JOINT DEVELOPMENT AGREEMENT

Development Agreement

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DOW CHEMICAL COMPANY | MILLENNIUM CELL INC

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Title: JOINT DEVELOPMENT AGREEMENT
Governing Law: Delaware Date: 2/28/2005
Industry: ELECTR Law Firm: Dickstein, Shapiro, Morin & Oshinsky LLP; Sector: TECHNO

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EXHIBIT 10.2

[Form of]

JOINT DEVELOPMENT AGREEMENT

By and Between

MILLENNIUM CELL INC.

and

THE DOW CHEMICAL COMPANY

TABLE OF CONTENTS

1.	Definitions	2

2.	Milestones.	2

2.1.	Purpose	2
2.2.	Milestones 1, 2, 3 and 4	2
2.3.	Steering Committee	2
2.4.	No Restrictions	3

Intellectual Property.

3.1.	MCEL-Contributed IP	3
3.2.	Cross Licensing Agreement	3

Development Obligations of MCEL.

4.1.	MCEL Obligations Generally	4
4.2.	MCEL Obligations Per Milestone	4

Development Obligations of Dow.

5.1.	Dow Obligations Generally.	7
5.2.	Dow Obligations Per Milestone	8

Compensation to Dow Upon Achievement of Milestones

6.1.	Compensation Per Milestone	9
6.2.	Limitations on Compensation.	10

Representations and Warranties By MCEL

7.1.	General Representations and Warranties.	11
7.2.	MCEL’s Commitment	12
7.3.	MCEL-Contributed Intellectual Property	12
7.4.	Disclaimer.	13
7.5.	JDA Intellectual Property	13
7.6.	Disclaimer.	15

Representations and Warranties By Dow

8.1.	General Representations and Warranties.	15
8.2.	Disclaimer	16

Other Agreements Relating to the Joint Development Activities.

9.1.	Confidential Information	16
9.2.	License and Supplier Arrangements with Third Parties.	18
9.3.	Non-Solicitation of Employees	19
9.4.	Costs and Expenses Related to Joint Development	19
9.5.	Determination of Milestone and Objectives under the Milestone Table.	19
9.6.	Publicity/Press Releases	20
9.7.	Records	20
9.8.	Insurance	20

10.

Indemnification.

10.1.	Survival	21
10.2.	Indemnification by MCEL	21
10.3.	Indemnification by Dow	22
10.4.	Limitation	22
10.5.	Procedures.	22
10.6.	Additional Obligations with respect to Intellectual Property	24
10.7.	Exclusivity of Remedies	24

11.

Term and Termination.

11.1.	Term	24
11.2.	Termination by Either Party	25
11.3.	Termination By Dow	25
11.4.	Termination by MCEL	25
11.5.	Effect of Termination.	26
11.6.	Survival of Certain Provisions	26

12.

Disputes.

12.1.

Alternative Dispute Resolution

13.

General Provisions.

13.1.	Relationship of the Parties	27
13.2.	Transfer; Successors and Assigns	27
13.3.	Governing Law	27
13.4.	Counterparts	27
13.5.	Construction of Certain Terms	27
13.6.	Notices	28
13.7.	Amendments and Waivers	29
13.8.	Severability	29
13.9.	Delays or Omissions	29
13.10.	Entire Agreement	29

Exhibit A Definitions

Exhibit B Milestones

Schedule 1 MCEL-Contributed Intellectual Property

Schedule 2 Excluded Intellectual Property

JOINT DEVELOPMENT AGREEMENT

THIS JOINT DEVELOPMENT AGREEMENT (this “Agreement”) is made and entered into on this __ day of __________, 2005 (the “Effective Date”) by and between THE DOW CHEMICAL COMPANY, a Delaware corporation (“Dow”) and MILLENNIUM CELL INC., a Delaware corporation (“MCEL”). Dow and MCEL also may be referred to herein individually as a “Party” or collectively as the “Parties.”

Recitals

WHEREAS, the Parties entered into that certain Stock Purchase Agreement, dated as of February 27, 2005 (the “Stock Purchase Agreement”), pursuant to which, among other things, at the First Closing (as defined in the Stock Purchase Agreement), the Parties are to enter into this Agreement;

WHEREAS, the First Closing has occurred and, simultaneously therewith, the Parties are entering into this Agreement pursuant of the Stock Purchase Agreement;

WHEREAS, simultaneously with the entering into of this Agreement, Dow and MCEL have also entered into that certain Cross Licensing and Intellectual Property Agreement, dated as of the Effective Date (the “Cross Licensing Agreement”);

WHEREAS, MCEL is engaged in the business of developing fuel systems for the safe storage, transportation and generation of hydrogen for use as an energy source and, in connection therewith, has developed and patented the proprietary system called Hydrogen on Demand®, whereby the energy potential of hydrogen is carried in the chemical bonds of sodium borohydride, which in the presence of a catalyst, releases hydrogen;

WHEREAS, among other things, Dow is engaged directly and indirectly in developing technologies addressing the increasing need for energy for portable electronics devices;

WHEREAS, the Parties wish to jointly develop portable energy solutions through the production of hydrogen gas for use by fuel cells within the Field of Use (as defined below) and within the Application (as defined below), using certain processes currently being developed by MCEL, as further described in this Agreement;

WHEREAS, in connection with the joint development arrangement described above, and pursuant to the terms and conditions of the Stock Purchase Agreement and this Agreement, MCEL and Dow have agreed that MCEL will (i) upon the execution of this Agreement, issue certain shares of Series A Preferred Stock (as defined below) and (ii) upon the achievement of Milestones 1, 2, 3 and 4 (each as defined below), issue certain shares of Series A Preferred Stock in consideration for Dow providing its commercial and technical services pursuant to this Agreement, as further described in this Agreement and the Stock Purchase Agreement; and

WHEREAS, pursuant to the terms and conditions of the Stock Purchase Agreement, MCEL and Dow have agreed that, upon the achievement of Milestones 1, 2, 3 and 4, MCEL will offer to sell, and Dow may purchase, certain shares of Series B Preferred Stock in consideration for Dow’s equity investments into MCEL, as further described in this Agreement and the Stock Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the Parties agree as follows:

1. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth in Exhibit A (Definitions). Capitalized terms that do not appear in Exhibit A shall have the meanings given such terms as provided for in this Agreement.

2. Milestones.

2.1. Purpose. The Parties have entered into this Agreement for the purpose of jointly developing portable energy solutions through the production of hydrogen gas for use by fuel cells using certain processes currently being developed by MCEL. In connection therewith, MCEL shall use reasonable best efforts to, among other things, perform the MCEL Military Tasks and the MCEL Consumer Tasks and Dow shall use commercially reasonable efforts when requested by MCEL to perform the Dow Military Tasks and the Dow Consumer Tasks in accordance with this Agreement. By performing these obligations, MCEL will seek to cause the occurrence of the Military Objectives and the Consumer Objectives (if any) contained in the four (4) milestones described in this Article 2 (each, a “Milestone” and, collectively, the “Milestones”) and, as a result of the occurrence of all the Military Objectives or the Consumer Objectives in any such Milestone, will achieve such Milestone as set forth in the Milestone Table. Upon the achievement of each Milestone, Dow will be entitled to receive Series A Preferred Stock and to purchase Series B Preferred Stock and receive Warrants, subject to the terms and conditions of this Agreement and the other Transaction Agreements.

2.2. Milestones 1, 2, 3 and 4. Each of the four (4) Milestones (“Milestone 1,” “Milestone 2”, “Milestone 3” and “Milestone 4”, respectively) shall be achieved upon the occurrence of either (i) all of the Military Objectives or (ii) all of the Consumer Objectives, in either case, corresponding to such Milestone in the Milestone Table set forth on Exhibit B of this Agreement (the “Milestone Table”). Notwithstanding anything to the contrary set forth in the Milestone Table, (i) if Milestone 2 is achieved prior to the achievement of Milestone 1, then Milestone 1 will be deemed to have been achieved upon the achievement of Milestone 2, (ii) if Milestone 3 is achieved prior to the achievement of Milestone 1 and/or Milestone 2, then any prior Milestone that has not been achieved at such time (Milestone 1 and/or Milestone 2, as the case may be) will be deemed to have been achieved upon the achievement of Milestone 3, (iii) if Milestone 4 is achieved prior to the achievement of Milestone 1, Milestone 2 and/or Milestone 3, then any prior Milestone that has not been achieved at such time (Milestone 1, Milestone 2 and/or Milestone 3, as the case may be) will be deemed to have been achieved upon the achievement of Milestone 4. In any such event, all of the Closings (as defined in the Stock Purchase Agreement) preceding the applicable Milestone shall occur simultaneously.

2.3. Steering Committee. The Parties shall establish and maintain a steering committee (the “Steering Committee”) that will oversee the development activities under, and all other aspects of the relationship contemplated by, this Agreement and facilitate the relationship between Dow and MCEL as explicitly set forth this Agreement. The Steering Committee shall consist of four (4) individuals (each, a “Committee Member”), two (2) of which shall be appointed by Dow at its sole discretion and two (2) of which shall be appointed by MCEL at its sole discretion. The initial Committee Members shall be as follows (a) two MCEL-appointed Committee Members shall be: (i) Adam Briggs and (ii) John Battaglini and the two-Dow appointed Committee Members shall be: (i) Director Emerging Energy Platform and (ii) another representative to be appointed in the future; provided, however, either Party may replace such Party’s Committee Members at any time by providing written notice to the other Party. During the Term, the Steering Committee will meet from time to time and in the manner as the Committee Members shall agree. Any action made by the Steering Committee under this Agreement shall only be enforceable if at least seventy-five percent (75%) of the Committee Members agree to such action in writing. Notwithstanding anything to the contrary set forth herein, in no event shall the Steering Committee have the right to modify, amend, supplement, change or waive any provision or term of this Agreement.

2.4. No Restrictions. In no event shall the obligations of the Parties contained in this Agreement, the Stock Purchase Agreement, the other Transaction Agreements or transactions contemplated hereby or thereby prevent or in any way prohibit or restrain the either Party from engaging in any activities (including without limitation, development activities, joint development activities, investment activities or otherwise) which may be deemed to be directly or indirectly competitive with the other Party, the current operations of the other Party or the future business plans of the other Party, it being understood that each Party may by itself or in combination with other third parties, develop, manufacture, produce or sell hydrogen fuel cell products; provided, however, each Party’s rights under this Section 2.4 shall be subject to all agreements and restrictions of the Parties with respect to (i) Dow Intellectual Property, MCEL-Contributed Intellectual Property (as defined below) and Joint Development Intellectual Property under this Agreement, the Cross Licensing Agreement and all other Transaction Agreements, (ii) the specific representations, warranties, covenants and agreements contained in the Transaction Agreements and (iii) confidentiality and non-solicitation obligations of the Parties under this Agreement.

Intellectual Property.

3.1. MCEL-Contributed IP. MCEL hereby acknowledges and agrees that all patents, copyrights, trade secrets, technical data, designs, concepts, processes, formulae, know-how and information of MCEL as of the date of this Agreement to be used by MCEL in furtherance of the purpose of this Agreement, including without limitation the patents, copyrights and other intellectual property set forth on Schedule 1, and all know-how and trade secrets embodied therein shall collectively be, “MCEL-Contributed Intellectual Property”; provided, however, neither (i) the intellectual property set forth on Schedule 2 of this Agreement nor (ii) the JDA Intellectual Property shall be deemed MCEL-Contributed Intellectual Property. MCEL shall use the MCEL-Contributed Intellectual Property to the extent necessary to meet its obligations under this Agreement.

3.2. Cross Licensing Agreement. Simultaneously herewith, the Parties acknowledge and agree that the Parties have entered into the Cross Licensing Agreement with respect to the intellectual property matters related to the transactions contemplated by this Agreement.

Development Obligations of MCEL.

4.1. MCEL Obligations Generally. During the Term, MCEL shall use its reasonable best efforts to achieve each of the Military Objectives and each of the Consumer Objectives as expeditiously as possible; provided, however, that in the event the Board of Directors of MCEL determines in good faith that it is in the best interests of MCEL to primarily pursue only the Military Objectives or the Consumer Objectives in respect of MCEL’s efforts to achieve the unachieved Milestones (such determination being a “One-Track Determination”), then MCEL shall (i) promptly inform Dow that MCEL has made such One-Track Determination and (ii) for the remainder of the Term MCEL shall use its reasonable best efforts to achieve only the Military Objectives or the Consumer Objectives, as the case may be, applicable to such unachieved Milestones.

4.2. MCEL Obligations Per Milestone. Without limiting the generality of Section 4.1, MCEL shall perform, at a minimum, each of the incomplete MCEL Military Tasks and the incomplete MCEL Consumer Tasks on the terms set forth in this Section 4.2 regardless of the Milestone that has been achieved for purposes of the Milestone Table; provided, however, if a Milestone has been achieved under the Milestone Table due to the occurrence of all Military Objectives, on the one hand, or Consumer Objectives, on the other hand, contained in such Milestone, then for the purposes of this Section 4.2, the Military Objectives or the Consumer Objectives, as applicable, contained in all preceding Milestones shall be deemed to have occurred; provided, further, if MCEL has made a One-Track Determination, then MCEL will only be required to perform such incomplete MCEL Consumer Tasks or such incomplete MCEL Military Tasks, as applicable.

(a) MCEL Military Tasks - Throughout Term For the time period commencing on the date hereof and ending upon the earlier of the achievement of the Military Objectives contained in Milestone 4 or the expiration of the Term, MCEL shall (i) identify potential opportunities with military and/or government entities to become Military Customers party to a Military Contract, Production-Ready Military Contract and/or Military P.O. and exercise reasonable best efforts through marketing and business development activities to enhance such potential opportunities; (ii) exercise best efforts to comply with any then-effective Military Contract, Production-Ready Military Contract or Military P.O.; and (iii) prepare the filings for all government/regulatory approvals necessary and appropriate for the use of NaBH₄ for the military applications contemplated by the Military Objectives, make such filings if and when applicable, and follow up with specific government/regulatory bodies and exercise reasonable best efforts to respond to further application issues as appropriate (the obligations described in this clause (iii) being the “Military NaBH₄ Approval Process”).

(b) MCEL Military Tasks - Milestone 1. From the date hereof until the achievement of the Military Objectives contained in Milestone 1, MCEL shall (i) develop proposed Military Prototype specifications to meet military needs for a fuel cell power source and develop proposed terms for a future Military Contract; (ii) develop and test the proposed Military Prototype and exercise reasonable best efforts to make the appropriate improvements thereto prior to the execution of the Military Contract; (iii) exercise reasonable best efforts to negotiate and execute a bona fide proposed Military Contract; and (iv) exercise reasonable best efforts to test, develop, manufacture and deliver a Military Prototype meeting the specifications of the executed Military Contract.

(c) MCEL Military Tasks - Milestone 2. From the date of achievement of the Military Objectives contained in Milestone 1 until the achievement of the Military Objectives contained in Milestone 2, MCEL shall (i) perform an evaluation of the Military Prototype and MCEL’s performance under the Military Contract to identify areas of improvement; (ii) develop and test the proposed production-ready Military Prototype and exercise reasonable best efforts to make the appropriate improvements thereto prior to execution of the Production-Ready Military Contract; (iii) exercise reasonable best efforts to negotiate and execute a proposed Production-Ready Military Contract; (iv) seek to become the preferred provider or the exclusive provider of the production-ready Military Prototype to the Military Customer under the Production-Ready Military Contract; and (v) exercise reasonable best efforts to test, develop, manufacture and deliver the Military Prototypes meeting the specifications of the executed Production-Ready Military Contract.

(d) MCEL Military Tasks - Milestone 3. From the date of achievement of the Military Objectives contained in Milestone 2 until the achievement of the Military Objectives contained in Milestone 3, MCEL shall (i) perform an evaluation of the production-ready Military Prototype and MCEL’s performance under the Production-Ready Military Contract to identify areas of improvement; (ii) develop a manufacturing plan for a Military Product; (iii) if applicable, identify and exercise reasonable best efforts to engage in discussions with potential licensees and suppliers of intellectual property, raw materials and products necessary or helpful for the manufacture of the production-ready Military Product and seek access thereto in anticipation of the Military P.O.; (iv) if applicable, exercise reasonable best efforts to negotiate and enter into appropriate license agreements and supplier agreements in anticipation of the Military P.O.; (v) if applicable, exercise reasonable best efforts to acquire required technology (by merger, acquisition, purchase or otherwise) to perform a proposed Military P.O.; (vi) develop and test the proposed Military Product and exercise reasonable best efforts to make the appropriate improvements thereto prior to the execution of the Military P.O.; and (vii) exercise reasonable best efforts to negotiate and execute a proposed Military P.O.; provided, that clauses (iii) and (iv) of this Section 4.2(d) shall be subject to Section 9.2.

(e)