Exhibit 10.1 

 

FuelCell Energy

3 Great Pasture Road

Danbury, CT 06810

[tv514228_ex10-1img1.jpg] 

 

February 21, 2019

 

CVI Investments, Inc.

c/o Heights Capital Management

101 California Street, Suite 3250

San Francisco, CA 94111

Attention: Martin Kobinger,

Investment Manager

 

Re:Waiver and Voluntary Reduction

 

Dear Sir:

 

Reference is hereby made to (a) that certain Certificate of Designations,
Preferences and Rights of the Series C Convertible Preferred Stock (the
“Certificate of Designations”, and the Series C Convertible Preferred Stock
previously issued thereunder, the “Series C Preferred Stock”) of FuelCell
Energy, Inc., a Delaware corporation (the “Company”, “us” or “we”) and (b) CVI
Investments, Inc., in its capacity as the sole holder of Series C Preferred
Stock of the Company (the “Holder” or “you”). All capitalized terms used but not
defined herein shall have the meanings given to such terms in the Certificate of
Designations.

 

 

 

 

From and after the later of (x) the date hereof and (y) the date the Company
obtains the Series D Consent (as defined below) (the “Applicable Time”), and
pursuant to the terms of this letter agreement (this “Agreement”), the parties
hereto agree as follows (collectively, the “Waivers”): (a) the Holder hereby
waives any Equity Conditions Failures which may have occurred with respect to
any Installment Date in calendar years 2018 or 2019, effective as of the time
immediately prior to the time of occurrence of such Equity Conditions Failures
(the “Waiver Effective Time”); (b) the Company hereby waives any restrictions in
the Certificate of Designations to the conversion of the Series C Preferred
Stock from and after the Maturity Date (other than the limitations set forth in
Section 4(d) of the Certificate of Designations); (c) the Holder hereby waives
any Late Charges accrued and unpaid as of the date hereof, if any; (d) the
parties hereto hereby waive Section 9 of the Certificate of Designations, which
shall be of no further force and effect; (e) the Holder hereby acknowledges and
agrees that neither the exchange of that certain Series A Warrant to Purchase
Common Stock, issued by the Company to Hudson Bay Master Fund Ltd. (“Hudson
Bay”) on July 12, 2016, for 6,000,000 shares of Common Stock pursuant to the
Exchange Agreement, dated as of the date hereof, between the Company and Hudson
Bay (the “Exchange Agreement”), nor the issuance of shares of Common Stock
pursuant to the Exchange Agreement shall result in any anti-dilution or other
adjustments under the Certificate of Designations or this Agreement; (f) the
Holder hereby waives (x) any anti-dilution rights and conversion price
adjustments with respect to the Series D Convertible Preferred Stock of the
Company (the “Series D Preferred Stock”), the conversion of the shares of Series
D Preferred Stock into Common Stock, and any future amendment, modification or
exchange of the Series D Preferred Stock (if any) and (y) any restrictions in
the Certificate of Designations that would otherwise require the consent of the
Holder to any such conversion, amendment, modification or exchange; and (g) the
parties hereto hereby agree that, from the date hereof until the first to occur
of the following: (x) an increase in the authorized shares of Common Stock the
Company or (y) any reverse stock split of the Common Stock of the Company (as
applicable, the “New Availability Event”), the Company shall reserve (and the
Holder waives, in part, any reserve requirements and obligations of the Company
under the Certificate of Designations and the Certificate of Designations,
Preferences and Rights of the Series D Preferred Stock as necessary such that
the Company shall only be required to reserve) 23,041,862 shares of Common Stock
for conversions of the shares of Series C Preferred Stock, 34,792,269 shares of
Common Stock for conversions of the shares of Series D Preferred Stock held by
the Holder and 31,649,342 shares of Common Stock for conversions of the shares
of Series D Preferred Stock held by Tech Opportunities LLC, in each case, prior
to the occurrence of a New Availability Event after the date hereof. As of the
Applicable Time, (I) the Holder shall be deemed to have deferred all Installment
Amounts related to such Equity Condition Failures to the Maturity Date and (II)
the Company shall be deemed to have reduced the Conversion Price of any
Preferred Shares converted by the Holder from and after the Waiver Effective
Time and prior to the date hereof, as necessary, to cause the aggregate number
of shares of Common Stock delivered with respect thereto to equal to the
aggregate number of shares of Common Stock issuable upon conversion of such
Preferred Shares at each such time, as applicable.

 

From and after the Applicable Time, but only until such time as a Limited Waiver
Termination Event (as defined below) has occurred (after which this paragraph
shall have no further force and effect and shall be null and void) (such period,
the “Limited Waiver Period”), the Holder hereby waives (the “Limited Waiver”)
(a) any Triggering Event occurring after the date hereof (excluding any
Triggering Events referred to in clauses (i) and (ii) of the definition of
“Limited Waiver Termination Event” below) and its rights in the Certificate of
Designations to receive notices with respect thereto (excluding any Triggering
Events referred to in clauses (i) and (ii) of the definition of “Limited Waiver
Termination Event” below), and (b) its rights to demand, require or otherwise
receive payment, in cash, of any amount due and payable under the Certificate of
Designations or to commence any actions with any court of any jurisdiction with
respect thereto (excluding any actions to enforce the terms and conditions of
this Agreement (including, without limitation, the Voluntary Reduction (as
defined below)), the conversion of any Preferred Shares and/or the delivery of
shares of Common Stock in connection with any such conversion of any Preferred
Shares, as applicable). For the purpose of this Agreement, “Limited Waiver
Termination Event” shall mean the earliest to occur of the following:

 

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(i)the occurrence of a Triggering Event under Sections 5(a)(i), (ii), (iv) or
(vii);

 

(ii)the occurrence of a Bankruptcy Triggering Event or a Fundamental
Transaction; or

 

(iii)the fifth (5th) Trading Day following the date of any breach by the Company
of this Agreement (including, without limitation, the failure to comply with the
Voluntary Reduction in connection with any conversion of any Preferred Shares),
absent cure by the Company of such breach within such five (5) Trading Day
period.

 

The Certificate of Designations is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects and the parties
hereto acknowledge and agree that nothing herein constitutes an amendment or
(except after the Applicable Time for the Waiver and, during the Limited Waiver
Period for the Limited Waiver) a waiver of any provision thereof.

 

In connection with the foregoing, in accordance with Section 8(d) of the
Certificate of Designations, with respect to any conversion of any Preferred
Shares on or after the date hereof, the Company hereby irrevocably reduces the
Conversion Price of each such conversion of Preferred Shares as necessary to
cause the number of shares of Common Stock to be issued in any such given
conversion to be as follows (collectively, the “Voluntary Reduction”):

 

(i)            Solely with respect to the initial conversion of Preferred Shares
immediately after the date of this Agreement, which relates, in part, to the
Conversion Notice originally provided by the Holder on January 25, 2019 (the
“Initial Conversion”):

 

N = ((CA + $1,000,000)* 125%) – (DS * Base Measurement Price) P

 

N = Aggregate number of shares of Common Stock to be issued in the Initial
Conversion

 

CA = The Conversion Amount of the Preferred Shares subject to such conversion

 

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P = Conversion Price of the Preferred Shares, which shall be lowest of (x) the
Base Measurement Price, (y) 85% of the lowest Closing Bid Price of the Common
Stock during the period beginning on and including the fifth (5th) Trading Day
prior to the date on which the applicable Conversion Notice is delivered to the
Company and ending on and including the date on which the applicable Conversion
Notice is delivered to the Company, and (z) 85% of the quotient of (I) the sum
of the five (5) lowest VWAPs of the Common Stock during the twenty (20)
consecutive Trading Day period ending and including the Trading Day immediately
preceding the applicable Conversion Date divided by (II) five (5) (it being
understood and agreed that all such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period)

 

DS = 2,488,479

 

(ii)          With respect to all subsequent conversions of Preferred Shares
(other than the Initial Conversion):

 

N = CA * 125% P

 

N = Aggregate number of shares of Common Stock to be issued in the applicable
conversion

 

CA = The Conversion Amount of the Preferred Shares subject to such conversion

 

P = Conversion Price of the Preferred Shares, which shall be lowest of (x) the
Base Measurement Price, (y) 85% of the lowest Closing Bid Price of the Common
Stock during the period beginning on and including the fifth (5th) Trading Day
prior to the date on which the applicable Conversion Notice is delivered to the
Company and ending on and including the date on which the applicable Conversion
Notice is delivered to the Company, and (z) 85% of the quotient of (I) the sum
of the five (5) lowest VWAPs of the Common Stock during the twenty (20)
consecutive Trading Day period ending and including the Trading Day immediately
preceding the applicable Conversion Date divided by (II) five (5) (it being
understood and agreed that all such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period)

 

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For the purpose of the foregoing formulas, (a) “Base Measurement Price” means
the lower of (x) $0.371 (subject to adjustment for stock splits, stock
dividends, stock combinations, recapitalizations and similar events) and (y) 85%
of the Adjustment Market Price (as defined below); (b) “Adjustment Market Price”
means the lesser of (i) the VWAP on the Trading Day immediately prior to the
Adjustment Date and (ii) the quotient determined by dividing (x) the sum of the
VWAP of the Common Stock for each of the two (2) lowest Trading Days during the
ten (10) consecutive Trading Day period ending on and including the Trading Day
immediately preceding the Adjustment Date, divided by (y) two (2); and (c)
“Adjustment Date” means the eleventh (11th) Trading Day immediately following
the earliest to occur of (x) if a reverse stock split of the Common Stock of the
Company occurs (after the date hereof) on or before May 1, 2019, May 1, 2019,
(y) if a reverse stock split of the Common Stock of the Company occurs after May
1, 2019 but before June 15, 2019, the date of the occurrence of such reverse
stock split, and (z) if a reverse stock split of the Common Stock of the Company
has not occurred by June 15, 2019, June 15, 2019.

 

For the avoidance of doubt, to convert Preferred Shares into shares of Common
Stock pursuant to this Agreement, the Holder shall deliver an executed
Conversion Notice in the form attached to the Certificate of Designations as
Exhibit I.

 

The Company shall obtain the consent of the holders of the existing Series D
Preferred Stock (including any shares of preferred stock issued in exchange
therefor) to the Voluntary Reduction and the waiver of any effects of the
Voluntary Reduction with respect thereto (including, without limitation, any
adjustment to the conversion price or otherwise) of the Series D Preferred Stock
(collectively, the “Series D Consent”).

 

The Holder hereby represents and warrants as follows:

 

a.       It is not under any contractual or other restriction or other
obligation which is inconsistent with this Agreement.

 

b.       It has not assigned to any Person any right, claim or cause of action
encompassed or arising from matters set forth in this Agreement.

 

c.       It has had a full and fair opportunity to make inquiries about the
terms and conditions of this Agreement and to discuss the same and all related
matters with its own independent counsel, accountant and tax advisers; and this
Agreement has been executed and delivered by it of its own free will and without
promises, threats or the exertion of any duress.

 

d.       This Agreement has been duly executed by the Holder and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Holder enforceable against the Holder in accordance with its
terms, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

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The Company hereby represents and warrants to the Holder as follows:

 

a.       The Company is an entity duly organized and validly existing and in
good standing under the laws of the jurisdiction in which it was formed, and has
the requisite power and authority to own its properties and to carry on its
business as now being conducted and as presently proposed to be conducted.

 

b.       The Company is not under any contractual or other restriction or other
obligation which is inconsistent with this Agreement.

 

c.       The Company has not assigned to any Person any right, claim or cause of
action encompassed or arising from matters set forth in this Agreement.

 

d.       The execution and delivery of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Company, and, other than the Series D
Consent, no further action is required by the Company, its board of directors or
the Company’s stockholders in connection therewith. This Agreement has been duly
executed by the Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

e.       The execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the Voluntary Reduction) will not (i) result in a violation
of the certificate of incorporation (including, without limitation, any
certificate of designation contained therein), bylaws, or the terms of any
capital stock or other securities of the Company, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected. After giving effect to any consents and waivers obtained by
the Company on or prior to the date hereto (including, without limitation, the
Series D Consent), there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the Voluntary
Reduction.

 

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This Agreement shall inure to the benefit of the parties hereto and shall be
binding upon each of the parties hereto and their assigns, successors, heirs,
and representatives.

 

Each of the parties hereto represents and warrants that it has the authority to
enter into this Agreement, that the Person(s) signing this Agreement on its
behalf is authorized to do so and that it has not assigned or otherwise
transferred any interest in any claim which is the subject of this Agreement.

 

Each of the parties hereto agrees and understands that all of the terms of this
Agreement are contractual and not merely recitals.

 

Each of the parties to this Agreement was represented by counsel and this
Agreement was negotiated at arm’s length and should not be read against any
party. Each of the parties hereto and their respective counsel acknowledge that
they have carefully read and fully understand the provisions of this Agreement,
that they have been given a reasonable period of time to consider the terms of
this Agreement, and that they enter into this Agreement knowingly and
voluntarily and not as a result of any pressure, coercion, or duress and thus no
party shall attempt to invoke the rule of construction to the effect that
ambiguities, if any, are to be resolved against the drafting party.

 

If any of the provisions of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or otherwise unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.

 

Each party hereto shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

 

This Agreement shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Agreement shall be governed by, the internal laws of the State of
Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Delaware. Each of the Company and the Holder hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in The
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the Company’s obligations to the
Holder, or to enforce a judgment or other court ruling in favor of the Holder.

 

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The Company shall promptly reimburse Kelley Drye & Warren, LLP (counsel to the
Holder), on demand, for all reasonable, documented costs and expenses incurred
by it in connection with negotiating, preparing and delivering this Agreement
and consummating the transactions contemplated hereby (including, without
limitation, all reasonable, documented legal fees and disbursements in
connection therewith and due diligence in connection with the transactions
contemplated thereby) in an aggregate amount not to exceed $85,000.

 

Each of the parties hereto acknowledges and agrees that this Agreement is the
final and binding Agreement between them concerning the matters discussed
herein. This writing contains the entire Agreement of the parties hereto and, in
entering into this Agreement, each of the parties hereto acknowledges that it
has not relied on any promise, agreement, representation or statement, whether
oral or written, that is not expressly set forth in this Agreement.

 

No change to or modification of this Agreement shall be valid or binding unless
it is in writing and signed by the parties hereto.

 

The date of execution of this Agreement shall be the date upon which the last of
the parties hereto signs this Agreement.

 

This Agreement may be signed in counterparts and, if so signed, this Agreement
shall have the same force and effect as if signed at the same time. A facsimile
or PDF signature shall be deemed to be an original signature for all purposes.

 

Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Business Day or later than 5:30 p.m. (New York City time) on any
Business Day, (c) the second (2nd) Business Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon
actual receipt by the party to whom such notice is required to be given. The
addresses and facsimile numbers for such notices and communications shall be as
set forth on the signature pages attached hereto.

 

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On or before 9:30 a.m., New York time, on the first (1st) Business Day after the
date of this Agreement, the Company shall file a Current Report on Form 8-K
describing all the material terms of the transactions contemplated hereby in the
form required by the Securities Exchange Act of 1934, as amended, and attaching
this Agreement (including all attachments, the “8-K Filing”). From and after the
filing of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) provided to the Holder by the Company or any of
its Subsidiaries or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated hereby. In addition,
effective upon the filing of the 8-K Filing, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of
their respective officers, directors, affiliates, employees or agents, on the
one hand, and the Holder or any of its affiliates, on the other hand, with
respect to this Agreement and the transactions contemplated hereby shall
terminate.

 

The Company shall not, and the Company shall cause each of its Subsidiaries and
each of its and their respective officers, directors, employees and agents not
to, provide the Holder with any material, non-public information regarding the
Company or any of its Subsidiaries from and after the date hereof without the
express prior written consent of the Holder (which may be granted or withheld in
the Holder’s sole discretion) unless such information is being expressly
requested in writing (which may be an e-mail) by the Holder after the Company
has stated that such information is material, non-public information. In the
event of a breach of any of the foregoing covenants, or any of the covenants or
agreements relating to material, non-public information contained in the
Certificate of Designations, by the Company, any of its Subsidiaries, or any of
its or their respective officers, directors, employees and agents (as determined
in the reasonable good faith judgment of the Holder following consultation with
the Company), in addition to any other remedy provided herein or in the
Certificate of Designations, on the third (3rd) Business Day after the Holder’s
delivery of a written request to the Company to publicly disclose such
information (and the failure by the Company to publicly disclose such
information prior thereto), the Holder shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, non-public information without the prior approval by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. The Holder shall not have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates, shareholders or agents, for any such
disclosure. To the extent that the Company delivers any material, non-public
information to the Holder without the Holder’s consent or request, the Company
hereby acknowledges and agrees that the Holder shall not have any duty of
confidentiality with respect to, or a duty not to trade on the basis of, such
material, non-public information. Subject to the foregoing, neither the Company,
its Subsidiaries nor the Holder shall issue any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided, however, the Company shall be entitled, without the prior approval of
the Holder, to make any press release or other public disclosure with respect to
such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) the Holder shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
the Holder (which may be granted or withheld in the Holder’s sole discretion),
the Company shall not (and shall cause each of its Subsidiaries and affiliates
to not) disclose the name of the Holder in any filing, announcement, release or
otherwise (other than in the exhibit of this Agreement attached to the 8-K
Filing). Notwithstanding anything contained in this Agreement to the contrary
and without implication that the contrary would otherwise be true, the Company
expressly acknowledges and agrees that the Holder shall not have (unless
expressly agreed to by the Holder after the date hereof in a written definitive
and binding agreement executed by the Company and the Holder), any duty of
confidentiality with respect to, or a duty to the Company not to trade on the
basis of, any material, non-public information regarding the Company or any of
its Subsidiaries.

 

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  Sincerely,       FUELCELL ENERGY, INC.       By: /s/ Michael S. Bishop    
Name: Michael S. Bishop     Title: Sr. VP & CFO       Address:     FuelCell
Energy, Inc.   3 Great Pasture Road   Danbury, CT 06810   Attention: Chief
Financial Officer       Facsimile Number: 203-825-6069

 

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Acknowledged and agreed by:       CVI INVESTMENTS, INC.      

By: Heights Capital Management, Inc.,

Its authorized agent 

        By:  /s/ Martin Kobinger     Name: Martin Kobinger     Title: Investment
Manager         Address:   CVI Investments, Inc.   c/o Heights Capital
Management   101 California Street, Suite 3250   San Francisco, CA 94111  
Attention: Martin Kobinger, Investment Manager       Facsimile Number:
______________  

 

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