/
          Anthony Durkacz

        Name: Anthony
          Durkacz

        Title: Vice
          President of Finance

         

        I
          have
          authority to bind the Corporation.

         

         

        MACNOR
          CORPORATION

         

        Per:/s/
          Jiri K. Nor

        Name: Jiri
          K.
          Nor

        Title: President

         

        I
          have
          authority to bind the Corporation.

         

         

        2062540
          ONTARIO
          INC.

         

        Per:/s/
          Jiri K. Nor

        Name: Jiri
          K.
          Nor

        Title: President

         

        I
          have
          authority to bind the Corporation.

         

         

        ROGERS,
          CAMPBELL, MICKLEBOROUGH

         

        Per:/s/
          Mark Mickleborough

        Name:
          Mark D. Mickleborough

        Title:
          Partner

         

        I
          have
          authority to bind the Partnership.

         

        
          
             

          

          
            -10-

            
              

            

          

          
             

          

        

        

        APPENDIX
          "A"

        

        ESCROWED
          SHARES

        RELEASE
          CERTIFICATE

        

        

        TO: **,
          as Escrow Agent

         

        Pursuant
          to the escrow agreement (the "Escrow
          Agreement")
          made
          as of the ____ day of January, 2005 among Astris Energi Inc. ("AEI"),
          Macnor Corporation ("Macnor"),
          2062540 Ontario
          Inc. ("Holdco")
          and **
          (the "Escrow
          Agent"),
          the
          undersigned, on behalf of Macnor and 2062540, respectively, hereby irrevocably
          authorize, order and direct the Escrow Agent to forthwith release the amount
          of
          __________________ of the Escrowed Shares to AEI. 

        

        All
          capitalized terms used herein and not defined herein shall have the meanings
          ascribed thereto in the Escrow Agreement.

        

        DATED
          this
          ____ day of ___________________, 200    .

        

        

        MACNOR
          CORPORATION

         

        Per:_____________________________

        Name:

        Title:

         

        I
          have
          authority to bind the Corporation.

         

        DATED
          this
          ____ day of ____________________, 200   
          .

         

        2062540
          ONTARIO INC.

         

        Per:_____________________________

        Name:

        Title:

         

        I
          have
          authority to bind the Corporation.EX 10.15

    EXHIBIT
      10.15

     

    Plasma
      Environmental Technologies Inc.

    200-4145
      North Service Road

    Burlington
      ON L7L 6A3

    phone:
      (905) 332-9693

    fax:
      (905) 332-9792

    e-mail:
      falconer@plasmaenvironmental.com

    

    February
      23, 2005

    

    Astris
      Energi Inc.

    2175-6
      Dunwin Drive

    Mississauga,
      Ontario

    L5L
      1X2

    

    Attention:
      Anthony Durkacz 

    Vice
      President of Finance 

    

    

    Dear
      Sirs:

    

    Subject: Teaming
      Arrangement

     

    Further
      to our recent discussions, the purpose of this letter is to set out the various
      terms and conditions on which Plasma Environmental Technologies Inc. (“PET”) and
      Astris Energi Inc. (“Astris”) have agreed to promote certain intellectual
      property and business contacts for their mutual benefit.

     

    
      	
              1.

            	
              Background

            

    

     

    Astris
      is
      a research and development company which designs and develops hydrogen fuelled
      electric power generating systems based on alkaline fuel cell (“AFC”) technology
      for use in stationary, portable and transportation applications.

     

    PET
      develops and markets plasma-based systems for the safe and cost-effective
      destruction of hazardous and non-hazardous wastes. PET holds the rights to
      a
      plasma-assisted gasifier (“PAG”) technology which allows for the destruction of
      municipal solid wastes and converts them into a clean syngas. One of the
      off-gases created in this process is hydrogen.

     

    
      	
              2.

            	
              Objective

            

    

     

    The
      objectives of this Agreement are to establish the relationship and to set
      certain understandings between PET and Astris in respect of:

     

    
      	 	
              (a)

            	
              ‘Stage
                1’
-
                the evaluation, development and testing of the gases produced in
                the PAG
                waste destruction process to determine what technology or similar
                changes
                are required to establish the production of appropriately pure hydrogen
                gas for use in Astris’ hydrogen fuel cell systems; and the demonstration
                of the PAG technology to produce such gas for such purpose;
                and

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	
              (b)

            	
              ‘Stage
                2’
                -
                following Stage 1, select a PAG installation site or sites for a
                demonstration/pilot project to further evaluate, under real-world
                conditions, the applicability of an installation as proposed in Stage
                1;
                it is expected that such an installation would be sponsored and funding
                would be sought from appropriate stakeholders including special interest
                groups, private/public companies and local, provincial and federal
                governments; and

            

    

     

    
      	 	
              (c)

            	
              ‘Stage
                3’
-
                the exploitation of certain business and similar contacts of PET;
                it being
                the expectation of PET and Astris that the introduction of such contacts
                by PET to Astris will result in contracts for services being entered
                into
                between Astris and third parties who wish to avail themselves of
                Astris’
                technology and products; and in particular, such business contacts
                may
                wish to make use of the PAG technology and in so doing see an opportunity
                to also use Astris’ hydrogen fuelled electric power generating
                systems.

            

    

     

    
      	
              3.

            	
              Stage
                1

            

    

     

    
      	 	
              (a)

            	
              Obligations
                of PET

            

    

     

    PET
      shall
      evaluate, develop and test the gases produced in the PAG waste destruction
      process to determine what technology or similar changes are required to
      establish the production of appropriately pure hydrogen gas to be used in Astris
      fuel cell systems.

     

    
      	 	
              (b)

            	
              Obligations
                of Astris

            

    

     

    Astris
      shall provide input and feedback on predicted or tested hydrogen purity as
      it
      relates to usage in its hydrogen fuel cell systems. 

     

    
      	
              4.

            	
              Stage
                2

            

    

     

    
      	 	
              (a)

            	
              Obligations
                of PET

            

    

     

    PET
      shall
      select a PAG installation site or sites for a demonstration/pilot project to
      further evaluate, under real-world conditions the applicability, of an
      installation as proposed in Stage 1. 

     

    
      	 	
              (b)

            	
              Obligations
                of Astris

            

    

     

    Astris
      shall support and make available current marketing literature and in some cases
      samples of its technology on a best effort basis and as it deems appropriate
      to
      facilitate access to funding for demonstration projects selected by
      PET.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    
      	
              5.

            	
              Stage
                3

            

    

     

    
      	 	
              (a)

            	
              Obligations
                of PET

            

    

     

    PET
      shall
      make every reasonable effort to introduce representatives of Astris to any
      of
      PET’s contacts who may desire to purchase or use the services of
      Astris.

     

    
      	 	
              (b)

            	
              Obligations
                of Astris

            

    

     

    Astris
      agrees to pay to PET, as a commission and as full compensation for PET’s
      obligations under this Agreement, a percentage of the gross fees earned by
      Astris (net of applicable taxes) from all contracts entered into by Astris
      with
      any of the contacts introduced to Astris by PET. The amount of such commission
      and the terms of payment thereof shall be as mutually agreed to by the parties
      from time to time. For these purposes, “contracts” includes all agreements,
      contracts, commitments and all other rights of or relating to the business
      of
      Astris, whether written or oral.

     

    
      	
              6.

            	
              Confidential
                Information

            

    

     

    Each
      of
      PET and Astris (the “disclosing party”) agrees that all facts, information,
      knowledge and data of any nature, including without limitation of a confidential
      nature, trade secrets and secret information, customer lists, publications
      or
      any other matter, concerning the business, management, finances or any other
      aspect of the other (the “recipient party”) or any of the disclosing party’s
      dealings, transactions or affairs, including in respect of any suppliers or
      customers of the disclosing party, as well as the technology owned or relied
      upon by the disclosing party, (all hereinafter called “Confidential
      Information”) which the recipient party, or any of the recipient party’s
      employees, agents or representatives, shall acquire or which may come to their
      knowledge during the term of this Agreement shall at all times (both during
      the
      term of this Agreement and subsequent to the termination thereof) and for all
      purposes be held by the recipient party in confidence, and for the benefit
      of
      the disclosing party. The recipient party further agrees that it shall not,
      and
      shall cause all of its employees, agents or representatives to not, either
      during or at any time after, the term of this Agreement, disclose, divulge
      or in
      any way communicate orally, in writing or otherwise to any person or persons
      any
      Confidential Information. 

     

    
      	
              7.

            	
              Ownership
                of Information

            

    

     

    All
      information, data, research, documents, photographs and materials received,
      prepared, discovered or produced by the recipient party or any of its employees,
      agents or representatives relating to the technology and other Confidential
      Information of the disclosing party in the performance of its obligations under
      this Agreement (collectively, the “Work Product”), and all copyright therein,
      shall be the exclusive property of the disclosing party, and shall be delivered
      without cost to the disclosing party upon request. While this Agreement is
      in
      effect, and at all times thereafter, the recipient party shall not use, publish
      or disclose any Work Product which incorporates any Confidential Information
      without the prior written consent of the disclosing party.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	
              8.

            	
              Terms/Conditions

            

    

    The
      term
      of this agreement is five years from its effective date. Upon mutual consent
      this agreement shall be extended for an additional five year term.

     

    
      	
              9.

            	
              Termination

            

    

     

    This
      agreement may be terminated at any time upon delivery of 30-day written
      notification of either of the parties hereto. Upon any termination of this
      agreement:

     

    
      
        	
              	(i)	
                PET
                  will, at ASTRIS's option, destroy or deliver to ASTRIS or its designee
                  all
                  items within PET’s possession or control that contain any Confidential
                  Information or bear a Mark and shall cease using all Marks;
                  and

              

      

    

     

    
      
        	
              	(ii)	
                ASTRIS
                  will, at PET's option, destroy or deliver to PET or its designee
                  all items
                  within ASTRIS’s possession or control that contain any Confidential
                  Information or bear a Mark and shall cease using all
                  Marks.

              

      

    

     

    
      	
              10.

            	
              General
                Provisions

            

    

     

    Nothing
      in this Agreement shall constitute either party as the agent of the other for
      any purpose and neither party shall have a right to incur liabilities or
      obligations for or on behalf of the other. Each party is and shall remain and
      independent contractor. This Agreement shall be binding upon and enure to the
      benefit of the parties and their respective successors and permitted assigns.
      This Agreement shall be governed by and construed in accordance with the laws
      of
      Ontario.

     

    If
      the
      foregoing is acceptable to you, would you kindly execute the attached duplicate
      copy of this letter and return same to me.

    

    Yours
      very truly,

    PLASMA
      ENVIRONMENTAL TECHNOLOGIES INC.

     

     

    “Alex
      Falconer”

    Alex
      Falconer

    Chairman

    

    The
      foregoing terms are agreed to and accepted this 23_ day of February,
      2005.

    

    ASTRIS
      ENERGI INC.

     

    By: /s/
      Anthony Durkacz

    Name:
      Anthony Durkacz

    Title:
      Vice President of Finance

     

    
      
         

      

        -4-

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