Exhibit 10.4
 

SECURITY AGREEMENT
 
SECURITY AGREEMENT, dated as of April 25, 2005 (this "Agreement") made by
Millennium Cell Inc., a Delaware corporation, ("Grantor"), in favor of Portside
Growth & Opportunity Fund, a company organized under the laws of the Cayman
Islands in its capacity as collateral agent (in such capacity, the "Collateral
Agent") for the "Buyers" (as defined below) party to the Securities Purchase
Agreement, dated as of even date herewith (as amended, restated or otherwise
modified from time to time, the "Securities Purchase Agreement").
 
W I T N E S S E T H:
 
WHEREAS, Grantor and each party listed as a "Buyer" on the Schedule of Buyers
attached thereto (collectively, the "Buyers") are parties to the Securities
Purchase Agreement, pursuant to which Grantor shall be required to sell, and the
Buyers shall purchase or have the right to purchase, the "Preferred Shares" (as
defined therein);
 
WHEREAS, it is a condition precedent to the Buyers entering into the Securities
Purchase Agreement that Grantor shall have executed and delivered to the
Collateral Agent this Agreement providing for the grant to the Collateral Agent
for the benefit of the Buyers of a security interest in certain segregated cash
and cash equivalents held in the Cash Collateral Account to provide for the
payment of dividends with respect to the Preferred Shares and to secure all of
Grantor's obligations under the Securities Purchase Agreement and the
"Certificate of Designations" (as defined therein); and
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Buyers to perform under the Securities Purchase
Agreement, the Grantor agrees with the Collateral Agent, for the benefit of the
Buyers, as follows:
 
SECTION 1.  Definitions.
 
(a)  Reference is hereby made to the Securities Purchase Agreement and the
Certificate of Designations for a statement of the terms thereof. All terms used
in this Agreement and the recitals hereto which are defined in the Securities
Purchase Agreement, the Certificate of Designations or in Articles 8 or 9 of the
Uniform Commercial Code (the "Code") as in effect from time to time in the State
of New York, and which are not otherwise defined herein shall have the same
meanings herein as set forth therein; provided that terms used herein which are
defined in the Code as in effect in the State of New York on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute except as the Collateral Agent may otherwise
determine.
 
(b)  The following terms shall have the respective meanings provided for in the
Code: "Cash Proceeds", "Deposit Account", "Financial Assistance", "Instruments",
"Investment Property", "Noncash Proceeds", "Proceeds", "Security", "Record" and
"Securities Account".
 
(c)  As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:
 

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"Account Control Agreement" has the meaning specified in Section 4(p) of the
Securities Purchase Agreement.
 
"Cash Collateral Account" means the deposit account established pursuant to
Section 4(p) of the Securities Purchase Agreement.
 
"Cash Collateral Bank" has the meaning specified in Section 4(p) of the
Securities Purchase Agreement.
 
"Insolvency Proceeding" means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
 
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or otherwise),
security interest, charge or other encumbrance or security or preferential
arrangement of any nature, including, without limitation, any conditional sale
or title retention arrangement, any capitalized lease and any assignment,
deposit arrangement or financing lease intended as, or having the effect of,
security.
 
SECTION 2.  Grant of Security Interest. As collateral security for all of the
"Obligations" (as defined in Section 3 hereof), the Grantor hereby pledges and
assigns to the Collateral Agent for the benefit of the Buyers, and grants to the
Collateral Agent for the benefit of the Buyers a continuing security interest in
the Cash Collateral Account, all cash, and all other property from time to time
deposited therein and all Proceeds, including all Cash Proceeds and Noncash
Proceeds (if any) of the foregoing (collectively, the "Collateral"), and
products of any and all of the foregoing Collateral, in each case howsoever the
Grantor's interest therein may arise or appear (whether by ownership, security
interest, claim or otherwise).
 
SECTION 3.  Security for Obligations. The security interest created hereby in
the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the "Obligations"):
 
(a)  (i) the payment by Grantor, as and when due and payable (at scheduled
maturity, required redemption, occurrence of Liquidation Event, demand or
otherwise), of all amounts from time to time owing by it in respect of the
Securities Purchase Agreement, the Preferred Shares, including, without
limitation, any cash or in kind dividends thereon (without regard to whether
such amounts are express to be junior to any other outstanding preferred sock of
the Company) and the other "Transaction Documents" (as defined in the Securities
Purchase Agreement); and
 
(b)  the due performance and observance by the Grantor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents, including without limitation, with respect to any conversion or
redemption rights of the Buyers under the Preferred Shares, for so long as the
Preferred Shares are outstanding.
 

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SECTION 4.  Representations and Warranties. The Grantor represents and warrants
as follows:
 
(a)  Schedule I hereto sets forth (i) the exact legal name of the Grantor, and
(ii) the organizational identification number of the Grantor or states that no
such organizational identification number exists.
 
(b)  There is no pending or written notice threatening any action, suit,
proceeding or claim affecting the Grantor before any governmental authority or
any arbitrator, or any order, judgment or award by any governmental authority or
arbitrator, that may adversely affect the grant by the Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.
 
(c)  All Federal, state and local tax returns and other reports required by
applicable law to be filed by the Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon the Grantor or any property of the Grantor (including, without limitation,
all federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with generally accepted accounting principles consistently
applied ("GAAP"). 
 
(d)  The Grantor is and agrees to take any and all actions to ensure that it
will remain the sole and exclusive owner of, or otherwise has or will have
adequate rights in, the Collateral free and clear of any Liens other than the
rights of the Cash Collateral Bank. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file with the Secretary of State of New Jersey or the recorder of deeds of
Monmouth County, New Jersey except such as may have been filed in favor of the
Collateral Agent relating to this Agreement.
 
(e)  The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or otherwise affecting the Grantor or any of its properties and will not result
in or require the creation of any Lien, upon or with respect to any of its
properties.
 
(f)  No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body, or any other Person
(other than the Company in the case of exercise of remedies), is required for
(i) the grant by the Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements, all of which financing statements,
have been duly filed and are in full force and effect.
 

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(g)  This Agreement creates in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral, as security for the
Obligations. The Account Control Agreement and/or the Collateral Agent's having
possession of all Instruments and cash constituting Collateral from time to
time, the recording of the appropriate, and the filing of the financing
statements and the other filings and recordings, as applicable, described in
Schedule I hereto will result in the protection of such security interests. Such
security interests are, or in the case of Collateral in which the Grantor
obtains rights after the date hereof, will be, perfected, first priority
security interests. Such recordings and filings and all other action necessary
or desirable to perfect and protect such security interests have been duly taken
with respect to assets held in the Cash Collateral Account.
 
SECTION 5.  Covenants as to the Collateral. So long as any of the Obligations
shall remain outstanding, unless the Collateral Agent shall otherwise consent in
writing:
 
(a)  Further Assurances. The Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action that the Collateral Agent may reasonably request in
order to: (i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (iii) otherwise effect the
purposes of this Agreement, including, without limitation: (A) executing and
filing (to the extent, if any, that the Grantor's signature is required thereon)
or authenticating the filing of, such financing or continuation statements, or
amendments thereto, as may be necessary or desirable or that the Collateral
Agent may request in order to perfect and preserve the security interest
purported to be created hereby, and (B) furnishing to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Collateral.
 
(b)  Transfers and Other Liens.
 
(i)  The Grantor will not sell, assign (by operation of law or otherwise),
exchange or otherwise transfer or dispose of any of the Collateral other than
the rights of the Cash Collateral Bank.
 
(ii)  The Grantor will not create, suffer to exist or grant any Lien upon or
with respect to any Collateral, except the Lien created hereby.
 
SECTION 6.  Additional Provisions Concerning the Collateral.
 
(a)  The Grantor hereby (i) authorizes the Collateral Agent to file one or more
Uniform Commercial Code financing or continuation statements, and amendments
thereto, relating to the Collateral and (ii) ratifies such authorization to the
extent that the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, prior to the date hereof. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
 

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(b)  The Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of the
Grantor and in the name of the Grantor or otherwise, from time to time in the
Collateral Agent's discretion, so long as (x) a Liquidation Event shall have
occurred and is continuing or (y) the Company has failed to pay any Obligation
when due, whether in cash or in kind as permitted pursuant to the Certificate of
Designation, and such failure to pay is continuing for a period of at least five
(5) Business Days, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, (i) to ask, demand, collect, sue
for, recover, compound, receive and give acquittance and receipts for moneys due
and to become due under or in respect of the Collateral, (ii) to receive,
endorse, and collect any drafts or other instruments, documents and chattel
paper in connection with clause (i) above, (iii) to file any claims or take any
action or institute any proceedings which the Collateral Agent may deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Collateral Agent and the Buyers with respect to any
Collateral, and (iv) to execute assignments and other documents to enforce the
rights of the Collateral Agent and the Buyers with respect to any Collateral.
This power is coupled with an interest and is irrevocable until all of the
Obligations are indefeasibly paid in full in cash.
 
(c)  If a Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of the Grantor or the Collateral Agent, and the expenses
of the Collateral Agent incurred in connection therewith shall be payable by the
Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.
 
(d)  The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
 
SECTION 7.  Remedies Upon Failure to Pay the Obligations. If any failure to pay
any of the Obligations has occurred and be continuing:
 
(a)  The Collateral Agent may exercise in respect of the Collateral, in addition
to any other rights and remedies provided for herein or otherwise available to
it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) take absolute control of a portion of the Collateral equal to the amount of
the Obligations which is then due but not paid, including, without limitation,
transfer into the Collateral Agent's name or into the name of its nominee or
nominees (to the extent the Collateral Agent has not theretofore done so) a
portion of the Collateral equal to the amount of the Obligations which is then
due but not paid or any part thereof consisting of cash equivalents, for cash at
such price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Grantor agrees that, to the extent notice of sale
or any other disposition of its respective Collateral shall be required by law,
at least ten (10) days' notice to the Grantor of the time and place of any
public sale or the time after which any private sale or other disposition of its
respective Collateral is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale or other
disposition of any Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. The
Grantor hereby waives any claims against the Collateral Agent and the Buyers
arising by reason of the fact that the price at which its respective Collateral
may have been sold at a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Collateral Agent accepts the first offer received and
does not offer such Collateral to more than one offeree, and waives all rights
that the Grantor may have to require that all or any part of such Collateral be
marshalled upon any sale (public or private) thereof. The Grantor hereby
acknowledges that (i) any such sale of its respective Collateral by the
Collateral Agent shall be made without warranty, (ii) the Collateral Agent may
specifically disclaim any warranties of title, possession, quiet enjoyment or
the like, and (iii) such actions set forth in clauses (i) and (ii) above shall
not adversely effect the commercial reasonableness of any such sale of
Collateral.
 

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(b)  A portion of the cash held in the Cash Collateral Account equal to the
amount of the Obligations which is then due but not paid and all Cash Proceeds
received by the Collateral Agent in respect of any sale of or collection from,
or other realization upon, all or any part of the Collateral may, in the
discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied (after payment of
any amounts payable to the Collateral Agent pursuant to Section 8 hereof) in
whole or in part by the Collateral Agent against, all or any part of the
Obligations in such order as the Collateral Agent shall elect, consistent with
the provisions of the Securities Purchase Agreement. Any surplus of such cash or
Cash Proceeds held by the Collateral Agent and remaining after the indefeasible
payment in full in cash of all of the Obligations shall be paid over to
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
 
(c)  In the event that the cash held in the Cash Collateral Account of Cash
Proceeds of any such sale, collection or realization are insufficient to pay the
amount of the Obligations which is then due but not paid, the Grantor shall
remain liable for the deficiency, together with interest thereon at the highest
rate specified in any of the applicable Transaction Documents for interest on
overdue amount thereof or such other rate as shall be fixed by applicable law,
together with the costs of collection and the reasonable fees, costs, expenses
and other client charges of any attorneys employed by the Collateral Agent to
collect such deficiency.
 
(d)  The Grantor hereby acknowledges that if the Collateral Agent complies with
any applicable state, provincial, or federal law requirements in connection with
a disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.
 
(e)  The Collateral Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the Collateral Agent's rights hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that the Grantor lawfully may, the Grantor hereby agrees that it will
not invoke any law relating to the marshalling of collateral which might cause
delay in or impede the enforcement of the Collateral Agent's rights under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, the Grantor hereby irrevocably waives the
benefits of all such laws.
 

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SECTION 8.  Indemnity and Expenses.
 
(a)  The Grantor agrees to protect, indemnify and hold the Collateral Agent and
each of the Buyers, jointly and severally, harmless from and against any and all
claims, damages (other than lost profits and consequential or incidental
damages), losses, liabilities, obligations, penalties, fees, costs and expenses
(including, without limitation, reasonable legal fees, costs, expenses, and
disbursements of such Person's counsel) to the extent that they arise out of or
otherwise result from the Grantor’s breach of this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from such Person's gross negligence, bad faith or willful misconduct.
 
(b)  The Grantor agrees to upon demand pay to the Collateral Agent the amount of
any and all costs and expenses, including the reasonable fees, costs, expenses
and disbursements of counsel for the Collateral Agent and of any experts and
agents (including, without limitation, any collateral trustee which may act as
agent of the Collateral Agent), which the Collateral Agent may incur in
connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Grantor to perform or observe any of the
provisions hereof.
 
SECTION 9.  Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to a Grantor
at its address specified below and if to the Collateral Agent to it, at its
address specified below; or as to any such Person, at such other address as
shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 9. All such notices and
other communications shall be effective (a) if sent by certified mail, return
receipt requested, when received or three days after deposited in the mails,
whichever occurs first, (b) if telecopied, when transmitted (during normal
business hours) and confirmation is received, otherwise, the day after the
notice was transmitted if confirmation is received, or (c) if delivered, upon
delivery.
 
SECTION 10.  Miscellaneous.
 
(a)  No amendment of any provision of this Agreement shall be effective unless
it is in writing and signed by the Grantor and the Collateral Agent, and no
waiver of any provision of this Agreement, and no consent to any departure by a
Grantor therefrom, shall be effective unless it is in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
 

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(b)  No failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any of the other Transaction Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of the Collateral Agent or any Buyer
provided herein and in the other Transaction Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights of the Collateral Agent or any Buyer under any of the other Transaction
Documents against any party thereto are not conditional or contingent on any
attempt by such Person to exercise any of its rights under any of the other
Transaction Documents against such party or against any other Person, including
but not limited to, any Grantor.
 
(c)  Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
 
(d)  This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the indefeasible
payment in full in cash of the Obligations, and (ii) be binding on the Grantor
and all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the
Collateral Agent and the Buyers and their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to any Grantor, the Collateral
Agent and the Buyers may assign or otherwise transfer their rights and
obligations under this Agreement and any of the other Transaction Documents, to
any other Person and such other Person shall thereupon become vested with all of
the benefits in respect thereof granted to the Collateral Agent and the Buyers
herein or otherwise. Upon any such assignment or transfer, all references in
this Agreement to the Collateral Agent or any such Buyer shall mean the assignee
of the Collateral Agent or such Buyer. None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
without the consent of the Collateral Agent shall be null and void.
 
(e)  Upon the indefeasible payment in full in cash of the Obligations, (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon the
Grantor's request and at the Grantor's expense, (A) return to the Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) promptly execute and deliver to
the Grantor such documents as the Grantor shall reasonably request to evidence
such termination, all without any representation, warranty or recourse
whatsoever.
 
(f)  THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
 

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(g)  ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
 
(h)  THE GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
 
(i)  The Grantor irrevocably consents to the service of process of any of the
aforesaid courts in any such action, suit or proceeding by the mailing of copies
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the Grantor at its address provided herein, such
service to become effective 10 days after such mailing.
 
(j)  Nothing contained herein shall affect the right of the Collateral Agent to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against any Grantor or any property of the Grantor in any
other jurisdiction.
 
(k)  The Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
 
(l)  Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
 
(m)  This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
 

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IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
 

        MILLENNIUM CELL INC.     By:  
/s/ John D. Giolli
 

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Name: John D. Giolli   Title: Vice President — Finance and Chief Financial
Officer

 

        Address: One Industrial Way West
Eatontown, New Jersey 07724
   

 

ACCEPTED BY:       PORTSIDE GROWTH OPPORTUNITY FUND,   as Collateral Agent      
By: /s/ Jeffrey Smith                                            Name: Jeffrey
Smith    Title: Authorized Signatory     Address: c/o Ramius Capital Group,
L.L.C.     666 Third Avenue, 26th Floor     New York, New York 10017  

 

 

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SCHEDULE I
 
 
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTION OF
ORGANIZATION
 

Millennium Cell Inc. Delaware Corporation - Tax ID number is 22-3726792

 

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SCHEDULE II
 
MILLENNIUM CELL INC.
 

UCC-1 FINANCING STATEMENTS