SECURITY AGREEMENT

Millennium Cell Inc.
1 Industrial Way West
Eatontown, New Jersey 07724
(Individually and collectively "Debtor") November 8, 2002     Wachovia Bank,
National Association
190 River Road
Summit, New Jersey 07901
(Hereinafter referred to as "Bank")  

For value received and to secure payment and performance of any and all
obligations of Debtor (also referred to herein as "Borrower") to Bank under the
Application and Agreement for Irrevocable Standby Letter of Credit pursuant to
which Debtor has requested Bank issue a letter of credit in the face amount of
$2,400,000 for the benefit of Ballard Power Systems, Inc. ("Ballard"), however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now existing or hereafter arising or acquired, and all costs and
expenses incurred by Bank to obtain, preserve, perfect and enforce the security
interest granted herein and to maintain, preserve and collect the property
subject to the security interest (collectively, "Obligations"), Debtor hereby
grants to Bank a continuing security interest in and lien upon, and for security
purposes assigns and transfers to Bank until all of the Obligations are repaid
in full, the following described property, whether now owned or hereafter
acquired, and any additions, replacements, accessions, or substitutions thereof
and all cash and non-cash proceeds and products thereof (collectively,
"Collateral"):

Deposit account number XXXXXXXXXXX of Debtor at Bank and all monies at any time
on deposit therein ("Assigned Deposits").

Debtor hereby represents and agrees that:

1.      OWNERSHIP.      Debtor owns the Collateral. The Collateral is free and
clear of all liens, security interests, and claims except those previously
reported in writing to and approved by Bank, and Debtor will keep the Collateral
free and clear from all liens, security interests and claims, other than those
granted to or approved by Bank. Until all of the Obligations are repaid in full
and subject to Section 7 hereof, Bank shall have the entire right and interest
in and to the Assigned Deposits. By executing this Security Agreement, Debtor
has divested itself of all control over the Assigned Deposits and Bank is
entitled to and does possess sole dominion and control over the Assigned
Deposits and is entitled to receive the benefits accruing with respect thereto
as additional security for the Obligations. Debtor surrenders all authority or
right to withdraw, collect, receive the benefits of, or otherwise assign or
encumber the Assigned Deposits, and authorizes Bank (and each affiliate and
branch office of Bank or such affiliate) to treat Bank as the sole and exclusive
owner of the Assigned Deposits held subject to the terms hereof for the benefit
of Debtor. Upon the maturity of the Assigned Deposits, other than Assigned
Deposits at Bank that automatically roll over at maturity, Bank shall reinvest
the Assigned Deposits in an investment of Bank's choice. Bank shall have no
liability to Debtor for any loss incurred in connection with or arising out of
any such reinvestment except for loss resulting from Bank's gross negligence or
willful misconduct. The assignment evidenced by this Security Agreement is a
continuing one and, unless released to Debtor pursuant to Section 7 hereof, is
irrevocable so long as any of the Obligations are outstanding or the Bank shall
have any obligations under the Loan Documents and shall terminate only upon
payment or other satisfaction in full of all Obligations or Bank's
acknowledgment in writing that this Security Agreement has been terminated. Upon
termination of this Security Agreement, and to the extent the Assigned Deposits
have not been applied in satisfaction of the Obligations or released to Debtor
pursuant to Section 7 hereof, Bank shall reassign the Assigned Deposits to
Debtor and return any passbooks, certificates, and other documents in Bank's
possession at Debtor's request. All securities and security entitlements

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pledged as Collateral are fully paid and non-assessable. All income, dividends,
earnings and profits with respect to the Collateral shall be reported for state
and federal income tax purposes as attributable to the Debtor and not Bank and
Third Party (as defined herein), and Bank or any other person authorized to
report income distributions, is authorized to issue IRS Forms 1099 indicating
Debtor as the recipient of such income, earnings and profits.

2.      NAME AND OFFICES; JURISDICTION OF ORGANIZATION.      The name and
address of Debtor appearing at the beginning of this Agreement are Debtor's
exact legal name and the address of its chief executive office. There has been
no change in the name of Debtor, or the name under which Debtor conducts
business, within the five years or such lesser time as Debtor shall have been in
business preceding the date hereof except as disclosed in filings with the
Securities and Exchange Commission and as previously reported in writing to
Bank. Debtor has not moved its chief executive office within the five years
preceding the date hereof except as previously reported in writing to Bank.
Debtor is organized under the laws of the State of Delaware and has not changed
the jurisdiction of its organization within the five years or such lesser time
as Debtor shall have been in business preceding the date hereof except as
previously reported in writing to Bank.

3.      TITLE/TAXES.      Debtor has good title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or otherwise
dispose of the Collateral (except as permitted herein). Debtor agrees to pay
promptly all taxes and assessments upon or for the use of Collateral and on this
Security Agreement. At its option, Bank may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on Collateral.
Debtor agrees to reimburse Bank, on demand, for any such payment made by Bank.
Any amounts so paid shall be added to the Obligations.

4.      WAIVERS.      Debtor agrees not to assert against Bank as a defense
(legal or equitable), as a set-off, as a counterclaim, or otherwise, any claims
Debtor may have against any seller or lessor that provided personal property or
services relating to any part of the Collateral. Debtor waives any and all
rights to any bond or security which might be required by applicable law prior
to the exercise of any of Bank's remedies against any Collateral. All rights of
Bank and security interests hereunder, and all obligations of Debtor hereunder,
shall be absolute and unconditional, not discharged or impaired irrespective of
(and regardless of whether Debtor receives any notice of): (i) any lack of
validity or enforceability of any Loan Document; (ii) any change in the time,
manner or place of payment or performance, or in any term, of all or any of the
Obligations or the Loan Documents or any other amendment or waiver of or any
consent to any departure from any Loan Document; (iii) any exchange, release or
non-perfection of any collateral, or any release of or modifications of the
obligations of any guarantor or other obligor; (iv) any amendment or waiver of
or consent to departure from any Loan Document or other agreement. To the extent
permitted by law, Debtor hereby waives any rights under any valuation, stay,
appraisement, extension or redemption laws now existing or which may hereafter
exist and which, but for this provision, might be applicable to any sale or
disposition of the Collateral by Bank; and any other circumstance which might
otherwise constitute a defense available to, or a discharge of any party with
respect to the Obligations.

5.      NOTIFICATIONS; LOCATION OF COLLATERAL.      Debtor will notify Bank in
writing at least 30 days prior to any change in: (i) Debtor's chief place of
business and/or residence; (ii) Debtor's name or identity; (iii) Debtor's
corporate/organizational structure; or (iv) the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Bank of any claims or
alleged claims of any other person or entity to the Collateral or the
institution of any litigation, arbitration, governmental investigation or
administrative proceedings against or affecting the Collateral. Debtor will keep
Collateral at the location(s) previously provided to Bank until such time as
Bank provides written advance consent to a change of location. Debtor will bear
the cost of preparing and filing any documents necessary to protect Bank's
liens.

6.      FINANCING STATEMENTS, POWER OF ATTORNEY.      No financing statement
(other than any filed or approved by Bank) covering any Collateral is on file in
any public filing office. On request of Bank,

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Debtor will execute one or more financing statements in form satisfactory to
Bank and will pay all costs and expenses of filing the same or of filing this
Security Agreement in all public filing offices, where filing is deemed by Bank
to be desirable. Bank is authorized to file financing statements relating to
Collateral without Debtor's signature where authorized by law. Debtor hereby
constitutes and appoints Bank the true and lawful attorney of Debtor with full
power of substitution to take any and all appropriate action and to execute any
and all documents or instruments that may be necessary or desirable to
accomplish the purpose and carry out the terms of this Security Agreement,
including, without limitation, to ask, demand, collect, receive, receipt for,
sue for, compound and give acquittance for any and all amounts which may be or
become due and payable under the Assigned Deposits; to execute any and all
withdrawal requests, receipts or other orders for the payment of money drawn on
the Assigned Deposits and to endorse the name of Bank on all instruments given
in payment or in partial payment therefor; and to complete, execute, and deliver
Control Agreement(s) by Bank, Debtor and Third Party(ies) required in connection
herewith (individually and collectively the "Control Agreement"), instructions
to Third Party(ies) regarding, among other things, control and disposition of
any Collateral, and endorsements desirable for transfer or delivery of any
Collateral, registration of any Collateral under applicable laws, retitling any
Collateral, receipt, endorsement and/or collection of all checks and other
orders for payment of money payable to Debtor with respect to Collateral. The
foregoing power of attorney is coupled with an interest and shall be irrevocable
until all of the Obligations have been paid in full. Neither Bank nor anyone
acting on its behalf shall be liable for acts, omissions, errors in judgment, or
mistakes in fact in such capacity as attorney-in-fact. Debtor ratifies all acts
of Bank as attorney-in-fact. Debtor agrees to take such other actions, at
Debtor's expense, as might be requested for the perfection, continuation and
assignment, in whole or in part, of the security interests granted herein and to
assure Bank's intended priority position. If certificates, passbooks, or other
documentation or evidence is/are issued or outstanding as to any of the
Collateral, Debtor will cause the security interests of Bank to be properly
protected, including perfection by notation thereon or delivery thereof to Bank.
Upon Bank's request, Debtor will, at its own expense: (i) do all things
determined by Bank to be desirable to register such Collateral or qualify for an
exemption from registration, under the provisions of all applicable securities
laws, and (ii) otherwise do or cause to be done all other acts and things as may
be necessary to make the sale of the Collateral valid, binding and in compliance
with applicable law.

7.      VALUE REQUIREMENT.      The amount of the Assigned Deposits shall at all
times be in an amount not less than the aggregate amount available for drawing
under all outstanding letters of credit issued by Bank for the account of Debtor
and for the benefit of Ballard (the "Minimum Deposit Value"). If at any time the
Minimum Deposit Value falls below this amount, Debtor shall within 3 business
days, deliver additional cash Collateral to Bank in an amount sufficient to
restore the Minimum Deposit Value to the required amount. As the outstanding
face amount of any such letters of credit is reduced as provided therein and
provided no Default has occurred and is then continuing, upon written request of
Debtor contained in a Certificate of Reduction, Bank shall permit amounts on
deposit in the Assigned Deposits to be withdrawn by Debtor provided that after
giving effect to such withdrawal the Minimum Deposit Value is maintained. In
addition, on a quarterly basis and so long as no Default has occurred and is
then continuing, the Bank shall permit Debtor to withdraw interest earned on the
Assigned Deposits provided that, after giving effect to such interest
withdrawal, the Minimum Deposit Value is maintained.

8.      INSTRUMENTS, CHATTEL PAPER, DOCUMENTS.      Any Collateral that is
instruments, chattel paper and negotiable documents will be properly assigned
to, the originals of any such Collateral in tangible form deposited with and
held by Bank, unless Bank shall hereafter otherwise direct or consent in
writing. Bank may, without notice, before or after maturity of the Obligations,
exercise any or all rights of collection, conversion, or exchange and other
similar rights, privileges and options pertaining to Collateral, but shall have
no duty to do so.

9.      WITHDRAWAL OF ASSIGNED DEPOSITS.      Debtor shall not be permitted to
withdraw funds from or exercise any authority of any kind with respect to the
Assigned Deposits except as provided in Section 7 hereof. Bank shall have the
exclusive authority to withdraw, or direct the withdrawal of, funds from the
Assigned Deposits. Upon any payment by Bank under any letter of credit, Bank is
hereby authorized to reimburse such payment by withdrawal of the necessary
amount from the Assigned

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Deposits. Notwithstanding the foregoing, Debtor's obligation to reimburse Bank
for any payment made by Bank under any letter of credit shall be absolute and
unconditional whether or not there are sufficient funds available in the
Assigned Deposits to reimburse Bank for any such payment and whether or not Bank
is able, for any reason, to be so reimbursed. So long as this Agreement remains
in effect, the Assigned Deposits will be titled as directed by Bank.

10.      COLLATERAL DUTIES.      Bank shall have no custodial or ministerial
duties to perform with respect to Collateral pledged except as set forth herein;
and by way of explanation and not by way of limitation, Bank shall incur no
liability for any of the following: (i) loss or depreciation of Collateral
(unless caused by its willful misconduct or gross negligence), (ii) failure to
present any paper for payment or protest, to protest or give notice of
nonpayment, or any other notice with respect to any paper or Collateral, (iii)
failure to ascertain, notify Debtor of, or take any action in connection with
any conversion, call, redemption, retirement or any other event relating to any
of the Collateral, or failure to notify any party hereto that Collateral should
be presented or surrendered for any such reason. Debtor acknowledges that Bank
is not an investment advisor or insurer with respect to the Collateral; and Bank
has no duty to advise Debtor of any actual or anticipated changes in the value
of the Collateral. Bank's sole duty with respect to the custody, safekeeping and
physical preservation of any certificate, passbook, or other documentation
evidencing the Assigned Deposits in its possession shall be to deal with it in
the same manner as it deals with similar property for its own account. Neither
Bank, nor any of its employees or agents shall be liable for failure to demand,
collect, or realize upon any of the Assigned Deposits or for any delay in doing
so.

11.      TRANSFER OF COLLATERAL.      Bank may assign its rights in Collateral
or any part thereof to any assignee who shall thereupon become vested with all
the powers and rights herein given to Bank with respect to the property so
transferred and delivered, and Bank shall thereafter be forever relieved and
fully discharged from any liability with respect to such property so
transferred, but with respect to any property not so transferred, Bank shall
retain all rights and powers hereby given.

12.      INSPECTION, BOOKS AND RECORDS.      Debtor will at all times keep
accurate and complete records covering each item of Collateral, including the
proceeds therefrom. Bank, or any of its agents, shall have the right, at
intervals to be determined by Bank and without hindrance or delay, during
regular business hours and after reasonable notice at Debtor's expense, to
inspect, audit, and examine the Collateral and to make copies of and extracts
from the books, records, journals, orders, receipts, correspondence and other
data relating to Collateral, Debtor's business or any other transaction between
the parties hereto. Debtor will at its expense furnish Bank copies thereof upon
request.

13.      ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION.      Debtor shall pay
all of Bank's reasonable expenses incurred in enforcing this Security Agreement
and in preserving and liquidating Collateral, including but not limited to,
reasonable arbitration, paralegals', attorneys' and experts' fees and expenses,
whether incurred with or without the commencement of a suit, trial, arbitration,
or administrative proceeding, or in any appellate or bankruptcy proceeding.

14.      DEFAULT.      If any of the following occurs, a default ("Default")
under this Security Agreement shall exist: Loan Document Default.      A default
or event of default (or similarly denominated term) under any Loan Document.
Collateral Encumbrance. Any encumbrance of any Collateral not specifically
permitted herein without prior written consent of Bank. Levy, Seizure or
Attachment. The making of any levy, seizure, or attachment on or of Collateral
which is not removed within 10 days. Unauthorized Collection of Collateral.
     Any attempt to collect, cash in or otherwise recover deposits that are
Collateral. Unauthorized Termination.      Any attempt to terminate, revoke,
rescind, modify, or violate the terms of this Security Agreement or any Control
Agreement without the prior written consent of Bank.

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15.      REMEDIES ON DEFAULT (INCLUDING POWER OF SALE).      If a Default
occurs, all of the Obligations shall be immediately due and payable, without
notice, other than Obligations under any swap agreements (as defined in 11
U.S.C. §101) with Bank, which shall be governed by the default and termination
provisions of said swap agreements, and Bank shall have all the rights and
remedies of a secured party under the Uniform Commercial Code. Without
limitation thereto, Bank shall have the following rights and remedies: (i) to
take immediate possession of Collateral, without notice or resort to legal
process, (ii) to exercise its right of set-off or bank lien as to any monies of
Debtor deposited in accounts of any nature maintained by Debtor with Bank or
affiliates of Bank, without advance notice, regardless of whether such accounts
are general or special; (iii) to dispose of Collateral in any county or place to
be selected by Bank, at either private or public sale (at which public sale Bank
may be the purchaser) (iv) to apply toward and set-off against and apply to the
then unpaid balance of the Obligations the Assigned Deposits (accelerated to
maturity if necessary), even if effecting such set-off results in a loss or
reduction of interest or the imposition of a penalty applicable to the early
withdrawal of time deposits; (v) to receive any interest or payments in respect
of the Assigned Deposits and apply such amounts and the Assigned Deposits to the
Obligations in such manner as Bank, in its sole discretion, may determine. In
addition to the foregoing, Bank shall be authorized to: transfer into Bank's
name or the name of its nominee, all or any part of the Collateral; receive all
interest, dividends, and other proceeds of the Collateral; notify any person
obligated on any Collateral of the security interest of Bank therein and require
such person to make payment directly to Bank; demand, sue for, collect or
receive the Collateral and any proceeds thereof, and/or make any settlement or
compromise as Bank deems desirable with respect to any Collateral; and exercise
any voting, conversion, registration, purchase or other rights of an owner,
holder or entitlement holder of the Collateral. Debtor agrees that Bank may
exercise its rights under this Security Agreement without regard for the actual
or potential tax consequences to Debtor under federal or state law and without
regard to any instructions or directives given Bank by Debtor.

Any notice of sale, disposition or other action by Bank required by law and sent
to Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 5 days prior to
such action, shall constitute reasonable notice to Debtor. Notice shall be
deemed given or sent when mailed postage prepaid to Debtor's address as provided
herein. Bank shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to Obligations in such order and manner as Bank may
determine. Collateral that is subject to rapid declines in value and is
customarily sold in recognized markets may be disposed of by Bank in a
recognized market for such collateral without providing notice of sale. Debtor
waives any and all requirements that the Bank sell or dispose of all or any part
of the Collateral at any particular time, regardless of whether Debtor has
requested such sale or disposition.

16.      REMEDIES ARE CUMULATIVE.      No failure on the part of Bank to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by Bank or
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies provided by law,
in equity, or in other Loan Documents.

17.      MISCELLANEOUS.      (i) Amendments and Waivers.      No waiver,
amendment or modification of any provision of this Security Agreement shall be
valid unless in writing and signed by Debtor and an officer of Bank. No waiver
by Bank of any Default shall operate as a waiver of any other Default or of the
same Default on a future occasion. (ii) Assignment.      All rights of Bank
hereunder are freely assignable, in whole or in part, and shall inure to the
benefit of and be enforceable by Bank, its successors, assigns and affiliates.
Debtor shall not assign its rights and interest hereunder without the prior
written consent of Bank, and any attempt by Debtor to assign without Bank's
prior written consent is null and void. Any assignment shall not release Debtor
from the Obligations. This Security Agreement shall be binding upon Debtor, and
the heirs, personal representatives, successors, and assigns of Debtor. (iii)
Applicable Law; Conflict Between Documents.      This Security Agreement shall
be governed by and construed under the

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law of the jurisdiction named in the address of the Bank first shown above (the
"Jurisdiction") without regard to that Jurisdiction's conflict of laws
principles, except to the extent that the UCC requires the application of the
law of a different jurisdiction. If any terms of this Security Agreement
conflict with the terms of any commitment letter or loan proposal, the terms of
this Security Agreement shall control. (iv) Jurisdiction.      Debtor
irrevocably agrees to non-exclusive personal jurisdiction in the Jurisdiction in
which the office of Bank as stated above is located. (v)Severability.     If any
provision of this Security Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Security Agreement. (vi) Notices.
     Any notices to Debtor shall be sufficiently given, if in writing and mailed
or delivered to the address of Debtor shown above or such other address as
provided hereunder; and to Bank, if in writing and mailed or delivered to Bank's
office address shown above or such other address as Bank may specify in writing
from time to time. In the event that Debtor changes Debtor's mailing address at
any time prior to the date the Obligations are paid in full, Debtor agrees to
promptly give written notice of said change of address by registered or
certified mail, return receipt requested, all charges prepaid. (vii) Captions.
     The captions contained herein are inserted for convenience only and shall
not affect the meaning or interpretation of this Security Agreement or any
provision hereof. The use of the plural shall also mean the singular, and vice
versa. (viii) Joint and Several Liability.      If more than one party has
signed this Security Agreement, such parties are jointly and severally obligated
hereunder. (ix) Binding Contract.      Debtor by execution and Bank by
acceptance of this Security Agreement, agree that each party is bound by all
terms and provisions of this Security Agreement.

18.      DEFINITIONS.     Loan Documents.     The term "Loan Documents" refers
to all documents, including this Agreement, whether now or hereafter existing,
executed in connection with or related to the Obligations, and may include,
without limitation and whether executed by Debtor or others, commitment letters
that survive closing, loan agreements, promissory notes, guaranty agreements,
deposit or other similar agreements, other security agreements, applications and
agreements for letters of credit, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. §101).Third Party.     The term "Third Party" means each and every
Broker, Collateral Agent or Securities Intermediary maintaining a securities
account, and acting in such capacity, for Debtor with respect to some or all of
the Collateral. UCC.      "UCC" means the Uniform Commercial Code as presently
and hereafter enacted in the Jurisdiction. Terms defined in the UCC.      Any
term used in this Agreement and in any financing statement filed in connection
herewith which is defined in the UCC and not otherwise defined in this Agreement
or any other Loan Document has the meaning given to the term in the UCC.

IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.

  Millennium Cell Inc.
Taxpayer Identification Number: 22-3726792       By: /s/ Norman R. Harpster,
Jr.(SEAL)
Name: Norman R. Harpster, Jr.
Title: Vice President & Chief Financial Officer

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Schedule A to UCC

Schedule A to UCC from Millennium Cell Inc. ("Debtor") and for the benefit of
Wachovia Bank, National Association ("Secured Party").

The following described property whether now owned or hereafter acquired, and
any additions, replacements, accessions, or substitutions thereof and all cash
and non-cash proceeds and products thereof.

Description of Collateral:

Deposit account number XXXXXXXXXX of Debtor at Secured Party and all amounts at
any time on deposit therein ("Assigned Deposits").

Any term which is defined in the Uniform Commercial Code (UCC) has the meaning
given to the term in the UCC.

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Payer's Request for Taxpayers Identification Number and Certification

Account Name Millennium Cell Inc. Address 1 Industrial Way West
Eatontown, New Jersey 07724

W-9 Substitute

Taxpayer Identification Number: XXXXXXXXXXX

Check this box if you are not subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code
------------------> [ ]

Check this box if you qualify as a Non-Resident Alien
--------------------------------> [ ]

Date__________

Certification- Under penalties of perjury, I certify that the information
provided on this form is true, correct and complete.

  Signature: /s/ Norman R. Harpster, Jr.   Print name:  Norman R. Harpster, Jr.
                     Vice President & Chief Financial Officer

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