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                                                                     EXHIBIT 4.9

                                                                       EXHIBIT F

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                              MILLENNIUM CELL INC.

                                SECOND WARRANT

Warrant No. [ ]                                   Date of Original Issuance: [ ]

         Millennium Cell Inc., a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, [ ] or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of 589,376
shares of common stock, $.001 par value per share (the "COMMON STOCK"), of the
Company (each such share, a "WARRANT SHARE" and all such shares, the "WARRANT
SHARES") at an exercise price (as adjusted from time to time as provided in
Section 9, the "EXERCISE PRICE") per Warrant Share equal to $3.93, at any time
and from time to time from and after the date hereof and through and including
the fifth year anniversary of the date hereof (the "EXPIRATION DATE"), and
subject to the following terms and conditions:

         1.       Definitions. In addition to the terms defined elsewhere in
this Warrant, capitalized terms that are not otherwise defined herein that are
defined in the Securities Purchase Agreement, dated October 31, 2002, between
the Company and the original Holder (the "PURCHASE AGREEMENT"), shall have the
meanings given to such terms in the Purchase Agreement.

         2.       Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the

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record Holder hereof from time to time. The Company may treat the registered
Holder as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.

         3.       Registration of Transfers. The Company shall register the
transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Transfer Agent or to the Company at its address specified herein.
Upon any such registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a "NEW
WARRANT"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant. The Holder shall be entitled to transfer or assign this Warrant to
an affiliate thereof or to a fund under common management and the Company shall
file with the Securities and Exchange Commission either an amendment or a
supplement to any registration statement or prospectus previously filed pursuant
to the Registration Rights Agreement (as defined in the Purchase Agreement)
covering the resale of the Warrant Shares in order to reflect such transfer or
assignment.

         4.       Exercise, Duration and Redemption.

                  (a)      Subject to the provisions of Section 5, this Warrant
shall be exercisable by the registered Holder at any time and from time to time
on or after the date hereof to and including the Expiration Date. At 6:30 p.m.,
New York City time on the Expiration Date, the portion of this Warrant available
for exercise and not exercised prior thereto shall be and become void and of no
value, provided, that if the closing sales price of the Common Stock on the
Expiration Date is greater than 102% of the Exercise Price on the Expiration
Date, then this Warrant shall be deemed to have been exercised in full (to the
extent not previously exercised) on in accordance with Section 10 hereof at 6:30
P.M. New York City time on the Expiration Date.

                  (b)      Commencing at any time after the date of the issuance
of this Warrant, if in excess of the amount of principal amount of the Secured
Debentures (as defined in the Purchase Agreement) issued to the original Holder,
indicated below shall have been prepaid in full by the Company pursuant to a
declaration of an Event of Default (as defined in the Secured Debentures)
pursuant to the Secured Debentures and, under clause (xiii) or (xiv) of the
Events of Default (as defined in the Unsecured Debentures) under the Unsecured
Debentures, then the Company shall have the right, on up to one occasion per
occurrence and upon one business day's notice to the Holder given not later than
five (5) business days after the occurrence of the condition set forth above, to
redeem up to the percentage amount indicated below of the then unexercised
Warrant Shares at a price of $.001 per Warrant Share (the "REDEMPTION PRICE"),
on the date set forth in such notice (the "REDEMPTION DATE"). Prior to the
Redemption Date, the Holder may exercise all or a portion of the Warrant Shares
subject to the redemption notice. On the Redemption Date, the Holder shall
tender the Warrant to the Company in exchange for a New Warrant reflecting the
Warrant Shares not redeemed pursuant to the terms hereof and

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payment of an amount equal to the number of Warrant Shares being redeemed
hereunder multiplied by the Redemption Price.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Amount Prepaid                               Redeemable Percentage
--------------                               ---------------------
<S>                                          <C>
$3,000,000                                   10%
-------------------------------------------------------------------------------
$6,000,000                                   20%
-------------------------------------------------------------------------------
$8,500,000                                   60%
-------------------------------------------------------------------------------
</TABLE>

         5.       Delivery of Warrant Shares.

                  (a)      Upon delivery of the Form of Election to Purchase to
the Company (with the attached Warrant Shares Exercise Log) at its address for
notice set forth in Section 13 and upon payment of the Exercise Price multiplied
by the number of Warrant Shares that the Holder intends to purchase hereunder,
the Company shall promptly (but in no event later than three Trading Days after
the Date of Exercise (as defined herein)) issue and deliver to the Holder, a
certificate for the Warrant Shares issuable upon such exercise free of
restrictive legends unless otherwise required by the Purchase Agreement. The
Company shall, upon request of the Holder and subsequent to the date on which a
registration statement covering the resale of the Warrant Shares has been
declared effective by the Securities and Exchange Commission, use its reasonable
commercial efforts to deliver Warrant Shares hereunder electronically through
the Depository Trust Corporation or another established clearing corporation
performing similar functions, if available, provided, that, the Company may, but
will not be required to change its transfer agent if its current transfer agent
cannot deliver Warrant Shares electronically through the Depository Trust
Corporation.

         A "DATE OF EXERCISE" means the date on which the Holder shall have
delivered to the Company (i) the Form of Election to Purchase attached hereto
(with the Warrant Exercise Log attached to it), appropriately completed and duly
signed and (ii) payment of the Exercise Price for the number of Warrant Shares
so indicated by the Holder to be purchased.

                  (b)      If by the fifth Trading Day after a Date of Exercise
the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to
rescind such exercise.

                  (c)      If by the fifth Trading Day after a Date of Exercise
the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such fifth Trading Day the
Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
which the Holder anticipated receiving upon such exercise (a "BUY-IN"), then the
Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue by (B)

                                      -3-

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the closing bid price of the Common Stock at the time of the obligation giving
rise to such purchase obligation and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of Common Stock
with a market price on the date of exercise totaled $10,000, under clause (1) of
the immediately preceding sentence the Company shall be required to pay the
Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In.

                  (d)      The Company's obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Holder's right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

         6.       Charges, Taxes and Expenses. Issuance and delivery of
certificates for shares of Common Stock upon exercise of this Warrant shall be
made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof.

         7.       Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. Applicants for a New Warrant
under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe.

         8.       Reservation of Warrant Shares. The Company covenants that it
will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the number of Warrant Shares which are then

                                      -4-

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issuable and deliverable upon the exercise of this entire Warrant. The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.

         9.       Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9.

                  (a)      Stock Dividends and Splits. If the Company, at any
time while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is
payable in shares of Common Stock, (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, or (iii) combines outstanding shares of
Common Stock into a smaller number of shares, then in each such case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event.

                  (b)      Pro Rata Distributions. If the Company, at any time
while this Warrant is outstanding, distributes to all holders of Common Stock
(i) evidences of its indebtedness, (ii) any security (other than a distribution
of Common Stock covered by the preceding paragraph), (iii) rights or warrants to
subscribe for or purchase any security, or (iv) any other asset (in each case,
"DISTRIBUTED PROPERTY"), then, at the request of any Holder delivered on the
record date fixed for determination of stockholders entitled to receive such
distribution, the Company will deliver to such Holder, within five Trading Days
after such request (or, if later, on the effective date of such distribution),
the Distributed Property that such Holder would have been entitled to receive in
respect of the Warrant Shares for which such Holder's Warrant could have been
exercised immediately prior to such record date. If such Distributed Property is
not delivered to a Holder pursuant to the preceding sentence, then upon any
exercise of the Warrant that occurs after such record date, such Holder shall be
entitled to receive, in addition to the Warrant Shares otherwise issuable upon
such conversion, the Distributed Property that such Holder would have been
entitled to receive in respect of such number of Warrant Shares had the Holder
been the record holder of such Warrant Shares immediately prior to such record
date.

                  (c)      Fundamental Transactions. If, at any time while this
Warrant is outstanding: (i) the Company effects any merger or consolidation of
the Company with or into another Person, (ii) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a "FUNDAMENTAL TRANSACTION"), then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the

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number of Warrant Shares then issuable upon exercise in full of this Warrant
(the "ALTERNATE CONSIDERATION"). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. At the Holder's option and request, any
successor to the Company or surviving entity in such Fundamental Transaction
shall, either (i) issue to the Holder a new warrant substantially in the form of
this Warrant and consistent with the foregoing provisions and omitting
subsection 9(d) below and evidencing the Holder's right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
or (ii) purchase the Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of the Fundamental
Transaction as well as assumptions reasonably mutually acceptable to the Company
and the Holder, provided that for purposes of such calculation, the market price
of the Common Stock shall be the closing bid price of the Common Stock on the
Trading Day immediately preceding the public announcement of the Fundamental
Transaction and the volatility factor shall be determined by reference to the 12
month average industry volatility measures. The terms of any agreement pursuant
to which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this
paragraph (c) and insuring that the Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.

                  (d)      Subsequent Equity Sales.

                           (i)      If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents (as defined below), at any
time while this Warrant is outstanding, shall issue shares of Common Stock or
rights, warrants, options or other securities or debt that is convertible into
or exchangeable for shares of Common Stock ("COMMON STOCK EQUIVALENTS")
entitling any Person to acquire shares of Common Stock, at a price per share
less than the Exercise Price (if the holder of the Common Stock or Common Stock
Equivalent so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights issued in connection with
such issuance, be entitled to receive shares of Common Stock at a price less
than the Exercise Price, such issuance shall be deemed to have occurred for less
than the Exercise Price), then, at the option of the Holder for such exercises
as it shall indicate, the Exercise Price shall be adjusted to mirror the
conversion, exchange or purchase price for such Common Stock or Common Stock
Equivalents (including any reset provisions thereof) at issue. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are issued.
The Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalent subject to
this section, indicating therein the applicable issuance price, or of applicable
reset price, exchange

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price, conversion price and other pricing terms. Notwithstanding the foregoing,
no adjustment will be made under this Section 9(d) in respect of:

                                    (A).     Any grant of an option or warrant
         for Common Stock or issuance of any shares of Common Stock upon the
         exercise of any options or warrants to employees, officers and
         directors of or consultants to the Company pursuant to any stock option
         plan, employee stock purchase plan or similar plan or incentive or
         consulting arrangement approved by the Company's board of directors;

                                    (B).     Any rights or agreements to
         purchase Common Stock Equivalents outstanding on the date hereof and as
         specified in Schedule 3.1(g) to the Purchase Agreement (but not as to
         any amendments or other modifications to the number of Common Stock
         issuable thereunder, the terms set forth therein, or the exercise price
         set forth therein);

                                    (C).     Any Common Stock or Common Stock
         Equivalents issued for consideration other than cash pursuant to a
         merger, consolidation, acquisition or other similar business
         combination;

                                    (D).     Any issuances of Common Stock or
         Common Stock Equivalents to a Person which is or will be, itself or
         through its subsidiaries, an operating company in a business related to
         or complementary with the business of the Company and in which the
         Company receives reasonably material benefits in addition to the
         investment of funds, but shall not include a transaction in which the
         Company is issuing securities primarily for the purpose of raising
         capital or to an entity whose primary business is investing in
         securities;

                                    (E).     Any Common Stock Equivalents that
         entitle the holders thereof to acquire up to 500,000 shares of Common
         Stock issued pursuant to any equipment leasing arrangement;

                                    (F).     Any Common Stock or Common Stock
         Equivalents issued to pay all or a portion of any investment banking,
         finders or similar fee or commission, which entitles the holders
         thereof to acquire shares of Common Stock at a price not less than the
         market price of the Common Stock on the date of such issuance and which
         is not subject to any adjustments other than on account of stock splits
         and reverse stock splits;

                                    (G).     Any shares of Common Stock issued
         upon: (i) exercise of the Warrants (as defined in the Purchase
         Agreement) or the warrants issued by the Company on June 19, 2002 to
         Pine Ridge Financial, Inc. and ZLP Master Technology Fund, Ltd. or (ii)
         conversion of the Debentures (as defined in the Purchase Agreement);

                                    (H).     Any adjustment to the Conversion
         Price (as defined in the Debentures) or exercise price in the Warrants;
         or

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                                    (I).     a bonafide underwritten public
         offering of the Common Stock resulting in gross proceeds in excess of
         $15 million to the Company (it being understood that equity line
         transactions, including any on going warrant financing, or any similar
         arrangements shall not constitute a bona fide underwritten public
         offering of the Common Stock for the purposes hereof).

                           (ii)     If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock Equivalents at a
price per share that floats or resets or otherwise varies or is subject to
adjustment based on market prices of the Common Stock (a "FLOATING PRICE
SECURITY"), then for purposes of applying the preceding paragraph in connection
with any subsequent exercise, the Exercise Price will be determined separately
on each Exercise Date and will be deemed to equal the lowest price per share at
which any holder of such Floating Price Security is entitled to acquire shares
of Common Stock on such Exercise Date (regardless of whether any such holder
actually acquires any shares on such date).

                  (e)      Number of Warrant Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraphs (a), (b) or (d) of this
Section, the number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.

                  (f)      Calculations. All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock.

                  (g)      Notice of Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.

                  (h)      Notice of Corporate Events. If the Company (i)
declares a dividend or any other distribution of cash, securities or other
property in respect of its Common Stock, including without limitation any
granting of rights or warrants to subscribe for or purchase any capital stock of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement providing for or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect

                                      -8-

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to such transaction, and the Company will take all steps reasonably necessary in
order to insure that the Holder is given the practical opportunity to exercise
this Warrant prior to such time so as to participate in or vote with respect to
such transaction; provided, however, that the failure to deliver such notice or
any defect therein shall not affect the validity of the corporate action
required to be described in such notice.

         10.      Payment of Exercise Price. The Holder shall pay the Exercise
Price in one of the following manners:

                  (a)      Cash Exercise. The Holder may deliver immediately
available funds; or

                  (b)      Cashless Exercise. At any time after the earlier to
occur of: (x) the date the registration statement covering the resale of the
Warrant Shares and filed pursuant to the Registration Rights Agreement is
declared effective by the Commission and (y) the Effectiveness Date (as defined
in the Registration Rights Agreement) related to such registration statement,
when a registration statement covering the resale of the Warrant Shares and
naming the Holder as a selling stockholder thereunder is not then effective, the
Holder may surrender this Warrant to the Company together with a notice of
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows

                                    X = Y [(A-B)/A]

                  where:

                                    X = the number of Warrant Shares to be
                                    issued to the Holder.

                                    Y = the number of Warrant Shares with
                                    respect to which this Warrant is being
                                    exercised.

                                    A = the average of the closing bid prices
                                    for the five Trading Days immediately prior
                                    to (but not including) the Exercise Date.

                                    B = the Exercise Price.

         For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Purchase Agreement.

         11.      Limitations on Exercise. Notwithstanding anything to the
contrary contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
exceed 9.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock

                                      -9-

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issuable upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated
the limitation set forth in this paragraph and determined that issuance of the
full number of Warrant Shares requested in such Exercise Notice is permitted
under this paragraph. This provision shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a merger or other business combination or
reclassification involving the Company as contemplated in Section 9 of this
Warrant.

         12.      No Fractional Shares. No fractional shares of Warrant Shares
will be issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing bid price of one
Warrant Share as reported on the Nasdaq National Market on the date of exercise.

         13.      Notices. Any and all notices or other communications or
deliveries hereunder (including without limitation any Exercise Notice) shall be
in writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section prior to 6:30 p.m. (New York
City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
the Company, to Millennium Cell Inc., 1 Industrial Way West, Eatontown, New
Jersey, 07724, Facsimile No.: (732) 542-4010, Attn: Chief Financial Officer, or
(ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.

         14.      Warrant Agent. The Company shall serve as warrant agent under
this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

         15.      Miscellaneous.

                  (a)      This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns.
Subject to the preceding sentence, nothing in this Warrant shall be construed to
give to any Person other than the Company and the Holder any

                                      -10-

<PAGE>

legal or equitable right, remedy or cause of action under this Warrant. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.

                  (b)      All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Warrant (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of this Warrant), and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Warrant and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Warrant or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Warrant, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

                  (c)      The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

                  (d)      In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                      -11-

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                    MILLENNIUM CELL INC.

                                    By:__________________________________
                                         Name:
                                         Title:

                                      -12-

<PAGE>

                          FORM OF ELECTION TO PURCHASE

To Millennium Cell Inc.:

         In accordance with Warrant No. [ ] issued to the undersigned, the
undersigned hereby elects to purchase _____________ shares of common stock
("COMMON STOCK"), $.001 par value per share, of Millennium Cell Inc., and, if
such Holder is not utilizing the cashless exercise provisions set forth in this
Warrant, encloses herewith $________ in cash, certified or official bank check
or checks, which sum represents the aggregate Exercise Price (as defined in the
Warrant) for the number of shares of Common Stock to which this Form of Election
to Purchase relates.

         By its delivery of this Form of Election To Purchase, the Holder
represents and warrants to the Company that in giving effect to the exercise
evidenced hereby the Holder will not beneficially own in excess of the number of
shares of Common Stock (determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) permitted to be owned under Section 11 of this
Warrant to which this notice relates.

         The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                    PLEASE INSERT SOCIAL SECURITY OR TAX
                                    IDENTIFICATION NUMBER

                         (Please print name and address)

<PAGE>

                           Warrant Shares Exercise Log

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Date        Number of Warrant Shares     Number of Warrant Shares   Number of Warrant Shares
            Available to be Exercised    Exercised                  Remaining to be Exercised
----------------------------------------------------------------------------------------------
<S>         <C>                          <C>                        <C>

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

<PAGE>

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Millennium Cell Inc.,
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of Millennium Cell Inc., with full power of
substitution in the premises.

Dated:   _______________, ____

                                    ____________________________________________
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant)

                                    ____________________________________________
                                    Address of Transferee

                                    ____________________________________________

                                    ____________________________________________

In the presence of:

_______________________<PAGE>
                                                                    EXHIBIT 4.10

                                                                       EXHIBIT A

NEITHER THIS DEBENTURE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
DEBENTURE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES. THIS DEBENTURE AND THE
SECURITIES ISSUABLE UPON CONVERSION OF THIS DEBENTURE MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

                                                            ORIGINAL ISSUE DATE:
                                                                             [ ]

                                                                      $1,750,000

No. [  ]

                              MILLENNIUM CELL INC.
                         UNSECURED CONVERTIBLE DEBENTURE
                              DUE ON JUNE 30, 2003

         THIS DEBENTURE is one of a series of duly authorized and issued
debentures of Millennium Cell Inc., a corporation organized under the laws of
the state of Delaware (the "COMPANY"), designated as its Unsecured Convertible
Debentures, due on June 30, 2003 in the aggregate principal amount of Three
Million Five Hundred Thousand Dollars ($3,500,000) (collectively, the "UNSECURED
DEBENTURES").

         FOR VALUE RECEIVED, the Company promises to pay to the order of [ ] or
its registered assigns (the "HOLDER") the principal sum of One Million Seven
Hundred and Fifty Thousand Dollars ($1,750,000) and any additional sums due
pursuant to the terms hereof on June 30, 2003, or such earlier date as the
Unsecured Debentures are required or permitted to be repaid hereunder ("MATURITY
DATE"), provided, that such Maturity Date may be extended by mutual consent of
the Company and the Holder on up to six occasions by 30 days, and to pay
interest to the Holder on the principal amount of this Unsecured Debenture in
accordance with the provisions hereof. This Unsecured Debenture is subject to
the following additional provisions.

                  1. Definitions. As used in this Unsecured Debenture, the
following terms shall have the meanings set forth in this Section 1:

                  "ADJUSTMENT DATE" means the tenth Trading Day following the
         Delivery Date.
<PAGE>
                  "ADJUSTMENT NOTICE" means a written notice delivered by the
         Company to a Holder pursuant to Section 5(c), indicating the Company's
         intent to adjust the Conversion Price pursuant to Section 5(c).

                  "ADJUSTMENT PERCENTAGE" means, as of any Adjustment Date, if
         the Holder shall have converted prior thereto, (pursuant to Section
         5(c), of the Unsecured Debentures or Section 6(c) of the Secured
         Debentures or Exchange Debentures (as applicable)) an aggregate
         principal amount of Debentures between: (i) $0 and $2,500,000, 88%;
         (ii) $2,500,001 and $5,000,000, 90%; (iii) $5,000,001 and $7,500,000,
         92%; (iv) $7,500,001 to $10,000,000, 94%; and (v) $10,000,001 to
         $12,000,000, 96%.

                  "BANKRUPTCY EVENT" means any of the following events: (a) the
         Company or any subsidiary thereof commences a case or other proceeding
         under any bankruptcy, reorganization, arrangement, adjustment of debt,
         relief of debtors, dissolution, insolvency or Liquidation or similar
         law of any jurisdiction relating to the Company or any subsidiary
         thereof; (b) there is commenced against the Company or any subsidiary
         thereof any such case or proceeding that is not dismissed within 60
         days after commencement; (c) the Company or any subsidiary thereof is
         adjudicated insolvent or bankrupt or any order of relief or other order
         approving any such case or proceeding is entered; (d) the Company or
         any subsidiary thereof suffers any appointment of any custodian or the
         like for it or any substantial part of its property that is not
         discharged or stayed within 60 days; (e) the Company or any subsidiary
         thereof makes a general assignment for the benefit of creditors; (f)
         the Company or any subsidiary thereof fails to pay, or states that it
         is unable to pay or is unable to pay, its debts generally as they
         become due; (g) the Company or any subsidiary thereof calls a meeting
         of its creditors with a view to arranging a composition, adjustment or
         restructuring of its debts; or (h) the Company or any subsidiary
         thereof, by any act or failure to act, expressly indicates its consent
         to, approval of or acquiescence in any of the foregoing or takes any
         corporate or other action for the purpose of effecting any of the
         foregoing.

                  "BUSINESS DAY" means any day except Saturday, Sunday and any
         day which shall be a federal legal holiday or a day on which banking
         institutions in the State of New York or the State of New Jersey are
         authorized or required by law or other governmental action to close.

                  "CHANGE OF CONTROL" means the occurrence of any of: (i) an
         acquisition after the date hereof by an individual or legal entity or
         "group" (as described in Rule 13d-5(b)(1) promulgated under the
         Exchange Act) of effective control (whether through legal or beneficial
         ownership of capital stock of the Company, by contract or otherwise) of
         in excess of 33% of the voting securities of the Company, (ii) a
         replacement at one time or over time of more than one-half of the
         members of the Company's board of directors which is not approved by a
         majority of those individuals who are members of the board of directors
         on the date hereof (or by those individuals who are serving as members
         of the board of directors on any date whose nomination to the board of
         directors was approved by a majority of the members of the board of
         directors who are members on the date hereof), (iii) the merger of the
         Company with or into another entity that is not wholly-owned by the
         Company, consolidation or sale of 50% or more of the assets of the

                                      -2-
<PAGE>
         Company in one or a series of related transactions, or (iv) the
         execution by the Company of an agreement to which the Company is a
         party or by which it is bound, providing for any of the events set
         forth above in (i), (ii) or (iii).

                  "CLOSING PRICE" means, for any date, the price determined by
         the first of the following clauses that applies: (a) if the Common
         Stock is then listed or quoted on an Eligible Market, the closing sales
         price per share of the Common Stock for such date (or the nearest
         preceding date) on the primary Eligible Market on which the Common
         Stock is then listed or quoted; (b) if the Common Stock is not then
         listed or quoted on an Eligible Market and if prices for the Common
         Stock are then quoted on the OTC Bulletin Board(or any successor
         thereto), the closing sales price per share of the Common Stock for
         such date (or the nearest preceding date) on the OTC Bulletin Board(or
         any successor thereto); (c) if the Common Stock is not then listed or
         quoted on an Eligible Market or the OTC Bulletin Board (or any
         successor thereto)and if prices for the Common Stock are then reported
         in the "Pink Sheets" published by the National Quotation Bureau
         Incorporated (or a similar organization or agency succeeding to its
         functions of reporting prices), the most recent sales price per share
         of the Common Stock so reported; or (d) in all other cases, the fair
         market value of a share of Common Stock as determined by an independent
         appraiser selected in good faith by the Holder.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the Company's common stock, $.001 par
         value, and stock of any other class into which such shares may be
         reclassified or changed.

                  "COMMON STOCK EQUIVALENTS" means any securities of the Company
         or a subsidiary thereof which entitle the holder thereof to acquire
         Common Stock at any time, including without limitation, any debt,
         preferred stock, rights, options, warrants or other instrument that is
         at any time convertible into or exchangeable for, or otherwise entitles
         the holder thereof to receive, Common Stock or other securities that
         entitle the holder to receive, directly or indirectly, Common Stock.

                  "COMPANY CONVERSION DATE" means the tenth (10th) day
         immediately following the date a Company Conversion Notice together
         with the Conversion Schedule is delivered to the Holder pursuant to
         Section 5(b).

                  "COMPANY CONVERSION NOTICE" means a written notice in the form
         attached hereto as Exhibit B.

                  "COMPANY PREPAYMENT PRICE" for any Unsecured Debentures which
         shall be subject to prepayment pursuant to Section 7(a), shall equal
         the sum of: (i) 110% of the principal amount of Unsecured Debentures to
         be prepaid, plus all accrued and unpaid interest thereon, and (ii) all
         other amounts, costs, expenses and liquidated damages due in respect of
         such Unsecured Debentures.

                  "CONVERSION DATE" means either a Holder Conversion Date, a
         Company Conversion Date or an Adjustment Date.

                                      -3-
<PAGE>
                  "CONVERSION NOTICE" means either a Holder Conversion Notice or
         a Company Conversion Notice.

                  "CONVERSION PRICE" means the Initial Conversion Price, subject
         to adjustment from time to time pursuant to Sections 5(c) (solely with
         respect to conversions pursuant to Section 5(c)) and 5(j).

                  "DEBENTURES" shall have the meaning set forth in the Purchase
         Agreement.

                  "DELIVERY DATE" means the date an Adjustment Notice is
         delivered to the Holder pursuant to Section 5(c).

                  "ELIGIBLE MARKET" means any of the New York Stock Exchange,
         the American Stock Exchange, the Nasdaq or the Nasdaq Small Cap Market.

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

                  "EQUITY CONDITIONS" means, with respect to a specified
         issuance of Common Stock, that each of the following conditions is
         satisfied: (i) the number of authorized but unissued and otherwise
         unreserved shares of Common Stock is sufficient for such issuance; (ii)
         such shares of Common Stock are registered for resale by the Holder
         pursuant to an effective registration statement, and the prospectus
         thereunder is available for use by the Holder to sell such shares or
         all such shares may be sold without volume restrictions pursuant to
         Rule 144(k) under the Securities Act; (iii) the Common Stock is listed
         or quoted (and is not suspended from trading) on an Eligible Market and
         such shares of Common Stock are approved for listing on such Eligible
         Market upon issuance; (iv) such issuance would be permitted in full
         without violating Section 5(d)(i), Section 5(d)(ii) or the rules or
         regulations of the Eligible Market on which such shares are listed or
         quoted; (v) no Event of Default nor any event that with the passage of
         time and without being cured would constitute a Event of Default has
         occurred and not been cured, and (vii) no public announcement of a
         pending or proposed Change of Control transaction has occurred that has
         not been consummated.

                  "EVENT OF DEFAULT" means the occurrence of any one of the
         following events (whatever the reason and whether it shall be voluntary
         or involuntary or effected by operation of law or pursuant to any
         judgment, decree or order of any court, or any order, rule or
         regulation of any administrative or governmental body):

                                    (i) any default in the payment of principal
         or liquidated damages in respect of any Unsecured Debentures, as and
         when the same becomes due and payable (whether by acceleration or
         otherwise), or any default in the payment of interest in respect of any
         Unsecured Debentures, within five Business Days of when the same
         becomes due and payable;

                                    (ii)    a Bankruptcy Event;

                                    (iii) the Common Stock is not listed or
         quoted, or is suspended from trading, on an Eligible Market for an
         aggregate of twelve Trading Days (which need

                                      -4-
<PAGE>
         not be consecutive Trading Days), provided, that voluntary suspensions
         of the Common Stock from an Eligible Market by the Company for less
         than one hour at a time to disseminate material information shall not
         be included within such number of Trading Days;

                                    (iv) the Company shall fail for any reason
         to deliver certificates representing Underlying Shares issuable upon a
         conversion hereunder that comply with the provisions hereof prior to
         the fifth Business Day after the Conversion Date or the Company shall
         provide notice to any Holder, including by way of public announcement,
         at any time, of its intention not to comply with requests for
         conversion of Unsecured Debentures in accordance with the terms hereof;

                                    (v) the Company shall fail to have available
         a sufficient number of authorized and unreserved shares of Common Stock
         to issue to such Holder upon a conversion hereunder;

                                    (vi) the Company shall fail for any reason
         to pay in full the amount of cash due pursuant to a Buy-In within seven
         days after notice therefor is delivered hereunder or shall fail to pay
         any liquidated damages due pursuant to the Transaction Documents within
         seven days of the date of the request for such payment;

                                    (vii) the occurrence of a Change of Control;

                                    (viii) during the Effectiveness Period (as
         defined in the Registration Rights Agreement) relating to the First
         Registration Statement, the effectiveness of the First Registration
         Statement lapses for any reason or the Holder shall not be permitted to
         resell Registrable Securities (as defined in the Registration Rights
         Agreement) under the First Registration Statement, in either case, for
         more than seven consecutive Trading Days or an aggregate of twenty
         Trading Days (which need not be consecutive Trading Days);

                                    (ix) the Company defaults in the timely
         performance of any other obligation under the Transaction Documents
         (other than in connection with the failure to issue the maximum
         aggregate principal amount of Secured Debentures due to the inability
         of the Company to obtain the Shareholder Approval) and such default
         continues uncured for a period of five Trading Days after the date on
         which notice of such default is first given to the Company by the
         Holder (it being understood that no prior notice need be given in the
         case of a default that cannot reasonably be cured within five Trading
         Days);

                                    (x) an Event (as defined in the Registration
         Rights Agreement) shall not have been cured to the satisfaction of the
         Holder prior to the expiration of ten days from the Event Date (as
         defined in the Registration Rights Agreement) relating thereto;

                                    (xi) the Company or any Subsidiary defaults
         in any of its obligations under any other debenture or any mortgage,
         credit agreement or other facility, indenture agreement, factoring
         agreement or other instrument under which there may be

                                      -5-
<PAGE>
         issued, or by which there may be secured or evidenced, any indebtedness
         for borrowed money or money due under any long term leasing or
         factoring arrangement of the Company or any Subsidiary in an amount
         exceeding $500,000, whether such indebtedness now exists or is
         hereafter created, and such default results in such indebtedness
         becoming or being declared due and payable prior to the date on which
         it would otherwise become due and payable;

                                    (xii) the occurrence of an Event of Default
         (as defined in the Debentures) under any Debenture or the occurrence of
         any event that, with the passage of time and without being cured, would
         constitute an Event of Default (as defined in the Debentures) under any
         Debenture;

                                    (xiii) the ratio of the Company's Unsecured
         Cash and Cash-Equivalents balances to Unsecured Indebtedness shall be
         less than 1.25 to 1; or

                                    (xiv) either: (x) the average of the Closing
         Prices during a 20 consecutive Trading Day period shall be less than
         $0.75 (subject to equitable adjustment for stock splits, recombinations
         and similar events) or (y) the average of the Closing Prices during a
         10 consecutive Trading Day period shall be less than $0.50 (subject to
         equitable adjustment for stock splits, recombinations and similar
         events).

                  FIRST REGISTRATION STATEMENT" shall have the meaning set forth
         in the Registration Rights Agreement.

                  "HOLDER CONVERSION DATE" means the date a Holder Conversion
         Notice together with the Conversion Schedule is delivered to the
         Company pursuant to Section 5(a).

                  "HOLDER CONVERSION NOTICE" means a written notice in the form
         attached hereto as Exhibit A.

                  "INITIAL CONVERSION PRICE" shall equal $4.25 (subject to
         equitable adjustment for stock splits, recombinations and similar
         events).

                  "INTEREST PAYMENT DATE" means each March 31, June 30,
         September 30 and December 31, beginning on the first such date
         following the Original Issue Date, except if such date is not a Trading
         Day, in which case such Interest Payment Date shall be the next
         succeeding Trading Day.

                  "INDEX PRICE" means the average of the VWAP's for the 10
         consecutive Trading Days immediately following the Delivery Date.

                  "INTEREST RATE" means 4%.

                  "LIQUIDATION" means for any Person, any liquidation,
         dissolution or winding-up of such Person, whether voluntary or
         involuntary, by operation or law or otherwise.

                                      -6-
<PAGE>
                  "MANDATORY CONVERTIBLE AMOUNT" means $300,000, provided, that
         any respect to each Adjustment Date, such amount may be increased up to
         $2,500,000 by mutual consent of the Holder and the Company reached
         prior to the applicable Adjustment Date.

                  "MANDATORY PREPAYMENT AMOUNT" means for any Unsecured
         Debentures: (I) with respect to an Event of Default under clauses
         (i)-(xii) hereof, shall equal the sum of: (i) the greater of (A) 130%
         of the principal amount of Unsecured Debentures to be prepaid and, if
         applicable, the Reinstated Principal, plus all accrued and unpaid
         interest thereon, and (B) the principal amount of Unsecured Debentures
         to be prepaid and, if applicable, the Reinstated Principal, plus all
         accrued and unpaid interest thereon, divided by the Conversion Price on
         the Trading Day immediately preceding (x) the date of the Event of
         Default or (y) the date the Mandatory Prepayment Amount is paid in
         full, whichever is less, multiplied by the Closing Price on (x) the
         date of the Event of Default or (y) the date the Mandatory Prepayment
         Amount is paid in full, whichever is greater, and (ii) all other
         amounts, costs, expenses and liquidated damages due in respect of such
         Unsecured Debentures; (II) with respect to an Event of Default under
         clause (xiii) hereof, shall equal the sum of: (i) 125% of the principal
         amount of Unsecured Debentures to be prepaid, plus 125% of all accrued
         and unpaid interest thereon and (ii) all other amounts, costs, expenses
         and liquidated damages due in respect of such Unsecured Debentures; and
         (III) with respect to an Event of Default under clause (xiv) hereof,
         shall equal the sum of: (i) the principal amount of Unsecured
         Debentures to be prepaid, plus of all accrued and unpaid interest
         thereon and (ii) all other amounts, costs, expenses and liquidated
         damages due in respect of such Unsecured Debentures.

                  "NASDAQ" means the Nasdaq National Market.

                  "ORIGINAL ISSUE DATE" means the date of the first issuance of
         any Unsecured Debentures, regardless of the number of transfers of any
         particular Unsecured Debenture and regardless of the number of
         certificates which may be issued to evidence such Unsecured Debentures.

                   "PERSON" means an individual or corporation, partnership,
         trust, incorporated or unincorporated association, joint venture,
         limited liability company, joint stock company, government (or an
         agency or subdivision thereof) or other entity of any kind.

                  "PROCEEDING" means an action, claim, suit, investigation or
         proceeding (including, without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened in
         writing concerning the interpretation, enforcement or defense of any
         transaction contemplated by any Transaction Document (whether brought
         against a party hereto or such parties affiliates, directors, officers,
         employees or agents).

                  "PURCHASE AGREEMENT" means the Securities Purchase Agreement,
         dated as of October 31, 2002, to which the Company and the original
         Holders are parties, as amended, modified or supplemented from time to
         time in accordance with its terms.

                                      -7-
<PAGE>
                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
         Agreement, dated as of October 31, 2002, to which the Company and the
         original Holders are parties, as amended, modified or supplemented from
         time to time in accordance with its terms.

                   "REINSTATED PRINCIPAL" means the principal amount of
         Unsecured Debentures converted during the ten Trading Days preceding
         the delivery of an Event of Default Notice, for which the Company
         issued or was obligated to issue Underlying Shares to the Holder.

                  "SECURED DEBENTURES" shall have the meaning set forth in the
         Purchase Agreement.

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

                  "SUBSIDIARY" shall have the meaning set forth in the Purchase
         Agreement.

                  "TRADING DAY" means: (a) a day on which the shares of Common
         Stock are traded on an Eligible Market, or (b) if the shares of Common
         Stock are not listed on an Eligible Market, a day on which the shares
         of Common Stock are traded in the over-the-counter market, as reported
         by the OTC Bulletin Board, or (c) if the shares of Common Stock are not
         quoted on the OTC Bulletin Board, a day on which the shares of Common
         Stock are quoted in the over-the-counter market as reported by the
         National Quotation Bureau Incorporated (or any similar organization or
         agency succeeding its functions of reporting prices); provided, that in
         the event that the shares of Common Stock are not listed or quoted as
         set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
         Business Day.

                  "TRANSACTION DOCUMENTS" shall have the meaning set forth in
         the Purchase Agreement.

                  "UNDERLYING SHARES" means, collectively, the shares of Common
         Stock issuable upon conversion of Unsecured Debentures in accordance
         with the terms hereof.

                  "UNSECURED CASH AND CASH EQUIVALENTS" refers to cash and
         cash-equivalent balances that is not pledged to collateralize the
         Letter of Credit (as defined in the Purchase Agreement), if any, or
         otherwise available for use by the Company in its operations, excluding
         the deferred royalty income described in Schedule 3.1(x) to the
         Purchase Agreement.

                  "UNSECURED INDEBTEDNESS" means any indebtedness of the
         Company, excluding any Secured Debentures, any other similar
         outstanding secured debentures of the Company issued to Ballard Power
         Systems, Inc. and any outstanding deferred royalty income described in
         Schedule 3.1(x) to the Purchase Agreement.

                   "VWAP" means on any particular Trading Day or for any
         particular period, the volume weighted average trading price per share
         of Common Stock on such date or for such period on an Eligible Market
         as reported by Bloomberg L.P., or any successor performing similar
         functions.

                                      -8-
<PAGE>
                  "WARRANTS" shall have the meaning set forth in the Purchase
         Agreement.

                  2.       Interest.

                           (a) The Company shall pay interest to the Holder on
the aggregate unconverted and then outstanding principal amount of this
Unsecured Debenture (including any interest added to such principal in
accordance with this Section 2) at an annual rate equal to the Interest Rate,
payable quarterly in arrears on each Interest Payment Date. Interest shall be
calculated on the basis of a 360-day year and shall accrue daily commencing on
the Original Issue Date. Subject to the conditions and limitations set forth
below, the Company will pay interest under this Unsecured Debenture either (i)
in cash, or (ii) by delivering by the third Trading Day following the Interest
Payment Date, a number of freely tradable shares of Common Stock equal to the
quotient obtained by dividing the amount of such interest by the arithmetic
average of the VWAP for the five Trading Days immediately preceding (but not
including) the Interest Payment Date. To pay the interest payable on an Interest
Payment Date in freely tradable shares of Common Stock, the Company must deliver
written notice to the Holder indicating its election to make such stock payment
at least 20 calendar days prior to such Interest Payment Date, but the Company
may indicate in any such notice that the election contained therein shall
continue for subsequent Interest Payment Dates until revised on not less than 20
calendar days notice prior to an Interest Payment Date. Failure to timely
provide such written notice shall be deemed an election by the Company to pay
such interest in cash. All interest payable on any Interest Payment Date must be
paid in the same manner.

                           (b) Notwithstanding the foregoing, the Company may
not pay interest in shares of Common Stock unless, on the Interest Payment Date,
the Equity Conditions are satisfied with respect to all of the Underlying Shares
then issuable upon conversion in full of all outstanding Unsecured Debentures.
If the Company is required but fails to pay interest in cash on any Interest
Payment Date, the Holder may (but shall not be required to), by notice to the
Company, treat such interest as if it had been accreted to the principal amount
of this Unsecured Debenture as of such Interest Payment Date.

                  3. Registration of Unsecured Debentures. The Company shall
register the Unsecured Debentures upon records to be maintained by the Company
for that purpose (the "UNSECURED DEBENTURE REGISTER") in the name of each record
holder thereof from time to time. The Company may deem and treat the registered
Holder as the absolute owner hereof for the purpose of any conversion hereof or
any payment of interest hereon, and for all other purposes, absent actual notice
to the contrary.

                  4. Registration of Transfers and Exchanges. The Company shall
register the transfer of any portion of this Unsecured Debenture in the
Unsecured Debenture Register upon surrender of this Unsecured Debenture to the
Company at its address for notice set forth herein. Upon any such registration
or transfer, a new debenture, in substantially the form of this Unsecured
Debenture (any such new debenture, a "NEW UNSECURED DEBENTURE"), evidencing the
portion of this Unsecured Debenture so transferred shall be issued to the
transferee and a New Unsecured Debenture evidencing the remaining portion of
this Unsecured Debenture not so transferred, if any, shall be issued to the
transferring Holder. The acceptance of the New

                                      -9-
<PAGE>
Unsecured Debenture by the transferee thereof shall be deemed the acceptance by
such transferee of all of the rights and obligations of a holder of a Unsecured
Debenture. This Unsecured Debenture is exchangeable for an equal aggregate
principal amount of Unsecured Debentures of different authorized denominations,
as requested by the Holder surrendering the same. No service charge or other fee
will be imposed in connection with any such registration of transfer or
exchange. Transfers of this Unsecured Debenture and the Underlying Shares
issuable on conversion thereof hereby are governed by Section 4.1 of the
Purchase Agreement.

                  5.       Conversion

                           (a) At the option of the Holder. The principal amount
of this Unsecured Debenture then outstanding is convertible into shares of
Common Stock at the Conversion Price (subject to limitations set forth in
Section 5(d)), at the option of the Holder, at any time and from time to time
from and after the Original Issue Date. Holders shall effect conversions under
this Section 5(a), by delivering to the Company a Holder Conversion Notice
together with a schedule in the form of Schedule 1 attached hereto (the
"CONVERSION SCHEDULE"). The number of Underlying Shares issuable upon any
conversion hereunder shall (subject to limitations set forth in Section 5(d))
equal the outstanding principal amount of this Unsecured Debenture to be
converted divided by the Initial Conversion Price. If the Holder is converting
less than all of the principal amount represented by this Unsecured Debenture,
or if a conversion hereunder may not be effected in full due to the application
of Section 5(d)(i), the Company shall honor such conversion to the extent
permissible hereunder and shall promptly deliver to the Holder a Conversion
Schedule indicating the principal amount which has not been converted.

                           (b) At the option of the Company. Subject to the
conditions set forth in this Section 5(b) and Section 5(d), at any time after
the first year anniversary of the Original Issue Date, the Company may require a
conversion of principal amount of this Unsecured Debenture, at the Conversion
Price and on the Company Conversion Date, of all or a portion of the outstanding
principal amount of this Unsecured Debenture if: (i) both: (A) the average of
the Closing Prices during any 30 consecutive Trading Days is equal to or greater
than $5.10 (subject to equitable adjustments for stock splits, recapitalizations
and similar events) and (B) the Closing Price for each of 15 Trading Days (which
need not be consecutive) during such 30 consecutive Trading Day period is equal
to or greater than $5.10 (subject to equitable adjustments for stock splits,
recapitalizations and similar events) and (ii) all of the Equity Conditions are
satisfied as of the Company Conversion Date with respect to all of the
Underlying Shares potentially issuable in connection with such proposed
conversion. The Company shall exercise its right to require conversions
hereunder by delivering to the Holder a Company Conversion Notice together with
a Conversion Schedule within 10 Business Days of the satisfaction of the
condition set forth in clause (i) of the immediately preceding sentence.
Notwithstanding anything herein to the contrary, if any of the conditions set
forth in clauses (i) and (ii) herein shall cease to be in effect during the
period between the date of the delivery of the Company Conversion Notice and the
Company Conversion Date, then the Holder subject to such conversion may elect,
by written notice to the Company given at any time after any such conditions
shall cease to be in effect, to invalidate ab initio such conversion. The number
of Underlying Shares issuable upon any conversion hereunder shall (subject to
limitations set forth in Section 5(d)) equal the outstanding principal amount of
this Unsecured Debenture to be converted (including any interest payments

                                      -10-
<PAGE>
accreted to principal pursuant to the terms hereof) divided by the Conversion
Price. The conversion subject to each Company Conversion Notice, once given,
shall be irrevocable as to the Company. If the conversion of a principal amount
of Unsecured Debentures indicated in a Company Conversion Notice would result in
the issuance to the Holder of Underlying Shares in excess of the amount
permitted pursuant to Section 5(d)(i), the Holder shall notify the Company of
this fact and the Company shall: (x) honor the conversion for the maximum
principal amount of Unsecured Debentures permitted, pursuant to Section 5(d)(i),
to be converted on such Company Conversion Date and (y) cancel the Company
Conversion Notice with respect to the portion of the principal amount of
Unsecured Debentures the conversion of which would violate Section 5(d)(i).
Notwithstanding anything herein to the contrary, the Company shall not be
entitled to deliver a Company Conversion Notice prior to the 10th Business Day
following the delivery of a company conversion notice pursuant to any Debenture.

                           (c) Company's option to adjust Conversion Price and
force conversion. At any time and from time to time after the date the First
Registration Statement has been declared effective by the Commission, the
Company shall have the option, upon the delivery of an Adjustment Notice to the
Holder, to adjust the Conversion Price then in effect with respect to the
Mandatory Convertible Amount applicable to such Adjustment Notice to equal the
lesser of: (A) the Initial Conversion Price and (B) the product of (x) the
applicable Adjustment Percentage and (y) the Index Price. Subject to the terms
hereof (including, without limitation, Section 5(d)(i)), on each Adjustment Date
immediately following the delivery of an Adjustment Notice, the applicable
Mandatory Convertible Amount shall be converted into Underlying Shares at the
Conversion Price as adjusted on such Adjustment Date pursuant to the terms of
the immediately preceding sentence, provided, that such conversion shall only
occur if all of the Equity Conditions are satisfied as of the Adjustment Date
with respect to all of the Underlying Shares potentially issuable in connection
with such proposed conversion. Notwithstanding anything herein to the contrary,
the Company shall not be entitled to deliver an Adjustment Notice prior to the
tenth (10th) Trading Day immediately following the immediately preceding
Delivery Date hereunder or a delivery date under any Debenture. If a conversion
of the Mandatory Convertible Amount would result in the issuance to the Holder
of Underlying Shares in excess of the amount permitted pursuant to Section
5(d)(i), the Holder shall notify the Company of this fact and the Company shall:
(x) honor the conversion for the maximum principal amount of Unsecured
Debentures permitted, pursuant to Section 5(d)(i), to be converted on the
applicable Adjustment Date and (y) cancel the portion of the Mandatory
Convertible Amount the conversion of which would violate Section 5(d)(i).

                           (d) Certain Conversion Restrictions.

                                    (i) Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by a
Holder upon any conversion of Unsecured Debentures (or otherwise in respect
hereof) shall be limited to the extent necessary to insure that, following such
conversion (or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with such Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such conversion). For such
purposes, beneficial ownership shall be

                                      -11-
<PAGE>
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. Each delivery of a Holder Conversion
Notice hereunder will constitute a representation by the applicable Holder that
it has evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Underlying Shares issuable in respect of such
Conversion Notice does not violate the restriction contained in this paragraph.
This provision shall not restrict the number of shares of Common Stock which a
Holder may receive or beneficially own in order to determine the amount of
securities or other consideration that such Holder may receive in the event of a
merger, sale or other business combination or reclassification involving the
Company as contemplated herein.

                                    (ii) If the Company has not previously
obtained Shareholder Approval (as defined below), then the Company may not issue
in excess of the Issuable Maximum upon conversions of the Unsecured Debentures.
The "ISSUABLE MAXIMUM" means a number of shares equal to 2,973,847, less: any
number of shares of Common Stock previously issued upon conversion of any
Debenture and exercise of any Warrants. Each Holder shall be entitled to a
portion of the Issuable Maximum equal to the quotient obtained by dividing: (x)
the principal amount of Unsecured Debentures issued and sold to such Holder on
the Original Issue Date by (y) the aggregate principal amount of Unsecured
Debentures issued and sold by the Company on the Original Issue Date. If any
Holder shall no longer hold Unsecured Debentures, then such Holder's remaining
portion of the Issuable Maximum shall be allocated pro-rata among the remaining
Holders. If on any Conversion Date: (A) the aggregate number of shares of Common
Stock that would then be issuable upon conversion in full of all then
outstanding principal amount of Unsecured Debentures would exceed the Issuable
Maximum, and (B) the Company shall not have previously obtained the vote of
shareholders, as may be required by the applicable rules and regulations of the
Nasdaq (or any successor entity) applicable to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms hereof (the
"SHAREHOLDER APPROVAL"), then, the Company shall issue to the converting Holder
a number of shares of Common Stock equal to such Holder's pro-rata portion
(which shall be calculated pursuant to the terms hereof) of the Issuable Maximum
and, with respect to the remainder of the principal amount of Unsecured
Debentures then held by such Holder for which a conversion would result in an
issuance of shares of Common Stock in excess of such Holder's pro-rata portion
(which shall be calculated pursuant to the terms hereof) of the Issuable Maximum
(the "EXCESS PRINCIPAL AMOUNT"), the applicable Holder shall have the right to
require the Company to either: (1) obtain the Shareholder Approval applicable to
such issuance as soon as is possible, but in any event not later than the 90th
day after such request, or (2) pay cash, in an amount equal to the Excess
Principal Amount (and accrued and unpaid interest thereon). If a Holder shall
have elected the first option pursuant to the immediately preceding sentence and
the Company shall have failed to obtain the Shareholder Approval on or prior to
the 90th day after such request, then within three (3) days of such 90th day,
the Company shall pay cash to such Holder an amount equal to Excess Principal
Amount (and accrued and unpaid interest thereon). Notwithstanding anything
herein to the contrary, if on any date other than a Conversion Date: (A) the
aggregate number of shares of Common Stock that would then be issuable upon
conversion in full of all then outstanding principal amount of Unsecured
Debentures would exceed the Issuable Maximum, and (B) the Company shall not have
previously obtained the Shareholder Approval, then, the Holder shall be entitled
to require the Company to pay to it in cash an amount equal to the principal
amount of Unsecured Debentures (and accrued and unpaid interest thereon) then
held by such Holder for which a potential

                                      -12-
<PAGE>
conversion on such date would result in an issuance of shares of Common Stock in
excess of such Holder's pro-rata portion (which shall be calculated pursuant to
the terms hereof) of the Issuable Maximum. The outstanding principal amount of
Unsecured Debentures shall be reduced by the Excess Principal Amount upon the
Holder's receipt of the Excess Principal Amount pursuant to the terms hereof.
The Company and the Holder understand and agree that shares of Common Stock
issued to and then held by the Holder as a result of conversions of Unsecured
Debentures shall not be entitled to cast votes on any resolution to obtain
Shareholder Approval pursuant hereto.

                           (e) Mechanics of Conversion. By the third Trading Day
after each Conversion Date, the Company shall issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate a certificate for the Underlying
Shares issuable upon such conversion which, unless required by the Purchase
Agreement, shall be free of all restrictive legends. The Holder, or any Person
so designated by the Holder to receive Underlying Shares, shall be deemed to
have become the holder of record of such Underlying Shares as of the Conversion
Date. If the Company's transfer agent is eligible to participate in the
Depositary Trust Corporation DWAC system and no legends are required to be
included on the certificates representing Underlying Shares pursuant to the
Purchase Agreement, the Company shall, upon request of the Holder, use its best
efforts to deliver Underlying Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions.

                           (f) To effect conversions hereunder, the Holder shall
not be required to physically surrender this Unsecured Debenture unless the
aggregate principal amount represented by such Unsecured Debenture is being
converted, in which event, the Holder shall deliver such Unsecured Debenture
promptly to the Company (it being understood that such delivery is not a
condition precedent to the Company's obligations to deliver Underlying Shares
upon such conversion). Conversions hereunder shall have the effect of lowering
the outstanding principal amount represented by such Unsecured Debenture in an
amount equal to the applicable conversion, which shall be evidenced by entries
set forth in the Conversion Schedule which will be maintained by the Company and
the Holder and be binding on both parties absent manifest error.

                           (g) The Company's obligations to issue and deliver
Underlying Shares upon conversion of this Unsecured Debenture in accordance with
the terms hereof (including, without limitations, Section 5(d)) are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of such Underlying Shares.

                           (h) If by the third Trading Day after a Conversion
Date the Company fails to deliver to the Holder such Underlying Shares in such
amounts and in the manner required pursuant to Section 5(e), then the Holder
will have the right to rescind such conversion.

                                      -13-
<PAGE>
                           (i) If by the third Trading Day after a Conversion
Date the Company fails to deliver to the Holder such Underlying Shares in such
amounts and in the manner required pursuant to Section 5(e), and if after such
third Trading Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
Holder of the Underlying Shares which the Holder anticipated receiving upon such
conversion (a "BUY-IN"), then the Company shall (A) pay in cash to the Holder
(in addition to any remedies available to or elected by the Holder) the amount
by which (x) the Holder's total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (1) the aggregate number of Underlying Shares that the
Company was required to deliver to the Holder in connection with the conversion
at issue by (2) the Closing Price at the time of the obligation giving rise to
such purchase obligation and (B) at the option of the Holder, either reinstate
the principal amount of Unsecured Debentures and equivalent number of Underlying
Shares for which such conversion was not timely honored or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its conversion and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of Unsecured
Debentures with a market price on the date of conversion totaling $10,000, under
clause (A) of the immediately preceding sentence, the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.

                           (j) Adjustments to Conversion Price. The Conversion
Price in effect on any Conversion Date shall be subject to adjustments in
accordance with this Section 5(j):

                                    (i) Stock Dividends and Splits. If the
Company, at any time while any Unsecured Debentures are outstanding, (i) pays a
stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii)
subdivides outstanding shares of Common Stock into a larger number of shares, or
(iii) combines outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

                                    (ii) Additional Distributions. If the
Company, at any time while any Unsecured Debentures are outstanding, shall
distribute to all holders of Common Stock (and not to Holders) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security, then in each such case the Conversion Price at which the principal
amount of Unsecured Debentures shall thereafter be convertible shall be
determined by multiplying the Conversion Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Closing Price
determined as of the record date mentioned above, and of

                                      -14-
<PAGE>
which the numerator shall be such Closing Price on such record date less the
then fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of
Common Stock as determined by the Board of Directors in good faith. In either
case the adjustments shall be described in a statement provided to the Holders
of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

                                    (iii) Subsequent Equity Sales. If the
Company or any subsidiary thereof, as applicable, at any time while this
Unsecured Debenture is outstanding, shall issue shares of Common Stock or Common
Stock Equivalents entitling any Person to acquire shares of Common Stock, at a
price per share less than the Conversion Price (if the holder of the Common
Stock or Common Stock Equivalent so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price less than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion Price), then, at the option of the
Holder for such conversions as it shall indicate, the Conversion Price shall be
adjusted to mirror the conversion, exchange or purchase price for such Common
Stock or Common Stock Equivalents (including any reset provisions thereof) at
issue. Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. The Company shall notify the Holder in writing, no later
than the Trading Day following the issuance of any Common Stock or Common Stock
Equivalent subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms. No further adjustments shall be made to the Conversion Price upon
the actual issuance of Common Stock upon conversion or exercise of the
applicable Common Stock Equivalent. Notwithstanding the foregoing, no adjustment
will be made under this Section 5(j)(iii) in respect of:

                                            (A) Any grant of an option or
warrant for Common Stock or issuance of any shares of Common Stock upon the
exercise of any options or warrants to employees, officers and directors of or
consultants to the Company pursuant to any stock option plan, employee stock
purchase plan or similar plan or incentive or consulting arrangement approved by
the Company's board of directors;

                                            (B) Any rights or agreements to
purchase Common Stock Equivalents outstanding on the date hereof and as
specified in Schedule 3.1(g) to the Purchase Agreement (but not as to any
amendments or other modifications to the number of Common Stock issuable
thereunder, the terms set forth therein, or the exercise price set forth
therein);

                                            (C) Any Common Stock or Common Stock
Equivalents issued for consideration other than cash pursuant to a merger,
consolidation, acquisition or other similar business combination;

                                            (D) Any issuances of Common Stock or
Common Stock

                                      -15-
<PAGE>
Equivalents to a Person which is or will be, itself or through its subsidiaries,
an operating company in a business related to or complementary with the business
of the Company and in which the Company receives reasonably material benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities;

                                            (E) Any Common Stock Equivalents
that entitle the holders thereof to acquire up to 500,000 shares of Common Stock
issued pursuant to any equipment leasing arrangement;

                                            (F) Any Common Stock or Common Stock
Equivalents issued to pay all or a portion of any investment banking, finders or
similar fee or commission, which entitles the holders thereof to acquire shares
of Common Stock at a price not less than the market price of the Common Stock on
the date of such issuance and which is not subject to any adjustments other than
on account of stock splits and reverse stock splits;

                                            (G) A bona fide underwritten public
offering of the Common Stock resulting in gross proceeds in excess of $15
million to the Company (it being understood that equity line transactions,
including any on going warrant financing, or any similar arrangements shall not
constitute a bona fide underwritten public offering of the Common Stock for the
purposes hereof);

                                            (H) Any adjustment to the Conversion
Price pursuant to Section 5(c); or

                                            (I) The issuance of any Debentures
or Warrants pursuant to the Purchase Agreement or the issuance of any shares of
Common Stock upon conversion and exercise, respectively, of Debentures and
Warrants or upon exercise of warrants issued by the Company on June 19, 2002 to
Pine Ridge Financial, Inc. and ZLP Master Technology Fund, Ltd.

                                    (iv) Calculations. All calculations under
this Section 5(j) shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.

                                    (v) Notice of Adjustments. Whenever the
Conversion Price is adjusted pursuant to the terms hereof the Company shall
promptly mail to each Holder, a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.

                           (k) Fundamental Transactions. If, at any time while
this Unsecured Debenture is outstanding: (i) the Company effects any merger or
consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the

                                      -16-
<PAGE>
Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon conversion of the outstanding principal amount of this Unsecured
Debenture, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Underlying Shares then issuable upon conversion in
full of the outstanding principal amount of this Unsecured Debenture (the
"ALTERNATE CONSIDERATION"). For purposes of any such exercise, the determination
of the Conversion Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of the outstanding principal
amount of this Unsecured Debenture following such Fundamental Transaction. At
the Holder's option and request, any successor to the Company or surviving
entity in such Fundamental Transaction shall, either (i) issue to the Holder a
new debenture substantially in the form of this Unsecured Debenture and
consistent with the foregoing provisions (omitting Section 5(j)(iii) hereof) and
evidencing the Holder's right to purchase the Alternate Consideration at the
Conversion Price upon conversion thereof, or (ii) purchase the Unsecured
Debenture from the Holder for a purchase price, payable in cash within five
Trading Days after such request (or, if later, on the effective date of the
Fundamental Transaction), equal to the Black Scholes value of the remaining
unconverted portion of the outstanding principal amount of this Unsecured
Debenture (together with any accrued but unpaid interest thereon) on the date of
the Fundamental Transaction as well as assumptions reasonably mutually
acceptable to the Company and the Holder, provided that for purposes of such
calculation, the market price of the Common Stock shall be the closing bid price
of the Common Stock on the Trading Day immediately preceding the public
announcement of the Fundamental Transaction and the volatility factor shall be
determined by reference to the 12 month average industry volatility measures.
The terms of any agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (k) and insuring that the Unsecured
Debenture (or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction.

                           (l) Reclassifications; Share Exchanges. In case of
any reclassification of the Common Stock, or any compulsory share exchange
pursuant to which the Common Stock is converted into other securities, cash or
property (other than compulsory share exchanges which constitute Change of
Control Transactions), the Holders of the Unsecured Debentures then outstanding
shall have the right thereafter to convert such shares only into the shares of
stock and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such reclassification or share
exchange, and the Holders shall be entitled upon such event to receive such
amount of securities, cash or property as a holder of the number of shares of
Common Stock of the Company into which such shares of Unsecured Debentures could
have been converted immediately prior to such reclassification or share exchange
would have

                                      -17-
<PAGE>
been entitled. This provision shall similarly apply to successive
reclassifications or share exchanges.

                           (m) Notice of Corporate Events. If (a) the Company
shall declare a dividend (or any other distribution) on the Common Stock, (b)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (c) the Company shall authorize the granting to
all holders of Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (d) the approval of any
stockholders of the Company shall be required in connection with any Change of
Control transaction or Fundamental Transaction, (e) the entering into an
agreement to effectuate a Change of Control transaction or Fundamental
Transaction, or (f) the Company shall authorize the Liquidation of the Company;
then the Company shall file a press release or Current Report on Form 8-K to
disclose such occurrence and notify the Holders at their last addresses as they
shall appear upon the stock books of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which any such Change of Control transaction or
Fundamental Transaction is expected to become effective or close, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities, cash or other property
deliverable upon any such Change of Control Transaction or Fundamental
Transaction. Holders are entitled to convert principal amount of this Unsecured
Debenture during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.

                           (n) The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance upon conversion of Unsecured
Debentures, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holders, not less
than such number of shares of Common Stock as shall be issuable upon the
conversion of all outstanding principal amount of Unsecured Debentures. The
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized and issued and fully paid and
nonassessable.

                           (o) Upon a conversion hereunder the Company shall not
be required to issue stock certificates representing fractions of shares of
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Closing Price on the applicable
Conversion Date. If any fraction of an Underlying Share would, except for the
provisions of this Section 5(o), be issuable upon a conversion hereunder, the
Company shall pay an amount in cash equal to the Conversion Price multiplied by
such fraction.

                           (p) The issuance of certificates for Common Stock on
conversion of principal amount of this Unsecured Debenture shall be made without
charge to the Holders thereof for any documentary stamp or similar taxes that
may be payable in respect of the issue or delivery of such certificate, provided
that the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such

                                      -18-
<PAGE>
certificate upon conversion in a name other than that of the Holder of such
Unsecured Debentures so converted.

                           (q) Any and all notices or other communications or
deliveries to be provided by the Holders, including, without limitation, any
Conversion Notice, shall be in writing and delivered personally, by facsimile or
sent by a nationally recognized overnight courier service, addressed to the
attention of the Chief Financial Officer of the Company addressed to 1
Industrial Way West, Eatontown, New Jersey, Facsimile No.: (732) 542-4010, or to
such other address or facsimile number as shall be specified in writing by the
Company for such purpose. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile or sent by a nationally recognized overnight
courier service, addressed to each Holder at the facsimile telephone number or
address of such Holder appearing on the books of the Company, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section 5(q) prior to 6:30 p.m.
(New York City time)(with confirmation of transmission), (ii) the date after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Section 5(q) later than 6:30
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date (with confirmation of transmission), (iii) upon receipt, if
sent by a nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.

                  6. Prepayments Upon Events of Default. Upon the occurrence of
an Event of Default, each Holder shall (in addition to all other rights it may
have hereunder or under applicable law), have the right exercisable at the sole
option of such Holder, and by delivery of a written notice to the Company to
require the Company (an "EVENT OF DEFAULT NOTICE"), to prepay all or a portion
of the Unsecured Debentures then held by such Holder and, at the option of the
Holder, all or a portion of the Reinstated Principal, for an amount, in cash,
equal to the Mandatory Prepayment Amount. The Mandatory Prepayment Amount shall
be due and payable within five Trading Days of the date of the Event of Default
Notice. For purposes of this Section 6 principal amount of Unsecured Debentures
shall remain outstanding until such date as the Holder shall have received
Underlying Shares upon a conversion (or attempted conversion) thereof that meets
the requirements hereof. Notwithstanding anything herein to the contrary, upon
the occurrence of a Bankruptcy Event, all outstanding principal and accrued but
unpaid interest on this Unsecured Debenture shall immediately become due and
payable in full in cash, without any further action by the Holder, and the
Company shall immediately be obligated to pay the Mandatory Prepayment Amount
pursuant to this paragraph as if the Holder had delivered a Event of Default
Notice immediately prior to the occurrence of any such Event of Default. The
Holder need not provide and the Company hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Holder at any time prior to payment
hereunder. No such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.

                                      -19-
<PAGE>
                  7.       Prepayment at the Option of the Company.

                           (a) At any time following the Original Issue Date and
prior to the Maturity Date, upon delivery of a written notice to the Holder (a
"COMPANY PREPAYMENT NOTICE" and the date such notice is delivered by the
Company, the "COMPANY NOTICE DATE"), the Company shall be entitled to prepay a
principal amount of Unsecured Debentures equal to the lesser of (x) the
aggregate outstanding principal amount of Unsecured Debentures then held by the
Holder and (y) the principal amount of Unsecured Debentures which may be
converted without violation of Section 5(d)(i), in either case, for an amount in
cash equal to the Company Prepayment Price. Notwithstanding anything herein to
the contrary, the Company shall only be entitled to deliver a Company Prepayment
Notice pursuant to the terms hereof if the Equity Conditions are satisfied with
respect to all shares of Common Stock issuable upon a Company Notice Date. If
any of Equity Conditions shall cease to be in effect during the period between
the Company Notice Date and the date the Company Prepayment Price is paid in
full, then the Holder subject to such prepayment may elect, by written notice to
the Company given at any time after any of the Equity Conditions shall cease to
be in effect, to invalidate ab initio such optional prepayment, notwithstanding
anything herein contained to the contrary. The Holder may convert any portion of
the outstanding principal amount of the Unsecured Debentures subject to a
Company Prepayment Notice prior to the date that the Company Prepayment Price is
due and paid in full. Once delivered, the Company shall not be entitled to
rescind a Company Prepayment Notice.

                           (b) The Company Prepayment Price shall be due on the
30th Trading Day immediately following the Company Notice Date. Any such
prepayment shall be free of any claim of subordination. If any portion of the
Company Prepayment Price shall not be timely paid by the Company, interest shall
accrue thereon at the rate of 12% per annum (or the maximum rate permitted by
applicable law, whichever is less) until the Company Prepayment Price plus all
such interest is paid in full, which payment shall constitute liquidated damages
and not a penalty. In addition, if any portion of the Company Prepayment Price
remains unpaid after such date, the Holder subject to such prepayment may elect
by written notice to the Company to invalidate ab initio such Company Prepayment
Notice with respect to the unpaid amount, notwithstanding anything herein
contained to the contrary. If the Holder makes such an election, this Unsecured
Debenture shall be reinstated with respect to such unpaid amount and the Company
shall no longer have any prepayment rights under this Section 7.

                  8. Ranking. This Unsecured Debenture ranks pari passu with all
other Unsecured Debentures now or hereafter issued pursuant to the Transaction
Documents. Except as set forth in Schedule 3.1(x) to the Purchase Agreement, no
indebtedness of the Company is senior to this Unsecured Debenture in right of
payment, whether with respect of interest, damages or upon liquidation or
dissolution or otherwise. Other than in connection with the Company's
reimbursement obligation to Wachovia Bank, National Association pursuant to the
Letter of Credit to be issued in connection with the issuance of the Secured
Debentures and except as set forth in Schedule 3.1(x) to the Purchase Agreement,
the Company will not, and will not permit any Subsidiary to, directly or
indirectly, enter into, create, incur, assume or suffer to exist indebtedness of
any kind, on or with respect to any of its property or assets now owned or

                                      -20-
<PAGE>
hereafter acquired or any interest therein or any income or profits therefrom,
that is senior in any respect to the Company's obligations under the Unsecured
Debentures.

                  9.       Miscellaneous.

                           (a) This Unsecured Debenture shall be binding on and
inure to the benefit of the parties hereto and their respective successors and
assigns. This Unsecured Debenture may be amended only in writing signed by the
Company and the Holder and their successors and assigns.

                           (b) Subject to Section 9(a), above, nothing in this
Unsecured Debenture shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause under this
Unsecured Debenture. This Unsecured Debenture shall inure to the sole and
exclusive benefit of the Company and the Holder.

                           (c) All questions concerning the construction,
validity, enforcement and interpretation of this Unsecured Debenture shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings shall be commenced exclusively
in the state and federal courts sitting in the City of New York, Borough of
Manhattan (the "NEW YORK COURTS"). Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the New York Courts for any proceeding, and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim
that it is not personally subject to the jurisdiction of any New York Court or
that a New York Court is an inconvenient forum for such Proceeding. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Unsecured
Debenture and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal Proceeding. If
either party shall commence a Proceeding, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorney's fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.

                           (d) The headings herein are for convenience only, do
not constitute a part of this Unsecured Debenture and shall not be deemed to
limit or affect any of the provisions hereof.

                           (e) In case any one or more of the provisions of this
Unsecured Debenture shall be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this
Unsecured Debenture shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Unsecured
Debenture.

                                      -21-
<PAGE>
                           (f) No provision of this Unsecured Debenture may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Holder or, or, in the case of a waiver, by the
Holder. No waiver of any default with respect to any provision, condition or
requirement of this Unsecured Debenture shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.

                           (g) If it shall be found that any interest due
hereunder shall violate applicable laws governing usury, the applicable rate of
interest due hereunder shall be reduced to the maximum permitted rate of
interest under such law.

                                      -22-
<PAGE>
                           (h) Except pursuant to Sections 5(d)(ii), 6 and 7
hereunder, the outstanding principal amount and interest under this Unsecured
Debenture may not be prepaid by the Company without the prior written consent of
the Holder.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

                                      -23-
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this Unsecured Debenture to
be duly executed by a duly authorized officer as of the date first above
indicated.

                                    MILLENNIUM CELL INC.

                                    By:/S/ Norman R. Harpster Jr.
                                           ----------------------
                                    Name:  Norman R. Harpster Jr.
                                    Title: Chief Financial Officer

                                      -24-
<PAGE>
                                    EXHIBIT A

                            HOLDER CONVERSION NOTICE

(To be Executed by the Registered Holder
in order to convert Unsecured Debentures)

         The undersigned hereby elects to convert the principal amount of
Unsecured Debenture indicated below, into shares of Common Stock of Millennium
Cell Inc., as of the date written below. If shares are to be issued in the name
of a Person other than undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. No fee
will be charged to the Holder for any conversion, except for such transfer
taxes, if any. All terms used in this notice shall have the meanings set forth
in the Unsecured Debenture.

Conversion calculations:
                    ------------------------------------------------
                    Date to Effect Conversion

                    ------------------------------------------------
                    Principal amount of Unsecured Debenture owned prior to
                    conversion

                    ------------------------------------------------
                    Principal amount of Unsecured Debenture to be Converted
                    (including _______________ of interest added under Section
                    2(b) of the Unsecured Debenture)

                    ---------------------------------------------------
                    Principal amount of Unsecured Debenture remaining after
                    Conversion

                    -------------------------------------------------
                    Number of shares of Common Stock to be Issued

                    --------------------------------------------------
                    Applicable Conversion Price

                    --------------------------------------------------
                    Name of Holder

                    By:_______________________________________________
                    Name:
                    Title:

         [ ]      By the delivery of this Conversion Notice the Holder
                  represents and warrants to the Company that its ownership of
                  the Common Stock does not exceed the restrictions set forth in
                  Section 5(d)(i) of the Unsecured Debenture.
<PAGE>
                                    EXHIBIT B

                            COMPANY CONVERSION NOTICE

(To be executed by the Company
in order to convert the Unsecured Debenture)

         The undersigned in the name and on behalf of Millennium Cell Inc.,
hereby elects to convert the principal amount of Unsecured Debenture indicated
below, into shares of Common Stock of Millennium Cell Inc., as of the date
written below. If shares are to be issued in the name of a Person other than
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
Holder for any conversion, except for such transfer taxes, if any. All terms
used in this notice shall have the meanings set forth in the Unsecured
Debenture.

Conversion calculations:
                    ------------------------------------------------
                    Date to Effect Conversion

                    ------------------------------------------------
                    Principal amount of Unsecured Debenture owned prior to
                    conversion

                    ------------------------------------------------
                    Principal amount of Unsecured Debenture to be Converted
                    (including _______________ of interest added under Section
                    2(b) of the Unsecured Debenture)

                    ---------------------------------------------------
                    Principal amount of Unsecured Debenture remaining after
                    Conversion

                    -------------------------------------------------
                    Number of shares of Common Stock to be Issued

                    --------------------------------------------------
                    Applicable Conversion Price

                    --------------------------------------------------
                    Name of Holder

                    By:_______________________________________________
                    Name:
                    Title:

                    MILLENNIUM CELL INC.

                    By:_______________________________________________
                    Name:
                    Title:

                                      -2-
<PAGE>
                                   SCHEDULE 1

                               CONVERSION SCHEDULE

Unsecured Debentures due on June 30, 2003 in the aggregate principal amount of
$3,500,000 issued by Millennium Cell Inc. This Conversion Schedule reflects
conversions made under the above referenced Unsecured Debentures.

                                     Dated:

<TABLE>
<CAPTION>
Date of Conversion               Amount of Conversion     Aggregate Principal     Applicable Conversion Price
                                                            Amount Remaining
                                                             Subsequent to
                                                               Conversion
<S>                              <C>                      <C>                     <C>
</TABLE>

                                      -3-

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