October 23, 2003


B.C. hybrid powertrain developer signs agreement with U.S Postal Service

Vancouver, B.C. – Azure Dynamics Corporation, a developer of hybrid electric
powertrains for commercial vehicles, has signed an agreement with the United States
Postal Service (“U.S.P.S.”) to test and retrofit two U.S.P.S. vehicles with Azure’s
“Smart Energy Management” hybrid technology.

Azure will develop a prototype gas hybrid electric powertrain for U.S.P.S.’s carrier
route vehicle (CRV) as well as a prototype diesel hybrid electric powertrain for the
U.S.P.S. two-ton step van. USPS operates approximately 140,000 CRV’s and 10,000 step
vans. Each of the prototype vehicles will be tested and monitored in regular
service.

Similar to the Azure Dynamics Purolator MOU of October 2002, the demonstration
vehicles are intended to allow the U.S.P.S. to evaluate the relative economics of
Azure’s hybrid powertrains benchmarked against the performance characteristics of
its existing fleet of conventional vehicles in the same categories.

David Deacon, President and Chief Operating Officer of Azure Dynamics said, “We are
pleased to have this opportunity to demonstrate our hybrid technology to the United
States Postal Service. We have proven our Smart Energy Management system can
significantly lower fuel consumption and harmful emissions, thereby making an
important difference to the environment. Azure believes it can achieve these results
without sacrificing sound economic principles.” He added, “The U.S.P.S. program is
designed specifically to determine the economic case.”

Han Dinh, Manager, Vehicle Engineering of U.S.P.S. stated, “We will examine Azure’s
technology on two vehicle platforms to determine exactly how much it will improve
fuel consumption while reducing emissions. It is important to U.S.P.S. to pursue
alternative energy programs with the potential to both improve the environment as
well as reduce our total energy usage.” Mr. Dinh went on to say, “The testing and
development program will be utilized as a means to determine the economic viability
of these hybrids in postal service drive cycles as well as experience their
performance in real day to day service.” U.S.P.S. will be contributing the vehicles
for both programs.

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