<PAGE>
                                                                     Exhibit 4.3

                                  H POWER CORP.
                            INVESTOR RIGHTS AGREEMENT

      This Investor Rights Agreement (the "Agreement") is entered into as of the
2nd day of May 1997 by and between (a) H Power Corp., a Delaware corporation
(the "Company"), and (b) Sofinov Societe Financiere D'Innovation Inc.
("Sofinov"), Societe Innovatech Du Grand Montreal and 9042-0175 Quebec Inc.,
bodies politic duly incorporated according to law (collectively the
"Investors").

                                R E C I T A L S:

      A. Concurrently with the execution of this Agreement, Sofinov has
subscribed for shares of Series C Preferred Stock of the Company (the "Company
Shares") pursuant to a Subscription Agreement between the Company and Sofinov
(the "Subscription Agreement").

      B. Concurrently with the execution of this Agreement, the Investors have
subscribed for shares of Series A Common Shares (the "Canco Shares") of 3362469
Canada Inc., a body politic duly according to law ("Canco"), pursuant to a
Subscription Agreement (the "Canada Subscription Agreement"; together with the
Subscription Agreement, the "Subscription Agreements").

      C. The Company has agreed to grant to each of the Investors the right to
exchange its Canco Shares for Company Shares on the terms and conditions set out
in the Stock Exchange Agreement dated the date hereof between the Company and
the Investors (the "Exchange Agreement").

      D. Concurrently with the execution of this Agreement, the Company has
granted Sofinov a warrant (the "Warrant") entitling the holder, upon exercise
thereof, to acquire up to 200,000 shares of Common Stock, subject to adjustment
as provided therein.

      E. The Company has agreed to provide for the registration of (i) the
shares of Common Stock issuable upon conversion of the Company Shares, (ii) the
shares of Common Stock issuable upon exercise of the Warrant (the "Warrant
Shares"), and (iii) the shares of Common Stock issuable upon the conversion of
the Company Shares issuable upon the exchange of Canco Shares pursuant to the
Exchange Agreement (the "Exchange Shares"), each on the terms and conditions
hereinafter set forth.
<PAGE>

                               A G R E E M E N T:

      NOW, THEREFORE, in consideration of the mutual premises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Subscription Agreements, the parties mutually agree as follows:

                                 I. DEFINITIONS

      1.1. Definitions. As used in this Agreement the following terms shall have
the following respective meanings:

      "Common Stock" means the Common Stock, par value $.001 per share, of the
Company.

      "Holders" means the Investors and any other person or entity owning of
record Registrable Securities, other than Registrable Securities that have been
sold to the public.

      "IPO" means the first family underwritten public offering pursuant to an
effective Registration Statement under the Securities Act covering the offer and
sale of Common Stock for the account of the Company.

      "1934 Act" means the Securities Exchange Act of 1934, as amended.

      "Register," "registered," and "registration" refer to a registration
effected by filing a registration statement in compliance with the Securities
Act and the declaration or ordering of effectiveness of such registration
statement or document.

      "Registrable Securities" means (i) the Warrant Shares, and (ii) any shares
of Common Stock issued or issuable upon the conversion of any Company Shares or
Exchange Shares.

      "Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of shares of Common Stock that are
Registrable Securities and either (i) are then issued and outstanding or (ii)
are issuable pursuant to then exercisable or convertible Warrant Shares,
Exchange Shares, or Company Shares.

      "Registration Expenses" means all expenses incurred by the Company in
complying with Sections 2.1 and 2.2 hereof, including without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Holders not to exceed $10,000, blue sky fees and expenses, fees
and expenses associated with any review by the NASD and the expense of any
special audits incident to or required by any such registration


                                       2
<PAGE>

(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).

      "Securities Act" means the Securities Act of 1933, as amended.

      "Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer taxes, if any, applicable to the sale of any Registrable
Securities.

      "SEC" means the Securities and Exchange Commission.

                             II. REGISTRATION RIGHTS

      2.1. Demand Registration.

      2.1.1. Subject to the conditions of this Section 2.1, if the Company shall
receive at any time subsequent to the consummation of the IPO, a written request
from any of the Holders, whose Registrable Securities had an aggregate original
subscription price of at least $2,500,000, that the Company file a registration
statement under the Securities Act covering the registration of at least 2% of
the Registrable Securities then outstanding (or any lesser number if the
aggregate offering price of Registrable Securities to be included in such
offering is not less than $2,500,000) (the Holders requesting such registration,
the"Initiating Holders"), then the Company shall within 15 days of the receipt
thereof, give written notice of such request to all Holders and, subject to the
limitations of this Section 2.1, shall use its commercially reasonable efforts
to effect, as soon as practicable, the registration under the Securities Act of
all Registrable Securities that the Holders request to be registered.

      2.1.2. If the registration referred to in Section 2.1.1. is to be an
underwritten offering, the right of any Holder to include his Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
such Holder and the Company). All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected by the Company
(which underwriter or underwriters shall be reasonably satisfictory to a
majority in interest of the Initiating Holders) and shall enter into customary
custody agreements for selling stockholders. Notwithstanding any other provision
of this Section 2.1, if the underwriter advises the Company in writing that
marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities), or the market otherwise will
likely be unable to accommodate the total amount of Registrable Securities
proposed to be offered and sold, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.


                                       3
<PAGE>

      2.1.3. The Company shall not be required to effect a registration pursuant
to this Section 2.1:

                  1. after the Company has effected two registrations pursuant
      to this Section 2.1 and such registrations have been declared or ordered
      effective;

                  2. during the period starting with the date of filing of, and
      ending on the date 180 days following the effective date of the
      registration statement pertaining to the IPO; provided, that the Company
      is making reasonable and good faith efforts to cause such registration
      statement to become effective; or

                  3. if the Company shall furnish to Holders requesting a
      registration statement pursuant to this Section 2.1, a certificate,
      stating that in the good faith judgment of the Board of Directors of the
      Company, it would materially and adversely affect the Company for such
      registration statement to be filed and it is therefore essential to defer
      the filing of such registration statement, in which event the Company
      shall have the right to defer such filing for a period of not more than
      180 days after receipt of the request of the Initiating Holders; provided,
      that such right to delay a request shall be exercised by the Company no
      more than once in any twelve month period.

      2.2. Piggyback Registrations. The Company shall notify all Holders
of Registrable Securities in writing at least 15 days prior to the filing of any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including without limitation,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or similar matters and corporate reorganizations or rights offerings to
stockholders) and will afford each such Holder an opportunity to include in such
registration statement all or part of the Registrable Securities held by such
Holder. Each such Holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within 10 days
after the above-described notice from the Company, so notify the Company in
writing. If a Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.

      2.2.1. Underwriting. If the registration statement under which the Company
gives notice under this Section 2.2 is for an underwritten offering, the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder to be included in a registration pursuant to this Section 2.2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting (which selection shall be made by the Company) and customary
custody agreements for selling stockholders.


                                       4
<PAGE>

Notwithstanding any other provision of this Agreement, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the number of shares that may be included
in the underwriting shall be allocated, first, to the Company; second, to the
Holders of Registrable Securities, the holders of shares of Common Stock issued
upon the conversion of the Series A Preferred Stock and Series B Preferred
Stock, and the holders of other securities participating through piggyback
registration rights in such offering, in each case on a pro rata basis based on
the total number of Registrable Securities held by such holders; and third, to
any selling stockholders (on a pro rata basis). No such reduction shall reduce
the securities being offered by the Company for its own account to be included
in the registration and underwriting.

      2.2.2. Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.2
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.4 hereof.

      2.3. [intentionally omitted]

      2.4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.1 or any registration under Section 2.2 herein shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the holders of the securities to be registered, pro
rata on the basis of the number of shares so registered. The Company shall not
however, be required to pay for expenses of any registration proceeding begun
pursuant to Section 2.1, the request of which has been subsequently withdrawn by
the Initiating Holders, unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) for registration proceedings begun
pursuant to Section 2.1, the Holders of a majority of Registrable Securities
agree to forfeit their right to one requested registration pursuant to Section
2.1 (in which event such right shall be forfeited by all Holders). If the
Holders are required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable Securities) requesting
such registration in proportion to the number of shares for which registration
was requested.

      2.5. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts, as expeditiously as reasonably possible, to:

      2.5.1. Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its commercially reasonable efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to 270 days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.


                                       5
<PAGE>

      2.5.2. Prepare and file with file SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of to
Securities Act with respect to the disposition of all securities covered by such
registration statement.

      2.5.3. Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.

      2.5.4. Use its commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.

      2.5.5. In the event of any underwritten public offering, enter into and
perform, its obligations under an underwriting agreement in usual and customary
form, with the underwriter(s) of such offering, each Holder participating in
such underwriting shall also enter into and perform its obligations under such
an agreement and customary custody agreements for selling stockholders.

      2.5.6. Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

      2.5.7. Furnish, at the request of a majority of the Holders participating
in the registration, on the date that such Registrable Securities are delivered.
to the underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) a copy of an opinion addressed to the holders and if the
applicable underwriters, dated as of such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as may bc
requested by the underwriters for an underwritten public offering which opinion
may be relied on by such Holders and (ii) a letter dated as of such date, from
the independent certified public accountants of the Company, in form and
substance as may be requested by the underwriters for an underwritten public
offering (or otherwise in form and substmace as would be customarily given to
underwriters in an underwritten offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration), such letter to be
addressed to the holders and the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.


                                       6
<PAGE>

      2.6. "Market Stand-Off" Agreements.

      2.6.1. If requested by the Company or a representative of the underwriters
of Common Stock or other securities of the Company, each Holder shall not sell
or otherwise transfer or dispose of any Common Stock (or other securities) of
the Company held by such Holder (other than those included in the registration)
for a period specified by the representative of the underwriters, not to exceed
180 days following the effective date of a registration statement of the Company
filed under the Securities Act (the "Effective Date"); provided, that:

                  (i) such agreement shall apply only to the Company's IPO; and

                  (ii) all persons entitled to registration rights similar to
      those granted hereunder, all other persons participating in the Company's
      IPO, all officers and directors of the Company and all shares that are
      beneficially owned by any person for any entity that is the beneficial
      owner (as determined in accordance with Rule l3d-3 of the Securities
      Exchange Act of 1934) of at least 7% of the Company's voting securities
      prior to the Company's IPO, shall have entered into similar agreements.

      The Company may impose stop-transfer instructions with respect to the
shares of Common Stock (or other securities) subject to tbo foregoing
restriction until the end of such 180-day period.

      2.6.2. To the extent reasonably requested by a representative of the
underwriters of Common Stock for the Company's IPO, each Holder will agree with
such representative not to sell or otherwise transfer or dispose of any Common
Stock of the Company acquired by such Holder in the Company's IPO pursuant to
Article IV hereof for a period so requested by the representative of the
underwriters, not to exceed 180 days following the Effective Date of the IPO.

      2.7. Delay of Registration; Furnishing Information.

      2.7.1. No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Article II.

      2.7.2. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to Section 2.1 or 2.2 that the selling Holders shall
furnish to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of their Registrable
Securities.

      2.8. Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 2.1 or 2.2:


                                       7
<PAGE>

      2.8.1. To the extent permitted by applicable law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the 1934 Act, against any losses, claims
damages or liabilities (joint or several) to which they may become subject under
the Securities Act the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law in connection with the offering covered
by such registration statement; and the Company will reimburse each such Holder,
partner, officer, director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 2.8.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person.

      2.8.2. To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors and officers, each person,
if any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder, may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder under an instrument
duly executed by such Holder and stated to be specifically for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling pawn of such other Holder, in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.8.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such


                                       8
<PAGE>

settlement is effected without the consent of the Holder which consent shall not
be unreasonably withheld, and provided further, that in no event shall any
indemnity under this Secton 2.8 exceed the gross proceeds from the offering
received by such Holder.

      2.8.3. Promptly after receipt by an indemnified party under this Section
2.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.8.

      2.8.4. If the indemnification provided for in this Section 2.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claim, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

      2.8.5. The obligations of the Company and Holders under this Section 2.8
shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.

      2.9. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Article II may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (i) is a
subsidiary, parent; general partner, limited partner or retired partner of a
Holder, (ii) is a governmental body of or controlled by the government of
Quebec, (iii) is a Holder's family member or trust for the benefit of an
individual Holder, or (iv) acquires at least 10,000 shares of Registrable


                                       9
<PAGE>

Securities (as adjusted for stock splits and combinations); provided, however,
(a) the transferor shall, within 30 days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned, and (b) such transferee shall agree in writing to be subject to all
restrictions set forth in this Agreement.

      2.10. Amendment of Registration Rights. Any provision of this Article II
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of not less than 50% of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 2.10 shall be binding upon each such Holder and the Company. By
acceptance of any benefit under this Article II Holders of Registrable
Securities hereby agree to be bound by the provisions hereunder.

      2.11. Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of not less than 50% of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would allow such holder or prospective holder (a) to include such
securities in any registration filed under Section 2.1 hereof, unless, under the
terms of such agreement, such holder or prospective holder may include stock
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included, or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the date
set forth in Section 2.1.3(2) or within 120 days of the effective date of any
registration statement effected pursuant to Section 2.1.

      2.12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:

                  (i) Make and keep public information available, as those terms
      are understood and defined in SEC Rule 144 or any similar or analogous
      rule promulgated under the Securities Act at all times after the effective
      date of the first Registration filed by the Company for an offering of its
      securities to the general public;

                  (ii) After such registration, file with the SEC, in a timely
      manner, all reports and other documents required of the Company under the
      Securities Act, and the 1934 Act; and

            (iii) After such registration and for so long as a Holder owns any
      Registrable Securities, furnish to such Holder forthwith upon request, (A)
      a written statement by the Company as to its compliance with the reporting
      requirements of such Rule 144 of the Securities Act, and of The 1934 Act
      (at any time after it has become subject to such reporting requirements);
      (B) a copy of the most recent annual or quarterly report of the Company,
      and (C) such other reports and


                                       10
<PAGE>

      documents as a Holder may reasonably request in availing itself of any
      rule or regulation of the SEC allowing it to sell any such securities
      without registration.

                          III. COVENANTS OF THE COMPANY

      3.1. Financial Information and Reporting.

      3.1.1. The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside an its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.

      3.1.2. As soon as practicable after the end of each fiscal year of the
Company, and in any event within 120 days thereafter, the Company will furnish
each Holder a consolidated balance sheet of the Company, as of the end of such
fiscal year, and a consolidated statement of income and a consolidated statement
of cash flows of the Company, for each year, all prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by a report and opinion
thereon by one of the "big six" independent public accounting firms selected by
the Company's Board of Directors.

      3.1.3. The Company will furnish only upon request to each Holder owning
more than 2.75% of the Registrable Securities, as soon as practicable at the end
of the first, second and third quarterly accounting periods in each fiscal year
of the Company, and in any event within 45 days thereafter, a consolidated
balance sheet of the Company as of the end of each such quarterly period, and a
consolidated statement of income and a consolidated statement of cash flows of
the Company for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles, with the option, that
no notes need be attached to such statements and year-end audit adjustments may
not have been made.

      3.1.4. The Company will furnish only upon request to each Holder owning
more than 10% of the Registrable Securities:

                  (i) at least 30 days prior to the beginning of each fiscal
      year, an annual budget and operating plans for such fiscal year (and as
      soon as available, any subsequent revisions thereto); and

                  (ii) as soon as practicable after the end of each month, and
      in any event within 20 days thereafter, a consolidated balance sheet of
      the Company as of the end of each such month, and, a consolidated
      statement of income and a consolidated statement of cash flows of the


                                       11
<PAGE>

      Company for such month and for the current fiscal year to date, including
      a comparison to plan figures for such period, prepared in accordance with
      generally accepted accounting principles, with the exception that no notes
      need be attached to such statements and year-end audit adjustments may not
      have been made.

      3.2. Confidentiality of Records.

      3.2.1. Each Holder agrees not to use Confidential Information (as
hereinafter defined) of the Company for its own use or for any purpose except to
monitor its equity investment in the Company and the performance of the Company
as well as to enforce its rights with respect to the Company from time to time.
Except as permitted under Section 3.12 below, such Holders agree to use their
respective best efforts not to disclose such Confidential Information to any
third parties. Each such Holder shall undertake to treat such proprietary nature
and agrees that it shall protect the confidentiality of and use reasonable
efforts to prevent disclosure of the Confidential Information to prevent it from
falling into the public, domain or the possession of unauthorized persons. Each
transferee of such Holder who receives Confidential Information shall agree to
be bound by such provisions. For purposes of this Section, "Confidential
Information" means any information, technical data or know-how, including, but
not limited to, the Company's research, products, software, services,
development, inventions, processes, designs, drawings, engineering, marketing,
or finances, disclosed by the Company either directly or indirectly in writing,
orally or by drawings or inspection of parts or equipment.

      3.2.2. Confidential Information does not include information, technical
data or know-how which (i) is in a Holder's possession at the time of
disclosure, (ii) before or after it has been disclosed to the Holder; it is part
of the public knowledge or literature, not as a result of any action or inaction
of the Holder, (iii) is approved for release by written authorization of
Company; or (iv) is developed independently by a Holder. The provisions of this
Section shall not apply (a) to the extent that a Holder is required to disclose
Confidential Information pursuant to any law, statute, rule, or regulation or
any order of any court or jurisdiction process or pursuant to any direction,
request or requirement (whether or not having the force of law but if not having
the force of law being of a type with which institutional investors in the
relevant jurisdiction are accustomed to comply) of any self-rcgulating
organization or my governmental, fiscal, monetary or other authority; (b) to the
disclosure of Confidential Information to the Holder's employees, counsel,
accountants or other professional advisors; (c) to tho extent that the Holder
needs to disclose Confidential Information for the protection of any of the
Holders rights or interest against the Company, whether under this Agreement or
otherwise; or (d) to the disclosure of Confidential Information to a prospective
transferee of securities which agrees to be bound by the provisions of this
Section in connection with the receipt of such Confidential Information.

      3.3. Proprietary Information. The Company shall require all employees of
and consultants to the Company who have access to proprietary information of the
Company to enter into agreements in the Company's standard form providing for
the protection of proprietary information and inventions.

      3.4. Board of Directors Approval.


                                       12
<PAGE>

            (i) The Company shall not without the approval of a majority of the
Board of Directors take any of the following actions:

            (a)   adopt any change to the fundamental nature of the Company or
                  the business carried on by it or Canco;

            (b)   transfer or dispose of all or any significant portion of the
                  assets of the Company,

            (c)   adopt any material changes in the bylaws, charter documents,
                  or capital structure of the Company;

            (d)   voluntarily dissolve the Company or undertake any major
                  reorganization;

            (e)   declare a dividend or make a dividend payment;

            (f)   make a loan or advance to any shareholder, director or officer
                  or person related to a shareholder, director or officer
                  excluding such transactions undertaken prior to the date
                  hereof;

            (g)   adopt any stock option or purchase plan;

            (h)   issue or grant equity securities of the Company or any options
                  or securities convertible into equity securities of the
                  Company other than option grants in the ordinary course of
                  business for 200 or fewer shares;

            (i)   adopt an annual budget;

            (j)   enter into any real estate lease or real property sales
                  agreement; or

            (k)   enter into any material transaction outside the ordinary
                  course of the Company's business.

            (ii) The Company's Board of Directors shall set a policy as to
whether the approval of a majority of the Board of Directors is required to take
any of the following actions:

            (a)   hire or extend an offer of employment to any officer of the
                  Company;

            (b)   enter into any consulting or employment arrangement involving
                  annual compensation in excess of $75,000; or


                                       13
<PAGE>

            (c)   adopt any compensation programs including but not limited to
                  establishing the base salary or bonus for any officer or
                  employee of the Company who earns greater than $75,000 per
                  year for his or her services to the Company.

      3.5. Board Meetings. The Board of Directors of the Company shall meet in
person or telephonically at least once every month for the first 24 months after
the date hereof until the initiation of the IPO; thereafter, the Board of
Directors, by the affirmative vote or written consent of a majority of the
directors, may alter the frequency of the regularly scheduled meetings and may
schedule meetings of the Board of Directors at such times, and from time to
time, as shall be deemed to be necessary or advisable. The Company will
reimburse each Director of the Company for all reasonable transportation and
out-of -pocket expenses incurred by such Director in the attending of no more
than four meetings a year of the Board of Directors of the Company or any
committees thereof in carrying out any business of the Company as authorized by
the Board of Director any executive officer of the Company. The Company shall
pay each Director that is not an employee of the Company, a subsidiary of the
Company, or the Investors, a fee for his attendance at each meeting of the
Board. The fees payable to such Directors shall be determined by the Board. The
Board of Directors may conduct certain meetings telephonically but shall meet at
least four times a year in person.

      3.6. Reservation of Common. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of the Company
Shares and Exchange Shares, all Common Stock issuable from time to time upon
such conversion, as well as Common Stock issuable pursuant to the exercise of
the Warrant.

      3.7. Real Property Holding Corporation. The Company covenants that it will
operate in a manner such that it will not become a "United States real property
holding corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder ("FIRTPA"). The Company agrees to make determinations as to its
status as a USRPHC, and will file statements concerning those determinations
with the Internal Revenue Service, in the manner and at the times required under
Reg. Sec. 1.897-2(h), or any supplementary or successor provision thereto.
Within 30 days of a request from an Investors or any of its partners, the
Company will inform the requesting party, in the manner set forth in Reg. Sec.
1.897-2(h)(1)(iv) or any supplementary or successor provision thereto, whether
that party's interest im the Company constitutes a United States real property
interest (within the meaning of Code Section 897(c)(1) end the regulations
thereunder) and whether the Company has provided to the Internal Revenue Service
all required notices as to its USRPHC status.

      3.8. Termination of Covenants. All covenants the Company contained in
Article III of this Agreement shall expire and terminate on the Effective Date
of the IPO.


                                       14
<PAGE>

                          IV. PRO RATA PURCHASE RIGHTS

      4.1. Grant. The Company hereby grants to each Holder, unless waived by the
Holders of not less than 50% of the Registerable Securities then outstanding the
right to purchase a pro rata share of New Securities (as defined below) that the
Company may, from time to time, propose to sell and issue up to but not
including the IPO. Each Holder's pro rate share, for purposes of this right, is
the ratio of (X) the number of shares of Registrable Securities then owned by
such Holder to (Y) the total number of shares of Registrable Securities of the
Company outstanding immediately prior to the issuance of the New Securities. The
purchase rights granted in this Article IV shall be subject to the following
provisions of this Article IV.

      4.2. New Securities. "New Securities" shall mean any offering by the
Company of any Common Stock or Preferred Stock of the Company, whether now
authorized or not, and right, options or warrants to purchase said Common Stock
or Preferred Stock, and securities of any type whatsoever that are, or may
become, convertible into said Common Stock or Preferred Stock; provided,
however, that "New Securities" does not include:

                  (i) securities issuable upon conversion of the Company Shares,
      Exchange Shares or Warrant Shares;

                  (ii) securities issued upon conversion or exchange of
      securities outstanding on the date hereof, including the Series A
      Preferred Stock, Series B Preferred Stock or outstanding Warrants on the
      date hereof;

                  (iii) any securities issued after the Company's IPO (but does
      not exclude shares issued in the IPO);

                  (iv) securities issued pursuant to the acquistion of another
      entity, business, product or technology by the Company by merger, purchase
      substantially all of the assets, or other reorganization whereby the
      Company owns more than 50% of the voting power of such entity, business,
      product or technology,

                  (v) shares of Common Stock (or related options) issued or
      issuable at any time to employees, directors or consultants of the
      Company, or any subsidiary, pursuant to any employee stock offering, plan,
      or arrangement approved by the Board of Directors; and

                  (vi) shares of Common Stock or Preferred Stock issued in
      connection with any stock split stock dividend, or recapitalization by the
      Company.


                                       15
<PAGE>

      4.3. Notice and Exercise.

      4.3.1. In the event that the Company proposes to undertake an issuance of
New Securities, it shall give, each Holder written notice of its intention,
describing the type of New Securities, the price and the general terms upon
which the Company propose to issue the same. Each such Holder shall have 20
business days from the date of mailing of any such notice to agree to purchase
its pro rata share of such New Securities for the price and upon the general
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.

      4.3.2. The Company shall promptly, in writing, inform each Holder which
purchases all the New Securities available to it ("Fully-Exercising Holder") of
any other Holder's failure to do likewise. During the 10 business day period
commencing after such information is delivered to each Fully-Exercising Holder,
each Fully-Exercising Holder shall be entitled to obtain that portion of the New
Securities for which Holders were entitled to subscribe, but which were not
subscribed for by such Holders, which is equal to the proportion that the number
of Registrable Securities then held by such Fully-Exercising Holder bears to the
total number of shares of Registrable Securities then held by all
Fully-Exercising Holders who wish to purchase some of the unsubscribed shares.

      4.3.3. Notwithstanding the foregoing the Company shall not be required to
offer or sell New Securities to any Holder who would cause the Company to be in
violation of applicable federal or state securities laws by virtue of such offer
or sale.

      4.4. Partial Exercise. In the event that the Holders fail to exercise in
full the pro rata purchase right provided in this Article IV, the Company shall
have 120 days thereafter to sell (or enter into an agreement pursuant to which
the sale of New Securities covered thereby shall be closed, if at all within 30
days from the date of said agreement) the New Securities respecting which such
Holders' rights were not exercised at a price and upon general terms materially
no more favorable to the purchasers thereof than specified in the Company's
notice. In the event the Company has not sold the New Securities within such
120-day period (or sold and issued New Securities in accordance with the
foregoing within 120 days from the date of said agreement), the Company shall
not thereafter issue or sell any New Securities without first offering such
securities to the Holders in the manner provided above.

                                V. MISCELLANEOUS

      5.1. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.


                                       16
<PAGE>

      5.2. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of be enforceable by each person
who shall be a holder of Registrable Securities from time to time; provided,
however, that prior to the receipt by the Company of adequate written notice of
the transfer of any Registrable Securities specifying the full name and address
of the transferee, the Company may deem and treat the person listed as the
holder of such shares in its records as the absolute owner and holder of such
shares for all purposes, including the payment of dividends or any redemption
price.

      5.3. Separability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

      5.4. Amendment and Waiver.

      5.4.1. Except as otherwise expressly provided, this agreement may be
amended or modified only upon the written consent of the Company and the holders
of not less than 50% of the Registrable Securities.

      5.4.2. Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of not less than 50% of the Registrable
Securities.

      5.5. Delays or Omission. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right power or remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or of any similar
breach, default or noncompliance thereafter occurring. It is further agreed that
any waiver, permit consent or approval of any kind or character on any Holder's
part of any breach, default or noncompliance under this Agreement or any waiver
on such Holder's part of any provisions or conditions of this Agreement must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.

      5.6. Notices. All notices required or permitted be under shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient or, if not, then on the next
business day, (iii) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (iv) or one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the Company and the Investors at their respective addresses set forth on the
signature page hereof or at such other address as any party may designate by 10
days advance written notice to the other parties hereto.


                                       17
<PAGE>

      5.7. Attorney's Fee. In the event the any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

      5.8. Titles and Subtitles. The titles of the sections and subsection of
this Agreement for convenience of reference only and are not to be considered in
construing this Agreement.

      5.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

      5.10. Remedies. The Investors, in addition to being entitled to exercise
all rights granted by law, including recovery of damages will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy of law
would be adequate.

      5.11. No Third Party Beneficiaries. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Shares or any Common Stock issued upon conversion
or exercise thereof). Nothing in this Agreement express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.


                                       18
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the date set forth in the first paragraph hereof.

                                   H POWER CORP.
                                   60 Montgomery Street
                                   Belleville, New Jersey  07109

                                   By: /s/ H. Frank Gibbard
                                      --------------------------------------

                                   Name: H. Frank Gibbard
                                        ------------------------------------
                                   Title:
                                         -----------------------------------


                                   SOFINOV SOCIETE FINANCIERE
                                   D'INNOVATION INC.
                                   1981 Avenue McGill College
                                   Montreal, Quebec  H3A3C7

                                   By: /s/ Denis Dionne
                                      --------------------------------------

                                   Name: Denis Dionne
                                        ------------------------------------
                                   Title:
                                         -----------------------------------

                                   By: /s/ Marcel Paquette
                                      --------------------------------------

                                   Name: Marcel Paquette
                                        ------------------------------------
                                   Title:
                                         -----------------------------------


                                   SOCIETE INNOVATECH DU GRAND MONTREAL
                                   2020 University Avenue
                                   Suite 1527
                                   Montreal, Quebec H3A2A5

                                   By: /s/ Bernard Coupal
                                      --------------------------------------

                                   Name: Bernard Coupal
                                        ------------------------------------
                                   Title:
                                         -----------------------------------


                                       19
<PAGE>

                                   9042-0175 QUEBEC INC.
                                   c/o Lapointe Rosenstein
                                   1250 Rene Levesque Blvd. West
                                   Suite 1400
                                   Montreal, Quebec H3B5E9

                                   By: /s/ Claude Bergeron
                                      --------------------------------------

                                   Name: Claude Bergeron
                                        ------------------------------------
                                   Title:
                                         -----------------------------------


                                       20