MILLENNIUM CELL INC, S-1, 2000-05-25

MILLENNIUM CELL INC
S-1, 2000-05-25

Previous: CURON MEDICAL INC, S-1, 2000-05-25

Next: FIRST NORTHERN COMMUNITY BANCORP, S-8, 2000-05-25

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

MILLENNIUM CELL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 8743 22-3726792
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

1 INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY 07724
(732) 542-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

STEPHEN S. TANG
CHIEF EXECUTIVE OFFICER
MILLENNIUM CELL INC.
1 INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY 07724
(732) 542-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

------------------------
COPIES TO:

<TABLE>
<S> <C>
MALCOLM I. ROSS, ESQ. ALAN P. BADEN, ESQ.
MICHAEL S. NOVINS, ESQ. VINSON & ELKINS L.L.P.
BAKER & MCKENZIE 1325 AVENUE OF THE AMERICAS
805 THIRD AVENUE 17TH FLOOR
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10019
(212) 751-5700 (917) 206-8000
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ---------------

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock, par value $.001 per share..................... $40,000,000(2) $10,560
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) Pursuant to Rule 457(o) under the Securities Act, the registrant proposes to
offer and sell a maximum of $40,000,000 in aggregate value of its common
stock.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION -- DATED MAY 25, 2000

PROSPECTUS
, 2000

[MILLENNIUM CELL LOGO]

SHARES OF COMMON STOCK

------------------------

MILLENNIUM CELL INC.:

- - We are an emerging technology company engaged in the development of a
patented alternative energy source based on boron chemistry.

- - Millennium Cell Inc.
1 Industrial Way West
Eatontown, New Jersey 07724
(732) 542-4000

SYMBOL & MARKET:

- - MCEL/Nasdaq National Market (proposed)
THE OFFERING:

- - We are offering shares of our common stock.

- - We have granted the underwriters an option to purchase an additional
shares of common stock to cover over-allotments.

- - This is our initial public offering, and no public market currently exists
for our shares.

- - We plan to use the net proceeds from this offering to expand our research and
product development efforts, including the construction of a pilot plant to
manufacture sodium borohydride and a prototype battery manufacturing line,
and for working capital and general corporate purposes.

- - Closing: , 2000.

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- --------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting fees...........................................
Proceeds to Millennium Cell.................................
</TABLE>

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5.

------------------------

Neither the SEC nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.

------------------------

MORGAN KEEGAN & COMPANY, INC.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Use of Proceeds............................................. 12
Dividend Policy............................................. 12
Capitalization.............................................. 13
Dilution.................................................... 14
Selected Financial Data..................................... 15
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 16
Business.................................................... 19
Management.................................................. 28
Certain Relationships and Related Transactions.............. 33
Principal Stockholders...................................... 34
Description of Capital Stock................................ 35
Shares Eligible for Future Sale............................. 38
Underwriting................................................ 39
Legal Matters............................................... 42
Experts..................................................... 42
Where You Can Find Additional Information................... 42
Index to Financial Statements............................... F-1
</TABLE>

------------------------

You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operations and prospects may have changed since that date.

The name Millennium Cell and our logo are names and trademarks that belong
to us. This prospectus also contains the names of other entities which are the
property of their respective owners.

i
<PAGE> 4

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information and our financial statements and the notes to those financial
statements appearing elsewhere in this prospectus. In addition to historical
information, the following summary and other parts of this prospectus contain
forward-looking statements that reflect our plans, estimates, intentions,
expectations and beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those set forth
in the "Risk Factors" section and contained elsewhere in this prospectus.

OUR BUSINESS

We are an emerging technology company engaged in the development of a
patented alternative energy source based on boron chemistry. Our proprietary
system generates energy in the form of hydrogen or electricity and can be
utilized as a:

- generator of hydrogen for use by internal combustion engines that have
been modified to accept hydrogen as fuel,

- generator of hydrogen for use by fuel cells in the production of
electricity,

- direct fuel cell, or

- battery that can be configured into a wide variety of shapes and sizes.

With respect to hydrogen generation, we believe that our Hydrogen on
Demand(TM) system offers significant advantages over other methods of utilizing
hydrogen as a fuel, which often require the storage of hydrogen in bulky and
potentially dangerous tanks or involve the consumption of hydrocarbon fuels that
produce pollutants as byproducts. We have designed and built a hydrogen
generating system, which we have used to modify an operating series-hybrid
sports utility vehicle. We will use this vehicle to demonstrate the ability of
the Hydrogen on Demand(TM) technology to power a vehicle using sodium
borohydride as the base fuel. We have also designed and produced prototype
direct fuel cells and batteries that utilize our proprietary system to provide
electricity for the portable power markets which may be adapted for use in
laptop computers, cellular telephones, hearing aids, personal organizers, power
tools and motorized transportation devices, such as scooters, and other portable
devices.

We have entered into a proprietary rights agreement with DaimlerChrysler
Corporation to participate in a program to test our sodium borohydride hydrogen
generating systems for vehicle applications. As part of that agreement, we have
granted a non-exclusive worldwide license to DaimlerChrysler to use in its
automotive business the technology that is developed from this program, subject
to the future issue of licenses that will allow DaimlerChrysler to utilize our
proprietary sodium borohydride technology.

OUR TECHNOLOGY

Hydrogen is the most energy-rich element occurring in nature and is highly
regarded as a source of clean, efficient fuel for the alternative energy
markets. We have invented, patented and developed a proprietary chemical process
that generates pure hydrogen or electricity from safe, environmentally friendly
raw materials. In our process, the energy potential of hydrogen is carried in
the chemical bonds of sodium borohydride, which in the presence of a catalyst
releases hydrogen or produces electricity in our fuel cell. The primary input
components of the reaction are water and sodium borohydride, a derivative of
sodium metaborate, or borax, which is found in substantial reserves globally.

We believe that our system minimizes the storage, handling and cost
problems that are encountered with many alternative hydrogen delivery systems.
The chemical reactions used in our process eliminate the undesirable pollutants
and emissions that are encountered in typical hydrocarbon-based energy
production systems. The byproducts of our process are primarily heat and borax,
which can be recycled to create sodium borohydride. Sodium borohydride-based
energy systems have favorable energy density, power-to-weight and volume
characteristics when compared to mobile power sources now in use. We believe
that
1
<PAGE> 5

sodium borohydride batteries, for example, can deliver substantially more
potential energy per unit of both weight and volume compared to the traditional
batteries in the commercial market today.

MARKET OPPORTUNITY

Government authorities in North America, Europe and Japan have imposed
stringent environmental standards generally and have increased support for the
development of clean and efficient technologies to significantly improve or
replace existing combustion-based technologies. While environmental
considerations provided the initial impetus for automobile manufacturers to seek
alternatives to the use of the internal combustion engine, we believe that these
manufacturers are beginning to recognize that fuel cell powered vehicles will
provide consumers with higher fuel efficiency, lower noise and vibration,
enhanced passenger comfort and performance and new vehicle design options, and
also have the potential to provide lower capital and maintenance costs.

In addition to the transportation markets, there is a growing worldwide
consumer demand for quiet, clean and environmentally friendly products in the
portable power markets. Promising applications include portable power products
for use in densely populated areas where noise pollution is a significant
concern and for use indoors or in other areas where high noise and high
emissions of internal combustion engine generators pose significant problems. We
also believe that public concern over pollution is focusing attention on the use
of environmentally cleaner methods of power generation that can use
non-renewable natural resources more efficiently. Within the portable power
markets, we believe that the battery market, fueled by technological
innovations, will continue to present a considerable market opportunity for more
durable and lighter power sources.

OUR STRATEGY

Our goal is to convert our technology from the research and development
stage to commercialization. We believe that our sodium borohydride technology
will capitalize on the growing need for a safe method of storing hydrogen across
a variety of markets, a higher energy output alternative fuel and a desire to
preserve the environment. To achieve our goal, we are implementing the following
strategy:

- Build Relationships with Automotive Manufacturers. We are pursuing
relationships with automotive manufacturers, as we believe they will be
the key to capitalizing on transportation opportunities in the future. As
many of the top tier global automotive manufacturers continue to allocate
substantial resources to research and development of alternative fuel
technologies, we believe that our technology will be an attractive choice
and will allow us to position our technology as a leader in the
alternative fuel market.

- Build Relationships with Other Fuel Cell Companies. We are pursuing
ventures with other manufacturers of fuel cells. We believe that our
Hydrogen on Demand(TM) system will provide a solution for existing fuel
cell companies that cannot produce hydrogen in a safe or efficient
manner. We will seek to leverage these relationships to further our brand
awareness and decrease the time to commercialization.

- Build Relationships with Key Battery Manufacturers. We plan to pursue in
the near term the construction of a prototype battery manufacturing line
for the manufacture of size AA and AAA batteries. We believe that the
production of prototypical batteries would enable us to validate our
technology, generate interest in the consumer battery market and
facilitate the establishment and development of strategic relationships
with other battery manufacturers.

- Build Manufacturing Capabilities to Lower the Costs of Sodium
Borohydride. Sodium borohydride is currently a specialty chemical that
we believe is produced by only two manufacturers located in the United
States and Germany. We believe that we can successfully compete in the
battery markets at the current price of sodium borohydride, but it will
be necessary to scale-up production of the chemical to be cost
competitive in the transportation markets. In late 2000, we plan to begin
construction of a pilot plant that we believe will cost approximately
$5.0 million to build and will

2
<PAGE> 6

take from nine months to one year to complete. Our goal is to demonstrate
that economies of scale and improved manufacturing efficiencies exhibited
in our pilot plant will verify the viability of cost-effective mass
production of sodium borohydride.

- Continue Research and Development of our Proprietary Technology. We plan
to continue our research and development of sodium borohydride based
technology. We believe that our continuing efforts in this area will
allow us to establish technological leadership in our target markets,
while also positioning us to potentially develop applications for other
markets.

- Develop Market Awareness Generally. We have relationships with various
state and federal governmental agencies and are also involved in several
hydrogen and environmentally-conscious organizations and events. Through
these continuing relationships, we believe that our technology will
become more visible to a broader group of individuals and companies in
the areas we are targeting. For example, we believe that our relationship
with the New Jersey Department of Transportation may lead to other types
of state and federal contracts involving all aspects of transportation,
including fleet demonstrations, commercial vehicles, highway signs and
lighting.
------------------------

We were formed as a Delaware limited liability company on December 17, 1998
and were converted into a Delaware corporation on April 25, 2000. All of the
outstanding equity interests of the limited liability company were converted on
a one-for-one basis into shares of common stock of the corporation and as of
April 26, 2000 we effected a 2,405-for-one stock split of our outstanding common
stock. Unless otherwise indicated, all information that we present in this
prospectus for any date or period gives effect to the conversion and stock split
and all references to capital stock for periods before the conversion mean our
issued and outstanding membership interests. Our principal executive offices are
located at 1 Industrial Way West, Eatontown, New Jersey 07724 and our telephone
number at that location is (732) 542-4000. Our internet address is
www.millenniumcell.com. The information contained in or connected to our website
is not incorporated by reference in this prospectus.

3
<PAGE> 7

THE OFFERING

Common stock offered.......... shares

Common stock outstanding after
this offering................. shares

Use of proceeds............... Based on an estimated offering price of $
per share, the mid-point of the range set forth
on the cover page of this prospectus, we
estimate that our net proceeds from this
offering will be approximately $ million.
We intend to use these proceeds:

- to expand our research and product
development efforts, including the
construction of a pilot plant to manufacture
sodium borohydride and a prototype battery
manufacturing line, and

- for working capital and general corporate
purposes.

For a more detailed description of how we
intend to use the net proceeds from this
offering, see "Use of Proceeds."

Risk factors.................. See "Risk Factors" and other information
included in this prospectus for a discussion of
factors you should carefully consider before
deciding to invest in our common stock.

Proposed Nasdaq National
Market symbol................. MCEL

The number of shares outstanding after the offering includes 759,366 shares
issuable upon the automatic conversion of our Series A preferred stock upon the
closing of this offering, and excludes shares of common stock issuable
upon exercise of the underwriters' over-allotment option and 5,500,000 shares of
common stock reserved for issuance under our proposed stock option plan.

4
<PAGE> 8

RISK FACTORS

An investment in our common stock involves a high degree of risk. You
should carefully consider the risks and uncertainties described below and the
other information in this prospectus before deciding whether to invest in our
common stock. Our business and results of operations could be seriously harmed
by any of the following risks. The trading price of our common stock could
decline due to any of these risks, and you may lose part or all of your
investment.

WE ARE A DEVELOPMENT STAGE COMPANY WHICH HAS ONLY BEEN IN BUSINESS FOR A SHORT
TIME. AS A RESULT, YOUR BASIS FOR EVALUATING US IS LIMITED.

We are a development stage company that was formed in December 1998 to
further the research and development of fuel cell systems. Accordingly, there is
only a limited basis upon which you can evaluate our business and prospects. An
investor in our common stock should consider the challenges, expenses and
difficulties that we will face as a development stage company seeking to develop
and manufacture a new product.

WE HAVE INCURRED SUBSTANTIAL LOSSES SINCE OUR INCEPTION AND WE EXPECT LOSSES FOR
THE FORESEEABLE FUTURE. ACCORDINGLY, WE MAY NOT BE ABLE TO ACHIEVE PROFITABLY,
AND EVEN IF WE DO BECOME PROFITABLE, WE MAY NOT BE ABLE TO SUSTAIN
PROFITABILITY. IF WE CONTINUE TO INCUR LOSSES, THE VALUE OF OUR COMMON STOCK
COULD DECLINE.

We have incurred substantial losses since we were founded and we anticipate
we will continue to incur substantial losses in the future. We had an
accumulated deficit of $1.5 million as of March 31, 2000. We cannot predict when
we will operate profitably, if ever. We expect to continue to incur net losses
for the next several years, largely due to two factors. First, we expect to
continue to make significant investments in research and product development
activities. Second, we anticipate that we will continue to incur losses until we
can cost-effectively produce and sell our fuel cell systems to the mass market,
which we expect will take at least several years. Even if we do achieve
profitability, we may be unable to sustain or increase our profitability in the
future. See "Selected Financial Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

IF WE ARE NOT ABLE TO COMPLETE THE RESEARCH AND DEVELOPMENT OF A COMMERCIALLY
VIABLE FUEL CELL SYSTEM, WE WILL NOT BE ABLE TO BUILD OUR BUSINESS AS
ANTICIPATED.

We do not know when or whether we will successfully complete research and
development of a commercially viable sodium borohydride fuel cell system. We
have produced and are currently demonstrating a number of test and evaluation
systems and are continuing our efforts to decrease the costs of our systems'
components and subsystems, improve their overall reliability and efficiency and
ensure their safety. However, we must complete substantial additional research
and development on our systems before we will have any commercially viable
products. In addition, while we are conducting tests to predict the overall life
of our systems, we will not have used any of our systems over their projected
useful life prior to commercialization. See "Business -- Product Development and
Commercialization Process."

WE MUST LOWER THE COST OF OUR FUEL CELL SYSTEMS AND DEMONSTRATE THEIR
RELIABILITY IN ORDER FOR THEM TO GAIN ACCEPTANCE BY CONSUMERS.

The sodium borohydride systems developed by us currently cost significantly
more than the cost of many established competing technologies, including
internal combustion engines. If we are unable to produce systems that are
competitive with competing technologies in terms of price, reliability and
longevity, consumers will be unlikely to buy products containing our fuel cells
and fuel cell systems.

The price of sodium borohydride systems is dependent largely on material
and manufacturing costs. We cannot guarantee that we will be able to lower these
costs to the level where we will be able to produce a competitive product or
that any product produced using lower cost materials and manufacturing processes
will not suffer from a reduction in performance, reliability and longevity.
5
<PAGE> 9

IF WE DO NOT SUCCESSFULLY BUILD A PILOT PLANT FOR THE MANUFACTURE OF SODIUM
BOROHYDRIDE, OUR COMMERCIALIZATION PLANS WILL BE HINDERED.

In order to reduce the production costs of sodium borohydride and
demonstrate to large manufacturers the feasibility of sodium borohydride
production in mass quantities, we plan to build a pilot plant for the production
of sodium borohydride within nine months to one year from this offering. We
cannot guarantee that we will be successful in completing this plant within this
time period, if at all, and in accordance with our budgeted cost, nor can we
guarantee that we will successfully demonstrate the commercial efficacy of mass
producing sodium borohydride. If we are unable to successfully complete this
plant and demonstrate the commercial viability of the mass production of sodium
borohydride, we may not be able to convince large manufacturers to produce mass
quantities of sodium borohydride, which will limit the availability of sodium
borohydride to us and negatively effect our commercialization efforts.

WE HAVE NO EXPERIENCE MANUFACTURING SODIUM BOROHYDRIDE FUEL CELLS AND FUEL CELL
SYSTEMS ON A COMMERCIAL BASIS.

To date, we have focused primarily on research and development and have no
experience manufacturing fuel cells and fuel cell systems on a commercial basis.
In order to produce fuel cells and fuel cell systems at affordable prices, we
will have to make our fuel cells and fuel cell systems through high volume
automated processes. We do not know whether or when we will be able to develop
efficient, automated, low-cost manufacturing capability and processes that will
enable us to meet the quality, price, engineering, design and production
standards or production volumes required to successfully mass market our fuel
cells and fuel cell systems. Even if we are successful in developing our
manufacturing capability and processes, we do not know whether we will do so in
time to meet our product commercialization schedule or to satisfy the
requirements of our customers. Our failure to develop such manufacturing
processes and capabilities could have a negative effect on our business and
financial results.

WE HAVE NO EXPERIENCE MANUFACTURING BATTERIES ON A COMMERCIAL BASIS.

We plan to use $500,000 of the proceeds from this offering to build a
prototype battery manufacturing line in order to validate our technology,
generate interest in the consumer battery market and facilitate the
establishment of strategic relationships with other battery manufacturers. We
have no experience manufacturing batteries on a commercial basis. There can be
no assurance that we will be able to successfully complete our proposed battery
line, or that, if completed, it will achieve our goals.

SODIUM BOROHYDRIDE MAY REQUIRE SPECIAL HANDLING AND MAY MAKE OUR HYDROGEN
GENERATION SYSTEMS MORE COSTLY THAN ALTERNATIVE SYSTEMS OFFERED BY OUR
COMPETITORS.

Sodium borohydride has a high pH level. Therefore, it may be corrosive and
harmful to human skin. Therefore, the processing and use of sodium borohydride
may require special handling and packaging, which may increase the costs of our
technology. If the cost of our technology is higher than the costs for
alternative technologies, our products may be less attractive.

THE RAW MATERIAL ON WHICH OUR SYSTEMS RELY IS EXPENSIVE AND HAS LIMITED
AVAILABILITY.

Our systems' ability to produce energy depends on the availability of
sodium borohydride. Sodium borohydride has a limited commercial use and is not
manufactured in vast quantities. There are currently only two major
manufacturers of sodium borohydride and there can be no assurance that the high
cost of this specialty chemical will be reduced. If the price of sodium
borohydride is such that the energy produced by our systems costs more than the
energy provided through conventional and other alternative systems, our systems
may be less attractive to potential users.

6
<PAGE> 10

WE MAY BE UNABLE TO RAISE ADDITIONAL CAPITAL TO PURSUE OUR COMMERCIALIZATION
PLANS THROUGH TO LARGE SCALE, HIGH VOLUME COMMERCIAL PRODUCTION, AND EVEN IF WE
ARE ABLE TO RAISE ADDITIONAL CAPITAL, IT MAY BE ON UNACCEPTABLE TERMS, MAY
DILUTE YOUR OWNERSHIP OR MAY RESTRICT OUR ABILITY TO RUN OUR BUSINESS.

Our product development and commercialization schedule could be delayed if
we are unable to fund our research and product development activities or the
development of our manufacturing capabilities. We do not know whether we will be
able to secure additional funding, or funding on terms acceptable to us, to
pursue our commercialization plans through to large scale, high volume
commercial production. If additional capital is raised through the issuance of
equity securities, the ownership interest of existing stockholders at the time
of issuance will be reduced. Any debt financing, if available, may involve
covenants limiting or restricting our operations or future opportunities or
pledging our assets as security for borrowings.

A MASS MARKET FOR SODIUM BOROHYDRIDE FUEL CELLS AND FUEL CELL SYSTEMS MAY NEVER
DEVELOP OR MAY TAKE LONGER TO DEVELOP THAN WE ANTICIPATE. IF A MASS MARKET FAILS
TO DEVELOP OR DEVELOPS MORE SLOWLY THAN WE ANTICIPATE, WE MAY BE UNABLE TO
RECOVER THE LOSSES WE WILL HAVE INCURRED IN THE DEVELOPMENT OF OUR PRODUCTS AND
MAY NEVER ACHIEVE PROFITABILITY.

A mass market may never develop for sodium borohydride fuel cell systems,
or may develop more slowly than we anticipate. Fuel cells and fuel cell systems
represent an emerging market, and we do not know whether end-users will want to
use them. The development of a mass market for our fuel cells and fuel cell
systems may be affected by many factors, some of which are beyond our control,
including:

- the cost competitiveness of fuel cell systems,

- the emergence of newer, more competitive technologies and products,

- the future cost of sodium borohydride,

- regulatory requirements,

- consumer perceptions of the safety of our products, and

- consumer reluctance to try a new product.

If a mass market fails to develop or develops more slowly than we
anticipate, we may be unable to recover the losses we will have incurred in the
development of our products and we may never achieve profitability.

WE EXPECT THAT SOME OF OUR FUEL CELLS AND FUEL CELL SYSTEMS WILL ONLY BE
COMMERCIALLY VIABLE AS A COMPONENT OF OTHER COMPANIES' PRODUCTS, AND THESE OTHER
COMPANIES MAY NOT CHOOSE TO INCLUDE OUR FUEL CELLS OR FUEL CELL SYSTEMS IN THEIR
PRODUCTS.

To be commercially useful, certain of our fuel cells and fuel cell systems
must be integrated into products manufactured by original equipment
manufacturers, which are known as OEMs. We can offer no guarantee that OEMs will
manufacture appropriate products or, if they do manufacture such products, that
they will choose to use our sodium borohydride fuel cells and fuel cell systems.
Any integration, design, manufacturing or marketing problems encountered by OEMs
could adversely affect the market for our fuel cells and fuel cell systems and
our financial results.

CHANGES IN ENVIRONMENTAL POLICIES COULD HURT THE MARKET FOR OUR PRODUCTS.

To date, the interest by automobile manufacturers in fuel cell technology
has been driven in large part by environmental laws and regulations mainly in
California and, to a lesser extent, certain northeastern states. There can be no
guarantee that these laws and regulations will not change. Changes in these laws
and regulations could result in automobile manufacturers abandoning their
interest in fuel cell powered vehicles. In addition, if current laws and
regulations in California and the northeastern states are not kept

7
<PAGE> 11

in force or if further environmental laws and regulations are not adopted in
these jurisdictions as well as in other jurisdictions, demand for vehicular fuel
cells may be limited.

Although the development of alternative energy sources, and in particular
fuel cells, has been identified as a significant priority by many governments,
we cannot assure you that governments will not change their priorities or that
any such change would not negatively affect our business or the development of
our products.

SINCE ZERO EMISSION VEHICLE REQUIREMENTS CAN BE MET WITHOUT USING OUR SODIUM
BOROHYDRIDE FUEL CELLS, AUTOMOBILE MANUFACTURERS MAY USE OTHER TECHNOLOGIES TO
MEET REGULATORY REQUIREMENTS.

It is possible to meet the zero emission vehicle requirements imposed by
California and certain northeastern states by using technologies other than our
sodium borohydride fuel cells. For example, vehicles powered by batteries can
receive full credit and vehicles powered by certain low emission internal
combustion engines and proton exchange membrane fuel cells can receive partial
credit toward the zero emission vehicle requirements. We can offer no assurance
that automobile manufacturers will use our sodium borohydride technology in
their vehicles to meet regulatory requirements. Their failure to do so could
have a negative effect on our business and financial results.

WE CURRENTLY FACE AND WILL CONTINUE TO FACE SIGNIFICANT COMPETITION.

Our products face and will continue to face significant competition. New
developments in technology may negatively affect the development or sale of some
or all of our products or make our products uncompetitive or obsolete. Other
companies, many of which have substantially greater resources than we do, are
currently engaged in the development of products and technologies that are
similar to, or may be competitive with, certain of our products and
technologies.

As the fuel cell has the potential to replace existing power sources,
competition for our products will come from current power technologies, from
improvements to current power technologies and from new alternative power
technologies, including other types of fuel cells. Each of our target markets is
currently serviced by existing manufacturers with existing customers and
suppliers. These manufacturers use proven and widely accepted technologies, such
as internal combustion engines and turbines, as well as coal, oil and nuclear
powered generators. Additionally, there are competitors working on developing
technologies other than sodium borohydride fuel cells, such as other types of
fuel cells, advanced batteries and engines, in each of our targeted markets.

A large number of corporations, national laboratories and universities in
the United States, Canada, Europe and Japan possess fuel cell technology and/or
are actively engaged in the development and manufacture of fuel cells. Each of
these competitors has the potential to capture market share in various markets,
which would have a negative effect on our position in the industry and our
financial results.

WE DEPEND ON OUR INTELLECTUAL PROPERTY AND OUR FAILURE TO PROTECT THAT
INTELLECTUAL PROPERTY COULD ADVERSELY AFFECT OUR FUTURE GROWTH AND SUCCESS.

Failure to protect our existing intellectual property rights may result in
the loss of our exclusivity or the right to use our technologies. If we do not
adequately ensure our freedom to use certain technology, we may have to pay
others for rights to use their intellectual property, pay damages for
infringement or misappropriation and/or be enjoined from using such intellectual
property. We rely on patent, trade secret, trademark and copyright law to
protect our intellectual property. The patents that we have obtained will expire
in 2015 and 2018. Some of our intellectual property is not covered by any patent
or patent application. As we further develop our system and related intellectual
property, we expect to seek additional patent protection. Our patent position is
subject to complex factual and legal issues that may

8
<PAGE> 12

give rise to uncertainty as to the validity, scope and enforceability of a
particular patent. Accordingly, we cannot assure you that:

- any of the patents owned by us or other patents that third parties
license to us in the future will not be invalidated, circumvented,
challenged, rendered unenforceable or licensed to others, or

- any of our pending or future patent applications will be issued with the
breadth of claim coverage sought by us, if issued at all.

In addition, effective patent, trademark, copyright and trade secret
protection may be unavailable, limited or not applied for in certain foreign
countries.

We also seek to protect our proprietary intellectual property, including
intellectual property that may not be patented or patentable, in part by
confidentiality agreements. We cannot assure you that these agreements will not
be breached, that we will have adequate remedies for any breach or that such
persons will not assert rights to intellectual property arising out of these
relationships.

OUR FAILURE TO OBTAIN OR MAINTAIN THE RIGHT TO USE CERTAIN INTELLECTUAL PROPERTY
MAY NEGATIVELY AFFECT
OUR BUSINESS.

Our future success and competitive position depends in part upon our
ability to obtain or maintain certain proprietary intellectual property to be
used in our principal products. This may be achieved in part by prosecuting
claims against others who we believe are infringing our rights and by defending
claims of intellectual property infringement by our competitors. While we are
not currently engaged in any material intellectual property litigation, we could
become subject to lawsuits in which it is alleged that we have infringed the
intellectual property rights of others or we could commence lawsuits against
others who we believe are infringing upon our rights. Our involvement in
intellectual property litigation could result in significant expense to us,
adversely affecting the development of sales of the challenged product or
intellectual property and diverting the efforts of our technical and management
personnel, whether or not such litigation is resolved in our favor. In the event
of an adverse outcome as a defendant in any such litigation, we may, among other
things, be required to:

- pay substantial damages,

- cease the development, manufacture, use, sale or importation of products
that infringe upon other patented intellectual property,

- expend significant resources to develop or acquire non-infringing
intellectual property,

- discontinue processes incorporating infringing technology, or

- obtain licenses to the infringing intellectual property.

We cannot assure you that we would be successful in such development or
acquisition or that such licenses would be available upon reasonable terms. Any
such development, acquisition or license could require the expenditure of
substantial time and other resources and could have a negative effect on our
business and financial results.

OUR FIELD TESTS COULD HAVE PROBLEMS. ANY PROBLEM OR PERCEIVED PROBLEM WITH OUR
FIELD TESTS COULD HURT OUR REPUTATION AND THE REPUTATION OF OUR PRODUCTS.

We are currently field testing our sodium borohydride technology and we
plan to conduct additional field tests in the future. These field tests may
encounter problems and delays for a number of reasons, including the failure of
our technology, the failure of the technology of others, the failure to combine
these technologies properly and the failure to maintain and service the test
prototypes properly. Many of these potential problems and delays are beyond our
control. In addition, field test programs, by their nature, will involve delays
and modifications. Any problem or perceived problem with our field tests could
hurt our reputation and the reputation of our products.

9
<PAGE> 13

IF OUR FUEL CELLS AND HYDROGEN GENERATION SYSTEMS EXHIBIT TECHNICAL DEFECTS OR
ARE UNABLE TO MEET COST OR PERFORMANCE GOALS, OUR COMMERCIALIZATION SCHEDULE
COULD BE DELAYED AND POTENTIAL PURCHASERS OF OUR INITIAL COMMERCIAL SYSTEMS MAY
DECLINE TO PURCHASE THEM OR CHOOSE TO PURCHASE ALTERNATIVE TECHNOLOGIES.

We have established product development and commercialization milestones
that we use to assess our progress toward developing commercially viable sodium
borohydride fuel cells and hydrogen generation systems. These milestones relate
to technology and design improvements, as well as to dates for achieving
development goals. To gauge our progress, we operate, test and evaluate fuel
cells and systems under actual conditions. If our fuel cells and systems exhibit
technical defects or are unable to meet cost or performance goals, including
power output, useful life and reliability, our commercialization schedule could
be delayed and potential purchasers of our initial commercial systems may
decline to purchase them or choose to purchase alternative technologies.

OUR FUTURE PLANS COULD BE HARMED IF WE ARE UNABLE TO ATTRACT OR RETAIN KEY
PERSONNEL.

Our management team consists of only two executive officers, including
Stephen S. Tang, who became our chief executive officer and president in May
2000, and Steven C. Amendola, our executive vice president and chief technical
officer. We currently have 18 employees and we need to attract a highly skilled
management team and specialized workforce, including scientists, engineers,
researchers and manufacturing and marketing professionals. Based on our planned
expansion, we will require a significant increase in the number of our employees
and outside contractors. Our future success, therefore, will depend, in part, on
attracting and retaining additional qualified management and technical
personnel. We do not know whether we will be successful in hiring or retaining
qualified personnel. Our inability to hire qualified personnel on a timely
basis, or the departure of key employees, could harm our expansion and
commercialization plans.

THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK.

Before this offering, there has been no public market for our common stock.
Although we have applied to have our common stock quoted on the Nasdaq National
Market upon completion of this offering, an active trading market for our shares
may not develop or be sustained following this offering. Purchasers in this
offering may not be able to resell their shares at prices equal to or greater
than the initial public offering price. The initial public offering price will
be determined through negotiations between us and the underwriters and may not
be indicative of the market price for these shares following this offering. For
additional information on how we and the underwriters determined the initial
public offering price, see "Underwriting."

POTENTIAL FLUCTUATIONS IN OUR FINANCIAL RESULTS MAKES FINANCIAL FORECASTING
DIFFICULT.

We expect our revenues and operating results to vary significantly from
quarter to quarter. As a result, quarter-to-quarter comparisons of our revenues
and operating results may not be meaningful. In addition, due to our stage of
development, we cannot predict our future revenues or results of operations
accurately. It is likely that in one or more future quarters our operating
results will fall below the expectations of securities analysts and investors.
If this happens, the trading price of our common stock may decline.

WE MAY BE SUBJECT TO LITIGATION IF OUR COMMON STOCK PRICE IS VOLATILE.

The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline, perhaps substantially, following this offering, including:

- failure to meet our product development and commercialization milestones,

- demand for our common stock,

- revenues and operating results failing to meet the expectations of
securities analysts or investors in any quarter,

10
<PAGE> 14

- downward revisions in securities analysts' estimates or changes in
general market conditions,

- technological innovations by competitors or in competing technologies,

- investor perception of our industry or our prospects, or

- general technology or economic trends.

In the past, companies that have experienced volatility in the market price
of their stock have been the subject of securities class action litigation. We
may be involved in a securities class action litigation in the future. Such
litigation often results in substantial costs and a diversion of management's
attention and resources and could have a negative effect on our business and
results of operations.

YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

The initial public offering price per share will be substantially higher
than the pro forma net tangible book value per share immediately after the
offering. If you purchase common stock in this offering at an assumed offering
price of $ per share, the mid-point of the range set forth on the cover
page of this prospectus, you will incur immediate and substantial dilution of
$ from the price per share you paid based on our as adjusted pro forma
net tangible book value at March 31, 2000. We also intend to grant stock options
to purchase our common stock with exercise prices significantly below the
initial public offering price of the common stock prior to this offering. To the
extent these options are exercised, there will be further dilution. For
information on how dilution is calculated, see "Dilution," and for information
on our outstanding stock options, see "Management -- Stock Option Plan."

FUTURE SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT OUR STOCK PRICE.

Substantial sales of our common stock in the public market following this
offering, or the perception by the market that such sales could occur, could
lower our stock price or make it difficult for us to raise additional equity
capital in the future. After this offering, we will have shares of
common stock outstanding. Of these shares, the shares sold in this
offering will be freely tradeable. In addition, we agreed to register for resale
beginning 90 days after the date of this prospectus, 759,366 shares of common
stock issuable upon the automatic conversion of our Series A preferred stock
upon the completion of this offering. All of the remaining shares of common
stock are subject to 180-day lock-up agreements. We cannot predict if future
sales of our common stock, or the availability of our common stock for sale,
will harm the market price of our common stock or our ability to raise capital
by offering equity securities.

WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE NET PROCEEDS FROM THIS
OFFERING.

Our board of directors and management will have broad discretion over the
use of the net proceeds of this offering. Investors will be relying on the
judgment of our board of directors and management regarding the application of
the net proceeds of this offering. For more information on how we intend to use
the net proceeds from this offering, see "Use of Proceeds."

11
<PAGE> 15

USE OF PROCEEDS

We estimate that the net proceeds from the sale of shares in this
offering will be $ million (approximately $ million if the
underwriters' over-allotment option is exercised in full), based on an assumed
initial public offering price of $ per share, the mid-point of the
range set forth on the cover page of this prospectus, after deducting
underwriting discounts and commissions and our estimated offering expenses. We
intend to use the net proceeds as follows:

- $ million to expand our research and product development
efforts, including:

-- approximately $5.0 million to build a pilot plant for the
manufacturing of sodium borohydride. We expect that it will take
between nine months and one year to complete the construction of this
plant. Based on our preliminary estimates, we expect that this
facility would be able to produce up to one ton per day of sodium
borohydride.

-- approximately $500,000 to build a prototype battery manufacturing
line for size AA and AAA sodium borohydride batteries. We expect that
it will take between six months and one year to complete the
construction of this battery line.

- the remainder for general corporate purposes, including working capital,
funds for operations, market development and capital expenditures.

We will retain broad discretion in the allocation of the net proceeds of
this offering. Pending their use, we intend to invest these net proceeds in
government securities and other short-term, investment-grade securities.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We
currently intend to retain our future earnings, if any, to finance the expansion
of our business and do not expect to pay any dividends in the foreseeable
future.

Payment of future cash dividends, if any, will be at the discretion of our
board of directors after taking into account various factors, including our
financial condition, operating results, current and anticipated cash needs and
plans for expansion.

12
<PAGE> 16

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2000:

- on a historical basis, giving retroactive effect to our conversion from a
limited liability company to a corporation on April 25, 2000,

- on a pro forma basis to give effect to the issuance of our Series A
preferred stock in May 2000, and

- on a pro forma as adjusted basis to give effect to the sale of
shares offered hereby at an assumed offering price of $ per share,
the mid-point of the range set forth on the cover page of this
prospectus, less underwriting discounts and commissions and estimated
offering expenses, and the conversion of our Series A preferred stock
into 759,366 shares of common stock upon completion of this offering.

<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
-----------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Stockholders' equity:
Common stock, $.001 par value; 40,000,000 shares
authorized; 22,849,416 shares issued and
outstanding historical; 22,849,416 shares issued
and outstanding pro forma; and shares
issued and outstanding pro forma as adjusted.... $ 22,849 $ 22,849 $
Series A preferred stock, $.001 par value;
5,000,000 shares authorized; none issued and
outstanding historical; 759,366 shares issued
and outstanding pro forma; and no shares issued
and outstanding pro forma as adjusted........... 759
Additional paid-in capital......................... 1,977,151 4,176,274
Deficit accumulated during development stage....... (1,512,398) (1,512,398)
----------- ----------- --------
Total stockholders' equity and capitalization... $ 487,602 $ 2,687,484 $
=========== =========== ========
</TABLE>

13
<PAGE> 17

DILUTION

As of March 31, 2000, we had a pro forma net tangible book value of
$2,239,717, or $.09 per share of common stock. Pro forma net tangible book value
per share is equal to our total tangible assets less total liabilities, divided
by the number of shares of our outstanding common stock after giving effect to
the automatic conversion of our Series A preferred stock into 759,366 shares of
common stock upon completion of this offering. After giving effect to the sale
of the shares of common stock offered hereby at an assumed initial public
offering price of $ per share, the mid-point of the range set forth on the
cover page of this prospectus, and after deducting underwriting discounts and
commissions and our estimated offering expenses, our as adjusted pro forma net
tangible book value, as of March 31, 2000, would have been $ million, or
$ per share of common stock. This represents an immediate increase in pro
forma net tangible book value of $ per share to our existing stockholders,
including stockholders who receive common stock upon the automatic conversion of
our Series A preferred stock, and an immediate dilution of $ per share to
new investors in this offering. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of March
31, 2000............................................... $ .09
Increase per share attributable to this offering..........
------
Pro forma as adjusted net tangible book value per share
after this offering.......................................
------
Dilution per share to new investors......................... $
======
</TABLE>

The following table shows the difference between existing stockholders,
including stockholders who receive common stock upon the automatic conversion of
our Series A preferred stock, and new investors with respect to the number of
shares of common stock purchased, the total consideration paid and the average
price per share paid. If the underwriters' over-allotment option is exercised in
full, the percentage of the total number of shares of common stock held by
existing stockholders will decrease from % to % of the total number of
shares of common stock outstanding after the offering, and the percentage of the
total number of shares of common stock held by new investors will increase from
% to % of the total number of shares of common stock outstanding after
the offering.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................ 23,608,782 % $4,199,882 % $.18
New investors........................
----------- ----- ---------- -----
Total.............................. 100.0% $ 100.0%
=========== ===== ========== =====
</TABLE>

The table excludes up to shares that may be issued by us pursuant to
the underwriters' overallotment option and approximately 3.4 million shares of
common stock issuable upon exercise of stock options that we plan to issue prior
to this offering at an average exercise price of $2.90 per share. To the extent
these shares are issued, there will be further dilution to new investors. See
"Management" and the notes to our financial statements included elsewhere in
this prospectus.

14
<PAGE> 18

SELECTED FINANCIAL DATA

The following table presents selected historical financial data for the
year ended December 31, 1999 and the three month periods ended March 31, 1999
and 2000. The balance sheet data as of December 31, 1999 and March 31, 2000 and
the statement of operations data for the year ended December 31, 1999 and the
three month periods ended March 31, 1999 and 2000 have been derived from our
financial statements, which are set forth elsewhere in this prospectus. The
statement of operations data for the three month periods ended March 31, 1999
and 2000 and the balance sheet data as of March 31, 2000 are derived from our
unaudited financial statements and, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of our results of operations and financial condition for those
periods. The data for the three month period ended March 31, 2000 is not
necessarily indicative of results for the year ending December 31, 2000 or any
future period.

Our selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical financial statements and related notes included
elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED --------------------------
DECEMBER 31, 1999 1999 2000
----------------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Product development and engineering................ $ 820,128 $ 151,589 $ 284,419
General and administrative......................... 164,953 6,939 113,528
Depreciation and amortization...................... 106,708 12,500 34,717
----------- --------- ----------
Total operating expenses........................... 1,091,789 171,028 432,664
Loss from operations............................... (1,091,789) (171,028) (432,664)
Interest income, net............................... 10,811 -- 1,244
----------- --------- ----------
Net loss........................................... $(1,080,978) $(171,028) $ (431,420)
=========== ========= ==========
Loss per share -- basic and diluted................ $ (.05) $ (.01) $ (.02)
=========== ========= ==========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ -----------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA
Total assets................................................ $ 946,776 $1,038,239
</TABLE>

15
<PAGE> 19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial
statements and the notes to those financial statements appearing elsewhere in
this prospectus. In addition to historical information, the following discussion
and other parts of this prospectus contain forward-looking statements that
reflect our plans, estimates, intentions, expectations and beliefs. Our actual
results could differ materially from those discussed in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, those set forth in the "Risk Factors" section and
contained elsewhere in this prospectus.

GENERAL

OVERVIEW

In May 1997, GP Strategies Corporation, which we refer to as GPS, entered
into a license agreement with Steven Amendola, our chief technical officer, and
received a perpetual exclusive license to exploit the sodium borohydride patent.
In order to exploit this technology, GPS formed a battery technology group,
which was funded by GPS until December 1998. In December 1998, GPS contributed
its battery technology group (which consisted of only four employees and a
patent) and the rights to the patent to us in exchange for its equity ownership
in us, a note payable and certain royalty payments. Our initial business plan
was to conduct research and development on sodium borohydride with the purpose
of developing an alternative energy system to gasoline for use in automobile
engines. In the course of investigating the use of our energy system, we focused
initially on the development of a sodium borohydride fuel cell for potential
commercial application. As our research progressed, we realized that sodium
borohydride not only had the potential to produce a better fuel cell than
currently exists, but that sodium borohydride can also be used to generate
hydrogen. Further research indicated that our proprietary system could also be
used to make longer lasting disposable batteries.

Our goal is to convert our technology from the research and development
stage to commercialization. Such potential revenue for the next several years is
likely to include upfront license fees, research contracts with various federal,
state and local agencies or through collaborations with other companies, and
royalty payments or joint venture revenue from licensees or strategic
partnerships. We have not generated any commercial revenue to date, and we
cannot assure you that we will develop any meaningful revenue in the future.

We incurred operating losses in 1999 and the three months ended March 31,
2000 of $1,091,789 and $432,664, and we had a net loss of $1,080,978 in 1999 and
$431,420 in the three months ended March 31, 2000. As of March 31, 2000, we had
an accumulated deficit of $1,512,398. Our losses have resulted primarily from
costs associated with research and development activities. As a result of
planned expenditures in the area of research and development, we expect to incur
additional operating losses for the foreseeable future.

Our limited operating history makes the prediction of future operating
results difficult. We believe that period-to-period comparisons of our operating
results should not be relied upon as predictive of future performance. Our
prospects must be considered in light of the risks, expenses and difficulties
encountered by companies at an early stage of development, particularly
companies in new and rapidly evolving markets. We may not be successful in
addressing these risks and difficulties.

16
<PAGE> 20

RESULTS OF OPERATIONS

Three months ended March 31, 2000 compared to three months ended March 31,
1999

Total Revenues. To date, we have not recognized any revenues related to
the sale or license of our technology.

Product Development and Engineering Expenses. Product development and
engineering expenses were $284,000 for the three months ended March 31, 2000
compared to $152,000 for the same period in 1999, an increase of $132,000. The
increase in product development and engineering expenses is primarily
attributable to increased staffing required to further the development of our
technology.

General and Administrative Expenses. General and administrative expenses
were $114,000 for the three months ended March 31, 2000 compared to $7,000 for
the same period in 1999, an increase of $107,000. The increase in general and
administrative expenses reflects the move from a shared rental building to our
current office location. In addition, there were increases in staffing and
support necessary to manage and facilitate our growth.

Depreciation and Amortization. Depreciation and amortization was $35,000
for the three months ended March 31, 2000 compared to $12,500 for the same
period in 1999, an increase of $22,500. This increase in depreciation and
amortization is related to depreciation of certain laboratory equipment, which
did not exist during the period ended March 31, 1999.

Interest Income. Interest income was $1,200 for the three months ended
March 31, 2000 compared to $0 for the same period in 1999, an increase of
$1,200. The increase in interest income is a result of interest earned on the
additional financing received from the original investors during the three-month
period ended March 31, 2000.

Year ended December 31, 1999

Total Revenues. To date, we have not recognized any revenues related to
the sale or license of our technology.

Product Development and Engineering Expenses. Product development and
engineering expenses were $820,000 in 1999 and were primarily attributable to
increased staffing required to further the development of our technology.

General and Administrative Expenses. General and administrative expenses
were $165,000 in 1999 and reflect increased lease costs in our current office
location that we moved into in January 1999. In addition, there were increases
in staffing and support necessary to manage and support our growth.

Depreciation and Amortization. Depreciation and amortization was $107,000
in 1999 and related to depreciation of certain laboratory equipment and the
amortization of intangible assets.

Interest Income. Interest income was $11,000 in 1999 relating to interest
earned on the capital we received in January 1999.

LIQUIDITY AND CAPITAL RESOURCES

Since our organization effective January 1, 1999, we have primarily
financed our operations through private placements of equity securities. In
1999, we issued $1,500,000 of membership interests for cash and assets, which
subsequently were converted into 22,849,416 shares of common stock as of April
25, 2000. We also received a capital contribution of $500,000 in the first
quarter of 2000, and in May 2000, we sold 759,336 shares of Series A preferred
stock, which will automatically convert into 759,336 shares of common stock upon
the completion of this offering. As of March 31, 2000, we had $56,000 in cash
and cash equivalents, which does not include $2.2 million we received from our
private placement of Series A preferred stock in May 2000.

17
<PAGE> 21

Cash used in operations totaled $953,000 and $385,000 for the year ended
December 31, 1999 and the three-month period ended March 31, 2000, and related
to funding our net operating losses.

Investing activities used cash of $448,000 for the year ended December 31,
1999 and $101,000 for the three-month period ended March 31, 2000. Investing
activities consisted primarily of purchases of laboratory equipment and
accessories necessary for the continuation of our research and development
activities and additional patent registration costs. We expect to continue to
make significant investments in research and development and our administrative
infrastructure, including the purchase of property, plant and equipment to
support our expansion plans.

Between January 1999 and April 2000, we have received an aggregate of
$226,000 from a recoverable grant award from the State of New Jersey Commission
on Science and Technology. The funds were used to partially fund costs directly
related to development of our fuel cell technology. The recoverable grant is
only required to be repaid when we generate net income in a fiscal year. The
repayment obligation ranges from 1% to 5% of net income over a ten-year period
and shall not exceed 200% of the original grant.

We believe that the net proceeds from this offering, together with our
current cash and cash equivalents, will be sufficient to satisfy our anticipated
cash needs for at least the next three years. It is possible, however, that we
may seek additional financing within this timeframe. We may raise additional
funds through public or private financings, collaborative relationships or other
arrangements. We cannot assure you that additional funding, if sought, will be
available or, even if available, will be on terms favorable to us. Further, any
additional equity financing may be dilutive to stockholders, and debt financing,
if available, may involve restrictive covenants. Our failure to raise capital
when needed may harm our business and operating results.

DISCLOSURE ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial
position, operating results or cash flows due to changes in U.S. interest rates.
This exposure is directly related to our normal operating activities. Our cash
and cash equivalents are invested with high quality issuers and are generally of
a short-term nature. As a result, we do not believe that near-term changes in
interest rates will have a material effect on our future results of operations.

18
<PAGE> 22

BUSINESS

- generator of hydrogen for use by internal combustion engines that have
been modified to accept hydrogen as fuel,

- generator of hydrogen for use by fuel cells in the production of
electricity,

- direct fuel cell, or

- battery that can be configured into a wide variety of shapes and sizes.

With respect to hydrogen generation, we believe that our Hydrogen on
Demand(TM) system offers significant advantages over other methods of utilizing
hydrogen as a fuel, which often require the storage of hydrogen in bulky and
potentially dangerous tanks or involve the consumption of hydrocarbon fuels that
produce pollutants as byproducts. We have designed and built a hydrogen
generating system, which we have used to modify an operating series-hybrid
sports utility vehicle. We will use this vehicle to demonstrate the ability of
the Hydrogen on Demand(TM) technology, to power a vehicle using sodium
borohydride as the base fuel. We have also designed and produced prototype
direct fuel cells and batteries that utilize our proprietary system to provide
electricity for the portable power markets for use in laptop computers, cellular
telephones, hearing aids, personal organizers and other portable devices.

OUR TECHNOLOGY

Hydrogen is the most energy-rich element occurring in nature and is highly
regarded as a source of clean, efficient fuel for the alternative energy
markets. We have invented, patented and developed a proprietary chemical process
that generates pure hydrogen or electricity from safe, environmentally friendly
raw materials. In our process, the energy potential of hydrogen is carried in
the chemical bonds of sodium borohydride, which in the presence of a catalyst
releases hydrogen or produces electricity in our fuel cell. The primary input
components of the reaction are water and sodium borohydride, a derivative of
borax, which is found in substantial reserves globally.

We believe that our system minimizes the storage, handling and cost
problems that are encountered with alternative hydrogen delivery systems. The
chemical reactions used in our process eliminate the undesirable pollutants and
emissions that are encountered in typical hydrocarbon-based energy production
systems. The byproducts of our process are primarily heat and borax, which can
be recycled to form sodium borohydride. Sodium borohydride-based energy systems
have favorable energy density, power-to-weight and volume characteristics when
compared to mobile power sources now in use. We believe that sodium borohydride
batteries, for example, can deliver substantially more potential energy per unit
of both weight and volume compared to the traditional batteries in the
commercial market today.

Gasoline, the primary fuel used in the transportation industry today,
consists of hydrogen and carbon chemically bound together. Gasoline is used as
fuel in processes that cause hydrogen and carbon to combine with oxygen. In
gasoline engines, hydrogen contributes more than half of the energy output while
carbon accounts for the rest. When carbon combines with oxygen, it releases
carbon monoxide and carbon dioxide, both of which are pollutants, into the
atmosphere. Moreover, the gasoline is not completely consumed in this process;
some of the resulting residue combines with other atmospheric components to form
additional pollutants, such as oxides of nitrogen, which are key contributors to
smog. By contrast, our process uses no carbon, while still taking advantage of
the vast power potential of hydrogen. Neither of the reaction's byproducts,
water and borax, is a pollutant. Furthermore, there is no "exhaust" in the
conventional sense -- water is ordinarily harmlessly vented into the air as
steam. Sodium metaborate is the byproduct captured in our system and it can be
converted back into sodium borohydride, the key input compound in our process.

19
<PAGE> 23

In addition to advantageous safety and environmental properties, our system
also possesses operating and manufacturing efficiencies that surpass those of
competitive technologies. In internal combustion engines, well-to-wheel
efficiency is a common measure of how much energy is lost in the process of
producing, refining, formulating and consuming a fuel. For example, consumption
of gasoline in an internal combustion engine results in a well-to-wheel
efficiency in the range of 8% to 16%. Approximately 20% of the energy of
gasoline is lost in the production, refinery and delivery phases, while another
64% to 72% of the energy is lost due to the operating inefficiency of the
internal combustion engine. Our testing to date indicates that a direct fuel
cell using sodium borohydride as its power source, and a sodium borohydride
system, when used as a hydrogen source to power a fuel cell, both have
well-to-wheel efficiencies more than twice that of gasoline in an internal
combustion engine.

Our manufacturing technology also utilizes more environmentally desirable
methods of energy input than traditional fuel technologies. The only
carbon-based raw material used in our sodium borohydride manufacturing process
is methane, which possesses only one carbon atom per molecule. When compared
with the multiple carbon atoms in high molecular weight fuels, such as gasoline
or diesel, our process significantly reduces the emissions of oxides of carbon,
nitrogen and sulfur per unit of energy generated. We believe that this aspect of
our technology, coupled with our more efficient well-to-wheel efficiencies, will
allow us to deliver energy in a cleaner and more efficient manner than
competitive fueling systems.

FUEL CELL TECHNOLOGY AND FUEL CELL SYSTEMS

A fuel cell is a device that combines hydrogen, derived from a fuel such as
natural gas, propane, methanol or gasoline, and oxygen from the air, to produce
electric power without combustion. The following table sets forth information
relating to the principal types of fuel cells.

<TABLE>
<CAPTION>
FUEL CELL TYPE PRINCIPAL APPLICATIONS INPUT FUEL OPERATING TEMPERATURE
-------------- ---------------------- --------------------------- ---------------------
<S> <C> <C> <C>
Alkaline fuel cells Small-size aerospace and Hydrogen (pure) 20 degreesC to 100
defense applications degreesC
Phosphoric acid fuel cells Mid- to large-size Hydrogen up to 200 degreesC
stationary power generation
applications
Molten carbonate fuel cells Large-size power generation Hydrogen or natural gas at least 650
applications degreesC
Solid oxide fuel cells Large- to very large- size Hydrogen, natural gas or at least 1000
stationary power generation fossil fuels degreesC
applications
Proton exchange membrane, Transportation, small- to Hydrogen (pure) up to 80 degreesC
or PEM, fuel cells mid- size stationary power
and portable power
generation applications
Sodium borohydride fuel Transportation, small- to Sodium borohydride solution up to 80 degreesC
cells very large-size stationary
power and portable power
generation applications
</TABLE>

In the small-scale commercial market, where sizes of fuel cells range from
25 watts to 250 kilowatts, the PEM fuel cell has been the type most tested and
utilized in the laboratories and in prototypical applications. The smaller size
and lower temperature characteristics make PEM fuel cells more optimal for use
in vehicles, and therefore, much of the current testing to date in the
transportation markets has involved this type of fuel cell.

The PEM fuel cell, as any fuel cell, requires hydrogen. We believe that the
only methods known today for storing significant amounts of hydrogen in vehicles
has been through large tanks of either liquid (cryogenic) or compressed gaseous
hydrogen. To put this in perspective, in order for a 3,000 pound automobile to
achieve a range of 300 miles using a PEM fuel cell system, the equivalent of 32
twenty-five pound tanks of compressed gaseous hydrogen would be required. For
cryogenically stored hydrogen, the weight drops significantly to 200 pounds.
However, even though the weight of the overall system decreases,

20
<PAGE> 24

the overall energy efficiency does too, as approximately two-thirds of the total
energy of the cryogenically stored hydrogen is required to liquefy the hydrogen.
Both of these systems are cumbersome, voluminous and potentially hazardous, as
an accident that damages a full tank of either system might result in an
extremely powerful explosion. To date, we are unaware of any other methods for
storing significant amounts of hydrogen in a compact, lightweight and safe
manner.

MARKET OPPORTUNITY FOR OUR TECHNOLOGY

Transportation Markets

In the transportation market, the United States federal government,
California and several northeastern states, principally New York, Massachusetts
and Maine, have adopted laws and regulations establishing vehicle emission
standards and requirements for the sale, commencing in 2003, of low, ultra-low,
super ultra-low and zero emission vehicles, or ZEVs. Regulations adopted by
these states provide that 10% of the new vehicles sold in these states must meet
zero emission guidelines by 2003. We believe that sodium borohydride-based
hydrogen generation systems will allow companies partial credit for lowering
emissions from vehicles. We also believe that a hybrid hydrogen generation
system will lead to significant commercial results much sooner than the
development of a fully electric vehicle. In our hybrid design, an automobile
will be powered by an electric motor which, in turn, will get its energy from
conventional batteries. Our technology will be used to generate the hydrogen
that runs a hydrogen-fueled engine, which

21
<PAGE> 25

will drive an alternator that will keep the batteries charged. The following
diagram illustrates the system for a sodium borohydride hydrogen generation
hybrid system.

[HYBRID AUTO SYSTEM GRAPHIC]

We have entered into a propriatery rights agreement with DaimlerChrysler
Corporation to participate in a program to test our sodium borohydride
generating systems for vehicle applications. As part of that agreement, we have
granted a non-exclusive worldwide lease to DaimlerChrysler to use in its
automotive business the technological benefits that we jointly develop, subject
to the future issue of licenses that will allow DaimlerChrysler to utilize our
proprietary sodium borohydride technology. Under the agreement, DaimlerChrysler
will gain ownership rights to technology that it will fund in the program. In
addition, DaimlerChrysler has a one-year non-exclusive right to access our
existing technology in furtherance of developing new technology.

Our prototype vehicle, a modified Ford Explorer SUV, will accommodate all
of the requisites for an emission-free electric vehicle with virtually no loss
of cabin space and no material change in fully-fueled weight. To modify the SUV,
we install reservoirs of sodium borohydride and water, a receiving tank for the
resulting sodium metaborate, as well as a chamber in which the
hydrogen-producing reaction takes place. The space required for our system is
approximately the same size that is required for a conventional internal
combustion engine. A sodium borohydride storage/borax collecting tank replaces
the standard gasoline tank. The internal combustion gasoline engine is replaced
with a smaller hydrogen engine/ alternator combination, and the transmission is
completely removed, because the electric motors that propel the car in our
hybrid system are linked directly to the drive train.

In the longer-term, we believe that fuel cell powered vehicles utilizing
the sodium borohydride technology will meet the performance requirements of
consumers and the regulatory requirement for a ZEV because a system using our
proprietary process to generate electricity directly in batteries or fuel cells
would be even more efficient than a hybrid system. Even though the zero emission
guidelines can also be satisfied by vehicles powered by other types of fuel
cells, such as PEM fuel cell powered vehicles, by other forms of ZEVs, such as a
battery powered vehicle, or in part by the sale of a large number of super
ultra-low emission vehicles, such as vehicles powered by improved internal
combustion engines, we believe that our technology will maintain the best
overall performance and environmental characteristics.

Portable Power Markets

Our sodium borohydride based process may be adapted for production of
batteries. We believe that our sodium borohydride batteries would have a higher
energy density by volume than batteries currently in use, and be more efficient.
As a result, we believe that our sodium borohydride batteries would be lighter
and smaller, embracing and advancing the trend towards smaller and lighter
products in consumer electronics.

22
<PAGE> 26

In addition, there is a growing worldwide consumer demand for quiet, clean
portable generators. Promising applications include their use in densely
populated areas where noise pollution is a significant concern and indoors or in
other areas where the high noise and high emissions of internal combustion
engine generators pose significant problems. We believe that portable power
generators powered by sodium borohydride fuel cells enjoy substantial advantages
over existing portable generators and can provide consumers with the power they
need in a package that is small and durable with low noise and emissions.

We believe that over the next ten years a significant market may develop
for portable sodium borohydride fuel cell power products. These products would
provide clean, quiet, vibration-free electric power on demand for a variety of
applications. We believe additional markets could develop where the attributes
of sodium borohydride fuel cell systems would provide a significant competitive
advantage over existing technologies. These markets would include recreational
vehicles, auxiliary power for boats and generators for densely populated areas
and other locations where noise pollution is a concern.

OUR STRATEGY

Our goal is to convert what we believe to be a superior technology in our
sodium borohydride chemistry from the research and development stage to
commercialization. We believe that the characteristics of our sodium borohydride
technology will capitalize on the growing need for a safe method of storing
hydrogen across a variety of markets, a higher energy output alternative fuel
and a desire to preserve the environment. To achieve our goal, we have
implemented the following strategy:

- Build Relationships with Automotive Manufacturers. We are pursuing
relationships with automotive manufacturers, because we believe they will
be the key to capitalizing on transportation opportunities in the future.
As many of the top tier global automotive manufacturers continue to
allocate substantial resources to research and development of alternative
fuel technologies, we believe that our technology will be an attractive
choice and will allow us to position our technology as a leader in the
alternative fuel market.

- Build Relationships with Key Battery Manufacturers. We plan to pursue in
the near term the construction of a battery manufacturing pilot plant for
the manufacture of size AA and AAA batteries. We believe that the
production of prototypical batteries would enable us to validate our
technology, generate interest in the consumer battery market and
facilitate the establishment and development of strategic relationships
with other battery manufacturers.

23
<PAGE> 27

- Develop Market Awareness Generally. We have relationships with various
state and federal governmental agencies and are also involved in several
hydrogen and environmentally conscious organizations and events. Through
these continuing relationships, we believe that our technology will
become more visible to a broader group of individuals and companies in
the areas we are targeting. For example, we believe that our relationship
with the New Jersey Department of Transportation may lead to other types
of state and federal contracts involving all aspects of transportation,
including fleet demonstrations, commercial vehicles, highway signs and
lighting.

INTELLECTUAL PROPERTY RIGHTS

Our intellectual property strategy is to identify key intellectual property
developed by us in order to protect it in a timely and effective manner. In
addition, we seek to use and assert such intellectual property to our
competitive advantage. Our goal is to be first to market with superior
technology and to sustain a long-term competitive edge in the market. We rely on
a combination of patents, trade secrets, trademarks, copyrights and contracts to
protect our proprietary technology.

We use patents as the primary means of protecting our technological
advances and innovations, such as our proprietary hydrogen generators, fuel cell
designs, components, materials, operating techniques and systems. We have
adopted a proactive approach to identifying patentable inventions and securing
patent protection through the timely filing and aggressive prosecution of patent
applications. Patent applications are filed in various jurisdictions
internationally, which are carefully chosen based on the likely value and
enforceability of intellectual property rights in those jurisdictions.

As of May 23, 2000, we owned two U.S. and one non-U.S. patent. We have
filed an additional five U.S. and 21 non-U.S. patent applications. Our earliest
patent expires in 2015 and the most recently filed applications, if issued, not
expiring until 2020.

Our intellectual property program includes a strong competitor monitoring
element. We actively monitor the patent position, technical developments and
market activities of our competitors. We expect activities relating to assertion
and enforcement of our intellectual property rights to increase as the market
develops.

RESEARCH AND DEVELOPMENT

Our research team focuses on improving our sodium borohydride
characteristics for use as a hydrogen source as well as in direct fuel cell
technology by working to optimize materials and processes. In order to most
effectively achieve these plans, our facility in Eatontown, New Jersey houses
key sophisticated research and development equipment. We are currently using a
scanning electron microscope with an X-ray attachment, a nuclear magnetic
resonance spectrograph with a broadband capability and a gas chromatograph/mass
spectrograph. We also have several potentiostats/galvanostats, a bi-potentiostat
for mechanistic studies and battery testers. Additionally, we have a fully
equipped chemical laboratory. We are purchasing additional equipment, including
an X-ray diffraction, Fourier transfer infra-red spectrometer, thermal
gravimetric analysis and ultraviolet visable spectrograph. These machines are
essential tools to improve synthesis and purity of sodium borohydride, to
produce better hydrogen generation catalysts and to develop better electrodes
for our batteries and fuel cells, all of which are key to accomplishing our
goals.

24
<PAGE> 28

Hydrogen Generation

As a generator of hydrogen, an aqueous solution of sodium borohydride is
passed over a catalyst via a pump. Once in contact with the catalyst, the sodium
borohydride reacts to form hydrogen gas, which can be used immediately or stored
in a tank. The byproduct formed in this process is borax.
[HYDROGEN GENERATION GRAPHIC]

Direct Fuel Cell

In the direct fuel cell, the sodium borohydride is passed into the anode
compartment and interacts with our proprietary anode. Here, the sodium
borohydride is directly oxidized to borate, giving its electrons up directly to
the anode instead of the water.

[DIRECT FUEL CELL GRAPHIC]

We believe, based on our laboratory tests to date, that our sodium
borohydride cell has an overall fuel cell efficiency of over 60%, making it more
efficient in its energy extraction than other fuel cells. The cell also has cost
advantages as it requires a less expenisve membrane than the costly
perfluorinated membranes used by most PEM fuel cells, and it does not require
platinum, an expensive precious metal, as a catalyst. Our laboratory tests also
indicate a higher open circuit voltage per cell of 1.55 volts

25
<PAGE> 29

compared to about 0.9 volts for PEM fuel cells. Since this system uses a liquid
fuel, a separate internal cooling system is not required, which allows for a
simpler, cheaper stack of fuel cells.

Since the fuel is an aqueous solution of sodium borohydride, which can be
easily stored in a tank, our laboratory tests indicate that this system provides
a fuel with an energy density in excess of 3,000 watt-hours per liter actually
produced by the cell at 60% efficiency.

COMMERCIALIZATION PROCESS

In the near-term, we do not anticipate manufacturing on a large-scale. Our
initial focus is in the automotive area, and is based on our belief that we can
develop prototypical vehicles to validate our technology. Once this is
accomplished, we will seek to interest automotive OEMs on licensing our hydrogen
generation technology, and, ultimately, our direct sodium borohydride fuel cell
technology. We will also seek to enter into licensing or joint ventures with
vehicle manufacturers, utilities and other companies requiring fuel cell
technologies. In addition to these areas, we plan on developing a replacement
for the current disposable batteries, either through small-scale manufacturing,
a joint venture or licensing of the sodium borohydride technology for batteries.
Over the next several years, our current plans for commercialization are as
follows:

- Research, Development and Engineering. This is a current aspect of our
business, and we will continue to pursue the research and development of
sodium borohydride for the foreseeable future as a source of hydrogen,
for use directly in fuel cells and for other potential markets that may
develop in the near future.

- Pre-Commercial Testing and Licensing for Hydrogen Generation Systems. We
intend to seek additional relationships, such as our proprietary rights
agreement with DaimlerChrysler, to test our system in vehicle
applications. We believe that the successful completion of our
demonstration vehicle will provide us with the opportunity to develop
stronger relationships with the automotive OEMs and enter into certain
licensing arrangements.

- Expansion into Battery Markets. We anticipate using a portion of the
proceeds from this offering to construct a battery manufacturing line for
a small number of prototype batteries. We believe that the production of
such prototypical batteries will enable us to validate our technology,
which in turn will generate interest in the overall battery market by
both consumers and manufacturers.

- Pre-Commercial Testing and Licensing for Direct Fuel Cells. We
anticipate that we will have a prototypical direct fuel cell using the
sodium borohydride technology within the next several years. At this
point, we will seek to forge strategic relationships, and we expect to
seek licensing arrangements for the direct fuel cell upon successful
direct fuel cell demonstration.

- Rechargability of Sodium Borohydride. We believe we can develop a
small-scale prototypical recharging machine for use with the sodium
borohydride batteries or the sodium borohydride vehicles. This recharging
feature is significant in that the overall cost of the sodium borohydride
system, whether for vehicles or portable power, will be significantly
decreased. The recharging infrastructure for large-scale production of
sodium borohydride should follow soon after this particular development.

COMPETITION

As our sodium borohydride power generation system has the potential to
replace existing power sources, competition will come from current power
technologies, improvements to current power technologies and from new
alternative power technologies. Each of our target markets is currently serviced
by existing manufacturers with existing customers and suppliers. These
manufacturers use proven and widely accepted technologies. Additionally, there
are competitors working on developing technologies other than fuel cells in each
of our targeted markets.

We believe that PEM fuel cell technology is likely to be our most direct
competitor. Ballard Power Systems and Plug Power Inc., two publicly traded
companies with PEM fuel cell technology, have significant histories,
field-testing experience and greater financial and personnel resources than we
have. A number of corporations, national laboratories and universities in the
United States, Canada, Europe and
26
<PAGE> 30

Japan possess PEM fuel cell technology. Most have financial, technological and
personnel resources greater than ours. Other companies, such as FuelCell Energy,
Inc., SatCon Technology Corporation and a number of energy concerns, including
utilities, have been developing other types of fuel cell technologies and have
greater access to capital and personnel. However, we believe that our sodium
borohydride based technology is superior to the demonstrated technology of our
PEM fuel cell competitors and other fuel cell designs, and we plan to maintain
our technological advantage by diligently prosecuting patents, improving our
system's designs, using fewer and lower cost materials, eventually developing
volume manufacturing processes and forming strategic relationships with
suppliers and leading companies within each of the industry groups that
constitute our target markets.

In the hydrogen generation segment, there are several competitors that
utilize different methods to generate hydrogen. One such company, Natex
Corporation, generates hydrogen by using a sharp tool to slice small sodium
hydride balls in the presence of water to create hydrogen. Sodium hydride,
however, is a hazardous material which causes burning if it comes into contact
with skin. Another company, Ovonics Battery Company, a subsidiary of Energy
Conversion Devices, Inc., generates hydrogen by utilizing nickel-metal hydride
technology in its storage batteries. This technology is more expensive than
ours, and the overall efficiency of the system decreases as more hydrogen is
stored, making this an unfavorable option for practical use. There are several
other companies in the energy and oil and gas industry that utilize reformers to
create hydrogen. Reformers use methanol, gasoline, natural gas or some other
fossil fuel to generate hydrogen. All of these types of fuels pollute the
atmosphere because of the nitrogen oxides emitted into the air. We believe our
sodium borohydride is a safer solution than any other hydrogen generation system
currently available.

RAW MATERIALS

Sodium borohydride is manufactured from the base material borax. There is a
significant global supply of borax, and the United States is believed to be the
largest holder of borax reserves in the world. Currently, sodium borohydride is
made as a specialty chemical by two manufacturers. Despite the great quantities
of reserves and current annual production of borax, there are few commercial
applications that require sodium borohydride today. The most common application
for sodium borohydride is for use as a bleaching agent in the paper industry. We
believe that as our commercialization efforts and demand for our products
increase, existing manufacturers will further develop their manufacturing
processes to meet the potential increase in demand for sodium borohydride.

FACILITIES

Our principal offices are located at 1 Industrial Way West, Eatontown, New
Jersey 07724, occupying 9,700 square feet. Our lease expires at the end of 2004,
with an option to renew through 2009. While our current facility contains
substantial laboratory space for our 15 employees, as well as a 2,400 square
foot area used exclusively for the completion of our demonstration vehicle, we
do not believe that our current facilities and equipment will be sufficient
through the market introduction of our products. We will need to purchase
additional equipment and expand the physical area.

We anticipate using a portion of net proceeds from this offering to
construct a prototypical sodium borohydride manufacturing facility. We believe
that such a facility will cost approximately $5.0 million and take nine months
to one year to complete. This type of facility would require approximately six
people to operate and it would produce at least one ton per day of sodium
borohydride. We believe that this facility would demonstrate the viability of
mass production of sodium borohydride and generate interest to attract larger
potential manufacturers of our material which should increase the overall demand
for sodium borohydride and decrease the costs associated with its production.

HUMAN RESOURCES

We have a total staff of 18 employees, including 15 full-time employees, of
which 10 are scientists, engineers and other professionals.

27
<PAGE> 31

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors are listed below.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
G. Chris Andersen.................... 62 Chairman of the Board of Directors
Stephen S. Tang...................... 39 Chief Executive Officer, President and Director
Steven Amendola...................... 45 Executive Vice President, Chief Technical Officer and Director
William H. Fike...................... 64 Director
Alexander MacLachlan................. 67 Director
Zoltan Merszei....................... 77 Director
James L. Rawlings.................... 55 Director
</TABLE>

G. CHRIS ANDERSEN has served as the chairman of our board of directors
since April 2000. Mr. Andersen is currently a general partner of Andersen,
Weinroth & Co., a merchant banking firm. From 1990 to 1995, Mr. Andersen was
vice chairman and head of international investment banking at PaineWebber
Incorporated. Previously, Mr. Andersen was a managing director for 15 years at
Drexel Burnham Lambert, Incorporated and a member of its board of directors. He
is currently a director of Terex Corporation, Headway Corporate Resources Inc.,
GP Strategies Corporation and Sunshine Mining and Refining Company.

STEPHEN S. TANG, PH.D. has served as our chief executive officer and
president and a member of our board of directors since May 2000. From January
1996 to June 2000, Dr. Tang was vice president and global leader of the
pharmaceutical and health care industry practice for the management consultancy
A.T. Kearney, Inc., a wholly owned subsidiary of Electronic Data Systems, Inc.,
where he directed global business development and marketing. Dr. Tang previously
served as co-leader of the global chemical and environmental practice for the
management consulting firm, Gemini Consulting, Inc., a wholly owned subsidiary
of Cap Gemini. Prior to that, he was the president and founder of Tangent
Technologies, a technical consulting firm to chemical, pharmaceutical and
biotechnology companies, and senior research engineer and assistant director of
Lehigh University's Center of Molecular Bioscience and Biotechnology. Dr. Tang
received his B.S. in chemistry from the College of William and Mary, an M.S. and
Ph.D. in chemical engineering from Lehigh University and an M.B.A. from the
Wharton School of Business at the University of Pennsylvania.

STEVEN C. AMENDOLA has served as our executive vice president and chief
technical officer since April 2000, and, prior to that time, he served as our
chief scientist since our inception in December 1998. Mr. Amendola has been
issued more than 20 patents in the petroleum processing, pollution control and
energy recovery areas, including our patent to produce hydrogen and electricity.
From May 1997 to December 1998, Mr. Amendola served as vice president of
National Patent Development Corporation (now known as GP Strategies
Corporation), where he headed their research and development effort of sodium
borohydride. From September 1996 to April 1997, Mr. Amendola served as vice
president of research and development for Nextcell Inc., where he supervised and
researched new battery chemistry. From February 1995 to September 1996, he was
involved in process development chemistry at RFE Industries Inc. Mr. Amendola
completed graduate courses in chemistry at Ohio State University, where he
developed new, high-energy explosives under a grant from the U.S. Army. He holds
a B.S. in Chemistry from The Kings College in New York.

WILLIAM H. FIKE has served on our board of directors since May 2000. Mr.
Fike retired as the vice-chairman and executive vice president of Magna
International, Inc., an automotive parts manufacturer based in Ontario, Canada,
in February 1999. Prior to joining Magna in 1994, Mr. Fike was employed by Ford
Motor Company from 1966 to 1994, where he served most recently as President of
Ford Europe. Mr. Fike currently serves as a director of Magna and AGCO
Corporation, a manufacturer of farm equipment.

28
<PAGE> 32

ALEXANDER MACLACHLAN, PH.D. has served on our board of directors since May
2000. He is currently chairman of the National Research Council's project to
evaluate the U.S. Department of Transportation's Intelligent Vehicle Initiative.
Prior to his retirement in March 1996, Dr. MacLachlan was the Deputy Under
Secretary for R&D Management at the U.S. Department of Energy and held various
other positions in the Department of Energy. Prior to his employment at the
Department of Energy, Mr. MacLachlan was employed by DuPont for 36 years, where
he was Senior Vice President for Research and Development and Chief Technical
Officer from 1986 to 1993, and a member of DuPont's Operating Group from 1990 to
1993.

ZOLTAN MERSZEI has served on our board of directors since May 2000. Mr.
Merszei retired as the president, chairman and chief executive officer of The
Dow Chemical Company in March 1980. From August 1974 to March 1980, he served as
president and chief executive officer of Dow Chemical Europe. From May 1980 to
May 1988, Mr. Merszei served in various executive positions with Occidental
Petroleum Corporation, including chairman and chief executive officer of
Occidental Chemical, chairman of Occidental Research and president and chief
executive officer, and subsequently, vice chairman of the board of directors of
Occidental Petroleum. Mr. Merszei currently serves as a director of The Budd
Company, Dole Food Company Inc., Thyssen Industrie AG (Germany) and Thyssen
Henschel America.

JAMES L. RAWLINGS has served on our board of directors since April 2000.
Mr. Rawlings is a partner at Andersen, Weinroth & Co. Prior to joining Andersen,
Weinroth, he was a managing director, principal and member of the board of
directors of Schooner Asset Management Co. LLC, an asset management firm. Before
joining Schooner, he was a managing director of Robert Fleming & Co., a London
based investment bank, where he was responsible for investment banking
activities in North and South America. He was a managing director in the
corporate finance department with Drexel Burnham Lambert, Incorporated from 1979
to 1988.

SCIENTIFIC ADVISORY BOARD

We have recently organized a scientific advisory board, currently
consisting of three individuals, whom we refer to as our scientific advisors. At
our request, the scientific advisors will review and evaluate our research
programs, advise us with respect to technical matters in fields in which we are
involved and recommend personnel to us.

All of our scientific advisors are employed by entities other than us, some
of which may in the future compete with us, and are expected to devote only a
small portion of their time to us. They are not expected to participate actively
in our affairs or in the development of our technology. The institutions with
which our scientific advisors are affiliated may adopt new regulations or
policies that limit the ability of the scientific advisors to consult with us.
In addition, since we have not entered into non-competition agreements with any
of the members of our scientific advisory board, if any scientific advisor were
to consult with or become employed by any of our competitors, our business could
be negatively affected.

We are planning to grant options to purchase 25,000 shares of our common
stock, exercisable over a five-year period, that will vest immediately upon the
closing of this offering, at $2.90 per share to each of our scientific advisors.

ANDREW B. BOCARSLY, PH.D. has been a Professor of Chemistry at Princeton
University since 1994, and has taught at the school since 1980 after receiving
his Ph.D. in Physical Inorganic Chemistry from the Massachusetts Institute of
Technology. Dr. Bocarsly is a member of the Electrochemical Society and the
American Chemical Society.

SHELDON L. GLASHOW, PH.D. is the Higgins Professor of Physics and the
Mellon Professor of Sciences at Harvard University. He was the recipient of the
Nobel Prize in Physics in 1971. He has been a director of GSE Systems, Inc., a
company engaged in the business of real time simulation and process automation
in the power and process industries, since 1995, and a director of Interferon
Sciences, Inc., a biopharmaceutical company, since 1991. Dr. Glashow is a
foreign member of the Russian Academy of Sciences.

29
<PAGE> 33

ROALD HOFFMANN, PH.D. has been the John Newman Professor of Physical
Science at Cornell University since 1974. Dr. Hoffmann is a member of the
National Academy of Sciences and the American Academy of Arts and Sciences. In
1981, he shared the Nobel Prize in Chemistry.

AUDIT COMMITTEE

Our board has established an audit committee consisting of William H. Fike,
Zoltan Merszei and James L. Rawlings, all of whom are independent directors. The
audit committee is responsible for reviewing and inquiring into matters
affecting financial reporting, the system of internal accounting, financial
controls and procedures and audit procedures and audit plans. Furthermore, the
audit committee approves the quarterly financial statements and also recommends
to the board of directors, for approval, the annual financial statements, the
annual report and certain other documents required by regulatory authorities.

DIRECTOR COMPENSATION

We are planning to grant to each of our independent directors options to
purchase 75,000 shares of our common stock, exercisable over a five-year period,
that will vest immediately upon the closing of this offering, at $2.90 per
share.

EXECUTIVE COMPENSATION

During 1999, James L. Rawlings served as our acting chief executive
officer, without compensation. In May 2000, Stephen S. Tang became our chief
executive officer and president. For information on our employment arrangements
with Mr. Tang, please see "-- Employment Agreements."

EMPLOYMENT AGREEMENTS

On May 16, 2000, we entered into an employment agreement with Stephen S.
Tang, our chief executive officer and president. Mr. Tang's employment agreement
provides for a base salary of $225,000 per year, increasing to $250,000 upon the
closing of this offering or January 1, 2001, whichever occurs earlier. In
addition, it provides for a bonus of 50% of his base salary, half of which is
guaranteed and the remaining half will be guaranteed upon the closing of this
offering or January 1, 2001, whichever occurs earlier. Upon joining us, Mr. Tang
was paid half of his $135,000 signing bonus, with the other half payable upon
the closing of this offering or January 1, 2001, whichever occurs earlier. Once
we adopt our stock option plan, Mr. Tang will be granted 1,012,500 options at an
exercise price of $2.90 per share, with a term of five years. One third of these
option will vest at the end of each year of employment for the first three
years. In the event that Mr. Tang's employment is terminated involuntarily or
without cause, 945,000 of his options will vest as if he were employed
throughout the entire year, 67,500 options will vest in accordance with the
terms of our stock option plan, and all options will have a term of one year.
Furthermore, Mr. Tang will be entitled to receive a severance payment in the
amount of his base salary at that time plus a one year bonus which will be the
greater of half of his base salary at that time or the actual bonus received by
Mr. Tang for the full year prior to such termination.

We expect to enter into an employment agreement with Steven C. Amendola,
our executive vice president and chief technical officer, in June 2000.

STOCK OPTION PLAN

2000 STOCK OPTION PLAN

We expect to adopt our 2000 Stock Option Plan before the closing of this
offering. The plan will be administered by our board of directors or by a
committee formed by our board in its sole discretion. 5,500,000 shares of common
stock have been reserved for issuance under the plan.

The form of our plan provides for the granting of the following types of
awards: stock options, stock appreciation rights, restricted stock awards,
performance unit awards and stock bonus awards. The terms

30
<PAGE> 34

and conditions of each type of award granted under the plan will be specified by
our board, in its sole discretion, in a written agreement between us and the
participant. These awards may be granted to any of our employees, directors,
officers or scientific advisors, or any of our other key advisers or consultants
who are responsible for or contribute to our management, growth or success.
Consultants and advisors must render bona fide services not in connection with
the offer and sale of our securities in a capital-raising transaction or
relating to the promotion or maintenance of a market for our securities.

Stock options. A stock option may be an incentive stock option or a
non-qualified stock option. Only our employees will be eligible to receive
incentive stock options. The incentive stock option exercise price will in no
event be less than 100% of the fair market value of the shares of common stock
subject to the option on the date of grant. The non-qualified stock option
exercise price will be fixed by our board, but in no event will it be less than
100% of the fair market value of the shares of common stock subject to the
option on the date of grant.

The form of our plan includes change in control provisions that may result
in the accelerated vesting of outstanding options. For purposes of the plan,
"change of control" means the occurrence of any of the following:

- any consolidation or merger of us pursuant to which less than 50% of the
outstanding voting securities of the surviving or resulting company are
owned by individuals or entities that were our shareholders prior to the
consolidation or merger,

- any sale, lease, exchange or other transfer, in one transaction or a
series of related transactions, of all, or substantially all, of our
assets, other than any sale, lease, exchange or other transfer to any
company where we own, directly or indirectly, 100% of the outstanding
voting securities of such company after any such transfer,

- any person, as defined in Section 13(d) of the Securities Exchange Act of
1934, other than one or more of our current shareholders or one or more
employee benefit plans established by us for the benefit of our
employees, shall become the beneficial owner, of 35% or more of our
outstanding common stock, other than as the result of this offering, or

- commencement by any entity, person, or group (including any affiliate
thereof, other than us) of a tender offer or exchange offer where the
offeror acquires more than 50% of our outstanding voting securities.

Stock appreciation rights. Stock appreciation rights entitle participants
to increases in the fair market value of shares of common stock. Stock
appreciation rights entitle a participant to receive an award equal to all, or a
portion of the excess of, the fair market value of a specified number of shares
of common stock at the time of exercise over a specified price, which shall not
be less than 100% of the fair market value of the common stock at the time the
right is granted or, if connected with a previously issued stock option, not
less than 100% of the fair market value of the common stock at the time such
stock option was granted. We may pay such amount in cash or in common stock,
valued at its then fair market value, or both.

Each agreement will state the period of time within which the stock
appreciation right may be exercised, in whole or in part, subject to such terms
and conditions prescribed for such purpose by our board of directors, provided
that no stock appreciation right shall be exercisable prior to six months nor
after ten years from the date of grant. Our board of directors has the
discretion to permit an acceleration of previously established exercise terms.
In the event of a change of control, the participant shall have the right to
exercise the vested portion of his or her unexercised stock appreciation right
for the remainder of their term.

Performance unit awards. Performance unit awards entitle participants to
future payments based upon the achievement of preestablished long-term
performance objectives. Our board of directors shall establish with respect to
each performance unit award a performance period and a value. It will also
establish maximum and minimum performance targets to be achieved during the
applicable performance period. The achievement of maximum targets entitles a
participant to payment with respect to the full

31
<PAGE> 35

value of a performance unit award. The achievement of less than the maximum
targets, but in excess of the minimum targets, entitles a participant to payment
with respect to a portion of a performance unit.

Restricted Stock Awards. Restricted stock awards consist of shares of
common stock restricted against transfer and subject to a substantial risk of
forfeiture. Shares awarded, and the right to vote such shares and to receive
dividends, may not be sold or otherwise transferred during the restriction
period, except as provided in an agreement between a participant and us. The
participant will have all the other rights of a stockholder, including the right
to receive dividends and the right to vote such shares.

Stock Bonus Awards. Our board of directors may grant a stock bonus award
based upon performance in terms of growth in gross revenue, earnings per share
or ratios of earnings to equity or assets or, with respect to participants not
subject to Section 162(m) of the Internal Revenue Code, such other measures or
standards determined by our board of directors. Performance objectives may be
reduced or eliminated, but not increased, in order to take into account
unforeseen events or changes in circumstances.

Loans. Our board may, in its sole discretion and to further the purpose of
the plan, provide for loans to persons in connection with all or any part of an
award under the plan. Loans will be evidenced by a loan agreement, promissory
note or other instruments containing terms and conditions relating to interest,
payment, schedules, collateral, forgiveness and acceleration as our board will
prescribe from time to time.

32
<PAGE> 36

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS WITH STEVEN AMENDOLA AND GP STRATEGIES CORPORATION RELATED TO OUR
PATENT

After developing the proprietary technology for energy generation based on
the use of sodium borohydride, Steven C. Amendola, our executive vice president
and chief technical officer, entered into a license agreement with GP Strategies
Corporation, or GPS, in July 1997. In accordance with that license agreement,
Mr. Amendola granted an exclusive license to make, use and sell the proprietary
technology he developed. When we acquired certain assets and liabilities of the
battery technology group of GPS, we agreed to pay a royalty to GPS. As
contemplated in the original acquisition of the intellectual property and
patents by us, all such royalty agreements were terminated in May 2000. In
consideration for terminating the royalty agreements, GPS will be granted
options to purchase 250,000 shares of common stock at the initial public
offering price, and Mr. Amendola will be granted options to purchase 206,897
shares of common stock at an exercise price of $2.90 per share once we adopt our
stock option plan. We also agreed to indemnify GPS against any future claims for
royalties and any future payments in connection with the royalty agreements
which may be made against GPS. Furthermore, Mr. Amendola and GPS terminated
their original license agreement and we acquired ownership of the patent rights
relating to the proprietary technology. In addition, in a separate assignment
executed concurrently with the omnibus agreement, Mr. Amendola assigned to us
the ownership of any future inventions as well as pending patent applications
and future patents. Furthermore, Mr. Amendola has granted to us a right of first
refusal for all unrelated inventions conceived by Mr. Amendola.

LOAN FROM GPS

In January 1999, we borrowed $250,000 from GPS in connection with an
agreement dated December 17, 1998 to purchase substantially all of the assets of
its Battery Technology Group. The loan bears interest at a rate of 6% per annum
and is payable with interest on September 25, 2001.

33
<PAGE> 37

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock by the following as of May 23, 2000 and as
adjusted to reflect the sale of common stock offered hereby and the conversion
of our Series A preferred stock into 759,366 shares of common stock upon
completion of this offering:

- all persons known by us to own beneficially 5% or more of our common
stock,

- each of our directors,

- our chief executive officer, and

- all directors and executive officers as a group.

Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of common stock beneficially owned
by the stockholder.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES OUTSTANDING
NAME AND ADDRESS NUMBER OF SHARES -----------------------------------
OF BENEFICIAL OWNER BENEFICIALLY OWNED PRIOR TO OFFERING AFTER OFFERING
------------------- ------------------ ----------------- --------------
<S> <C> <C> <C>
FIVE PERCENT STOCKHOLDERS:
E. Alan Brumberger(1)........................... 1,260,615 5.5%
GP Strategies Corporation(2).................... 6,024,368(3) 26.4
Randolph W. Lenz(4)............................. 2,269,760 9.9
Stephen D. Weinroth(1).......................... 3,553,127 15.6
DIRECTORS AND CHIEF EXECUTIVE OFFICER:
Steven C. Amendola(5)........................... --(6) --
G. Chris Andersen(1)............................ 3,543,127(7) 15.5
William H. Fike(5).............................. --(7) --
Alexander MacLachlan(5)......................... --(7) --
Zoltan Merszei(5)............................... --(7) --
James L. Rawlings(1)............................ 511,153(7) 2.2
Stephen S. Tang(5).............................. --(8) --
All directors and executive officers as a group
(7 persons)................................... 4,054,280(9) 17.7%
</TABLE>

- ---------------
* Less than 1%

(1) Address is Andersen, Weinroth & Co., 1330 Avenue of the Americas, 36th
Floor, New York, New York 10019.

(2) Address is 9 West 57th Street, Suite 4170, New York, New York 10019.

(3) Does not include 250,000 options not exercisable within 60 days which will
be granted once we adopt our stock option plan.

(4) Address is 5401 North Federal Highway, Ft. Lauderdale, Florida 33308.

(5) Address is 1 Industrial Way West, Eatontown, New Jersey 07724.

(6) Does not include 1,087,333 options not exercisable within 60 days which
will be granted once we adopt our stock option plan.

(7) Does not include 75,000 options not exercisable within 60 days which will
be granted once we adopt our stock option plan.

(8) Does not include 1,012,500 options not exercisable within 60 days which
will be granted once we adopt our stock option plan.

(9) Does not include 2,474,833 options not exercisable within 60 days which
will be granted once we adopt our stock option plan.

34
<PAGE> 38

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

As of May 23, 2000, there were 22,849,416 shares of common stock issued and
outstanding. Following the offering, our authorized capital stock will consist
of 40,000,000 shares of common stock, of which will be issued and
outstanding, and 5,000,000 shares of undesignated preferred stock issuable in
one or more series designated by our board of directors, of which no shares will
be issued and outstanding. At May 23, 2000, there were 47 holders of record of
our common stock.

COMMON STOCK

Voting Rights

The holders of our common stock have one vote per share. Holders of our
common stock are not entitled to vote cumulatively for the election of
directors. Generally, all matters to be voted on by stockholders must be
approved by a majority, or, in the case of election of directors, by a
plurality, of the votes entitled to be cast at a meeting at which a quorum is
present by all shares of common stock present in person or represented by proxy,
voting together as a single class, subject to any voting rights granted to
holders of any then outstanding preferred stock.

Dividends

Holders of common stock will share ratably in any dividends declared by our
board of directors, subject to the preferential rights of any preferred stock
then outstanding. Dividends consisting of shares of common stock may be paid to
holders of shares of common stock.

Other Rights

On liquidation, dissolution or winding up of us, all holders of common
stock are entitled to share ratably in any assets available for distribution to
holders of shares of common stock. No shares of common stock are subject to
redemption or have preemptive rights to purchase additional shares of common
stock.

PREFERRED STOCK

Our certificate of incorporation provides that shares of preferred stock
may be issued from time to time in one or more series. Our board of directors is
authorized to fix the voting rights, if any, designations, powers, preferences,
qualifications, limitations and restrictions thereof, applicable to the shares
of each series. Our board of directors may, without stockholder approval, issue
preferred stock with voting and other rights that could adversely affect the
voting power and other rights of the holders of the common stock and could have
anti-takeover effects. We have no present plans to issue any additional shares
of preferred stock. The ability of our board of directors to issue preferred
stock without stockholder approval could have the effect of delaying, deferring
or preventing a change of control of us or the removal of existing management.

INDEMNIFICATION MATTERS

Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. This provision does not alter a
director's liability under the federal securities laws and does not affect the
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty. Our by-laws provide that directors and officers shall
be, and in the discretion of our board of directors, non-officer employees may

35
<PAGE> 39

be, indemnified by us to the fullest extent authorized by Delaware law, as it
now exists or may in the future be amended, against all expenses and liabilities
reasonably incurred in connection with service for or on our behalf. Our by-laws
also provide that the right of directors and officers to indemnification shall
be a contract right and shall not be exclusive of any other right now possessed
or hereafter acquired under any by-law, agreement, vote of stockholders or
otherwise. We intend to apply for directors' and officers' insurance against
certain liabilities.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us as described
above, we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. At present, there is no pending
material litigation or proceeding involving any of our directors, officers,
employees or agents in which indemnification will be required or permitted.

PROVISIONS OF CERTIFICATE OF INCORPORATION AND BY-LAWS WHICH MAY HAVE
ANTI-TAKEOVER EFFECT

A number of provisions of our certificate of incorporation and by-laws
concern matters of corporate governance and the rights of stockholders. These
provisions, as well as the ability of our board of directors to issue shares of
preferred stock and to set the voting rights, preferences and other terms, may
be deemed to have an anti-takeover effect and may discourage takeover attempts
not first approved by our board of directors, including takeovers which
stockholders may deem to be in their best interests. If takeover attempts are
discouraged, temporary fluctuations in the market price of our common stock,
which may result from actual or rumored takeover attempts, may be inhibited.
These provisions, together with the ability of our board of directors to issue
preferred stock without further stockholder action, also could delay or
frustrate the removal of incumbent directors or the assumption of control by
stockholders, even if the removal or assumption would be beneficial to our
stockholders. These provisions also could discourage or make more difficult a
merger, tender offer or proxy contest, even if favorable to the interests of
stockholders, and could depress the market price of our common stock. Our board
of directors believes that these provisions are appropriate to protect the
interests of the company and our stockholders. Our board of directors has no
present plans to adopt any further measures or devices which may be deemed to
have an "anti-takeover effect."

No Stockholder Action by Written Consent

Our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders at an annual or special meeting of
stockholders must be effected at a duly called meeting and may not be taken or
effected by a written consent of stockholders.

Meetings of Stockholders

Our by-laws provide that a special meeting of stockholders may be called
only by our chairman, if any, the president, the chief executive officer or our
board of directors unless otherwise required by law. Our by-laws provide that
only those matters included in the notice of the special meeting may be
considered or acted upon at that special meeting unless otherwise provided by
law. In addition, our by-laws include advance notice and informational
requirements and time limitations on any director nomination or any new proposal
which a stockholder wishes to make at an annual meeting of stockholders.

Ability to Adopt Stockholder Rights Plan

Our board of directors may in the future resolve to issue shares of
preferred stock or rights to acquire such shares in order to implement a
stockholder rights plan. A stockholder rights plan typically creates voting or
other impediments to discourage persons seeking to gain control of us by means
of a merger, tender offer, proxy contest or otherwise if our board of directors
determines that such change in control is not in the best interests of us and
our stockholders. Our board of directors has no present intention of adopting a
stockholder rights plan and is not aware of any attempt to effect a change in
control of us.

36
<PAGE> 40

Amendment of the Certificate of Incorporation

Any amendment to our certificate of incorporation must first be approved by
a majority of our board of directors and, if required by law, thereafter
approved by a majority of the outstanding shares entitled to vote with respect
to such amendment, except that any amendment to the provisions relating to
stockholder action, directors, limitation of liability and the amendment of our
certificate of incorporation must be approved by a super-majority of the
outstanding shares entitled to vote with respect to such amendment.

Amendment of By-laws

Our certificate of incorporation and by-laws provide that our by-laws may
be amended or repealed by our board of directors or by the stockholders. Such
action by the board of directors requires the affirmative vote of a majority of
the directors then in office. Such action by the stockholders requires the
affirmative vote of at least two-thirds of the shares present in person or
represented by proxy at an annual meeting of stockholders or a special meeting
called for such purpose unless our board of directors recommends that the
stockholders approve such amendment or repeal at such meeting, in which case
such amendment or repeal shall only require the affirmative vote of a majority
of the shares present in person or represented by proxy at the meeting.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock will be
.

37
<PAGE> 41

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, there will be outstanding
shares of our common stock, or shares of our common stock if the
underwriters' over-allotment option is exercised in full, including 759,366
shares of common stock issuable upon the automatic conversion of the Series A
preferred stock upon completion of this offering. Of such shares,
shares of common stock sold in this offering, or
shares if the underwriters' over-allotment option is exercised in full, will be
freely transferable without restriction if purchased by persons other than our
affiliates.

We have agreed to file a registration statement covering resales of the
759,366 shares of common stock issuable upon the automatic conversion of our
Series A preferred stock, and to use our best efforts to have that registration
statement declared effective, within 90 days of the date of this prospectus.
Sales of shares of common stock by the selling stockholders may have an adverse
effect on the market price of our common stock.

The remaining 22,849,416 shares of common stock will be "restricted
securities" under Rule 144. These shares may be sold in the future without
registration under the Securities Act to the extent permitted by Rule 144,
pursuant to another exemption from registration under the Securities Act or
under an effective registration statement. As currently in effect, Rule 144
provides that any person, or persons whose shares are aggregated, holding
restricted securities, who has beneficially owned the shares for at least one
year, is entitled to sell within any three-month period the number of shares
that does not exceed the greater of 1% of the then outstanding shares of the
common stock (approximately shares after the offering and giving
effect to the conversion of the Series A preferred stock) and the reported
average weekly trading volume of the then outstanding shares of common stock
during the four calendar weeks immediately preceding the date on which the
notice of sale is filed with the Securities and Exchange Commission. Sales under
Rule 144 also are subject to certain provisions relating to the manner and
notice of sale and the availability of current public information about us. A
person, or persons whose shares are aggregated, who is not deemed one of our
affiliates at any time during the 90 days immediately preceding a sale and who
has beneficially owned the shares for at least two years, would be entitled to
sell such shares under Rule 144(k) without regard to the volume limitation and
the other conditions mentioned above.

We cannot predict the effect that any future sales of shares of common
stock, or the availability of such shares for sale, will have on the market
price of the common stock from time to time. We believe that sales of
substantial numbers of shares of common stock, or the perception that such sales
could occur, would adversely affect prevailing market prices of the common stock
and our ability to raise capital in the future through the sale of additional
securities.

In addition to the outstanding shares of common stock, and the shares
issuable upon the conversion of the Series A preferred stock upon the completion
of this offering, we have reserved a total of [ ] shares of common stock
for issuance upon exercise of outstanding options. Shares of common stock
issuable in the future could hinder future financings.

LOCK-UP AGREEMENTS

In connection with this offering, our existing officers, directors and
stockholders, except for those persons who will receive common stock upon the
automatic conversion of the Series A preferred stock, who hold all of the
currently outstanding shares of common stock, have agreed with the underwriters
that, subject to limited exceptions, they will not sell or dispose of any of
their shares for 180 days after the date of this prospectus. Morgan Keegan &
Company, Inc. may, in its sole discretion and at any time without notice,
release all or any portion of the shares subject to such restrictions. We have
agreed to use our best efforts to register for resale commencing 90 days from
the date of this prospectus the shares of common stock issuable upon conversion
of the Series A preferred stock.

We have agreed not to sell or otherwise dispose of any shares of common
stock during the 180-day period following the date of this prospectus, except we
may issue, and grant options to purchase, shares of common stock under our stock
option plan.

38
<PAGE> 42

UNDERWRITING

Under an underwriting agreement, Morgan Keegan & Company, Inc. is acting as
representative of the underwriters named below. Under the underwriting
agreement, each of the underwriters has severally agreed to purchase from us the
respective number of shares of common stock set forth opposite its name below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ------------ ---------
<S> <C>
Morgan Keegan & Company, Inc. ..............................

--------
Total.............................................
========
</TABLE>

The underwriting agreement provides that the underwriters' obligations to
purchase shares are subject to conditions contained in the underwriting
agreement, and that if any of the shares are purchased by any underwriter under
the underwriting agreement, then all of the shares that such underwriter has
agreed to purchase under the underwriting agreement must be purchased. The
conditions contained in the underwriting agreement include the requirement that
the representations and warranties made by us to the underwriter are true, that
there is no material change in the financial markets and that we deliver to the
underwriters customary closing documents.

The underwriters have advised us that they propose to offer the shares
directly to the public at the public offering price set forth on the cover page
of this prospectus and to dealers at the public offering price less a selling
concession not in excess of per share. The underwriters may allow, and the
dealers may re-allow, a concession not in excess of per share to brokers
and dealers. After the offering, the underwriters may change the offering price
and other selling terms.

We have granted to the underwriters an option to purchase up to an
additional shares, exercisable solely to cover over-allotments, if any, at
the public offering price less the underwriting discounts and commissions shown
on the cover page of this prospectus. The underwriters may exercise this option
at any time until 30 days after the date of the underwriting agreement. To the
extent that the underwriters exercise this option, each underwriter will be
committed, subject to conditions, to purchase the additional shares, and the
company will be obligated under the over-allotment option to sell the shares to
the underwriter.

The following table shows the per share and total public offering price,
the underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us. This information is presented assuming either no exercise
or full exercise by the underwriters of their over-allotment option.

<TABLE>
<CAPTION>
PER WITHOUT WITH
SHARE OPTION OPTION
-------- -------- --------
<S> <C> <C> <C>
Public offering price..............................
Underwriting discount..............................
Proceeds before expenses...........................
</TABLE>

We estimate our expenses relating to the offering to be $ . We will
pay to the underwriters underwriting discounts and commissions in an amount
equal to the public offering price per share of common stock less the amount the
underwriters pay to us for each share of common stock.

39
<PAGE> 43

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute payments that
the underwriters may be required to make with respect to these liabilities.

For a period ending 180 days from the date of this prospectus, we and our
executive officers and directors and certain of our stockholders have agreed
that, without the prior written consent of Morgan Keegan & Company, Inc., we
will not:

- offer, pledge, sell, contract to sell or sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock, or

- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock, whether any such transaction described above is to be settled by
delivery of common stock or other securities, in cash or otherwise.

In addition, during this 180-day period, we have also agreed not to file
any registration statement for the registration of any shares of common stock or
any securities convertible into or exercisable or exchangeable for common stock
without the prior written consent of Morgan, Keegan & Company, Inc. We have
agreed to use our best efforts to register for resale commencing 90 days from
the date of this prospectus the shares of common stock issuable upon conversion
of the Series A preferred stock.

At our request, the underwriters have reserved up to 10% of the shares
offered hereby for sale at the initial public offering price to certain of our
employees, directors and members of their immediate families. These persons must
commit to purchase after the registration statement has become effective, but
before the open of business on the following day. The number of shares available
for sale to the general public will be reduced to the extent these individuals
purchase such reserved shares. Any reserved shares not purchased will be offered
by the underwriters to the general public on the same basis as the other shares
offered hereby.

In connection with this offering, the underwriters may engage in
transactions that stabilize or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot this offering, creating a
syndicate short position. The underwriters may also bid for and purchase shares
of common stock in the open market to cover syndicate short positions or to
stabilize the price of the common stock. In addition, the underwriting syndicate
may reclaim concessions from syndicate members and selected dealers if they
repurchase previously distributed common stock in syndicate covering
transactions, in stabilizing transactions or otherwise. These activities may
stabilize or maintain the market price of the common stock above independent
market levels. The underwriters are not required to engage in these activities
and may end any of these activities at any time.

Neither we nor the underwriters make any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the shares. In addition, neither we nor the
underwriters make any representation that the underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.

Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of common stock
included in this offering in any jurisdiction where action for that purpose is
required. The shares of common stock included in this offering may not be
offered or sold, directly or indirectly, nor may this prospectus or any other
offering material or advertisements in connection with the offer and sales of
any shares of common stock be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with the applicable
rules and regulations of that jurisdiction. Persons who receive this prospectus
are advised to inform themselves about and to observe any restrictions relating
to this offering of our common stock and the distribution of this prospectus.
This prospectus is not an offer to sell or a solicitation of any offer to buy

40
<PAGE> 44

any shares of common stock included in this offering in any jurisdiction where
that would not be permitted or legal.

Prior to this offering, there has been no established market for our common
stock. The initial public offering price for the shares of common stock offered
by this prospectus will be determined by negotiation between us and the
representative of the underwriters. The factors to be considered in determining
the initial public offering price include the following:

- the history and the prospects for the industry in which we compete,

- our past and present operations,

- our historical results of operations,

- our prospects for future operating results,

- the recent market prices of securities of generally comparable companies,
and

- general conditions of the securities market at the time of this offering.

Application will be made to list our common stock on the Nasdaq National
Market under the symbol "MCEL." In order to meet the requirements for listing
the common stock on the Nasdaq National Market, the underwriters have undertaken
to sell lots of 100 or more shares to a minimum of 2,000 beneficial owners.

41
<PAGE> 45

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by Baker & McKenzie. Various legal matters related to the sale of
the common stock offered hereby will be passed upon for the underwriters by
Vinson & Elkins L.L.P.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1999 and for the year then ended as set forth in
their report. We have included our financial statements in the prospectus, and
elsewhere in the registration statement, in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including the exhibits and schedules thereto) under the
Securities Act and the rules and regulations thereunder, for the registration of
the common stock offered hereby. This prospectus is part of the registration
statement. For further information about us and our common stock, you should
refer to the registration statement. Statements contained in this prospectus as
to any contract, agreement or other document referred to are not necessarily
complete. Where the contract or other document is an exhibit to the registration
statement, each statement is qualified by the provisions of that exhibit.

You can inspect and copy all or any portion of the registration statement
or any reports, statements or other information we file at the public reference
facility maintained by the Securities and Exchange Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may call the Securities
and Exchange Commission at 1-800-SEC-0330 for further information about the
operation of the public reference rooms. Copies of all or any portion of the
registration statement can be obtained from the public reference section of the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, the registration statement is publicly
available through the Securities and Exchange Commission's Internet site located
at www.sec.gov.

42
<PAGE> 46

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-2
Balance Sheet as of December 31, 1999 and March 31, 2000
(unaudited)............................................... F-3
Statement of Operations for the Year ended December 31,
1999, the three months ended March 31, 1999 (unaudited)
the three months ended March 31, 2000 (unaudited), and
cumulative amounts from inception (unaudited)............. F-4
Statement of Stockholders' equity for the Year Ended
December 31, 1999 and the three months ended March 31,
2000 (unaudited).......................................... F-5
Statement of Cash Flows for the Year ended December 31,
1999, the three months ended March 31, 1999 (unaudited),
the three months ended March 31, 2000 (unaudited) and
cumulative amounts from inception (unaudited)............. F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 47

REPORT OF INDEPENDENT AUDITORS

The Managing Members
Millennium Cell LLC

We have audited the accompanying balance sheet of Millennium Cell LLC (a
development stage company) as of December 31, 1999, and the related statements
of operations, stockholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Millennium Cell LLC at
December 31, 1999 and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States.

The accompanying financial statements have been prepared assuming
Millennium Cell LLC will continue as a going concern. As more fully described in
Note 2, the Company is a development stage company, and accordingly, has
generated no revenue and incurred operating losses since inception and these
conditions raise substantial doubt about the Company's ability to continue as
going concern. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

New York, New York
May 5, 2000

F-2
<PAGE> 48

MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 42,165 $ 56,174
Prepaid expenses.......................................... 10,815
----------- -----------
Total current assets........................................ 42,165 66,989
Property and equipment, net................................. 386,587 459,758
Intangible assets, net...................................... 454,799 447,767
Other assets................................................ 63,225 63,725
----------- -----------
$ 946,776 $ 1,038,239
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 41,700 $ 21,645
Accrued expenses.......................................... 12,432 41,262
Due to affiliate.......................................... 30,000 44,108
Note payable to affiliate................................. 250,000 250,000
----------- -----------
Total current liabilities................................... 334,132 357,015

Refundable grant obligation................................. 193,622 193,622

Commitments and contingencies

Stockholders' equity:
Common stock, $.001 par value; authorized 40,000,000
shares and 22,849,416 shares issued and outstanding.... 22,849 22,849
Additional paid-in capital................................ 1,477,151 1,977,151
Deficit accumulated during development stage.............. (1,080,978) (1,512,398)
----------- -----------
Total stockholders' equity.................................. 419,022 487,602
----------- -----------
$ 946,776 $ 1,038,239
=========== ===========
</TABLE>

See accompanying notes.
F-3
<PAGE> 49

MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED CUMULATIVE
YEAR ENDED MARCH 31, AMOUNTS
DECEMBER 31, -------------------------- FROM
1999 1999 2000 INCEPTION
------------ ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenue.................................. $ -- $ -- $ -- $ --
Cost of revenue.......................... -- -- -- --
Product development and engineering...... 820,128 151,589 284,419 1,104,547
General and administrative............... 164,953 6,939 113,528 278,481
Depreciation and amortization............ 106,708 12,500 34,717 141,425
----------- --------- --------- -----------
Total operating expenses................. 1,091,789 171,028 432,664 1,524,453
----------- --------- --------- -----------
Loss from operations..................... (1,091,789) (171,028) (432,664) (1,524,453)
Interest income, net..................... 10,811 -- 1,244 12,055
----------- --------- --------- -----------
Net loss................................. $(1,080,978) $(171,028) $(431,420) $(1,512,398)
=========== ========= ========= ===========
Loss per share -- basic and diluted...... $ (.05) $ (.01) $ (.02) $ (.07)
=========== ========= ========= ===========
Weighted-average number of shares
outstanding............................ 22,849,416 22,849,416 22,849,416 22,849,416
=========== ========= ========= ===========
</TABLE>

See accompanying notes.
F-4
<PAGE> 50

MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
---------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Inception.................... -- $ -- $ -- $ -- $ --
Issuance of Common Stock... 22,849,416 22,849 1,477,151 -- 1,500,000
Net loss................... -- -- -- (1,080,978) (1,080,978)
---------- ------- ---------- ----------- -----------
Balance at December 31,
1999....................... 22,849,416 22,849 1,477,151 (1,080,978) 419,022
Capital contribution......... -- -- 500,000 -- 500,000
Net loss..................... (431,420) (431,420)
---------- ------- ---------- ----------- -----------
Balance at March 31, 2000.... 22,849,416 $22,849 $1,977,151 $(1,512,398) $ 487,602
========== ======= ========== =========== ===========
</TABLE>

See accompanying notes.
F-5
<PAGE> 51

MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED MARCH 31 CUMULATIVE
DECEMBER 31, --------------------------- AMOUNTS FROM
1999 1999 2000 INCEPTION
------------ ------------ ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................ $(1,080,978) $ (171,028) $(431,420) $(1,512,398)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation.......................... 43,504 -- 20,688 64,192
Amortization.......................... 63,204 12,500 14,030 77,234
Changes in operating assets and
liabilities:
Prepaid expenses................... -- (10,815) (10,815)
Other assets....................... (63,225) -- (500) (63,725)
Accounts payable................... 41,700 7,839 (20,055) 21,645
Accrued expenses................... 12,432 -- 28,830 41,262
Due to affiliate................... 30,000 30,000 14,108 44,108
----------- ---------- --------- -----------
Net cash used in operating activities... (953,363) (120,689) (385,134) (1,338,497)
INVESTING ACTIVITIES
Purchase of property and equipment...... (330,091) -- (93,859) (423,950)
Patent registration costs............... (118,003) (25,880) (6,998) (125,001)
----------- ---------- --------- -----------
Net cash used in investing activities... (448,094) (25,880) (100,857) (548,951)
FINANCING ACTIVITIES
Proceeds from sale of stock............. 1,250,000 925,000 500,000 1,750,000
Proceeds from grant..................... 193,622 193,622
----------- ---------- --------- -----------
Net cash provided by financing
activities............................ 1,443,622 925,000 500,000 1,943,622
----------- ---------- --------- -----------
Net increase in cash and cash
equivalents........................... 42,165 778,431 14,009 56,174
Cash and cash equivalents, at
inception............................. -- -- 42,165 --
----------- ---------- --------- -----------
Cash and cash equivalents, end of
period................................ $ 42,165 $ 778,431 $ 56,174 $ 56,174
=========== ========== ========= ===========
</TABLE>

NON-CASH TRANSACTIONS

In January 1999, the Company received patents and equipment from GP
Strategies ("GPS") in exchange for $250,000 of equity of the Company and entered
into a note payable to GPS for $250,000.

See accompanying notes.
F-6
<PAGE> 52

MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION AND DESCRIPTION OF BUSINESS

Millennium Cell LLC (the "Company") was incorporated on December 17, 1998
and organized on January 1, 1999 as a limited liability company with an initial
capital contribution of $1.5 million. In general, the members are not personally
liable for any liabilities of the Company, and the common unit holders share in
the profits and losses of the Company on a pro rata basis. (See also Note 2)

The Company is a development stage company, as defined in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by Development
Stage Enterprises." The Company was formed based on an invented, patented and
developed proprietary chemical process ("Invention") that generates hydrogen and
electricity from safe, environmentally friendly raw materials. The Company's
core capability is in the design of a sodium borohydride process which can
generate hydrogen as a high-energy fuel for the transportation and fuel cell
markets. The Company has also designed and produced prototype direct fuel cells
and batteries that utilize the sodium borohydride process to provide electricity
for the portable and stationary power markets.

On December 17, 1998, the Company entered into an agreement ("Agreement")
with GP Strategies Corporation ("GPS") pursuant to which substantially all of
the assets of its Battery Technology Group (which consisted only of a license
("License"), equipment and four employees) were exchanged for equity of the
Company and a note payable to GPS for $250,000.

The License covers the use of the Invention to make, use and sell licensed
products within the licensed territory in perpetuity. The Agreement includes a
royalty (see Note 9) based on annual sales of the Company relating to products
manufactured or produced using the Invention.

NOTE 2 -- BASIS OF PRESENTATION

The Company has incurred an operating loss and negative cash flows since
inception and expects to incur additional operating losses and negative cash
flows in the future as it continues to develop technology. The Company's
financial statements have been presented on the basis that it is a going
concern, which contemplates continuity of operations, realization of assets and
the satisfaction of liabilities in the normal course of business. The Company's
continued existence, however, is dependent on its ability to obtain additional
financing in the next fiscal year and successful commercial development of a
marketable product. These circumstances raise substantial doubt about the
Company's ability to continue as a going concern. Management plans to obtain
additional financing in the next fiscal year through private and public equity
offerings to continue operations, including the ongoing development of
technology. The Company has obtained preferred equity financing totalling
approximately $2.2 million in May 2000. Additionally, the Company plans to raise
additional financing through an initial public offering in the third quarter of
2000.

There can be no assurance that the Company will achieve its operating plan
or that it will be able to obtain financing to provide the liquidity necessary
for the Company to continue its operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

The unaudited interim financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair statement of the results
for the interim periods presented.

The Company is authorized to issue 10,000 units. Each unit holder is
entitled to one vote for each unit held, and to receive dividends if and when
declared by the Managing Members.

On April 25, 2000, the Company converted from a limited liability company
to a C corporation with one class of common stock and one class of preferred
stock. All of the outstanding equity interests of the
F-7
<PAGE> 53
MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

limited liability company were converted on a one for one basis into shares of
common stock of the new corporation. As of April 25, 2000 a 2,405 for one stock
split of the outstanding common stock was also completed. All membership unit
amounts in the accompanying financial statements have been restated to reflect
the aforementioned conversion.

In connection with this conversion, the Company would then be subject to
state and federal income taxes and will account for income taxes under SFAS 109,
"Accounting for Income Taxes". Net deferred tax assets would be fully reserved
with a valuation allowance due to the uncertainty regarding the realization of
such deferred tax assets.

NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all highly-liquid instruments purchased with an
initial maturity of three months or less to be cash equivalents.

Other Assets

Other assets primarily consists of deposits with certain vendors and
landlords.

Property and Equipment

Property and equipment are stated at cost. The Company provides for
depreciation and amortization using the straight-line method over their
estimated useful lives as follows:

<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
- -------------------- -----------
<S> <C>
Machinery and equipment..................................... 5 years
Furniture and fixtures...................................... 5 years
Leasehold improvements...................................... 5 years
</TABLE>

Leasehold improvements are amortized over the estimated useful lives of the
assets or related lease term, whichever is shorter.

Repairs and maintenance are charged to expense as incurred.

Long-Lived Assets

The Company tests its long-lived assets for impairment at each balance
sheet date. If impairment is indicated, the asset is written down to its fair
value based on the present value of estimated future cash flows. To date, no
impairments have occurred.

Patents

Certain costs associated with obtaining and licensing patents are
capitalized as incurred and are amortized on a straight-line basis over their
estimated useful lives up to 17 years. Amortization of such costs begins once
the patent has been issued. Costs associated with patents are capitalized as
incurred and amortized over the remaining life. The Company evaluates the
recoverability of its patent costs at each balance sheet date based on estimated
undiscounted future cash flows.

F-8
<PAGE> 54
MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Earnings Per Share

Basic earnings per share (EPS) is computed by dividing income available to
common stockholders by the weighted average number of common shares actually
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company. Basic and diluted EPS
were the same for all periods presented herein.

Income Taxes

The Company is organized as a limited liability company, which is treated
as a partnership for federal income tax purposes. Accordingly, no provision for
federal income tax and no provision for state income tax in states recognizing
the limited liability company (i.e., partnership) tax status is required. (Also
see Note 2)

Use of Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NOTE 4 -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1999:

<TABLE>
<S> <C>
Machinery and equipment..................................... $321,211
Furniture and fixtures...................................... 38,878
Leasehold improvements...................................... 70,002
--------
430,091
Accumulated depreciation.................................... (43,504)
--------
Property and equipment, net................................. $386,587
========
</TABLE>

NOTE 5 -- INTANGIBLE ASSETS

Patent and license costs consist of the following at December 31, 1999:

<TABLE>
<S> <C>
Patent and license costs.................................... $518,003
Less accumulated amortization............................... (63,204)
--------
$454,799
========
</TABLE>

NOTE 6 -- GRANT OBLIGATION

In April 1999, the Company received a recoverable grant award from the
State of New Jersey Commission on Science and Technology ("NJS&T"). The funds
were used to partially fund costs directly related to the Borohydride Fuel Cell
technology development. The recoverable grant is only required to be repaid to
NJS&T upon the Company generating net income in a fiscal year. The repayment
obligation ranges from 1% to 5% of net income over a ten year period and shall
not exceed 200% of the original grant. The original grant amount has been
recorded as a liability at December 31, 1999. Additional

F-9
<PAGE> 55
MILLENNIUM CELL LLC
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

liability, if any, will be recorded upon the attainment of net income in excess
of the amount required to establish such additional liability.

NOTE 7 -- PAYABLE TO AFFILIATE

In connection with the GPS Agreement, the Company entered into a 6% note
payable to GPS, which is payable with interest on September 25, 2001.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES

The Company leases office space under an operating lease that expires
September 30, 2004. Future minimum lease payments under the operating lease
relates to the Company's principal office. The lease requires the Company to pay
its allocated share of taxes and operating cost in addition to the annual base
rent payment. Future minimum annual lease commitments under the operating lease
at December 31, 1999 are as follows:

Rent expense was approximately $23,000 for the year ended December 31,
1999.

In connection with the Agreement, the Company agreed to make the following
royalty payments to GPS, based on eventual sales derived from the Invention: 5%
of the first $10 million of sales, 4% of the second $15 million of sales, 2 1/2%
of the third $25 million of sales and 1% of any sales thereafter. The Company
also agreed with GP Strategies to negotiate in good faith at a future date to
exchange the royalty payments for an equity interest in the Company.

NOTE 9 -- SUBSEQUENT EVENTS (UNAUDITED)

On April 25, 2000, the Company converted from a limited liability company
to a C corporation. The new corporation is authorized to issue a total of
45,000,000 shares of which 40,000,000 will be common stock and 5,000,000 will be
preferred.

In the first quarter of 2000 the members made a capital contribution in the
amount of $500,000 to the Company to fund additional working capital
requirements.

In May 2000, in exchange for approximately $2.2 million, the Company sold
759,336 shares of Series A preferred stock, which will automatically convert
into 759,336 shares of common stock upon completion of the Company's planned
initial public equity offering. The holders of each share of Series A preferred
stock shall have the right to one vote for each share of common stock.

F-10
<PAGE> 56

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 2000

[MILLENIUM CELL LOGO]

SHARES OF COMMON STOCK

------------------------
PROSPECTUS
------------------------

MORGAN KEEGAN & COMPANY, INC.

------------------------

We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Millennium
Cell Inc. have not changed since the date hereof.

------------------------

Until , 2000 (25 days after the date of this prospectus), all
dealers that effect transactions in these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 57

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated costs and expenses, other than
the underwriting discount, payable by the registrant in connection with the sale
of the common stock being registered.

<TABLE>
<S> <C>
SEC registration fee........................................ $10,560
NASD filing fee............................................. 4,500
Nasdaq National Market listing fee.......................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Printing and expenses....................................... *
Miscellaneous............................................... *
-------
Total..................................................... *
=======
</TABLE>

- ---------------
* To be furnished by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

In accordance with Section 145 of the Delaware General Corporation Law,
Article 11 of our certificate of incorporation provides that no director of
Millennium Cell shall be personally liable to Millennium Cell or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to
Millennium Cell or its stockholders, (2) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (3) in
respect of unlawful dividend payments or stock redemptions or repurchases or (4)
for any transaction from which the director derived an improper personal
benefit.

Article V of our by-laws provides for indemnification by Millennium Cell of
its officers and certain non-officer employees under certain circumstances
against expenses, including attorneys fees, judgments, fines and amounts paid in
settlement, reasonably incurred in connection with the defense or settlement of
any threatened, pending or completed legal proceeding in which any such person
is involved by reason of the fact that such person is or was an officer or
employee of the registrant if such person acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
Millennium Cell, and, with respect to criminal actions or proceedings, if such
person had no reasonable cause to believe his or her conduct was unlawful.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since its formation in December 1998, Millennium Cell has issued the
following securities that were not registered under the Securities Act of 1933,
as amended (the "Securities Act"). Millennium Cell relied on Section 4(2) of the
Securities Act or Regulation D promulgated thereunder relative to sales by an
issuer not involving a public offering.

In December 1998, Millennium Cell LLC issued membership interests for an
aggregate purchase price of $1.5 million to nine accredited investors. In April
2000, Millennium Cell LLC was converted into a Delaware corporation and these
membership interests were converted into 22,849,416 shares of common stock
(giving effect to the 2,405-for-one stock split effected in April 2000).

In May 2000, Millennium Cell Inc. issued an aggregate of 759,366 shares of
its Series A Convertible Preferred Stock to 14 accredited investors at a
purchase price of $2.90 per share for cash proceeds in the amount of $2.2
million.

II-1
<PAGE> 58

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
1.1* -- Underwriting Agreement
2.1 -- Certificate of Conversion of Millennium Cell LLC to
Millenium Cell Inc.
3.1 -- Certificate of Incorporation of Millennium Cell Inc.
3.2 -- By-Laws of Millennium Cell Inc.
4.1 -- Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and
Restrictions of Series A Convertible Preferred Stock of
Millennium Cell Inc.
4.2* -- Specimen stock certificate representing the Registrant's
Common Stock
5.1* -- Opinion of Baker & McKenzie regarding the legality of the
securities being registered
10.1 -- Agreement for Recoverable Grant Award, dated as of April
1999, by and between State of New Jersey Commission on
Science and Technology and Millennium Cell LLC
10.2 -- Flex/Office Lease Agreement, dated as of June 9, 1999, by
and between Ten Thirty-Five Associates, Limited Partnership
and Millennium Cell LLC
10.3 -- Agreement, dated as of May 24, 2000, by and among Millennium
Cell Inc., GP Strategies Corporation and Steven Amendola
10.4 -- Assignment, dated as of May 24, 2000, by Steven Amendola in
favor of Millennium Cell Inc.
10.5 -- Employment Agreement, dated as of May 16, 2000, by and
between Stephen S. Tang and Millennium Cell Inc.
10.6* -- Employment Agreement, dated as of 2000, by
and between Steven C. Amendola and Millenium Cell Inc.
10.7 -- Form of Millennium Cell Inc. 2000 Stock Option Plan
23.1 -- Consent of Ernst & Young L.L.P.
23.2* -- Consent of Baker & McKenzie (included in Exhibit 5.1)
24.2 -- Powers of Attorney (included on Page II-4)
27.1 -- Financial Data Schedule
</TABLE>

- ---------------
* To be filed by amendment.

(b) FINANCIAL STATEMENT SCHEDULES.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate

II-2
<PAGE> 59

jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act of 1933, shall be deemed to be part
of this registration statement as of the time it was declared effective.

(2) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 60

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Eatontown, state of New
Jersey, on May 25, 2000.

MILLENNIUM CELL INC.

By: /s/ STEPHEN S. TANG
--------------------------------------
Name: Stephen S. Tang
Title: Chief Executive Officer and
President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen S. Tang and Steven C. Amendola, or either
of them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments and amendments pursuant to Rule 462 under the Securities Act of 1933)
to this Registration Statement, and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes may lawfully do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ STEPHEN S. TANG Chief Executive Officer, May 25, 2000
- --------------------------------------------------- President and Director (Principal
Stephen S. Tang Executive, Accounting and
Financial Officer)

/s/ STEVEN C. AMENDOLA Director May 25, 2000
- ---------------------------------------------------
Steven C. Amendola

/s/ G. CHRIS ANDERSEN Director May 25, 2000
- ---------------------------------------------------
G. Chris Andersen

/s/ WILLIAM H. FIKE Director May 25, 2000
- ---------------------------------------------------
William H. Fike

/s/ ALEXANDER MACLACHLAN Director May 25, 2000
- ---------------------------------------------------
Alexander MacLachlan

/s/ ZOLTAN MERSZEI Director May 25, 2000
- ---------------------------------------------------
Zoltan Merszei

Director
- ---------------------------------------------------
James L. Rawlings
</TABLE>

II-4
<PAGE> 61

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
1.1* -- Underwriting Agreement
2.1 -- Certificate of Conversion of Millennium Cell LLC to
Millennium Cell Inc.
3.1 -- Certificate of Incorporation of Millennium Cell Inc.
3.2 -- By-Laws of Millennium Cell Inc.
4.1 -- Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and
Restrictions of Series A Convertible Preferred Stock of
Millennium Cell Inc.
4.2* -- Specimen stock certificate representing the Registrant's
Common Stock
5.1* -- Opinion of Baker & McKenzie regarding the legality of the
securities being registered
10.1 -- Agreement for Recoverable Grant Award, dated as of April
1999, by and between State of New Jersey Commission on
Science and Technology and Millennium Cell LLC
10.2 -- Flex/Office Lease Agreement, dated as of June 9, 1999, by
and between Ten Thirty-Five Associates, Limited Partnership
and Millennium Cell LLC
10.3 -- Agreement, dated as of May 24, 2000, by and among Millennium
Cell Inc., GP Strategies Corporation and Steven Amendola
10.4 -- Assignment, dated as of May 24, 2000, by Steven Amendola in
favor of Millennium Cell Inc.
10.5 -- Employment Agreement, dated as of May 16, 2000, by and
between Stephen S. Tang and Millennium Cell Inc.
10.6* -- Employment Agreement, dated as of 2000, by
and between Steven C. Amendola and Millenium Cell Inc.
10.7 -- Form of Millennium Cell Inc. 2000 Stock Option Plan
23.1 -- Consent of Ernst & Young L.L.P.
23.2* -- Consent of Baker & McKenzie (included in Exhibit 5.1)
24.2 -- Powers of Attorney (included on Page II-4)
27.1 -- Financial Data Schedule
</TABLE>

- ---------------
* To be filed by amendment.

<PAGE> 1
CERTIFICATE OF CONVERSION

OF A LIMITED LIABILITY COMPANY

TO A CORPORATION

Pursuant to Section 265 of the General Corporation Law of the
State of Delaware, it is hereby certified that:

1. The limited liability company Millennium Cell, LLC is
formed under the laws of the State of Delaware.

2. The date the limited liability company Millennium Cell, LLC
was first formed is December 17, 1998.

3. The name of the limited liability company immediately prior
to the filing of this Certificate is Millennium Cell, LLC.

4. The name of the corporation into which the company shall be
converted is Millennium Cell Inc.

The conversion herein certified has been approved in
accordance with the provisions of Section 265 of the General Corporation Law of
the State of Delaware.

Dated: April 19, 2000

- -------------------------------------
James L. Rawlings, Manager

<PAGE> 1
EXHIBIT 3.1

CERTIFICATE OF INCORPORATION

MILLENNIUM CELL INC.

1. The name of the corporation is Millennium Cell Inc. (the
"Corporation").

2. The address of its registered office in the State of Delaware
is: c/o Corporation Service Company, 1013 Centre Road, in the City of
Wilmington, County of New Castle, Delaware 19805. The name of its registered
agent at such address is Corporation Service Company.

3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.

4. The Corporation is authorized to issue two classes of stock to
be designated, respectively, "Common Stock" and "Preferred Stock". The total
number of shares which the Corporation is authorized to issue is 45,000,000
shares. 40,000,000 shall be Common Stock, par value $0.001 per share, 5,000,000
shall be Preferred Stock, par value $0.001 per share.

5. The Preferred Stock may be issued from time to time in one or
more series. The board of directors of the Corporation ("Board of Directors") is
hereby expressly authorized to provide, by resolution or resolutions duly
adopted by it prior to issuance, for the creation of each such series and to fix
the designation and the powers, preferences, rights, qualifications, limitations
and restrictions relating to the shares of each such series. The authority of
the Board of Directors with respect to each series of Preferred Stock shall
include, but not be limited to, determining the following:

(a) the designation of such series, the number of shares to
constitute such series and the stated value if different from the par value
thereof;

(b) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the terms
of such voting rights, which may be general or limited;

(c) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, and the preference or
relation which such dividends shall bear to the dividends payable on any shares
of stock of any other class or any other series of Preferred Stock;

(d) whether the shares of such series shall be subject to
redemption by the corporation, and, if so, the times, prices and other
conditions of such redemption;
<PAGE> 2
(e) the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution of
the assets, of the Corporation;

(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and the
manner in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for retirement or other
corporate purposes and the terms and provisions relating to the operation
thereof;

(g) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any other
series of Preferred Stock or any other securities and, if so, the price or
prices or the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;

(h) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of dividends or
the making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of Preferred Stock;

(i) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of Preferred
Stock or of any other class; and

(j) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions, thereof.

The powers, preferences and relative, participating, optional and
other special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series any time outstanding. All shares of any one series of Preferred
Stock shall be identical in all respects with all other shares of such series,
except that shares of any one series issued at different times may differ as to
the dates from which dividends thereof shall be cumulative.

6. The name and mailing address of the incorporator is as follows:

NAME MAILING ADDRESS

Laszlo Serester c/o Baker & McKenzie
805 Third Avenue
New York, NY 10022

7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or repeal
the by-laws of the Corporation.

- 2 -
<PAGE> 3
8. Elections of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.

9. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.

10. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

11. No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law or (iv) for any transaction from which the director derived an improper
personal benefit.

I, Laszlo Serester, being the incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and affirming,
under penalties of perjury, that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 25th day of
April, 2000.

/s/ Laszlo Serester
-------------------------
Laszlo Serester
Incorporator

- 3 -

<PAGE> 1
EXHIBIT 3.2

BY-LAWS

MILLENNIUM CELL INC.

ARTICLE I

STOCKHOLDERS

Section 1.1. Annual Meeting. The Annual Meeting of Stockholders shall
be held each year at the place, date and time determined by the Board of
Directors. The purposes for which the annual meeting is to be held, in addition
to those prescribed by law, by the Certificate of Incorporation or by these
By-laws, may be specified by the Board of Directors or the Chief Executive
Officer and President. If no annual meeting has been held on the date fixed
above, a special meeting in lieu thereof may be held, and such special meeting
shall have, for the purposes of these By-laws or otherwise, all the force and
effect of an annual meeting.

Section 1.2. Special Meetings. Special meetings of the stockholders may
be called at any time by the Chief Executive Officer and President or the Board
of Directors.

Section 1.3. Notice of Meetings. A written notice stating the place,
date and hour of the Annual Meeting of Stockholders shall be given by the
Secretary (or other person authorized by these By-laws or by law) not less than
ten, nor more than sixty, days before the meeting to each stockholder entitled
to vote thereat, and to each stockholder who, under the Certificate of
Incorporation or under these By-laws, is entitled to such notice, by delivering
such notice to him or by mailing it, postage prepaid, and addressed to such
stockholder at his address as it appears in the records of the Corporation.
Notice need not be given to a stockholder if a written waiver of notice is
executed before or after the meeting by such stockholder, if communication with
such stockholder is unlawful, or if such stockholder attends the meeting in
question, unless such attendance was for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting was not lawfully called or convened.

Notice of Special Meetings shall be given in the same manner as
provided for Annual Meetings, except that the written notice of Special Meetings
shall state clearly and briefly the purpose or purposes for which the meeting is
called. Only such purposes shall be considered or dealt with at Special
Meetings.

Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in the written
waiver of notice.

If a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place are announced at the
meeting at which the adjournment is taken, except that if the adjournment is for
more than thirty days, or if after the adjournment a
<PAGE> 2
new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.

Section 1.4. Quorum. The holders of a majority in interest of all stock
issued, outstanding and entitled to vote at a meeting shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority of the votes
properly cast upon the question, whether or not a quorum is present.

Section 1.5. Voting and Proxies. Stockholders shall have one vote for
each share of stock entitled to vote owned by them of record according to the
books of the corporation unless otherwise provided by law or by the Certificate
of Incorporation. Stockholders may vote either in person or by written proxy,
but no proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. Proxies shall be filed with the
Secretary of the meeting, or of any adjournment thereof. Except as otherwise
limited therein, proxies shall entitle the persons authorized thereby to vote at
any adjournment of such meeting. A proxy purporting to be executed by, or on
behalf of, a stockholder shall be deemed valid unless challenged at or prior to
its exercise, and the burden of proving invalidity shall rest on the challenger.

Section 1.6. Action at Meeting. When a quorum is present, any matter
before the meeting shall be decided by vote of the holders of a majority of the
shares of stock voting on such matter except where a larger vote is required by
law, by the Certificate of Incorporation or by these By-laws. Any election by
stockholders shall be determined by a plurality of the votes cast, except where
a larger vote is required by law, by the Certificate of Incorporation or by
these By-laws. No ballot shall be required for any election. The Corporation
shall not directly or indirectly vote any share of its own stock; provided,
however, that the Corporation may vote shares which it holds in a fiduciary
capacity to the extent permitted by law.

Section 1.7. Action Without a Meeting. Any action required or permitted
by law to be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
all outstanding shares of stock entitled to vote thereon.

Section 1.8. Stockholder Lists. The Secretary (or the corporation's
transfer agent or other person authorized by these By-laws or by law) shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

2
<PAGE> 3
ARTICLE II

DIRECTORS

Section 2.1. Powers. The business of the Corporation shall be managed
by or under the direction of a Board of Directors that may exercise all the
powers of the Corporation except as otherwise provided by law, by the
Certificate of Incorporation or by these By-laws. In the event of a vacancy in
the Board of Directors, the remaining Directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.

Section 2.2. Number; Election and Qualification. The number of
Directors shall be not less than one (1) nor more than eleven (11). At each
Annual Meeting, the stockholders shall fix the number of Directors, and shall
elect not more than the number so designated. No Director need be a stockholder.

Section 2.3. Vacancies; Reduction of Board. Any vacancy in the Board of
Directors, however occurring, including a vacancy resulting from the enlargement
of the Board of Directors, may be filled by the stockholders or by the Directors
then in office or by a sole remaining Director. In lieu of filling any such
vacancy, the stockholders or Board of Directors may reduce the number of
Directors, but not to a number less than the minimum number required by Section
2.2 of this Article II. When one or more Directors shall resign from the Board
of Directors, effective at a future date, a majority of the Directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.

Section 2.4. Enlargement of the Board. The Board of Directors may be
enlarged by the stockholders at any meeting or by vote of a majority of the
Directors then in office.

Section 2.5. Tenure. Except as otherwise provided by law, by the
Certificate of Incorporation or by these By-laws, Directors shall hold office
for one year or until their successors are elected and qualified or until their
earlier resignation or removal. Any Director may resign by delivering his
written resignation to the Corporation. Such resignation shall be effective upon
receipt unless it is specified to be effective at some other time or upon the
happening of some other event.

Section 2.6. Removal. A Director may be removed from office with or
without cause by vote of the holders of a majority of the shares of stock
entitled to vote in the election of Directors.

Section 2.7. Meetings. The regular Annual Meeting of the Board of
Directors shall be held immediately after the close of the Annual Meeting of the
Stockholders. No notice shall be required for this meeting. Other regular
meetings of the Board of Directors may be held without notice at such time, date
and place as the Board of Directors may from time to time determine. Special
meetings of the Board of Directors may be called, orally or in writing, by the
Chief Executive Officer and President designating the time, date and place
thereof. Any matter of

3
<PAGE> 4
business which may properly come before the Board of Directors may be transacted
at either a regular or special meeting thereof. Directors may participate in
meetings of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all Directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting.

Section 2.8. Notice of Meetings. Notice of the time, date and place of
all special meetings of the Board of Directors shall be given to each Director
by the Secretary or Assistant Secretary, or in case of the death, absence,
incapacity or refusal of such persons, by the Chief Executive Officer and
President. Notice shall be given to each Director in person or by telephone or
by telegram sent to his business or home address at least twenty-four hours in
advance of the meeting, or by written notice mailed to be business or home
address at least forty-eight hours in advance of the meeting. Notice need not be
given to any Director if a written waiver of notice is executed by him before or
after the meeting, or if communications with such Director is unlawful, or if
all of the Directors are present at the meeting. A notice or waiver of notice of
a meeting of the Board of Directors need not specify the purpose of the meeting.

Section 2.9. Quorum. At any meeting of the Board of Directors, a
majority of the Directors then in office shall constitute a quorum. Less than a
quorum may adjourn any meeting from time to time and the meeting may be held as
adjourned without further notice.

Section 2.10. Action at Meeting. At any meeting of the Board of
Directors at which a quorum is present, a majority of the Directors present may
take any action on behalf of the Board of Directors, unless a larger number is
required by law, by the Certificate of Incorporation or by these By-laws.

Section 2.11. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
all members of the Board of Directors consent thereto in writing, and the
writing or writings are filed with the minutes of the Board of Directors. Such
consent shall be treated as a vote of the Board of Directors for all purposes.

Section 2.12. Committees. The Board of Directors, by vote of a majority
of the Directors then in office, may elect from its number one or more
committees, including an Executive Committee and an Audit Committee, and may
delegate thereto some or all of its powers except those which by law, by the
Certificate of Incorporation, or by these By-laws may not be delegated. Except
as the Board of Directors may otherwise determine, any such committee may make
rules for the conduct of its business, but unless otherwise provided by the
Board of Directors or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-laws for the Board of
Directors. All members of such committees shall hold such offices at the
pleasure of the Board of Directors. The Board of Directors may abolish any such
committee at any time. Any committee to which the Board of Directors delegates
any of its powers or duties shall keep records of its meetings and shall report

4
<PAGE> 5
its action to the Board of Directors. The Board of Directors shall have power to
rescind any action of any committee, but no such rescission shall have
retroactive effect.

ARTICLE III

OFFICERS

Section 3.1. Enumeration. The officers of the Corporation shall consist
of a Chief Executive Officer and President, a Secretary, a Treasurer, and such
other officers, including one or more Vice-Presidents, Assistant Secretaries,
and Assistant Treasurers, as the Board of Directors may determine.

Section 3.2. Election. At its Annual Meeting, the Board of Directors
shall elect the Chief Executive Officer and President, the Secretary, and the
Treasurer. Other officers may be chosen by the Board of Directors at such
meeting or any other meeting.

Section 3.3. Qualification. No officer need be a stockholder. No
officer need be a Director. Any person may occupy more than one office of the
Corporation at any time. Any officer may be required by the Board of Directors
to give bond for the faithful performance of his duties in such amount and with
such sureties as the Board of Directors may determine.

Section 3.4. Tenure. Except as otherwise provided by the Certificate of
Incorporation or by these By-laws, each of the officers of the Corporation shall
hold his office for one year or until his successor is elected and qualified or
until his earlier resignation or removal. Any officer may resign by delivering
his written resignation to the Corporation, and such resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event.

Section 3.5. Removal. The Board of Directors may remove any officer
with or without cause by a vote of a majority of the entire number of Directors
then in office; provided, that if an officer is to be removed for cause, he may
only be removed after reasonable notice and an opportunity to be heard by the
Board of Directors.

Section 3.6. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.

Section 3.7. Chief Executive Officer and President. The Chief Executive
Officer and President shall be the chief executive officer of the corporation
and shall, subject to the direction of the Board of Directors, have general
supervision and control of its business. Unless otherwise provided by the Board
of Directors, he shall preside, when present, at all meetings of stockholders
and of the Board of Directors.

Section 3.8. Vice-Presidents. Any Vice-President shall have such powers
and shall perform such duties as the Board of Directors may from time to time
designate.

5
<PAGE> 6
Section 3.9. Treasurer and Assistant Treasurers. The Treasurer shall,
subject to the direction of the Board of Directors, have general charge of the
financial affairs of the Company and shall cause to be kept accurate books of
account. He shall have custody of all funds, securities, and valuable documents
of the Corporation, except as the Board of Directors may otherwise provide. Any
Assistant Treasurer shall have such powers and perform such duties as the Board
of Directors may from time to time designate.

Section 3.10. Secretary and Assistant Secretaries. The Secretary shall
record all the proceedings of the meetings of the stockholders and the Board of
Directors (including committees of the Board) in books kept for that purpose. In
his absence from any such meeting, a temporary secretary chosen at the meeting
shall record the proceedings thereof. The Secretary shall have charge of the
stock ledger (which may, however, be kept by any transfer or other agent of the
Corporation). He shall have custody of the seal of the Corporation, and he, or
an Assistant Secretary, shall have authority to affix it to any instrument
requiring it, and, when so affixed, the seal may be attested by his signature.
He shall have such other duties and powers as may be designated from time to
time by the Board of Directors or the Chief Executive Officer and President.

Any Assistant Secretary shall have such powers and perform such duties
as the Board of Directors may from time to time designate.

Section 3.11. Other Powers and Duties. Subject to these By-laws and to
such limitations as the Board of Directors may from time to time prescribe, the
officers of the Corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the Board of Directors.

ARTICLE IV

CAPITAL STOCK

Section 4.1. Certificates of Stock. Each stockholder shall be entitled
to a certificate of the capital stock of the Corporation in such form as may
from time to time be prescribed by the Board of Directors. Such certificate
shall be signed by the Chairman of the Board of Directors or the Chief Executive
Officer and President or a Vice-President and by the Treasurer or the Secretary.
Such signatures may be facsimile if the certificate is manually countersigned by
an authorized person on behalf of a transfer agent or registrar other than the
Corporation or its employee. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed on such certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the time of its
issue. Every certificate for shares of stock which are subject to any
restriction on transfer and every certificate issued when the Corporation is
authorized to issue more than one class or series of stock shall contain such
legend with respect thereto as is required by law.

6
<PAGE> 7
Section 4.2. Transfers. Subject to any restrictions on transfer, shares
of stock may be transferred only on the books of the Corporation by the
surrender to the Corporation or its transfer agent of the certificate therefor
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, with transfer stamps (if necessary) affixed, and with such
proof of the authenticity of signature as the Corporation or its transfer agent
may reasonably require.

Section 4.3. Record Holders. Except as may otherwise be required by
law, by the Certificate of Incorporation or by these By-laws, the Corporation
shall be entitled to treat the record holder of stock as shown on its books as
the owner of such stock for all purposes, including the payment of dividends and
the right to vote with respect thereto, regardless of any transfer, pledge or
other disposition of such stock, until the shares have been transferred on the
books of the Corporation in accordance with the requirements of these By-laws.

It shall be the duty of each stockholder to notify the Corporation of
his post office address.

Section 4.4. Record Date. In order that the Corporation may determine
the stockholders entitled to receive notice of or to vote at any meeting of
stockholders or any adjournments thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. In such case, only stockholders of record on such record date
shall be so entitled, notwithstanding any transfer of stock on the books of the
Corporation after the record date.

If no record date is fixed: (i) the record date for determining
stockholders entitled to receive notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (ii) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written consent is
expressed; and (iii) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.

Section 4.5. Replacement of Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms as the Board of Directors may
prescribe.

ARTICLE V

INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS

7
<PAGE> 8
Section 5.1. Indemnifiable Events; Extent of Indemnification.

A. The Corporation shall indemnify, to the fullest extent permitted by
the General Corporation Law of the State of Delaware (as presently in effect or
as hereafter amended):

(1) any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than an action or suit by or in the right of the Company) by
reason of the fact that he is or was a Director or officer of the
Corporation, or is or was serving at the request of the Corporation as
a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such suit,
action or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.

(2) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a Director or officer of the
Corporation, or is or was serving at the request of the Corporation as
a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent that, the Court of Chancery
of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

(3) To the extent that a Director or officer of the
Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in paragraphs (1) and
(2), or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.

8
<PAGE> 9
B. The Board of Directors, in its discretion, may authorize the
Corporation to indemnify:

(1) Any person who was or is a party or is threatened to be
made a party to any threatened pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason
of the fact that he is or was an employee or agent of the Corporation,
or is or was serving at the request of the Corporation as an employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.

(2) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was an employee or agent of the
Corporation, or is or was serving at the request of the Corporation as
an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent that, the Court of Chancery
of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnify for such expenses
which the Court of Chancery or such other court shall deem proper.

Section 5.2. Determination of Entitlement. Any indemnification
hereunder (unless required by law or ordered by a court) shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 5.1 of this Article V. Such determination shall be made (i) by the Board
of Directors by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a

9
<PAGE> 10
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders of the Corporation.

Section 5.3. Advance Payments. Expenses incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding, only as authorized
by the Board of Directors in the specific case (including by one or more
Directors who may be parties to such action, suit or proceeding), upon receipt
of an undertaking by or on behalf of the Director, officer, employee or agent to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the Corporation as authorized in this Article V.

Section 5.4. Non-Exclusive Nature of Indemnification. The
indemnification provided herein shall not be deemed exclusive of any other
rights to which any person, whether or not entitled to be indemnified hereunder,
may be entitled under any statute, by-law, agreement, vote of stockholders or
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a Director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person. Each person who is or becomes a Director or officer as aforesaid shall
be deemed to have served or to have continued to serve in such capacity in
reliance upon the indemnity provided for in this Article V.

Section 5.5. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of the General Corporation Law of
the State of Delaware (as presently in effect or hereafter amended), the
Certificate of Incorporation of the Corporation or these By-laws.

Section 5.6. No Duplicate Payments. The Corporation's indemnification
under Section 5.1 of this Article V of any person who is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person receives as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the Corporation,
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise, or (iii) under any other applicable indemnification provision.

Section 5.7. Amendment. This Article V may be amended only so as to
have a prospective effect. Any amendment to this Article V which would result in
any person having a more limited entitlement to indemnification may be approved
only by the stockholders.

10
<PAGE> 11
ARTICLE VI

TRANSACTIONS WITH RELATED PARTIES

Section 6.1. Transactions Not Void. No contract or transaction between
the Corporation and one or more of its Directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its Directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the Director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof,
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose, if:

(1) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
Board of Directors, or the committee, and the Board of Directors or
committee in good faith authorizes the contract or transaction by the
affirmative votes Of a majority of the disinterested Directors, even
though the disinterested Directors be less than a quorum; or

(2) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the shareholders; or

(3) The contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the shareholders.

Section 6.2. Quorum. Common or interested Directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.

Section 6.3. Limitation. Nothing herein contained shall protect or
purport to protect any Director or officer of the Corporation against any
liability to the Corporation or its security holders to which he would otherwise
be subject by reason of his willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.

ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.1. Fiscal Year. The fiscal year of the Corporation shall end
on December 31 of each year.

Section 7.2. Seal. The Board of Directors shall have power to adopt and
alter the seal of the Corporation.

11
<PAGE> 12
Section 7.3. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without Director action may
be executed on behalf of the Corporation by the Chief Executive Officer and
President or the Treasurer.

Section 7.4. Voting of Securities. Unless the Board of Directors
otherwise provides, the Chief Executive Officer and President or the Treasurer
may waive notice of and act on behalf of this Corporation, or appoint another
person or persons to act as proxy or attorney in fact for this Corporation with
or without discretionary power and/or power of substitution, at any meeting of
stockholders or shareholders of any other corporation or organization, any of
whose securities are held by this Corporation.

Section 7.5. Resident Agent. The Board of Directors may appoint a
resident agent upon whom legal process may be served in any action or proceeding
against the Corporation.

Section 7.6. Corporate Records. The original or attested copies of the
Certificate of Incorporation, By-laws and records of all meetings of the
incorporators, stockholders and the Board of Directors and the stock and
transfer records, which shall contain the names of all stockholders, their
record addresses and the amount of stock held by each, shall be kept at the
principal office of the Corporation, at the office of its counsel, or at an
office of its transfer agent.

Section 7.7. Certificate of Incorporation. All references in these
By-laws to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the Corporation, as amended and in effect from
time to time.

Section 7.8. Amendments. These By-laws may be altered, amended or
repealed by the vote of a majority in interest of the stockholders of the
Corporation at any regular or special meeting thereof; or by the vote of a
majority of the Board of Directors at any regular or special meeting thereof,
without any action on the part of the stockholders, unless otherwise provided
herein; provided, that (i) the Board of Directors may not amend or repeal this
Section 7.8 nor may it amend or repeal any other provision of these By-laws to
the extent such amendment or repeal requires action by the stockholders, and
(ii) any amendment or repeal of these By-laws by the Board of Directors and any
provision to these By-laws adopted by the Board of Directors may be amended or
repealed by the stockholders.

<PAGE> 1
EXHIBIT 4.1

CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF

SERIES A CONVERTIBLE PREFERRED STOCK

MILLENNIUM CELL INC.

---------------

Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

---------------

Millennium Cell Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that pursuant to authority conferred upon the board of directors (the
"Board of Directors") by its Certificate of Incorporation, and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Company in one or more series and has adopted the resolution set forth below on
May 9, 2000 (the "Resolution"):

RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issuance of Series A
Convertible Preferred Stock, par value $0.001 per share, with a liquidation
preference of $2.905 per share, consisting of 1,032,740 shares having the
designation, preferences, relative, participating, optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth in the Certificate of Incorporation and in this Resolution as follows:

1. Designation. There is hereby created out of the authorized and unissued
shares of Preferred Stock of the Company a series of Preferred Stock designated
as the "Series A Convertible Preferred Stock" (the "Series A Preferred Stock").
The authorized number of shares constituting the Series A Preferred Stock shall
be 1,032,740.

2. Dividend Provisions

(a) Subject to the rights of series of Preferred Stock which may
from time to time come into existence, the holders of shares of Series A
Preferred Stock shall be entitled to
<PAGE> 2
receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
common stock of the Company ("Common Stock") or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock) on the Common Stock of the
Company, at the rate of $0.232 per share of Series A Preferred Stock per annum
payable semiannually in arrears, except that no dividends shall be payable on
the Series A Preferred Stock from the period starting on the date on which the
Series A Preferred Stock was first issued and ending on the first anniversary
thereof. Such dividends will accumulate to the extent they are not paid for the
six month period to which they relate.

(b) In the event the Company shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by the Company or
other persons, assets (excluding cash dividends) or options or rights to
purchase any such securities or evidences of indebtedness, then, in each case
the holders of the Series A Preferred Stock shall be entitled to a proportionate
share of any such distribution as though the holders of the Series A Preferred
Stock were the holders of the number of shares of Common Stock of the Company
into which their respective shares of Series A Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
of the Company entitled to receive such distribution.

3. Liquidation Preference

(a) In the event of any liquidation, dissolution or winding up of
the Company, either voluntary or involuntary, subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders of
Series A Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of the Company to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (i) $2.905 for each outstanding share of Series A Preferred Stock (the
"Original Series A Issue Price") and (ii) an amount equal to declared but unpaid
dividends on such share. If upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series A Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the entire assets and funds of
the Company legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock in proportion to the amount of
such stock owned by each such holder.

(b) After the distributions described in subsection (a) above have
been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence, the remaining assets of the Company available
for distribution to stockholders shall be distributed among the holders of
Common Stock pro rata based on the number of shares of Common Stock held by
each.

(c) A consolidation or merger reorganization of the Company with or
into any other corporation or corporations, or the effectuation by the Company
of a transaction or series

2
<PAGE> 3
of related transactions in which more than 75% of the voting power of the
Company is disposed of, or a sale, conveyance or disposition of all or
substantially all of the assets of the Company shall be deemed to be a
liquidation within the meaning of this Section 3.

4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

(a) Right to Convert.

i) Subject to subsection 4(c), each share of Series A
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the Company
or any transfer agent for the Series A Preferred Stock, into such number of
fully paid and non-assessable shares of Common Stock as is determined by
dividing the Original Series A Issue Price by the Conversion Price at the time
in effect for such share. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price; provided,
however, that the Conversion Price for the Series A Preferred Stock shall be
subject to adjustment as set forth in subsection 4(c).

ii) Each share of Series A Preferred Stock shall automatically
be converted into shares of Common Stock at the Conversion Price at the time in
effect for such Series A Preferred Stock immediately upon the consummation of
the Company's sale of its Common Stock in a bona fide, firm commitment
underwriting pursuant to a registration statement under the Securities Act of
1933, as amended.

(b) Mechanics of Conversion. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Company or of any transfer agent for the Series A Preferred Stock,
and shall give written notice by mail, postage prepaid, to the Company at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Company shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series A Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, the conversion may, at the option of any holder tendering Series A
Preferred Stock for conversion, be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the Series A Preferred Stock shall not be deemed to have converted such
Series A Preferred Stock until immediately prior to the closing of such sale of
securities.

3
<PAGE> 4
(c) Conversion Price Adjustments of Preferred Stock. The Conversion
Price of the Series A Preferred Stock shall be subject to adjustment from time
to time as follows:

i) A. Upon each issuance by the Company of any Additional
Stock (as defined below), after the date upon which any shares of the Series A
Preferred Stock were first issued (the "Purchase Date" with respect to such
series), without consideration or for a consideration per share less than the
Conversion Price for such series in effect immediately prior to the issuance of
such Additional Stock, the Conversion Price for such series in effect
immediately prior to each such issuance shall forthwith (except as otherwise
provided in this clause (i)) be adjusted to a price determined by multiplying
such Conversion Price by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issuance
(including, without limitation, the number of shares of Common Stock issuable
upon the conversion of all outstanding Preferred Stock and all other convertible
securities and the exercise of all outstanding options, warrants or other rights
to purchase Common Stock or other securities convertible into Common Stock) plus
the number of shares of Common Stock which the aggregate consideration received
by the Company for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance (including, without limitation,
the number of shares of Common Stock issuable upon the conversion of all
outstanding Preferred Stock and all other convertible securities and the
exercise of all outstanding options, warrants or other rights to purchase Common
Stock or other securities convertible into Common Stock) plus the number of
shares of such Additional Stock.

B. No adjustment of the Conversion Price for the
Series A Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to 2 years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of 2 years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in subsections
4(c)(i)(E)(3) and 4(c)(i)(E)(4), no adjustment of such Conversion Price pursuant
to this subsection 4(c)(i) shall have the effect of increasing the Conversion
Price above the Conversion Price in effect immediately prior to such adjustment.

C. In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses
allowed, paid or incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof.

D. In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.

4
<PAGE> 5
E. In the case of the issuance (whether before, on
or after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 4(c)(i) and subsection 4(c)(ii):

1. The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability including without limitation, the
passage of time, but without taking into account potential
antidilution adjustments) of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at
the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in
subsections 4(c)(i)(C) and 4(c)(i)(D)), if any, received by the
Company upon the issuance of such options or rights plus the
exercise price provided in such options or rights (without taking
into account potential antidilution adjustments) for the Common
Stock covered thereby.

2. The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming
the satisfaction of any conditions to convertibility or
exchangeability including without limitation, the passage of time,
but without taking into account potential antidilution adjustments)
for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued
and for a consideration equal to the consideration, if any, received
by the Company for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to be
received by the Company (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such
securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided
in subsections 4(c)(i)(C) and 4(c)(i)(D)).

3. In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable
to the Company upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from
the antidilution provisions thereof, the Conversion Price of the
Series A Preferred Stock to the extent in any way affected by or
computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall
be made for the actual issuance of Common Stock or any payment of
such consideration upon the exercise of any

5
<PAGE> 6
such options or rights or the conversion or exchange of such
securities.

4. Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible
or exchangeable securities, the Conversion Price of the Series A
Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in affect)
actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such securities or upon the exercise
of the options or rights related to such securities.

5. The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to
subsections 4(c)(i)(E)(1) and (2) shall be appropriately adjusted to
reflect any change, termination or expiration of the type described
in either subsection 4(c)(i)(E)(3) or (4).

ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 4(c)(i)(E)) by the
Company after the Purchase Date other than:

A. Common Stock issued pursuant to a transaction
described in subsection 4(c)(iii) hereof,

B. shares of Common Stock issuable or issued to
employees, consultants or directors of the Company directly or pursuant to a
stock option plan or restricted stock plan approved by the Board of Directors,
or

C. shares of Common Stock issued upon conversion
of the Series A Preferred Stock, or

D. shares of Common Stock issued or issuable (I)
in a public offering before or in connection with which all outstanding shares
of Series A Preferred Stock will be converted to Common Stock or (II) upon
exercise of warrants or rights granted to underwriters in connection with such a
public offering, or

E. shares of Common Stock issued or issuable to
persons or entities with which the Company has business relationships provided
such issuances are for other than primarily equity financing purposes.

iii) In the event the Company should at any time or from time
to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the

6
<PAGE> 7
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as "Common Stock Equivalents"),
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof, then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of the Series A Preferred Stock
shall be appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents
with the number of shares issuable with respect to Common Stock Equivalents
determined from time to time in the manner provided for deemed issuances in
subsection 4(c)(i)(E).

iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.

(d) Other Distributions. In the event the Company shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Company or other persons, assets (excluding cash dividends) or
options or rights not referred to in subsection 4(c)(iii), then, in each such
case for the purpose of this subsection 4(d), the holders of the Series A
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Company entitled to receive such distribution.

(e) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4) provision shall be made so that the holders of the Series A
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Series A Preferred Stock the number of shares of stock or other securities or
property of the Company or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Series A Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the Conversion Price then
in effect and the number of shares purchasable upon conversion of the Series A
Preferred Stock) shall be applicable after that event as nearly equivalent as
may be practicable.

7
<PAGE> 8
(f) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to void the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.

(g) No Fractional Shares and Certificate as to Adjustments.

i) No fractional shares shall be issued upon conversion of the
Series A Preferred Stock, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of the total
number of shares of Series A Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.

ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this Section 4, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to each holder of
Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of any holder of Series A Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price at the time in effect, and (C) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of a share of Series A Preferred
Stock.

(h) Notices of Record Date. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each holder of Series A Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.

(i) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the

8
<PAGE> 9
conversion of all then outstanding shares of the Series A Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.

(j) Notices. Any notice required by the provisions of this Section 4
to be given to the holders of Shares of Series A Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at the address appearing on the books of the Company.

5. Mandatory Redemption. On May 10, 2003, the Company shall redeem
(subject to legal availability of funds therefor) all outstanding shares of
Series A Preferred Stock at a price in cash equal to the Original Series A Issue
Price, together with an amount equal to accrued and unpaid dividends on the
Series A Preferred Stock to the date of redemption.

6. Voting Rights. The holder of each share of Series A Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Series A Preferred Stock could then be converted (with any fractional share
determined on an aggregate conversion basis being rounded to the nearest whole
share), and with respect to such vote such holder shall have full voting rights
and powers equal to the voting rights and powers of the holders of Common Stock
and shall be entitled, notwithstanding any provision hereof to notice of any
stockholders' meeting in accordance with the by-laws of the Company, and shall
be entitled to vote, together with holders of Common Stock, with respect to any
question upon which holders of Common Stock have the right to vote.

7. Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 4 hereof the shares so
converted shall be cancelled and shall not be issuable by the Company. The
Certificate of Incorporation of the Company shall be appropriately amended to
effect the corresponding reduction in the corporation's authorized capital
stock.

9
<PAGE> 10
IN WITNESS WHEREOF, this Certificate of Designation has been executed as
of this 9th day of May, 2000.

MILLENNIUM CELL INC.

By: /s/ James L. Rawlings
--------------------------
Name: James L. Rawlings
Title: Chief Executive Officer

<PAGE> 1
EXHIBIT 10.1

AGREEMENT

for

RECOVERABLE GRANT AWARD

between

STATE OF NEW JERSEY

NEW JERSEY COMMISSION ON SCIENCE AND TECHNOLOGY

and

MILLENNIUM CELL, LLC

AWARD NUMBER 99-2042-010-07

<PAGE> 2

TABLE OF CONTENTS

I. AGREEMENT DATA SHEET ............................................... 1

II. GENERAL TERMS AND CONDITIONS

A. Parties ...................................................... 2

B. Eligibility .................................................. 2

C. Corporate Authority .......................................... 2

D. Entitlement To Funds ......................................... 2

E. Payment Of Funds By Commission ............................... 2

F. Availability Of Funds ........................................ 3

G. Intellectual Property ........................................ 3

H. Publicity Policy ............................................. 3

I. Compliance With Existing Laws ................................ 3

J. Conflict Of Interest ......................................... 3

K. Remedies ..................................................... 4

L. Hearings, Appeals ............................................ 5

M. Changes To Scope ............................................. 5

N. Assignability ................................................ 5

0. Indemnification .............................................. 5

P. Entire Agreement ............................................. 6

Q. Jurisdiction And Choice Of Law ............................... 6

R. Construction ................................................. 6

S. Notices ...................................................... 6

ii
<PAGE> 3

II. POST AWARD REQUIREMENTS

A. Identification Of Key Personnel .............................. 7

B. Financial Management System .................................. 7

C. Use Of Funds ................................................. 8

D. Matching And Cost Sharing .................................... 8

E. Budget Revisions And Modifications ........................... 8

F. Monitoring Of Program Performance ............................ 9

G. Accounting Principles ........................................ 9

H. Audit Requirements ........................................... 9

I. Access To Records ............................................ 10

J. Insurance .................................................... 10

K. Taxes, Assessments and Governmental Charges .................. 10

L. Year 2000 Compliance ......................................... 10

III. AWARD CLOSEOUT

A. Procedures ................................................... 11

B. Financial And Performance Reporting .......................... 11

C. Record Retention ............................................. 12

IV. REPAYMENT .......................................................... 13

ATTACHMENTS

Program Specifications ................................................... A

Award Budget ............................................................. B

Comparison Of Actual To Budget Expenditures .............................. C

Final Report Guidelines .................................................. D

iii
<PAGE> 4

1. Agreement Data Sheet

- --------------------- STATE OF NEW JERSEY -----------------
1. Date Issued: 3. Award No.:
COMMISSION ON SCIENCE AND TECHNOLOGY
2. Supersedes Award 99-2042-010-07
Notice Dated: RECOVERABLE GRANT AGREEMENT
N/A
- --------------------- -----------------
- --------------------------------------------------------------------------------
4. Title of Award: A New High-Energy Borohydride-Air Cell
- --------------------------------------------------------------------------------

5a. State Issuing Agency: New Jersey Commission on Science and Technology,
P0 Box 832, Trenton, NJ 08625-0832
- --------------------------------------------------------------------------------

5b. Award Recipient 6. Award Period (Mo./Day/Yr.)

Name: Millennium Cell, LLC From: Through:
4/1/99 3/31/00
Street: 8 Cedar Brook Drive ---------------------------------

City/State/Zip: Cranbury, NJ 08512 7. Vendor ID No: 13-401-7952

8. Source of Funds:

<TABLE>
<CAPTION>
-----------------------------------------------------------------
FISCAL ACCOUNT CFDA
YEAR NUMBER(S) NUMBER AMOUNT
-----------------------------------------------------------------
<S> <C> <C>
1999 100-082-2042-010-6130 $226,000.00

-----------------------------------------------------------------
</TABLE>

9. Award Computation:

<TABLE>
<S> <C>
a. Amount of Financial
Assistance $226,000.00
-----------
b. Less Unobligated Balance,
Prior Budget Periods $ 0.00
-----------

c. Less Cum. Prior Award(s),.
this Budget Period $ 0.00
-----------

d. AMOUNT of this ACTION $226,000.00
-----------
</TABLE>

- --------------------------------------------------------------------------------

10a. Nature or purpose of program to be funded: Technology Transfer Program
Award
- --------------------------------------------------------------------------------

10b. This Award is subject to the terms and conditions incorporated either
directly or by reference to the following:

Attachment A -- Program Specifications
Attachment B -- Approved Budget
Attachment C -- Comparison of Actual to Budget Expenditures
Attachment D -- Final Performance Report Guidelines

Acceptance of the award terms and conditions is acknowledged by the Award
Recipient by returning a copy of this Award Agreement with section I(12)
properly completed.

- --------------------------------------------------------------------------------
11. Remarks (Other Terms and Conditions attached): Yes |X| No |_|
- --------------------------------------------------------------------------------
12. Commission and Award Recipient Agreement Signatures

If this Agreement, including all attachments annexed hereto, correctly
sets forth your understanding of the terms of the agreement, please
indicate your organizations concurrence with such terms by having the
enclosed copy of this Agreement signed by an appropriate officer of your
organization and returned to the Commission on Science and Technology.

ACCEPTED AND AGREED: COUNTERSIGNED:

New Jersey Commission on Science and
Millennium Cell, LLC Technology
------------------------------ -----------------------------------------
(Award Recipient)

By____________________________ By_______________________________________

Title President Title Executive Director

I attest that sufficient funds APPROVED FOR FORM:
have been appropriated by the
State Legislature to cover the
current state fiscal year portion
of this grant.

/S/ [ILLEGIBLE] (S) Peter Verniero, Attorney General
--------------------------------- -----------------------------------------
COMMISSION AWARD APPROVAL OFFICER OFFICE OF THE ATTORNEY GENERAL

<PAGE> 5

II. GENERAL TERMS AND CONDITIONS

A. PARTIES

Whereas, Millennium Cell, LLC (hereinafter "award recipient"), with
principal place of business located at Cranbury, New Jersey, has been
selected by the New Jersey Commission on Science and Technology
(hereinafter "Commission") to receive a recoverable grant award under the
Technology Transfer Program, for a project entitled "A New High-Energy
Borohydride-Air Cell";

Award recipient and the Commission, intending to be legally bound hereto,
accept and agree to abide by the following terms and conditions set forth
in this Agreement.

B. ELIGIBILITY

Award recipient represents and warrants that it is a for-profit technology
company, with 500 or fewer employees, with its principal place of business
located and registered to do business in the State of New Jersey on the
date of execution of this Agreement. Award recipient represents and
warrants that it is duly organized, validly existing, and in good standing
under the laws of the State of New Jersey as of the time of execution of
this Agreement. Award recipient agrees that any product development or
process improvement activities that result from this funding, will occur
in New Jersey. Award recipient agrees that it will maintain its primary
place of business and principal operations in New Jersey, during the
funding period and until all obligations under this agreement have been
satisfied, unless otherwise agreed by the Commission. Violation of this
provision without express written approval of the Commission constitutes
default under this Agreement and may result in penalties pursuant to
section I.K. herein.

C. CORPORATE AUTHORITY

Award recipient represents and warrants that it has the corporate power
and authority and legal right to execute and perform its obligations under
this Agreement and that it has taken all necessary corporate action to
authorize its execution and performance of obligations under this
Agreement.

D. ENTITLEMENT TO FUNDS

Upon execution of this Agreement, award recipient shall be entitled to
receive a total of $226,000 in funding (hereinafter "award") from the
Commission, subject to the terms and conditions stated herein, for the
purposes set forth in the Program Specifications, Attachment "A" hereto,
(hereinafter "award supported activities").

E. PAYMENT OF FUNDS BY COMMISSION

Payment of funds for this award shall be made to award recipient upon
receipt by the Commission of a properly executed copy of this Agreement,
signed by an authorized officer of the award recipient, together with a
properly executed stare payment voucher. The Commission will advance funds
to the award recipient in an amount equal to eighty five percent (85%) of
this award, within thirty (30) days of receipt of a properly executed
Agreement and payment voucher. The remaining fifteen percent (15%) of the
award to be provided will be retained by the Commission until all final
fiscal and performance reports required under Section III.B.(1) of this
Agreement have been received and accepted by the Commission.

2
<PAGE> 6

The period of funding shall be from the start date of the award supported
activities, or the initial payment of funds to award recipient, whichever
shall occur earlier, to the projected date of conclusion of the award
supported activities (the "ending date"), as set forth in the Agreement
Data Sheet.

F. AVAILABILITY OF FUNDS

The parties recognize and agree that initial and continued funding for
this award is expressly dependent upon the availability to the Commission
of funds appropriated by the state legislature from state or federal
revenue or other such funding sources as may be applicable for the
Technology Transfer Program. The Commission shall not be held liable for
any breach of this Agreement because of the absence of available funding
appropriations.

G. INTELLECTUAL PROPERTY

Award recipient warrants and represents that it owns or holds licenses for
the use of all patents, trademarks, trade names, service marks,
copyrights, and franchise and marketing rights or rights in any of the
foregoing, as is necessary to engage in the award related activities.

H. PUBLICITY POLICY

All publications resulting from publicity releases concerning award
related activities shall acknowledge the support of the Commission and
shall refer to the Commission explicitly as the "New Jersey Commission on
Science and Technology."

I. COMPLIANCE WITH EXISTING LAWS

Award recipient agrees to comply with and require all contractors and
consultants used by it in relation to the award supported activities to
comply with all federal, state and municipal laws, rules and regulations
applicable to all activities performed by award recipient in pursuit of
and in relation to award supported activities. The award recipient agrees
to comply with and require all contractors and consultants used by it in
pursuit of and in relation to the award supported activities to comply
with the requirements of N.J.A.C. 17:27 et. seq. (Affirmative Action
Rules), where applicable, P.L. 1975, c.127 (N.J.S.A 10:5-31 et. seq.
(Equal Opportunity in Public Works Contracts), where applicable, and all
implementing regulations, and the Americans With Disabilities Act and
implementing regulations and guidelines, where applicable. Failure to
comply with such laws, rules or regulations shall be grounds for
termination of this Agreement.

J. CONFLICT OF INTEREST

Award recipient agrees to abide by the provisions of N.J.S.A 52:13D et
seq. (the New Jersey State Employees Conflict of Interest Law) governing
activities between award recipient and state officials, employees, special
state officers and members of the Legislature. The provisions of N.J.S.A
52:13D et seq. are incorporated herein in their entirety, by reference
thereto. Award recipient represents and warrants that it has not and will
not at any time in the future act in violation of said statutory
provisions. Any violation of said prohibitions shall render award
recipient liable to debarment in the public interest.

3
<PAGE> 7

K. REMEDIES

The following definitions shall apply for the purposes of this section:

Termination -- the termination of an award means the cancellation of
an award, in whole or in part, at any time prior to the date of
completion.

Suspension -- the suspension of an award is an action by the
Commission which temporarily suspends funding under the award,
pending corrective action by the award recipient or pending a
decision to terminate the award by the Commission.

Disallowed costs -- disallowed costs are those charges to the
program which the Commission or its representatives determine to be
beyond the scope of the purpose of the award supported activities or
are excessive or incurred during a period of suspension or after
termination or are otherwise unallowable.

Award recipient warrants and represents that all statements,
representations and warranties made by award recipient in its application
and proposal package to the Commission, and any other materials furnished
in support of the request for funding are true. It is specifically
understood by award recipient that all such statements, representations
and warranties shall be deemed to have been relied upon by the Commission
in its decision to make the award, and that if any such statements,
representations or warranties were materially false at the time they were
made or are breached during the term hereof, the Commission may, in its
sole discretion, consider any such misrepresentation or breach an event of
default and the Commission may take one or more of the following actions,
as appropriate in the circumstances.

If the award recipient materially fails to comply with any term of this
Agreement or a state or federal statute or regulation, the Commission may,
in its sole discretion, consider any such misrepresentation or breach an
event of default and the Commission may take one or more of the following
actions, as appropriate in the circumstances:

(1) The Commission may suspend the award, withhold further funding and
prohibit the award recipient from incurring additional obligations
pending corrective action by the award recipient and disallow costs
incurred during suspension.

(2) The Commission may terminate the award in whole or in part. The
Commission shall promptly notify the award recipient, in writing, of
the termination and the reasons for the termination, together with
the effective date and, in case of partial termination, the portion
to be terminated and the recoverable portion, if any. When an award
is terminated pursuant to this paragraph, payments made to the award
recipient shall be terminated and any funds already distributed that
are determined by the Commission to be recoverable shall be returned
within thirty (30) days of demand thereof by the Commission. Costs
incurred after termination shall be disallowed.

(3) The Commission may disallow any costs.

(4) The Commission may demand immediate return of some or all of funds
already disbursed.

(5) The Commission may pursue other remedies at law or in equity as may
be within legal right.

4
<PAGE> 8

The Commission may also terminate the award at any time, in whole or in
part, when the Commission determines that the continuation of the project
would not produce beneficial results commensurate with the further
expenditure of funds. The Commission shall promptly notify the award
recipient in writing, of the determination to terminate the award,
together with the effective date and, in case of partial termination, the
portion to be terminated. The award recipient shall cancel as many
outstanding obligations as possible. Costs incurred after termination
pursuant to this paragraph shall be disallowed.

The costs of the award recipient resulting from obligations incurred by it
during a suspension, or after termination of an award, are not allowable
unless the Commission expressly authorizes them in the notice of
suspension or termination or subsequently. Such costs may be allowed if
they are: (1) necessary and (2) not reasonably avoidable and (3) were
properly incurred by the award recipient before the effective date of
suspension or termination and (4) are not in anticipation of it and (5) in
the case of a termination are noncancelable and (6) the costs would be
allowable if the award were not suspended or expired normally at the end
of the funding period.

No remedy herein conferred or reserved to the Commission is intended to be
exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof.

Section III of this Agreement, Award Closeout Procedures, shall apply in
all cases of termination.

L. HEARINGS, APPEALS

Upon taking an enforcement action pursuant to section I.K. above, the
Commission will provide the award recipient an opportunity for such
hearing, appeal, or other administrative proceeding to which the award
recipient is entitled under any stature or regulation applicable to the
action involved.

M. CHANGES TO SCOPE

The Commission may request changes in the scope of the services to be
performed hereunder. Such changes, including any increase or decrease in
the amount of the funds provided herein, shall be mutually agreed upon by
and between the Commission and the award recipient, and must be
incorporated in written amendments to this Agreement.

N. ASSIGNABILITY

The award recipient shall not subcontract or assign any of the work or
services to be performed by it in relation to award supported activities
except as already stated in Attachment "A," without the express written
approval of the Commission. All terms and provisions herein shall apply to
all subcontractors or assignees.

O. INDEMNIFICATION

The award recipient shall be solely responsible for and shall keep, save,
hold harmless and indemnify the Commission and the State of New Jersey
from and against any and all actions, costs, damages, disbursements,
expenses including attorney's fees, judgments, liabilities, losses,
obligations, penalties, suits, proceedings, claims and matters of any kind
whatsoever

5
<PAGE> 9

which may at any time be imposed on, incurred by, agreed to or asserted
against the Commission and the State of New Jersey, arising out of any and
all activities, acts, omissions, services performed and products provided
by award recipients, including the award supported activities. The
Commission and the State of New Jersey shall bear no liability in any form
to any third party for any acts or omissions on the part of the award
recipient. The award recipient's liability under this paragraph shall
continue after the closeout or termination of this Agreement.

P. ENTIRE AGREEMENT

This Agreement and the attachments hereto embody the entire Agreement and
understanding between the award recipient and the Commission, representing
the State of New Jersey and supersede all prior agreements and
understandings, both written and oral, between the parties relating to the
subject matter herein. All modifications, waivers, and amendments hereto
must be made in writing by mutual agreement of the parties, except as
otherwise stated herein.

Q. JURISDICTION AND CHOICE OF LAW

Jurisdiction of any action hereunder shall lie in a court of competent
jurisdiction in the State of New Jersey and shall be construed in
accordance with the laws of the State of New Jersey applicable to
contracts made and performed in the State of New Jersey.

R. CONSTRUCTION

Whenever possible, each provision of the Agreement shall be interpreted in
such a manner as to be effective and valid under the applicable law, but,
if any provision of this Agreement shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of the
Agreement.

S. NOTICES

Upon request by the Commission, any notices, demands, and communications
hereunder shall be given by certified or overnight mail and shall be
addressed to:

For Award Recipient:

Millennium Cell, LLC
8 Cedar Brook Drive
Cranbury, NJ 08512

For The State:

New Jersey Commission on Science & Technology
Technology Transfer Program
28 West State Street, P.O. Box 832
Trenton, NJ 08625-0832

Any changes or additions to the notice provisions above shall be made in
writing provided as stated above.

6
<PAGE> 10

II. POST AWARD REQUIREMENTS

A. IDENTIFICATION OF KEY PERSONNEL

Award recipient shall identify and maintain an individual with the
principal responsibility for the management of all award related
activities. This individual, designated the Project Manager, shall be
Steven Amendola, Vice President, R&D.

Award recipient shall identify and maintain an individual with the
principal responsibility for maintaining an adequate financial management
system as described below. This individual, designated the Financial
Manager, shall be Scott Greenberg, Executive Vice President & CEO.

B. FINANCIAL MANAGEMENT SYSTEM

The Financial Manager shall be responsible for maintaining a financial
management system in compliance with this Agreement. The Financial Manager
shall notify the Commission immediately if the award recipient cannot
comply with the requirements established herein.

The financial management system shall provide for

(1) accurate, current and complete records of the financial results of
this program, in conformity with generally accepted principles of
accounting, capable of being reported in a format in accordance with
the financial reporting requirements as described herein; and

(2) records that adequately identify the source and application of funds
for Commission supported activities, containing information
pertaining to awards and authorizations, obligations, unobligated
balances, assets, liabilities, outlays or expenditures, and income,
and be maintained in conformity with generally accepted principles
of accounting; and

(3) effective internal and accounting controls over all funds, property,
and other assets; and

(4) comparison of actual expenditures or outlays with budgeted amounts
for the award, which shall be related to performance or productivity
data; and

(5) procedures for determining reasonableness, allowableness, and
allocability of costs, consistent with the provisions of federal and
state requirements; and

(6) source documentation.

The Commission may review the adequacy of the award recipient's financial
management system as part of a pre-award review, or at any time during the
period of the award. If the Commission determines that the award
recipient's system does not meet the standards described in this section,
additional information may be required by the Commission upon written
notice to the award recipient. This information shall be provided to the
Commission until such time as the Commission determines that the system
meets with Commission approval, If award recipient fails to provide such
information to the satisfaction of the Commission, or if the Commission
determines that the award recipient has consistently failed to maintain
the proper financial management system, the Commission may take action
pursuant to section I.K, herein.

7
<PAGE> 11

C. USE OF FUNDS

The funds provided herein may be used only for allowable costs. Award
funds may be used for salaries, supplies, travel, purchase of services,
equipment, and other direct project expenses. Funds may only be used for
costs that are directly applicable to the project, not for overhead costs
to the company.

Award recipient may charge to the award only the costs resulting from
obligations incurred during the funding period, unless carryover of
unobligated balances is permitted, in which case the carryover balances
may be charged for costs resulting from obligations of the subsequent
program period.

The award recipient must liquidate all obligations incurred under this
award not later than ninety (90) days after the end of the funding period,
unless specific authority to extend this deadline is granted, in writing,
by the Commission.

D. MATCHING AND COST SHARING

Award recipient shall be required to account for, to the satisfaction of
the Commission, the matching and cost-sharing requirements as stated
herein. The Commission requires that any funds it commits to support award
related activities shall be matched in at least a 1:1 ratio with non-state
support. Non-state support may include cash and/or in kind support. In
kind support includes the salary costs of the research team, use of
company equipment, materials, and other resources devoted to the project
by the company, its consultants, subcontractors, vendors, or other
participating partners. Cash support includes third party equity
investments or loans, funding from federal grants, foundations, and
universities, cash commitments from distributors to support marketing,
sales promotion, and/or customer service, investments by company
principals, payments to outside vendors, consultants, or contractors for
work performed related to the project. The matching support may include
contributions by the sponsoring company for the expenses of the project,
and contributions by individuals and/or organizations collaborating with
the company. To qualify as cost sharing, all support must be available for
expenditure during the funding period.

E. BUDGET REVISIONS AND MODIFICATIONS

The "award budget" as used in this section means the agreed financial plan
approved by the Commission that will be utilized to implement
award-related activities. The award budget is appended as Attachment "B"
hereto. Line item variances in the award budget, in amounts up to twenty
five thousand dollars ($25,000) or ten percent (10%) of the total amount
of the award, whichever is less, do not require the prior approval of the
Commission but may be initiated by award recipient and reported in the
final financial report. In the event that the final financial report
indicates line item variances in excess of this amount (either under or
over expenditure), the Commission may require that the amount of the
variance over twenty five thousand dollars ($25,000) or ten percent (l0%)
of the total award be refunded to the State of New Jersey.

All other budget revisions and modifications to the award budget in
amounts in excess of twenty five thousand dollars or ten percent (10%) of
the total amount of the award, must be approved in advance, in writing, by
the Commission. Before any obligation is incurred which would result in
any line item variance in excess of the variances permitted above, the
award recipient must obtain an award budget amendment, in writing, from
the Commission. Requests for amendments of the award budget must include
an interim comparison of budget to actual expenditures to date, in the
form of Attachment "C", hereto, a proposed amended budget, in
substantially the same form and level of detail as the award budget, and
an explanation for the requested amendment.

8
<PAGE> 12

The award recipient must also obtain prior written approval when a
revision or modification will be necessary for any of the following
reasons:

(1) changes in the scope, objective, or timing of the project or
program;

(2) the need for additional funding, or to extend the period of
availability of funds;

(3) the award recipient plans to transfer funds that would cause a state
appropriation, or part thereof to be used for purposes other than
those originally indicated.

If the award recipient is making program expenditures or providing grant
services at a rate which, in the judgment of the Commission, will result
in substantial failure to expend the award amount or provide services, the
Commission shall so notify the award recipient. If, within fifteen (15)
days of such notice, the award recipient is unable to develop, to the
satisfaction of the Commission, a plan to rectify its low level of program
expenditures or services, the Commission may, upon a thirty (30) day
notice, reduce the award amount so that the revised award amount fairly
projects program expenditures over the award period. This reduction shall
take into account the award recipient's fixed costs and shall establish
the committed level of activity for each program element of activity at
the reduced amount.

F. MONITORING OF PROGRAM PERFORMANCE

The award recipient shall continually monitor the performance of award
supported activities to assure that time schedules are being met,
projected work units by time periods are being accomplished, and other
performance goals are being achieved, as applicable, and as defined by the
Program Specifications, Attachment "A" hereto.

The award recipient shall inform the Commission of the following types of
conditions which affect program objectives and performance as soon as they
become known:

(1) problems, delays or adverse conditions which will materially impair
the ability to attain program objectives, prevent the meeting of
time schedules and goals, or preclude the attainment of project work
units by established time periods, accompanied by a statement of the
action taken, or contemplated, and any Commission assistance needed
to resolve the situation; and

(2) favorable developments or events which enable meeting time schedules
and goals sooner than anticipated or at less cost, or producing more
beneficial results than originally planned.

The Commission may at its discretion make site visits to review program
accomplishments and management control systems and to provide technical
assistance as the Commission determines may be required.

G. ACCOUNTING PRINCIPLES

Compliance with any provision of this Agreement relating to financial or
accounting computation or reporting shall be determined in accordance with
generally accepted principles of accounting.

9
<PAGE> 13

H. AUDIT REQUIREMENTS

The award recipient must obtain an annual audit for each fiscal year in
which the award recipient expends state-provided funds, in accordance with
the New Jersey Department of Treasury Circular Letter 98-07, "Single Audit
Policy For Recipients Of Federal Grants, State Grant And State Aid
Payments," and with the Federal Single Audit Act of 1984, as amended.

All audits will be conducted on an organization wide basis and on the
award recipient's fiscal year, which ends on December 31. Any changes in
fiscal year must be reported immediately to the Commission.

The award recipient shall provide to the Commission in a timely fashion
copies of all required single audit reports, including the auditor's
comments on the award recipient's compliance with the material terms and
conditions of this Agreement and applicable laws and regulations. In the
event of audit findings requiring corrective action by the award
recipient, the award recipient shall provide to the Commission copies of
all documentation of appropriate corrective actions taken. Such
documentation shall be provided within one month of the issuance of the
audit report.

I. ACCESS TO RECORDS

The award recipient agrees to make available to the Commission, and any
state or federal agency whose funds are expended in the course of this
program, or any of their duly authorized representatives, pertinent
accounting records, books, documents, electronic files, and other items as
may be necessary to monitor and audit operations and finances. All
visitations, inspections and audits, including visits and requests for
documentation in discharge of the Commission's responsibilities, shall as
a general rule provide for prior notice when reasonable and practical to
do so. However, the Commission retains the right to make unannounced
visitations, inspections, and audits as deemed necessary. The Commission
reserves the right to have access to all work papers produced in
connection with audits made by the award recipient or by independent
certified public accountants, registered municipal accountants, or
licensed public accountants hired by the award recipient to perform such
audits.

J. INSURANCE

Award recipient agrees to carry general liability insurance and other such
insurance against loss, damage and liability as is customary within its
industry, to be held with insurance companies licensed to do business in
New Jersey.

K. TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES

Award recipient warrants and represents that all tax returns and reports
of award recipient required by law to be filed have been duly filed and
all taxes, assessments, fees and other governmental charges upon the award
recipient or upon any of its respective properties, assets, income or
franchises which are due and payable pursuant to such returns and reports,
or pursuant to any assessment received by the award recipient have been
paid other than those which may be presently payable without penalty or
interest.

Award recipient agrees to pay as they become due, all taxes, assessments
and governmental charges which may be required by law or contract to be
paid by the award recipient. Award recipient may in good faith contest
such taxes and governmental charges and such taxes and charges may remain
unpaid during the period of such contest.

10
<PAGE> 14

L. YEAR 2000 COMPLIANCE.

Award recipient warrants and represents that it has taken all steps
necessary to reasonably assure, or will use reasonable and necessary
efforts to assure, that all software or computer programs used by it,
which are material to the operation of its business, are designed to be
used prior to, during and after the calendar year 2000 A.D. and such
software or computer programs will operate during each time period without
error regarding date data, specifically including any error relating to,
or the product of, date data which represents or references different
centuries or more than one century.

III. AWARD CLOSEOUT

A. PROCEDURES

The Commission shall close out the award provided herein when it
determines that all applicable administrative action and all required work
pertaining to the award have been completed by the award recipient.

The date of completion of this program shall be when all activities
related to the award are completed, the funding period has expired, or the
Commission terminates the award, whichever occurs earliest.

The award recipient shall submit a final report pursuant to section II.B.
below upon the date of completion or termination of the award. The
Commission may permit extensions when requested in advance, in writing, by
the award recipient.

Upon the date of completion, or termination of the award by the
Commission, the award recipient will, together with the submission of the
final report, refund to the Commission any unexpended funds or unobligated
(unencumbered) cash advanced, except such sums that have been otherwise
authorized in writing by the Commission to be retained.

Award recipient must liquidate all obligations incurred under this award
not later than ninety (90) days after date of completion or termination of
the award, unless specific authority to extend this deadline is granted,
in writing, by the Commission.

Within the limits of the award amount, the Commission may make a
settlement for any upward or downward adjustment of costs after these
reports are received.

In the event a final audit has not been performed prior to the closeout of
the award, the Commission retains the right to recover any appropriate
amount after fully considering the recommendations on disallowed costs
resulting from the final audit.

The award recipient shall account for any property acquired with award
funds or received from the Commission.

B. FINANCIAL AND PERFORMANCE REPORTING

(1) Final reports shall be submitted to the Commission by the award
recipient no later than ninety days after date of completion of the
award related activities, or termination of the award by the
Commission. At a minimum, these final reports shall include:

11
<PAGE> 15

(a) a final performance report, in a format which conforms to the
Final Report Guidelines, Attachment "D" hereto. The accuracy
of this performance report shall be certified, in writing, by
the Project Manager;

(b) a final comparison of actual to budget expenditures in the
format provided in Attachment "C" hereto. The accuracy of this
financial report shall be certified, in writing, by the
Financial Manager. This comparison of actual to budget
expenditures shall be presented in the same organization and
level of detail as that of the original award budget
(Attachment "B"). If any comparison of actual to budget
expenditures is submitted to the Commission prior to
liquidation of all outstanding obligations, then this
comparison of actual to budget expenditures shall separately
present actual expenses and outstanding obligations, and shall
indicate the effective date of a comparison of actual with
budget expenditures. A final comparison of actual to budget
expenditures must be submitted to the Commission upon
liquidation of all obligations under this award; and

(c) a summary report of all non-Commission resources expended by
the award recipient in support of the project or program
supported by the Commission's investment. This report should
include any support which is claimed as formal matching to the
Commission's award, pursuant to section II.E. of this
Agreement. Upon acceptance of the terms of this Agreement, the
award recipient shall commit itself to the appropriate match
or contribution to the awarded amount. The award recipient
shall identify and enumerate in writing all the components of
the match or contribution. In addition, this report should
summarize any other resources utilized by the program, which
are not eligible for consideration as matching, whether any
form of equipment, grants and discounts, in kind donations,
etc. from all sources of support. The accuracy of this
matching report shall be certified, in writing, by the
Financial Manager.

If reports are not submitted as required, the Commission may take
action pursuant to section I.K. herein.

(2) As soon as possible and in any event within ninety (90) days after
the close of each fiscal year subsequent to the ending date of
activity supported under this award, the award recipient shall
submit to the Commission an unqualified audit report, certified by
an independent certified public accountant or licensed public
accountant, using generally accepted accounting principles, on a
consolidated and consolidating basis (consolidating statements need
not be certified by such accountants), for the immediately preceding
fiscal year, including balance sheets as of the end of such fiscal
year, related profit and loss and reconciliation of surplus
statements and a statement of changes in financial position,
accompanied by certificate of said accountants that in the course of
their examination necessary for their certification of the
foregoing, they have obtained no knowledge of any default or
potential default, or if, in the opinion of such accountant, any
default or potential default shall exist, said certificate shall
state the nature and status thereof.

(3) As soon as possible after the close of each fiscal year subsequent
to the ending date of activity supported under this award, the award
recipient shall submit to the Commission a copy of the award
recipient's federal income tax return for the immediately preceding
fiscal year.

(4) If applicable, the award recipient shall provide to the Commission,
concurrently with the furnishings thereof, copies of all reports
sent to award recipient's shareholders, the Securities and Exchange
Commission, or any securities exchange.

12
<PAGE> 16

C. RECORD RETENTION

Except as otherwise noted below, financial and program records, supporting
documents, statistical records, and all other records pertinent to this
award shall be retained for a period of three years, starting from the
date of submission of the final expenditure report, unless federal or
state funding statutes require a longer period.

If any litigation, claim, negotiation, action or audit involving the
records is started before the expiration of the three year period, the
records must be retained until completion of the action and resolution of
all issues which arise from it, or until the end of the regular three year
period, whichever is later.

Records for nonexpendable property acquired with Commission funds shall be
retained for three years after final disposition of the property.

The retention period for real property and equipment records starts from
the date of the disposition, replacement or transfer of the real property
or equipment.

The Commission may request transfer of certain records to its custody from
the award recipient when it determines that the records possess long-term
retention value and will make arrangements with the award recipient to
retain any records that are continuously needed for joint use.

IV. REPAYMENT

All terms and conditions of this Agreement shall remain in full force and
effect until the award has been repaid in full pursuant to this section,
or the Commission otherwise releases award recipient, in writing, from
some or all obligations contained herein.

A percentage of the annual net income received by the award recipient, as
specified in subsection B. of this section, shall be remitted to the
Commission by the award recipient.

A. DEFINITIONS

For the purposes of this section, "net income" shall be defined as the
award recipient's billings for products or services, less the sum of the
following:

(1) discounts allowed in amounts customary in the trade for quantity
purchases, cash payments, prompt payments, wholesalers and
distributors;

(2) sales taxes, tariff duties, and/or use taxes directly imposed and
with reference to particular sales;

(3) outbound transportation prepaid or allowed; and

(4) amounts allowed or credited on returns.

No deductions shall be made for commissions paid to individuals whether
they be with independent sales agencies or regularly employed by the award
recipient and on its payroll, or for cost of collections. Net revenue
shall occur when a product or service is invoiced. If a product or service
is distributed or invoiced for a discounted price substantially lower than
customary in the trade, or distributed at no cost to affiliates or
otherwise, net revenue shall be

13
<PAGE> 17

based on the customary amount billed for such products or services.

B. ANNUAL PAYMENTS

The award recipient shall make payments in the required amounts annually
to the Commission, for a period often years, up to a maximum cumulative
repayment to the Commission of the amount of this Technology Transfer
Program award. Annual payments, as specified below, shall be due to the
Commission not later than ninety (90) days after the first through tenth
anniversary dates of the ending date of the funded activity, as specified
on the award data sheet. These required payments shall be submitted
together with the unqualified audit reports required under Section
III.B.(2) of this agreement.

The amount to be remitted shall be determined as follows: in the first
year following the ending date of activity supported under this award, the
award recipient shall remit 1% (one percent) of net income; in the second
year, the award recipient shall remit 2% (two percent) of net income; in
the third year, the award recipient shall remit 3% (three percent) of net
income; in the fourth year, the award recipient shall remit 4% (four
percent) of net income; in the fifth year through the ninth year, the
award recipient shall remit 5% (five percent) of net income; in the tenth
year, the award recipient shall remit the difference between the amount of
the Commission's original award and the cumulative repayments through the
ninth year, if any.

The award recipient may, in its sole discretion, choose to make full or
partial repayment of the amount of this Technology Transfer Program award
at any time in advance of the schedule established in this section.

14
<PAGE> 18

IN WITNESS WHEREOF, the parties, duly authorized and intending to be
legally bound hereto, execute this Agreement, as of the date last written below.

(AWARD RECIPIENT)

_____________________________ _________________________________________
Witness (Name)
(Title)

______________________
Date

===========================================

New Jersey Commission On
Science and Technology

_____________________________ _________________________________________
Witness John V. Tesoriero, Ph.D.
Executive Director

______________________
Date

===========================================

APPROVED AS TO FORM:
PETER VERNIERO
ATTORNEY GENERAL OF
NEW JERSEY

_____________________________ By: _____________________________________
Date Deputy Attorney General

15
<PAGE> 19

If award recipient is a corporation, the following certificate shall be
executed by the secretary or assistant secretary.

I, ______________________________, certify that I am the secretary of the
corporation named as award recipient in the attached Agreement; that
___________________________, who signed said agreement on behalf of the award
recipient, was then __________________________ of said corporation, that said
Agreement duly signed for and in behalf of said corporation by authority of its
governing body, and is within the scope of its corporate powers.

_________________________________________
(Corporate Seal)

<PAGE> 1
EXHIBIT 10.2

FLEX/OFFICE
LEASE
AGREEMENT

TEN THIRTY-FIVE ASSOCIATES, LIMITED PARTNERSHIP

LESSOR

MILLENIUM CELL, LLC

LESSEE

HOVPARK EATONTOWN
ONE INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY

June 9, 1999

DATE PREPARED: 5/18/99

<PAGE> 2

SUMMARY OF BASIC LEASE PROVISIONS

LESSOR: TEN THIRTY-FIVE ASSOCIATES, LIMITED PARTNERSHIP

ADDRESS OF LESSOR: 225 Highway 35, P.O. Box 500, Red Bank, New Jersey
07701.

LESSEE: Millenium Cell, LLC

ADDRESS OF LESSEE: 5 Jules Lane, New Brunswick, NJ 08901

DEMISED PREMISES: Unit K in Building E located at HovPark Eatontown,
One Industrial Way West, Eatontown, New Jersey, as
set forth on the Site Plan attached hereto as
Exhibit "A", the Building Plan attached hereto as
Exhibit "B" and the Floor Plan attached hereto as
Exhibit "C".

LEASE TERM: Five (5) years

RENT COMMENCEMENT
DATE: The date established in accordance with Article
2(a) estimate to be August 1, 1999.

LEASE EXPIRATION DATE
ESTIMATED TO BE: July 31, 2004

BASE RENT: Year 1 - $9.35 per square foot, triple net, $7,581.34 monthly,
$90,976.00 annually

Year 2 - $9.85 per square foot, triple net, $7,986.75 monthly,
$95,841.00 annually

Year 3 - $10.35 per square foot, triple net, $8392.16 monthly,
$100,706.00 annually

Year 4 - $10.85 per square foot, triple net, $8,797.58 monthly,
$105,571.00 annually

Year 5 - $11.35 per square foot, triple net, $9,203.00 monthly,
$110,436.00 annually

PERMITTED USES: Research and Development

LESSEE'S S.I.C. NO.: 8731

TOTAL AREA WITHIN
THE BUILDING: 79,323 (flex) SQUARE FEET

TOTAL LEASED AREA OF
DEMISED PREMISES: 9,730 SQUARE FEET

LESSEE'S PROPORTIONATE
PERCENTAGE SHARE OF
COMMON AREA MAINTENANCE
CHARGES: 8.15%

SECURITY DEPOSIT: Three (3) months base rent -
$22,744.02.

RENEWAL OPTION: One (1) Five (5) year option period.

1
<PAGE> 3

GUARANTOR: In the event of a default, G.P. Strategies
Corporation will be responsible for the payment of
up to one (1) year of the then current rent and
any and all additional charges.

2
<PAGE> 4

LEASE

TABLE OF CONTENTS

ARTICLE
1 Demised Premises ...................................................5
2 Lease Term and Option to Renew .....................................5
3 Use ................................................................5
4 Security Deposit ...................................................5
5 Base Rent ..........................................................6
6 Adjustment to Base Rent ............................................6
7 Tax Rent ...........................................................7
8 Common Areas and Common Area Maintenance ...........................8
9 Additional Rent ....................................................9
10 Lessor's Standard Work .............................................9
11 Additional Work to be Performed for Lessee .........................9
12 Peaceful Enjoyment .................................................9
13 Lessee's Representations
A. Payment .................................................10
B. Repairs and Re-Entry ....................................10
C. Assignment and Subletting ...............................10
D. Alterations, Additions, Damage & Improvements ...........11
E. Legal Use, Insurance Violations and Costs ...............12
F. Laws and Regulations ....................................12
G. Indemnity and Insurance
1. Indemnity .........................................12
2. Insurance .........................................12
H. Building Rules and Regulations ..........................13
I. Entry for Repairs, Inspection, Showing ..................13
J. Nuisance ................................................13
K. Utility Charges .........................................13
L. Janitorial ..............................................13
M. Net-Net-Net Lease .......................................14
14 Mutual Representations and Covenants
A. Condemnation ............................................13
B. Loss or Damage ..........................................14
C. Lien for Rent ...........................................14
D. Abandonment .............................................14
E. Holding Over ............................................14
F. Fire or Casualty ........................................15
G. Attorneys Fees and Costs ................................15
H. Amendment or Modification ...............................15
I. Transfer of Lessor's Rights .............................15
J. Default by Lessee
1. Right to Re-Enter .................................15
2. Right to Relet ....................................15
3. Notice of Default, Right to Cure ..................16
4. Remedies Cumulative ...............................16
K. Waiver ..................................................16
L. Possession ..............................................16
M. Bankruptcy ..............................................16
N. Assignment by Lessor ....................................16
0. Pronouns and Genders ....................................16
P. Subordination ...........................................16
Q. Force Majeure ...........................................17
R. Time of Essence .........................................17

3
<PAGE> 5

S. Transmittal .............................................17
15 Mechanic's Liens ..................................................17
16 Estoppel Certificates .............................................17
17 Waiver of Jury Trial ..............................................17
18 Limits of Lessor's Liability ......................................17
19 Severability ......................................................18
20 Notices ...........................................................18
21 Relationship of Parties ...........................................18
22 Memorandum of Lease ...............................................18
23 Construction ......................................................18
24 Parking ...........................................................18
25 Signs .............................................................18
26 Brokerage .........................................................18
27 Late Payments .....................................................18
28 Headings ..........................................................19
29 Integration .......................................................19
30 Governing Law .....................................................19
31 No Third Party Rights .............................................19
32 Shift Premises ....................................................19
33 Environmental Law Compliance ......................................19
34 Confidentiality ...................................................21

EXHIBITS
"A" Site Plan .........................................................25
"B" Building Plan .....................................................26
"C" Floor Plan ........................................................27
"D" Lessor's Standard Work ............................................28
"E" Additional Work to be Performed by Lessor
for Lessee at Lessee's Expense ....................................29
"E-1" Lessee Interior Construction Requirements .........................31
"F" Rules and Regulations .............................................36
"G" Guaranty (if applicable) ..........................................39

4
<PAGE> 6

FLEX/OFFICE
LEASE AGREEMENT

THIS AGREEMENT entered into this _____ day of June ___ 1999, between Ten Thirty
Five Associates, a Limited Partnership of the State of New Jersey, having its
principal place of business at 225 Highway 35, Red Bank, New Jersey, 07701,
referred to as "Lessor"; and Millenium Cell, LLC, a Corporation of the State of
New Jersey, with offices at 5 Jules Lane, New Brunswick, referred to as
"Lessee".

W I T N E S S E T H:

1. Demised Premises. Lessor has leased to Lessee the area located in the
property known as Unit K in Building E located at HovPark Eatontown, One
Industrial Way West, in the municipality of Eatontown, New Jersey, as designated
and highlighted: (a) on the Site Plan attached hereto as Exhibit "A"
("Project"); (b) on Exhibit "B" hereto which is the plan of the building in
which the demised premises is a part ("Building"); and (c) on the Floor Plan of
the first floor of the Building attached hereto as Exhibit "C", ("Demised
Premises").

2. Lease Term and Option to Renew. (A) The Lease Term shall be five (5) years
and shall commence on Lessor's delivery of the demised premises to Lessee in
accordance with the delivery specification set forth in Exhibit "E" attached
hereto, estimated at August 1, 1999 and expire on July 31, 2004 ("Lease Term").
The Lease Term is subject to adjustment based upon the actual Rent Commencement
Date and unless sooner terminated as herein provided.

The "Rent Commencement Date" shall mean: (1) the date Lessor, or Lessor's Agent,
notifies Lessee in writing that the Demised premises are ready for occupancy; or
(2) the date on which Lessee shall first take possession of any portion of the
Demised Premises; or (3) the day following the issuance of any Certificate of
Occupancy for the Demised premises, whichever of said dates shall occur first.

(B) Provided Lessee is not in default hereunder, Lessee shall have the right and
option to renew this lease ("Option to Renew") for one (1) additional option
period of five (5) years ("Option Term") upon the same terms and conditions
herein set forth except that the Base Rent shall be adjusted in accordance with
Paragraph 6 below. To exercise its Option to Renew, Lessee must give Lessor
notice in writing sent so as to be received at least nine (9) months prior to
the expiration of the initial Lease Term or the Option Term; as applicable.
Lessee's exercise of its Option shall be void and of no effect if Lessee is in
default of this Lease on the date it exercises its Option to renew or on the
expiration of the Lease Term or Option Term, as applicable. Not withstanding
anything above to the contrary, in no event shall Lessee be allowed to renew
when a subLessee is in possession of the Demised Premises.

3. Use. Lessee shall continuously use and occupy the Demised Premises during the
full term of this Lease for no other purpose than research and development,
which is the Permitted Use. Any changes in same must be approved in writing by
Lessor in advance, which approval may be refused by Lessor for any reason.
Lessee represents and warrants to Lessor that the Permitted Uses have the
Standard Industrial Classification ("S.I.C.") Numbers set forth in the Summary
of Basic Lease Provisions hereof.

4. Security Deposit. Lessee, concurrently with the execution of this Lease, has
deposited $22,743.88 with Lessor (the "Security Deposit"), the receipt of which
is hereby acknowledged. Said sum shall be retained by Lessor as security for the
payment by Lessee of the monies herein agreed to be paid by Lessee, and for the
faithful performance by Lessee of the terms and covenants of the Lease. In the
event of any default by Lessee, Lessor, at its option, may at any time apply
said sum, or any part thereof, (a) toward the payment of any or all rent or
other monies payable under this Lease which are in default, or (b) so as to cure
any default of Lessee; but Lessee's liability under this Lease shall thereby be
discharged but only to the extent that Security Deposit covers the amount in
default and Lessee shall remain liable for any amounts that such sum shall be
insufficient to pay. Lessor is not required to exhaust any or all rights and
remedies available at law or equity against Lessee before resorting to the
Security Deposit.

5
<PAGE> 7

Lessee's failure to restore any of the Security Deposit used by Lessor within
(10) days of Lessor's request for same shall be an act of default hereunder. In
the event this deposit shall not be utilized for any purposes herein permitted
and provided Lessee is not in default at the expiration of the Lease Term or any
Option Term as applicable, then such deposit shall be returned by Lessor to
Lessee within thirty (30) days after the expiration of the Lease Term or Option
Term, as applicable. Lessor shall not be required to pay Lessee any interest on
said Security Deposit.

5. Base Rent. Lessee shall pay to the Lessor as Base Rent for the Demised
Premises the following:

A. For the first year of the Lease Term, Lessee shall pay Ninety Thousand Nine
Hundred Seventy-Five and 50/100 Dollars per annum, ($90,975.50), $9.35 a square
foot, payable in equal monthly installments of Seven Thousand Five Hundred
Eighty-One and 29/100 ($7,581.29) and;

B. For the second year of the Lease Term, Lessee shall pay Ninety Five Thousand
Eight Hundred Forty One 00/00 Dollars per annum, ($95,841.00), $9.85 per square
foot, payable in equal monthly installments of Seven Thousand Ninety Hundred
Eighty-Six and 75/100 ($7,986.75) and;

C. For the third year of the Lease Term, Lessee shall pay One Hundred Thousand
Seven hundred Six and 50/100 Dollars per annum, ($100,706.00), $10.35 per square
foot, payable in equal monthly installments of Eight Thousand Three Hundred
Ninety-Two and 16/100 ($8,392.16) and;

D. For the fourth year of the Lease Term, Lessee shall pay One Hundred Five
Thousand Five Hundred Seventy-One and 00/100 Dollars per annum, ($105,571.00),
$10.85 per square foot, payable in equal monthly installments of Eight Thousand
Seven hundred Ninety-Seven and 58/100 ($8,797.58) and;

E. For the fifth year of the Lease Term, Lessee shall pay One Hundred Ten
Thousand Four Hundred Thirty-Six and 00/100 Dollars per annum, ($110,436.00),
$11.35 per square foot, payable in monthly installments of Nine Thousand Two
Hundred Three and 00/100 ($9,203.00).

Each payment shall be paid in advance, without demand, on the first day of each
and every calendar month during the Lease Term without deduction or setoffs. If
the Lease Term shall begin on other than the first day of a calendar month, then
the Base Rent for such portion of the particular calendar month at the beginning
of the Lease Term shall be apportioned and paid on the basis of a month of
thirty days. The Base Rent shall be paid to Lessor in legal tender of the United
States of America at the address of Lessor, specified above, or at such place as
Lessor may from time to time designate by notice in writing.

6. Adjustment of Base Rent. If the Option to Renew as set forth above in 2 (b)
is exercised, the annual base rent for each year of the Option Term will be
adjusted as follows:

A. For the first year of the Option Term, Lessee shall pay One hundred Fifteen
Thousand Three Hundred and 50/100 Dollars per annum ($115,300.50), $11.85 per
square foot, payable in equal monthly installments of Nine Thousand Six Hundred
and Eight and 37/100 ($9,608.37) and;

B. For the second year of the Option Term, Lessee shall pay One Hundred Twenty
Thousand and One Hundred and Sixty-Five and 50/100 Dollars per annum
($120,165.50), $12.35 per square foot, payable in equal monthly installments of
Ten Thousand Thirteen and 79/100 ($10,013.79) and;

C. For the third year of the Option Term, Lessee shall pay One Hundred
Twenty-Five Thousand Thirty and 50/100 Dollars per annum ($125,030.50), $12.85
per square foot, payable in equal monthly installments of Ten Thousand Four
Hundred and Nineteen and 20/100 ($10,419.20) and;

D. For the fourth year of the Option Term, Lessee shall pay One hundred
Twenty-Nine Thousand Eight Hundred Ninety-Five and 50/100 Dollars per annum
($129,895.50), $13.35 per square fool, payable in equal monthly installments of
Ten Thousand Eight Hundred Twenty-Four and 62/100 (10,824.62) and;

E. For the fifth year of the Option Term, Lessee shall pay One Hundred
Thirty-Four Thousand Seven Hundred Sixty and 50/100 Dollars per annum
($134,760.50), $13.85 per square foot, payable in equal monthly installments of
Eleven Thousand Two Hundred Thirty and 04/100 ($11,230.04).

6
<PAGE> 8

7. Tax Rent. The term "Taxes" shall mean the aggregate of the real-estate taxes,
assessments and other governmental charges and levies, general and special,
ordinary and extraordinary, foreseen and unforeseen, of any kind or nature
whatsoever (including without limitation assessments for public improvements or
benefits and interest on unpaid installments thereof) which may be levied,
assessed or imposed or become liens upon or arise out of the use, occupancy or
possession of the land, buildings, leasehold improvements, betterment's, and
other permanent improvements within or to the Lessor's property from time to
time. The term "Taxes" shall not, however, include inheritance, estate,
succession, transfer, gift, franchise, corporation income or profit tax imposed
upon Lessor. However, if at any time during the Lease Term the methods of
taxation prevailing at the commencement of the Lease Term shall be altered so
that in addition to or in lieu of or as a substitute for the whole or any part
of the Taxes now levied, assessed or imposed on real-estate as such there shall
be levied, assessed or imposed: (i) a tax on the rents received; or (ii) a
license fee measured by the rents receivable by Lessor; or (iii) a tax or
license imposed upon Lessor which is otherwise measured by or based in whole or
in part upon the real-estate, then the same shall also be within the definition
of the term "Taxes" above.

Lessor covenants that it will pay, when due, all Taxes, imposed on the tax lot
wherein the Demised Premises are situated. Lessee shall pay to Lessor an amount
equal to Lessee's proportionate share of such Taxes ("Tax Rent") which shall be
determined by a fraction, the numerator of which shall be the Total Leased Area
of the Demised Premises, and the denominator of which shall be the Total Area
with the Building or Project wherein the Demised Premises are situated, subject
to the method by which taxes are calculated. Such amount shall be fairly and
equitably prorated for any partial lease year during the Lease Term.

The term "Tax Year" shall mean the twelve (12) month period established as the
real estate tax year by the taxing authorities having jurisdiction over the
Demised Premises. Lessee's Tax Rent (as the same may be subsequently increased
or decreased) shall be paid to Lessor in equal monthly installments in advance
on the first day of any calendar month during such Tax Year. If, on the first
day of any calendar month the amount of Taxes payable during the then current
Tax Year shall have not been determined by the taxing authorities, then the Fax
Rent then payable by Lessee shall be estimated by Lessor and be subject to
immediate (i) adjustment when the amount of such Taxes shall be determined; and
(ii) payment upon submission of a statement therefore by Lessor.

Within 60 days after the end of each Tax Year, Lessor shall deliver a copy to
Lessee of all bills for Taxes for such Tax Year and certify to Lessee the amount
of Lessee's Tax Rent. If the amount of such monthly Tax Rent payments paid by
Lessee exceeds the actual amount due, the overpayment shall be credited on
Lessee's next succeeding payment or during the last year of the Lease Term.
Lessor will refund such excess to Lessee within thirty (30) days following the
expiration of the Lease Term, if Lessee is not in default hereunder. If the
amount of such monthly Tax Rent payments paid by Lessee were less than the
actual amount due, Lessee shall pay to Lessor the difference between the amount
paid and the actual amount due, within ten (10) days after receipt of Lessor's
certification of amount due.

Lessee shall pay (or reimburse Lessor upon demand if the same are levied against
Lessor or the Demised Premises), before delinquency, any and all taxes,
assessment, license fees and public charges, of whatever kind or nature, levied
or assessed during the Lease Term by any governmental authority against Lessee's
business in the Demised Premises and the fixtures, furniture, appliances and any
other personal property therein.

Lessor shall have the right but not the obligation, if permitted by law, to make
installment payments of any assessments levied against the Demised Premises and
in such event, Lessee's share of the Taxes shall be computed upon the
installments and interest thereon paid by Lessor in each Tax Year.

Lessor shall have the sole, absolute right, but not the obligation, to contest
the validity or amount of any Taxes by appropriate proceedings, and the sole,
absolute and unrestricted right to negotiate and settle any contest, proceeding
or action upon whatever terms Lessor may, in its sole discretion, determine. In
the event Lessor receives any refund of such Taxes (and provided Lessee is not
then in default under this Lease) Lessor shall credit such proportion of the
refund

7
<PAGE> 9

(less pro rata costs, expenses and attorney's fees) as shall be allocable to the
Lessee's Tax Rent against the next succeeding payments due of Lessee's Tax Rent.

In the event of any dispute under this Article, Lessee shall pay its Tax Rent in
accordance with the applicable bill or statement, and such payment shall be
without prejudice to Lessee's position. If the dispute shall be determined in
Lessee's favor by agreement or otherwise, Lessor shall pay to Lessee the amount
of Lessee's overpayment resulting from compliance with such bill or statement.
Any such bill or statement shall be deemed binding and conclusive if Lessee
fails to object to it in a detailed writing within thirty (30) days after it is
mailed by Lessor.

Failure of Lessor to provide any statement called for hereunder within the
period of time prescribed, will not relieve Lessee from its obligations
hereunder.

8. Common Areas and Common Area Maintenance.

A. The term "Common Areas" means the portions of the lot or Building or Project
as herein described which have been designated and improved for common use by or
for the benefit of more than one occupant of same including, without limitation
(if and to the extent facilities therefore are provided by the Lessor at the
time in question): the land and facilities utilized for or as parking lots;
access and perimeter roads; truck passageways and loading platforms (which
includes any platform that may be used by only one occupant); service corridors;
landscaped and grass areas; exterior lawn sprinklers, walks, stairways, ramps;
interior corridors and stairs; directory equipment; storm and sanitary sewers;
utility lines and the like installed at the cost of the Lessor; and the
structure of the Building and any buildings or other structures in the Project
and all component and structural parts and systems of same including but not
limited to the roof, mechanical systems, load bearing walls, floors and all
other structural components but excluding all portions of the Building which are
used or intended for use by one occupant, except as provided above.

B. The term "Common Area Maintenance" charges (sometimes referred to by Lessor
as "CAM" charges) shall mean an amount equal to the sum of: (i) the actual cost
of operating, managing, lawn sprinklers and lawn maintenance, equipping,
landscaping, cleaning, lighting, snow and ice removal from, repairing,
replacing, and otherwise maintaining the Common Areas, including, but not
limited to; all costs of insurance relating to the Common Areas, all taxes
allocable thereto, all sewer and water costs, costs of maintaining and operating
any private sewerage disposal or septic facilities and meter equipment rooms,
and the cost of all utilities servicing the Common Areas; and (ii) 1 0% of the
costs referred to in (i) above as a reserve fund for making capital repairs and
replacements to the Common Areas; and (iii) 5% of Base Rent as a management fee.

The term "Common Area Maintenance" shall also include Lessor's actual annual
cost of procuring and maintaining insurance covering fire and such other risks
as are from time to time included in standard extended coverage endorsements and
special broad form coverage's, insuring not less than ninety percent (90%) of
the full insurable value (based on completed construction but excluding
foundation and excavation costs and underground floor pipes and drains) of the
Project, the Demised Premises and Buildings, and improvements and betterment's
installed by Lessor or others within same, in addition to rent loss insurance.
Lessee hereby acknowledges that Lessor will not insure Lessee's personal
property, fixtures, equipment, furniture, machinery, decorations, stock-in-trade
or other property or the contents within the Demised Premises belonging to the
Lessee or others and Lessee shall be solely responsible for maintaining
liability coverage and insurance on any and all of its personal property and all
of the items herein set fourth in this sentence.

Lessor shall notify the Lessee of Lessee's pro rata share of the Common Area
Maintenance charges estimated and computed in the same manners as set forth
above for Tax Rent computation by Lessor in advance and for each annual lease
period during the Lease Term and any portion thereof. Lessee shall pay its pro
rata share of such estimated Common Area Maintenance charges in equal monthly
installments coincident with payment of Base Rent. Lessor shall make available
to the Lessee after each annual period during the Lease Term, a statement
showing the Lessor's actual costs of maintaining and operating the Common Areas.
If

8
<PAGE> 10

the pro rata share of the actual Common Area Maintenance charges for such annual
lease period exceeds the estimated amount paid by Lessee, Lessee shall pay to
the Lessor the balance of its pro rata share of such excess within thirty (30)
days after receipt of a statement of Lessor therefore. If the estimated amount
so paid by Lessee exceeded the Lessee's pro-rata share of the actual Common Area
Maintenance charges, then, the Lessee's share of such excess shall be credited
against the next succeeding payment(s) due of Lessee's pro-rata estimated share
of Common Area Maintenance charges for the next annual lease period.

Failure of Lessor to provide any statement called for hereunder within the
period of time prescribed, will not relieve Lessee from its obligations
hereunder.

Not withstanding anything above, if an expenditure is incurred for the benefit
of less than all Lessees, Building or Project, said expenditures shall be
allocated proportionately to the benefiting parties.

9. Additional Rent. Wherever the phrase "Additional Rent" is used in this Lease,
it shall mean not only the additional monies to be paid to Lessor as provided
for in Article 7 and 8 hereof, but also all other charges or sums due by Lessee
to Lessor hereunder, including, without limitation, attorney's fees and court
costs; reimbursement for sums advanced by Lessor, if any, on Lessee's behalf;
costs of performing Lessee's Work and interest on all monies due at the then
applicable maximum legal rate.

10. Lessor's Standard Work. All work to be performed within and needed in order
to ready the Demised Premises for Lessee's use and occupancy is described and
set forth on Exhibit "D" (other than decorations and installation of movable
trade fixtures, office and other equipment) ("Lessor's Standard Work"). Lessor
shall, at its sole cost and expense, perform "Lessor's Standard Work" on the
Demised Premises and the Building. The shape, height and location of the Demised
Premises within the Building, Lessor's Standard Work and the design criteria
therefore set forth in Exhibit "D" or otherwise, and the nature and identity of
the occupants of the other leased premises in the project are each subject to
such changes as Lessor shall, at any time and from time to time, deem to be
desirable for the benefit of the Lessor and the overall Project. However, such
changes shall not materially adversely affect Lessee and provided further that
the resulting Demised Premises shall be substantially equivalent in usefulness
for Lessee's purposes as prior to such changes. No changes shall invalidate or
affect this Lease, and Lessor and Lessee shall, on request by either, modify
Exhibits "A", "B", "C" and/or "D" to such extent as the architects or engineers
selected by Lessor certify to be proper to be in accord with the changes
referred to in this Article. Lessee shall be responsible for obtaining a
Certificate of Occupancy.

It shall be conclusively established that the Demised Premises and all work to
be done by Lessor under Article 10 and 11 were in satisfactory condition in all
respects by and as of Lessee taking possession of the Demised Premises, except
for items on Exhibit "D" and Exhibit "E" as to which Lessee shall give written
notice to Lessor within ten (10) days after the commencement of the Lease Term.

Any disagreement which may arise between Lessor and Lessee with respect to
either Lessor's Standard Work (Article 10) or Additional Work To Be Performed On
Behalf of Lessee (Article 11) shall be resolved by the decision of Lessor's
architects or engineers, the cost of whose services in respect of such
disagreement shall be borne equally by Lessor and Lessee. The decision of said
architects or engineers shall be final and binding on the parties.

11. Additional Work To Be Performed. If Lessee has requested any work to be
performed within the Demised Premises which is different in scope or amount of
Lessor's Standard Work (Exhibit D), said additional work is set forth and
defined in Exhibit "E" ("Additional Work To Be Performed On Behalf Of Lessee").
Lessee shall pay Lessor for all of said work as set forth on a schedule within
Exhibit E.

12. Peaceful Enjoyment. Lessee shall and may peaceably have, hold and enjoy
possession of the Demised Premises subject to the other terms hereof, provided
Lessee pays the monies herein required and performs all covenants and agreements
herein contained.

9
<PAGE> 11

13. Lessee's Representations. The Lessee hereby represents, warrants and
covenants to Lessor as follows:

A. Payments. To pay to Lessor all rents and sums provided to be paid hereunder
at the times and in the manner herein provided.

B. Repairs and Re-Entry. Lessee will, at Lessee's own cost and expense, make all
repairs with respect to the Demised Premises during and at the expiration or
termination of the Lease Term and shall be solely responsible for the condition,
repairs to and replacement of, compliance with all codes and regulations and
maintenance of the Demised Premises. Lessor shall, at Lessee's expense, maintain
throughout the term of this Lease, including any extension term hereof, the
H.V.A.C. system serving the Demised Premises, including without limitation
periodic changing of any and all filters, changing of belts, lubricating of
equipment and maintenance of operating levels of freon in accordance with
manufacturers specifications. Lessor is not obligated to but may, at its sole
option, make such repairs and perform such maintenance to the Demised Premises
as Lessor determines to be necessary, in which event the Lessee shall repay the
full cost thereof to Lessor on demand. Lessee will not commit or allow any waste
or damage to be committed on any portion of the Demised Premises, and shall, at
the termination of this Lease, by lapse of time or otherwise, deliver up the
Demised Premises to Lessor in as good condition as at date of possession of
Lessee, ordinary wear and tear excepted. Upon such expiration or termination of
the Lease Term or abandonment of possession by Lessee, Lessor shall have the
right to re-enter and resume possession of the Demised Premises without any
further notice or liability to Lessee.

C. Assignment & Subletting.

1. Subletting Prohibited. Lessee shall not (i) sublet the Demised Premises
in whole or in part, (ii) sell or encumber this Lease or any interest therein,
and (iii) except in the case of an assignment permitted pursuant to Section
13C(2) of this Article, permit the use or occupancy of the Demised Premises or
any part thereof by anyone other than the Lessee named in this Lease who has
executed same.

2. Assignment.

a. Lessee shall not assign this Lease without the prior written
consent of the Lessor which consent shall not be unreasonably withheld. Consent
withheld for any of the following reasons shall be deemed conclusively to be
consent reasonably withheld: (i) the proposed assignee is not financially
qualified or is an otherwise unsatisfactory credit risk, or is not sufficiently
experienced, (ii) the proposed assignment would result in the creation of more
than one office, or in a change of the Permitted Use or Trade Name, or (iii) the
proposed assignment would adversely affect the overall character or quality of
the Building in which the Demised Premises are located, (iv) the proposed
assignee or use of the Demised Premises by the proposed assignee would come
within the provisions of ISRA or the Spill Compensation and Control Act, or (v)
the proposed assignee is an existing Lessee in the Complex. Not withstanding
anything above to the contrary, the length of any assignment shall be limited to
the expiration of the then current term at date of execution of said assignment.
The assignor and assignee shall not have any further right to exercise any
option periods.

b. In the event Lessee proposes to assign this Lease, Lessee shall
request Lessor's consent by notice given not less than ninety (90) days prior to
the intended effective date of the proposed assignment. Lessee's notice shall
include the proposed assignee's name and address, current financial statement
and business resume, including other business locations, other lessors, trade
and bank references and other information as reasonably requested by Lessor. If
Lessee claims that Lessor has been unreasonable in withholding or delaying
consent or unreasonable in its request for information as to a proposal to
assign, Lessee's remedy shall be restricted to a declaratory judgment and an
injunction for the relief sought, and shall exclude money damages.

10
<PAGE> 12

c. In addition to requiring Lessor's consent as aforesaid, any
assignment of this Lease shall be subject to the following:

(1) each assignee shall assume the obligations of this Lease
by executing, acknowledging and delivering to Lessor, prior to the effective
date of the assignment, an agreement in form and substance satisfactory to
Lessor wherein the assignee assumes the obligations of Lessee under this Lease
and wherein the assignor remains jointly and severally liable therefore; and

(2) There has been no Default hereunder on Lessee's part still
existing and uncured as of the effective date of the assignment.

(3) The Minimum Rent shall be increased by such amount to
reflect the current market rent in the area, but in no event shall the Minimum
Rent be less than provided in this Lease.

d. In furtherance of the provisions of Paragraph a of this Section
13C(2), if Lessee is a corporation (except a corporation whose outstanding
voting shares are listed on a recognized security exchange) and if the person or
persons who own a majority of its voting shares as of the date of this Lease
cease to own a majority of such shares at any time hereafter, except as a result
of transfers by gift, bequest, or inheritance by or among immediate family
members, such change of ownership shall constitute an assignment of this Lease.

e. All costs and expenses, including attorney's fees (which shall
include the cost of time expended by in-house counsel) incurred by Lessor and
Lessor's agent in connection with any proposed assignment, shall be paid by
Lessee as Additional Rent.

f. Neither Lessee nor any successor in interest nor a trustee in
bankruptcy shall have the right to assign this Lease, nor to sublet the whole or
any part of the Demised Premises after the adjudication of Lessee as a bankrupt
or in any liquidation proceedings as distinguished from an arrangement or
reorganization proceeding pursuant to federal or state statutes. Notice of this
provision shall be contained in any "short form" of Lease prepared pursuant to
this Lease.

g. Notwithstanding the other provisions of Section 13C (1) and
13C(2) hereof, Lessor shall have the right to recapture and terminate this Lease
if it receives a notice pursuant to Section 13C(2)(b) hereof.

Lessee will not assign this Lease, or allow the same to be assigned by operation
of law or otherwise; nor shall Lessee sublet the Demised Premises, or any part
thereof, or use or permit the same to be used for any other purpose than the
Permitted Use herein set forth without the prior written permission of Lessor
which may be refused for any reason. The selling or other transfer of the
corporate stock of any corporate Lessee or partnership interest in Lessee, as
applicable, shall be a prohibited assignment for purposes of this Lease
Agreement. Any assignment or subletting permitted by Lessor will not relieve the
Lessee of any obligation herein.

D. Alterations, Additions, Damage and Improvements. Lessee will not make or
allow to be made any alterations, additions or improvements in or to the Demised
Premises without the prior written consent of Lessor. Any and all such
alterations, additions or improvements when made to the Demised Premises by the
Lessee shall be at the Lessee's cost and expense. Lessor reserves the right to
undertake the construction of same but at Lessee's expense. Any and all such
alterations, additions or improvements, except removable fixtures and furniture
of the Lessee, shall at once become property of the Lessor and shall be
surrendered to the Lessor upon the termination in any manner of this Lease.
Notwithstanding the foregoing, Lessee shall not perform any repairs,
alterations, modification or maintenance of any type to the Common Areas or any
structural components of the Building, the Demised Premises or the Project. If
any of the Common Areas or any of said structural components are damaged by acts
or due to the negligence of the Lessee, its officers, employees, invitees or
guests, Lessor shall repair same and charge Lessee for the reasonable costs of
repair as Additional Rent.

11
<PAGE> 13

E. Legal Use, Insurance Violations and Costs. Lessee will not occupy or use, or
permit any portion of the Demised Premises to be occupied or used for any
business or purpose which is unlawful in part or in whole or deemed by Lessor to
be disreputable in any manner, or extra hazardous, or permit anything to be done
which will in any way increase the rate of insurance on the Project or the
Building and/or its contents. Upon demand Lessee agrees to pay any increase to
Lessor in insurance premiums on the Project or Building caused by Lessee's acts
or conduct of business at the Demised Premises and Project.

F. Laws and Regulations. Lessee will keep and maintain the Demised Premises in a
clean and healthful condition and comply with all laws, ordinances, orders,
rules and regulations (State, Federal, Municipal, and other agencies or bodies
having any jurisdiction thereof) which apply to the Project and rules, orders,
and regulations of the Underwriters Association for the prevention of fires,
with reference to use, conditions or occupancy of the Premised Premises.

G. Indemnity and Insurance.

1. Indemnity. The term "Claims" means all claims, suits, proceeding,
actions, causes of action, responsibility, liability, demands, fines, judgments
and executions of any kind and reasonable legal fees and all costs related
thereto. Lessee hereby indemnifies and agrees to save harmless Lessor and any
Mortgagee of Lessor regarding the Demised Premises from and against any and all
Claims, which either: (i) arise from the possession, use, occupation,
management, or control of and accidents occurring on the Demised Premises, or
any portion thereof; (ii) arise from any act or omission of Lessee or Lessee's
agents, contractors, employees, officers, invitees, or visitors; (iii) result
from any Default, breach, violation or non-performance of this Lease or any
provision hereof to be performed in whole or in part by Lessee; or (iv) result
in injury to person or property or loss of life sustained in or about the
Demised Premises. Lessee shall notify Lessor upon receiving any knowledge or
notice of any Claim and shall defend, with counsel satisfactory to Lessor and
its mortgagee, any Claim proceeding which may be brought against Lessor or any
mortgagee of Lessor with respect to the foregoing or in which they may be
impleaded. Lessee shall pay, satisfy and discharge any judgments, orders and
decrees which may be recovered against Lessor or any mortgagee of Lessor. Lessor
shall not be liable to Lessee or Lessee's agents, employees, officers, invitees
or visitors for any damage to persons or property due to condition, design, or
defect in the Demised Premises, Building or Project or its mechanical systems or
elsewhere in the Demised Premises, Building or Project which may now exist or
hereafter occur, including acts of negligence of co-Lessees or others. Lessee
assumes all risks of damage to persons or property.

2. Insurance.

(A) Comprehensive General Liability Insurance. Lessee shall maintain
and supply certificates of comprehensive general liability insurance coverage in
a combined single limit policy for bodily injury, death and property damage in
the amount of one million ($1,000,000) dollars with an umbrella or excess
liability policy with additional coverage of two million ($2,000,000) dollars.

(B) Fire Insurance. Lessee shall maintain and supply certificates of
Fire Insurance, with the usual extended coverage endorsement and endorsement for
vandalism, malicious mischief, rent continuation insurance and such other
extended coverage endorsements covering all of Lessee's property in the Demised
Premises including but not limited to stock, trade fixtures, furniture,
furnishings, floor covering and equipment and signs and all other property,
installations, betterment's, alterations, additions and improvements made by
Lessee in, on or about the Demised Premises. Said insurance shall be in an
amount of not less than one hundred percent (100%) of the full insurable value
of the items set forth above.

(C) Other Insurance. Lessee shall provide and keep in force other
insurance in amounts that may from time to time be required by Lessor against
other insurable hazards as are commonly insured against for the type of business
activity that Lessee will conduct.

All insurance required of Lessee hereunder shall be in form and from carriers
licensed by in the State of New Jersey satisfactory to Lessor. Each policy shall
contain an express waiver of

12
<PAGE> 14

subrogation by the insurance carrier in favor of Lessor, Lessor's agents and
employees, mortgagees and ground lessors, if any; and shall provide that it
shall not be subject to cancellation, termination or material change except
after at least thirty (30) day prior written notice to Lessor from the insurance
carrier. All insurance required of Lessee shall name Lessor and the Lessee as
the insureds as their interests may appear and shall include the holder of any
mortgage on the fee or any underlying or overriding leasehold under a standard
mortgagee clause. Lessee shall furnish Lessor with a manually countersigned
certificate or original signed policy for each type of insurance required
hereunder no less than ten (10) days before Lessee takes possession of the
Demised Premises and annually thereafter. If by any reason of changed economic
conditions or otherwise, the insurance amounts required or referred to in this
Lease become inadequate in Lessor's sole determination, Lessee shall promptly
increase the amounts of such insurance upon Lessor's written request.

H. Building Rules and Regulations. Lessee and Lessee's agents, employees,
invitees and visitors will comply fully with all Rules and Regulations of the
Building which are attached hereto as Exhibit "F". They are made a part hereof
as though fully set out herein. Lessor shall at all times have the right to
reasonably change such Rules and Regulations or to amend them in any reasonable
manner as may be deemed advisable by Lessor for the safety, welfare, order, care
and cleanliness of the Project, Building and the Demised Premises. All changes
and amendments will be sent in writing by Lessor to Lessee and be effective upon
being deposited in the U.S. mail or hand delivered to the Demised Premises by
Lessor. They will thereafter carried out and observed by Lessee.

I. Entry for Repairs, Inspection and Showing. Lessee will permit Lessor, its
employees, officers, agents, contractors or representatives the right to enter
into and upon any and all parts of the Demised Premises, at any time to inspect,
clean, repair, alter or make additions as Lessor may deem necessary or
desirable, and Lessee shall not be entitled to any abatement or reduction of
rent by reason thereof or disruption to Lessee's business caused thereby. Lessor
shall have the right beginning one hundred twenty (120) days prior to the
expiration date of the Lease Term or any Option Term, as applicable, to enter
the Demised Premises for the purpose of showing the Demised Premises to
prospective Lessees. Lessor shall, at all times, have the right to enter the
Demised Premises for the purpose of showing same to any prospective purchaser of
the Project or any part thereof.

J. Nuisance. Lessee will conduct its business, and control its agents,
employees, invitees and visitors at the Project in such a manner as not to
create any nuisance, or interfere with, annoy, or disturb any other Lessee or
Lessor in its management of the Project and Building.

K. Utility Charges. Lessee shall pay all charges incurred for the installation
and the use of utility services at the Demised Premises whether separately
metered to the Demised Premises or not, including, without limitation; the cost
of gas, electricity, water, sewer, telephone and waste disposal. No electric
current or gas lines shall be used except those which are approved by Lessor,
nor shall electric or other wires be brought to additional outlets or electrical
fixtures installed within the Demised Premises except upon the written consent
and approval of the Lessor. Lessee will not overload any of the circuits within
the Demised Premises and shall have no right to use any electric current outside
the Demised Premises. Lessee shall be responsible for complying with any
applicable governmental or Lessor's regulations pertaining to recycling of
garbage or waste from the Demised Premises.

L. Janitorial. The Lessee will not obstruct the hallways or other Common Areas
and will not place refuse outside the Demised Premises except in areas and
receptacles designated by the Lessor for same. Lessee, at its expense, will keep
the interior of the Demised Premises clean and orderly and, if necessary, hire
janitorial services to this end. However, Lessor shall have the right (in order
to insure uniform cleaning, preservation of the Building and systematic and
orderly refuse disposal) at its option to provide janitorial service to the
Lessee for a reasonable fee to be paid by Lessee as Additional Rent and the
alternative right to hire janitorial services for the Project and include same
in the Common Area Maintenance charge calculation. If Lessee does not agree with
the reasonableness of the Lessor's janitorial service fees, Lessee shall so
notify Lessor and thereafter Lessee shall hire its own janitorial services for
the Demised Premises. Thereafter, if Lessor determines in its sole discretion
that the condition of the

13
<PAGE> 15

Demised Premises are not up to Lessor's and the Project's reasonable standards,
Lessor shall so notify Lessee and thereafter Lessor shall supply janitorial
services either directly to Lessee at the Demised Premises for which Lessee
shall pay directly Lessor's reasonable fee, or to the project in which event,
Lessor shall include the charges for same in the Common Area Maintenance charge
calculation.

M. Net-Net-Net Lease. Lessee agrees that this Lease Agreement and the Base Rent
hereunder shall be absolutely net to Lessor and that the Lessor shall receive
the rentals herein reserved free from all charges and expenses imposed upon or
by reason of the Demised Premises and the ownership of Lessor, its successors
and assigns and without deduction by way of any claim or set off alleged by
Lessee.

14. Mutual Representations and Covenants. The Lessor and Lessee hereby mutually
represent, warrant and covenant as follows:

A. Condemnation. In the event the whole or any part of the Building other than a
part which does not interfere with the maintenance or operation thereof is taken
or condemned for any public or quasi-public use or purpose, or a conveyance is
made in lieu of such a taking, the Lessor may at its option terminate this Lease
from the time title to or right of possession shall vest in or be taken for such
public or quasi-public use or purpose. Lessor shall be entitled to any and all
income, rent, awards or any interest thereon and compensation for any taking or
conveyance, whether for the whole or a part of the Building, the Demised
Premises or otherwise. Lessee hereby assigns to Lessor all of Lessee's right,
title and interest in and to any and all such claims, awards and compensation,
excluding any award Lessee shall be entitled to claim, prove and receive in the
condemnation proceeding for its relocation or trade fixtures but only if such
award or compensation shall be made by the condemning authority in addition to,
and shall not result in a reduction of, the award and compensation paid by it to
Lessor.

B. Loss or Damage. Lessor shall not be liable or responsible for any loss or
damage to any property or person occasioned by: (i) theft, fire, water, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition or order of governmental body or authority, lack of services to
Lessee hereunder; or (ii) any other matter beyond the control of Lessor; or
(iii) for any damage or inconvenience to Lessee which may arise through repair,
modification or alteration of or to any part of the Project, Building, or the
Demised Premises, or their equipment or mechanical systems; or (iv) failure to
make any such repairs; or (v) from any cause whatever unless caused solely by
Lessor's gross negligence.

C. Lien for Rent. In consideration of the mutual benefits arising under this
Lease, Lessee does hereby pledge and assign unto Lessor all property of Lessee
now or hereafter placed in or upon the Demised Premises (except such part of any
property or merchandise as maybe exchanged, replaced or sold from time to time
in Lessee's ordinary course of operations or trade). Such property is hereby
subjected to alien in favor of Lessor and shall be and remain subject to such
lien of Lessor for payment of all Base Rent, Tax Rent, Common Area Maintenance
charges. Additional Rent and all other sums agreed to be paid by Lessee herein.
Said lien shall be in addition to and shall supplement any of the Lessor's liens
provided by law. At the time of execution of this Lease or thereafter upon
request, Lessee will execute a UCC-Financing Statement in recordable form and
Lessor may record same.

D. Abandonment. If the Lessee shall abandon or vacate the Demised Premises
before the expiration of the term of this Lease, or shall suffer the Base Rent
or other monies to be paid Lessor to be in arrears, the Lessor may, at its
option, forthwith but upon written notification to Lessee, cancel this Lease. In
which event Lessor may enter the Demised Premises as the agent of the Lessee, by
force or otherwise, without being liable in any way therefore, and relet all or
any part of the Demised Premises with or without any of Lessee's fixtures,
furniture, or other personality that may be therein, all as the agent of the
Lessee and all pursuant to Paragraph 14J hereof.

E. Holding Over. In case of holding over by Lessee after expiration of the Lease
Term or termination of this Lease, Lessee will pay as liquidated damages double
the Base Rent, Additional Rent and other sums due hereunder for the entire
holdover period. Lessee agrees that

14
<PAGE> 16

said liquidated damages are a fair and reasonable compensation to Lessor, as
Lessor's actual damages would be difficult to measure with mathematic certainty.
Holding over by Lessee, either with or without consent or acquiescence of
Lessor, shall not operate to extend the Lease for a period longer than one
month; and any holding over with the consent of Lessor in writing shall
thereafter constitute a Lease from month to month only.

F. Fire or Casualty. Lessee shall, in case of fire or other damage, give
immediate notice thereof to Lessor. In the event of damage to the Demised
Premises or Building by fire or other causes resulting from the act, fault or
negligence of Lessee or Lessee's agents, officers, employees, invitees, or
visitors, the same shall be repaired by Lessor but at the expense of Lessee or,
at Lessor's election, by the Lessee but under the direction and supervision of
Lessor. If the Demised Premises shall be partially destroyed by fire or other
casualty so as not to render the Demised Premises unLesseeable in Lessor's sole
discretion, all payments to be made to the Lessor herein recited shall not
cease. In case of the total destruction of the Demised Premises without act,
fault or negligence of Lessee, its agents, officers, employees, invitees, or
visitors, or if from such cause the same shall be so damaged that Lessor shall
decide in its sole discretion not to rebuild, then Lessor shall so notify Lessee
of same and all Base Rent and other payments due up to the time of such
destruction or termination shall be paid by Lessee, and Lessee agrees to quit
and surrender the Demised Premises and thereafter this Lease shall cease and
come to an end.

G. Attorney Fees and Costs. In the event of any litigation between the parties,
or if the Lessor in its sole discretion determines to utilize the services of
any of its attorneys (including in-house counsel) for any purpose related to an
actual or alleged default of Lessee under this Lease, the Lessee upon demand
shall pay the Lessor's reasonable attorney's fees and court and other collection
and litigation costs.

H. Amendment or Modification to this Lease. This Agreement may not be altered,
changed, or amended, except by an instrument in writing, signed by both parties
hereto.

I. Transfer of Lessor's Rights. Lessor shall have the right to transfer and
assign in whole or in part, its rights and obligations hereunder. Such transfers
or assignments may be made by Lessor in anyway, and howsoever made, are to be
recognized by Lessee. Lessee agrees to execute such documents required by Lessor
or any transferee or assignee of Lessor's rights, including documents evidencing
attornment of this Lease to such transferee or assignee. Upon transferring
Lessee's security deposit to Lessor's transferee or assignee, Lessor shall have
no further liability to Lessee thereafter and Lessee shall look only to Lessor's
transferee or assignee for the return of Lessee's security deposit and
performance of all of the Lessor's obligations and duties herein set forth.

J. Default by Lessee. Default on the part of Lessee in paying the Base Rent or
other monies due Lessor or any installment thereof, or default on Lessee's part
in keeping or performing any other term, covenant or condition of this Lease,
shall constitute authorization to the Lessor, at its option at any time after
such default to declare this Lease terminated, and upon the occurrence of any
one or more of such acts of default, Lessor immediately, or at any time
thereafter, may at Lessor's option:

1. Right to Re-Enter. Re-enter the Demised Premises and remove all persons
and property therefrom by appropriate legal process or otherwise, and without
prejudice to any of its other legal rights. All claims for damages by Lessee or
others claiming under Lessee by reason of such re-entry are expressly waived, as
also are all claims for damages by reason of any distress warrants or
proceedings by way of sequestration which Lessor may employ to recover monies
due it, or possession of said premises.

2. Right to Relet. Relet the Demised Premises or any part or parts
thereof, either as agent for Lessee or otherwise, and receive the rents
therefore and apply same, (i) to the payment of such expenses, reasonable
attorney fees and costs, as Lessor may have incurred in re-entering and making
such repairs and alterations as may be necessary in order to relet the Demised
Premises, and (ii) to the payment of monies due from Lessee hereunder. The
Lessee shall remain liable for such monies as may be in arrears and any
additional monies as may accrue subsequent

15
<PAGE> 17

to the re-entry by Lessor, to the extent of the difference between the monies
reserved hereunder to Lessor, and the monies, if any, received by Lessor during
the remainder of the unexpired term of this Lease, after deducting the
aforementioned expenses, fees and costs. If payment of the full monies herein
provided shall not be realized by Lessor over and above the expenses to Lessor
in such reletting, including but not limited to, the cost of renovating,
altering and decorating for the new occupant, the Lessee shall pay any
deficiency to Lessor and Lessor may sue Lessee for monies due as provided
herein.

3. Notice of Default, Right to Cure. Lessor shall not have the right to
declare this Lease terminated by reason of Lessee's default unless it gives
Lessee 10 day written notice of any default not pertaining to a payment
provision, if Lessee fully cures all defaults in said 10 day period. However, no
notice shall be necessary in the case of a default in payment of any Base Rent
or Additional Rent or other payment required hereunder for more than ten (10)
days after the due date. In the event of a default hereunder entitling the
Lessor to terminate this Lease, the Lessor may declare all Base Rent and other
monies reserved and due for the entire Lease Term provided for herein
immediately due and payable.

4. Remedies Cumulative. All the rights and remedies given Lessor in
this Lease and all other rights and remedies allowed at law or equity are
reserved and conferred upon the Lessor as distinct, separate, and cumulative
remedies, and no one of them, whether exercised by the Lessor or not, shall be
deemed to be in exclusion of any of the others.

K. Waiver. Failure of Lessor to declare any default immediately upon occurrence
thereof or delay in taking any action in connection therewith shall not
constitute any waiver of such default, but Lessor shall have the right to
declare any such default at any time and take such action as authorized
hereunder or as might be lawful either in law or in equity. Acceptance by Lessor
of any full or partial payment of monies due, or any check in tender of payment
due shall not be deemed an accord and satisfaction regarding any dispute between
the parties.

L. Possession. If for any reason, the Demised Premises shall not be ready for
occupancy by Lessee at the time of commencement of the Lease Term (which for
purposes hereof is defined as Lessor's failure to substantially complete the
work required of Lessor as per Articles 10 and 11 hereof), this Lease shall not
be affected thereby, nor shall Lessee have any claim against Lessor by reason
thereof, however, no monies shall be payable by Lessee to Lessor under this
Lease for the period of time during which the Demised Premises are not ready for
occupancy (as defined above) and all claims against Lessor for damages arising
out of such delay are waived and released by Lessee.

M. Bankruptcy. If Chapter 11 or any other voluntary bankruptcy proceedings are
instituted by Lessee, or if involuntary proceedings are instituted by anyone
else to adjudge Lessee a bankrupt or to have a fiduciary appointed over the
assets of Lessee, or if Lessee makes an assignment for the benefit of Lessee's
creditors, or if execution is issued against it, or if the interest of Lessee in
this Lease passes by operation of law to any person other than Lessee; this
Lease may, at the option of Lessor, be terminated by notice to Lessee.

N. Assignment by Lessor. This Lease shall also inure to the benefit of the
successors and assigns of Lessor; and with the prior written consent of Lessor
(which may be refused for any reason), but not otherwise, to the benefit of the
heirs, executors, and or administrators, successors and assigns of Lessee as
applicable.

O. Pronouns and Genders. When this Lease is executed by more than one person it
shall be construed as though Lessee were written "Lessees" and the words in
their number were changed to correspond; and pronouns of the masculine gender,
whenever used herein shall include persons of female sex, and corporations and
associations of every kind and character.

P. Subordination. This Lease is hereby made expressly subject and subordinate at
all times to any and all mortgages, deeds of trust and ground or underlying
leases affecting the Demised Premises which have been executed and delivered, or
which may at any time hereafter be executed and delivered, and any and all
advances made or to be made under said mortgages, deeds of trust, ground or
underlying leases. Within five (5) days of request by Lessor, Lessee

16
<PAGE> 18

agrees to execute any instrument or instruments which the Lessor may deem
necessary or desirable to evidence or to give effect to the subordination of
this Lease to any or all such mortgages, deeds of trust, ground or underlying
leases. In the event the Lessee shall refuse after reasonable notice to execute
such instrument or instruments, Lessor, in addition to any other remedies
available to it, may execute and acknowledge and deliver such instrument, as
attorney-in-fact of the Lessee and in the Lessee's name and place, and for such
purpose the Lessee does hereby irrevocably appoint the Lessor, its successors or
assigns as its attorney-in-fact. Said appointment shall further remain
unaffected by any incompetency or disability of any individual Lessee.

Q. Force Majeure. Except as to monies to be paid to Lessor pursuant hereto, the
time for performance by Lessor or Lessee of any term, provision or covenant of
this Lease Agreement shall be deemed extended by the amount of any time lost due
to delays resulting from acts of God, strikes, unavailability of building
materials, civil riots, floods, material or labor restrictions or shortages, by
governmental authority, moratoria of any type and any other cause not within the
control of Lessor which affects construction of the Project, Demised Premises or
the Commencement of the Lease Term.

R. Time of Essence. It is understood and agreed between the parties hereto that
time is of the essence of this Lease and this applies to all terms and
conditions contained herein except that the Rent Commencement Date may vary due
to circumstances involving approvals, etc. and except as set forth in Article
14Q hereof.

S. Transmittal. This Lease is transmitted for examination only and does not
constitute an offer to Lease. This Lease shall become effective only upon
execution and unconditional delivery of same by Lessor and Lessee.

15. Mechanic's Liens. It is expressly understood that in no event shall
mechanic's liens attach to the Demised Premises by virtue of any alterations,
improvements, repairs or other activities performed by, at the direction of
Lessee or its agents, employees, officers or contractors. Lessee shall post with
Lessor evidence of surety, or discharge any such lien within ten (10) days of
the filing of any such lien. If Lessee does not do so, Lessor shall have the
option of paying or discharging any lien which is so filed and the costs of same
together with reasonable legal fees shall be charged to Lessee as Additional
Rent.

16. Estoppel Certificates. Lessee shall, at any time and from time to time,
within ten (10) days following notice by Lessor, execute, acknowledge and
deliver to the Lessor a statement in writing certifying that this Lease is
unmodified and in full force and effect, or if' there shall have been any
modification(s) that the same is in full force and effect as modified and
stating the modification(s) and the date to which Base Rent and Additional Rent
have been paid in advance, and stating whether or not to the best knowledge of
the signer of such certificate that the Lessee is in default and, if so,
specifying each such default.

17. Waiver of Jury Trial. Lessor and Lessee shall and they hereby do waive trial
by jury in any action, proceeding or counterclaim brought by either of them
against the other on any matters arising out of or in anyway connected with this
Lease, the relationship of Lessor and Lessee, Lessee's use or occupancy of the
Demised Premises and any emergency, common law or statutory remedy. Lessee
further agrees that it shall not interpose any counterclaim(s) in a summary
manner or in any action based upon hold over or non-payment of Base Rent or
Additional Rent due Lessor hereunder.

18. Limits of Lessor's Liability. Notwithstanding any provision to the contrary
herein, Lessee shall look solely to the equity of Lessor in and to the Building
within which the Demised Premises are located in the event of an actual or
alleged breach or default by Lessor of the provisions of this Lease, and Lessee
agrees that the liability of Lessor under this Lease shall not exceed the value
of such equity of Lessor in the Building within which the Demised Premises forms
a part. No other property or assets of Lessor shall be subject to levy,
execution or enforcement procedures for the satisfaction of any judgment or
process arising out of, or in connection with this Lease or its breach; and if
Lessee shall acquire a lien on any such other

17
<PAGE> 19

property or assets of Lessor by judgment or otherwise, Lessee shall promptly
release such lien on such other property or assets by executing, acknowledging
and delivering to the Lessor an instrument to that effect prepared by Lessor's
attorneys.

19. Severability. In the event of the invalidity of any provision hereof, same
shall be deemed stricken from this Lease which shall continue in full force and
effect as if the offending provisions wherever part hereof.

20. Notices. Any notice, demand, waiver, approval or consent hereunder shall be
in writing, signed by all parties hereto and shall be deemed duly served if
mailed by registered or certified mail, return receipt requested, addressed, if
to Lessee, at the address of the Demised Premises or at such other address as
Lessee shall have last designated by written notice to Lessor, and if addressed
to Lessor, to it at the address of Lessor set forth herein or such other address
as Lessor shall have last designated by written notice to Lessee. Any such
notice, demand, waiver, approval or consent may also be hand delivered and be
deemed served the earlier of actual receipt thereof or two days after mailing.

21. Relationship of Parties. This Lease creates only a Lessor and Lessee
relationship between the parties and under no circumstances shall any
partnership, joint venture or agency or any other relationship be created by
virtue of this Lease.

22. Memorandum of Lease. Lessee shall not record this Lease. However, Lessor
shall have the right to require Lessee to execute, acknowledge and deliver at
any time after the date of this Lease a Memorandum of this Lease and Lessor
shall have the right to record same. The Memorandum of Lease shall contain a
clause to the effect that the Lessor may at any time there is a default
hereunder and Lessor has terminated this Lease, file in the public records, an
Affidavit to that effect so as to evidence that the Lessee's interest in the
Demised Premises was terminated.

23. [Intentionally left blank]

24. Parking. Lessee, its employees and agents shall park their motor vehicles
only in those portions of the parking area designated for that purpose by
Lessor. Lessee shall, upon written notice from Lessor, within ten (10) days,
furnish Lessor, or its authorized agent, the state automobile license plate
numbers assigned to all motor vehicles used by its employees or others who will
be regularly present at the Demised Premises. Lessee shall not at any time park
any trucks or any delivery vehicles except in those areas specifically
designated as truck areas.

25. Sign. Lessor shall provide a suitable identification sign or signs of such
size, design and character as shall fit in the sign which Lessor erects for the
Project or Building at Lessee's sole cost and expense which will be due and
payable within ten (10) days after installation of the sign as an item of
Additional Rent.

26. Brokerage. Lessee represents that it has had no dealings with any real
estate broker, salesperson or agent or others in connection with this Lease
other than The Schultz Organization, and Lessee covenants to pay, hold harmless
and indemnify Lessor from and against any and all claims for costs, expenses,
for any fees, compensation or commissions to any broker, salesperson, agent or
others in respect of this Lease or the negotiation hereof with whom Lessee is
alleged to have had dealings.

27. Late Payments. In the event Lessee fails to pay its rent or additional rent
within five (5) calendar days following the due date, Lessee shall pay a late
charge equal to the greater of (i) five (5%) percent of such overdue payment or
(ii) $50.00. Lessee agrees that said charge is reasonable and said amount shall
compensate Lessor for its administrative cost. In addition, at the option of
Lessor, and in addition to any and all other remedies reserved to Lessor herein
or

18
<PAGE> 20

by law, the Lessor may collect interest on any payments due hereunder from
Lessee hereunder, whether in the form of Base Rent or Additional Rent, at the
legal maximum rate of interest per annum, due and payable after the due date of
any such payment due from Lessee to Lessor. Interest and late charges due may be
billed by Lessor to Lessee after acceptance of payment of the principal amount
due without Lessor waiving its right to collect interest.

28. Headings. Paragraph headings are used herein for identification only and
shall not in any way affect the interpretation of the Lease.

29. Integration. This Agreement states the entire agreement between the parties
and incorporates all prior and contemporaneous agreements and representations
with respect to the subject matter hereof. No alteration, modification,
termination, waiver or release, in whole or in part of this lease, shall be
effective unless in writing, signed by a duly authorized representative of each
of the parties hereto or their successors or assigns.

30. Governing Law. This Lease Agreement shall be construed under the laws of the
State of New Jersey.

31. No Third Party Rights. Nothing in this Agreement shall be interpreted as
conferring any rights on any party other than the parties hereto.

32. Shift Premises. Lessor hereby reserves the right (and Lessee hereby
acknowledges and consents thereto) to shift the location of the Demised Premises
to an alternate location within the Complex.

33. Environmental Law Compliance.

(A) During the term of this Lease, Lessee shall, at Lessee's own expense,
comply with all Federal or State laws, rules and regulations pertaining to the
environment, hazardous substances or hazardous wastes as defined by law and the
Industrial site recovery act, N.J.S.A. 13:1K-6 et seq. and the regulations
promulgated thereunder and any successor legislation and regulations ("ISRA").
If required hereunder, Lessee shall, at Lessee's own expense, make all
submissions to, provide all information to, and comply with all requirements of
the various governmental agencies or bodies having jurisdiction, including but
not limited to, the Bureau of Industrial Site Evaluation or its
successor("Bureau") of the New Jersey Department of Environmental Protection("NJ
DEP"). Lessee's obligation under ISRA shall arise only if there is a closing,
termination or transferring of operations of any industrial establishment during
or by reason of the termination or cancellation of this Lease pursuant to ISRA,
or if the actions or in action's of Lessee or its agents at the Demised Premises
either directly or indirectly results in an event which, by the occurrence of
same, requires compliance with ISRA or the regulations thereunder.

(B) Provided this Lease is not previously canceled or terminated by either
party or by operation of law, Lessee shall commence its submission to the Bureau
in anticipation of the end of the Lease Term or Option Term, as applicable, no
later than six (6) months prior to the expiration of the Lease Term or Option
Term. Lessee shall promptly furnish to Lessor true and complete copies of all
documents, submissions, correspondence and oral or written communications by the
Bureau to Lessee or its agents or visa versa. Lessee shall also promptly furnish
to Lessor true and complete copies of all test results and reports, if any,
obtained and prepared at and around the Demised Premises. Lessee shall notify
Lessor in advance of any meetings scheduled between Lessee or its agents and the
NJ DEP, and Lessor may attend all such meetings.

(C) Should Lessee's operations at the Demised Premises be outside of those
industrial operations covered by ISRA, Lessee shall, at Lessee's own expense,
obtain a letter of non-applicability or de minimus quantity exemption from the
Bureau prior to the expiration of the Lease Term or its earlier cancellation and
shall promptly provide a copy of Lessee's submission and the original of the
Bureau's exemption letter to Lessor.

<PAGE> 21

(D) Should NJ DEP determine that a cleanup plan be prepared and undertaken
because of a spill or discharge of a hazardous substance or waste at the Demised
Premises which occurred during the Lease Term or any Option Term, Lessee shall,
at Lessee's own expense, promptly take any necessary samples and prepare and
submit the required cleanup plan and financial assurance, and shall promptly
carry out the approved plan.

(E) If Lessee fails to comply with any environmental law, rule or
regulation; or fails to obtain either: (i) a non-applicability letter; (ii) a de
minimus quantity exemption; (iii) a negative declaration; or (iv) final approval
of cleanup; (collectively referred to as "ISRA Clearance") from NJ DEP; or fails
to clean up the Demised Premises pursuant to the above prior to the expiration
of the Lease Term, then Lessor shall have the option either to consider the
Lease as having ended or to treat Lessee as a holdover Lessee. If Lessor
considers the lease as having ended, then Lessee shall nevertheless be obligated
to promptly obtain ISRA Clearance and to fulfill the obligation set forth above
regarding compliance with applicable environmental laws, rules and regulations..
If Lessor treats Lessee as a holdover Lessee, then Lessee shall pay monthly to
Lessor double the Base Rent and Additional Rent which Lessee would otherwise
have paid, until such time as Lessee obtains ISRA Clearance and fulfills its
obligations above, and during the holdover period all of the terms of this Lease
shall remain in full force and effect.

(F) For any ISRA or other submittals to environmental authorities
undertaken by Lessor or its agents, at no expense to Lessor, Lessee shall
promptly provide all information required or requested by Lessor for Lessor's
preparation of any ISRA or other environmental submission and shall promptly
sign such affidavits and submissions when requested or required by Lessor, if
they are correct.

(G) Lessee represents and warrants to Lessor that Lessee intends to use
the premises only for the uses permitted in this Lease, which operations have
the Standard Industrial Classification ("S.I.C.") numbers as defined in the most
recent edition of the SIC manual published by the Federal Executive Office of
the President, Office of Management and Budget as set forth in the Summary of
Basic Lease Provisions hereof. Lessee's use of the Demised Premises shall be
restricted to said uses only unless Lessee obtains Lessor's prior written
consent to any change in use. Lessee shall notify Lessor as to any changes in
Lessee's overall operation, S.I.C. number or use during the Lease Term.

(H) Lessee shall permit Lessor and Lessor's agents and employees access to
the Demised Premises for the purposes of environmental inspections and sampling
during regular business hours, or during other hours in the event of any
emergency. Lessee shall not restrict access to any part of the Demised Premises,
and Lessee shall not impose any conditions to access.

(I) Lessee shall indemnify, defend and hold Lessor harmless from and
against all claims, fines, suits, procedures, actions, proceedings, liabilities,
losses, damages, penalties and costs, foreseen and unforeseen, including
counsel, engineering and other professional or expert fees which Lessor may
incur by reason of Lessee's action or non-action with regard to Lessee's
obligations under this Article and spills or discharges of hazardous substances
or wastes at the Demised Premises during Lessee's occupancy of same and Lessee's
failure to provide all information required by any environmental law or NJ DEP.
This Article shall survive the expiration or earlier termination of this Lease.
Lessee's failure to abide by the terms of this Article shall be restrainable by
injunction.

(J) Lessee shall promptly: (i) supply Lessor with copies of all notices,
reports, correspondence and submissions made by Lessee to any local, state or
federal authority which requires submission of any information concerning
environmental matters or hazardous wastes or substances; and (ii) notify Lessor
as to any liens threatened or attached against property of Lessee or the Demised
Premises pursuant to any environmental law, rule or regulation. The event that
such a lien in field against the Demised Premises, then Lessee shall, within
thirty days from the date that the lien is placed against the Demised Premises
either pay the claim and remove the lien, or furnish either a bond of cash
deposit in the amount of the claim out of which the lien arises, or other
security satisfactory to the Lessor in an amount sufficient to discharge the
claim out of which the lien arises.

<PAGE> 22

(K) Condition Precedent to Assignment and Sublease Rights, if any. If
Lessee is permitted to assign or sublease the Demised Premises pursuant to this
Lease Agreement, then as a condition precedent to Lessee's right to sublease the
Demised Premises or to assign this Lease, if any, Lessee shall, at Lessee's own
expense, first comply with ISRA and fulfill all of Lessee's environmental
obligations under this Lease pursuant to Article 32 which also arise upon
termination of Lessee's Lease Term.

34. Confidentiality. Lessee shall not discuss, divulge, reveal or
otherwise disclose the terms of this Lease to any entity or individual,
including but not limited to information relating to Rent, except in the
following contexts: (i) in compliance with Lessor's request; (ii) to Lessee's
accountant and/or attorney (who shall be bound by the confidentiality provisions
of this Lease); (iii) on Lessee's tax return; or (iv) in Lessee's financial
statements. Aside from the foregoing exceptions, neither Lessee nor Lessee's
employees, agents or contractors shall discuss, divulge, reveal or otherwise
disclose any terms of this Lease without the prior written consent of Lessor in
each instance.

<PAGE> 23

IN WITNESS thereof the parties have set their hands and seals hereto the day
first written above.

ATTEST/WITNESS: LESSOR: TEN THIRTY-FIVE ASSOCIATES,
LIMITED PARTNERSHIP, BY K. HOVNANIAN
INVESTMENT PROPERTIES, INC., ITS AGENT

BY:
- ------------------------ ---------------------------

DATE SIGNED:

- ------------------------

(Corp. Seal)

ATTEST/WITNESS LESSEE: MILLENIUM CELL, LLC

/s/ illegible BY: /s/ illegible
- ------------------------ ---------------------------

DATE SIGNED:

6/9/99
- ------------------------

(Corp. Seal)

<PAGE> 24

(ACKNOWLEDGMENT FOR CORPORATION)

STATE OF NEW YORK

SS.:

COUNTY OF NEW YORK

BE IT REMEMBERED, that on this 10 day of June, 1999, before me, the subscriber,
a Notary Public of the State of New York, personally appeared Russell J Steward,
who being by me duly sworn on his oath, doth depose and make proof to my
satisfaction that he is the _____________________________ Secretary of Millenium
Cell LLC, the Lessee named in the within instrument; that Steven C. Amendola is
Vice President of said corporation; that the execution of this Lease was
approved by the resolution of the board of directors of said corporation; that
deponent well knows the corporate seal of said corporation; and the seal affixed
to this Lease is the corporate seal and was thereto affixed and said instrument
signed and delivered by said Steven C. Amendola, Vice President, as and for his
voluntary act and deed and as for the voluntary act and deed of said
corporation, in presence of deponent, who thereupon subscribed his name thereto
as witness.

/s/ Russell J. Steward
----------------------------
Secretary

Subscribed and sworn to before me, at New York City, on the date aforesaid.

/s/ Lydia M. DeSantis
- ---------------------------
Notary Public

LYDIA M. DeSANTIS
NOTARY PUBLIC, State of New York
No. 31-4724309
Qualified in New York County
Term Expires December 31, 2000

(Notarial Seal)

<PAGE> 25

(ACKNOWLEDGMENT FOR INDIVIDUAL)

STATE OF ________________

SS.:

COUNTY OF ______________

BE IT REMEMBERED, that on this ________ day of __________, 199_, before me, the
subscriber, ___________________________________, personally appeared
_____________________________________________________, the person named in and
who executed the within instrument; and thereupon _____________________________
acknowledged that ___________________________ signed, sealed and delivered the
same as _______________________ act and deed, for the uses and purposes there in
expressed.

------------------------------------

<PAGE> 1
EXHIBIT 10.3

AGREEMENT

This Agreement dated May 24, 2000 is made by and among Steven
C. Amendola ("Amendola"), GP Strategies Corporation, a Delaware corporation ("GP
Strategies"), and Millennium Cell Inc., a Delaware corporation (f/k/a Millennium
Cell LLC and hereinafter the "Company").

WHEREAS, Amendola and GP Strategies, f/k/a National Patent
Development Corporation, entered into a License Agreement dated July 31, 1997
(the "License Agreement") pursuant to which, inter alia, Amendola granted GP
Strategies an exclusive worldwide license to use and develop the invention
relating to United States Letters Patent No. 5,804,329 (f/k/a U.S. Application
Serial No. 08/579,781) including any improvements or modifications thereto
(hereinafter "Covered Technology");

WHEREAS, GP Strategies and the Company, with the consent of
Amendola, entered into an agreement dated December 17, 1998 styled "Assignment
and Assumption of License Agreement," whereby the Company acquired all rights
and obligations of GP Strategies relating to the License Agreement in
consideration for certain royalty payments; and

WHEREAS, each party to this Agreement represents and warrants
that he or it has the full and unencumbered right and authority to enter into
this Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:

-1-
<PAGE> 2
1. License Agreement

Amendola and the Company hereby agree that, as of the date of
this Agreement, the License Agreement is hereby terminated. Amendola agrees to
execute as of the date hereof the Assignment, attached hereto as Appendix A,
whereby all right, title and interest in and to "Covered Technology" is and is
hereby assigned from Amendola to the Company, including the right to sue for any
past infringement of said "Covered Technology." In consideration for the
foregoing Assignment, the Company agrees to issue 206,897 options in the Company
("Options") with an exercise price of $2.90 per share to Amendola; and Amendola
agrees that the Company is fully, forever, irrevocably and unconditionally
discharged and released from all past, present and future claims, obligations,
duties, promises, agreements and liabilities to make royalty payments of any
kind relating to "Covered Technology."

2. Assignment and Assumption of License Agreement

GP Strategies and the Company hereby agree that the Assignment
and Assumption of License Agreement is terminated concurrently with the
termination of the License Agreement. In consideration for terminating the
Assignment and Assumption of License Agreement, the Company agrees to issue to
GP Strategies 250,000 Options in the Company with an exercise price equal to the
price of the common stock of the Company at its initial public offering. GP
Strategies agrees that the Company is fully, forever, irrevocably and
unconditionally discharged and released from all past, present and future
claims, obligations, duties, promises, agreements and liabilities to make
royalty payments of any kind relating to the Assignment and Assumption
Agreement.

-2-
<PAGE> 3
3. Representations by and Covenants of Amendola and GP
Strategies

(a) Each of Amendola and GP Strategies acknowledges that the
Company is a private corporation which intends to file a registration statement
(the "Registration Statement") for its initial public offering on Form S-1 with
the Securities and Exchange Commission ("SEC") pursuant to the registration
requirements of the Securities Act of 1933, as amended (the "Act").

(b) Each of Amendola and GP Strategies recognizes that the
acceptance of the Options involves a high degree of risk in that (i) the Company
will need additional capital but has no assurance of additional necessary
capital; (ii) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should consider
investing in the Company and Options; (iii) an investor may not be able to
liquidate his investment; (iv) transferability of the securities comprising the
Options is extremely limited; and (v) an investor could sustain the loss of his
entire investment, as well as other risks, as more fully set forth herein and in
the Offering Documents (as hereinafter defined).

(c) Each of Amendola and GP Strategies represents that he or
it is able to bear the economic risk of an investment in the Options and can
afford the loss of his or its entire investment.

(d) Each of Amendola and GP Strategies acknowledges that he or
it has prior investment experience, including investments in non-listed and
non-registered securities, or he or it has employed the services of an
investment advisor, attorney or accountant to read all of the documents
furnished or made available by the Company both to him and to all other
prospective investors in the Options and to evaluate the merits and risks of
such an

-3-
<PAGE> 4
investment on his or its behalf, and that he or it recognizes the highly
speculative nature of this investment.

(e) Each of Amendola and GP Strategies acknowledges receipt
and careful review of a draft of the Registration Statement (draft dated April
7, 2000) and the attachments thereto (the "Offering Documents") and hereby
represents that he or it has been furnished by the Company during the course of
this transaction with all information regarding the Company which he or it had
requested or desired to know; that all documents which could be reasonably
provided have been made available for his or its inspection and review; that he
or it has been afforded the opportunity to ask questions of and receive answers
from duly authorized officers or other representatives of the Company concerning
the terms and conditions of the Offering, and any additional information which
he or it had requested.

(f) Each of Amendola and GP Strategies acknowledges that the
offering of Options contemplated hereby may involve tax consequences, and that
the contents of the Offering Documents do not contain tax advice or information.
Each of Amendola and GP Strategies acknowledges that he or it must retain his or
its own professional advisors to evaluate the tax and other consequences of an
investment in the Options.

(g) Each of Amendola and GP Strategies acknowledges that the
offering of Options contemplated hereby has not been reviewed by the SEC because
of the Company's representations that this is intended to be a nonpublic
offering pursuant to Section 4(2) of the Act. Each of Amendola and GP Strategies
represents that the Options to be acquired by him or it pursuant hereto are
being acquired for his or its own account, for investment and not for
distribution or resale to others. Each of Amendola and GP Strategies agrees that
he or it will

-4-
<PAGE> 5
not sell or otherwise transfer such securities unless they are registered under
the Act or unless an exemption from such registration is available.

(h) Each of Amendola and GP Strategies understands that the
Options have not been registered under the Act by reason of a claimed exemption
under the provisions of the Act which depends, in part, upon his or its
investment intention. In this connection, each of Amendola and GP Strategies
understands that it is the position of the SEC that the statutory basis for such
exemption would not be present if his or its representation merely meant that
his or its present intention was to hold such securities for a short period,
such as the capital gains period of tax statutes, for a deferred sale, for a
market rise, assuming a market develops, or for any other fixed period. Each of
Amendola and GP Strategies realizes that, in the view of the SEC, acceptance of
Options now with an intent to resell would create a purchase with an intent
inconsistent with his or its representation to the Company, and the SEC might
regard such a sale or disposition as a deferred sale to which such exemptions
are not available.

(i) Each of Amendola and GP Strategies understands that there
is no public market for the Options. Each of Amendola and GP Strategies
understands that even if a public market were to exist following the Company's
proposed initial public offering for the Common Stock, Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a one year holding
period prior to the resale (in limited amounts) of securities acquired in a
nonpublic offering without having to satisfy the registration requirements under
the Act. Each of Amendola and GP Strategies understands that the Company makes
no representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Securities Exchange Act of 1934, as amended, or
its dissemination to the public of any current financial or other information
concerning the Company, as is required by the Rule as one

-5-
<PAGE> 6
of the conditions of its availability. Each of Amendola and GP Strategies
understands and hereby acknowledges that the Company is under no obligation to
register the Options to be issued pursuant to this Agreement under the Act. Each
of Amendola and GP Strategies consents that the Company may, if it desires,
permit the transfer of the securities comprising the Options out of his or its
name only when his or its request for transfer is accompanied by an opinion of
counsel reasonably satisfactory to the Company that neither the sale nor the
proposed transfer results in a violation of the Act or any applicable state
"blue sky" laws (collectively "Securities Laws"). Each of Amendola and GP
Strategies agrees to hold the Company and its directors, officers and
controlling persons and their respective heirs, representatives, successors and
assigns harmless and to indemnify them against all liabilities, costs and
expenses incurred by them as a result of any misrepresentation made by him or it
contained herein or any sale or distribution by each of Amendola and GP
Strategies in violation of any Securities Laws.

(j) Each of Amendola and GP Strategies consents to the
placement of one or more legends on any certificate or other document evidencing
his or its Options and the common Stock stating that they have not been
registered under the Act and setting forth or referring to the restrictions on
transferability and sale thereof.

4. Representations of The Company

The Company represents and warrants to Amendola and GP Strategies that:

(a) The Company is a corporation duly organized, existing and
in good standing under the laws of the State of Delaware and has the corporate
power to conduct the business which it conducts and proposes to conduct.

-6-
<PAGE> 7
(b) The execution, delivery and performance of this Agreement
by the Company will have been duly approved by the Board of Directors of the
Company and all other actions required to authorize and effect the offer, sale
and transfer of the Options and the securities contained therein will have been
duly taken and approved.

(c) The Options have been duly and validly authorized and when
exercised, the shares of Common Stock, upon payment of the applicable exercise
price, will be validly issued, fully paid and nonassessable.

(d) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations necessary
to the conduct of its business; such licenses, permits and other governmental
authorizations obtained are in full force and effect; and the Company is in all
material respects complying therewith.

(e) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could materially
adversely affect the business, property, financial condition or operations of
the Company.

(f) The Company is not in violation of or default under, nor
will the execution and delivery of this Agreement, the issuance of the Options,
and the incurrence of the obligations herein and therein set forth and the
consummation of the transactions herein or therein contemplated, result in a
violation of, or constitute a default under, the certificate of incorporation or
by-laws of the Company, in the performance or observance of any material
obligations, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture or other agreement or instrument
to which the Company is a party or by which it or any of its properties may be
bound or in violation of any material order, rule, regulation, writ,

-7-
<PAGE> 8
injunction, or decree of any government, governmental instrumentality or court,
domestic or foreign.

5. Miscellaneous

(a) This Agreement and the rights of the parties hereto shall
be governed as to the validity, construction, enforcement and in all other
respects by the laws of the State of New York, without regard to its conflict of
laws rules.

(b) At any time, and from time to time, each party hereby
agrees with the other party that it will execute such additional instruments and
take such actions as may be reasonably requested by such other party in order
for it to realize the benefit of the transactions contemplated hereby.

(c) This Agreement embodies the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings between the parties hereto, written or oral,
relating to the subject matter hereof.

(d) This Agreement may be executed in one or more counterparts
which, taken together, shall constitute the original action of the signatories
hereto.

-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

MILLENNIUM CELL INC.

By: /s/ Stephen S. Tang
________________________________
Name: Stephen S. Tang
Title: CEO and President

GP STRATEGIES CORPORATION

By: /s/ Scott N. Greenberg
________________________________
Name: Scott N. Greenberg
Title: Executive Vice President

/s/ Steven C. Amendola
________________________________________
STEVEN C. AMENDOLA

-9-
<PAGE> 10
APPENDIX A

ASSIGNMENT

WHEREAS, I, STEVEN C. AMENDOLA, a citizen of the United States
of America, whose post office address is 22 Lambert Johnson Drive, Ocean, New
Jersey 07712, have made the inventions identified in the attached Schedule A;

WHEREAS, the inventions identified in Schedule A were the
subject of a License Agreement dated July 31, 1997, which has now been
terminated;

WHEREAS, the inventions identified in Schedule A constitute
all of the Covered Technology as that term is defined in the Agreement dated May
24, 2000 attached hereto; and

WHEREAS, MILLENNIUM CELL INC., a corporation organized and
existing under the laws of the State of Delaware, and having an office for the
transaction of business at 1 Industrial Way West, Eatontown, New Jersey 07724,
is desirous of acquiring the entire right, title and interest in and to the
inventions identified in Schedule A and in and to the applications for Letters
Patent therefor, and any Letters Patent which may be obtained therefor,
including any reissued or re-examined patents and each and every foreign
counterpart of said inventions, all as set forth in Schedule A;

NOW, THEREFORE, TO ALL WHOM IT MAY CONCERN, BE IT KNOWN, that
I, STEVEN C. AMENDOLA, for the consideration recited in the attached AGREEMENT,
hereby acknowledge at or before the ensealing and delivery of these presents,
and the receipt of which is hereby acknowledged, have sold, assigned,
transferred and conveyed and by these presents do sell, assign, transfer and
convey, unto said MILLENNIUM CELL INC., its successors and assigns the entire
right, title and interest in and to the inventions identified in
<PAGE> 11
Schedule A, including all rights, past, present and future, to enforce any and
all patents issuing thereon, and any and all improvements thereon, and in and to
said applications and any divisions, continuations or continuations-in-part
thereof, and in and to any Letters Patent of the United States of America which
may be issued on any of said applications, and any reissues and/or
re-examinations thereof, and in and to any and all applications for Letters
Patent filed in foreign countries for said inventions or improvements including
all priority rights, and any and all Letters Patent which may be granted in
foreign countries therefor, TO HAVE AND TO HOLD THE SAME to the full end of the
term or terms for which any and all said Letters Patent may be granted;

AND I, STEVEN C. AMENDOLA, do hereby authorize and request the
Commissioner of Patents and Trademarks to issue Letters Patent of the United
States of America to said MILLENNIUM CELL INC., as the assignee of the entire
right, title and interest in and to the same, for the sole use and benefit of
said MILLENNIUM CELL INC., its successors and assigns;

AND I, STEVEN C. AMENDOLA, do hereby covenant and agree to and
with said MILLENNIUM CELL INC., its successors and assigns, that I have the full
power to make this assignment, and that the rights assigned are not encumbered
by any grant, license or right heretofore given, and that I, my executors or
administrators, shall and will do all lawful acts and things and make, execute
and deliver without further compensation, any and all other instruments in
writing, further applications, papers, affidavits, powers of attorney,
assignments, and other documents which, in the opinion of counsel for said
MILLENNIUM CELL INC., its successors and assigns, may be required or necessary
more effectively to secure to and vest in said MILLENNIUM CELL INC., its
successors and assigns, the entire right, title and interest in

2
<PAGE> 12
and to said inventions and improvements, applications, Letters Patent, rights,
titles, benefits, privileges, and advantages hereby sold, assigned, transferred
and conveyed, and that I will sign any applications for reissue or
re-examination which may be desired by the owner of the patents assigned hereby.

IN WITNESS WHEREOF, I, STEVEN C. AMENDOLA, have hereunto set
my hand and seal on the date below written.

/s/ STEVEN C. AMENDOLA
DATED:______________________ ____________________________________
STEVEN C. AMENDOLA

STATE OF ____________________)
) ss.:
COUNTY OF ___________________)

BE IT KNOWN, that on this ___ day of ____________, 2000,
before me personally came STEVEN C. AMENDOLA, to me known and known to me to be
the person mentioned in and who executed the foregoing assignment, and he
acknowledged to me that he executed the same as his free act and deed for the
use and purposes therein mentioned.

____________________________________
Notary Public

3
<PAGE> 13
SCHEDULE A

United States Patent No. 5,804,329
for ELECTROCONVERSION CELL
(Appln. Ser. No. 08/579,781)

Australian Appln. Ser. No. 14320/97

Canadian Appln. Ser. No. 2241862

Chinese Appln. Ser. No. 96180019.4

European Patent Convention Appln. Ser. No. 96944546.9

Israeli Appln. Ser. No. 125,126

Indian Appln. Ser. No. 2943/DEL/96

Japanese Appln. Ser. No. 9-524601

Mexican Appln. Ser. No. 98 5327

Norwegian Appln. Ser. No. 19982990

Federation of Russia Appln. Ser. No. 98 114096

Taiwanese Patent No. 104555

WIPO Appln. Ser. No. US96/20851

South African Patent No. 96/10870

United States Appln. Ser. No. 08/883,859
for ELECTROCONVERSION CELL
(CIP of Appln. Ser. No. 08/579,781)

<PAGE> 1
EXHIBIT 10.4

ASSIGNMENT

WHEREAS, the inventions identified in the attached Schedule A
were the subject of a License Agreement dated July 31, 1997, which has now been
terminated; and

NOW, THEREFORE, TO ALL WHOM IT MAY CONCERN, BE IT KNOWN, that
I, STEVEN C. AMENDOLA, for the consideration recited in the attached AGREEMENT,
hereby acknowledge at or before the ensealing and delivery of these presents,
and the receipt of which is hereby acknowledged, have sold, assigned,
transferred and conveyed and by these presents do sell, assign, transfer and
convey, unto said MILLENNIUM CELL INC., its successors and assigns the entire
right, title and interest in and to the inventions identified in Schedule A,
including all rights, past, present and future, to enforce any and all patents
issuing thereon, and any and all improvements thereon, and in and to said
applications and any divisions, continuations or continuations-in-part thereof,
and in and to any Letters Patent of the United
<PAGE> 2
States of America which may be issued on any of said applications, and any
reissues and/or re-examinations thereof, and in and to any and all applications
for Letters Patent filed in foreign countries for said inventions or
improvements including all priority rights, and any and all Letters Patent which
may be granted in foreign countries therefor, and further including any future
invention(s) relating to the subject matter of the inventions assigned herein,
TO HAVE AND TO HOLD THE SAME to the full end of the term or terms for which any
and all said Letters Patent may be granted;

2
<PAGE> 3
perfection of the right of first refusal granted to MILLENNIUM CELL INC. in the
License Agreement, and that I will sign any applications for reissue or
re-examination which may be desired by the owner of the patents assigned hereby.

IN WITNESS WHEREOF, I, STEVEN C. AMENDOLA, have hereunto set
my hand and seal on the date below written.

DATED:____________________ /s/ STEVEN C. AMENDOLA
______________________
STEVEN C. AMENDOLA

STATE OF )
) ss.:
COUNTY OF )

BE IT KNOWN, that on this ___ day of ____________, 2000, before me
personally came STEVEN C. AMENDOLA, to me known and known to me to be the person
mentioned in and who executed the foregoing assignment, and he acknowledged to
me that he executed the same as his free act and deed for the use and purposes
therein mentioned.

_____________________________________
Notary Public

3
<PAGE> 4
SCHEDULE A

United States Patent No. 5,948,558
for HIGH ENERGY DENSITY BORIDE BATTERIES
(Appln. Ser. No. 08/829,497)

Australian Appln. Ser. No. 64462/98

Canadian Appln. Ser. No. 2297167

United Kingdom Appln. Ser. No. 9922864.5

Israeli Appln. Ser. No. 132091

Japanese Appln. Ser. No. 10-541641

South Korean Appln. Ser. No. 98-7008826

Mexican Appln. Ser. No. 99 8865

Singapore Appln. Ser. No. 9904715-1

WIPO Appln. Ser. No. US98/04185

WIPO Appln. Ser. No. US99/22303

United States Appln. Ser. No. 09/162,428
for HIGH ENERGY DENSITY BORIDE BATTERIES
(CIP of Appln. Ser. No. 08/829,497)

United States Appln. Ser. No. 09/479,362
for SYSTEM FOR HYDROGEN GENERATION

United States Appln. Ser. No. 09/552,017
for ELECTROCHEMICAL CELL AND ASSEMBLY FOR SAME
(Baker Botts File No. A32147)

United States Appln. Ser. No. 09/559,024
for ENGINE CYCLE AND FUELS FOR SAME
(Baker Botts File No. A32672)

Proposed United States Appln.
for MEMBRANE ELECTRODE ASSEMBLY FOR USE
IN BOROHYDRIDE ELECTROCHEMICAL CELLS

<PAGE> 1
EXHIBIT 10.5

AGREEMENT

This agreement dated May 16, 2000 between Stephen S. Tang (Executive) and
Millennium Cell Inc. (Company). The following are the terms of this agreement.

1. Title - The Executive shall be the President and Chief Executive
Officer of the Company, reporting directly to the Board of Directors.

2. Base Salary - Base salary shall be at $225,000, (payable on a
semi-monthly basis) per annum, increasing to $250,000 upon the earlier
of the Company's IPO or January 1, 2001. - (Salary can be increased,
but not decreased).

3. Bonus - The Executive will be eligible for a target bonus of 50% of
base salary. For the remainder of 2000 and 2001, a bonus of 50% of base
salary would be guaranteed as follows:

- 1/2 of the bonus guaranteed - no conditions.

- The remaining 50% of 2000 and 2001 bonus, shall be guaranteed
upon the earlier of the Company's IPO or January 1, 2001.

- All Bonuses shall be paid within 90 days of the end of the
calendar year.

4. Signing Bonus - The Executive will receive a signing bonus of One
hundred and thirty-five thousand ($135,000). 1/2 of the bonus shall be
paid upon joining the Company. The remaining portion shall be paid upon
the earlier of the Company's IPO or January 1, 2001.

5. Equity/Stock Options - Upon joining Millennium, the Executive shall
receive stock options on a total of 3.75% of the Company's equity;
based on 27,000,000 common shares outstanding, this 3.75% equity grant
is equivalent to 1,012,500 Options at a strike price in the range of
$2.82 - $2.90 per share. The Options will have a term of a minimum of 5
years and a maximum of 10 years. The exact term shall be determined by
the Company and shall apply to all other Executives as well.

Additionally, the new Board will be implementing a Stock Option Plan
granting up to an additional 8% Equity and the Company anticipates that
the Executive would be a major participant in that program.

The Vesting Schedule of the initial 3.75% Equity Grant (1,012,500 Stock
Options) is based on the Agreement anniversary date in accordance with
the following schedule:

Year 1 - 1/3 (33.33%)
Year 2 - 1/3 (33.33%)
Year 3 - 1/3 (33.33%)

6. Termination - If the Executive is terminated by the Company other than
for "Cause" (Cause is defined as fraud, embezzlement, or conviction of
a crime involving moral turpitude) or the Executive resigns/terminates
from employment for "Good Reason" (Good Reason is defined as
<PAGE> 2
no longer being the President and Chief Executive Officer of the
Company that reports directly to the Board of Directors or the
Executive is not elected to the Board of Directors), then the following
will occur:

a 1) With respect to 3.5% Equity - 945,000 Stock Options, the
Executive's Options shall vest as if he were employed throughout the
entire year of the year of termination. For example, if the Executive
is terminated on July 15, 2001 (assume agreement date June 1, 2000),
then the Executive would be deemed as if he were employed through May
31, 2002 and would vest in 2/3 of his Stock Options (June 1, 2000
through May 31, 2001 = one year - June 1, 2001 through May 31, 2002 =
two years). Notwithstanding the above, the Executive shall always vest
a minimum of 50% of his Stock Options. For example, if the Executive
resigns for "Good Reason" on August 15, 2000 (assume agreement date of
June 1, 2000), then the Executive would still vest in 50% of his Stock
Options and not 1/3.

a 2) With respect to .25% Equity - 67,500 Options, the Executive's
Options will vest in accordance with the terms of the Company's Stock
Option Plan.

b) The executive will have 12 months from the termination of his
employment to exercise his Stock Options.

c) There shall be severance of one times the then base salary
plus one year bonus (bonus at the greater of 50% of then base
salary or the actual bonus paid for the full year preceding
the year of termination. The severance shall be paid in 4
quarterly/equal increments with no duty to mitigate; nor shall
this be a right of set-off.

In the event of a "Change in Control", (40% or more in the change of
stock ownership in the company or the sale of substantially all of the
company's assets), all stock options and other equity will vest
immediately and the Executive shall be entitled to the severance
contained in paragraph 6(c) and the 12 month time period of 6(b) as if
the Executive had been terminated other than for "Cause". However, the
Executive shall not be entitled to severance under paragraph 6(c) if
the Executive is the CEO of the acquiring company or is elected to the
acquiring company's Board of Directors.

7. Tax Gross-Up - The Executive shall be grossed-up for any excise taxes
under Section 280(g) - Parachute Payments or any successor provision.
The intent of this gross-up is to put the Executive in the same after
tax position as if the excise tax was not imposed. The Company's
accounting firm shall compute the Excise Tax. If the Company's
accountant's determination of the Excise Taxes turns out to be
inconsistent with the IRS, then the Executive shall notify the Company
on the IRS's position. The Company shall defend its position and
increase the gross-up amount to the extent the IRS prevails in its
position; plus reimburse the Executive for any interest and penalties
associated with the accountants computations.

8. Board of Directors - The Executive shall serve on the Board of the
Company and shall be entitled to indemnification from lawsuits and have
coverage under a D&O Insurance Policy on the same terms as other
Directors when such policy is obtained.
<PAGE> 3
9. Death or Disability - All the Executive's Stock Options shall vest
immediately in the event of death or disability and the Executive or
his personal representative shall have 12 months from termination of
employment to exercise his Stock Options. Disability shall be
determined by an independent physician selected jointly by the Company
and the Executive's personal representative, to determine that by
reason of mental or physical illness the Executive would be able to
resume his duties in the foreseeable future.

10. Stock Option Plan - In the event there are any terms contained in the
Company's Stock Option Plan (to be created) that may be more favorable
to the Executive than those contained in this Agreement, then the
Executive shall be entitled to those more favorable terms contained in
the Plan. The terms of the Plan shall only apply where they are more
favorable than those under this agreement.

11. Non-Compete/Non-Solicitation - During employment and for a period of 12
months following termination of employment, the Executive is not
permitted to engage directly or indirectly in any business that
generates hydrogen for the use in conventional engines, fuel cells, or
batteries; nor shall the Executive for the same period, directly or
indirectly endeavor to entice away any employees of the Company.

Agreed and Accepted: Company /s/ G. CHRIS ANDERSEN
-----------------------------------------
G. CHRIS ANDERSEN

/s/ STEPHEN S. TANG
-----------------------------------------
STEPHEN S. TANG

<PAGE> 1
EXHIBIT 10.7

MILLENNIUM CELL INC.

2000 STOCK OPTION PLAN
<PAGE> 2
MILLENNIUM CELL INC.

2000 LONG-TERM INCENTIVE PLAN

SECTION 1. PURPOSE. The purpose of the Millennium Cell Inc. 2000
Long-Term Incentive Plan (the "Plan") is to foster and promote the long-term
financial success of Millennium Cell Inc., a Delaware corporation (the
"Company"), and its Subsidiaries and thereby increase stockholder value. The
Plan provides for the award of long-term incentives to those directors,
consultants, advisers, officers and other employees who make substantial
contributions to the Company or its Subsidiaries by their loyalty, industry and
invention.

SECTION 2. DEFINITIONS. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.

2.1 "Board" means the Board of Directors of the Company.

2.2 "Cause" means any one of the following: the Participant's
conviction for any felony crime, the Participant's refusal to perform his or her
assigned duties, engaging in any act of fraud injurious to the Company or any
Subsidiary, the Participant's breach of any contract where such breach is
materially injurious to the Company or any Subsidiary, engaging in any conduct
that constitutes willful gross neglect with respect to the Company or any
Subsidiary and engaging in willful misconduct that results in material economic
harm to the Company or any Subsidiary.

2.3 "Change of Control" means the occurrence of any of the following:

(i) the Board votes to approve:

(A) any consolidation or merger of the Company
pursuant to which less than 50 percent of the outstanding voting securities of
the surviving or resulting company are owned by the individuals or entities
which were shareholders of the Company prior to the consolidation or merger;

(B) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company other than any sale, lease, exchange or other
transfer to any company where the Company owns, directly or indirectly, 100
percent of the outstanding voting securities of such company after any such
transfer;

(ii) any person (as such term is used in Section 13(d) of the
Exchange Act), other than one or more current shareholders, the Company, a
Subsidiary, or one or more employee benefit plans established by the Company for
the benefit of employees of the Company or its subsidiaries, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
whether directly, indirectly, beneficially or of record, of 35 percent or more
of outstanding Common Stock (other than as the result of an initial public
offering);

-1-
<PAGE> 3
(iii) commencement by any entity, person, or group (including
any affiliate thereof, other than the Company) of a tender offer or exchange
offer where the offeree acquires more than 50 percent of the outstanding
voting securities of the Company.

2.4 "Code" means the Internal Revenue Code of 1986, as amended.

2.5 "Committee" shall have the meaning provided in Section 3 of the
Plan.

2.6 "Common Stock" means the common stock, $0.001 par value, of the
Company.

2.7 "Constructive Discharge" means upon or within _____ of a "Change in
Control," the termination of a Participant's Continuous Service by the
Participant on account of (i) a material reduction in the Participant's
compensation, (ii) a material reduction in the level or scope of job
responsibility or status of the Participant occurring without the Participant's
consent, or (iii) the relocation of a Participant to a location which is more
than 50 miles from the office of the Company where the Participant was
previously located to which the Participant has not agreed.

2.8 "Continuous Service" means that the Participant's service with the
Company or any Subsidiary whether as an employee, officer, director, adviser or
consultant, is not interrupted or terminated. Subject to Section 2.7 above, the
Participant's Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders service to
the Company or any Subsidiary as an employee, officer, consultant, adviser or
director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant's Continuous Service. For example, a change in status from an
employee of the Company to a consultant of a Subsidiary or a director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

2.9 "Disability" means, as it relates to the exercise of an Incentive
Stock Option after termination of employment, a disability within the meaning of
Section 22(e)(3) of the Code, and for all other purposes, a mental or physical
condition which, in the opinion of the Committee, renders a Participant unable
or incompetent to carry out the job responsibilities which such Participant held
or the tasks to which such Participant was assigned at the time the disability
was incurred, and which is expected to be permanent or for an indefinite
duration exceeding one year.

2.10 "Effective Date" shall have the meaning provided in Section 27 of
the Plan.

2.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

2.12 "Fair Market Value" means, as determined by the Committee, the
last sale price as quoted on the National Market System on the trading day
immediately preceding the date for which the determination is being made or, in
the event that no such sale takes place on such day, the average of the reported
closing bid and asked prices on such day, or, if the Common Stock of the Company
is listed on a national securities exchange, the last reported sale price on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading on the trading day immediately preceding the date for which
the determination is being

-2-
<PAGE> 4
made or, if no such reported sale takes place on such day, the average of the
closing bid and asked prices on such day on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if the
Common Stock is not quoted on such National Market System nor listed or admitted
to trading on a national securities exchange, then the average of the closing
bid and asked prices on the day immediately preceding the date for which the
determination is being made in the over-the-counter market as reported by NASDAQ
or, if bid and asked prices for the Common Stock on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in the Common Stock selected for such purpose by the Board or a committee
thereof. If none of the foregoing is applicable, then the fair market value of
the Common Stock shall be its value as determined in connection with the
Company's most recent corporate financing; provided, however, that if a
significant event (as determined in good faith by the Committee in its sole
discretion) has occurred with respect to the Company since the Company's most
recent corporate financing, the value of the Common Stock shall be determined in
good faith by the Committee in its sole discretion.

2.13 "Immediate Family" means the Participant's spouse, parents,
children, stepchildren, adoptive relationships, sisters, brothers and
grandchildren (and, for this purpose, shall also include the Participant.

2.14 "Incentive Stock Option" means a stock option granted under the
Plan which is intended to be designated as an "incentive stock option" within
the meaning of Section 422 of the Code.

2.15 "Listing Date" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.

2.16 "Non-Qualified Stock Option" means a stock option granted under
the Plan which is not intended to be an Incentive Stock Option, including any
stock option that provides (as of the time such option is granted) that it will
not be treated as an Incentive Stock Option nor as an option described in
Section 423(b) of the Code.

2.17 "Parent Company" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time of the
granting of the option, each of the corporations other than the Company owns
stock possessing 50 percent or more of the combined voting power of all classes
of stock in one of the other corporations in the chain.

2.18 "Participant" shall mean any employee, director or officer of, or
key adviser or consultant to, the Company or any Subsidiary to whom an award is
granted under the Plan.

2.19 "Performance Unit Award" means an award made pursuant to Section
8.
2.20 "Plan Year" means the twelve-month period beginning on January 1
and ending on December 31; provided, however, that the first Plan Year shall be
a short Plan Year beginning on the Effective Date and ending on December 31,
2000.

-3-
<PAGE> 5
2.21 "Restricted Stock Award" means an award of shares of Common Stock
pursuant to Section 9.

2.22 "Retirement" means _________________________.

2.23 "Stock Appreciation Right" means an award made pursuant to Section
7.

2.24 "Stock Bonus Award" means an award made pursuant to Section 10.

2.25 "Stock Option" means any option to purchase Common Stock granted
pursuant to Section 6.

2.26 "Subsidiary" means: (i) as it relates to Incentive Stock Options,
any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the option, each
of the corporations (other than the last corporation in the unbroken chain) owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain; and (ii) for all
other purposes, a company, domestic or foreign, of which not less than 50
percent of the voting shares are held by the Company or by a Subsidiary, whether
or not such company now exists or is hereafter organized or acquired by the
Company or by a Subsidiary .

2.27 "Term of the Plan" means the period beginning on the Effective
Date and ending on the earlier to occur of (i) the date the Plan is terminated
by the Committee in accordance with Section 24 and (ii) the date which is ten
years from the Effective Date.

SECTION 3. ADMINISTRATION. The Plan shall be administered by the Board
or a committee of the Board (as the Board in its sole discretion shall
determine); provided, however, that if the Company registers any class of equity
security pursuant to Section 12 of the Exchange Act, and if the Plan is to be
administered by a committee, then such committee shall consist of two or more
members of the Board, each of whom shall each qualify as a "Non-employee
Director" within the meaning of Rule 16b-3 of the Exchange Act and also qualify
as an "outside director" within the meaning of Section l62(m) of the Code and
regulations pursuant thereto. For purposes of the Plan, the Board acting in this
capacity or the Committee described in the preceding sentence shall be referred
to as the "Committee". The Committee shall have the power and authority to grant
to eligible persons pursuant to the terms of the Plan: (1) Stock Options, (2)
Stock Appreciation Rights, (3) Restricted Stock Awards, (4) Performance Unit
Awards, (5) Stock Bonus Awards, or (6) any combination of the foregoing.

The Committee shall have authority in its discretion to interpret the
provisions of the Plan and to decide all questions of fact arising in its
application; to select the persons to whom awards shall be made under the Plan;
to determine whether and to what extent awards shall be made under the Plan; to
determine the types of award to be made and the amount, size, terms and
conditions of each such award; to determine the time when the awards shall be
granted; to determine whether, to what extent and under what circumstances
Common Stock and other amounts payable with respect to an award under the Plan
shall be deferred either automatically or at the election of the Participant; to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; and to make all
other determinations necessary or advisable for the administration of the Plan.

-4-
<PAGE> 6
The Committee also shall have authority in its discretion to vary the
terms of the Plan to the extent necessary to comply with federal, state or local
law.

Notwithstanding anything in the Plan to the contrary, with respect to
any Participant or eligible person who is resident outside of the United States,
the Committee may, in its sole discretion, amend the terms of the Plan in order
to conform such terms with the requirements of local law or to meet the
objectives of the Plan. The Committee may, where appropriate, establish one or
more sub-plans for this purpose.

All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons who participate in the Plan.

All expenses and liabilities incurred by the Committee in the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants or other persons in connection with
the administration of the Plan. The Company, and its officers and directors,
shall be entitled to rely upon the advice, opinions or valuations of any such
persons.

SECTION 4. COMMON STOCK SUBJECT TO THE PLAN.

4.1 Share Reserve. There shall be reserved and available for issuance
under the Plan 5,500,000 shares of Common Stock, subject to such adjustment as
may be made pursuant to Section 23.

4.2 Source of Shares/Reversion of Shares. Such shares may consist in
whole or in part of authorized and unissued shares or treasury shares or any
combination thereof as the Committee may determine. Except as otherwise provided
herein, any shares subject to an option or right which for any reason expires or
is terminated unexercised, becomes unexercisable, or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, or if any shares of Common
Stock are surrendered to the Company in connection with any award (whether or
not such surrendered shares were acquired pursuant to any award), or if any
shares are withheld by the Company, the shares subject to such award and the
surrendered and withheld shares shall thereafter be available for further awards
under the Plan; provided, however, that any such shares that are surrendered to
or withheld by the Company in connection with any award or that are otherwise
forfeited after issuance shall not be available for purchase pursuant to
Incentive Stock Options. No awards may be granted following the end of the Term
of the Plan.

4.3 Code Section 162(m) Limitation. The total number of shares of
Common Stock for which (i) Stock Options, (ii) Stock Appreciation Rights, and
(iii) Restricted Stock Awards and Stock Bonus Awards that are subject to the
attainment of performance criteria to protect against loss of deductibility
under Section 162(m) of the Code, may be granted to any employee during any
twelve month period shall not exceed _____________ in the aggregate, subject to
adjustment pursuant to Section 23. The maximum amount that may be earned under
Performance Unit Awards that are subject to the attainment of performance
criteria to protect against loss of deductibility under Section 162(m) of the
Code, by any employee during any twelve month period shall not exceed
$____________. This Section 4.3 shall not apply prior to the Listing Date and,
following the Listing Date, this Section 4.3 shall not apply until (i) the

-5-
<PAGE> 7
earliest of: (1) the first material modification of the Plan (including any
increase in the number of shares of Common Stock reserved for issuance under the
Plan in accordance with Section 4.1); (2) the issuance of all of the shares of
Common Stock reserved for issuance under the Plan; (3) the expiration of the
Plan; or (4) the first meeting of shareholders at which directors are to be
elected that occurs after the close of the third calendar year following the
calendar year in which occurred the first registration of an equity security
under Section 12 of the Exchange Act; or (ii) such other date required by
Section 162(m) of the Code and the rules and regulations promulgated thereunder.

SECTION 5. ELIGIBILITY TO RECEIVE AWARDS. An award may be granted to any
employee, director, or officer of, or key adviser or consultant to, the Company
or any Subsidiary, who is responsible for or contributes to the management,
growth or success of the Company or any Subsidiary, provided that bona fide
services shall be rendered by consultants or advisers to the Company or its
Subsidiaries and such services must not be in connection with the offer and sale
of securities in a capital-raising transaction and must not directly or
indirectly promote or maintain a market for the Company's securities. Subject to
the preceding sentence, the Committee shall have the sole authority to select
the persons to whom an award is to be granted hereunder and to determine what
type of award is to be granted to each such person. No person shall have any
right to participate in the Plan. Any person selected by the Committee for
participation during any one period will not by virtue of such participation
have the right to be selected as a Participant for any other period.

SECTION 6. STOCK OPTIONS. A Stock Option may be an Incentive Stock Option or a
Non-Qualified Stock Option. Only employees of the Company or any Parent or
Subsidiary of the Company are eligible to receive Incentive Stock Options. To
the extent that any Stock Option does not qualify as an Incentive Stock Option,
it shall constitute a separate Non-Qualified Stock Option. Stock Options may be
granted alone or in addition to other awards granted under the Plan. The terms
and conditions of each Stock Option granted under the Plan shall be specified by
the Committee, in its sole discretion, and shall be set forth in a written
option agreement between the Company and the Participant in such form as the
Committee shall approve from time to time. No person shall have any rights under
any Stock Option granted under the Plan unless and until the Company and the
person to whom such Stock Option shall have been granted shall have executed and
delivered an agreement expressly granting the Stock Option to such person and
containing provisions setting forth the terms for the Stock Option. The terms
and conditions of each Incentive Stock Option shall be such that each Incentive
Stock Option issued hereunder shall constitute and shall be treated as an
"incentive stock option" as defined in Section 422 of the Code. The terms and
conditions of each Non-Qualified Stock Option will be such that each
Non-Qualified Stock Option issued hereunder shall not constitute nor be treated
as an "incentive stock option" as defined in Section 422 of the Code or an
option described in Section 423(b) of the Code and will be a "non-qualified
stock option" for federal income tax purposes. The terms and conditions of any
Stock Option granted hereunder need not be identical to those of any other Stock
Option granted hereunder. The agreements shall contain in substance the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:

6.1 Type of Option. Each option agreement shall identify the option
represented thereby as an Incentive Stock Option or a Non-Qualified Stock
Option, as the case may be.

-6-
<PAGE> 8
6.2 Option Price. The Incentive Stock Option exercise price shall be
fixed by the Committee but shall in no event be less than 100 percent (or 110
percent in the case of an employee referred to in Section 6.7(ii) below) of the
Fair Market Value of the shares of Common Stock subject to the Incentive Stock
Option on the date the Incentive Stock Option is granted. The Non-Qualified
Stock Option exercise price shall be fixed by the Committee but in no event
shall be less than 100 percent of the Fair Market Value of the shares of Common
Stock subject to the Non-Qualified Stock Option at the time the option is
granted, and in no event less than the par value of the Common Stock.

6.3 Exercise Term. Each option agreement shall state the period or
periods of time within which the Stock Option may be exercised, in whole or in
part, which shall be such period or periods of time as may be determined by the
Committee, provided that no Stock Option shall be exercisable after ten years
from the date of grant thereof (or, in the case of an Incentive Stock Option
granted to an employee referred to in Section 6.7(ii) below, such term shall in
no event exceed five (5) years from the date on which such Incentive Stock
Option is granted); provided further, each option granted under the Plan shall
become exercisable six (6) months after the grant date, unless specifically
stipulated otherwise under the option agreement. The Committee shall have the
power to permit an acceleration of previously established exercise terms,
subject to the requirements set forth herein, upon such circumstances and
subject to such terms and conditions as the Committee deems appropriate.

6.4 Payment for Shares. A Stock Option shall be deemed to be exercised
when written notice of such exercise has been given to the Company in accordance
with the terms of the option agreement by the Participant entitled to exercise
the Stock Option and full payment for the shares of Common Stock with respect to
which the Stock Option is exercised has been received by the Company. The
Committee, in its sole discretion, may permit all or part of the payment of the
exercise price to be made, to the extent permitted by applicable statutes and
regulations, either: (i) in cash, by check or wire transfer, (ii) in any other
form of legal consideration as provided for under the terms of the Stock Option
agreement, or (iii) in the event the Common Stock is listed on any United States
securities exchange or traded on NASDAQ or on an over-the-counter quotation
system in the United States, through the delivery of irrevocable instructions to
a broker to deliver property to the Company in an amount equal to the aggregate
exercise price for the shares being purchased. In lieu of payment in fractions
of shares, payment of any fractional share amount shall be made in cash or check
payable to the Company. No shares of Common Stock shall be issued to any
Participant upon exercise of a Stock Option until the Company receives full
payment therefor as described above. Upon the receipt of notice of exercise and
full payment for the shares of Common Stock, the shares of Common Stock shall be
deemed to have been issued and the Participant shall be entitled to receive such
shares of Common Stock and shall be a stockholder with respect to such shares,
and the shares of Common Stock shall be considered fully paid and nonassessable.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date on which the stock certificate is issued, except as
provided in Section 23 of the Plan. Each exercise of a Stock Option shall
reduce, by an equal number, the total number of shares of Common Stock that may
thereafter be purchased under such Stock Option.

6.5 Rights upon Termination of Continuous Service or Change of Control.
In the event that a Participant's Continuous Service terminates for any reason,
other than death, Retirement,

-7-
<PAGE> 9
Disability, or for Cause, any rights of the Participant under any Stock Option
shall immediately terminate; provided, however, that the Participant (or any
successor or legal representative) shall have the right to exercise the Stock
Option (to the extent that the Stock Option was exercisable at the time of
termination) within a period equal to the lesser of: (i) three (3) months after
the effective date of such termination of Continuous Service, and (ii) the
remainder of the term set forth in the Stock Option agreement.

In the event that a Participant's Continuous Service terminates
for Cause, the Participant (or any successor or legal representative) shall not
have any rights under any Stock Option, and the Company shall not be obligated
to sell or deliver shares of Common Stock (or have any other obligation or
liability) under the Plan. The Committee shall determine in its sole discretion
whether the Participant's Continuous Service shall have been terminated for
Cause. In the event of such determination, the Participant (or any successor or
legal representative) shall have no right under any Stock Option to purchase any
shares of Common Stock regardless of whether the Participant (or any successor
or legal representative) shall have delivered a notice of exercise prior to the
making of such determination. Any Stock Option may be terminated entirely by the
Committee at the time or at any time subsequent to a determination by the
Committee under this Section 6.5 which has the effect of eliminating the
Company's obligation to sell or deliver shares of Common Stock under such Stock
Option.

In the event that a Participant's Continuous Service terminates due to
a Participant's Retirement prior to the expiration of the Stock Option and
without the Participant's having fully exercised the Stock Option, the Stock
Option shall be deemed to be fully exercisable, and the Participant or his
successor or legal representative shall have the right to exercise the Stock
Option within a period of three (3) months following such Retirement.

In the event that a Participant's Continuous Service terminates due to
a Participant's Disability prior to the expiration of the Stock Option and
without the Participant's having fully exercised the Stock Option, the Stock
Option shall be deemed to be exercisable as the Committee, in its sole
discretion, may determine, and the Participant or his successor or legal
representative shall have the right to exercise the Stock Option within the
period determined by the Committee.

In the event that a Participant's Continuous Service terminates due to
a Participant's death prior to the expiration of the Stock Option and without
the Participant's having fully exercised the Stock Option, the Stock Option
shall be deemed to be fully exercisable, and the Participant's successor or
legal representative shall have the right to exercise the Stock Option within a
period of twelve (12) months following the Participant's death.

The Stock Option agreement may, but need not, include a provision
whereby the Participant may elect at any time before the Participant's
Continuous Service terminates to exercise the Stock Option as to any part or all
of the shares of Common Stock subject to the Stock Option prior to the full
vesting of the Stock Option. Any unvested shares of Common Stock so purchased
may be subject to a repurchase option in favor of the Company (including but not
limited to the Right of Repurchase under Section 14) or to any other restriction
the Committee determines to be appropriate.

-8-
<PAGE> 10
In the event of a Change of Control prior to the date a Participant's
Continuous Service terminates, such Participant shall have the right to exercise
the vested portion of his or her unexercised Stock Option for the remainder of
its term, provided, however, that upon the approval by the Board of any event
specified in Section 2.3(i)(A) or (B), any such Stock Option shall terminate if
it is not exercised prior to or upon the consummation of any such event. For
purposes of determining the vested portion of any unexercised Stock Option, upon
a Change of Control for any Stock Option subject to a vesting schedule, an
additional one (1) year shall be deemed to have lapsed since the Participant's
hire date or such other measurement date established by the Committee.

6.6 Re-load Options. Without in any way limiting the authority of the
Committee to make or not to make grants of Stock Options hereunder, the
Committee shall have the authority (but not an obligation) to include as part of
any Stock Option a provision entitling the Participant to a further Stock Option
(a "Re-Load Option") in the event the Participant exercises the original Stock
Option, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Stock Option
agreement. Any such Re-Load Option shall (i) provide for a number of shares of
Common Stock equal to the number of shares of Common Stock surrendered as part
or all of the exercise price of such Stock Option; (ii) have an expiration date
which is the same as the expiration date of the Stock Option the exercise of
which gave rise to such Re-Load Option; and (iii) have an exercise price which
is equal to 100 percent of the Fair Market Value of the Common Stock subject to
the Re-Load Option on the date of exercise of the original Stock Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Stock Options under
the Plan.

Any such Re-Load Option may be an Incentive Stock Option or a
Non-Qualified Stock Option, as the Committee may designate at the time of the
grant of the original Stock Option; provided, however, the designation of any
Re-Load Option as an Incentive Stock Option shall be subject to the $100,000
annual limitation on the exercisability of Incentive Stock Options described in
Section 6.7 and in Section 422(d) of the Code. There shall be no Re-Load Options
on a Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares of Common Stock under Section 4.1 and the
limitation on the grants of Stock Options under Section 4.3 and shall be subject
to such other terms and conditions as the Committee may determine which are not
inconsistent with the express provisions of the Plan regarding the terms of
Stock Options.

6.7 Special Incentive Stock Option Rules. Notwithstanding the
foregoing, in the case of an Incentive Stock Option, each option agreement shall
contain such other terms, conditions and provisions as the Committee determines
necessary or desirable in order to qualify such Stock Option as an Incentive
Stock Option under the Code including, without limitation, the following:

(i) To the extent that the aggregate Fair Market Value
(determined as of the time the option is granted) of the Common Stock, with
respect to which Incentive Stock Options granted under this Plan (and all other
plans of the Company and its Subsidiaries) become exercisable for the first time
by any person in any calendar year, exceeds $100,000, such options shall be
treated as Non-Qualified Stock Options; and

-9-
<PAGE> 11
(ii) No Incentive Stock Option shall be granted to any
employee if, at the time the Incentive Stock Option is granted, the employee (by
reason of the attribution rules applicable under Section 424(d) of the Code)
owns more than 10 percent of the combined voting power of all classes of stock
of the Company or any Parent or Subsidiary unless at the time such Incentive
Stock Option is granted the option price is at least 110 percent of the Fair
Market Value (determined as of the time the Incentive Stock Option is granted)
of the shares of Common Stock subject to the Incentive Stock Option and such
Incentive Stock Option by its terms is not exercisable after the expiration of
five years from the date of grant.

If an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option
shall thereafter be treated as a Non-Qualified Stock Option.

SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights entitle
Participants to increases in the Fair Market Value of shares of Common Stock.
The terms and conditions of each Stock Appreciation Right granted under the Plan
shall be specified by the Committee, in its sole discretion, and shall be set
forth in a written agreement between the Company and the Participant in such
form as the Committee shall approve from time to time. The agreements shall
contain in substance the following terms and conditions and may contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:

7.1 Award. Stock Appreciation Rights shall entitle the Participant,
subject to such terms and conditions determined by the Committee, to receive
upon exercise thereof an award equal to all or a portion of the excess of: (i)
the Fair Market Value of a specified number of shares of Common Stock at the
time of exercise, over (ii) a specified price which shall not be less than 100
percent of the Fair Market Value of the Common Stock at the time the right is
granted or, if connected with a previously issued Stock Option, not less than
100 percent of the Fair Market Value of the Common Stock at the time such Stock
Option was granted. Such amount may be paid by the Company in cash, Common Stock
(valued at its then Fair Market Value) or any combination thereof, as the
Committee may determine. Stock Appreciation Rights may be, but are not required
to be, granted in connection with a previously or contemporaneously granted
Stock Option. In the event of the exercise of a Stock Appreciation Right, the
number of shares reserved for issuance hereunder shall be reduced by the number
of shares covered by the Stock Appreciation Right.

7.2 Term. Each agreement shall state the period or periods of time
within which the Stock Appreciation Right may be exercised, in whole or in part,
subject to such terms and conditions prescribed for such purpose by the
Committee provided that no Stock Appreciation Right shall be exercisable prior
to six months nor after ten years from the date of grant thereof. The Committee
shall have the power to permit an acceleration of previously established
exercise terms, subject to the requirements set forth herein, upon such
circumstances and subject to such terms and conditions as the Committee deems
appropriate.

7.3 Rights upon Termination of Continuous Service or Change of Control.
In the event that a Participant's Continuous Service terminates for any reason,
other than death, Retirement, Disability or for Cause, any rights of the
Participant under any Stock Appreciation Right shall

-10-
<PAGE> 12
immediately terminate; provided, however, that the Participant (or any successor
or legal representative) shall have the right to exercise the Stock Appreciation
Right (to the extent that the Stock Appreciation Right was exercisable at the
time of termination) within a period equal to the lesser of (i) three (3) months
after the effective date of such termination of Continuous Service, and (ii) the
remainder of term set forth in the Stock Appreciation Right.

In the event that a Participant's Continuous Service terminates for
Cause, the Participant (or any successor or legal representative) shall not have
any rights under any Stock Appreciation Right, and the Company shall not be
obligated to pay or deliver any cash, Common Stock or any combination thereof
(or have any other obligation or liability) under any Stock Appreciation Right.
The Committee shall determine in its sole discretion whether the Participant's
Continuous Service shall have been terminated for Cause. In the event of such
determination, the Participant (or any successor or legal representative) shall
have no right under any Stock Appreciation Right to purchase any shares of
Common Stock regardless of whether the Participant (or any successor or legal
representative) shall have delivered a notice of exercise prior to the making of
such determination. Any Stock Appreciation Right may be terminated entirely by
the Committee at the time of or at any time subsequent to the determination by
the Committee under this Section 7.3 which has the effect of eliminating the
Company's obligations under such Stock Appreciation Right.

In the event that a Participant's Continuous Service terminates due to
a Participant's Retirement prior to the expiration of the Stock Appreciation
Right and without the Participant's having fully exercised the Stock
Appreciation Right, the Stock Appreciation Right shall be deemed to be fully
exercisable, and the Participant or his successor or legal representative shall
have the right to exercise the Stock Appreciation Right within a period of three
(3) months following such Retirement.

In the event that a Participant's Continuous Service terminates due to
a Participant's Disability prior to the expiration of the Stock Appreciation
Right and without the Participant's having fully exercised the Stock
Appreciation Right, the Stock Appreciation Right shall be deemed to be
exercisable as the Committee, in it's sole discretion, may determine, and the
Participant or his successor or legal representative shall have the right to
exercise the Stock Appreciation Right within the period determined by the
Committee.

In the event that a Participant's Continuous Service terminates due to
a Participant's death prior to the expiration of the Stock Appreciation Right
and without the Participant's having fully exercised the Stock Appreciation
Right, the Stock Appreciation Right shall be deemed to be fully exercisable, and
the Participant's successor or legal representative shall have the right to
exercise the Stock Appreciation Right within a period of twelve (12) months
following the Participant's death.

In the event of a Change of Control prior to the date a Participant's
Continuous Service terminates, the Participant shall have the right to exercise
the vested portion of his or her unexercised Stock Appreciation Rights for the
remainder of their term; provided, however, that upon the approval by the Board
of any event specified in Section 2.3(i)(A) or (B), any such Stock Appreciation
Rights shall terminate if they are not exercised prior to or upon the
consummation of any such event. For purposes of determining the vested portion
of any

-11-
<PAGE> 13
unexercised Stock Appreciation Rights, upon a Change of Control for any Stock
Appreciation Rights subject to a vesting schedule, an additional one (1) year
shall be deemed to have lapsed since the Participant's hire date or such other
measurement date established by the Committee.

SECTION 8. PERFORMANCE UNIT AWARDS. Performance Unit Awards under the
Plan shall entitle Participants to future payments based upon the achievement of
preestablished long-term performance objectives. The terms and conditions of
each Performance Unit Award granted under the Plan shall be specified by the
Committee, in its sole discretion, and shall be set forth in a written agreement
between the Company and the Participant in such form as the Committee shall
approve from time to time. The agreements shall contain in substance the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:

8.1 Performance Period. The Committee shall establish with respect to
each Performance Unit Award a performance period as determined by the Committee
in its discretion.

8.2 Unit Value. The Committee shall establish with respect to each
Performance Unit Award a value for each unit which shall not thereafter change
or which may vary thereafter on the basis of criteria specified by the
Committee.

8.3 Performance Targets. The Committee shall establish with respect to
each Performance Unit Award maximum and minimum performance targets to be
achieved during the applicable performance period. The achievement of maximum
targets shall entitle a Participant to payment with respect to the full value of
a Performance Unit Award. The achievement of less than the maximum targets, but
in excess of the minimum targets, shall entitle a Participant to payment with
respect to a portion of a Performance Unit Award according to the level of
achievement of targets as specified by the Committee. To the extent the
Committee deems necessary or appropriate to protect against the loss of
deductibility pursuant to Section 162(m) of the Code, such targets shall be
established in conformity with the requirements of Section 162(m) of the Code.

8.4 Performance Measures. Performance targets established by the
Committee shall relate to corporate, division, subsidiary, group or unit
performance and may be established in terms of growth in gross revenue, earnings
per share, or ratios of earnings to equity or assets, net profits, stock price,
market share, sales or costs or, with respect to Participants not subject to
Section 162(m) of the Code, such other measures or standards determined by the
Committee in its discretion. Multiple targets may be used and may have the same
or different weighting, and they may relate to absolute performance or relative
performance measured against other companies or businesses.

8.5 Adjustments. At any time prior to payment of a Performance Unit
Award, the Committee may adjust previously established performance targets or
other terms and conditions, including the Company's or other company's financial
performance, for Plan purposes, in order to reduce or eliminate, but not to
increase, the payment with respect to a Performance Unit Award that would
otherwise be due upon attainment of a preestablished performance objective. Such
adjustments shall be made to reflect major unforeseen events such as changes in
laws,

-12-
<PAGE> 14
regulations or accounting practices, mergers, acquisitions or divestitures or
other extraordinary, unusual or nonrecurring items or events.

8.6 Payment of Performance Unit Awards. Following the conclusion of
each performance period, the Committee shall determine the extent to which
performance targets have been attained, and any other terms and conditions
satisfied, for such period. The Committee shall determine what, if any, payment
is due on the Performance Unit Award and whether such payment shall be made in
cash, Common Stock or a combination thereof. Payment shall be made in a lump sum
or installments, as determined by the Committee, commencing as promptly as
practicable following the end of the performance period unless deferred subject
to such terms and conditions and in such form as may be prescribed by the
Committee.

8.7 Termination of Continuous Service or Change of Control. In the
event that a Participant's Continuous Service terminates for any reason, other
than death or Disability, any rights of the Participant or his successor or
legal representative under any Performance Unit Award shall immediately
terminate.

In the event that a Participant's Continuous Service terminates because
such Participant dies or suffers a Disability, or in the event of a Change of
Control prior to the date a Participant's Continuous Service terminates, the
Committee may, in its sole discretion, pay to the Participant or his successor
or legal representative all or any portion of any Performance Unit Award to the
extent earned under the applicable performance targets regardless of whether the
applicable performance period has ended, pursuant to such terms as the Committee
in its sole discretion shall determine.

SECTION 9. RESTRICTED STOCK AWARDS. Restricted Stock Awards shall
consist of shares of Common Stock restricted against transfer ("Restricted
Stock"), subject to a substantial risk of forfeiture and other terms and
conditions intended to further the purpose of the Plan. The terms and conditions
of each Restricted Stock Award granted under the Plan shall be specified by the
Committee, in its sole discretion, and shall be set forth in a written agreement
between the Company and the Participant in such form as the Committee shall
approve from time to time. The agreements shall contain in substance the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:

9.1 Restriction Period. Restricted Stock Awards shall be subject to the
above-described restrictions over such period as the Committee determines. To
the extent the Committee deems necessary or appropriate to protect against loss
of deductibility pursuant to Section 162(m) of the Code, Restricted Stock Awards
to certain Participants may also be subject to certain conditions with respect
to attainment of one or more preestablished performance objectives which shall
relate to corporate, subsidiary, division, group or unit performance in terms of
growth in gross revenue, earnings per share or ratios of earnings to equity or
assets; provided that such objectives may be adjusted to reduce or eliminate,
but not to increase, an award in order to take into account unforeseen events or
changes in circumstances.

9.2 Restriction upon Transfer. Shares awarded, and the right to vote
such shares and to receive dividends thereon, may not be sold, assigned,
transferred, exchanged, pledged,

-13-
<PAGE> 15
hypothecated or otherwise encumbered, except as herein provided or as provided
in any agreement entered into between the Company and a Participant in
connection with the Plan, during the restriction period applicable to such
shares. Notwithstanding the foregoing, and except as otherwise provided in the
Plan, the Participant shall have all the other rights of a stockholder
including, but not limited to, the right to receive dividends and the right to
vote such shares.

9.3 Certificates. Each certificate issued in respect of shares awarded
to a Participant shall be registered in the name of the Participant and
deposited with the Company, or its designee, and shall bear the following
legend:

"This certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture
provisions and restrictions against transfer) contained in the
Millennium Cell Inc. 2000 Long-Term Incentive Plan and a
Restricted Stock Award Agreement entered into between the
registered owner and Millennium Cell Inc. Release from such
terms and conditions shall be obtained only in accordance with
the provisions of the Plan and Agreement, a copy of each of
which is on file in the office of the Secretary of Millennium
Cell Inc."

Each Participant, as a condition of any Restricted Stock Award, shall have
delivered a stock power, endorsed in blank, relating to the Common Stock covered
by such award.

9.4 Lapse of Restrictions. Except for preestablished performance
objectives established with respect to awards to Participants subject to Section
162(m) of the Code, the Committee may, in its sole discretion, provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions in whole or in part based on such factors and such circumstances as
the Committee may determine. Upon the lapse of such restrictions, shares of
Common Stock, free of the restrictive legend set forth in Section 9.3 above,
shall be issued to the Participant or his legal representative. The Committee
shall have the power to permit, in its discretion, an acceleration of the
expiration of the applicable restrictions period with respect to any part or all
of the shares awarded to a Participant, except, with respect to Participants
subject to Section 162(m) of the Code, to the extent such acceleration would
result in the loss of the deductibility of an award to the Company.

9.5 Termination of Continuous Service or Change of Control. In the
event that a Participant's Continuous Service terminates for any reason, other
than death or Disability, any rights of the Participant or his successors or
legal representatives under any Restricted Stock Award that remains subject to
restrictions shall immediately terminate and any Restricted Stock Award with
unlapsed restrictions shall be forfeited to the Company without payment of any
consideration.

In the event that a Participant's Continuous Service terminates because
such Participant dies or suffers a Disability, or in the event of a Change of
Control prior to the date the Participant's Continuous Service terminates, all
remaining shares of a Restricted Stock Award shall no longer be subject to any
unlapsed restrictions.

-14-
<PAGE> 16
SECTION 10. STOCK BONUS AWARDS. The Committee may, in its sole
discretion, grant a Stock Bonus Award based upon corporate, division,
subsidiary, group or unit performance in terms of growth in gross revenue,
earnings per share or ratios of earnings to equity or assets or, with respect to
Participants not subject to Section 162(m) of the Code, such other measures or
standards determined by the Committee in its discretion; provided, that such
performance objectives may be adjusted to reduce or eliminate but not to
increase an award in order to take into account unforeseen events or changes in
circumstances.

The terms and conditions of each Stock Bonus Award granted under the
Plan shall be specified by the Committee, in its sole discretion, and shall be
set forth in a written agreement between the Company and the Participant in such
form as the Committee shall approve from time to time. In addition to any
applicable performance goals, shares of Common Stock subject to a Stock Bonus
Award may be: (i) subject to additional restrictions (including, without
limitation, restrictions on transfer), or (ii) granted directly to a person free
of any restrictions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable.

SECTION 11. LOANS. The Committee may, in its sole discretion and to
further the purpose of the Plan, provide for loans to persons in connection with
all or any part of an award under the Plan. Any loan made pursuant to this
Section 11 shall be evidenced by a loan agreement, promissory note or other
instruments in such form and which shall contain such terms and conditions
(including, without limitation, provisions for interest, payment, schedules,
collateral, forgiveness, acceleration of such loans or parts thereof or
acceleration in the event of termination) as the Committee shall prescribe from
time to time. Notwithstanding the foregoing, each loan shall comply with all
applicable laws, regulations and rules of the Board of Governors of the Federal
Reserve System and any other governmental agency having jurisdiction.

SECTION 12. SECURITIES LAW REQUIREMENTS. No shares of Common Stock
shall be issued upon the exercise or payment of any Award unless and until:

(i) The shares of Common Stock underlying the Award have been
registered under the Securities Act of 1933, as amended (the "Act"), or the
Company has determined that an exemption from the registration requirements
under the Act is available or the registration requirements of the Act do not
apply to such exercise or payment;

(ii) The Company has determined that all applicable listing
requirements of any stock exchange or quotation system on which the shares of
Common Stock are listed have been satisfied; and

(iii) The Company has determined that any other applicable
provision of state or Federal law, including without limitation applicable state
securities laws, has been satisfied.

SECTION 13. RESTRICTIONS ON TRANSFER; REPRESENTATIONS OF
PARTICIPANT; LEGENDS.

The Committee in its sole discretion may restrict the transferability
of shares until the Common Stock is listed on any United States securities
exchange or traded on NASDAQ or an over-the-counter quotation system in the
United States.

-15-
<PAGE> 17
Regardless of whether the offering and sale of shares of Common Stock
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose restrictions upon
the sale, pledge, or other transfer of such shares, including the placement of
appropriate legends on stock certificates, if, in the judgment of the Company
and its counsel, such restrictions are necessary or desirable in order to
achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law. As a condition to the Participant's receipt
of shares, the Company may require the Participant to represent that such shares
are being acquired for investment, and not with a view to the sale or
distribution thereof, except in compliance with the Securities Act, and to make
other representations as are deemed necessary or appropriate by the Company and
its counsel. Stock certificates evidencing shares acquired pursuant to an
unregistered transaction to which the Securities Act applies shall bear a
restrictive legend substantially in the following form and such other
restrictive legends as are required or deemed advisable under the Plan or the
provisions of any applicable law:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION
THEREOF, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
UNDER THE ACT AND QUALIFICATION UNDER ANY APPLICABLE STATE
SECURITIES LAWS, OR WITHOUT AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED."

The Company shall also place legends on stock certificates representing its
right of repurchase under Section 14 hereof and the right of first refusal under
Section 15 hereof. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 13 shall be
conclusive and binding on all persons.

The Company may, but shall not be obligated to, register or qualify the
sale of shares under the Securities Act or any other applicable law.

SECTION 14. RIGHT OF REPURCHASE.

14.1 Repurchase Right. At the Committee's discretion, shares of Common
Stock issued to a Participant under this Plan may be subject to a right, but not
an obligation, of repurchase by the Company (the "Right of Repurchase"), at the
price specified in Section 14.2 below, if the Participant's Continuous Service
terminates for any reason ("Employment Termination"). Shares issued by the
Company shall be transferable only by the Participant subject to the Right of
Repurchase, and the Company shall legend the Right of Repurchase on the stock
certificates evidencing such shares and shall take such other steps as it deems
necessary

-16-
<PAGE> 18
to ensure compliance with this restriction. The Company's rights under this
Section 14.1 shall be freely assignable, in whole or in part.

14.2 Repurchase Price. The price per share at which the Company may
exercise the Right of Repurchase under Section 14.1 (the "Repurchase Price")
shall be:

(a) the lower of: (i) the exercise price of each share as paid
by the Participant (in the case of a Stock Option), or (ii) the Fair Market
Value of each share at the later of the date of the Participant's Employment
Termination or the date of issuance of such share to the Participant (provided,
the Company's ability to exercise the Right of Repurchase at the exercise price
of each share as paid by the Participant shall only apply to unvested shares
issued upon early exercise of the nonvested portion of the Participant's Stock
Option and shall lapse at a rate that will result in the same vesting as if
early exercise of the nonvested portion of the Participant's Stock Option had
not occurred); or

(b) such other price as the Committee in its sole discretion
shall determine in accordance with applicable state Blue Sky or other laws.

14.3 Repurchase Procedure. The Company may exercise its Right of
Repurchase by sending a written notice to the Participant or his or her
successor or legal representative and to the escrow agent, if any, of its taking
such action and specifying the number of shares being repurchased. The Company's
Right of Repurchase with respect to vested shares at their Fair Market Value as
provided in clause (a)(ii) of Section 14.2 above shall terminate if not
exercised by written notice from the Company to the Participant or his or her
successor or legal representative within thirty (30) days of the effective date
of the Employment Termination. If the Company exercises its Right of Repurchase,
within ninety (90) days of the effective date of the Participant's Employment
Termination (or, in the case of Common Stock issued upon exercise of the Stock
Option after the effective date of the Participant's Employment Termination,
within ninety (90) days after the date of exercise), the Participant, or his or
her successor or legal representative, or if applicable, the escrow agent, shall
deliver to the Company every stock certificate representing the shares being
repurchased, together with appropriate assignments separate from certificates,
and the Company shall then promptly pay the total Repurchase Price in cash to
the Participant, or if applicable, to the escrow agent, for delivery to the
Participant.

14.4 Escrow. To facilitate the consummation of the Company's Right of
Repurchase under this Section 14, at the request of the Committee, the
Participant and the Company shall execute joint escrow instructions and the
Participant shall deliver and deposit with the escrow agent named in the joint
escrow instructions two "Assignments Separate from Certificate", together with
all certificates evidencing the shares of Common Stock issued to the Participant
pursuant to the Plan, duly endorsed in blank. The escrow agent shall hold such
documents and deliver the same to the Company pursuant to the joint escrow
instructions and in accordance with the terms of this Section 14, as applicable.

14.5 Binding Effect. The Company's Right of Repurchase shall inure to
the benefit of its successors and assigns and shall be binding upon any
representative, executor, administrator, heir, or legatee of the Participant.

-17-
<PAGE> 19
14.6 Termination of Right of Repurchase. Notwithstanding any other
provision of this Section 14, in the event that the Common Stock is listed on
any United States securities exchange or traded on any formal over-the-counter
market in general use in the United States at the time the Participant would
otherwise be required to transfer his or her vested shares to the Company at not
less than the Fair Market Value thereof as provided in clause (a)(ii) of Section
14.2 above, the Company shall no longer have the Right of Repurchase with
respect to such vested shares, and the Participant shall have no obligations to
comply with this Section 14 with respect to such vested shares. The Company's
Right of Repurchase at the exercise price of each unvested share issued upon
early exercise of the nonvested portion of a Participant's Stock Option as
provided in clause (a)(i) of Section 14.2 above shall not expire but shall
continue in full force and effect on and after the date the Common Stock becomes
publicly traded.

SECTION 15. RIGHT OF FIRST REFUSAL.

15.1 Right of First Refusal. At the Committee's discretion, shares
issued to a Participant under this Plan may be subject to a requirement that if
the Participant proposes to sell, pledge, or otherwise transfer any such shares
or any interest in such shares, to any person or entity, the Company shall have
a right of first refusal (the "Right of First Refusal") with respect to such
shares. Any Participant desiring to transfer shares subject to the Right of
First Refusal shall give a written notice (the "Transfer Notice") to the Company
describing fully the proposed transfer, including the number of shares proposed
to be transferred, the proposed transfer price, and the name and address of the
proposed transferee. The Transfer Notice shall be signed both by the Participant
and by the proposed transferee and must constitute a binding commitment of both
parties to the transfer of the shares. The Company shall have the right to
purchase all (but not less than all) the shares subject to the Transfer Notice
on the terms of the proposal referred to in the Transfer Notice, subject to any
change in such terms permitted under Section 15.2 hereof, by delivery of a
notice of exercise of the Right of First Refusal within thirty (30) days after
the date the Transfer Notice is received by the Company. The Company's rights
under this Section 15.1 shall be freely assignable, in whole or in part.

15.2 Transfer of Shares. If the Company fails to exercise the Right of
First Refusal within thirty (30) days after the date on which it receives the
Transfer Notice, the Participant may, not later than six (6) months following
receipt of the Transfer Notice by the Company, consummate a transfer of the
shares subject to the Transfer Notice on the terms and conditions described in
the Transfer Notice, subject to restrictions on the transfer of such shares
imposed pursuant to Section 13. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Participant, shall again be subject to the Right of
First Refusal and shall again require compliance with the procedure described in
Section 15.1. If the Company exercises its Right of First Refusal, the
Participant shall immediately endorse and deliver to the Company every stock
certificate representing the shares being purchased, and the Company shall then
promptly pay the purchase price in accordance with the terms set forth in the
Transfer Notice.

15.3 Repurchase Payment. The amount payable to a Participant pursuant
to the Company's exercise of the Right of First Refusal shall be paid to the
Participant in accordance with the terms and conditions of the Transfer Notice
or may, at the election of the Company, be paid in full in cash.

-18-
<PAGE> 20
15.4 Binding Effect. The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and shall be binding upon any
transferee of the shares, other than a transferee acquiring shares in a
transaction with respect to which the Company failed to exercise its Right of
First Refusal (a "Free Transferee") or a transferee of a Free Transferee.

15.5 Termination of Right of First Refusal. Notwithstanding any other
provision of this Section 15, if the Common Stock is listed on any United States
securities exchange or traded on any formal over-the-counter market in general
use in the United States at the time the Participant desires to transfer his or
her shares, the Company shall no longer have the Right of First Refusal, and the
Participant shall have no obligation to comply with this Section 15.

SECTION 16. SINGLE OR MULTIPLE AGREEMENTS. Multiple forms of awards or
combinations thereof may be evidenced by a single agreement or multiple
agreements, as determined by the Committee.

SECTION 17. RIGHTS OF A STOCKHOLDER. The recipient of any award under
the Plan, unless otherwise provided by the Plan, shall have no rights as a
stockholder with respect thereto unless and until certificates for shares of
Common Stock are issued to him.

SECTION 18. NO RIGHT TO CONTINUE EMPLOYMENT OR SERVICE. Nothing in the
Plan or any instrument executed or award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or any
Subsidiary in the capacity in effect at the time the award was granted or shall
affect the right of the Company or any Subsidiary to terminate (i) the
employment of an employee with or without notice and with or without cause, (ii)
the service of a consultant or adviser pursuant to the terms of such
consultant's or adviser's agreement with the Company or any Subsidiary or (iii)
the service of a director pursuant to the Bylaws of the Company or any
Subsidiary and any applicable provisions of the corporate law of the state in
which the Company or any Subsidiary is incorporated, as the case may be.

SECTION 19. WITHHOLDING. The Company's obligation to (i) deliver shares
of Common Stock or pay cash upon the exercise of any Non-Qualified Stock Option
or any Stock Appreciation Right granted under the Plan, (ii) deliver shares of
Common Stock or pay cash in payment of any Performance Unit Award, (iii) deliver
stock certificates upon the vesting of any award of Restricted Stock Award, and
(iv) deliver shares of Common Stock upon the grant of any Stock Bonus Award
shall be subject to the minimum statutory withholding requirements under
applicable foreign, federal, state and local law. Foreign, federal, state and
local withholding tax due under the terms of the Plan may be paid in cash or
shares of Common Stock (either through the surrender of previously held shares
of Common Stock or the withholding of shares of Common Stock otherwise issuable
upon the exercise or payment of such award) having a Fair Market Value equal to
the required withholding and upon such other terms and conditions as the
Committee shall determine; provided, however, the Committee, in its sole
discretion, may require that such taxes be paid in cash; and provided, further,
any election by a Participant subject to Section 16(b) of the Exchange Act to
pay his withholding tax in shares of Common Stock shall be subject to and must
comply with Rule 16b-3(e) of the Exchange Act.

SECTION 20. INDEMNIFICATION. No member of the Board or the Committee,
nor any officer or employee of the Company or a Subsidiary acting on behalf of
the Board or the

-19-
<PAGE> 21
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company or any Subsidiary acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.

SECTION 21. NON-ASSIGNABILITY. No award under the Plan shall be
assignable or transferable by the recipient thereof except by will, by the laws
of descent and distribution and by such other means as the Committee may approve
from time to time. However, the Participant, with the approval of the Committee,
may transfer a Stock Option (other than an Incentive Stock Option) for no
consideration to or for the benefit of the Participant's Immediate Family
(including without limitation, to a trust for the benefit of a Participant's
Immediate Family or to a partnership or limited liability company for one or
more members of the Participant's Immediate Family), subject to such limits as
the Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to the Stock Option prior to such transfer. The
foregoing right to transfer the Stock Option shall apply to the right to consent
to amendments to Plan and, in the discretion of the Committee, shall also apply
the right to transfer ancillary rights associated with the Stock Option.

SECTION 22. NONUNIFORM DETERMINATIONS. The Committee's determinations
under the Plan (including without limitation determinations of the persons to
receive awards, the form, amount and timing of such awards, the terms and
provisions of such awards and the agreements evidencing same, and the
establishment of values and performance targets) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.

SECTION 23. ADJUSTMENTS. In the event of any change in the outstanding
shares of Common Stock, without the receipt of consideration by the Company, by
reason of a stock dividend, stock split, reverse stock split or distribution,
recapitalization, merger, reorganization, reclassification, consolidation,
split-up, spin-off, combination of shares, exchange of shares or other change in
corporate structure affecting the Common Stock and not involving the receipt of
consideration by the Company, the Committee shall make appropriate adjustments
in (a) the aggregate number of shares of Common Stock (i) reserved for issuance
under the Plan, (ii) for which grants or awards may be made to any Participant
and (iii) covered by outstanding awards and grants denominated in shares or
units of Common Stock, (b) the exercise or other applicable price related to
outstanding awards or grants and (c) the appropriate Fair Market Value and other
price determinations relevant to outstanding awards or grants and shall make
such other adjustments as may be appropriate under the circumstances; provided,
that the number of shares subject to any award or grant always shall be a whole
number.

SECTION 24. TERMINATION AND AMENDMENT. The Board may terminate or amend
the Plan or any portion thereof at any time, including but not limited to
amendments to the Plan necessary to comply with the requirements of Section
16(b) of the Exchange Act or to correct any defect or supply an omission or
reconcile any inconsistency in the Plan or any award granted hereunder, without
approval of the shareholders of the Company, unless shareholder approval is
required by Rule 16b-3 of the Exchange Act, applicable stock exchange or NASDAQ
or other quotation system rules, or applicable Code provisions. No amendment,
termination or

-20-
<PAGE> 22
modification of the Plan shall affect any award theretofore granted in any
material adverse way without the consent of the recipient.

SECTION 25. SEVERABILITY. With respect to Participants subject to
Section 16 of the Exchange Act, (i) the Plan is intended to comply with all
applicable conditions of Rule 16b-3 or its successors, (ii) all transactions
involving Participants who are subject to Section 16(b) of the Exchange Act are
subject to such conditions, regardless of whether the conditions are expressly
set forth in the Plan, and (iii) any provision of the Plan that is contrary to a
condition of Rule 16b-3 shall not apply to Participants who are subject to
Section 16(b) of the Exchange Act. If any of the terms or provisions of this
Plan, or awards made under this Plan, conflict with the requirements of Section
162(m) or Section 422 of the Code with respect to awards subject to or governed
by Section 162(m) or Section 422 of the Code, then such terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements
of Section 162(m) or Section 422 of the Code. With respect to an Incentive Stock
Option, if this Plan does not contain any provision required to be included
herein under Section 422 of the Code (as the same shall be amended from time to
time), such provision shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out herein.

SECTION 26. EFFECT ON OTHER PLANS. Participation in this Plan shall not
affect an employee's eligibility to participate in any other benefit or
incentive plan of the Company or any Subsidiary and any awards made pursuant to
this Plan shall not be used in determining the benefits provided under any other
plan of the Company or any Subsidiary unless specifically provided.

SECTION 27. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective
as determined by the Board, but no Stock Option shall be exercised and no other
awards shall be granted unless and until the Plan has been approved by the
shareholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

SECTION 28. GOVERNING LAW. This Plan and all agreements executed in
connection with the Plan shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to its conflicts of law
doctrine.

SECTION 29. GENDER AND NUMBER. Words denoting the masculine gender
shall include the feminine gender, and words denoting the feminine gender shall
include the masculine gender. Words in the plural shall include the singular,
and the singular shall include the plural.

SECTION 30. ACCELERATION OF EXERCISABILITY AND VESTING. The Committee
shall have the power to accelerate the time at which an award may first be
exercised or the time during which an award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the award stating
the time at which it may first be exercised or the time during which it will
vest.

SECTION 31. MODIFICATION OF AWARDS. Within the limitations of the Plan
and subject to Section 23, the Committee may modify outstanding awards or accept
the cancellation of outstanding awards for the granting of new awards in
substitution therefor. Notwithstanding the

- 21 -
<PAGE> 23
preceding sentence, except for any adjustment described in Section 23, no
modification of an award shall, without the consent of the Participant, alter or
impair any rights or obligations under any award previously granted under the
Plan in any material adverse way without the affected Participant's consent.

SECTION 32. NO STRICT CONSTRUCTION. No rule of strict construction
shall be applied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any agreement executed in
connection with the Plan, any award granted under the Plan, or any rule,
regulation or procedure established by the Committee.

SECTION 33. SUCCESSORS. This Plan is binding on and will inure to the
benefit of any successor to the Company, whether by way of merger,
consolidation, purchase, or otherwise.

SECTION 34. PLAN PROVISIONS CONTROL. The terms of the Plan govern all
awards granted under the Plan, and in no event will the Committee have the power
to grant any award under the Plan which is contrary to any of the provisions of
the Plan. In the event any provision of any award granted under the Plan shall
conflict with any term in the Plan as constituted on the grant date of such
award, the term in the Plan as constituted on the grant date of such award shall
control.

SECTION 35. HEADINGS. The headings used in the Plan are for convenience
only, do not constitute a part of the Plan, and shall not be deemed to limit,
characterize, or affect in any way any provisions of the Plan, and all
provisions of the Plan shall be construed as if no captions had been used in the
Plan.

- 22 -

<PAGE> 1
Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our Report dated May 5, 2000, in the Registration Statement (Form
S-1 No. 33-00000) and related Prospectus of Millennium Cell LLC for the
registration of its common stock.

/s/ Ernst & Young LLP

New York, New York
May 24, 2000

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 42,165
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,165
<PP&E> 430,091
<DEPRECIATION> (43,504)
<TOTAL-ASSETS> 946,776
<CURRENT-LIABILITIES> 334,132
<BONDS> 0
0
0
<COMMON> 22,849
<OTHER-SE> 1,477,151
<TOTAL-LIABILITY-AND-EQUITY> 946,776
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,091,789
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,080,978)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,080,978)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,080,978)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)

</TABLE>