Exhibit 10.3
 
RETENTION AGREEMENT
 
This Retention Agreement (this "Agreement") is dated this 28th day of September,
2007 by Millennium Cell Inc., a Delaware corporation (the "Company") and John D.
Giolli (the "Executive").
 
WHEREAS, the Executive is the Chief Financial Officer of the Company, which is a
position of substantial authority and responsibility;
 
WHEREAS, the Executive has demonstrated extensive knowledge, skill and expertise
in the operation of the Company's business and possesses a great deal of
information in connection therewith;
 
WHEREAS, the Company desires that Executive remain an employee of the Company;
and
 
WHEREAS, the Company is willing to compensate the Executive, in addition to his
normal salary and benefits, for his agreement to remain an employee of the
Company upon the terms and conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the compensation paid hereunder, the mutual
covenants, agreements and promises hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby agreed
and acknowledged, the parties hereto agree as follows:
 
1.    Retention. The Executive hereby agrees to continue to perform his duties
and responsibilities as Chief Financial Officer of the Company in good faith and
in compliance with all applicable laws, rules and regulations.
 
2.    Compensation. (a) In exchange for his agreement under paragraph 1 above,
the Company will pay the Executive a lump sum cash payment in the amount of
$163,400 (the "Retention Payment"), which shall be payable in full on the date
hereof. Notwithstanding the Retention Payment, the Executive shall continue to
be entitled to any other compensation or benefits that were previously available
to him in connection with his employment with the Company and shall be included
in any future Company executive retention programs; provided, however, that any
payments hereunder shall be credited against any future payments under any such
executive retention programs.
 
(b)    If at any time on or prior to January 31, 2008: (i) the Executive
voluntarily terminates his employment with the Company other than for Good
Reason (as hereinafter defined); or (ii) the Company terminates the Executive's
employment for Cause (as hereinafter defined), the Executive shall immediately
refund the entire amount of the Retention Payment to the Company.
 
(c)    If at any time on or after February 1, 2008 and on or before May 31,
2008: (i) the Executive voluntarily terminates his employment with the Company
other than for Good Reason; or (ii) the Company terminates the Executive's
employment for Cause, the Executive shall immediately refund fifty percent (50%)
of the Retention Payment to the Company.
 
 
 

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

 
(d)    If at any time prior to June 1, 2008: (i) the Company terminates the
Executive's employment without Cause; or (ii) the Executive terminates his
employment with the Company for Good Reason, the Company will pay the Executive
a lump sum cash payment in the amount of $80,500. The Executive's right to any
payment under this Section 2(d) shall be conditioned upon his execution of a
general release of known and unknown claims (the “Release”), in such form as
shall be prescribed by the Company, and which shall be provided to the Executive
within ten (10) business days after the date of any such termination of
employment. The Release shall also contain a release by the Company of any known
claims against the Executive. Subject to the provisions of Section 4 below,
payment to the Executive pursuant to this Section 2(d) shall be made within ten
(10) business days after the execution of the Release by the Executive. Nothing
in this Agreement shall limit the scope or time of applicability of the Release
once it is executed and not timely revoked.
 
(e)    For purposes of this Agreement, "Good Reason" shall mean, without the
Executive's prior written consent or that is not cured by the Company within
thirty (30) days after its receipt of written notice of the Executive's
objection to the occurrence: (i) assignment to the Executive of any title,
position, duties or responsibilities that are significantly diminished when
compared with the title, position, duties or responsibilities of the Executive
on the date of this Agreement; (ii) reduction in the Executive's then current
annual salary; (iii) the Company's failure to pay the Executive any material
amounts otherwise vested and due him hereunder or under any plan, program or
policy of the Company; or (iv) the Executive being forced to relocate to a
principal place of employment that is more than fifty (50) miles from the
current address of the Company (i.e., One Industrial Way West, Eatontown, New
Jersey).
 
(f)    For purposes of this Agreement, "Cause" shall mean any one of the
following (all as reasonably determined by the Company): (i) a final judgment of
conviction of the Executive for a felony entered by a trial court regardless of
whether the Executive appeals the judgment; provided, however, that such felony
is the type of felony that causes or threatens to cause material harm to the
Company; (ii) the issuance of a final award, judgment or order by an
administrative agency, arbitrator, governmental body, governmentally-owned
corporation, mediator, self-regulatory organization or trial court that the
Executive is prohibited from performing any material duty as an employee of the
Company or an affiliate thereof for more than three (3) months, regardless of
whether the Executive appeals the award, judgment or order; (iii) a final
judgment determining that the Executive committed, or a final conviction of the
Executive for, a violation of any federal, state or local law or regulation that
adversely affects the Company or an affiliate thereof; provided, however, that
this provision shall not apply to a violation subject only to a monetary fine or
penalty of Three Thousand Dollars ($3,000) or less; (iv) the neglect by the
Executive on a regular basis, other than by reason of his disability or legal
incompetency, of his material duties as an employee of the Company or an
affiliate thereof; (v) the failure of the Executive, other than by reason of his
disability or legal incompetency, to carry out the lawful business directions of
the Company or any officer of the Company who customarily gives business
directions to the Executive, and the failure continues for more than thirty (30)
days after the Company or officer gives written notice to the Executive
specifying the nature of the failure and requesting the Executive to cure it;
(vi) any act or failure to act that (A) the Executive intends to cause or to
threaten to cause a material loss to the business of the Company or an affiliate
thereof or (B) constitutes gross negligence and causes or threatens to cause a
material loss to the business of the Company or an affiliate thereof; (vii)
appropriation of the business opportunities of the Company or an affiliate
thereof for the personal benefit of the Executive or any person or entity in
which the Executive has an interest; (viii) intentional interference with the
business of the Company or an affiliate thereof that is a violation of any law
or provision of this Agreement, and that causes or threatens to cause a material
loss to the business of the Company or an affiliate thereof; (ix) falsification
of any information given to any director or officer of the Company or an
affiliate thereof; or (x) any act by the Executive directed against the Company
or an affiliate thereof of bribery, embezzlement, fraud, misappropriation of
assets or the receipt of kickbacks.
 
 
2

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

 
3.    Executive's Acknowledgement. The Executive acknowledges that the duties
and obligations of the Company to the Executive under this Agreement are in
consideration of the Executive's past services to the Company, the Executive's
continued employment with the Company, and the Executive's execution of the
release described in Section 2(d).
 
4.    Withholding and Special Terms Relating to Payments and Benefits Subject to
IRC Section 409A. The Company shall be entitled to withhold from the payments
due hereunder any required federal, state or local withholding or other taxes.
To the extent that any amounts payable to the Executive under Section 2(d)
hereof are subject to Section 409A(a)(2)(B) of the Internal Revenue Code of
1986, as amended, any requirement under Section 2(d) that such amounts be paid
within ten (10) business days after the execution by the Executive of the
Release shall not apply and instead such amounts shall be paid in a lump sum as
of the date that is six (6) months after the date of a termination described in
Section 2(d).
 
5.    Employment Status. This Agreement does not constitute a contract of
employment or impose on the Executive any obligation to remain as an employee,
or impose on the Company any obligation to: (a) retain the Executive as an
employee; (b) change the status of the Executive as an at-will employee; or (c)
change the Company's policies regarding termination of employment.
 
6.    Invalid or Unenforceable Provisions. In the event that any part of this
Agreement shall be held to be unenforceable or invalid, the remaining parts
hereof shall nevertheless continue to be valid and enforceable as though the
invalid portions were not a part hereof.
 
7.    Notices. Any notices provided hereunder must be in writing and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to the Executive at the Executive's address as listed in the
Company's payroll records. Any payments made by the Company to the Executive
under the terms of this Agreement shall be delivered to the Executive either in
person or at such address as listed in the Company's payroll records.
 
8.    Miscellaneous. (a) No change or modification of this Agreement shall be
valid unless the same is in writing and signed by each of the parties hereto.
 
(b)    No waiver of any provision of this Agreement shall be valid unless in
writing and signed by the party against whom it is sought to be enforced. The
failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or other conditions, promises, agreements or
understandings at a future time.
 
 
3

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

 
(c)    This Agreement is intended to bind and inure to the benefit of and be
enforceable by the Executive and the Company, and their respective successors,
assigns, heirs, executors and administrators, except that the Executive may not
delegate any of the Executive's duties hereunder and may not assign any of the
Executive's rights hereunder without the written consent of the Company. Any
successor to the Company (whether direct or indirect and whether by purchase,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets shall assume the Company's obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
For all purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets, whether or not such successor
executes and delivers an assumption agreement referred to in the preceding
sentence or becomes bound by the terms of this Agreement by operation of law or
otherwise.
 
(d)    This Agreement shall be construed and enforced in accordance with the
laws of the State of New Jersey, without regard to such its conflict of laws
principles.
 
(e)    The headings and other captions in this Agreement are for convenience and
reference only and shall not be used in interpreting, construing or enforcing
any of the provisions of this Agreement.
 
(f)    This Agreement contains all of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto with
respect to the subject matter hereof, and there are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, between them with respect to such matters other than as set
forth herein. Any and all prior agreements among the parties hereto with respect
to such matters are hereby revoked and are deemed null and void. This Agreement
is, and is intended by the parties to be, an integration of any and all prior
agreements or understandings, oral or written, with respect to the subject
matter hereof.
 
(g)    This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one and
the same instrument. Any such counterpart may be executed by facsimile signature
with only verbal confirmation.
 
 
[Remainder of this page left intentionally blank]
 
 
4

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

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

        MILLENNIUM CELL INC.  
   
   
    By:   /s/ George C. Zalepa  

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

Name: George C. Zalepa   Title: Vice Precedent of Administration

 

       
   
   
            /s/ John D. Giolli  

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

John D. Giolli

 
5

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