Document:

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                                                                     EXHIBIT 4.1

                   CERTIFICATE OF DESIGNATIONS, PREFERENCES
                  AND RELATIVE, PARTICIPATING, OPTIONAL AND
                        OTHER SPECIAL RIGHTS OF PREFERRED
                      STOCK AND QUALIFICATIONS, LIMITATIONS
                            AND RESTRICTIONS THEREOF

                                       OF

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       OF

                              MILLENNIUM CELL INC.

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

                         Pursuant to Section 151 of the
               General Corporation Law of the State of Delaware

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

         Millennium Cell Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that pursuant to authority conferred upon the board of directors (the
"Board of Directors") by its Certificate of Incorporation, and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Company in one or more series and has adopted the resolution set forth below on
May 9, 2000 (the "Resolution"):

         RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issuance of Series A
Convertible Preferred Stock, par value $0.001 per share, with a liquidation
preference of $2.905 per share, consisting of 1,032,740 shares having the
designation, preferences, relative, participating, optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth in the Certificate of Incorporation and in this Resolution as follows:

      1. Designation. There is hereby created out of the authorized and unissued
shares of Preferred Stock of the Company a series of Preferred Stock designated
as the "Series A Convertible Preferred Stock" (the "Series A Preferred Stock").
The authorized number of shares constituting the Series A Preferred Stock shall
be 1,032,740.

      2.    Dividend Provisions

            (a) Subject to the rights of series of Preferred Stock which may
from time to time come into existence, the holders of shares of Series A
Preferred Stock shall be entitled to
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receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
common stock of the Company ("Common Stock") or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock) on the Common Stock of the
Company, at the rate of $0.232 per share of Series A Preferred Stock per annum
payable semiannually in arrears, except that no dividends shall be payable on
the Series A Preferred Stock from the period starting on the date on which the
Series A Preferred Stock was first issued and ending on the first anniversary
thereof. Such dividends will accumulate to the extent they are not paid for the
six month period to which they relate.

            (b) In the event the Company shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by the Company or
other persons, assets (excluding cash dividends) or options or rights to
purchase any such securities or evidences of indebtedness, then, in each case
the holders of the Series A Preferred Stock shall be entitled to a proportionate
share of any such distribution as though the holders of the Series A Preferred
Stock were the holders of the number of shares of Common Stock of the Company
into which their respective shares of Series A Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
of the Company entitled to receive such distribution.

3.    Liquidation Preference

            (a) In the event of any liquidation, dissolution or winding up of
the Company, either voluntary or involuntary, subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders of
Series A Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of the Company to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (i) $2.905 for each outstanding share of Series A Preferred Stock (the
"Original Series A Issue Price") and (ii) an amount equal to declared but unpaid
dividends on such share. If upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series A Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the entire assets and funds of
the Company legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock in proportion to the amount of
such stock owned by each such holder.

            (b) After the distributions described in subsection (a) above have
been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence, the remaining assets of the Company available
for distribution to stockholders shall be distributed among the holders of
Common Stock pro rata based on the number of shares of Common Stock held by
each.

            (c) A consolidation or merger reorganization of the Company with or
into any other corporation or corporations, or the effectuation by the Company
of a transaction or series

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of related transactions in which more than 75% of the voting power of the
Company is disposed of, or a sale, conveyance or disposition of all or
substantially all of the assets of the Company shall be deemed to be a
liquidation within the meaning of this Section 3.

         4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

            (a)   Right to Convert.

                  i) Subject to subsection 4(c), each share of Series A
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the Company
or any transfer agent for the Series A Preferred Stock, into such number of
fully paid and non-assessable shares of Common Stock as is determined by
dividing the Original Series A Issue Price by the Conversion Price at the time
in effect for such share. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price; provided,
however, that the Conversion Price for the Series A Preferred Stock shall be
subject to adjustment as set forth in subsection 4(c).

                  ii) Each share of Series A Preferred Stock shall automatically
be converted into shares of Common Stock at the Conversion Price at the time in
effect for such Series A Preferred Stock immediately upon the consummation of
the Company's sale of its Common Stock in a bona fide, firm commitment
underwriting pursuant to a registration statement under the Securities Act of
1933, as amended.

            (b) Mechanics of Conversion. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Company or of any transfer agent for the Series A Preferred Stock,
and shall give written notice by mail, postage prepaid, to the Company at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Company shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series A Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, the conversion may, at the option of any holder tendering Series A
Preferred Stock for conversion, be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the Series A Preferred Stock shall not be deemed to have converted such
Series A Preferred Stock until immediately prior to the closing of such sale of
securities.

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<PAGE>   4
            (c) Conversion Price Adjustments of Preferred Stock. The Conversion
Price of the Series A Preferred Stock shall be subject to adjustment from time
to time as follows:

                  i)    A. Upon each issuance by the Company of any Additional
Stock (as defined below), after the date upon which any shares of the Series A
Preferred Stock were first issued (the "Purchase Date" with respect to such
series), without consideration or for a consideration per share less than the
Conversion Price for such series in effect immediately prior to the issuance of
such Additional Stock, the Conversion Price for such series in effect
immediately prior to each such issuance shall forthwith (except as otherwise
provided in this clause (i)) be adjusted to a price determined by multiplying
such Conversion Price by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issuance
(including, without limitation, the number of shares of Common Stock issuable
upon the conversion of all outstanding Preferred Stock and all other convertible
securities and the exercise of all outstanding options, warrants or other rights
to purchase Common Stock or other securities convertible into Common Stock) plus
the number of shares of Common Stock which the aggregate consideration received
by the Company for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance (including, without limitation,
the number of shares of Common Stock issuable upon the conversion of all
outstanding Preferred Stock and all other convertible securities and the
exercise of all outstanding options, warrants or other rights to purchase Common
Stock or other securities convertible into Common Stock) plus the number of
shares of such Additional Stock.

                        B.    No adjustment of the Conversion Price for the
Series A Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to 2 years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of 2 years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in subsections
4(c)(i)(E)(3) and 4(c)(i)(E)(4), no adjustment of such Conversion Price pursuant
to this subsection 4(c)(i) shall have the effect of increasing the Conversion
Price above the Conversion Price in effect immediately prior to such adjustment.

                        C.    In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses
allowed, paid or incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof.

                        D.    In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.

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                        E.    In the case of the issuance (whether before, on
or after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 4(c)(i) and subsection 4(c)(ii):

                              1. The aggregate maximum number of shares of
            Common Stock deliverable upon exercise (assuming the satisfaction of
            any conditions to exercisability including without limitation, the
            passage of time, but without taking into account potential
            antidilution adjustments) of such options to purchase or rights to
            subscribe for Common Stock shall be deemed to have been issued at
            the time such options or rights were issued and for a consideration
            equal to the consideration (determined in the manner provided in
            subsections 4(c)(i)(C) and 4(c)(i)(D)), if any, received by the
            Company upon the issuance of such options or rights plus the
            exercise price provided in such options or rights (without taking
            into account potential antidilution adjustments) for the Common
            Stock covered thereby.

                              2. The aggregate maximum number of shares of
            Common Stock deliverable upon conversion of or in exchange (assuming
            the satisfaction of any conditions to convertibility or
            exchangeability including without limitation, the passage of time,
            but without taking into account potential antidilution adjustments)
            for any such convertible or exchangeable securities or upon the
            exercise of options to purchase or rights to subscribe for such
            convertible or exchangeable securities and subsequent conversion or
            exchange thereof shall be deemed to have been issued at the time
            such securities were issued or such options or rights were issued
            and for a consideration equal to the consideration, if any, received
            by the Company for any such securities and related options or rights
            (excluding any cash received on account of accrued interest or
            accrued dividends), plus the additional consideration, if any, to be
            received by the Company (without taking into account potential
            antidilution adjustments) upon the conversion or exchange of such
            securities or the exercise of any related options or rights (the
            consideration in each case to be determined in the manner provided
            in subsections 4(c)(i)(C) and 4(c)(i)(D)).

                              3. In the event of any change in the number of
            shares of Common Stock deliverable or in the consideration payable
            to the Company upon exercise of such options or rights or upon
            conversion of or in exchange for such convertible or exchangeable
            securities, including, but not limited to, a change resulting from
            the antidilution provisions thereof, the Conversion Price of the
            Series A Preferred Stock to the extent in any way affected by or
            computed using such options, rights or securities, shall be
            recomputed to reflect such change, but no further adjustment shall
            be made for the actual issuance of Common Stock or any payment of
            such consideration upon the exercise of any

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            such options or rights or the conversion or exchange of such
            securities.

                              4. Upon the expiration of any such options or
            rights, the termination of any such rights to convert or exchange or
            the expiration of any options or rights related to such convertible
            or exchangeable securities, the Conversion Price of the Series A
            Preferred Stock, to the extent in any way affected by or computed
            using such options, rights or securities or options or rights
            related to such securities, shall be recomputed to reflect the
            issuance of only the number of shares of Common Stock (and
            convertible or exchangeable securities which remain in affect)
            actually issued upon the exercise of such options or rights, upon
            the conversion or exchange of such securities or upon the exercise
            of the options or rights related to such securities.

                              5. The number of shares of Common Stock deemed
            issued and the consideration deemed paid therefor pursuant to
            subsections 4(c)(i)(E)(1) and (2) shall be appropriately adjusted to
            reflect any change, termination or expiration of the type described
            in either subsection 4(c)(i)(E)(3) or (4).

                  ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 4(c)(i)(E)) by the
Company after the Purchase Date other than:

                        A.    Common Stock issued pursuant to a transaction
described in subsection 4(c)(iii) hereof,

                        B.    shares of Common Stock issuable or issued to
employees, consultants or directors of the Company directly or pursuant to a
stock option plan or restricted stock plan approved by the Board of Directors,
or

                        C.    shares of Common Stock issued upon conversion
of the Series A Preferred Stock, or

                        D.    shares of Common Stock issued or issuable (I)
in a public offering before or in connection with which all outstanding shares
of Series A Preferred Stock will be converted to Common Stock or (II) upon
exercise of warrants or rights granted to underwriters in connection with such a
public offering, or

                        E.    shares of Common Stock issued or issuable to
persons or entities with which the Company has business relationships provided
such issuances are for other than primarily equity financing purposes.

                  iii) In the event the Company should at any time or from time
to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the

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outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as "Common Stock Equivalents"),
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof, then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of the Series A Preferred Stock
shall be appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents
with the number of shares issuable with respect to Common Stock Equivalents
determined from time to time in the manner provided for deemed issuances in
subsection 4(c)(i)(E).

                  iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.

            (d) Other Distributions. In the event the Company shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Company or other persons, assets (excluding cash dividends) or
options or rights not referred to in subsection 4(c)(iii), then, in each such
case for the purpose of this subsection 4(d), the holders of the Series A
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Company entitled to receive such distribution.

            (e) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4) provision shall be made so that the holders of the Series A
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Series A Preferred Stock the number of shares of stock or other securities or
property of the Company or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Series A Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the Conversion Price then
in effect and the number of shares purchasable upon conversion of the Series A
Preferred Stock) shall be applicable after that event as nearly equivalent as
may be practicable.

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<PAGE>   8
            (f) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to void the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.

            (g)   No Fractional Shares and Certificate as to Adjustments.

                  i) No fractional shares shall be issued upon conversion of the
Series A Preferred Stock, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of the total
number of shares of Series A Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.

                  ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this Section 4, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to each holder of
Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of any holder of Series A Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price at the time in effect, and (C) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of a share of Series A Preferred
Stock.

            (h) Notices of Record Date. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each holder of Series A Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.

            (i) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the

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<PAGE>   9
conversion of all then outstanding shares of the Series A Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.

            (j) Notices. Any notice required by the provisions of this Section 4
to be given to the holders of Shares of Series A Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at the address appearing on the books of the Company.

      5. Mandatory Redemption. On May 10, 2003, the Company shall redeem
(subject to legal availability of funds therefor) all outstanding shares of
Series A Preferred Stock at a price in cash equal to the Original Series A Issue
Price, together with an amount equal to accrued and unpaid dividends on the
Series A Preferred Stock to the date of redemption.

      6. Voting Rights. The holder of each share of Series A Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Series A Preferred Stock could then be converted (with any fractional share
determined on an aggregate conversion basis being rounded to the nearest whole
share), and with respect to such vote such holder shall have full voting rights
and powers equal to the voting rights and powers of the holders of Common Stock
and shall be entitled, notwithstanding any provision hereof to notice of any
stockholders' meeting in accordance with the by-laws of the Company, and shall
be entitled to vote, together with holders of Common Stock, with respect to any
question upon which holders of Common Stock have the right to vote.

      7. Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 4 hereof the shares so
converted shall be cancelled and shall not be issuable by the Company. The
Certificate of Incorporation of the Company shall be appropriately amended to
effect the corresponding reduction in the corporation's authorized capital
stock.

                                       9
<PAGE>   10
      IN WITNESS WHEREOF, this Certificate of Designation has been executed as
of this 9th day of May, 2000.

                                                  MILLENNIUM CELL INC.

                                                  By: /s/ James L. Rawlings
                                                      --------------------------
                                                  Name: James L. Rawlings
                                                  Title: Chief Executive Officer

                                       10<PAGE>   1
                                                                   EXHIBIT 10.1

                                    AGREEMENT

                                       for

                             RECOVERABLE GRANT AWARD

                                     between

                               STATE OF NEW JERSEY

                 NEW JERSEY COMMISSION ON SCIENCE AND TECHNOLOGY

                                       and

                              MILLENNIUM CELL, LLC

                           AWARD NUMBER 99-2042-010-07

<PAGE>   2

TABLE OF CONTENTS

I.    AGREEMENT DATA SHEET ...............................................     1

II.   GENERAL TERMS AND CONDITIONS

      A.    Parties ......................................................     2

      B.    Eligibility ..................................................     2

      C.    Corporate Authority ..........................................     2

      D.    Entitlement To Funds .........................................     2

      E.    Payment Of Funds By Commission ...............................     2

      F.    Availability Of Funds ........................................     3

      G.    Intellectual Property ........................................     3

      H.    Publicity Policy .............................................     3

      I.    Compliance With Existing Laws ................................     3

      J.    Conflict Of Interest .........................................     3

      K.    Remedies .....................................................     4

      L.    Hearings, Appeals ............................................     5

      M.    Changes To Scope .............................................     5

      N.    Assignability ................................................     5

      0.    Indemnification ..............................................     5

      P.    Entire Agreement .............................................     6

      Q.    Jurisdiction And Choice Of Law ...............................     6

      R.    Construction .................................................     6

      S.    Notices ......................................................     6

                                       ii
<PAGE>   3

II.   POST AWARD REQUIREMENTS

      A.    Identification Of Key Personnel ..............................     7

      B.    Financial Management System ..................................     7

      C.    Use Of Funds .................................................     8

      D.    Matching And Cost Sharing ....................................     8

      E.    Budget Revisions And Modifications ...........................     8

      F.    Monitoring Of Program Performance ............................     9

      G.    Accounting Principles ........................................     9

      H.    Audit Requirements ...........................................     9

      I.    Access To Records ............................................    10

      J.    Insurance ....................................................    10

      K.    Taxes, Assessments and Governmental Charges ..................    10

      L.    Year 2000 Compliance .........................................    10

III.  AWARD CLOSEOUT

      A.    Procedures ...................................................    11

      B.    Financial And Performance Reporting ..........................    11

      C.    Record Retention .............................................    12

IV.   REPAYMENT ..........................................................    13

ATTACHMENTS

Program Specifications ...................................................     A

Award Budget .............................................................     B

Comparison Of Actual To Budget Expenditures ..............................     C

Final Report Guidelines ..................................................     D

                                       iii
<PAGE>   4

1. Agreement Data Sheet

---------------------           STATE OF NEW JERSEY            -----------------
   1. Date Issued:                                             3. Award No.:
                        COMMISSION ON SCIENCE AND TECHNOLOGY
   2. Supersedes Award                                            99-2042-010-07
      Notice Dated:          RECOVERABLE GRANT AGREEMENT
          N/A
---------------------                                          -----------------
--------------------------------------------------------------------------------
   4.  Title of Award: A New High-Energy Borohydride-Air Cell
--------------------------------------------------------------------------------

   5a. State Issuing Agency: New Jersey Commission on Science and Technology,
       P0 Box 832, Trenton, NJ 08625-0832
--------------------------------------------------------------------------------

   5b. Award Recipient                         6. Award Period (Mo./Day/Yr.)

       Name:           Millennium Cell, LLC       From:         Through:
                                                        4/1/99           3/31/00
       Street:         8 Cedar Brook Drive     ---------------------------------

       City/State/Zip: Cranbury, NJ 08512      7. Vendor ID No: 13-401-7952

   8.  Source of Funds:

<TABLE>
<CAPTION>
       -----------------------------------------------------------------
         FISCAL           ACCOUNT              CFDA
          YEAR           NUMBER(S)            NUMBER          AMOUNT
       -----------------------------------------------------------------
          <S>       <C>                                     <C>
          1999      100-082-2042-010-6130                   $226,000.00

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

   9.  Award Computation:

<TABLE>
<S>                                          <C>
       a. Amount of Financial
           Assistance                        $226,000.00
                                             -----------
       b. Less Unobligated Balance,
           Prior Budget Periods              $      0.00
                                             -----------

       c. Less Cum. Prior Award(s),.
           this Budget Period                $      0.00
                                             -----------

       d. AMOUNT of this ACTION              $226,000.00
                                             -----------
</TABLE>

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

   10a.  Nature or purpose of program to be funded: Technology Transfer Program
         Award
--------------------------------------------------------------------------------

   10b. This Award is subject to the terms and conditions incorporated either
        directly or by reference to the following:

          Attachment A -- Program Specifications
          Attachment B -- Approved Budget
          Attachment C -- Comparison of Actual to Budget Expenditures
          Attachment D -- Final Performance Report Guidelines

       Acceptance of the award terms and conditions is acknowledged by the Award
       Recipient by returning a copy of this Award Agreement with section I(12)
       properly completed.

--------------------------------------------------------------------------------
   11. Remarks (Other Terms and Conditions attached): Yes |X|  No |_|
--------------------------------------------------------------------------------
   12. Commission and Award Recipient Agreement Signatures

       If this Agreement, including all attachments annexed hereto, correctly
       sets forth your understanding of the terms of the agreement, please
       indicate your organizations concurrence with such terms by having the
       enclosed copy of this Agreement signed by an appropriate officer of your
       organization and returned to the Commission on Science and Technology.

   ACCEPTED AND AGREED:                COUNTERSIGNED:

                                       New Jersey Commission on Science and
   Millennium Cell, LLC                  Technology
   ------------------------------      -----------------------------------------
       (Award Recipient)

   By____________________________      By_______________________________________

   Title  President                    Title  Executive Director

   I attest that sufficient funds      APPROVED FOR FORM:
   have been appropriated by the
   State Legislature to cover the
   current state fiscal year portion
   of this grant.

   /S/ [ILLEGIBLE]                     (S) Peter Verniero, Attorney General
   ---------------------------------   -----------------------------------------
   COMMISSION AWARD APPROVAL OFFICER       OFFICE OF THE ATTORNEY GENERAL

<PAGE>   5

II.   GENERAL TERMS AND CONDITIONS

      A.    PARTIES

      Whereas, Millennium Cell, LLC (hereinafter "award recipient"), with
      principal place of business located at Cranbury, New Jersey, has been
      selected by the New Jersey Commission on Science and Technology
      (hereinafter "Commission") to receive a recoverable grant award under the
      Technology Transfer Program, for a project entitled "A New High-Energy
      Borohydride-Air Cell";

      Award recipient and the Commission, intending to be legally bound hereto,
      accept and agree to abide by the following terms and conditions set forth
      in this Agreement.

      B.    ELIGIBILITY

      Award recipient represents and warrants that it is a for-profit technology
      company, with 500 or fewer employees, with its principal place of business
      located and registered to do business in the State of New Jersey on the
      date of execution of this Agreement. Award recipient represents and
      warrants that it is duly organized, validly existing, and in good standing
      under the laws of the State of New Jersey as of the time of execution of
      this Agreement. Award recipient agrees that any product development or
      process improvement activities that result from this funding, will occur
      in New Jersey. Award recipient agrees that it will maintain its primary
      place of business and principal operations in New Jersey, during the
      funding period and until all obligations under this agreement have been
      satisfied, unless otherwise agreed by the Commission. Violation of this
      provision without express written approval of the Commission constitutes
      default under this Agreement and may result in penalties pursuant to
      section I.K. herein.

      C.    CORPORATE AUTHORITY

      Award recipient represents and warrants that it has the corporate power
      and authority and legal right to execute and perform its obligations under
      this Agreement and that it has taken all necessary corporate action to
      authorize its execution and performance of obligations under this
      Agreement.

      D.    ENTITLEMENT TO FUNDS

      Upon execution of this Agreement, award recipient shall be entitled to
      receive a total of $226,000 in funding (hereinafter "award") from the
      Commission, subject to the terms and conditions stated herein, for the
      purposes set forth in the Program Specifications, Attachment "A" hereto,
      (hereinafter "award supported activities").

      E.    PAYMENT OF FUNDS BY COMMISSION

      Payment of funds for this award shall be made to award recipient upon
      receipt by the Commission of a properly executed copy of this Agreement,
      signed by an authorized officer of the award recipient, together with a
      properly executed stare payment voucher. The Commission will advance funds
      to the award recipient in an amount equal to eighty five percent (85%) of
      this award, within thirty (30) days of receipt of a properly executed
      Agreement and payment voucher. The remaining fifteen percent (15%) of the
      award to be provided will be retained by the Commission until all final
      fiscal and performance reports required under Section III.B.(1) of this
      Agreement have been received and accepted by the Commission.

                                       2
<PAGE>   6

      The period of funding shall be from the start date of the award supported
      activities, or the initial payment of funds to award recipient, whichever
      shall occur earlier, to the projected date of conclusion of the award
      supported activities (the "ending date"), as set forth in the Agreement
      Data Sheet.

      F.    AVAILABILITY OF FUNDS

      The parties recognize and agree that initial and continued funding for
      this award is expressly dependent upon the availability to the Commission
      of funds appropriated by the state legislature from state or federal
      revenue or other such funding sources as may be applicable for the
      Technology Transfer Program. The Commission shall not be held liable for
      any breach of this Agreement because of the absence of available funding
      appropriations.

      G.    INTELLECTUAL PROPERTY

      Award recipient warrants and represents that it owns or holds licenses for
      the use of all patents, trademarks, trade names, service marks,
      copyrights, and franchise and marketing rights or rights in any of the
      foregoing, as is necessary to engage in the award related activities.

      H.    PUBLICITY POLICY

      All publications resulting from publicity releases concerning award
      related activities shall acknowledge the support of the Commission and
      shall refer to the Commission explicitly as the "New Jersey Commission on
      Science and Technology."

      I.    COMPLIANCE WITH EXISTING LAWS

      Award recipient agrees to comply with and require all contractors and
      consultants used by it in relation to the award supported activities to
      comply with all federal, state and municipal laws, rules and regulations
      applicable to all activities performed by award recipient in pursuit of
      and in relation to award supported activities. The award recipient agrees
      to comply with and require all contractors and consultants used by it in
      pursuit of and in relation to the award supported activities to comply
      with the requirements of N.J.A.C. 17:27 et. seq. (Affirmative Action
      Rules), where applicable, P.L. 1975, c.127 (N.J.S.A 10:5-31 et. seq.
      (Equal Opportunity in Public Works Contracts), where applicable, and all
      implementing regulations, and the Americans With Disabilities Act and
      implementing regulations and guidelines, where applicable. Failure to
      comply with such laws, rules or regulations shall be grounds for
      termination of this Agreement.

      J.    CONFLICT OF INTEREST

      Award recipient agrees to abide by the provisions of N.J.S.A 52:13D et
      seq. (the New Jersey State Employees Conflict of Interest Law) governing
      activities between award recipient and state officials, employees, special
      state officers and members of the Legislature. The provisions of N.J.S.A
      52:13D et seq. are incorporated herein in their entirety, by reference
      thereto. Award recipient represents and warrants that it has not and will
      not at any time in the future act in violation of said statutory
      provisions. Any violation of said prohibitions shall render award
      recipient liable to debarment in the public interest.

                                       3
<PAGE>   7

      K.    REMEDIES

      The following definitions shall apply for the purposes of this section:

            Termination -- the termination of an award means the cancellation of
            an award, in whole or in part, at any time prior to the date of
            completion.

            Suspension -- the suspension of an award is an action by the
            Commission which temporarily suspends funding under the award,
            pending corrective action by the award recipient or pending a
            decision to terminate the award by the Commission.

            Disallowed costs -- disallowed costs are those charges to the
            program which the Commission or its representatives determine to be
            beyond the scope of the purpose of the award supported activities or
            are excessive or incurred during a period of suspension or after
            termination or are otherwise unallowable.

      Award recipient warrants and represents that all statements,
      representations and warranties made by award recipient in its application
      and proposal package to the Commission, and any other materials furnished
      in support of the request for funding are true. It is specifically
      understood by award recipient that all such statements, representations
      and warranties shall be deemed to have been relied upon by the Commission
      in its decision to make the award, and that if any such statements,
      representations or warranties were materially false at the time they were
      made or are breached during the term hereof, the Commission may, in its
      sole discretion, consider any such misrepresentation or breach an event of
      default and the Commission may take one or more of the following actions,
      as appropriate in the circumstances.

      If the award recipient materially fails to comply with any term of this
      Agreement or a state or federal statute or regulation, the Commission may,
      in its sole discretion, consider any such misrepresentation or breach an
      event of default and the Commission may take one or more of the following
      actions, as appropriate in the circumstances:

      (1)   The Commission may suspend the award, withhold further funding and
            prohibit the award recipient from incurring additional obligations
            pending corrective action by the award recipient and disallow costs
            incurred during suspension.

      (2)   The Commission may terminate the award in whole or in part. The
            Commission shall promptly notify the award recipient, in writing, of
            the termination and the reasons for the termination, together with
            the effective date and, in case of partial termination, the portion
            to be terminated and the recoverable portion, if any. When an award
            is terminated pursuant to this paragraph, payments made to the award
            recipient shall be terminated and any funds already distributed that
            are determined by the Commission to be recoverable shall be returned
            within thirty (30) days of demand thereof by the Commission. Costs
            incurred after termination shall be disallowed.

      (3)   The Commission may disallow any costs.

      (4)   The Commission may demand immediate return of some or all of funds
            already disbursed.

      (5)   The Commission may pursue other remedies at law or in equity as may
            be within legal right.

                                       4
<PAGE>   8

      The Commission may also terminate the award at any time, in whole or in
      part, when the Commission determines that the continuation of the project
      would not produce beneficial results commensurate with the further
      expenditure of funds. The Commission shall promptly notify the award
      recipient in writing, of the determination to terminate the award,
      together with the effective date and, in case of partial termination, the
      portion to be terminated. The award recipient shall cancel as many
      outstanding obligations as possible. Costs incurred after termination
      pursuant to this paragraph shall be disallowed.

      The costs of the award recipient resulting from obligations incurred by it
      during a suspension, or after termination of an award, are not allowable
      unless the Commission expressly authorizes them in the notice of
      suspension or termination or subsequently. Such costs may be allowed if
      they are: (1) necessary and (2) not reasonably avoidable and (3) were
      properly incurred by the award recipient before the effective date of
      suspension or termination and (4) are not in anticipation of it and (5) in
      the case of a termination are noncancelable and (6) the costs would be
      allowable if the award were not suspended or expired normally at the end
      of the funding period.

      No remedy herein conferred or reserved to the Commission is intended to be
      exclusive of any other available remedy or remedies, but each and every
      such remedy shall be cumulative and shall be in addition to every other
      remedy given under this Agreement or now or hereafter existing at law or
      in equity or by statute. No delay or omission to exercise any right or
      power accruing upon any default shall impair any such right or power or
      shall be construed to be a waiver thereof.

      Section III of this Agreement, Award Closeout Procedures, shall apply in
      all cases of termination.

      L.    HEARINGS, APPEALS

      Upon taking an enforcement action pursuant to section I.K. above, the
      Commission will provide the award recipient an opportunity for such
      hearing, appeal, or other administrative proceeding to which the award
      recipient is entitled under any stature or regulation applicable to the
      action involved.

      M.    CHANGES TO SCOPE

      The Commission may request changes in the scope of the services to be
      performed hereunder. Such changes, including any increase or decrease in
      the amount of the funds provided herein, shall be mutually agreed upon by
      and between the Commission and the award recipient, and must be
      incorporated in written amendments to this Agreement.

      N.    ASSIGNABILITY

      The award recipient shall not subcontract or assign any of the work or
      services to be performed by it in relation to award supported activities
      except as already stated in Attachment "A," without the express written
      approval of the Commission. All terms and provisions herein shall apply to
      all subcontractors or assignees.

      O.    INDEMNIFICATION

      The award recipient shall be solely responsible for and shall keep, save,
      hold harmless and indemnify the Commission and the State of New Jersey
      from and against any and all actions, costs, damages, disbursements,
      expenses including attorney's fees, judgments, liabilities, losses,
      obligations, penalties, suits, proceedings, claims and matters of any kind
      whatsoever

                                       5
<PAGE>   9

      which may at any time be imposed on, incurred by, agreed to or asserted
      against the Commission and the State of New Jersey, arising out of any and
      all activities, acts, omissions, services performed and products provided
      by award recipients, including the award supported activities. The
      Commission and the State of New Jersey shall bear no liability in any form
      to any third party for any acts or omissions on the part of the award
      recipient. The award recipient's liability under this paragraph shall
      continue after the closeout or termination of this Agreement.

      P.    ENTIRE AGREEMENT

      This Agreement and the attachments hereto embody the entire Agreement and
      understanding between the award recipient and the Commission, representing
      the State of New Jersey and supersede all prior agreements and
      understandings, both written and oral, between the parties relating to the
      subject matter herein. All modifications, waivers, and amendments hereto
      must be made in writing by mutual agreement of the parties, except as
      otherwise stated herein.

      Q.    JURISDICTION AND CHOICE OF LAW

      Jurisdiction of any action hereunder shall lie in a court of competent
      jurisdiction in the State of New Jersey and shall be construed in
      accordance with the laws of the State of New Jersey applicable to
      contracts made and performed in the State of New Jersey.

      R.    CONSTRUCTION

      Whenever possible, each provision of the Agreement shall be interpreted in
      such a manner as to be effective and valid under the applicable law, but,
      if any provision of this Agreement shall be held to be prohibited or
      invalid under such applicable law, such provision shall be ineffective
      only to the extent of such prohibition or invalidity without invalidating
      the remainder of such provision or the remaining provisions of the
      Agreement.

      S.    NOTICES

      Upon request by the Commission, any notices, demands, and communications
      hereunder shall be given by certified or overnight mail and shall be
      addressed to:

            For Award Recipient:

                  Millennium Cell, LLC
                  8 Cedar Brook Drive
                  Cranbury, NJ 08512

            For The State:

                  New Jersey Commission on Science & Technology
                  Technology Transfer Program
                  28 West State Street, P.O. Box 832
                  Trenton, NJ 08625-0832

      Any changes or additions to the notice provisions above shall be made in
      writing provided as stated above.

                                       6
<PAGE>   10

II.   POST AWARD REQUIREMENTS

      A.    IDENTIFICATION OF KEY PERSONNEL

      Award recipient shall identify and maintain an individual with the
      principal responsibility for the management of all award related
      activities. This individual, designated the Project Manager, shall be
      Steven Amendola, Vice President, R&D.

      Award recipient shall identify and maintain an individual with the
      principal responsibility for maintaining an adequate financial management
      system as described below. This individual, designated the Financial
      Manager, shall be Scott Greenberg, Executive Vice President & CEO.

      B.    FINANCIAL MANAGEMENT SYSTEM

      The Financial Manager shall be responsible for maintaining a financial
      management system in compliance with this Agreement. The Financial Manager
      shall notify the Commission immediately if the award recipient cannot
      comply with the requirements established herein.

      The financial management system shall provide for

      (1)   accurate, current and complete records of the financial results of
            this program, in conformity with generally accepted principles of
            accounting, capable of being reported in a format in accordance with
            the financial reporting requirements as described herein; and

      (2)   records that adequately identify the source and application of funds
            for Commission supported activities, containing information
            pertaining to awards and authorizations, obligations, unobligated
            balances, assets, liabilities, outlays or expenditures, and income,
            and be maintained in conformity with generally accepted principles
            of accounting; and

      (3)   effective internal and accounting controls over all funds, property,
            and other assets; and

      (4)   comparison of actual expenditures or outlays with budgeted amounts
            for the award, which shall be related to performance or productivity
            data; and

      (5)   procedures for determining reasonableness, allowableness, and
            allocability of costs, consistent with the provisions of federal and
            state requirements; and

      (6)   source documentation.

      The Commission may review the adequacy of the award recipient's financial
      management system as part of a pre-award review, or at any time during the
      period of the award. If the Commission determines that the award
      recipient's system does not meet the standards described in this section,
      additional information may be required by the Commission upon written
      notice to the award recipient. This information shall be provided to the
      Commission until such time as the Commission determines that the system
      meets with Commission approval, If award recipient fails to provide such
      information to the satisfaction of the Commission, or if the Commission
      determines that the award recipient has consistently failed to maintain
      the proper financial management system, the Commission may take action
      pursuant to section I.K, herein.

                                       7
<PAGE>   11

      C.    USE OF FUNDS

      The funds provided herein may be used only for allowable costs. Award
      funds may be used for salaries, supplies, travel, purchase of services,
      equipment, and other direct project expenses. Funds may only be used for
      costs that are directly applicable to the project, not for overhead costs
      to the company.

      Award recipient may charge to the award only the costs resulting from
      obligations incurred during the funding period, unless carryover of
      unobligated balances is permitted, in which case the carryover balances
      may be charged for costs resulting from obligations of the subsequent
      program period.

      The award recipient must liquidate all obligations incurred under this
      award not later than ninety (90) days after the end of the funding period,
      unless specific authority to extend this deadline is granted, in writing,
      by the Commission.

      D.    MATCHING AND COST SHARING

      Award recipient shall be required to account for, to the satisfaction of
      the Commission, the matching and cost-sharing requirements as stated
      herein. The Commission requires that any funds it commits to support award
      related activities shall be matched in at least a 1:1 ratio with non-state
      support. Non-state support may include cash and/or in kind support. In
      kind support includes the salary costs of the research team, use of
      company equipment, materials, and other resources devoted to the project
      by the company, its consultants, subcontractors, vendors, or other
      participating partners. Cash support includes third party equity
      investments or loans, funding from federal grants, foundations, and
      universities, cash commitments from distributors to support marketing,
      sales promotion, and/or customer service, investments by company
      principals, payments to outside vendors, consultants, or contractors for
      work performed related to the project. The matching support may include
      contributions by the sponsoring company for the expenses of the project,
      and contributions by individuals and/or organizations collaborating with
      the company. To qualify as cost sharing, all support must be available for
      expenditure during the funding period.

      E.    BUDGET REVISIONS AND MODIFICATIONS

      The "award budget" as used in this section means the agreed financial plan
      approved by the Commission that will be utilized to implement
      award-related activities. The award budget is appended as Attachment "B"
      hereto. Line item variances in the award budget, in amounts up to twenty
      five thousand dollars ($25,000) or ten percent (10%) of the total amount
      of the award, whichever is less, do not require the prior approval of the
      Commission but may be initiated by award recipient and reported in the
      final financial report. In the event that the final financial report
      indicates line item variances in excess of this amount (either under or
      over expenditure), the Commission may require that the amount of the
      variance over twenty five thousand dollars ($25,000) or ten percent (l0%)
      of the total award be refunded to the State of New Jersey.

      All other budget revisions and modifications to the award budget in
      amounts in excess of twenty five thousand dollars or ten percent (10%) of
      the total amount of the award, must be approved in advance, in writing, by
      the Commission. Before any obligation is incurred which would result in
      any line item variance in excess of the variances permitted above, the
      award recipient must obtain an award budget amendment, in writing, from
      the Commission. Requests for amendments of the award budget must include
      an interim comparison of budget to actual expenditures to date, in the
      form of Attachment "C", hereto, a proposed amended budget, in
      substantially the same form and level of detail as the award budget, and
      an explanation for the requested amendment.

                                       8
<PAGE>   12

      The award recipient must also obtain prior written approval when a
      revision or modification will be necessary for any of the following
      reasons:

      (1)   changes in the scope, objective, or timing of the project or
            program;

      (2)   the need for additional funding, or to extend the period of
            availability of funds;

      (3)   the award recipient plans to transfer funds that would cause a state
            appropriation, or part thereof to be used for purposes other than
            those originally indicated.

      If the award recipient is making program expenditures or providing grant
      services at a rate which, in the judgment of the Commission, will result
      in substantial failure to expend the award amount or provide services, the
      Commission shall so notify the award recipient. If, within fifteen (15)
      days of such notice, the award recipient is unable to develop, to the
      satisfaction of the Commission, a plan to rectify its low level of program
      expenditures or services, the Commission may, upon a thirty (30) day
      notice, reduce the award amount so that the revised award amount fairly
      projects program expenditures over the award period. This reduction shall
      take into account the award recipient's fixed costs and shall establish
      the committed level of activity for each program element of activity at
      the reduced amount.

      F.    MONITORING OF PROGRAM PERFORMANCE

      The award recipient shall continually monitor the performance of award
      supported activities to assure that time schedules are being met,
      projected work units by time periods are being accomplished, and other
      performance goals are being achieved, as applicable, and as defined by the
      Program Specifications, Attachment "A" hereto.

      The award recipient shall inform the Commission of the following types of
      conditions which affect program objectives and performance as soon as they
      become known:

      (1)   problems, delays or adverse conditions which will materially impair
            the ability to attain program objectives, prevent the meeting of
            time schedules and goals, or preclude the attainment of project work
            units by established time periods, accompanied by a statement of the
            action taken, or contemplated, and any Commission assistance needed
            to resolve the situation; and

      (2)   favorable developments or events which enable meeting time schedules
            and goals sooner than anticipated or at less cost, or producing more
            beneficial results than originally planned.

      The Commission may at its discretion make site visits to review program
      accomplishments and management control systems and to provide technical
      assistance as the Commission determines may be required.

      G.    ACCOUNTING PRINCIPLES

      Compliance with any provision of this Agreement relating to financial or
      accounting computation or reporting shall be determined in accordance with
      generally accepted principles of accounting.

                                       9
<PAGE>   13

      H.    AUDIT REQUIREMENTS

      The award recipient must obtain an annual audit for each fiscal year in
      which the award recipient expends state-provided funds, in accordance with
      the New Jersey Department of Treasury Circular Letter 98-07, "Single Audit
      Policy For Recipients Of Federal Grants, State Grant And State Aid
      Payments," and with the Federal Single Audit Act of 1984, as amended.

      All audits will be conducted on an organization wide basis and on the
      award recipient's fiscal year, which ends on December 31. Any changes in
      fiscal year must be reported immediately to the Commission.

      The award recipient shall provide to the Commission in a timely fashion
      copies of all required single audit reports, including the auditor's
      comments on the award recipient's compliance with the material terms and
      conditions of this Agreement and applicable laws and regulations. In the
      event of audit findings requiring corrective action by the award
      recipient, the award recipient shall provide to the Commission copies of
      all documentation of appropriate corrective actions taken. Such
      documentation shall be provided within one month of the issuance of the
      audit report.

      I.    ACCESS TO RECORDS

      The award recipient agrees to make available to the Commission, and any
      state or federal agency whose funds are expended in the course of this
      program, or any of their duly authorized representatives, pertinent
      accounting records, books, documents, electronic files, and other items as
      may be necessary to monitor and audit operations and finances. All
      visitations, inspections and audits, including visits and requests for
      documentation in discharge of the Commission's responsibilities, shall as
      a general rule provide for prior notice when reasonable and practical to
      do so. However, the Commission retains the right to make unannounced
      visitations, inspections, and audits as deemed necessary. The Commission
      reserves the right to have access to all work papers produced in
      connection with audits made by the award recipient or by independent
      certified public accountants, registered municipal accountants, or
      licensed public accountants hired by the award recipient to perform such
      audits.

      J.    INSURANCE

      Award recipient agrees to carry general liability insurance and other such
      insurance against loss, damage and liability as is customary within its
      industry, to be held with insurance companies licensed to do business in
      New Jersey.

      K.    TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES

      Award recipient warrants and represents that all tax returns and reports
      of award recipient required by law to be filed have been duly filed and
      all taxes, assessments, fees and other governmental charges upon the award
      recipient or upon any of its respective properties, assets, income or
      franchises which are due and payable pursuant to such returns and reports,
      or pursuant to any assessment received by the award recipient have been
      paid other than those which may be presently payable without penalty or
      interest.

      Award recipient agrees to pay as they become due, all taxes, assessments
      and governmental charges which may be required by law or contract to be
      paid by the award recipient. Award recipient may in good faith contest
      such taxes and governmental charges and such taxes and charges may remain
      unpaid during the period of such contest.

                                       10
<PAGE>   14

      L.    YEAR 2000 COMPLIANCE.

      Award recipient warrants and represents that it has taken all steps
      necessary to reasonably assure, or will use reasonable and necessary
      efforts to assure, that all software or computer programs used by it,
      which are material to the operation of its business, are designed to be
      used prior to, during and after the calendar year 2000 A.D. and such
      software or computer programs will operate during each time period without
      error regarding date data, specifically including any error relating to,
      or the product of, date data which represents or references different
      centuries or more than one century.

III.  AWARD CLOSEOUT

      A.    PROCEDURES

      The Commission shall close out the award provided herein when it
      determines that all applicable administrative action and all required work
      pertaining to the award have been completed by the award recipient.

      The date of completion of this program shall be when all activities
      related to the award are completed, the funding period has expired, or the
      Commission terminates the award, whichever occurs earliest.

      The award recipient shall submit a final report pursuant to section II.B.
      below upon the date of completion or termination of the award. The
      Commission may permit extensions when requested in advance, in writing, by
      the award recipient.

      Upon the date of completion, or termination of the award by the
      Commission, the award recipient will, together with the submission of the
      final report, refund to the Commission any unexpended funds or unobligated
      (unencumbered) cash advanced, except such sums that have been otherwise
      authorized in writing by the Commission to be retained.

      Award recipient must liquidate all obligations incurred under this award
      not later than ninety (90) days after date of completion or termination of
      the award, unless specific authority to extend this deadline is granted,
      in writing, by the Commission.

      Within the limits of the award amount, the Commission may make a
      settlement for any upward or downward adjustment of costs after these
      reports are received.

      In the event a final audit has not been performed prior to the closeout of
      the award, the Commission retains the right to recover any appropriate
      amount after fully considering the recommendations on disallowed costs
      resulting from the final audit.

      The award recipient shall account for any property acquired with award
      funds or received from the Commission.

      B.    FINANCIAL AND PERFORMANCE REPORTING

      (1)   Final reports shall be submitted to the Commission by the award
            recipient no later than ninety days after date of completion of the
            award related activities, or termination of the award by the
            Commission. At a minimum, these final reports shall include:

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<PAGE>   15

            (a)   a final performance report, in a format which conforms to the
                  Final Report Guidelines, Attachment "D" hereto. The accuracy
                  of this performance report shall be certified, in writing, by
                  the Project Manager;

            (b)   a final comparison of actual to budget expenditures in the
                  format provided in Attachment "C" hereto. The accuracy of this
                  financial report shall be certified, in writing, by the
                  Financial Manager. This comparison of actual to budget
                  expenditures shall be presented in the same organization and
                  level of detail as that of the original award budget
                  (Attachment "B"). If any comparison of actual to budget
                  expenditures is submitted to the Commission prior to
                  liquidation of all outstanding obligations, then this
                  comparison of actual to budget expenditures shall separately
                  present actual expenses and outstanding obligations, and shall
                  indicate the effective date of a comparison of actual with
                  budget expenditures. A final comparison of actual to budget
                  expenditures must be submitted to the Commission upon
                  liquidation of all obligations under this award; and

            (c)   a summary report of all non-Commission resources expended by
                  the award recipient in support of the project or program
                  supported by the Commission's investment. This report should
                  include any support which is claimed as formal matching to the
                  Commission's award, pursuant to section II.E. of this
                  Agreement. Upon acceptance of the terms of this Agreement, the
                  award recipient shall commit itself to the appropriate match
                  or contribution to the awarded amount. The award recipient
                  shall identify and enumerate in writing all the components of
                  the match or contribution. In addition, this report should
                  summarize any other resources utilized by the program, which
                  are not eligible for consideration as matching, whether any
                  form of equipment, grants and discounts, in kind donations,
                  etc. from all sources of support. The accuracy of this
                  matching report shall be certified, in writing, by the
                  Financial Manager.

            If reports are not submitted as required, the Commission may take
            action pursuant to section I.K. herein.

      (2)   As soon as possible and in any event within ninety (90) days after
            the close of each fiscal year subsequent to the ending date of
            activity supported under this award, the award recipient shall
            submit to the Commission an unqualified audit report, certified by
            an independent certified public accountant or licensed public
            accountant, using generally accepted accounting principles, on a
            consolidated and consolidating basis (consolidating statements need
            not be certified by such accountants), for the immediately preceding
            fiscal year, including balance sheets as of the end of such fiscal
            year, related profit and loss and reconciliation of surplus
            statements and a statement of changes in financial position,
            accompanied by certificate of said accountants that in the course of
            their examination necessary for their certification of the
            foregoing, they have obtained no knowledge of any default or
            potential default, or if, in the opinion of such accountant, any
            default or potential default shall exist, said certificate shall
            state the nature and status thereof.

      (3)   As soon as possible after the close of each fiscal year subsequent
            to the ending date of activity supported under this award, the award
            recipient shall submit to the Commission a copy of the award
            recipient's federal income tax return for the immediately preceding
            fiscal year.

      (4)   If applicable, the award recipient shall provide to the Commission,
            concurrently with the furnishings thereof, copies of all reports
            sent to award recipient's shareholders, the Securities and Exchange
            Commission, or any securities exchange.

                                       12
<PAGE>   16

      C.    RECORD RETENTION

      Except as otherwise noted below, financial and program records, supporting
      documents, statistical records, and all other records pertinent to this
      award shall be retained for a period of three years, starting from the
      date of submission of the final expenditure report, unless federal or
      state funding statutes require a longer period.

      If any litigation, claim, negotiation, action or audit involving the
      records is started before the expiration of the three year period, the
      records must be retained until completion of the action and resolution of
      all issues which arise from it, or until the end of the regular three year
      period, whichever is later.

      Records for nonexpendable property acquired with Commission funds shall be
      retained for three years after final disposition of the property.

      The retention period for real property and equipment records starts from
      the date of the disposition, replacement or transfer of the real property
      or equipment.

      The Commission may request transfer of certain records to its custody from
      the award recipient when it determines that the records possess long-term
      retention value and will make arrangements with the award recipient to
      retain any records that are continuously needed for joint use.

IV.   REPAYMENT

      All terms and conditions of this Agreement shall remain in full force and
      effect until the award has been repaid in full pursuant to this section,
      or the Commission otherwise releases award recipient, in writing, from
      some or all obligations contained herein.

      A percentage of the annual net income received by the award recipient, as
      specified in subsection B. of this section, shall be remitted to the
      Commission by the award recipient.

      A.    DEFINITIONS

      For the purposes of this section, "net income" shall be defined as the
      award recipient's billings for products or services, less the sum of the
      following:

      (1)   discounts allowed in amounts customary in the trade for quantity
            purchases, cash payments, prompt payments, wholesalers and
            distributors;

      (2)   sales taxes, tariff duties, and/or use taxes directly imposed and
            with reference to particular sales;

      (3)   outbound transportation prepaid or allowed; and

      (4)   amounts allowed or credited on returns.

      No deductions shall be made for commissions paid to individuals whether
      they be with independent sales agencies or regularly employed by the award
      recipient and on its payroll, or for cost of collections. Net revenue
      shall occur when a product or service is invoiced. If a product or service
      is distributed or invoiced for a discounted price substantially lower than
      customary in the trade, or distributed at no cost to affiliates or
      otherwise, net revenue shall be

                                       13
<PAGE>   17

      based on the customary amount billed for such products or services.

      B.    ANNUAL PAYMENTS

      The award recipient shall make payments in the required amounts annually
      to the Commission, for a period often years, up to a maximum cumulative
      repayment to the Commission of the amount of this Technology Transfer
      Program award. Annual payments, as specified below, shall be due to the
      Commission not later than ninety (90) days after the first through tenth
      anniversary dates of the ending date of the funded activity, as specified
      on the award data sheet. These required payments shall be submitted
      together with the unqualified audit reports required under Section
      III.B.(2) of this agreement.

      The amount to be remitted shall be determined as follows: in the first
      year following the ending date of activity supported under this award, the
      award recipient shall remit 1% (one percent) of net income; in the second
      year, the award recipient shall remit 2% (two percent) of net income; in
      the third year, the award recipient shall remit 3% (three percent) of net
      income; in the fourth year, the award recipient shall remit 4% (four
      percent) of net income; in the fifth year through the ninth year, the
      award recipient shall remit 5% (five percent) of net income; in the tenth
      year, the award recipient shall remit the difference between the amount of
      the Commission's original award and the cumulative repayments through the
      ninth year, if any.

      The award recipient may, in its sole discretion, choose to make full or
      partial repayment of the amount of this Technology Transfer Program award
      at any time in advance of the schedule established in this section.

                                       14
<PAGE>   18

            IN WITNESS WHEREOF, the parties, duly authorized and intending to be
legally bound hereto, execute this Agreement, as of the date last written below.

                                       (AWARD RECIPIENT)

_____________________________          _________________________________________
Witness                                (Name)
                                       (Title)

                                       ______________________
                                       Date

                  ===========================================

                                       New Jersey Commission On
                                       Science and Technology

_____________________________          _________________________________________
Witness                                John V. Tesoriero, Ph.D.
                                       Executive Director

                                       ______________________
                                       Date

                  ===========================================

                                       APPROVED AS TO FORM:
                                       PETER VERNIERO
                                       ATTORNEY GENERAL OF
                                       NEW JERSEY

_____________________________          By: _____________________________________
Date                                       Deputy Attorney General

                                       15
<PAGE>   19

      If award recipient is a corporation, the following certificate shall be
executed by the secretary or assistant secretary.

      I, ______________________________, certify that I am the secretary of the
corporation named as award recipient in the attached Agreement; that
___________________________, who signed said agreement on behalf of the award
recipient, was then __________________________ of said corporation, that said
Agreement duly signed for and in behalf of said corporation by authority of its
governing body, and is within the scope of its corporate powers.

                                       _________________________________________
                                                  (Corporate Seal)

                                       16

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