Document:

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;

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      “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.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      “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);

              

      

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      
        	
              	(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;

              

      

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      
        	
              	(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);

              

      

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      
        	
              	(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.

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      

      
        	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.

              

      

       

      

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

      
        	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.

              

      

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      
        	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.

       

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

       

      
        	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

      

       

       

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

       

      
        	
              	(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.

              

      

       

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

       

      
        	
              	(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.

              

      

       

       

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

      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
        

       

       

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

      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.

       

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

      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.

       

      

      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

       

      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;

              

      

       

      

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

       

      
        	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.

       

      
        
           

        

        
          -18-

          
            

          

        

        
           

        

      

      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.

       

       

      
        
           

        

        
          -19-

          
            

          

        

        
           

        

      

      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.

       

      
        
           

        

        
          -20-

          
            

          

        

        
           

        

      

      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.
                  

              

      

       

      

      
        
           

        

        
          -21-

          
            

          

        

        
           

        

      

       

      
        	
              	(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.

              

      

       

      
        
           

        

        
          -22-

          
            

          

        

        
           

        

      

       

      
        	
              	(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:

       

      
        	
              	(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 ༠ Trade-Mark
                Agents

        	 	 	350
                Bay Street

        	 	 	11th
                Floor

        	 	 	Toronto,
                Ontario

        	 	 	M5H
                2S6

        	 	 	 

        	 	 	Attention:
                Mark D. Mickleborough

        	 	 	Facsimile:
                (416) 366-2860

      

       

       

      
        
           

        

        
          -23-

          
            

          

        

        
           

        

      

      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.

       

      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.

       

      

      
        
           

        

        
          -24-

          
            

          

        

        
           

        

      

      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.

       

       

      
        
           

        

        
          -25-

          
            

          

        

        
           

        

      

      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.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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