NEITHERTHESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLEHAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION ORTHE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROMREGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIESACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO ANAVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATESECURITIESLAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TOSUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY.
Dateof Issuance: ______ __, 200_
MillenniumCell Inc., a Delaware corporation (the “Company”),hereby certifies that, for value received, The Dow Chemical Company or itsregistered assigns (the “Holder”),is entitled to purchase from the Company up to a total of [INSERTTHE PRODUCT OF (I) NUMBER OF SHARES OF COMMON STOCK INTO WHICH THE SHARES OFSERIES B PURCHASED SIMULTANEOUSLY WITH ISSUANCE OF THE WARRANT ARE THENCONVERTIBLE AND (II) .25]shares of common stock, $0.001 par value per share (the “CommonStock”),of the Company (each such share, a “WarrantShare”and all suchshares, the “WarrantShares”)at an exercise price (the“ExercisePrice”)per Warrant Share equal to$[INSERTTHE PRODUCT OF (I) 1.2 AND (II) THEVWAP OF THE COMMON STOCK FOR THE 30-TRADING DAY PERIOD IMMEDIATELY PRECEDING THEDATE OF ISSUANCE],at any time and from time to time from and after the six (6) month anniversaryof the Date of Issuance(the “TargetDate”)and through and including the five (5) year anniversary of the Date of Issuance(the “ExpirationDate”),and subject to the following terms and conditions:
1. Definitions.In addition to the terms defined elsewhere in this Warrant, capitalized termsthat are not otherwise defined herein shall have the meanings given to suchterms in the Stock Purchase Agreement dated on or about ______ __, 2005, betweenthe Company and the original Holder (the “PurchaseAgreement”).
2. Registrationof Warrant.The Company shall register this Warrant, uponrecords to be maintained by the Company for that purpose (the “WarrantRegister”),in the name of the record Holder hereof from time to time. The Company may treatthe registered Holder as the absoluteowner hereof for the purpose of any exercise hereof or anydistribution tothe Holder, and for all other purposes, absent actual notice to thecontrary.
3. Registrationof Transfers.The Company shall register the transfer of any portion of this Warrant in theWarrant Register, upon surrender of this Warrant accompanied by a writteninstrument of transfer duly executed by the Holder or by the duly appointedlegal representative or attorney thereof, to the Company at its addressspecified herein. Upon any such registration or transfer, a new warrant topurchase Common Stock, in substantially the form of this Warrant (any such newwarrant, a “New Warrant”),evidencing the portion of this Warrant so transferred shall be issued to thetransferee and a New Warrant evidencing the remaining portion of this Warrantnot so transferred, if any, shall be issued to the transferring Holder. Theacceptance of the New Warrant by the transferee thereof shall be deemed theacceptance by such transferee of all of the rights and obligations of a holderof a Warrant.
4. Exerciseand Duration.Subject to the provisions of Section6,this Warrantshall be exercisable by the registered Holder at any time and fromtimeto time on or after the Target Date to and including the Expiration Date (the“ExercisePeriod”).At 11:59 p.m., New York City time on the Expiration Date, the portion of thisWarrant available for exercise and not exercised prior thereto shall be andbecome void without the necessity of any further action by the Company and of novalue.
5. RequiredExercise.At any time during the Exercise Period, as long as the Common Stock is publiclytraded on a Trading Market the Company may elect, by written notice to Holder,to require the Holder to exercise all or any portion of the Warrant, if, for thethirty (30)-trading day period immediately preceding the date of such electionthe Common Stock (i) has an average daily trading volume which exceeds theproduct of (x) the average daily trading volume for Common Stock during calendaryears 2003 and 2004 multiplied by (y) fifteen (15), and (ii) has a VWAP which isat least four (4) times greater than the Exercise Price; provided,however,that upon such election by the Company, the Holder will have the right toimmediately sell or otherwise transfer this Warrant to a third party who willthen be required to exercise this Warrant in accordance with the Company’selection under this Section5;providedfurther,however,that if, within ten (10) Business Days after the Company’s election,(i) the Holder has not exercised this Warrant, or (ii) the Holder hasnot sold or otherwise transferred this Warrant to a third party, or if sold orotherwise transferred, such third party has not exercised this Warrant, thenthis Warrant shall immediately terminate and be of no force and effect withoutany action on the part of the Company, the Holder or such thirdparty.
6. Deliveryof Warrant Shares.
(a) Upondelivery of: (i) the Notice of Exercise attached hereto as ExhibitAto the Company at its address for noticeset forth in Section14,(ii) this Warrant, and (iii) the Exercise Price multipliedby the number of Warrant Shares that the Holder intends to purchase hereunder(the “AggregateExercise Price”),theCompany shall promptly (but in no event later than ten (10) Business Daysafterthe Date of Exercise (as defined herein)) issue and deliver to the Holder, acertificate for the Warrant Shares issuable upon such exercise bearing only therestrictive legends required by the Purchase Agreement. The Companyshall,upon request of the Holder and subsequent to the date on which aregistration statement covering the resale of the Warrant Shares has beendeclaredeffective by the Securities and Exchange Commission, use itsreasonablecommercial efforts to deliver Warrant Shares hereunder electronically throughthe Depository Trust Corporation or another established clearing corporationperformingsimilar functions, if available, provided, that, the Company may,but willnot be required to change its transfer agent if its current transferagentcannot deliver Warrant Shares electronically through the Depository TrustCorporation.
A“Dateof Exercise”means the date on which the Holder shall have delivered to the Company (i) theNotice of Exercise,appropriately completed and dulysigned, (ii) this Warrant and (iii) the Aggregate Exercise Price.
(b) Ifby the tenth (10th)Business Day after a Date of Exercise the Company fails to deliver the requirednumber of Warrant Shares in the manner required pursuant to Section6(a),then the Holder will have the right to rescind such exercise.
(c) TheCompany’s obligations to issue and deliver Warrant Shares in accordance with theterms hereof are absolute and unconditional, irrespective of any action orinaction by the Holder to enforce the same, any waiver or consent with respectto any provision hereof, the recovery of any judgment against any Person or anyaction to enforce the same, or any setoff, counterclaim, recoupment, limitationor termination, or any breach or alleged breachby the Holder or any other Person of any obligation to the Company oranyviolation or alleged violation of law by the Holder or any otherPerson.Nothing herein shall limit a Holder’s right to pursue any otherremedies available to it hereunder, at law or in equity including, withoutlimitation, a decree of specific performance and/or injunctive relief withrespect to the Company’s failure to timely deliver certificates representingsharesof Common Stock upon exercise of the Warrant as required pursuant totheterms hereof.
7. Charges,Taxes and Expenses.Issuance and delivery of certificates forshares of Common Stock upon exercise of this Warrant shall be madewithoutcharge to the Holder for any issue or transfer tax, withholding tax, transferagentfee or other incidental tax or expense in respect of the issuance ofsuchcertificates, all of which taxes and expenses shall be paid by theCompany.
8. Replacementof Warrant.If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issueor cause to be issued in exchange and substitution for and upon cancellationhereof, or in lieu of and substitution for this Warrant, a New Warrant, but onlyupon receipt of evidence reasonably satisfactoryto the Company of such loss, theft or destruction and customary andreasonable indemnity, if requested. Applicants for a New Warrant under suchcircumstances shall also comply with such other reasonable regulations andprocedures and pay such other reasonable third-party costs as the Company mayprescribe.
9. Reservationof Warrant Shares.The Company covenants that it will at alltimes reserve and keep available out of the aggregate of its authorizedbutunissued and otherwise unreserved Common Stock, solely for the purpose ofenabling it to issue Warrant Shares upon exercise of this Warrant as hereinprovided, the number of Warrant Shares which are then issuable and deliverableuponthe exercise of this Warrant in its entirety; andif at any time the number of authorized but unissued shares of Common Stockwould be insufficient to effect the exercise of the entire Warrant, the Companyshall take such corporate action prior to taking any action that would result inany such insufficiency as may, in the opinion of its counsel, be necessary toincrease its authorized but unissued shares of Common Stock to such number ofshares as shall be sufficient for such purpose.
10. Characterof Warrant Shares.The Company covenants that all WarrantShares, upon issuance and the payment of the applicable Exercise Price inaccordance with the terms hereof, shall be duly and validly authorized, issuedand fully paid and nonassessable.
11. CertainAdjustments.The Exercise Price and number of Warrant Shares issuable upon exercise of thisWarrant are subject to adjustment from time to time as set forth in thisSection11.
(a) StockDividends and Splits.If the Company, at any time while this Warrant is outstanding, either (i) pays astock dividend on its Common Stock or otherwise makes a distribution on anyclass of capital stock that is payable in shares of Common Stock or (ii)subdivides outstanding shares of Common Stock into a larger number of shares,then in each such case (A) the Exercise Price shall be proportionately decreasedby multiplying the Exercise Price in effect immediately before such event by afraction of which the numerator shall be the number of shares of Common Stockoutstanding immediately before such event and of which the denominator shall bethe number of shares of Common Stock outstanding immediately after such eventand (B) the number of Warrant Shares issuable upon exercise of this Warrantshall be proportionately increased by multiplying the number of Warrant Sharesissuable upon exercise of this Warrant immediately before such event by afraction of which the numerator shall be the number of shares of Common Stockoutstanding immediately after such event and of which the denominator shall bethe number of shares of Common Stock outstanding immediately before such event.
(b) Combinations.If the Company, at any time while this Warrant is outstanding, combinesoutstanding shares of Common Stock into a smaller number of shares, then in suchcase (A) the Exercise Price shall be proportionately increased by multiplyingthe Exercise Price in effect immediately before such event by a fraction ofwhich the numerator shall be the number of shares of Common Stock outstandingimmediately before such event and of which the denominator shall be the numberof shares of Common Stock outstanding immediately after such event and (B) thenumber of Warrant Shares issuable upon exercise of this Warrant shall beproportionately decreased by multiplying the number of Warrant Shares issuableupon exercise of this Warrant immediately before such event by a fraction ofwhich the numerator shall be the number of shares of Common Stock outstandingimmediately after such event and of which the denominator shall be the number ofshares of Common Stock outstanding immediately before such event.
(c) FundamentalTransactions.If, at any time while this Warrant is outstanding: (i) the Company effects anymerger or consolidation of the Company with or into another Person, (ii) theCompany effects any sale of all or substantially all of its assets in one or aseries of related transactions, (iii) any tender offer or exchange offer(whether by the Company or another Person) is completed pursuant to whichholders of Common Stock are permitted to tender or exchange their shares forother securities, cash or property, or (iv) the Company effects any
reclassificationof the Common Stock or any compulsory share exchange pursuant to which theCommon Stock is effectively converted into or exchanged for other securities,cash or property (in any such case, a “FundamentalTransaction”),then the Holder shall have the right thereafter to receive, upon exercise ofthis Warrant, the same amount and kind of securities, cash or property as itwould have been entitled to receive upon the occurrence of such FundamentalTransaction if it had been, immediately prior to such Fundamental Transaction,the holder of the number of Warrant Shares then issuable upon exercise in fullof this Warrant (the “AlternateConsideration”).For purposes of any such exercise, the determination of the Exercise Price shallbe appropriately adjusted to apply to such Alternate Consideration based on theamount of Alternate Consideration issuable in respect of one share of CommonStock in such Fundamental Transaction, and the Company shall apportion theExercise Price among the Alternate Consideration in a reasonable mannerreflecting the relative value of any different components of the AlternateConsideration. If holders of Common Stock are given any choice as to thesecurities, cash or property to be received in a Fundamental Transaction, thenthe Holder shall be given the same choice as to the Alternate Consideration itreceives upon any exercise of this Warrant following such FundamentalTransaction. At the Holder’s option and request, any successor to the Company orsurviving entity in such Fundamental Transaction shall, either (i) issue to theHolder a new warrant substantially in the form of this Warrant and consistentwith the foregoing provisions and evidencing the Holder’s right to purchase theAlternate Consideration for the aggregate Exercise Price upon exercise thereof,or (ii) purchase the Warrant from the Holder for a purchase price, payable incash within ten (10) trading days after such request (or, if later, on theeffective date of the Fundamental Transaction), equal to the Black Scholes valueof the remaining unexercised portion of this Warrant on the date of theFundamental Transaction as well as assumptions reasonably mutually acceptable tothe Company and the Holder, provided that for purposes of such calculation, themarket price of the Common Stock shall be the closing bid price of the CommonStock on the trading day immediately preceding the public announcement of theFundamental Transaction and the volatility factor shall be determined byreference to the 12 month average industry volatility measures. The terms of anyagreement pursuant to which a Fundamental Transaction is effected shall includeterms requiring any such successor or surviving entity to comply with theprovisions of this paragraph(c)and insuring that this Warrant (or any such replacement security) will besimilarly adjusted upon any subsequent transaction analogous to a FundamentalTransaction.
12.Paymentof Exercise Price.The Holder shall pay the Exercise Price by check or a wire transfer ofimmediately available funds.
13.No Fractional Shares.No fractional shares of Warrant Shares will be issued in connection with anyexercise of this Warrant. In lieu of any fractionalshares which would, otherwise be issuable, the Company shall paycash equalto the product of such fraction multiplied by theVWAP of the Common Stock for the thirty (30)-trading day period immediatelypreceding the Date of Exercise.
14.Notices.Any and all notices or other communications or deliveries hereunder(including without limitation any Exercise Notice) shall be inwritingand shall be deemed given and effective on the earliest of (i) the date oftransmission,if such notice or communication is delivered via facsimile at thefacsimile number specified in this Section14prior to 6:30 p.m. (New York City time) on a Business Day, (ii) the nextBusiness Day after the date of transmission,if such notice or communication is delivered via facsimile at the facsimilenumber specified in this Section14on a day that is not a Business Day or laterthan 6:30 p.m. (New York City time) on any Business Day, (iii) theBusinessDay following the date of mailing, if sent by nationally recognized overnightcourierservice, or (iv) upon actual receipt by the party to whom such noticeis requiredto be given. The addresses for such communications shall be: (i) iftothe Company, to Millennium Cell Inc., 1 Industrial Way West, Eatontown, NewJersey,07724, Facsimile No.: (732) 542-4010, Attn: Chief Financial Officer,or(ii) if to the Holder, to the address or facsimile number appearing on theWarrant Register or such other address or facsimile number as the Holder mayprovide to the Company in accordance with this Section14.
15.WarrantAgent.The Company shall serve as warrant agent under this Warrant. Upon thirty (30)days’ notice to the Holder, the Company may appoint a new warrant agent. Anycorporation into which the Company or any new warrant agent may be merged or anycorporation resulting from any consolidation to which the Company or any newwarrant agent shall be a party or any corporation to which the Company or anynew warrant agent transfers substantially all of its corporate trust orshareholders services business shall be a successor warrant agent under thisWarrant without any further act. Any such successor warrant agent shall promptlycause notice of its succession as warrant agent to be mailed(by first class mail, postage prepaid) to the Holder at the Holder’slastaddress as shown on the Warrant Register.
(a) ThisWarrant shall be binding on and inure to the benefit of the parties hereto andtheir respective successors and assigns. Subject to the preceding sentence,nothing in this Warrant shall be construed to give to any Person other than theCompany and the Holder any legal or equitable right, remedy or cause of actionunder this Warrant. This Warrant may be amended only in writing signed by theCompany and the Holder and their successors and assigns.
(b) Allquestions concerning the construction, validity, enforcement and interpretationof this Warrant shall be governed by and construed and enforced in accordancewith the internal laws of the State of Delaware, without regard to theprinciples of conflicts of law thereof. Each party agrees that all legalproceedings concerning the interpretations, enforcement and defense of thetransactions contemplated by this Warrant (whether brought against a partyhereto or its respective affiliates, directors, officers, shareholders,employees or agents) shall be commenced in the state and federal courts sittingin Delaware . Each party hereto hereby irrevocably submits to the exclusivejurisdiction of the state and federal courts sitting in the Delaware for theadjudication of any dispute hereunder or in connection herewith or with anytransaction contemplated hereby or discussed herein (including with respect tothe enforcement of this Warrant), and hereby irrevocably waives, and agrees nottoassert in any suit, action or proceeding, any claim that it is notpersonallysubject to the jurisdiction of any such court, that such suit, action orproceeding is improper. Each party hereto hereby irrevocably waives personalserviceof process and consents to process being served in any such suit,actionor proceeding by mailing a copy thereof via registered or certified mail orovernight delivery (with evidence of delivery) to such party at the address ineffect for notices to it under this Warrant and agrees that such service shallconstitute good and sufficient service of process and notice thereof. Nothingcontained herein shall be deemed to limit in any way any right to serve processin any manner permitted by law. Each party hereto (including its affiliates,agents, officers, directors and employees) hereby irrevocably waives, to thefullest extent permitted by applicable law, any and all right to trial by juryin any legal proceeding arising out of or relating to this Warrant or thetransactions contemplated hereby.
(c) Theheadings herein are for convenience only, do not constitutea part of this Warrant and shall not be deemed to limit or affectanyof the provisions hereof.
(d) Incase any one or more of the provisions of this Warrant shall be invalid orunenforceable in any respect, the validity and enforceabilityof the remaining terms and provisions of this Warrant shall not inany way be affected or impaired thereby and the parties will attempt ingoodfaith to agree upon a valid and enforceable provision which shall be acommercially reasonable substitute therefor, and upon so agreeing, shallincorporate such substitute provision in this Warrant.
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INWITNESS WHEREOF, the Company has caused this Warrant to be dulyexecuted by its authorized officer as of the date first indicatedabove.
FORMOF NOTICE OF EXERCISE
1Industrial Way West
Eatontown,New Jersey 07724
Attention: ChiefFinancial Officer
1. Theundersigned hereby elects to purchase, pursuant to the provisions of thatcertain Warrant No. __ dated as of _________ ___, 200_, issued by MillenniumCell Inc. (the “Company”)and held by the undersigned (the “Warrant”), shares of Common Stock, by exercise of the Warrant with respect to that numberof Warrant Shares. Capitalized terms used but not defined in this Notice ofExercise shall have the meanings given such terms in the Warrant.
2. Theexercise of the Warrant is pursuant to Section 12 of the Warrant, andpayment, in cash or by check, of the aggregate Purchase Price under such Warrantwith respect to the number of Warrant Shares set forth in Section1of this Notice of Exercise, accompanies this Notice of Exercise.
3. Pleaseissue a certificate or certificates representing said shares of Common Stock inthe name of the undersigned or in such other name as is specifiedbelow: