Document:

NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    NOTICE
      OF GRANT

    

    Capitalized
      but otherwise undefined terms in this Notice of Grant and the attached Stock
      Option Agreement shall have the same defined meanings as in the Amended and
      Restated 2006 Stock Plan (the “Plan”). 

    

    
      	
              Name:

            	
              LARRY
                GOLDMAN

            	
              Address:

            	
              c/o
                Novastar Resources Ltd.,

            
	 	 	 	
              8300
                Greensboro Drive, Suite 800, 

            
	 	 	 	
              McLean,
                VA 22102

            

    

    

    You
      have
      been granted an option (the “Option”) to purchase Common Stock of the
      Corporation, subject to the terms and conditions of the Plan and the attached
      Stock Option Agreement, as follows:

    

    
      	
              Date
                of Grant:

            	
              June
                13, 2006

            
	 	 
	
              Vesting
                Commencement Date:

            	
              June
                13, 2006

            
	 	 
	
              Option
                Price per Share:

            	
              $0.51

            
	 	 
	
              Total
                Number of Shares Granted:

            	
              350,000

            
	 	 
	
              Total
                Option Price:

            	
              $178,500

            
	 	 
	
              Type
                of Option:

            	
              Nonqualified
                Stock Option

            
	 	 
	
              Term/Expiration
                Date:

            	
              Ten
                (10) years after Date of Grant

            

    

    

    Vesting
      Schedule:

    

    The
      Option shall vest, in whole or in part, in accordance with the following
      schedule:

    

    

    The
      Option shall vest with respect to 1/36 of the Total Number of Shares Granted
      (as
      specified above) on the Vesting Commencement Date and shall thereafter vest
      1/36
      on each one month anniversary of the Vesting Commencement Date until all shares
      underlying the Option have vested. The Option shall immediately and
      automatically vest in full upon a Change of Control or upon the termination
      of
      the Optionee’s employment by the Company without Cause. For purposes of this
      Notice of Grant, “Cause” shall be as determined in good faith at the time of
      termination by the Board of Directors of the Company; and a “Change of Control”
shall be deemed to have occurred if (i) a tender offer shall be made and
      consummated for the ownership of more than 50% of the outstanding voting
      securities of the Company, (ii) the Company shall be merged or consolidated
      with
      another corporation or entity and as a result of such merger or consolidation
      less than 50% of the outstanding voting securities of the surviving or resulting
      corporation or entity shall be owned in the aggregate by former shareholders
      of
      the Company, as the same shall have existing immediately prior to such merger
      or
      consolidation, (iii) the Company shall sell, lease, or otherwise dispose of,
      all
      or substantially all of its assets to another corporation or entity which is
      not
      a wholly-owned subsidiary, or (iv) a person, within the meaning of Section
      3(a)(9) or Section 13(d)(3) (as in effect on the date hereof) of the Securities
      Exchange Act of 1934 shall acquire more than 50% of the outstanding voting
      securities of the Company (whether directly, indirectly, beneficially, or of
      record). Notwithstanding the foregoing, the transactions contemplated by the
      Agreement and Plan of Merger, as amended, dated February 14, 2006, between
      the
      Company and Thorium Power, Inc. shall not constitute a Change of
      Control.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    STOCK
      OPTION AGREEMENT

    

    This
      STOCK
      OPTION AGREEMENT (“Agreement”),
      dated as of the 13th day of June, 2006 is made by and between NOVASTAR RESOURCES
      LTD., a Nevada corporation (the “Corporation”), and LARRY GOLDMAN (the
“Optionee,” which term as used herein shall be deemed to include any successor
      to the Optionee by will or by the laws of descent and distribution, unless
      the
      context shall otherwise require).

    

    BACKGROUND

    

    Pursuant
      to the Corporation’s Amended and Restated 2006 Stock Plan (the “Plan”), the
      Corporation, acting through the Committee of the Board of Directors (if a
      committee has been formed to administer the Plan) or its entire Board of
      Directors (if no such committee has been formed) responsible for administering
      the Plan (in either case, referred to herein as the “Committee”), approved the
      issuance to the Optionee, effective as of the date set forth above, of a stock
      option to purchase shares of Common Stock of the Corporation at the price (the
      “Option Price”) set forth in the attached Notice of Grant (which is expressly
      incorporated herein and made a part hereof, the “Notice of Grant”), upon the
      terms and conditions hereinafter set forth.

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual premises and undertakings hereinafter set forth,
      the
      parties hereto agree as follows:

    

    1. Option;
      Option Price.
      On
      behalf of the Corporation, the Committee hereby grants to the Optionee the
      option (the “Option”) to purchase, subject to the terms and conditions of this
      Agreement and the Plan (which is incorporated by reference herein and which
      in
      all cases shall control in the event of any conflict with the terms, definitions
      and provisions of this Agreement), that number of shares of Common Stock of
      the
      Corporation set forth in the Notice of Grant, at an exercise price per share
      equal to the Option Price as is set forth in the Notice of Grant (the “Optioned
      Shares”). If designated in the Notice of Grant as an “incentive stock option,”
the Option is intended to qualify for Federal income tax purposes as an
“incentive stock option” within the meaning of Section 422 of the Code. A copy
      of the Plan as in effect on the date hereof has been supplied to the Optionee,
      and the Optionee hereby acknowledges receipt thereof.

    

    2. Term.
      The term
      (the “Option Term”) of the Option shall commence on the date of this Agreement
      and shall expire on the Expiration Date set forth in the Notice of Grant unless
      such Option shall theretofore have been terminated in accordance with the terms
      of the Notice of Grant, this Agreement or of the Plan.

    

    3. Time
      of Exercise.
      

    

    (a) Unless
      accelerated in the discretion of the Committee or as otherwise provided herein,
      the Option shall become exercisable during its term in accordance with the
      Vesting Schedule set out in the Notice of Grant. Subject to the provisions
      of
      Sections 5 and 8 hereof, shares as to which the Option becomes exercisable
      pursuant to the foregoing provisions may be purchased at any time thereafter
      prior to the expiration or termination of the Option.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) Anything
      contained in this Agreement to the contrary notwithstanding, to the extent
      the
      Option is intended to be an Incentive Stock Option, the Option shall not be
      exercisable as an Incentive Stock Option, and shall be treated as a
      Non-Statutory Option, to the extent that the aggregate Fair Market Value on
      the
      date hereof of all stock with respect to which Incentive Stock Options are
      exercisable for the first time by the Optionee during any calendar year (under
      the Plan and all other plans of the Corporation, its parent and its
      subsidiaries, if any) exceeds $100,000.

    

    4. Termination
      of Option.

    

    (a) 
      The
      Optionee may exercise the Option (but only to the extent the Option was
      exercisable at the time of termination of the Optionee’s employment with the
      Corporation, its parent or any of its subsidiaries) at any time within three
      (3)
      months following the termination of the Optionee’s employment with the
      Corporation, its parent or any of its subsidiaries, but not later than the
      scheduled expiration date. If the termination of the Optionee’s employment is
      for cause or is otherwise attributable to a breach by the Optionee of an
      employment, non-competition, non-disclosure or other material agreement, the
      Option shall expire immediately upon such termination. If the Optionee is a
      natural person who dies while in employment with the Corporation, its parent
      or
      any of its subsidiaries, this option may be exercised, to the extent of the
      number of shares with respect to which the Optionee could have exercised it
      on
      the date of his death, by his estate, personal representative or beneficiary
      to
      whom this option has been assigned pursuant to Section 9 of the Plan, at any
      time within the twelve (12) month period following the date of death. If the
      Optionee is a natural person whose employment with the Corporation, its parent
      or any of its subsidiaries is terminated by reason of his disability, this
      Option may be exercised, to the extent of the number of shares with respect
      to
      which the Optionee could have exercised it on the date the employment was
      terminated, at any time within the twelve (12) month period following the date
      of such termination, but not later than the scheduled expiration date. At the
      expiration of such three (3) or twelve (12) month period or the scheduled
      expiration date, whichever is the earlier, this Option shall terminate and
      the
      only rights hereunder shall be those as to which the Option was properly
      exercised before such termination.

    

    (b) Anything
      contained herein to the contrary notwithstanding, the Option shall not be
      affected by any change of duties or position of the Optionee (including a
      transfer to or from the Corporation, its parent or any of its subsidiaries)
      so
      long as the Optionee continues in a Business Relationship with the Corporation,
      its parent or any of its subsidiaries.

    

    5. Procedure
      for Exercise.

    

    (a) The
      Option may be exercised, from time to time, in whole or in part (but for the
      purchase of whole shares only), by delivery of a written notice in the form
      attached as Exhibit
      A
      hereto
      (the “Notice”) from the Optionee to the Secretary of the Corporation, which
      Notice shall: 

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (i) state
      that the Optionee elects to exercise the Option;

    

    (ii) state
      the
      number of shares with respect to which the Option is being exercised (the
“Optioned Shares”);

    

    (iii) state
      the
      method of payment for the Optioned Shares pursuant to Section 5(b);

    

    (iv) state
      the
      date upon which the Optionee desires to consummate the purchase of the Optioned
      Shares (which date must be prior to the termination of such Option and no later
      than 30 days from the delivery of such Notice);

    

    (v) include
      any representations of the Optionee required under Section 8(b); 

    

    (vi) if
      the
      Option shall be exercised in accordance with Section 9 of the Plan by any person
      other than the Optionee, include evidence to the satisfaction of the Committee
      of the right of such person to exercise the Option; and

    

    (b) Payment
      of the Option Price for the Optioned Shares shall be made either (i)
      by
      delivery of cash or a check to the order of the Corporation in an amount equal
      to the Option Price, (ii) if approved by the Committee, by delivery to the
      Corporation of shares of Common Stock of the Corporation having a Fair Market
      Value on the date of exercise equal in amount to the Option Price of the options
      being exercised, (iii) by any other means which the Board of Directors
      determines are consistent with the purpose of the Plan and with applicable
      laws
      and regulations (including, without limitation, the provisions of Rule 16b-3
      and
      Regulation T promulgated by the Federal Reserve Board), or (iv) by any
      combination of such methods of payment. Notwithstanding
      any provisions herein to the contrary, if the Fair Market Value of one share
      of
      Common Stock of the Corporation is greater than the Option Price (at the date
      of
      calculation as set forth below), in lieu of paying the Option Price in cash,
      the
      Optionee may elect to receive shares equal to the value (as determined below)
      of
      the Optioned Shares by delivering notice of such election to the Corporation
      in
      which event the Corporation shall issue to the Optionee a number of shares
      of
      Common Stock computed using the following formula:

    

    
      	 	
              X
                =
                Y(A-B)

              
                A

              

            	 
	 	
               

            	 
	
              Where

            	
              
                X
                  =

              

            	
              the
                number of shares of Common Stock to be issued to the
                Optionee

            
	 	
              Y
                =

            	
              the
                number of Optioned Shares

            
	 	
              A
                =

            	
              the
                Fair Market Value of one share of Common Stock (at the date of such
                calculation)

            
	 	
              B
                =

            	
              Option
                Price (as adjusted to the date of such
                calculation)

            

    

    

    (c) The
      Corporation shall issue a stock certificate in the name of the Optionee (or
      such
      other person exercising the Option in accordance with the provisions of Section
      9 of the Plan) for the Optioned Shares as soon as practicable after receipt
      of
      the Notice and payment of the aggregate Option Price for such
      shares.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    6. No
      Rights as a Stockholder.
      The
      Optionee shall not have any privileges of a stockholder of the Corporation
      with
      respect to any Optioned Shares until the date of issuance of a stock certificate
      pursuant to Section 5(c).

    

    7.  Adjustments. The
      Plan
      contains provisions covering the treatment of options in a number of
      contingencies such as stock splits and mergers. Provisions in the Plan for
      adjustment with respect to stock subject to options and the related provisions
      with respect to successors to the business of the Corporation are hereby made
      applicable hereunder and are incorporated herein by reference. In general,
      the
      Optionee should not assume that options would survive the acquisition of the
      Corporation.

    

    8. Additional
      Provisions Related to Exercise.
      

    

    (a) The
      Option shall be exercisable only on such date or dates and during such period
      and for such number of shares of Common Stock as are set forth in this
      Agreement.

    

    (b) To
      exercise the Option, the Optionee shall follow the procedures set forth in
      Section 5 hereof. Upon the exercise of the Option at a time when there is not
      in
      effect a registration statement under the Securities Act of 1933, as amended
      (the “Securities Act”), relating to the shares of Common Stock issuable upon
      exercise of the Option, the Committee in its discretion may, as a condition
      to
      the exercise of the Option, require the Optionee (i) to execute an Investment
      Representation Statement substantially in the form set forth in Exhibit
      B
      hereto
      and (ii) to make such other representations and warranties as are deemed
      appropriate by counsel to the Corporation. 

    

    (c) Stock
      certificates representing shares of Common Stock acquired upon the exercise
      of
      Options that have not been registered under the Securities Act shall, if
      required by the Committee, bear an appropriate restrictive legend referring
      to
      the Securities Act. No shares of Common Stock shall be issued and delivered
      upon
      the exercise of the Option unless and until the Corporation and/or the Optionee
      shall have complied with all applicable Federal or state registration, listing
      and/or qualification requirements and all other requirements of law or of any
      regulatory agencies having jurisdiction.

    

    9.  No
      Evidence of Employment or Service.
      Nothing
      contained in the Plan or this Agreement shall confer upon the Optionee any
      right
      to continue in employment with the Corporation, its parent or any of its
      subsidiaries or interfere in any way with the right of the Corporation, its
      parent or its subsidiaries (subject to the terms of any separate agreement
      to
      the contrary) to terminate the Optionee’s employment or to increase or decrease
      the Optionee’s compensation at any time.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    10. Restriction
      on Transfer.
      The
      Option may not be transferred, pledged, assigned, hypothecated or otherwise
      disposed of in any way by the Optionee, except by will or by the laws of descent
      and distribution, and may be exercised during the lifetime of the Optionee
      only
      by the Optionee. If the Optionee dies, the Option shall thereafter be
      exercisable, during the period specified in Section 4, by his executors or
      administrators to the full extent to which the Option was exercisable by the
      Optionee at the time of his death. The Option shall not be subject to execution,
      attachment or similar process. Any attempted assignment, transfer, pledge,
      hypothecation or other disposition of the Option contrary to the provisions
      hereof, and the levy of any execution, attachment or similar process upon the
      Option, shall be null and void and without effect. The words “transfer” and
“dispose” include without limitation the making of any sale, exchange,
      assignment, gift, security interest, pledge or other encumbrance, or any
      contract therefor, any voting trust or other agreement or arrangement with
      respect to the transfer of any interest, beneficial or otherwise, in the Option,
      the creation of any other claim thereto or any other transfer or disposition
      whatsoever, whether voluntary or involuntary, affecting the right, title,
      interest or possession with respect to the Option.

    

    11. Specific
      Performance.
      Optionee expressly agrees that the Corporation will be irreparably damaged
      if
      the provisions of this Agreement and the Plan are not specifically enforced.
      Upon a breach or threatened breach of the terms, covenants and/or conditions
      of
      this Agreement or the Plan by the Optionee, the Corporation shall, in addition
      to all other remedies, be entitled to a temporary or permanent injunction,
      without showing any actual damage, and/or decree for specific performance,
      in
      accordance with the provisions hereof and thereof. The Board of Directors shall
      have the power to determine what constitutes a breach or threatened breach
      of
      this Agreement or the Plan. Any such determinations shall be final and
      conclusive and binding upon the Optionee.

    

    12. Disqualifying
      Dispositions.
      To the
      extent the Option is intended to be an Incentive Stock Option, and if the
      Optioned Shares are disposed of within two years following the date of this
      Agreement or one year following the issuance thereof to the Optionee (a
“Disqualifying Disposition”), the Optionee shall, immediately prior to such
      Disqualifying Disposition, notify the Corporation in writing of the date and
      terms of such Disqualifying Disposition and provide such other information
      regarding the Disqualifying Disposition as the Corporation may reasonably
      require.

    

    
      
        13. Notices.
          All
          notices or other communications which are required or permitted hereunder
          shall
          be in writing and sufficient if (i)
          personally delivered or sent by telecopy, (ii)
          sent by
          nationally-recognized overnight courier or (iii)
          sent by
          registered or certified mail, postage prepaid, return receipt requested,
          addressed as follows: 

         

        if
          to the
          Optionee, to the address (or telecopy number) set forth on the Notice of
          Grant;
          and

        

        if
          to the
          Corporation, to its principal executive office as specified in any report
          filed
          by the Corporation with the Securities and Exchange Commission or to such
          address as the Corporation may have specified to the Optionee in writing,
          Attention: Corporate Secretary;

        

        or
          to
          such other address as the party to whom notice is to be given may have
          furnished
          to the other party in writing in accordance herewith. Any such communication
          shall be deemed to have been given (i) when delivered, if personally delivered,
          or when telecopied, if telecopied, (ii) on the first Business Day (as
          hereinafter defined) after dispatch, if sent by nationally-recognized overnight
          courier and (iii) on the third Business Day following the date on which
          the
          piece of mail containing such communication is posted, if sent by mail.
          As used
          herein, “Business Day” means a day that is not a Saturday, Sunday or a day on
          which banking institutions in the city to which the notice or communication
          is
          to be sent are not required to be open.

         

      

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    14. No
      Waiver.
      No
      waiver of any breach or condition of this Agreement shall be deemed to be a
      waiver of any other or subsequent breach or condition, whether of like or
      different nature.

    

    15. Optionee
      Undertaking.
      The
      Optionee hereby agrees to take whatever additional actions and execute whatever
      additional documents the Corporation may in its reasonable judgment deem
      necessary or advisable in order to carry out or effect one or more of the
      obligations or restrictions imposed on the Optionee pursuant to the express
      provisions of this Agreement.

    

    16. Modification
      of Rights.
      The
      rights of the Optionee are subject to modification and termination in certain
      events as provided in this Agreement and the Plan.

    

    17. Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Nevada applicable to contracts made and to be wholly performed
      therein, without giving effect to its conflicts of laws principles.

    

    18. Counterparts;
      Facsimile Execution.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original, but all of which together shall constitute one and
      the
      same instrument. Facsimile execution and delivery of this Agreement is legal,
      valid and binding execution and delivery for all purposes.

    

    19. Entire
      Agreement.
      This
      Agreement (including the Notice of Grant) and the Plan, and, upon execution,
      the
      Notice and Investment Representation Statement, constitute the entire agreement
      between the parties with respect to the subject matter hereof, and supersede
      all
      previously written or oral negotiations, commitments, representations and
      agreements with respect thereto.

    

    20. Severability.
      In the
      event one or more of the provisions of this Agreement should, for any reason,
      be
      held to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provisions of this
      Agreement, and this Agreement shall be construed as if such invalid, illegal
      or
      unenforceable provision had never been contained herein. 

    

    21. WAIVER
      OF JURY TRIAL.
      THE
      OPTIONEE HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
      JURY
      IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
      COUNTERCLAIM THEREIN.

    

    [Signature
      Page Follows]

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Option Agreement as of the date first written
      above.

    

    
      	 	
              NOVASTAR
                RESOURCES LTD.

            
	 	 
	 	
              By: 
                /s/ Seth
                Grae                                             
                

            
	 	
              Seth
                Grae

            
	 	
              President
                and Chief Executive Officer

            
	 	 
	 	 
	 	
              OPTIONEE:

            
	 	 
	 	
              /s/
                Larry
                Goldman                                              
                

            
	 	
              Larry
                Goldman

            

    

    

    
      [Signature
        Page to Option Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    NOTE
      RE: EXHIBITS

    

    EXHIBITS
      A AND B ARE TO BE SIGNED

    

    WHEN
      OPTIONS ARE EXERCISED,

    

    NOT
      WHEN OPTION AGREEMENT IS SIGNED.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    EXERCISE
      NOTICE

    

    Novastar
      Resources Ltd.

    Attention:
      Chief Executive Officer

    

    1. Exercise
      of Option.
      Effective as of today, _______________________, 20__ , the undersigned (the
      “Optionee”) hereby elects to exercise the Optionee’s option to purchase
      ________________ shares of the Common Stock (the “Shares”) of Novastar Resources
      Ltd. (the “Corporation”) under and pursuant to the Amended and Restated 2006
      Stock Plan (the “Plan”) and the Stock Option Agreement dated May 22, 2006 (the
“Stock Option Agreement”), with the purchase of the Shares to be consummated on
      ______________ ___, ____ (the “Effective Date”), which date is prior to the
      termination of the Option and no later than 30 days from the date of delivery
      of
      this Notice.

    

    2. Representations
      of the Optionee.
      The
      Optionee acknowledges that the Optionee has received, read and understood the
      Plan and the Stock Option Agreement and agrees to abide by and be bound by
      their
      terms and conditions. 

    

    3. Rights
      as Shareholder; Shares Subject to Stockholders Agreement.
      Until
      the stock certificate evidencing such Shares is issued (as evidenced by the
      appropriate entry on the books of the Corporation or of a duly authorized
      transfer agent of the Corporation), no right to vote or receive dividends or
      any
      other rights as a stockholder shall exist with respect to the Shares,
      notwithstanding the exercise of the Option. The Corporation shall issue (or
      cause to be issued) such stock certificate promptly after the Effective Date,
      provided the applicable price has been paid and the required documents have
      been
      received. No adjustment will be made for a dividend or other right for which
      the
      record date is prior to the date the stock certificate is issued, except as
      otherwise provided in the Plan. Unless waived by the Corporation in writing,
      the
      Shares shall automatically become subject to the terms and conditions of any
      stockholders agreement or similar agreement to which a majority of the
      outstanding capital stock of the Corporation is subject at the time of exercise
      and the Optionee shall sign as a condition to the issuance of the Shares such
      joinder agreement, signature pages or other documents in order to evidence
      the
      Optionee’s agreement to be so bound.

    

    4. Tax
      Consultation.
      The
      Optionee understands that the Optionee may suffer adverse tax consequences
      as a
      result of the Optionee’s purchase or disposition of the Shares. The Optionee
      represents that the Optionee has consulted with any tax consultants the Optionee
      deems advisable in connection with the purchase or disposition of the Shares
      and
      that the Optionee is not relying on the Corporation for any tax
      advice.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5. Successors
      and Assigns.
      The
      Corporation may assign any of its rights under the Stock Option Agreement to
      single or multiple assignees (who may be stockholders, officers, directors,
      employees or consultants of the Corporation), and this Agreement shall inure
      to
      the benefit of the successors and assigns of the Corporation. Subject to the
      restrictions on transfer set forth in the Stock Option Agreement, this Agreement
      shall be binding upon the Optionee and his or her heirs, executors,
      administrators, successors and assigns.

    

    6. Interpretation.
      Any
      dispute regarding the interpretations of this Agreement shall be submitted
      by
      the Optionee or by the Corporation forthwith to the Committee, which shall
      review such dispute at its next regular meeting. The resolution of such a
      dispute by the Committee shall be final and binding on the Corporation and
      on
      the Optionee.

    

    7. Governing
      Laws: Severability.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York applicable to contracts made and to be wholly performed
      therein, without giving effect to its conflicts of laws principles. Should
      any
      provision of this Agreement be determined by a court of law to be illegal or
      unenforceable, the other provisions shall nevertheless remain effective and
      shall remain enforceable.

    

    8. Notices.
      Any
      notice required or permitted hereunder shall be given in writing and shall
      be
      deemed effectively given if given in the manner specified in the Stock Option
      Agreement.

    

    9. Further
      Instruments.
      The
      parties agree to execute such further instruments and to take such further
      action as may be reasonably necessary to carry out the purposes and intent
      of
      this Agreement.

    

    10. Delivery
      of Payment.
      The
      Optionee herewith delivers to the Corporation the full Option Price for the
      Shares.

    

    11. Entire
      Agreement.
      The
      Plan, the Notice of Grant, and the Stock Option Agreement are incorporated
      herein by reference. This Agreement, the Plan, the Notice of Grant, the Stock
      Option Agreement, and the Investment Representation Statement constitute the
      entire agreement of the parties and supersede in their entirety all prior
      undertakings and agreements of the Corporation and the Optionee with respect
      to
      the subject matter hereof.

    

    
      	
              Submitted
                by:

            	
              Accepted
                by:

            
	 	 
	
              OPTIONEE:

            	
              NOVASTAR
                RESOURCES LTD.

            
	 	 
	 	 
	 	
              By:_____________________________

            
	 	 
	
              ___________________________

            	
              Its:______________________________

            
	
              LARRY
                GOLDMAN

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    INVESTMENT
      REPRESENTATION STATEMENT

    

    
      	
              OPTIONEE

            	
              :

            	
              ___________________________________

            
	 	 	 
	
              CORPORATION

            	
              :

            	
              NOVASTAR
                RESOURCES LTD.

            
	 	
               

            	 
	
              SECURITY

            	
              :

            	
              Common
                Stock

            
	 	 	 
	
              AMOUNT

            	
              :

            	
              ___________________________________

            
	 	 	 
	
              DATE

            	
              :

            	
              ___________________________________

            

    

    

    In
      connection with the purchase of the above-listed Securities, the undersigned
      Optionee represents to the Corporation the following:

    

    (a) The
      Optionee is aware of the Corporation’s business affairs and financial condition
      and has acquired sufficient information about the Corporation to reach an
      informed and knowledgeable decision to acquire the Securities. The Optionee
      is
      acquiring these Securities for investment for the Optionee’s own account only
      and not with a view to, or for resale in connection with, a “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”).

    

    (b) The
      Optionee acknowledges and understands that the Securities constitute “restricted
      securities” under the Securities Act and have not been registered under the
      Securities Act in reliance upon a specific exemption therefrom, which exemption
      depends upon, among other things, the bona fide nature of the Optionee’s
      investment intent as expressed herein. In this connection, the Optionee
      understands that, in the view of the Securities and Exchange Commission, the
      statutory basis for such exemption may be unavailable if the Optionee’s
      representation was predicated solely upon a present intention to hold these
      Securities for the minimum capital gains period specified under tax statutes,
      for a deferred sale, for or until an increase or decrease in the market price
      of
      the Securities, or for a period of one year or any other fixed period in the
      future. The Optionee further understands that the Securities must be held
      indefinitely unless they are subsequently registered under the Securities Act
      or
      an exemption from such registration is available. The Optionee further
      acknowledges and understands that the Corporation is under no obligation to
      register the Securities. The Optionee understands that the certificate
      evidencing the Securities will be imprinted with a legend which prohibits the
      transfer of the Securities unless they are registered or such registration
      is
      not required in the opinion of counsel satisfactory to the Corporation and
      other
      legends required under the applicable state or federal securities
      laws.

    

    

    Signature
      of Optionee: _____________________________

    LARRY
      GOLDMAN

    Date:__________________Dated:
      May
      30, 2006

     

    NEITHER
      THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
      HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS.

     

     

    
      	No. CCP-_	 	
              [Amount]

            

    

     

    ASTRIS
      ENERGI, INC.

     

    Secured
      Convertible Debenture

     

    Due
      April 9, 2009

     

    This
      Secured Convertible Debenture (the “Debenture”)
      is
      issued by ASTRIS
      ENERGI, INC., a
      corporation organized under the laws of the province of Ontario, Canada (the
      “Obligor”),
      to
[Name],
      [Address here]
      (the
      “Holder”),
      pursuant to all rights on a pro-rata basis of that certain Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      of
      Cornell Capital Partners, LP dated April 10, 2006. 

     

    FOR
      VALUE RECEIVED,
      the
      Obligor hereby promises to pay to the Holder or its successors and assigns
      the
      principal sum of [Amount]
      together
      with accrued but unpaid interest on or before April 9, 2009 (the “Maturity
      Date”)
      in
      accordance with the following terms:

     

    Interest.
      Interest shall accrue on the outstanding principal balance hereof at an annual
      rate equal to ten percent (10%). Interest shall be calculated on the basis
      of a
      365-day year and the actual number of days elapsed, to the extent permitted
      by
      applicable law. Interest hereunder will be paid to the Holder or its assignee
      (as defined in Section
      5)
      in
      whose name this Debenture is registered on the records of the Obligor regarding
      registration and transfers of Debentures (the “Debenture
      Register”)
      and
      shall be paid in cash or in Common Stock at the Conversion Price in effect
      at
      the time payment is made, at the option of the Obligor.

     

    Right
      of Redemption.
      The
      Obligor at its option shall have the right, with three (3) business days advance
      written notice (the “Redemption
      Notice”),
      to
      redeem a portion or all amounts outstanding under this Debenture prior to the
      Maturity Date by paying an amount (the “Redemption
      Amount”)
      equal
      to (a) if Closing Bid Price of the of the Obligor’s Common Stock, as reported by
      Bloomberg, LP, is less than the Fixed Conversion Price at the time of the
      Redemption Notice, the Obligor shall pay an amount equal to the principal amount
      being redeemed plus a redemption premium (“Redemption
      Premium”)
      equal
      to twenty percent (20%) of the principal amount being redeemed, and accrued
      interest, and (b) if the Closing Bid Price of the Obligor’s Common Stock at the
      time of the Redemption Notice is above the Fixed Conversion Price (hereinafter
      defined), the Obligor shall pay an amount equal to the principal amount being
      redeemed plus an amount in cash equal to the product of the principal amount
      being redeemed plus any interest due therein divided by the Conversion Price
      then in effect, and multiplied by the highest closing price of the stock from
      date of the Redemption Notice through the date that such redemption is made.
      The
      Obligor shall deliver to the Holder the Redemption Amount on the third
      (3rd)
      business day after the Redemption Notice. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Notwithstanding
      the foregoing in the event that the Obligor has elected to redeem a portion
      of
      the outstanding principal amount and accrued interest under this Debenture
      the
      Holder shall be permitted to convert all or any portion of this Debenture during
      such three business day period. 

     

    Security
      Agreements.
      This
      Debenture is secured by a Share Escrow Agreement (the “Share
      Escrow Agreement”)
      of
      even date herewith among the Obligor, the Holder, and the Escrow Agent, a
      Security Agreement (the “Security
      Agreement”)
      of
      even date herewith between the Obligor and the Holder, and a Subsidiary Security
      Agreement (the “Subsidiary Security
      Agreement”)
      of
      even date herewith between 206254 Ontario, Inc. and the Holder.

     

    This
      Debenture is subject to the following additional provisions:

     

    Section
      1. This
      Debenture is exchangeable for an equal aggregate principal amount of Debentures
      of different authorized denominations, as requested by the Holder surrendering
      the same. No service charge will be made for such registration of transfer
      or
      exchange.

     

    Section
      2. Events
      of Default.

     

    (a) An
      “Event
      of Default”,
      wherever used herein, means any one of the following events (whatever the reason
      and whether it shall be voluntary or involuntary or effected by operation of
      law
      or pursuant to any judgment, decree or order of any court, or any order, rule
      or
      regulation of any administrative or governmental body):

     

    (i) Any
      default in the payment of the principal of, interest on or other charges in
      respect of this Debenture, free of any claim of subordination, as and when
      the
      same shall become due and payable (whether on a Conversion Date or the Maturity
      Date or by acceleration or otherwise), which is not cured within 5 Trading
      Days;

     

    (ii) The
      Obligor shall fail to observe or perform any other material covenant, agreement
      or warranty contained in, or otherwise commit any breach or default of any
      provision of this Debenture (except as may be covered by Section
      2(a)(i)
      hereof)
      or any Transaction Document (as defined in Section
      5)
      which
      is not cured with in the time prescribed;

     

    (iii) The
      Obligor or any subsidiary of the Obligor shall commence a proceeding, or there
      shall be commenced against the Obligor or any subsidiary of the Obligor under
      any applicable bankruptcy or insolvency laws as now or hereafter in effect
      or
      any successor thereto, or the Obligor or any subsidiary of the Obligor commences
      any other proceeding under any reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law of
      any
      jurisdiction whether now or hereafter in effect relating to the Obligor or
      any
      subsidiary of the Obligor or there is commenced against the Obligor or any
      subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding
      which remains undismissed for a period of 61 days; or the Obligor or any
      subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order
      of
      relief or other order approving any such case or proceeding is entered; or
      the
      Obligor or any subsidiary of the Obligor suffers any appointment of any
      custodian, private or court appointed receiver or the like for it or any
      substantial part of its property which continues undischarged or unstayed for
      a
      period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor
      makes a general assignment for the benefit of creditors; or the Obligor or
      any
      subsidiary of the Obligor shall fail to pay, or shall state that it is unable
      to
      pay, or shall be unable to pay, its debts generally as they become due; or
      the
      Obligor or any subsidiary of the Obligor shall call a meeting of its creditors
      with a view to arranging a composition, adjustment or restructuring of its
      debts; or the Obligor or any subsidiary of the Obligor shall by any act or
      failure to act expressly indicate its consent to, approval of or acquiescence
      in
      any of the foregoing; or any corporate or other action is taken by the Obligor
      or any subsidiary of the Obligor for the purpose of effecting any of the
      foregoing;

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (iv) The
      Obligor or any subsidiary of the Obligor shall default in any of its obligations
      under any other debenture or any mortgage, credit agreement or other facility,
      indenture agreement, factoring agreement or other instrument under which there
      may be issued, or by which there may be secured or evidenced any indebtedness
      for borrowed money or money due under any long term leasing or factoring
      arrangement of the Obligor or any subsidiary of the Obligor in an amount
      exceeding $100,000, whether such indebtedness now exists or shall hereafter
      be
      created and such default shall result in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable;

     

    (v) The
      Common Stock shall cease to be quoted for trading or listed for trading on
      either the Nasdaq OTC Bulletin Board (“OTC”),
      Nasdaq Capital Market, New York Stock Exchange, American Stock Exchange or
      the
      Nasdaq National Market (each, a “Subsequent
      Market”)
      and
      shall not again be quoted or listed for trading thereon within five (5) Trading
      Days of such delisting;

     

    (vi) The
      Obligor or any subsidiary of the Obligor shall be a party to any Change of
      Control Transaction (as defined in Section
      5);
      

     

    (vii) The
      Obligor shall fail to file the Underlying Shares Registration Statement (as
      defined in Section
      5)
      with
      the Commission (as defined in Section
      5),
      or the
      Underlying Shares Registration Statement shall not have been declared effective
      by the Commission, in each case within the time periods set forth in the
      Investor Registration Rights Agreement (“Registration
      Rights Agreement”)
      of
      even date herewith between the Obligor and the Holder; provided, however, that
      it shall not be an Event of Default if the Shares Registration Statement shall
      not have been declared effective by the Commission, within the time periods
      set
      forth in the Investor Registration Rights Agreement solely as a result of the
      Commission raising an issue with respect to the Holder or with respect to the
      structure of the transaction contemplated by the Transaction Documents.

     

    (viii) If
      the
      effectiveness of the Underlying Shares Registration Statement lapses for any
      reason or the Holder shall not be permitted to resell the shares of Common
      Stock
      underlying this Debenture under the Underlying Shares Registration Statement,
      in
      either case, for more than ten (10) consecutive Trading Days or an aggregate
      of
      twenty (20) Trading Days (which need not be consecutive Trading
      Days);

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (ix) The
      Obligor shall fail for any reason to deliver Common Stock certificates to a
      Holder prior to the seventh (7th)
      Trading
      Day after a Conversion Date or the Obligor shall provide notice to the Holder,
      including by way of public announcement, at any time, of its intention not
      to
      comply with requests for conversions of this Debenture in accordance with the
      terms hereof; 

     

    (x)  The
      Obligor shall fail for any reason to deliver the payment in cash pursuant to
      a
      Buy-In (as defined herein) within three (3) days after notice is claimed
      delivered hereunder; 

     

    (b) During
      the time that any portion of this Debenture is outstanding, if any Event of
      Default has occurred, the full principal amount of this Debenture, together
      with
      interest and other amounts owing in respect thereof, to the date of acceleration
      shall become at the Holder's election, immediately due and payable in cash,
      provided
      however,
      the
      Holder may request (but shall have no obligation to request) payment of such
      amounts in Common Stock of the Obligor. In addition to any other remedies,
      the
      Holder shall have the right (but not the obligation) to convert this Debenture
      at any time (x) after an Event of Default or (y) on the Maturity Date at the
      Conversion Price then in-effect. The Holder need not provide and the Obligor
      hereby waives any presentment, demand, protest or other notice of any kind,
      and
      the Holder may immediately enforce any and all of its rights and remedies
      hereunder and all other remedies available to it under applicable law. Such
      declaration may be rescinded and annulled by Holder at any time prior to payment
      hereunder. No such rescission or annulment shall affect any subsequent Event
      of
      Default or impair any right consequent thereon. Upon an Event of Default,
      notwithstanding any other provision of this Debenture or any Transaction
      Document, the Holder shall have no obligation to comply with or adhere to any
      limitations in Section 3(b), if any, on the conversion of this Debenture or
      the
      sale of the Underlying Shares. 

     

    Section
      3. Conversion.

     

    (a) Conversion
      at Option of Holder.

     

    (i) This
      Debenture shall be convertible into shares of Common Stock at the option of
      the
      Holder, in whole or in part at any time and from time to time, after the
      Original Issue Date (as defined in Section
      5)
      (subject to the limitations on conversion set forth in Section
      3(b)
      hereof).
      The number of shares of Common Stock issuable upon a conversion hereunder equals
      the quotient obtained by dividing (x) the outstanding amount of this Debenture
      to be converted by (y) the Conversion Price (as defined in Section
      3(c)(i)).
      The
      Obligor shall deliver, or cause its transfer agent to deliver Common Stock
      certificates to the Holder prior to the Fifth (5th)
      Trading
      Day after a Conversion Date.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (ii) Notwithstanding
      anything to the contrary contained herein, if on any Conversion Date: (1) the
      number of shares of Common Stock at the time authorized, unissued and unreserved
      for all purposes, or held as treasury stock, is insufficient to pay principal
      and interest hereunder in shares of Common Stock; (2) the Common Stock is not
      listed or quoted for trading on the OTC or on a Subsequent Market; (3) the
      Obligor has failed to timely satisfy its conversion; or (4) the issuance of
      such
      shares of Common Stock would result in a violation of Section
      3(b),
      then,
      at the option of the Holder, the Obligor, in lieu of delivering shares of Common
      Stock pursuant to Section
      3(a)(i),
      shall
      deliver, within three (3) Trading Days of each applicable Conversion Date,
      an
      amount in cash equal to the product of the outstanding principal amount to
      be
      converted plus any interest due therein divided by the Conversion Price, chosen
      by the Holder, and multiplied by the highest closing price of the stock from
      date of the conversion notice till the date that such cash payment is
      made.

     

    Further,
      if the Obligor shall not have delivered any cash due in respect of conversion
      of
      this Debenture or as payment of interest thereon by the fifth (5th)
      Trading
      Day after the Conversion Date, the Holder may, by notice to the Obligor, require
      the Obligor to issue shares of Common Stock pursuant to Section
      3(c),
      except
      that for such purpose the Conversion Price applicable thereto shall be the
      lesser of the Conversion Price on the Conversion Date and the Conversion Price
      on the date of such Holder demand. Any such shares will be subject to the
      provisions of this Section.

     

    (iii) The
      Holder shall effect conversions by delivering to the Obligor a completed notice
      in the form attached hereto as Exhibit A (a “Conversion
      Notice”).
      The
      date on which a Conversion Notice is delivered is the “Conversion
      Date.”
Unless
      the Holder is converting the entire principal amount outstanding under this
      Debenture at the time of conversion, the Holder is not required to physically
      surrender this Debenture to the Obligor in order to effect conversions.
      Conversions hereunder shall have the effect of lowering the outstanding
      principal amount of this Debenture plus all accrued and unpaid interest thereon
      in an amount equal to the applicable conversion. The Holder and the Obligor
      shall maintain records showing the principal amount converted and the date
      of
      such conversions. In the event of any dispute or discrepancy, the records of
      the
      Holder shall be controlling and determinative in the absence of manifest
      error.

     

    (b) Certain
      Conversion Restrictions.

     

    (i) A
      Holder
      may not convert this Debenture or receive shares of Common Stock as payment
      of
      interest hereunder to the extent such conversion or receipt of such interest
      payment would result in the Holder, together with any affiliate thereof,
      beneficially owning (as determined in accordance with Section 13(d) of the
      Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the
      then issued and outstanding shares of Common Stock, including shares issuable
      upon conversion of, and payment of interest on, this Debenture held by such
      Holder after application of this Section. Since the Holder will not be obligated
      to report to the Obligor the number of shares of Common Stock it may hold at
      the
      time of a conversion hereunder, unless the conversion at issue would result
      in
      the issuance of shares of Common Stock in excess of 4.9% of the then outstanding
      shares of Common Stock without regard to any other shares which may be
      beneficially owned by the Holder or an affiliate thereof, the Holder shall
      have
      the authority and obligation to determine whether the restriction contained
      in
      this Section will limit any particular conversion hereunder and to the extent
      that the Holder determines that the limitation contained in this Section
      applies, the determination of which portion of the principal amount of this
      Debenture is convertible shall be the responsibility and obligation of the
      Holder. If the Holder has delivered a Conversion Notice for a principal amount
      of this Debenture that, without regard to any other shares that the Holder
      or
      its affiliates may beneficially own, would result in the issuance in excess
      of
      the permitted amount hereunder, the Obligor shall notify the Holder of this
      fact
      and shall honor the conversion for the maximum principal amount permitted to
      be
      converted on such Conversion Date in accordance with the periods described
      in
Section
      3(a)(i)
      and, at
      the option of the Holder, either retain any principal amount tendered for
      conversion in excess of the permitted amount hereunder for future conversions
      or
      return such excess principal amount to the Holder. The provisions of this
      Section may be waived by a Holder (but only as to itself and not to any other
      Holder) upon not less than 65 days prior notice to the Obligor. Other Holders
      shall be unaffected by any such waiver.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (ii)
       In
      the
      event that the Closing Bid Price of the Common Stock is below $0.07 for ten
      (10)
      consecutive trading days then the Holder shall not convert in excess of $75,000
      of principal amount of this Debenture in a thirty (30) day period, provided
      however,
      that
      during any period that this conversion limitation is in effect, it shall cease
      to apply on the next Trading Day following the occurrence of any one of the
      following events: (i) the Closing Bid Price of the Obligor’s Common Stock is
      above $0.07, or (ii) the Closing Bid Price of the Obligor’s Common Stock is
      below $0.07 for forty (40) consecutive Trading Days, or (iii) an Event of
      Default. 

     

    (c) Conversion
      Price and Adjustments to Conversion Price.

     

    (i) The
      conversion price shall equal the lesser of (i) a price equal to _.2483__( the
      “Fixed
      Conversion Price”)
      or
      (ii) ninety percent (90%) of the lowest daily Volume Weighted Average Price
      of the Common Stock during the ten (10) trading days immediately preceding
      the
      Conversion Date as quoted by Bloomberg, LP (the “Market
      Conversion Price”).
      The
      Fixed Conversion Price and the Market Conversion Price are collectively referred
      to as the “Conversion
      Price.”
The
      Conversion Price may be adjusted pursuant to the other terms of this
      Debenture.

     

    (ii) If
      the
      Obligor, at any time while this Debenture is outstanding, shall (a) pay a
      stock dividend or otherwise make a distribution or distributions on shares
      of
      its Common Stock or any other equity or equity equivalent securities payable
      in
      shares of Common Stock, (b) subdivide outstanding shares of Common Stock into
      a
      larger number of shares, (c) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (d)
      issue
      by reclassification of shares of the Common Stock any shares of capital stock
      of
      the Obligor, then the Fixed Conversion Price shall be multiplied by a fraction
      of which the numerator shall be the number of shares of Common Stock (excluding
      treasury shares, if any) outstanding before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding after
      such
      event. Any adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution and shall become effective immediately
      after the effective date in the case of a subdivision, combination or
      re-classification.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (iii) If
      the
      Obligor, at any time while this Debenture is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to the Holder)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the Fixed Conversion Price, then the Fixed Conversion Price
      shall be multiplied by a fraction, of which the denominator shall be the number
      of shares of the Common Stock (excluding treasury shares, if any) outstanding
      on
      the date of issuance of such rights or warrants (plus the number of additional
      shares of Common Stock offered for subscription or purchase), and of which
      the
      numerator shall be the number of shares of the Common Stock (excluding treasury
      shares, if any) outstanding on the date of issuance of such rights or warrants,
      plus the number of shares which the aggregate offering price of the total number
      of shares so offered would purchase at the Fixed Conversion Price. Such
      adjustment shall be made whenever such rights or warrants are issued, and shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such rights, options or warrants. However,
      upon
      the expiration of any such right, option or warrant to purchase shares of the
      Common Stock the issuance of which resulted in an adjustment in the Fixed
      Conversion Price pursuant to this Section, if any such right, option or warrant
      shall expire and shall not have been exercised, the Fixed Conversion Price
      shall
      immediately upon such expiration be recomputed and effective immediately upon
      such expiration be increased to the price which it would have been (but
      reflecting any other adjustments in the Fixed Conversion Price made pursuant
      to
      the provisions of this Section after the issuance of such rights or warrants)
      had the adjustment of the Fixed Conversion Price made upon the issuance of
      such
      rights, options or warrants been made on the basis of offering for subscription
      or purchase only that number of shares of the Common Stock actually purchased
      upon the exercise of such rights, options or warrants actually
      exercised.

     

    (iv) If
      the
      Obligor or any subsidiary thereof, as applicable, at any time while this
      Debenture is outstanding, shall issue, other than Excluded Securities, shares
      of
      Common Stock or rights, warrants, options or other securities or debt that
      are
      convertible into or exchangeable for shares of Common Stock (“Common
      Stock Equivalents”)
      entitling any Person to acquire shares of Common Stock, at a price per share
      less than the Fixed Conversion Price (if the holder of the Common Stock or
      Common Stock Equivalent so issued shall at any time, whether by operation of
      purchase price adjustments, reset provisions, floating conversion, exercise
      or
      exchange prices or otherwise, or due to warrants, options or rights per share
      which is issued in connection with such issuance, be entitled to receive shares
      of Common Stock at a price per share which is less than the Fixed Conversion
      Price, such issuance shall be deemed to have occurred for less than the Fixed
      Conversion Price), then, at the sole option of the Holder, the Fixed Conversion
      Price shall be adjusted immediately thereafter so that it shall equal the price
      determined by multiplying the Fixed Conversion Price in effect immediately
      prior
      thereto by a fraction, the numerator of which shall be the sum of the number
      of
      shares of Common Stock outstanding immediately prior to the issuance of such
      additional shares and the number of shares of Common Stock which the aggregate
      consideration received for the issuance of such additional shares would purchase
      at such current market price per share of Common Stock, and the denominator
      of
      which shall be the number of shares of Common Stock outstanding immediately
      after the issuance of such additional shares. Such adjustment shall be made
      whenever such Common Stock or Common Stock Equivalents are issued. The Obligor
      shall notify the Holder in writing, no later than one (1) business day following
      the issuance of any Common Stock or Common Stock Equivalent subject to this
      Section, indicating therein the applicable issuance price, or of applicable
      reset price, exchange price, conversion price and other pricing terms. No
      adjustment under this Section shall be made as a result of issuances and
      exercises of options to purchase shares of Common Stock issued for compensatory
      purposes pursuant to any of the Obligor's stock option or stock purchase
      plans.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (v) If
      the
      Obligor, at any time while this Debenture is outstanding, shall distribute
      to
      all holders of Common Stock (and not to the Holder) evidences of its
      indebtedness or assets or rights or warrants to subscribe for or purchase any
      security, then in each such case the Fixed Conversion Price at which this
      Debenture shall thereafter be convertible shall be determined by multiplying
      the
      Fixed Conversion Price in effect immediately prior to the record date fixed
      for
      determination of stockholders entitled to receive such distribution by a
      fraction of which the denominator shall be the Closing Bid Price determined
      as
      of the record date mentioned above, and of which the numerator shall be such
      Closing Bid Price on such record date less the then fair market value at such
      record date of the portion of such assets or evidence of indebtedness so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith. In either case the
      adjustments shall be described in a statement provided to the Holder of the
      portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common Stock. Such adjustment
      shall be made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

     

    (vi) In
      case
      of any reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is converted into other securities, cash
      or
      property, the Holder shall have the right thereafter to, at its option, (A)
      convert the then outstanding principal amount, together with all accrued but
      unpaid interest and any other amounts then owing hereunder in respect of this
      Debenture into the shares of stock and other securities, cash and property
      receivable upon or deemed to be held by holders of the Common Stock following
      such reclassification or share exchange, and the Holder of this Debenture shall
      be entitled upon such event to receive such amount of securities, cash or
      property as the shares of the Common Stock of the Obligor into which the then
      outstanding principal amount, together with all accrued but unpaid interest
      and
      any other amounts then owing hereunder in respect of this Debenture could have
      been converted immediately prior to such reclassification or share exchange
      would have been entitled, or (B) require the Obligor to prepay the outstanding
      principal amount of this Debenture, plus all interest and other amounts due
      and
      payable thereon. The entire prepayment price shall be paid in cash. This
      provision shall similarly apply to successive reclassifications or share
      exchanges.

     

    (vii) The
      Obligor shall at all times reserve and keep available out of its authorized
      Common Stock the full number of shares of Common Stock issuable upon conversion
      of all outstanding amounts under this Debenture; and within three (3) Business
      Days following the receipt by the Obligor of a Holder's notice that such minimum
      number of Underlying Shares is not so reserved, the Obligor shall promptly
      reserve a sufficient number of shares of Common Stock to comply with such
      requirement.

     

    (viii) All
      calculations under this Section
      3
      shall be
      rounded up to the nearest $0.001 or whole share.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (ix) Whenever
      the Conversion Price is adjusted pursuant to Section
      3
      hereof,
      the Obligor shall promptly mail to the Holder a notice setting forth the
      Conversion Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment.

     

    (x) If
      (A)
      the Obligor shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Obligor shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Obligor shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Obligor shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Obligor is a party, any sale or transfer of all or substantially all of
      the
      assets of the Obligor, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; or (E) the Obligor shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Obligor; then, in each case, the Obligor shall cause to
      be
      filed at each office or agency maintained for the purpose of conversion of
      this
      Debenture, and shall cause to be mailed to the Holder at its last address as
      it
      shall appear upon the stock books of the Obligor, at least twenty (20) calendar
      days prior to the applicable record or effective date hereinafter specified,
      a
      notice stating (x) the date on which a record is to be taken for the purpose
      of
      such dividend, distribution, redemption, rights or warrants, or if a record
      is
      not to be taken, the date as of which the holders of the Common Stock of record
      to be entitled to such dividend, distributions, redemption, rights or warrants
      are to be determined or (y) the date on which such reclassification,
      consolidation, merger, sale, transfer or share exchange is expected to become
      effective or close, and the date as of which it is expected that holders of
      the
      Common Stock of record shall be entitled to exchange their shares of the Common
      Stock for securities, cash or other property deliverable upon such
      reclassification, consolidation, merger, sale, transfer or share exchange,
      provided, that the failure to mail such notice or any defect therein or in
      the
      mailing thereof shall not affect the validity of the corporate action required
      to be specified in such notice. The Holder is entitled to convert this Debenture
      during the 20-day calendar period commencing the date of such notice to the
      effective date of the event triggering such notice.

     

    (xi) In
      case
      of any (1) merger or consolidation of the Obligor or any subsidiary of the
      Obligor with or into another Person, or (2) sale by the Obligor or any
      subsidiary of the Obligor of more than one-half of the assets of the Obligor
      in
      one or a series of related transactions, a Holder shall have the right to (A)
      exercise any rights under Section
      2(b),
      (B)
      convert the aggregate amount of this Debenture then outstanding into the shares
      of stock and other securities, cash and property receivable upon or deemed
      to be
      held by holders of Common Stock following such merger, consolidation or sale,
      and such Holder shall be entitled upon such event or series of related events
      to
      receive such amount of securities, cash and property as the shares of Common
      Stock into which such aggregate principal amount of this Debenture could have
      been converted immediately prior to such merger, consolidation or sales would
      have been entitled, or (C) in the case of a merger or consolidation, require
      the
      surviving entity to issue to the Holder a convertible Debenture with a principal
      amount equal to the aggregate principal amount of this Debenture then held
      by
      such Holder, plus all accrued and unpaid interest and other amounts owing
      thereon, which such newly issued convertible Debenture shall have terms
      identical (including with respect to conversion) to the terms of this Debenture,
      and shall be entitled to all of the rights and privileges of the Holder of
      this
      Debenture set forth herein and the agreements pursuant to which this Debentures
      were issued. In the case of clause (C), the conversion price applicable for
      the
      newly issued shares of convertible preferred stock or convertible Debentures
      shall be based upon the amount of securities, cash and property that each share
      of Common Stock would receive in such transaction and the Conversion Price
      in
      effect immediately prior to the effectiveness or closing date for such
      transaction. The terms of any such merger, sale or consolidation shall include
      such terms so as to continue to give the Holder the right to receive the
      securities, cash and property set forth in this Section upon any conversion
      or
      redemption following such event. This provision shall similarly apply to
      successive such events.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (d) Other
      Provisions.

     

    (i) The
      Obligor covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of this Debenture and payment of interest on this
      Debenture, each as herein provided, free from preemptive rights or any other
      actual contingent purchase rights of persons other than the Holder, not less
      than such number of shares of the Common Stock as shall (subject to any
      additional requirements of the Obligor as to reservation of such shares set
      forth in this Debenture) be issuable (taking into account the adjustments and
      restrictions of Sections
      2(b) and 3(c))
      upon
      the conversion of the outstanding principal amount of this Debenture and payment
      of interest hereunder. The Obligor covenants that all shares of Common Stock
      that shall be so issuable shall, upon issue, be duly and validly authorized,
      issued and fully paid, nonassessable and, if the Underlying Shares Registration
      Statement has been declared effective under the Securities Act, registered
      for
      public sale in accordance with such Underlying Shares Registration
      Statement.

     

    (ii) Upon
      a
      conversion hereunder the Obligor shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock, but may
      if
      otherwise permitted, make a cash payment in respect of any final fraction of
      a
      share based on the Closing Bid Price at such time. If the Obligor elects not,
      or
      is unable, to make such a cash payment, the Holder shall be entitled to receive,
      in lieu of the final fraction of a share, one whole share of Common
      Stock.

     

    (iii) The
      issuance of certificates for shares of the Common Stock on conversion of this
      Debenture shall be made without charge to the Holder thereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificate, provided that the Obligor shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of such Debenture so converted and the Obligor shall not be required
      to issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Obligor the amount of
      such tax or shall have established to the satisfaction of the Obligor that
      such
      tax has been paid.

     

    (iv) Nothing
      herein shall limit a Holder's right to pursue actual damages or declare an
      Event
      of Default pursuant to Section
      2
      herein
      for the Obligor 's failure to deliver certificates representing shares of Common
      Stock upon conversion within the period specified herein and such Holder shall
      have the right to pursue all remedies available to it at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief, in each case without the need to post a bond or provide
      other
      security. The exercise of any such rights shall not prohibit the Holder from
      seeking to enforce damages pursuant to any other Section hereof or under
      applicable law. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (v) In
      addition to any other rights available to the Holder, if the Obligor fails
      to
      deliver to the Holder such certificate or certificates pursuant to Section
      3(a)(i) by
      the
      fifth (5th)
      Trading
      Day after the Conversion Date, and if after such fifth (5th)
      Trading
      Day the Holder purchases (in an open market transaction or otherwise) Common
      Stock to deliver in satisfaction of a sale by such Holder of the Underlying
      Shares which the Holder anticipated receiving upon such conversion (a
“Buy-In”),
      then
      the Obligor shall (A) pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (x) the Holder's
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
      of Common Stock that such Holder anticipated receiving from the conversion
      at
      issue multiplied by (2) the market price of the Common Stock at the time of
      the
      sale giving rise to such purchase obligation and (B) at the option of the
      Holder, either reissue a Debenture in the principal amount equal to the
      principal amount of the attempted conversion or deliver to the Holder the number
      of shares of Common Stock that would have been issued had the Obligor timely
      complied with its delivery requirements under Section
      3(a)(i).
      For
      example, if the Holder purchases Common Stock having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures
      with respect to which the market price of the Underlying Shares on the date
      of
      conversion was a total of $10,000 under clause (A) of the immediately preceding
      sentence, the Obligor shall be required to pay the Holder $1,000. The Holder
      shall provide the Obligor written notice indicating the amounts payable to
      the
      Holder in respect of the Buy-In.

     

    Section
      4. Notices.
       Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms hereof must be in writing and will be deemed to have
      been
      delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
      when
      sent by facsimile (provided confirmation of transmission is mechanically or
      electronically generated and kept on file by the sending party); or (iii) one
      (1) trading day after deposit with a nationally recognized overnight delivery
      service, in each case properly addressed to the party to receive the same.
      The
      addresses and facsimile numbers for such communications shall be:

    

    

    
      	
              If
                to the Company, to:

            	
              Astris
                Energi, Inc.

            
	 	
              2175
                Dunwin Drive, Unit 6

            
	 	
              Mississauga,
                ON L5L 1X2

            
	 	
              Attention: Jiri
                Nor

            
	 	
              Telephone: (905)
                608-2000

            
	 	
              Facsimile: (905)
                608-8222

            
	 	 
	
              With
                a copy to: 

            	
              Ellenoff
                Grossman & Schole LLP

            
	 	
              370
                Lexington Avenue, 19th
                Floor

            
	 	
              New
                York, NY 10017

            
	 	
              Telephone: 
                (212) 370-1300

            
	 	
              Facsimile:
                 (212)
                370-7889

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	 	 
	
              If
                to the Holder:

            	
              [Name]

            
	 	
              [Address]

            
	 	 
	 	 
	 	 
	 	 
	
              With
                a copy to:

            	 
	 	 
	 	 
	 	 
	 	 

    

    

    or
      at
      such other address and/or facsimile number and/or to the attention of such
      other
      person as the recipient party has specified by written notice given to each
      other party three (3) business days prior to the effectiveness of such change.
      Written confirmation of receipt (i) given by the recipient of such notice,
      consent, waiver or other communication, (ii) mechanically or electronically
      generated by the sender's facsimile machine containing the time, date, recipient
      facsimile number and an image of the first page of such transmission or (iii)
      provided by a nationally recognized overnight delivery service, shall be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

     

    Section
      5. Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday in the United States or a day on which banking institutions are
      authorized or required by law or other government action to close.

     

    “Change
      of Control Transaction”
means,
      except with respect to mergers or acquisitions by the Obligor in the normal
      course of business and in industries related to the Obligor’s, the occurrence of
      (a) an acquisition after the date hereof by an individual or legal entity or
      “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
      effective control (whether through legal or beneficial ownership of capital
      stock of the Obligor, by contract or otherwise) of in excess of fifty percent
      (50%) of the voting securities of the Obligor (except that the acquisition
      of
      voting securities by the Holder shall not constitute a Change of Control
      Transaction for purposes hereof), (b) a replacement at one time or over time
      of
      more than one-half of the members of the board of directors of the Obligor
      which
      is not approved by a majority of those individuals who are members of the board
      of directors on the date hereof (or by those individuals who are serving as
      members of the board of directors on any date whose nomination to the board
      of
      directors was approved by a majority of the members of the board of directors
      who are members on the date hereof), (c) the merger, consolidation or sale
      of
      fifty percent (50%) or more of the assets of the Obligor or any subsidiary
      of
      the Obligor in one or a series of related transactions with or into another
      entity, or (d) the execution by the Obligor of an agreement to which the Obligor
      is a party or by which it is bound, providing for any of the events set forth
      above in (a), (b) or (c).

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock, no par value, of the Obligor and stock of any other class
      into
      which such shares may hereafter be changed or reclassified.

     

    “Conversion
      Date”
shall
      mean the date upon which the Holder gives the Obligor notice of their intention
      to effectuate a conversion of this Debenture into shares of the Company’s Common
      Stock as outlined herein.

     

    “Closing
      Bid Price”
means
      the price per share in the last reported trade of the Common Stock on the OTC
      or
      on the exchange which the Common Stock is then listed as quoted by Bloomberg,
      LP.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Excluded
      Securities”
means,
      provided such security is issued at a price which is greater than or equal
      to
      the arithmetic average of the Closing Bid Prices of the Common Stock for the
      ten
      (10) consecutive trading days immediately preceding the date of issuance, any
      of
      the following: (a) any issuance by the Obligor of securities in connection
      with
      a strategic partnership or a joint venture (the primary purpose of which is
      not
      to raise equity capital), (b) any issuance by the Obligor of securities as
      consideration for a merger or consolidation or the acquisition of a business,
      product, license, or other assets of another person or entity (c) shares of
      Common Stock issued to employees, consultants, officers, or directors of the
      Company under the Company’s stock incentive plan and approved by the Company’s
      board of directors, (d) options to purchase shares of Common Stock, provided
      (1)
      such options are issued after the date of this Debenture, (2) such options
      are
      issued to employees, consultants, officers or directors of the Obligor within
      thirty (30) days of such employee’s starting his employment with the Obligor,
      and (3) the exercise price of such options is not less than the Closing Bid
      Price of the Common Stock on the date of issuance of such option, and (e)
      issuances of Common Stock upon exercise or conversion of currently outstanding
      derivative securities.

     

    “Original
      Issue Date”
shall
      mean the date of the first issuance of this Debenture regardless of the number
      of transfers and regardless of the number of instruments, which may be issued
      to
      evidence such Debenture.

     

    “Person”
means
      a
      corporation, an association, a partnership, organization, a business, an
      individual, a government or political subdivision thereof or a governmental
      agency.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Trading
      Day”
means
      a
      day on which the shares of Common Stock are quoted on the OTC or quoted or
      traded on such Subsequent Market on which the shares of Common Stock are then
      quoted or listed; provided, that in the event that the shares of Common Stock
      are not listed or quoted, then Trading Day shall mean a Business
      Day.

     

    “Transaction
      Documents”
means
      the Securities Purchase Agreement or any other agreement delivered in connection
      with the Securities Purchase Agreement, including, without limitation, the
      Pledge Agreement, the Security Agreement, the Subsidiary Security Agreements,
      the Irrevocable Transfer Agent Instructions, and the Registration Rights
      Agreement.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    “Underlying
      Shares”
means
      the shares of Common Stock issuable upon conversion of this Debenture or as
      payment of interest in accordance with the terms hereof.

     

    “Underlying
      Shares Registration Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement, covering among other things the resale of the Underlying
      Shares and naming the Holder as a “selling stockholder” thereunder.

     

    Section
      6. Except
      as
      expressly provided herein, no provision of this Debenture shall alter or impair
      the obligations of the Obligor, which are absolute and unconditional, to pay
      the
      principal of, interest and other charges (if any) on, this Debenture at the
      time, place, and rate, and in the coin or currency, herein prescribed. This
      Debenture is a direct obligation of the Obligor. This Debenture ranks pari
      passu
      with all other Debentures now or hereafter issued under the terms set forth
      herein. As long as this Debenture is outstanding, the Obligor shall not and
      shall cause their subsidiaries not to, without the consent of the Holder, (i)
      amend its certificate of incorporation, bylaws or other charter documents so
      as
      to adversely affect any rights of the Holder; (ii) repay, repurchase or offer
      to
      repay, repurchase or otherwise acquire shares of its Common Stock or other
      equity securities other than as to the Underlying Shares to the extent permitted
      or required under the Transaction Documents; or (iii) enter into any agreement
      with respect to any of the foregoing. 

     

    Section
      7. This
      Debenture shall not entitle the Holder to any of the rights of a stockholder
      of
      the Obligor, including without limitation, the right to vote, to receive
      dividends and other distributions, or to receive any notice of, or to attend,
      meetings of stockholders or any other proceedings of the Obligor, unless and
      to
      the extent converted into shares of Common Stock in accordance with the terms
      hereof.

     

    Section
      8. If
      this
      Debenture is mutilated, lost, stolen or destroyed, the Obligor shall execute
      and
      deliver, in exchange and substitution for and upon cancellation of the mutilated
      Debenture, or in lieu of or in substitution for a lost, stolen or destroyed
      Debenture, a new Debenture for the principal amount of this Debenture so
      mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
      loss, theft or destruction of such Debenture, and of the ownership hereof,
      and
      indemnity, if requested, all reasonably satisfactory to the
      Obligor.

     

    Section
      9. No
      indebtedness of the Obligor is senior to this Debenture in right of payment,
      whether with respect to interest, damages or upon liquidation or dissolution
      or
      otherwise. Without the Holder’s consent, the Obligor will not and will not
      permit any of their subsidiaries to, directly or indirectly, enter into, create,
      incur, assume or suffer to exist any indebtedness of any kind, on or with
      respect to any of its property or assets now owned or hereafter acquired or
      any
      interest therein or any income or profits there from that is senior in any
      respect to the obligations of the Obligor under this Debenture.

     

    Section
      10. This
      Debenture shall be governed by and construed in accordance with the laws of
      the
      State of New Jersey, without giving effect to conflicts of laws thereof. Each
      of
      the parties consents to the jurisdiction of the Superior Courts of the State
      of
      New Jersey sitting in Hudson County, New Jersey and the U.S. District Court
      for the District of New Jersey sitting in Newark, New Jersey in connection
      with
      any dispute arising under this Debenture and hereby waives, to the maximum
      extent permitted by law, any objection, including any objection based on
forum non conveniens
      to the
      bringing of any such proceeding in such jurisdictions. 

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    Section
      11. If
      the
      Obligor fails to strictly comply with the terms of this Debenture, then the
      Obligor shall reimburse the Holder promptly for all fees, costs and expenses,
      including, without limitation, attorneys’ fees and expenses incurred by the
      Holder in any action in connection with this Debenture, including, without
      limitation, those incurred: (i) during any workout, attempted workout, and/or
      in
      connection with the rendering of legal advice as to the Holder’s rights,
      remedies and obligations, (ii) collecting any sums which become due to the
      Holder, (iii) defending or prosecuting any proceeding or any counterclaim to
      any
      proceeding or appeal; or (iv) the protection, preservation or enforcement of
      any
      rights or remedies of the Holder.

     

    Section
      12. Any
      waiver by the Holder of a breach of any provision of this Debenture shall not
      operate as or be construed to be a waiver of any other breach of such provision
      or of any breach of any other provision of this Debenture. The failure of the
      Holder to insist upon strict adherence to any term of this Debenture on one
      or
      more occasions shall not be considered a waiver or deprive that party of the
      right thereafter to insist upon strict adherence to that term or any other
      term
      of this Debenture. Any waiver must be in writing.

     

    Section
      13. If
      any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any person or circumstance, it shall nevertheless remain applicable to all
      other
      persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder shall violate applicable laws governing
      usury, the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum permitted rate of interest. The Obligor covenants
      (to the extent that it may lawfully do so) that it shall not at any time insist
      upon, plead, or in any manner whatsoever claim or take the benefit or advantage
      of, any stay, extension or usury law or other law which would prohibit or
      forgive the Obligor from paying all or any portion of the principal of or
      interest on this Debenture as contemplated herein, wherever enacted, now or
      at
      any time hereafter in force, or which may affect the covenants or the
      performance of this indenture, and the Obligor (to the extent it may lawfully
      do
      so) hereby expressly waives all benefits or advantage of any such law, and
      covenants that it will not, by resort to any such law, hinder, delay or impeded
      the execution of any power herein granted to the Holder, but will suffer and
      permit the execution of every such as though no such law has been
      enacted.

     

    Section
      14. Whenever
      any payment or other obligation hereunder shall be due on a day other than
      a
      Business Day, such payment shall be made on the next succeeding Business
      Day.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    Section
      15. THE
      PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
      OF
      THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
      OR
      ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
      DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
      OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
      FOR
      THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

     

    [REMAINDER
      OF PAGE INTENTIONLLY LEFT BLANK]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    IN
      WITNESS WHEREOF,
      the
      Obligor has caused this Secured Convertible Debenture to be duly executed by
      a
      duly authorized officer as of the date set forth above.

     

    
      	 	
              ASTRIS
                ENERGI, INC. 

            
	 	 
	 	
              By:
                ______________________________________     

            
	 	
              Name: Anthony
                J. Durkacz

            
	 	
              Title: Chief
                Financial Officer

            

    

    

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    EXHIBIT
      “A”

     

    NOTICE
      OF CONVERSION

     

    (To
      be executed by the Holder in order to convert the
      Debenture)

     

    

    
      	
              TO:

            	 

    

    

    The
      undersigned hereby irrevocably elects to convert $_______________________
of
      the
      principal amount of the above Debenture into Shares of Common Stock of Astris
      Energi, Inc., according to the conditions stated therein, as of the Conversion
      Date written below.

     

     

    
      	
              Conversion
                Date:

            	 	 
	
              Applicable
                Conversion Price:

            	 	 
	
              Signature:

            	 	 
	
              Name:

            	 	 
	
              Address:

            	 	 

    

    
      	
              Amount
                to be converted:

            	 	
              $       

            
	
              Amount
                of Debenture unconverted:

            	 	
              $      

            
	
              Conversion
                Price per share: 

            	 	
              $     

            
	
              Number
                of shares of Common Stock to be issued:

            	 	 
	
              Please
                issue the shares of Common Stock in the following name and to the
                following address:

            	 	 
	
              Issue
                to:

            	 	 
	
              Authorized
                Signature:

            	 	 
	
              Name:

            	 	 
	
              Title:

            	 	 
	
              Phone
                Number:

            	 	 
	
              Broker
                DTC Participant Code:

            	 	 
	
              Account
                Number:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]