Exhibit 10.2

 

EXECUTION VERSION

 

FUELCELL energy, inc.
EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and entered into effective as of
August 26, 2019 (the “Effective Date”), by and between FuelCell Energy, Inc.
(the “Corporation”), a Delaware corporation with its principal office at 3 Great
Pasture Road, Danbury, Connecticut 06813, and Jason B. Few (“Executive”).

 

WHEREAS, the Corporation desires to hire Executive as its President and Chief
Executive Officer and Executive desires to accept such position, commencing as
of the Effective Date; and

 

WHEREAS, the Corporation and Executive desire to enter into this Agreement to
set forth the terms and conditions of their employment relationship.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties agree as
follows:

 

1.                   Term; At-Will Employment. This Agreement shall become
effective on the Effective Date and continue until Executive’s employment with
the Corporation ends pursuant to the terms hereof; provided, however, that the
parties agree and acknowledge that Executive’s employment with the Corporation
shall be at-will, meaning that either party may terminate Executive’s employment
under this Agreement by providing written notice to the other party of the
intent to terminate such employment under this Agreement at any time (in
accordance with the procedures described in Section 8 of this Agreement). The
period during which Executive is employed by the Corporation under this
Agreement shall be referred to as the “Employment Term.”

 

2.                   Employment; Position. As of the Effective Date, the
Corporation hereby employs Executive, and Executive hereby accepts full-time
employment, upon the terms and subject to the conditions contained in this
Agreement. The Corporation shall employ Executive in the capacity of President
and Chief Executive Officer (“President and CEO”) of the Corporation during the
Employment Term, reporting to the Board of Directors of the Corporation (the
“Board”).

 

3.                   Duties. During the Employment Term, Executive shall perform
all duties, consistent with his positions as President and CEO, in order to
advance the Corporation’s affairs and related business efforts, assigned or
delegated to him by the Board and normally associated with the positions of
President and CEO. Executive shall devote all of his full business time,
attention, energies, skills, and efforts to the advancement of the interests and
business of the Corporation; provided, however, that this Agreement shall not be
interpreted as prohibiting Executive from managing Executive’s personal affairs
or engaging in charitable or civic activities or professional industry societies
so long as such activities do not interfere in any material respect with the
performance of Executive’s duties and responsibilities hereunder or conflict
with Section 7. Subject to the foregoing, Executive may serve on outside boards,
including for public companies, privately held companies and not-for-profit
organizations, provided, however, that Executive may not serve at any one time
on more than one (1) outside board of directors of a for-profit company (that is
in addition to serving on the Board of the Corporation). In addition, following
the Effective Date of this Agreement, Executive shall continue to serve as a
member of the Board, subject to the approval of the Corporation’s shareholders.

 

 

 

 

4.                   Compensation. As compensation for any and all services to
be rendered by Executive to the Corporation pursuant to this Agreement, the
Corporation shall pay Executive and provide Executive with the following
compensation and benefits during the Employment Term, which Executive agrees to
accept in full satisfaction for his services:

 

a.                   Base Salary. The Corporation shall pay Executive a base
salary, payable in equal installments at such payment intervals as are the usual
payroll practices of the Corporation, at an initial annual rate of $475,000,
less such deductions or amounts to be withheld as shall be required by
applicable law or as may be allowed at the request of Executive (the “Base
Salary”). The Base Salary shall be reviewed by the Compensation Committee of the
Board (the “Compensation Committee”) from time to time and shall be adjusted by
such amount, if any, as Compensation Committee or the independent members of the
Board, in their sole discretion, shall determine and approve. Any such
adjustment of Base Salary shall be made effective on the date set by the
Compensation Committee or the independent members of the Board (other than the
President and CEO), as applicable.

 

b.                   Annual Bonus. Beginning with the Corporation’s fiscal year
2020, for each full fiscal year of the Corporation, Executive shall be eligible
to participate in the Corporation’s annual cash incentive plans and programs
that are generally provided to the senior executives of the Corporation pursuant
to such terms and conditions as the Compensation Committee or the independent
members of the Board may prescribe from time to time (the “Annual Bonus”),
provided that Executive’s annual target bonus if the target annual performance
goal(s) are achieved shall be equal to no less than 90% of Base Salary (the
“Target Bonus”). For the portion of the Corporation’s 2019 fiscal year
(including any extension thereof for purpose of determining the 2019 Annual
Bonus, as approved by the Board) following the Effective Date, Executive shall
be eligible to receive a pro-rated Target Bonus based on the number of days that
Executive is employed by the Corporation as the President and CEO during the
fiscal year (including any extension thereof for purpose of determining the 2019
Annual Bonus, as approved by the Board), and such Target Bonus shall be paid
only to the extent the three milestone goals (with each goal equally weighted)
that other executive officers are required to achieve to receive the cash
incentive awards pursuant to the letter agreements entered into in July of 2019
are achieved, as determined by the Compensation Committee. For the avoidance of
doubt, other than the terms specified in this Section 4.b, the pro-rated 2019
Annual Bonus shall otherwise be subject to the general terms and conditions of
the Corporation’s annual cash incentive plan or program for the 2019 fiscal year
for its senior executives, provided, that, such 2019 Annual Bonus shall be paid
to Executive (to the extent earned) by no later than March 15, 2020.

 

c.                   Sign-On Bonus. In recognition of, among other things,
Executive’s resignation from his current position and agreement to work in a
location far from his current home and family, the Corporation shall pay
Executive a cash signing bonus in the gross amount of $500,000 (the “Signing
Bonus”), 50% of which will be included in Executive’s first paycheck following
the Effective Date, and 50% of which will be paid within thirty (30) days
following the Board’s approval of Executive’s business plan for the
Corporation’s 2020 fiscal year (including, if Executive dies after he submits
such business plan, provided that, the Board approves such plan as submitted),
provided, however, that the second 50% payment shall, in all events, be paid to
Executive (to the extent earned) in the 2020 calendar year. The Corporation
agrees that Executive’s business plan shall be placed before the Board for
approval by the end of the Corporation’s 2019 fiscal year, provided it is timely
submitted by Executive, and that, to the extent the business plan is
satisfactory to the Board, approval shall not unreasonably be withheld or
delayed by the Board. Notwithstanding the foregoing, Executive shall repay a
pro-rata portion of the Signing Bonus if, prior to the eighteen (18) month
anniversary of the Effective Date, Executive terminates his employment (other
than for Good Reason (as defined below) or other than on account of Executive’s
death or Disability) or his employment is terminated by the Corporation for
Cause (as defined below). For purposes of determining the pro-rata repayment
obligation, Executive’s obligation shall lapse as to 1/18th of the Signing Bonus
for each complete month or portion thereof that Executive remains employed by
the Corporation.

 

 

 

 

d.                   Long-Term Incentive Compensation.

 

(i)                 On the Effective Date, the Corporation shall grant to
Executive an award of 500,000 restricted stock units (the “Initial RSU Award”)
to be settled in shares of the Corporation’s common stock pursuant to the
Corporation’s 2018 Omnibus Incentive Plan (the “Plan”). The Initial RSU Award
shall (a) be contingent on shareholder approval of a sufficient number of
additional shares of the Corporation’s common stock to settle the Initial RSU
Award in such shares, (b) vest on the third (3rd) anniversary of the Effective
Date provided that Executive remains continuously employed by the Corporation
through such date and (c) include an opportunity for Executive to earn
additional restricted stock units at the end of the vesting period based on the
price of the Corporation’s common stock, as described in Appendix A attached
hereto. The Corporation shall submit a proposal for the approval of additional
shares under the Plan to its shareholders no later than the Corporation’s next
annual meeting of shareholders, and Executive and the Corporation shall make
good faith efforts to continue to seek such shareholder approval if the initial
proposal is not approved. If the Corporation’s shareholders do not approve
sufficient additional shares under the Plan, then the Initial RSU Award shall be
null and void and the Corporation shall grant to Executive a cash-settled award
of restricted stock units (the “Cash-Settled RSU Award”) with similar terms to
the Initial RSU Award except that such award shall be settled in cash rather
than shares and shall be subject to a cap on the amount payable by the
Corporation of $10,000,000 and such Cash-Settled RSU Award will be made in
compliance with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). If the amount of the payment under the Cash-Settled RSU Award is
limited by such cap, then the Corporation and Executive agree to negotiate in
good faith to reach agreement with respect to alternative arrangements to
compensate Executive for such limitation, which agreement may include one or
more grants of shares if and when additional shares are authorized by the
Corporation’s shareholders. Executive understands and agrees that the Initial
RSU Award (and any Cash-Settled RSU Award, if applicable) shall be subject to
the provisions of the Plan and an award agreement or other separate written
agreements evidencing the grant, which shall conform to the applicable terms of
this Agreement. Notwithstanding the foregoing, to the extent the Corporation
determines that the Cash-Settled RSU Award may not be granted under the Plan,
nothing contained in this Section 4.d.i is intended to be construed as limiting
the Corporation’s obligation to grant the Cash-Settled RSU Award outside of the
terms of the Plan. Additional terms and conditions of the Initial RSU Award,
including the treatment thereof upon a Change of Control (as defined below), are
set forth in Appendix A attached hereto.

 

(ii)               Beginning with the Corporation’s fiscal year 2020, and on an
annual basis thereafter, Executive shall be eligible to participate in such
long-term incentive plans or programs of the Corporation as are generally
provided to the senior executives of the Corporation, as determined by the
Compensation Committee or the independent members of the Board in their
discretion.

 

e.                   Benefits. Executive shall be entitled to participate, to
the extent he is eligible, in all group insurance programs, health, medical,
dental, and disability plans (including, without limitations, the Corporation’s
401(k) plan), and other employee benefit plans, programs and policies (including
the Corporation’s vacation policy, as more fully described in paragraph (k)
below) which the Corporation may hereafter in its sole and absolute discretion
make available generally to its full-time salaried employees, but the
Corporation shall not be required to establish or maintain any such program or
plan other than as specifically set forth herein. Executive understands that
except as otherwise provided for herein, the Corporation may amend, change, or
cancel its employment policies and benefit plans at any time as allowed by law
or by any applicable plan documents. To the extent (i) Executive is subject to
an eligibility waiting period under the Corporation’s medical plan, and (ii)
Executive timely enrolls in COBRA group health coverage offered by a prior
employer for such waiting period and provides documentation to the Corporation
identifying such premium costs, then the Corporation shall provide a cash
payment to Executive for each month of the waiting period in an amount equal to
the Executive’s COBRA premium cost for such eligibility waiting period only.

 

f.                    Business Expenses. The Corporation shall pay, or reimburse
Executive for, the reasonable and necessary business expenses of Executive
incurred in the performance of his duties under this Agreement in accordance
with the Corporation’s expense reimbursement policies and procedures, provided
Executive provides timely and reasonable documentation of those expenses in
accordance with the rules and regulations of the Corporation. Any such
reimbursements shall be made as soon as practicable after Executive provides
documentation of expenses to the Corporation, but in no event later than the
last day of the calendar year following the end of the calendar year in which
such expense is incurred.

 

 

 

 

g.                   Membership Fees. The Corporation shall reimburse Executive
for fees, up to ten thousand dollars ($10,000) annually, for Executive’s
membership in the Young Presidents Organization (“YPO”) and shall reimburse
Executive for fees for any other organizations mutually agreeable to Executive
and the Corporation. Such fees shall include, but not be limited to, expenses
associated with Executive’s attendance at the annual YPO Forum Retreat and
attendance at any other educational events.

 

h.                   Tax Preparation Fees. The Corporation shall reimburse
Executive for Executive’s reasonable fees incurred from time to time for tax
preparation and planning services, up to a maximum amount of ten thousand
dollars ($10,000) per annum.

 

i.                    Relocation. In recognition of Executive’s agreement to
relocate to the Danbury, Connecticut area by no later than the first (1st)
anniversary of the Effective Date, the Corporation shall pay to Executive a lump
sum cash payment in the gross amount of $200,000 (the “Relocation Payment”),
which shall be payable to Executive within thirty (30) days following
Executive’s relocation, provided that (i) such relocation occurs by no later
than the first (1st) anniversary of the Effective Date, and (ii) Executive is
employed by the Corporation on the date of any such payment. For purposes of
this Section 4.i, the Executive shall have “relocated” to the Danbury,
Connecticut area as of the time Executive has established permanent residence in
the Danbury, Connecticut area, which shall include ceasing use of the apartment
and receiving monthly payment as provided to Executive pursuant to Section 4.j.
If the Board has determined that Executive is otherwise entitled to payment
under this Section 4.i, but Executive (i) is terminated by the Corporation
without Cause or (ii) dies, in ease case following relocation, but prior to the
actual payment date, then the Corporation shall pay such Relocation Payment to
Executive (or, in the case of death, Executive’s legal representatives). The
Corporation shall also pay or promptly reimburse Executive for the reasonable
cost of up to two (2) trips to the Danbury, Connecticut area for Executive’s
spouse to facilitate possible relocation. If Executive terminates his employment
other than for Good Reason or the Corporation terminates Executive’s employment
for Cause, in each case prior to the first (1st) anniversary following such
relocation, then Executive shall be required to repay the Corporation a pro-rata
portion of such Relocation Payment. For purposes of determining the pro-rata
repayment obligation, Executive’s obligation shall lapse as to 1/12th of the
Relocation Payment for each complete month or portion thereof that Executive
remains employed by the Corporation following relocation.

 

j.                    Commuting and Apartment Expenses. In recognition of
Executive’s agreement to commute to the Danbury, Connecticut area until he is
able to relocate to such area (as described above), the Corporation shall pay to
Executive the gross amount of $13,000 per month, which shall be payable to the
Executive on a regularly scheduled payment date that occurs in each month during
which Executive is employed by the Corporation through the first (1st)
anniversary of the Effective Date (or such earlier time upon Executive’s
relocation (as described in Section 4.j above). In addition, through the first
(1st) anniversary of the Effective Date, the Corporation shall provide Executive
with a reasonable apartment in the Danbury, Connecticut area.

 

k.                   Vacation. Executive shall be entitled to receive five (5)
weeks of paid vacation per annum (pro-rated for partial fiscal years) and shall
be entitled to receive paid holidays as enjoyed by all other employees of the
Corporation.

 

5.                   Compliance with Policies. Executive acknowledges and agrees
that, except as set forth in this Agreement, compliance with the Corporation’s
policies, practices and procedures is a term and condition of his employment
under this Agreement. The Corporation agrees to make available to Executive a
copy of all current policies, practices and procedures and any such changes
therein as provided to other similarly-situated employees.

 

 

 

 

6.                   Intellectual Property, Inventions and Improvements.
Executive acknowledges, covenants and agrees that the Corporation shall be the
sole owner of all the fruits and proceeds of Executive’s services to the
Corporation, including but not limited to all writings, inventions, discoveries,
designs, systems, processes, software or other improvements relating to the
business or products of the Corporation, whether or not patentable,
registerable, or copyrightable, which Executive may, alone or with others,
conceive, create, develop, produce or make during or as a result of his
employment with the Corporation (collectively, the “Inventions”), free and clear
of any claims by Executive of any kind or character whatsoever other than
Executive’s rights to compensation under this Agreement. Executive agrees that
he shall disclose each of the Inventions promptly and completely to the
Corporation, and shall, at the request of the Board, execute such assignments,
certificates or other instruments as the Board or the Corporation from time to
time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend the Corporation’s right, title and interest in or to
any or all of the Inventions. Executive acknowledges that all works of
authorship (including, without limitation, works of authorship that contain
software program code) relating to the business of the Corporation and produced
during Executive’s employment with the Corporation, whether they are or are not
created on the Corporation’s premises or during regular working hours, are works
made for hire and are the property of the Corporation, and that copyrights in
those works of authorship are the property of the Corporation. If for any reason
the Corporation is not the author of any such work of authorship for copyright
purposes, Executive hereby expressly assigns all of his rights in and to that
work to the Corporation and agrees to sign any instrument of specific assignment
requested. Executive, whether or not still employed by the Corporation, agrees
to supply evidence, give testimony, sign and execute all papers, and do all
other legal and proper things that the Corporation may deem reasonably necessary
for obtaining, maintaining, and enforcing patents for such Inventions and for
vesting in the Corporation full title. If Executive is no longer employed by the
Corporation at such time, then the Corporation shall pay Executive his
reasonable out-of-pocket expenses incurred in connection with his providing the
services rendered by him in the previous sentence.

 

7.                   Restrictive Covenants.

 

a.                   Non-Disclosure of Confidential Information. Executive
acknowledges that, in and as a result of his employment by the Corporation, he
will be making use of, acquiring and/or adding to the Corporation’s Confidential
Information (as defined below). As a material inducement to the Corporation to
employ Executive and to pay Executive the compensation and benefits set forth in
this Agreement, Executive covenants and agrees that he shall not, at any time
during or following the term of his employment with the Corporation, directly or
indirectly divulge or disclose for any purposes whatsoever, any Confidential
Information that has been obtained by, or disclosed to, him as a result of his
employment with the Corporation. For purposes of this Agreement, “Confidential
Information” means, collectively, all confidential matters and materials of the
Corporation, including without limitation, (i) the Corporation’s proprietary
information, inventions, trade secrets, knowledge, data, know-how, intellectual
property, systems, procedures, manuals, pricing policies, operational methods
and information relating to the Corporation’s products, processes, formulae,
business plans, marketing plans and strategies, pricing strategies, customer
lists, and all other subject matters pertaining to the business and/or financial
affairs of the Corporation; (ii) the Corporation’s information regarding plans
and strategies for research, development, new products, future business plans,
budgets and unpublished financial statements, licenses, prices and costs; (iii)
information regarding the skills and compensation of other employees of the
Corporation; and (iv) information disclosed in confidence to the Corporation by
a third party with a duty on the Corporation to maintain the confidentiality of
such information. The term “Confidential Information” shall not include any
information that (x) is generally available to the public on the Effective Date;
(y) becomes generally available to the public other than as a result of a
disclosure not otherwise permissible hereunder or made by a third party without
the Corporation’s consent. If Executive is required by a court, arbitration
tribunal, or governmental agency (by oral questions, interrogatories, requests
for information or documents, subpoena, civil investigation demand or similar
process) to disclose any Confidential Information, Executive may disclose such
Information to such court, tribunal, or agency without liability hereunder,
provided, that to the extent allowed by law, Executive first provides the
Corporation with notice of any such requirement(s) as promptly as practicable,
but in any case, to the extent allowed by law, with sufficient timeliness to
enable the Corporation to seek an appropriate protective order and/or waive its
compliance with the relevant provisions of this Agreement. Notwithstanding the
foregoing, under no circumstances shall Executive be obligated not to disclose
Confidential Information if to so withhold such information would be in
violation of law.

 

 

 

 

b.                   Non-Solicitation of Employees. While Executive is employed
by the Corporation and for a period of one (1) year, followed by a second period
of one (1) year, for a total period of two (2) years, from the date of
termination of Executive's Employment Term with the Corporation for any reason,
Executive shall not directly or indirectly solicit, induce or encourage any of
the Corporation’s employees to terminate their employment with the Corporation
or to accept employment with any competitor, supplier, client, agent or broker
of the Corporation, nor shall Executive cooperate with any others in doing or
attempting to do so. As used in this paragraph, the term “solicit, induce or
encourage” includes, but is not limited to, (i) initiating communications with
any employee of the Corporation relating to a possible employment or independent
contractor relationship, (ii) offering bonuses or additional compensation to
encourage any employee of the Corporation to terminate his or her employment
with the Corporation and accept employment with a competitor, supplier, client,
agent or broker of the Corporation, or (iii) referring any employee of the
Corporation to recruiters, personnel or agents employed by competitors,
suppliers, clients, agents or brokers of the Corporation. Notwithstanding the
foregoing, the term “solicit, induce or encourage”, as used in this Section 7.b,
specifically excludes any action by Executive related to any of the
Corporation’s employees where it is in the Corporation’s best interest to
terminate any such employees as in the case of a planned reduction in force by
the Corporation or any general solicitation not directed specifically to
employees of the Corporation.

 

c.                   Non-Compete. While Executive is employed by the Corporation
and for a period of one (1) year, followed by a second period of one (1) year,
for a total period of two (2) years, from the date of termination of Executive's
employment with the Corporation for any reason, Executive shall not directly or
indirectly, as a principal, agent, contractor, employee, employer, partner,
shareholder, proprietor, investor, member, director, officer or consultant or in
any other capacity, engage in or perform any managerial or executive services
for any corporation, partnership, individual or entity which is engaged in a
business competitive with the Corporation or affiliate of the Corporation,
where:

 

(i)                 The term “engaged in a business competitive with the
Corporation” means directly or indirectly engaging in the business of
researching, developing, designing, manufacturing, selling or distributing fuel
cells or batteries or engaging in the same or any substantially similar business
as the Corporation or any of its affiliates in any manner whatsoever within any
geographic area in which the Corporation’s products or services are offered or
distributed. Executive understands and agrees that, because the Corporation is
engaged in business throughout the world, the geographic area covered by this
non-compete covenant extends throughout North America, South America, Europe,
Asia and Africa; and

 

(ii)               The term “affiliate” means any legal entity that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with the Corporation.

 

d.                   Exclusion for Investments. None of the provisions of this
Section 7 shall prohibit Executive from investing in securities (i) listed on a
national securities exchange or actively traded over-the-counter so long as such
investments are not greater than five percent (5%) of the outstanding securities
of any issuer of the same class or issue or (ii) of entities engaged in a
business competitive with the Corporation so long as any such entity was not
engaged in a business competitive with the Corporation at the time Executive
made such investment.

 

e.                   Limits on Confidentiality Requirements. Notwithstanding any
provision of this Agreement to the contrary, the covenants set forth in this
Section 7 are not intended to, and shall be interpreted in a manner that does
not, limit or restrict Executive from exercising any legally protected
whistleblower rights.

 

 

 

 

(i)                 Nothing in this Agreement is intended to discourage or
restrict Executive from communicating with, or making a report with, any
governmental authority regarding a good faith belief of any violations of law or
regulations based on information that Executive acquired through lawful means in
the course of Executive's employment, including such disclosures protected or
required by any whistleblower law or regulation of the Securities and Exchange
Commission, the Department of Labor, or any other appropriate governmental
authority.

 

(ii)               Nothing in this Agreement is intended to discourage or
restrict Executive from reporting any theft of Trade Secrets (as defined below)
pursuant to the Defend Trade Secrets Act of 2016 (the “DTSA”) or other
applicable state or federal law. “Trade Secret” shall mean information,
including a formula, pattern, compilation, program, device, method, technique,
process, financial data, or list of actual or potential customers or suppliers
that: (A) derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use; and
(B) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. The DTSA prohibits retaliation against an employee because
of whistleblower activity in connection with the disclosure of Trade Secrets, so
long as any such disclosure is made either (x) in confidence to an attorney or a
federal, state, or local government official and solely to report or investigate
a suspected violation of the law, or (y) under seal in a complaint or other
document filed in a lawsuit or other proceeding.

 

(iii)             If Executive believes that any employee or any third party has
misappropriated or improperly used or disclosed Trade Secrets or Confidential
Information, Executive should report such activity through applicable policies
and procedures of the Corporation. This Agreement is in addition to and not in
lieu of any obligations to protect the Corporation’s Trade Secrets and
Confidential Information pursuant to the Corporation’s Employee Handbook and/or
any other then applicable policies and procedures of the Corporation. Nothing in
this Agreement shall limit, curtail or diminish the Corporation’s statutory
rights under the DTSA or any applicable state law regarding trade secrets or
common law.

 

f.                    Reasonableness of Restrictions. Executive has carefully
read and considered the provisions of this Section 7, and, having done so,
agrees that:

 

(i)                 The restrictions set forth in Section 7, including but not
limited to the character, duration, and geographical area of restriction, are
fair and reasonable and are reasonably required for the protection of the good
will and other legitimate business interests of the Corporation and its
affiliates, officers, directors, shareholders, and other employees;

 

(ii)               Executive has received, or is entitled to receive, adequate
consideration for such obligations; and

 

(iii)             Such obligations do not prevent Executive from earning a
livelihood.

 

If, notwithstanding the foregoing, any of the provisions of this Section 7 shall
be held to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid and
unenforceable parts had not been included therein. If any provision of this
Section 7 is determined by a court of competent jurisdiction that the character,
duration, geographical scope, or related aspects are unreasonable in light of
the circumstances as they then exist, then it is the intention of the parties
that Section 7 shall be construed by the court in such a manner as to impose
only those restrictions on the conduct of Executive that are reasonable in light
of the circumstances as they then exist and as are necessary to assure the
Corporation of the intended benefit of this Agreement and such restrictions, as
so modified, shall become and thereafter be the maximum restriction in such
regard, and the restriction shall remain enforceable to the fullest extent
deemed reasonable by such court.

 

 

 

 

g.                   Remedies for Breach of Restrictive Covenants. Executive
recognizes and agrees that the Corporation’s remedy at law for any breach of
Section 7 could be inadequate as such a breach could cause irreparable harm to
the Corporation, and he agrees that, for any actual or threatened breach of such
provisions, the Corporation shall, in addition to such other remedies as may be
available to it at law or in equity, be entitled to seek injunctive relief and
to enforce its rights by an action for specific performance. All of the
Corporation’s remedies for any breach of this Agreement shall be cumulative and
the pursuit of any one remedy shall not exclude the Corporation’s pursuit of any
other remedies.

 

8.                   Termination and Severance.

 

a.                   Termination Procedures.

 

(i)                 The Employment Term and Executive’s employment hereunder may
be terminated by either the Corporation or Executive at any time and for any
reason or for no reason, provided that Executive must provide the Corporation
with thirty (30) days’ advance notice of his intent to terminate his employment,
although if Executive’s termination is without Good Reason, then the Corporation
may, in its discretion, immediately relieve Executive of all duties and
responsibilities and choose to terminate Executive’s employment without further
notice or delay, which termination shall not in and of itself constitute a
termination without Cause. The Employment Term and Executive’s employment
hereunder shall automatically be terminated upon Executive’s death.

 

(ii)               Any termination of Executive’s employment hereunder by the
Corporation or by Executive during the Employment Term (other than termination
on account of Executive’s death) shall be communicated by written notice of
termination to the other party hereto (the “Notice of Termination”) in
accordance with Section 16.

 

(iii)             Upon termination of Executive’s employment during the
Employment Term, Executive shall only be entitled to the compensation and
benefits described in this Section 8 and shall have no further rights to any
compensation or any other benefits from the Corporation or any of its affiliates
under this Agreement.

 

(iv)              Upon termination of Executive’s employment for any reason,
Executive shall be deemed to have resigned from all positions held in the
Corporation, including, without limitation, any position as a director, officer,
agent, trustee, or consultant of the Corporation or any affiliate of the
Corporation, unless the Board expressly determines otherwise. Upon request of
the Corporation, Executive shall promptly sign and deliver to the Corporation
any and all documents reflecting such resignations as of the date of termination
of his employment.

 

b.                   Termination due to Death or Disability or Voluntary
Resignation by Executive. In the event that Executive’s employment is terminated
during the Employment Term due to Executive’s death or Disability (as defined
below), or due to Executive’s voluntary resignation to which neither Section 8.d
or 8.e applies, then Executive (or, in the case of death, Executive’s legal
representatives) shall be entitled to receive only the following (collectively,
the “Accrued Benefits”):

 

(i)                 any accrued but unpaid Base Salary and accrued but unused
vacation as of Executive’s termination date, which shall be paid in accordance
with the Corporation’s customary payroll procedures;

 

(ii)               any earned but unpaid Annual Bonus with respect to any
completed fiscal year immediately preceding the date of Executive’s termination,
paid at the same time such bonus would have been paid if Executive’s employment
had not terminated;

 

(iii)             reimbursement for unreimbursed business expenses properly
incurred by Executive, paid in accordance with the Corporation’s expense
reimbursement policy; and

 

(iv)              employee benefits, if any, to which Executive may be entitled
under the Corporation’s employee benefit plans as of the date of Executive’s
termination.

 

 

 

 

Except as otherwise provided herein, the treatment of any outstanding
equity-based awards shall be determined in accordance with the terms of the Plan
and any applicable award agreement.

 

For purposes of this Agreement, “Disability” means Executive is entitled to
receive long-term disability benefits under the Corporation’s long-term
disability plan or, if there is no such plan, Executive has incurred a permanent
and total disability (within the meaning of Section 22(e)(3) of the Code or any
successor provision), which has existed for 180 consecutive days. Any question
as to the existence of Executive’s Disability to which Executive and the
Corporation cannot agree shall be determined by an independent qualified
physician selected by the Corporation and reasonably acceptable to Executive.

 

c.                   Termination by Corporation for Cause. In the event that
Executive’s employment is terminated by the Corporation for Cause, then
Executive shall only be entitled to receive the Accrued Benefits, except that
Executive shall forfeit any earned but unpaid Annual Bonus described in Section
8.b(ii) above. For purposes of this Agreement, “Cause” shall mean that any of
the following has occurred:

 

(i)                 Executive’s material breach of this Agreement if the
Corporation has notified Executive of such breach and he has not cured such
breach within the period described below;

 

(ii)               Executive’s conviction of, or the entering of a guilty plea
or plea of no contest with respect to, a felony, the equivalent thereof, or of a
lesser crime having as its predicate element fraud, dishonesty or
misappropriation of property, whether or not property of the Corporation;

 

(iii)             Executive’s willful misconduct, willful dishonesty, or illegal
conduct, whether or not related to Executive’s employment with the Corporation
and including any acts that occurred prior to the Effective Date of this
Agreement, in each case which the Board reasonably determines has or could cause
material financial or reputational harm to the Corporation or its affiliates;

 

(iv)              Executive’s material failure to adhere to any policy of the
Corporation generally applicable to employees of the Corporation if Executive
has been given a reasonable opportunity to comply with such policy or cure his
failure to comply;

 

(v)                Executive’s appropriation (or attempted appropriation) of a
business opportunity of the Corporation, including attempting to secure or
securing any personal profit in connection with any transaction entered into on
behalf of the Corporation;

 

(vi)              Executive’s misappropriation (or attempted misappropriation)
of any of the Corporation’s funds or property;

 

(vii)            Executive’s engaging in bad faith or gross negligence in the
performance of his duties under this Agreement; or

 

(viii)          Executive’s willful and material failure to comply with any
valid and legal directive of the Board; provided, however, that the
unwillingness of Executive to accept an act that would constitute Good Reason or
any other action by or at the request of the Corporation that is contrary to
this Agreement, may not be considered by the Board to be a failure to comply.

 

 

 

 

To terminate Executive’s employment for Cause, the Board must provide Executive
with written notice to Executive of the existence of the circumstances providing
grounds for termination for Cause and, except for a circumstance which, by its
nature, cannot reasonably be expected to be cured, Executive shall have fifteen
(15) business days after delivery of such notice to cure the circumstances
constituting Cause. If such circumstance is timely cured, it shall not
constitute grounds for a termination for Cause.

 

d.                   Termination by the Corporation without Cause or Executive
for Good Reason. In the event that the Corporation terminates Executive’s
employment without Cause, or Executive terminates his employment for Good
Reason, in each case other than in connection with a Change of Control (which is
provided for under Section 8.e of this Agreement), then Executive shall be
entitled receive:

 

(i)                 the Accrued Benefits;

 

(ii)               a severance payment in an amount equal to the sum of (A)
Executive’s Base Salary as of the date of termination (excluding any reduction
in Base Salary that resulted in Executive’s termination of his employment for
Good Reason, unless Executive has waived his right to terminate for Good Reason
as provided herein) plus (B) Executive’s Target Bonus for the year of
termination. Such severance payment shall be made over the six (6) month period
beginning on the first regular payroll date of the Corporation following thirty
(30) days after Executive’s date of termination of employment (subject to
Section 8.h), with payments made to Executive in equal installments during each
of the Corporation’s usual pay periods during such six (6) month period;

 

(iii)             a pro-rata portion of the Annual Bonus amount for the year of
termination equal to the Annual Bonus that would have been payable to Executive
under Section 4.b for the year of termination if Executive had not terminated
employment, pro-rated based on the number of days in such fiscal year that
Executive is employed by the Corporation. The pro-rata Annual Bonus amount
payable to Executive hereunder, if any, shall be paid under the same terms and
conditions and at the time such bonus would normally be payable to Executive
under Section 4.b as though Executive had not been terminated;

 

(iv)              the Corporation shall pay or promptly reimburse Executive for
all reasonable relocation expenses that he incurs through the first (1st)
anniversary of his date of termination in connection with his relocation from
the Danbury, Connecticut area back to Houston, Texas (or such other city in
Executive’s discretion, provided that the expense shall not exceed the expense
of relocating to Houston, Texas). The reasonable expenses that the Corporation
shall pay or reimburse shall be limited to the same type that are payable or
reimbursable under the Corporation’s relocation policy, and shall not exceed
$200,000;

 

(v)                accelerated vesting of all outstanding equity awards,
provided, however, that any unearned performance awards shall be forfeited to
the extent not earned as of the date of Executive’s termination, and provided
further that the Additional Units (as defined in Appendix A) granted pursuant to
the Initial RSU Award shall be forfeited if Executive’s employment terminates
prior to the Vesting Date (as defined in Appendix A); and

 

 

 

 

(vi)              continued coverage of Executive and his dependents (as
applicable) during the twelve (12) month period following his termination of
employment under the Corporation’s group health and dental insurance plans to
the extent that such benefits were in effect for Executive and his family as of
the date of Executive’s termination, subject to Executive’s timely election of
group health and/or dental continuation coverage pursuant to COBRA or similar
state laws. The Corporation shall be responsible for payment of all premiums
necessary to maintain these benefits during such period of coverage. Benefit
continuation under this paragraph shall be concurrent with any coverage under
the Corporation’s plans pursuant to COBRA or similar state laws. Such benefits
shall be terminated prior to the expiration of the twelve (12) month
continuation period to the extent Executive has obtained new employment and is
covered by benefits which in the aggregate are comparable to such continued
benefits. Executive shall promptly notify the Corporation when he becomes
employed after the date of his termination with the Corporation and shall
provide such reasonable cooperation as the Corporation requests with respect to
determining whether Executive is covered by comparable benefits with such new
employer. If the health or dental benefits are fully insured, and the provision
of such benefits under this paragraph would subject the Corporation or its
benefits arrangements to a penalty or adverse tax treatment, then the
Corporation shall provide a cash payment to Executive in an amount reasonably
determined by the Corporation to be equivalent to the COBRA premiums for such
benefits. If the health or dental benefits are self-insured, and the provision
of such benefits under this paragraph is considered discriminatory under Code
Section 105(h) and/or not exempt from the requirements of Section 409A of the
Code, then to the extent required by applicable tax law, Executive acknowledges
that the value of the premiums paid by the Corporation hereunder shall be
considered taxable wages to Executive, and the Corporation shall be permitted to
withhold applicable taxes with respect to such wages from other amounts owed to
Executive, or require Executive to make satisfactory arrangements with the
Corporation for the payment of such withholding taxes.

 

e.                   Termination in Connection with a Change of Control. If the
Corporation terminates Executive’s employment without Cause, or Executive
terminates his employment for Good Reason, in either case within the three (3)
months prior to or the eighteen (18) months following a Change of Control, then
Executive shall be entitled to receive:

 

(i)                 the Accrued Benefits;

 

(ii)               a severance payment in an amount equal to two (2) times the
sum of (A) Executive’s Base Salary as of the date of termination (excluding any
reduction in Base Salary that resulted in Executive’s termination for Good
Reason, unless Executive has waived his right to terminate for Good Reason as
provided herein) plus (B) Executive’s Target Bonus for the year of termination.
Such severance payment shall made over the six (6) month period beginning on the
first regular payroll date of the Corporation following thirty (30) days after
Executive’s date of termination of employment (subject to Section 8.h), with
payments made to Executive in equal installments during each of the
Corporation’s usual pay periods during such six (6) month period;

 

(iii)             a pro-rata portion of the Annual Bonus amount for the year of
termination equal to the Annual Bonus that would have been payable to Executive
under Section 4.b for the year of termination if Executive had not terminated
employment, pro-rated based on the number of days in such fiscal year that
Executive is employed by the Corporation. The pro-rata Annual Bonus amount
payable to Executive hereunder, if any, shall be paid under the same terms and
conditions and at the time such bonus would normally be payable to Executive
under Section 4.b as though Executive had not been terminated;

 

(iv)              the Corporation shall pay or promptly reimburse Executive for
all reasonable relocation expenses that he incurs through the first (1st)
anniversary of his date of termination in connection with his relocation from
the Danbury, Connecticut area back to Houston, Texas (or such other city in
Executive’s discretion, provided that the expense shall not exceed the expense
of relocating to Houston, Texas). The reasonable expenses that the Corporation
shall pay or reimburse shall be limited to the same type that are payable or
reimbursable under the Corporation’s relocation policy and shall not exceed
$200,000;

 

(v)                accelerated vesting of all outstanding equity awards, with
any unearned performance awards as of the date of Executive’s termination deemed
earned at target; and

 

 

 

 

(vi)              continued coverage of Executive and his dependents (as
applicable) during the twenty-four (24) month period following his termination
of employment under the Corporation’s group health and dental insurance plans to
the extent that such benefits were in effect for Executive and his family as of
the date of Executive’s termination, subject to Executive’s timely election of
group health and/or dental continuation coverage pursuant to COBRA or similar
state laws. The Corporation shall be responsible for payment of all premiums
necessary to maintain these benefits during such period of coverage. Benefit
continuation under this paragraph shall be concurrent with any coverage under
the Corporation’s plans pursuant to COBRA or similar state laws. Such benefits
shall be terminated prior to the expiration of the twenty-four (24) month
continuation period to the extent Executive has obtained new employment and is
covered by benefits which in the aggregate are comparable to such continued
benefits. Executive shall promptly notify the Corporation when he becomes
employed after the date of his termination with the Corporation and shall
provide such reasonable cooperation as the Corporation requests with respect to
determining whether Executive is covered by comparable benefits with such new
employer. If the health or dental benefits are fully insured, and the provision
of such benefits under this paragraph would subject the Corporation or its
benefits arrangements to a penalty or adverse tax treatment, then the
Corporation shall provide a cash payment to Executive in an amount reasonably
determined by the Corporation to be equivalent to the COBRA premiums for such
benefits. If the health or dental benefits are self-insured, and the provision
of such benefits under this paragraph is considered discriminatory under Code
Section 105(h) and/or not exempt from the requirements of Section 409A of the
Code, then to the extent required by applicable tax law, Executive acknowledges
that the value of the premiums paid by the Corporation hereunder shall be
considered taxable wages to Executive, and the Corporation shall be permitted to
withhold applicable taxes with respect to such wages from other amounts owed to
Executive, or require Executive to make satisfactory arrangements with the
Corporation for the payment of such withholding taxes.

 

f.                    Definitions. For purposes of this Agreement, the following
definitions shall apply:

 

(i)                 Good Reason.

 

(1)          Good Reason (General Definition). Executive shall be considered to
have terminated his employment for “Good Reason”, if the separation from service
occurs during the one hundred twenty (120) day period following the initial
existence of one or more of the following conditions arising without the consent
of Executive:

 

(1)               a material reduction in Executive’s Base Salary;

 

(2)               a material reduction in Executive’s title, authority, duties,
responsibilities or reporting requirements;

 

(3)               relocation of Executive to an office more than seventy-five
(75) miles from the current office of the Corporation in Danbury, Connecticut;

 

(4)               a material breach by the Corporation of this Agreement; or

 

(5)               a request by the Corporation that Executive engage in any
activity that constitutes a violation of applicable law.

 

 

 

 

(2)          Good Reason (Following a Change of Control). Notwithstanding
Section 8.f.i.1 above, in the circumstance where Executive terminates his
employment within the three (3) months prior to or the eighteen (18) months
following a Change of Control, Executive shall be considered to have terminated
his employment for “Good Reason”, if the separation from service occurs during
the one hundred twenty (120) day period following the initial existence of one
or more of the following conditions arising without the consent of Executive:

 

(1)               a material reduction in Executive’s Base Salary compared to
his Base Salary in effect immediately prior to the Change of Control;

 

(2)               a material reduction in the aggregate value of employee
benefits provided to Executive compared to those in effect immediately prior to
the Change of Control (which reduction shall be calculated on the basis of the
Corporation’s per participant cost and excluding any incentive-based
compensation);

 

(3)               a material reduction in Executive’s Target Bonus opportunity
or any material adverse change to the Annual Bonus program in which Executive
participates compared to the opportunities represented by Target Bonus and
Annual Bonus program in place immediately prior to the Change of Control;

 

(4)               a material adverse change with respect to the long-term
incentive program in which Executive is eligible to participate (including a
material reduction in Executive’s target incentive opportunity);

 

(5)               a material reduction in Executive’s title, authority, duties,
responsibilities or reporting requirements compared to the most significant of
those held, exercised or assigned to him at any time within the 180-day period
immediately prior to the Change of Control;

 

(6)               relocation of Executive to an office more than seventy-five
(75) miles from the current office of the Corporation in Danbury, Connecticut;

 

(7)               a material breach by the Corporation of this Agreement; or

 

(8)               a request by the Corporation that Executive engage in any
activity that constitutes a violation of applicable law.

 

(3)          Notice and Timing Requirements. In any circumstance to which this
Section 8.f. applies, to terminate his employment for Good Reason, Executive
must provide notice to the Corporation of the existence of the condition
constituting a Good Reason within a period not to exceed ninety (90) days of the
initial existence of the condition, upon the notice of which the Corporation
must be provided a period of at least thirty (30) days from the date of receipt
of such notice during which it may remedy the condition and not be required to
pay the amount due under this Section 8. If Executive does not provide notice of
Good Reason within ninety (90) days after he first becomes aware of occurrence
of the applicable grounds, then Executive will be deemed to have waived his
right to terminate for Good Reason with respect to such grounds.

 

 

 

 

(ii)               Change of Control. For purposes of this Agreement, a “Change
of Control” shall mean the first to occur of the following events:

 

(1)          any “Person” (as such term is defined in the Securities Exchange
Act of 1934, as amended) (other than the Corporation or any of its subsidiaries,
a trustee or other fiduciary holding securities under any employee benefit plan
of the Corporation or any of its subsidiaries, an underwriter temporarily
holding securities pursuant to an offering of such securities or a corporation
owned, directly or indirectly, by the shareholders of the Corporation in
substantially the same proportions as their ownership of stock in the
Corporation (“Excluded Persons”)) is or becomes the beneficial owner , directly
or indirectly, of securities of the Corporation representing fifty percent (50%)
or more of either the then outstanding shares of common stock of the Corporation
or the combined voting power of the Corporation’s then outstanding voting
securities;

 

(2)          the following individuals cease for any reason to constitute a
majority of the number of directors of the Corporation then serving: (A)
individuals who, on the Effective Date, constituted the Board and (B) any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Corporation) whose appointment or election by the Board or nomination for
election by the Corporation’s shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
on the Effective Date, or whose appointment, election or nomination for election
was previously so approved (collectively the “Continuing Directors”); provided,
however, that individuals who are appointed to the Board pursuant to or in
accordance with the terms of an agreement relating to a merger, consolidation,
or share exchange involving the Corporation (or any direct or indirect
subsidiary of the Corporation) shall not be Continuing Directors for purposes of
this Agreement until after such individuals are first nominated for election by
a vote of at least two-thirds (2/3) of the then Continuing Directors and are
thereafter elected as directors by the shareholders of the Corporation at a
meeting of shareholders held following consummation of such merger,
consolidation, or share exchange; and, provided further, that in the event the
failure of any such persons appointed to the Board to be Continuing Directors
results in a Change of Control, the subsequent qualification of such persons as
Continuing Directors shall not alter the fact that a Change of Control occurred;

 

(3)          the consummation of a merger, consolidation or share exchange of
the Corporation with any other corporation (or other entity) or the issuance of
voting securities of the Corporation in connection with a merger, consolidation
or share exchange of the Corporation (or any direct or indirect subsidiary of
the Corporation), in each case, which requires approval of the shareholders of
the Corporation, other than (A) a merger, consolidation or share exchange which
would result in the voting securities of the Corporation outstanding immediately
prior to such merger, consolidation or share exchange continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least fifty percent (50%) of the
combined voting power of the voting securities of the Corporation or such
surviving entity or any parent thereof outstanding immediately after such
merger, consolidation or share exchange, or (B) a merger, consolidation or share
exchange effected to implement a recapitalization of the Corporation (or similar
transaction) in which no Person (other than an Excluded Person) is or becomes
the beneficial owner, directly or indirectly, of securities of the Corporation
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Corporation or its affiliates after the
Effective Date, pursuant to express authorization by the Board that refers to
this exception) representing fifty percent (50%) or more of either the then
outstanding shares of common stock of the Corporation or the combined voting
power of the Corporation’s then outstanding voting securities; or

 

(4)          the consummation of a plan of complete liquidation or dissolution
of the Corporation or a sale or disposition by the Corporation of all or
substantially all of the Corporation’s assets (in one transaction or a series of
related transactions within any period of 24 consecutive months), other than a
sale or disposition by the Corporation of all or substantially all of the
Corporation’s assets to an entity at least seventy-five percent (75%) of the
combined voting power of the voting securities of which are owned by Persons in
substantially the same proportions as their ownership of the Corporation
immediately prior to such sale.

 

 

 

 

g.                   Requirement of Release. Notwithstanding anything herein to
the contrary, no severance or benefits shall be paid under this Section 8 (other
than the Accrued Benefits) unless Executive first executes and agrees to be
bound by a release of all claims, on a form provided by the Corporation to
Executive promptly upon Executive’s termination, which releases any and all
claims that Executive has or might have against the Corporation, its affiliates,
and its respective officers and directors and which contains terms customary in
such agreements. If the Corporation does not receive an executed release prior
to the date occurring thirty (30) days after the date of termination of
Executive’s employment with the Corporation (including within such thirty (30)
day period any applicable revocation period), the Corporation shall have no
obligation to make any payments or provide any benefits to Executive under this
Section 8 (other than the Accrued Benefits).

 

h.                   Compliance with Section 409A of the Code; 6 Month Delay.

 

(i)                 Notwithstanding anything to the contrary in this Agreement,
to the extent that the Corporation, in the exercise of its reasonable judgment,
shall determine that Section 409A of the Code applies to any amounts payable
under this Section 8, any such amounts shall be paid in such fashion and at such
times so as to ensure that the Corporation and Executive are in compliance with
Section 409A of the Code. For purposes of this Agreement, Executive’s
termination of employment must constitute a separation from service under
Section 409A of the Code, and its accompanying regulations. In the event that
the Corporation, in the exercise of its reasonable judgment, determines that any
portion of the payments and benefits under this Section 8 are subject to the
requirements of Section 409A of the Code, and that Executive is a “specified
employee” within the meaning of Section 409A of the Code, then, to the extent
required for compliance with Section 409A of the Code, any portion of the such
payments or benefits that are subject to Section 409A of the Code and that would
otherwise be payable or provided within the first six (6) months following such
termination of employment shall be delayed, and paid in a lump sum, on the first
regular payroll date of the Corporation following the six (6) month anniversary
of Executive’s termination of employment (or the date of his death, if earlier
than that anniversary).

 

(ii)               For purposes of this Agreement, Executive’s termination of
employment must constitute a “separation from service” under Section 409A of the
Code and its accompanying regulations. It is the intent of the parties hereto
that the payments and benefits under this Agreement comply with or be exempt
from Section 409A of the Code, and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted and administered to be in
compliance therewith. Each amount to be paid or benefit to be provided
(including any installment payments) under this Agreement shall be construed as
a separate payment for purposes of Section 409A of the Code.

 

(iii)             Any reimbursements of Executive by the Corporation under this
Agreement shall be made as soon as practicable after Executive provides
sufficient documentation of expenses to the Corporation and in accordance with
the Corporation’s expense reimbursement policy, but in no event later than the
last day of the calendar year following the end of the calendar year in which
such expense is incurred. The amount of expenses eligible for reimbursement
pursuant to this Agreement during a given taxable year of Executive shall not
affect the amount of expenses eligible for reimbursement in any other taxable
year of Executive. The Executive’s right to reimbursement under this Agreement
is not subject to liquidation or exchange for another benefit.

 

 

 

 

9.                   Limitation on Severance Payments and Benefits. Upon a
Change of Control, if the Corporation’s legal counsel or accountants determine
that any payment, benefit or transfer by the Corporation or an affiliate under
this Agreement or any other plan, agreement, or arrangement to or for the
benefit of Executive (in the aggregate, the “Total Payments”) to be subject to
the tax (“Excise Tax”) imposed by Section 4999 of the Code but for this Section
9, then the Total Payments shall be delivered either (a) in full or (b) in an
amount such that the value of the aggregate Total Payments that Executive is
entitled to receive shall be One Dollar ($1.00) less than the maximum amount
that Executive may receive without being subject to the Excise Tax, whichever of
(a) or (b) results in Executive receiving the greatest benefit on an after-tax
basis (taking into account applicable federal, state and local income taxes and
the Excise Tax). In the event that (b) results in a greater after-tax benefit to
Executive, payments or benefits included in the Total Payments shall be reduced
or eliminated by applying the following principles, in order: (i) the payment or
benefit with the higher ratio of the parachute payment value to present economic
value (determined using reasonable actuarial assumptions) shall be reduced or
eliminated before a payment or benefit with a lower ratio; (ii) the payment or
benefit with the later possible payment date shall be reduced or eliminated
before a payment or benefit with an earlier payment date; and (iii) cash
payments shall be reduced prior to non-cash benefits; provided that if the
foregoing order of reduction or elimination would violate Section 409A of the
Code, then the reduction shall be made pro rata among the payments or benefits
included in the Total Payments (on the basis of the relative present value of
the parachute payments).

 

10.                Set Off; Mitigation. The Corporation’s obligation to pay
Executive the amounts and to provide the benefits hereunder shall be subject to
set-off, counterclaim or recoupment of amounts determined by a final judicial or
arbitral decision to be owed by Executive to the Corporation for a breach of
this Agreement or his fiduciary duties to the Corporation. However, Executive
shall not be required to mitigate the amount of any payment provided for
pursuant to this Agreement by seeking other employment or otherwise.

 

11.               Taxes. All compensation and benefits provided for in this
Agreement shall be subject to applicable withholding for taxes, (federal, state,
and local), and any other proper deductions. The Corporation shall in no event
be obligated to make any gross-up or make-whole payments relating to taxes or
withholdings on amounts or benefits received by Executive.

 

12.               Waiver. A party's failure to insist on compliance or
enforcement of any provision of this Agreement shall not affect the validity or
enforceability or constitute a waiver of future enforcement of that provision or
of any other provision of this Agreement by that party or any other party.

 

13.               Governing Law. This Agreement shall in all respects be subject
to, and governed by the laws of the State of Connecticut without reference to
its conflict of laws.

 

14.               Severability. Subject to the provisions of Section 15,
Executive and the Corporation agree that the invalidity or unenforceability of
any provision in the Agreement shall not in any way affect the validity or
enforceability of any other provision and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision had never been in the
Agreement.

 

15.               Judicial Modification. If a court of competent jurisdiction
determines that the character, duration, geographic scope, activity and/or
subject of the provisions in Section 7 of this Agreement is or are unreasonable
under the circumstances as they then exist, then Executive and the Corporation
agree that such provisions should be limited and reduced, and request that any
reviewing court limit and reduce such provisions, so as to make them enforceable
under applicable law to assure the Corporation of the intended maximum benefit
of such provisions under this Agreement.

 

16.               Notice. Any and all notices required or permitted herein shall
be in writing and shall be deemed to have been duly given (a) when delivered if
delivered personally, (b) on the fifth day following the date of deposit in the
United States mail if sent first class, postage prepaid, or by certified mail,
or (c) one day after delivery to a nationally recognized overnight courier
service. The parties' respective addresses for such notices shall be those set
forth below, or such other address or addresses as either party may hereafter
designate in writing to the other.

 

 

 

 

If to the Corporation: FuelCell Energy, Inc.   Great Pasture Road   Danbury, CT
06813   Attention: Chairman of the Board of Directors   Facsimile No.: (203)
825-6100     With a copy to: Foley & Lardner LLP   Attention: Paul D. Broude  
111 Huntington Avenue   Suite 2500   Boston, MA 02199-7610     If to Executive:
To the most recent address then on file with the Corporation.     With a copy
to: BoyarMiller   Attention: Gary W. Miller   Kirby Grove   2925 Richmond Ave.,
14th Floor   Houston, TX 77098

 

17.               Assignment. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and legal representatives, including any entity with which the
Corporation may merge or consolidate or to which all or substantially all of its
assets may be transferred. The duties and covenants of Executive under this
Agreement, being personal, may not be delegated.

 

18.               Amendments. This Agreement may be amended at any time by
mutual consent of the parties hereto, with any such amendment to be invalid
unless in writing and signed by the Corporation and Executive and expressly
referring to this Agreement.

 

19.               Entire Agreement. This Agreement contains the entire agreement
and understanding by and between Executive and the Corporation with respect to
the employment of Executive and supersedes all existing agreements between the
Corporation and Executive with respect to such subject matter. No
representations, promises, agreements, or understandings, written or oral,
relating to the employment of Executive by the Corporation, or any of its
officers, directors, employees, or agents, not contained herein shall be of any
force or effect, provided that, Sections 6 and 7 shall be supplemental to any
other agreement of Executive with the Corporation related to the matters
identified therein.

 

20.               No Undue Influence - Construction. This Agreement is executed
voluntarily and without any duress or undue influence. Executive acknowledges
that he has read this Agreement and executed it with his full and free consent.
No provision of this Agreement shall be construed against any party by virtue of
the fact that such party or its counsel drafted such provision or the entirety
of this Agreement.

 

21.               Representations of Executive. Executive represents and
warrants to the Corporation that, to the best of his knowledge and belief:

 

a.                   Executive’s acceptance of employment with the Corporation
and the performance of his duties hereunder will not conflict with or result in
a violation of, a breach of, or a default under any contract, agreement or
understanding to which he is a party or is otherwise bound.

 

b.                   Executive’s acceptance of employment with the Corporation
and the performance of his duties hereunder will not violate any
non-solicitation, non-competition, or other similar covenant or agreement of a
prior employer or third party.

 

 

 

 

c.                   This Agreement has been jointly drafted by both parties and
is the result of full and otherwise fair and good faith bargaining over its
terms following a full and otherwise fair opportunity to have legal counsel for
Executive review this Agreement, propose modifications and changes, and to
verify that the terms and provisions of this Agreement are reasonable and
enforceable.

 

d.                   Executive has truthfully answered all questions asked by
the Board prior to the Effective Date, has disclosed all information that a
reasonable person would believe is material to the Board’s decision to extend an
offer of employment to Executive, and has not falsified any materials or other
information requested by the Corporation in connection with his employment.

 

e.                   Executive has not been the subject of any complaint or
allegation regarding his sexual harassment, his sexual misconduct, fraud or
embezzlement in any prior employment situation.

 

22.               References to Gender and Number Terms. In construing this
Agreement, feminine or neutral pronouns shall be substituted for those masculine
in form and vice versa, and plural terms shall be substituted for singular and
singular for plural in any place in which the context so requires.

 

23.               Counterparts: Headings; Sections. This Agreement may be
executed in multiple counterparts, each of which shall be considered to have the
force and effect of any original but all of which taken together shall
constitute but one and the same instrument. The various headings in this
Agreement are inserted for convenience only and are not part of the Agreement.
All references to “Sections” in this Agreement refer to the various
corresponding sections of this Agreement.

 

24.               Survival. The covenants and agreements contained in Sections 5
through 10 shall survive any termination of Executive’s employment with the
Corporation.

 

25.               Attorney’s Fees Incurred by Executive. The Corporation
covenants and agrees that it will promptly pay, or reimburse Executive if
Executive provides reasonable evidence he has already paid, all reasonable
attorney’s fees incurred by Executive in connection with the negotiation and
execution of this Agreement (including the discussions leading up thereto), up
to an aggregate maximum of $25,000.

 

26.               Arbitration: Waiver of Trial by Jury. Executive and the
Corporation shall submit any disputes arising under this Agreement to an
arbitration panel conducting a binding arbitration in Hartford, Connecticut or
at such other location as may be agreeable to the parties, in accordance with
the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association in effect on the date of such arbitration (the “Rules”),
and judgment upon the award rendered by the arbitrator or arbitrators may be
entered in any court having jurisdiction thereof; provided, however, that
nothing herein shall impair the Corporation’s right to seek equitable relief in
any court for any breach or threatened breach of Section 7. The award of the
arbitrators shall be final and shall be the sole and exclusive remedy between
the parties regarding any claims, counterclaims, issues or accountings presented
to the arbitration panel. The parties hereto further agree that the arbitration
panel shall consist of one (l) person mutually acceptable to the Corporation and
Executive, provided that if the parties cannot agree on an arbitrator within
thirty (30) days of filing a notice of arbitration, the arbitrator shall be
selected by the manager of the principal office of the American Arbitration
Association serving Hartford County in the State of Connecticut. Each party will
pay for the fees and expenses of its own attorneys, experts, witnesses, and
preparation and presentation of proofs and post-hearing briefs (unless the party
prevails on a claim for which attorney's fees and expenses are recoverable under
the Rules and those amounts are included as part of the award). Any action to
enforce or vacate the arbitrator's award shall be governed by the federal
Arbitration Act, if applicable, and otherwise by applicable state law. If either
the Corporation or Executive pursues any claim, dispute or controversy against
the other in a proceeding other than the arbitration provided for herein, the
responding party shall be entitled to dismissal or injunctive relief regarding
such action and recovery of all costs, losses and attorney's fees related to
such action. Executive acknowledges and expressly agrees that this arbitration
provision constitutes a knowing and voluntary waiver of trial by jury in any
action or proceeding to which Executive and the Corporation may be parties
arising out of or pertaining to this Agreement.

 

THE NEXT PAGE IS THE SIGNATURE PAGE

 

 

 

 

IN WITNESS WHEREOF, the Corporation and Executive have duly executed this
Agreement to be effective as of the Effective Date:

 

CORPORATION:   FUELCELL ENERGY, INC.   By: /s/ J. H. England Name: J. H. England
Title: Chairman     EXECUTIVE:     By: /s/ Jason B. Few Name:   Jason B. Few

 

 

 

 

APPENDIX A

 

Additional Terms for the Initial RSU Award

 

This Appendix A provides additional terms for the Initial RSU Award that may be
granted to Jason B. Few under the terms of his employment agreement with
FuelCell Energy, Inc. (the “Agreement”). Capitalized terms not otherwise defined
in this Appendix A shall have the same definitions as in the Agreement.

 

1.                   Base Units. On the Effective Date, the Corporation shall
grant to Executive an award (the “Initial RSU Award”) of 500,000 restricted
stock units (the “Base Units”) under the Plan. One hundred percent (100%) of the
Base Units will vest upon the third (3rd) anniversary of the Effective Date (the
“Vesting Date”), provided that Executive has been continuously employed by the
Corporation from the Effective Date through the Vesting Date. The Initial RSU
Award shall be contingent on shareholder approval of a sufficient number of
additional shares of the Corporation’s common stock to settle the Initial RSU
Award in such shares.

 

2.                   Additional Units. In addition to the Base Units, the
Initial RSU Award shall permit Executive to earn additional restricted stock
units (the “Additional Units”) based on the weighted-average stock price of the
Corporation’s common stock during the thirty (30) calendar day period ending on
the Vesting Date, according to the following schedule, provided that Executive
has been continuously employed by the Corporation from the Effective Date
through the Vesting Date:

 

Common Stock Price (per Share) Additional Units Earned (as % of Base Units)
<$1.00 0% $1.00 0% $3.00 25% $4.00 50% $5.00 75% >$6.00 100%

 

The number of Additional Units earned for stock prices that are between those
prices indicated in the table above will be interpolated on a linear basis. For
the sake of clarity, the maximum number of Additional Units that may be earned
hereunder is 500,000 Additional Units. Any Additional Units that do not vest as
of the Vesting Date shall be forfeited.

 

3.                   Payment. Each Base Unit and Additional Unit (collectively,
the “Units”) represents the right to receive one (1) share of the Corporation’s
common stock (“Share”) for each Unit that has vested or been earned within sixty
(60) days after the Vesting Date. The Shares received in settlement of the Units
will be registered under the Securities Act of 1933 and may immediately sold by
Executive, subject to (a) any applicable trading restrictions under the
securities laws, stock exchange requirements or other laws or regulations, (b)
any trading restrictions imposed by agreements between the Corporation and its
underwriters, and (c) Executive’s compliance with the Corporation’s stock
ownership guidelines and policies.

 

4.                   Change of Control. Notwithstanding anything herein to the
contrary, upon the consummation of a Change of Control prior to the Vesting
Date, Executive shall vest in (a) 100% of the Base Units and (b) a number of
Additional Units (if any) based on the per-Share price paid (or deemed paid) in
the Change of Control transaction. Any Additional Units that do not vest as a
result of the Change of Control shall be forfeited.

 

 

 

 

5.                   Termination of Employment.

 

If the Corporation terminates Executive’s employment without Cause before the
Vesting Date or Executive terminates his employment for Good Reason before the
Vesting Date, then:

 

(i)                 Executive shall immediately vest in 100% of the Base Units
on Executive’s date of termination, and Shares with respect to the Base Units
shall be distributed to Executive within sixty (60) days of Executive’s
termination date; and

 

(ii)               Executive shall forfeit his right to receive any Additional
Units.

 

If the Corporation terminates Executive’s employment for any reason other than
those specified above, or if Executive terminates his employment other than for
Good Reason, in either case before the Vesting Date, then Executive shall
immediately forfeit all Base Units and Additional Units that are unvested as of
the date of Executive’s termination date.