4. Compensation. As compensation for any and all services to be rendered by Executiveto the Corporation pursuant to this Agreement, the Corporation shall pay Executive and provideExecutive with the following compensation and benefits, which Executive agrees to accept in fullsatisfaction for his services:a. Base Salary. The Corporation shall pay Executive a Base Salary, payable inequal installments at such payment intervals as are the usual payroll practices of theCorporation, at an initial annual rate of $340,000, less such deductions or amounts to bewithheld as shall be required by applicable law or as may be allowed at the request ofExecutive (the “Base Salary”). The Base Salary shall be reviewed at least annually by theCompensation Committee of the Board after the end of each fiscal year of the Corporation andshall be adjusted by such amount, if any, as Compensation Committee of the Board, in itssole discretion, shall determine and approve. Any such adjustment of Base Salary shall bemade effective on the date set by the Compensation Committee of the Board.b. Bonus. Provided Executive first meets the Corporation’s expectations forhis performance during the Employment Term and remains employed on the date of payment,Executive shall be eligible for a discretionary bonus (a “Discretionary Bonus”) of up tofifty percent (50%) of his Base Salary as determined and approved by the Board in its solediscretion based upon Executive’s achievements in meeting his performance goals and those ofthe Corporation for its most recently ended fiscal year. Goals shall be established afterthe commencement of the Employment Term and then in the first quarter of any subsequentfiscal year. Any such Discretionary Bonus may be payable in cash, stock options, and/orrestricted stock upon such terms and conditions as determined by the Board. The Corporationshall pay any such Discretionary Bonus by the end of the first quarter of the followingfiscal year. Should the Executive no longer be employed by the Corporation on the date suchDiscretionary Bonus is paid, such Discretionary Bonus shall be forfeited. As any bonus paidto Executive is discretionary, the payment of any bonus in a year must not be construed asrequiring the payment of a bonus in any other year.c. Benefits.(i) Executive shall be entitled to participate, to the extent he is eligible, inall group insurance programs, health, medical, dental, and disability plans(including, without limitations, the Corporation’s 401(k) plan), and other employeebenefit plans which the Corporation may hereafter in its sole and absolute discretionmake available generally to its senior executives (other than any incentivecompensation or equity ownership plan), but the Corporation shall not be required toestablish or maintain any such program or plan.(ii) Executive shall be entitled to four (4) weeks paid vacation during eachcalendar year, in accordance with the Corporation’s vacation policies. Such vacationmay be taken at such time or times as is reasonably consistent with the Corporation’svacation policies and the performance by Executive of his duties and responsibilitiesunder this Agreement. Up to one week of unused vacation time in one year may becarried over and used in the subsequent year.
 
 

 
(iii) Executive shall be entitled to participate in the Corporation’s EquityIncentive Plan (the “Plan”). Effective upon the execution of this Agreement, theBoard of Directors has approved a grant of restricted stock valued at $360,000. Thenumber of shares will be based upon the dollar value of the award approved by theBoard of Directors divided by the closing market price of the Company’s common stockon the date of grant. This grant shall not be subject to accelerated vesting in theevent Executive is terminated for Cause pursuant to Section 12c hereof. Executiveunderstands and agrees that any stock rights granted to Executive shall be subject tothe provisions of the Plan and any separate written agreements embodying the grant ofthe rights that are required by the Plan. The rights shall be set forth in aseparate agreement embodying the grant of the rights which shall be otherwise in theform stipulated in the Plan. To the extent that there is any conflict between thevesting provisions of this Agreement and the provisions of the Plan, the provisionsof this Agreement shall govern.d. Taxes. All compensation and benefits are subject to applicable withholdingtaxes, federal, state, and local, and any other proper deductions.e. Benefit Plans. Executive understands that the Corporation may amend,change, or cancel its employment policies and benefit plans at any time as allowed by law orby any applicable plan documents.5. Business Expenses. The Corporation shall pay, or reimburse Executive for, thereasonable and necessary business expenses of Executive incurred in the performance of his dutiesunder this Agreement, provided Executive provides timely and reasonable documentation of thoseexpenses in accordance with the rules and regulations of the Corporation. Any such reimbursementsshall be made no later than the last day of the calendar year following the end of the calendaryear in which such expense is incurred.6. Compliance with Policies. Executive acknowledges and agrees that, except as setforth in this Agreement, compliance with the Corporation’s policies, practices and procedures is aterm and condition of his employment under this Agreement.7. Intellectual Property, Inventions and Improvements. Executive acknowledges,covenants and agrees that the Corporation shall be the sole owner of all the fruits and proceeds ofExecutive’s services to the Corporation, including but not limited to all writings, inventions,discoveries, designs, systems, processes, software or other improvements relating to the businessor products of the Corporation, whether or not patentable, registerable, or copyrightable, whichExecutive may, alone or with others, conceive, create, develop, produce or make during or as aresult of his employment with the Corporation (collectively, the “Invention”), free and clear ofany claims by Executive of any kind or character whatsoever other than Executive’s rights tocompensation under this Agreement. Executive agrees that he shall disclose each of the Inventionspromptly and completely to the Corporation, and shall, at the request of the Board, execute suchassignments, certificates or other instruments as the Board or the Corporation from time to timedeem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defendthe Corporation’s right, title and interest in or to any or all of the Inventions. Executiveacknowledges that all works of authorship (including, without limitation, works of authorship thatcontain software program code) relating to the business of the Corporation and produced duringExecutive’s employment with the Corporation, whether they are or are not created on theCorporation’s premises or during regularworking hours, are works made for hire and are the property of the Corporation, and thatcopyrights in those works of authorship are the property of the Corporation. If for any reason theCorporation is not the author of any such work of authorship for copyright purposes, Executivehereby expressly assigns all of his rights in and to that work to the Corporation and agrees tosign any instrument of specific assignment requested. Executive, whether or not still employed bythe Corporation, agrees to supply evidence, give testimony, sign and execute all papers, and do allother 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 fulltitle. If Executive is no longer employed by the Corporation at such time, then Corporation shallpay Executive his reasonable out-of-pocket expenses incurred in connection with his providing theservices rendered by him in the previous sentence.
 
 

 
8. Non-Disclosure of Confidential Information.a. Executive acknowledges that, in and as a result of his employment by theCorporation, he will be making use of, acquiring and/or adding to the Corporation’sConfidential Information (as defined below). As a material inducement to the Corporation toemploy Executive and to pay Executive the compensation and benefits set forth in thisAgreement, Executive covenants and agrees that he shall not, at any time during or followingthe term of his employment with the Corporation, directly or indirectly divulge or disclosefor any purposes whatsoever, any Confidential Information that has been obtained by, ordisclosed to, him as a result of his employment with the Corporation. For purposes of thisAgreement, “Confidential Information” means, collectively, all confidential matters andmaterials of the Corporation, including without limitation, (i) the Corporation’sproprietary information, inventions, trade secrets, knowledge, data, know-how, intellectualproperty, systems, procedures, manuals, pricing policies, operational methods andinformation relating to the Corporation’s products, processes, formulae, business plans,marketing plans and strategies, pricing strategies, customer lists, and all other subjectmatters pertaining to the business and/or financial affairs of the Corporation; (ii) theCorporation’s information regarding plans and strategies for research, development, newproducts, future business plans, budgets and unpublished financial statements, licenses,prices and costs; (iii) information regarding the skills and compensation of other employeesof the Corporation; and (iv) information disclosed in confidence to the Corporation by athird party with a duty on the Corporation to maintain the confidentiality of suchinformation. The term “Confidential Information” shall not include any information that (x)has been made available generally to the public either by the Corporation or by a thirdparty with the Corporation’s consent, unless such information became available as a resultof any action by Executive in violation of this Agreement, any other agreement, or hisobligations under law, or (y) has been made available as a result of a final award, order,or ruling by an arbitration tribunal or a court of competent jurisdiction that hasdetermined that such Confidential Information may be disclosed.b. If Executive is required by a court, arbitration tribunal, or governmental agency(by oral questions, interrogatories, requests for information or documents, subpoena, civilinvestigation demand or similar process) to disclose any Confidential Information, Executivemay disclose such Information to such court, tribunal, or agency without liabilityhereunder, provided, that Executive first provides the Corporation with notice of any suchrequirement(s) as promptly as practicable, but in any case with sufficient timeliness toenable the Corporation to seek an appropriate protective order and/or waive its compliancewith the relevant provisions of this Agreement.
 
 

 
9. Covenants Against Competition.a. Non-Solicitation of Employees. While employed by the Corporation and for aperiod of one (1) year, followed by a second period of one (1) year, for a total period oftwo (2) years, from the date of termination of Executive’s Employment Term with theCorporation for any reason, Executive shall not directly or indirectly solicit, induce orencourage any of the Corporation’s employees to terminate their employment with theCorporation or to accept employment with any competitor, supplier, client, agent or brokerof the Corporation, nor shall Executive cooperate with any others in doing or attempting todo so. As used in this paragraph, the term “solicit, induce or encourage” includes, but isnot limited to, (i) initiating communications with any employee of the Corporation relatingto possible employment or independent contractor relationship, (ii) offering bonuses oradditional compensation to encourage any employee of the Corporation to terminate his or heremployment 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 torecruiters, personnel or agents employed by competitors, suppliers, clients, agents orbrokers of the Corporation. Notwithstanding the foregoing, the term “solicit, induce orencourage”, as used in this Section 9a, specifically excludes any action by the Executiverelated to any of the Corporation’s employees where it is in the Corporation’s best interestto terminate any such employees as in the case of a planned reduction in force by theCorporation.b. Non-Compete. While Executive is employed by the Corporation and for aperiod of one (1) year, followed by a second period of one (1) year, for a total period oftwo (2) years, from the date of termination of Executive’s Employment Term for any reason,Executive shall not directly or indirectly, as a principal, agent, contractor, employee,employer, partner, shareholder, proprietor, investor, member, director, officer orconsultant or in any other capacity, engage in or perform any managerial or executiveservices (a) for any corporation, partnership, individual or entity which is engaged in abusiness competitive with the Corporation or affiliate of the Corporation, or (b) to anycustomer of the Corporation or affiliate of the Corporation.c. For the purposes of this Agreement:(i) The term “engaged in a business competitive with the Corporation” meansdirectly or indirectly engaging in the business of researching, developing,designing, manufacturing, selling or distributing fuel cells or batteries or engagingin the same or any substantially similar business as the Corporation or any of itsaffiliates in any manner whatsoever within any geographic area in which theCorporation’s products or services are offered or distributed. Executive understandsand agrees that, because the Corporation is engaged in business throughout the world,the geographic area covered by this noncompete covenant extends throughout NorthAmerica, South America, Europe, Asia and Africa;(ii) The term “affiliate” means any legal entity that directly or indirectlythrough one or more intermediaries controls, is controlled by, or is under commoncontrol with the Corporation; and(iii) The term “customer” means any business, company, person, and any otherentity to whom the Corporation or any of its affiliates has provided any productor service, whether or not for compensation, within a period of two (2) yearsprior to the time Executive ceases to be employed by the Corporation.
 
 

 
d. Exclusion for Investments. None of the provisions of this Section 9 shallprohibit Executive from investing in securities (i) listed on a national securities exchangeor actively traded over-the-counter so long as such investments are not greater than fivepercent (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 suchentity was not engaged in a business competitive with the Corporation at the time Executivemade such investment.10. Reasonableness of Restrictions.a. Executive has carefully read and considered the provisions of Section 8 and Section9, and, having done so, agrees that:(i) The restrictions set forth in Section 8 and Section 9, including but notlimited to the character, duration, and geographical area of restriction, are fairand reasonable and are reasonably required for the protection of the good will andother 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 considerationfor such obligations; and(iii) Such obligations do not prevent Executive from earning a livelihood.b. If, notwithstanding the foregoing, any of the provisions of Section 8 or Section 9shall be held to be invalid or unenforceable, the remaining provisions thereof shallnevertheless continue to be valid and enforceable as though the invalid and unenforceableparts had not been included therein. If any provision of Section 8 or Section 9 isdetermined by a court of competent jurisdiction that the character, duration, geographicalscope, or related aspects are unreasonable in light of the circumstances as they then exist,then it is the intention of the parties that Section 8 and/or Section 9 shall be construedby the court in such a manner as to impose only those restrictions on the conduct ofExecutive that are reasonable in light of the circumstances as they then exist and as arenecessary to assure the Corporation of the intended benefit of this Agreement and suchrestrictions, as so modified, shall become and thereafter be the maximum restriction in suchregard, and the restriction shall remain enforceable to the fullest extent deemed reasonableby such court.11. Remedies for Breach of Executive’s Covenants of Non-Disclosure andNon-Competition. Executive recognizes and agrees that the Corporation’s remedy at lawfor any breach of Section 8 or Section 9 would be inadequate as such a breach would causeirreparable harm to the Corporation, and he agrees that, for any actual or threatened breachof such provisions, the Corporation shall, in addition to such other remedies as may beavailable to it at law or in equity, be entitled to injunctive relief and to enforce itsrights by an action for specific performance. All of the Corporation’s remedies for anybreach of this Agreement shall be cumulative and the pursuit of any one remedy shall notexclude the Corporation’s pursuit of any other remedies.
 
 

 
12. Termination and Severance.a. Death. In the event that Executive dies during the Employment Term, thisAgreement shall terminate automatically upon his death, upon which event Executive’s legalrepresentatives shall be entitled to receive, and the Corporation shall pay or cause to bepaid to Executive’s legal representatives, any Base Salary and other compensation orbenefits accrued but as yet unpaid on the date of Executive’s death.b. Incapacity or Disability. If during the Employment Term, Executive isprevented from performing the duties or fulfilling responsibilities of his employment underthis Agreement by reason of any incapacity or disability for a continuous period of six (6)months, as determined by an independent qualified physician selected by the Corporation andreasonably acceptable to Executive (or his representative), then the Corporation mayterminate Executive’s employment hereunder, but Executive shall continue to be eligible toreceive any benefits to which he may be entitled under the terms of any long-term disabilityplan or insurance policy maintained by the Corporation for its employees generally or forExecutive specifically. In the event of such incapacity or disability, the Corporationshall continue to pay full compensation to Executive in accordance with the terms of thisAgreement until the date of such termination of employment.c. By Corporation for Cause. The Corporation may, upon written notice toExecutive, terminate Executive’s employment hereunder for Cause (as defined hereafter);provided that the Corporation shall first provide Executive with an opportunity to be heardby the Board on any proposed termination for Cause by the Board. For purposes of thisAgreement, the term “Cause” shall mean (i) Executive’s material breach of this Agreement ifthe Corporation has notified Executive of such breach and he has not cured such breachwithin 15 days of having received such notice; (ii) Executive’s material failure to adhereto any policy of the Corporation generally applicable to employees of the Corporation ifExecutive has been given a reasonable opportunity to comply with such policy or cure hisfailure to comply; (iii) Executive’s appropriation (or attempted appropriation) of abusiness opportunity of the Corporation, including attempting to secure or securing anypersonal profit in connection with any transaction entered into on behalf of theCorporation; (iv) Executive’s misappropriation (or attempted misappropriation) of any of theCorporation’s funds or property; (v) Executive’s conviction of, or the entering of a guiltyplea or plea of no contest with respect to, a felony, the equivalent thereof, or of a lessercrime having as its predicate element fraud, dishonesty or misappropriation of property ofthe Corporation; (vi) Executive’s willful misconduct or insubordination; (vii) Executive’sphysical or mental disability or other inability to perform the essential functions of hisposition for a consecutive six (6) month period, with or without reasonable accommodation,as determined by an independent qualified physician selected by the Corporation andreasonably acceptable to Executive (or his representative) if Executive is not eligible forbenefits under the terms of any long-term disability policy or insurance policy maintainedby the Corporation for its employees generally or for Executive specifically; (viii)Executive’s engaging in bad faith or gross negligence in the performance of his dutiesunder this Agreement as determined in good faith by the Board; or (ix) any other conduct ofExecutive sufficiently detrimental to the Corporation so as to warrant immediate terminationof Executive’s employment with the Corporation.In the event of termination for Cause of Executive’s employment, Executive’s right toreceive compensation and other benefits hereunder (other than any Base Salary and anyvacation accrued but as yet unpaid on the effective date of such termination) shallterminate on the effective date of such termination, and Executive shall not be entitled toany severance payments or other benefits.
 
 

 
d. Termination by the Corporation without Cause. The Corporation may elect toterminate Executive’s employment at any time without Cause upon written notice to Executive.In the event of such termination without Cause, Executive shall be entitled to aseverance payment in an amount equal to two (2) years of (i) Executive’s Base Salary asof the date of termination plus (ii) the average of the bonuses paid Employee since theinception of the Agreement. Such severance payment shall be made over the six month periodbeginning on the Executive’s date of termination of employment, with payments made to theExecutive in equal installments during each of the Corporation’s usual pay periods duringsuch six month period.Payments under this Paragraph (d) in excess of two (2) times the lesser of (i) the sum of the Executive’s annualized compensation based uponthe annual rate of pay for services provided to the Corporation for the taxableyear of the Executive preceding the taxable year of the Executive in which theExecutive has a separation from service with the Corporation (adjusted for anyincrease during that year that was expected to continue indefinitely if theExecutive had not separated from service), or  (ii) the maximum amount that may be taken into account under aqualified plan pursuant to Section 401(a)(17) of the Code for the year in whichthe Executive has a separation from serviceshall be subject to the payment timing restrictions set forth in Section 12(n) of thisAgreement.For purposes of this Agreement, the Executive’s termination of employment mustconstitute a separation from service under Section 409A of the Internal Revenue Code of1986, as amended (the “Code”), and its accompanying regulations.e. Nonrenewal of Agreement. The Corporation may elect to not renew or extend thisAgreement at any time without cause upon written notice to Executive not later than thirty(30) days prior to the end of any Initial Term or any extended Employment Term. In theevent of a nonrenewal or non-extension pursuant to this Paragraph, Executive’s rights toreceive compensation and other benefits (other than any Base Salary and vacation accrued butas yet unpaid on the effective date of such termination) shall terminate at the expirationof the Initial Term or Employment Term. In the event of such termination, Executive shallbe entitled to a severance payment following the end of such Initial Term or Employment Termin an amount equal to the amounts specified in Section 12(d).f. By Executive for Good Reason. Executive may, at his option, upon at leastthirty (30) days written notice to the Corporation, terminate his employment hereunder forGood Reason. The Executive shall be considered to have terminated his employment for GoodReason if the separation from service occurs during the one year period following theinitial existence of one or more of the following conditions arising without theconsent of the Executive: (1) a material diminution in the Executive’s base compensation;  (2) a material diminution in the Executive’s authority, duties, orresponsibilities;
 
 

 
 (3) a material diminution in the authority, duties, orresponsibilities of the Executive such that that Executive is required to reportto a corporate officer or employee instead of reporting directly to the board ofdirectors of Corporation;  (4) a material diminution in the budget over which the Executiveretains authority;  (5) a material change in the geographic location at which theExecutive must perform the services; or  (6) any other action or inaction that constitutes a material breachby the Corporation of this Agreement.Upon any termination by Executive under this Paragraph (f), the Corporation shall beobligated to pay Executive the severance payments specified in Section 12(d).For this provision to apply, the Executive must provide notice to the Corporation ofthe existence of the condition constituting a Good Reason within a period not to exceedninety (90) days of the initial existence of the condition, upon the notice of which theCorporation must be provided a period of at least thirty (30) days during which it mayremedy the condition and not be required to pay the amount due under this Paragraph (f).g. By Executive Following Change of Control. Executive may, at his option,upon thirty (30) days written notice to the Corporation, terminate his employment hereunderfor Good Reason (as defined in Section 12(f) above) following a Change of Control of theCorporation. Upon any termination by Executive under this Paragraph (g), the Corporationshall be obligated to pay Executive the amounts specified in Section 12(d). Termination byExecutive pursuant to this paragraph shall not be deemed a voluntary termination byExecutive pursuant to Section 12(j) hereof.h. Change of Control Defined. For purposes of this Agreement, a “Change ofControl” shall be deemed to have occurred if the transaction is of a nature that would berequired to be reported in response to Item l(a) of the Current Report on Form 8-K, as ineffect on January 1, 2003, pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934 (the “Exchange Act”); provided that, without limitation, such a “Change of Control”shall be deemed to have occurred if: (i) a third Person, including a “group” as such term isused in Section 13(d)(3) of the Exchange Act, other than the trustee of any employee benefitplan of the Corporation, becomes the beneficial owner, directly or indirectly, of 35% ormore of the combined voting power of the Corporation’s outstanding voting securitiesordinarily having the right to vote for the election of directors of the Corporation; (ii)during any period of twenty-four (24) consecutive months individuals who, at the beginningof such consecutive twenty-four (24) month period, constitute the Board of Directors of theCorporation (the “Board”) cease for any reason (other than retirement upon reaching normalretirement age, disability, or death) to constitute at least a majority of the Board;provided that any personbecoming a director subsequent to the date hereof whose election, or nomination forelection by the Corporation’s shareholders, was approved by a vote of at least threequarters of the directors comprising the Incumbent Board shall be, for purposes of thisAgreement, considered as though such person were a member of the Incumbent Board; or (iii)the Corporation shall cease to be a publicly owned corporation having its outstanding CommonStock listed on the New York Stock Exchange or quoted in the NASDAQ National or Small CapMarket System, except where the delisting is related to a private purchase of theCorporation’s stock by a group consisting of the Corporation’s current officers.
 
 

 
For these purposes, a “Change of Control” also shall not be deemed to have occurredwhere, with respect to any transaction otherwise constituting a “Change of Control,”Executive is reasonably expected to maintain his existing position as President and CEO withthe Corporation.For these purposes, Incumbent Board means the Board as in existence twenty-four (24)months prior to the date the action is being considered. Notwithstanding the foregoing, ifthe Incumbent Board specifically determines that any transaction does not constitute aChange of Control for purposes of this Agreement such determination shall be conclusive andbinding.i. Person Defined. For purposes of this Agreement, the term “Person” means anyindividual, corporation, association, partnership, limited partnership, limited liabilitycompany, limited liability partnership, organization, business, joint venture, soleproprietorship, governmental agency, entity or subdivision or other entity of any kind ornature.j. Voluntary Termination by Executive. Executive may, at his option, uponthirty (30) days prior written notice to the Corporation, terminate his employmenthereunder. In the event of a voluntary termination of his employment by the Executivepursuant to this Paragraph (j), Executive’s rights to receive compensation and otherbenefits (other than any Base Salary and vacation accrued but as yet unpaid on the effectivedate of such termination) shall terminate on the effective date of such termination, andExecutive shall not be entitled to any severance payments or other benefits.k. Eligibility for Severance; Requirement of Release. Except as provided inSections 12(d), 12(e), 12(f), and 12(g), Executive shall not be eligible for or entitled toany severance payments in the event of termination of his employment hereunder. Noseverance shall be paid under this Agreement unless Executive first executes and agrees tobe bound by a release of all claims, on a form provided by the Corporation, which releasesany and all claims that Executive has or might have against the Corporation and whichcontains terms customary in such agreements. If the Corporation does not receive anexecuted release prior to the date occurring sixty (60) days after the date of terminationof the Executive’s employment with the Corporation (including within such sixty day periodany applicable revocation period), the Corporation shall have no obligation to makeseverance payments to the Executive.l. Resignation. In the event of termination of his employment other than fordeath, Executive shall be deemed to have resigned from all positions held in theCorporation, including without limitation any position as a director, officer, agent,trustee, or consultant of the Corporation or any affiliate of the Corporation. Upon requestof the Corporation,Executive shall promptly sign and deliver to the Corporation any and all documentsreflecting such resignations as of the date of termination of his employment.m. Compliance with Section 409A of the Code. Notwithstanding anything to thecontrary in this Agreement, to the extent that the Corporation in the exercise of itsreasonable judgment shall determine that Section 409A of the Code, applies to any amountspayable under this Section 12, then any such amounts shall be paid in such fashion and atsuch times so as to ensure that the Corporation and Executive are in compliance with Section409A of the Code.
 
 

 
n. Six Month Delay for Specified Employee. In the event that any stock of theCorporation or any entity within the same controlled group (as defined in Section 414(b) ofthe Code), is publicly traded on an established securities market as defined in Section1.409A-1(i) of the Regulations under Section 409A of the Code, distributions to theExecutive will not be made until the date that is six (6) months plus one day after theExecutive’s date of separation from service, or, if earlier than the end of the six-monthperiod, the date of the death of the Executive, if the Executive is a Specified Employee.Any payments delayed under this Paragraph (n) shall be paid in a single lump sum payment onsuch date. For purposes of this Paragraph (n), “Specified Employee” means a key employee(as defined in Code Section 416(i) without regard to paragraph (5) thereof) of theCorporation or any affiliated organization with employees in the United States. TheExecutive will be considered a key employee for the period commencing April 1 and ending onthe March 31 thereafter if he was a key employee on the previous December 31 and suchdesignation shall be effective solely for that period.o. Compliance with Section 162(m). In no event shall any payment be made under thisAgreement that shall exceed the limitations of Section 162(m) of the Code and anyregulations thereunder applicable to the Corporation.13. Vesting upon Change of Control. Any stock options and restricted stock granted toExecutive by the Corporation shall accelerate and immediately vest upon the occurrence of thefollowing events: if (a) any “person,” as such term is used in Sections 13(d) and 14(e) of theSecurities and Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Corporation,any trustee or other fiduciary holding securities under an employee benefit plan of theCorporation, or any corporation owned directly or indirectly by the stockholders of the Corporationin substantially the same proportion as their ownership of stock in the Corporation) is or becomesthe “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,of securities of the Corporation representing 50% or more of the combined voting power of theCorporation’s then outstanding securities (other than as a result of acquisitions of suchsecurities from the Corporation); (b) individuals who, as of the date hereof, constitute the Boardof Directors of the Corporation (the “Incumbent Board”) cease for any reason to constitute at leasta majority of the Board, provided that any person becoming a director after the date hereof whoseelection, or nomination for election by the Corporation’s stockholders, was approved by a majorityof the directors then comprising the Incumbent Board (other than an election or nomination of anindividual whose initial assumption of office is in connection with an actual or threatenedelection contest relating to the election of the directors of the Corporation) shall be, forpurposes of this Agreement, considered to be a member of the Incumbent Board; (c) the stockholdersof the Corporation approve a merger or consolidation of the Corporation with any other corporation,other than (i) a merger or consolidation that would result in the voting securities of theCorporation outstanding immediately prior thereto continuing torepresent (either by remaining outstanding or by being converted into voting securities of thesurviving entity) more than 50% of the combined voting power of the voting securities of theCorporation or such surviving entity outstanding immediately after such merger or consolidation or(ii) a merger or consolidation effected to implement a recapitalization of the Corporation (orsimilar transaction) in which no “person” (as defined above, acquires more than 20% of the combinedvoting power of the Corporation’s then outstanding securities; or (d) the stockholders of theCorporation approve a plan of complete liquidation of the Corporation or an agreement for the saleor disposition of the Corporation of all or substantially all of the Corporation’s assets. To theextent permitted by applicable law, Executive shall be entitled to exercise, for a period of 12months from the effective date of termination of his employment, all of his stock options andrestricted grants, which vest pursuant to this Section or were otherwise vested prior to thetermination of his employment.
 
 

 
14. Payment or Benefit in Connection with Change of Control.a. Notwithstanding any other provision of this Agreement, in the event that any paymentor benefit received or to be received by the Executive (i) is deemed to be in connectionwith a Change of Control (whether payable pursuant to the terms of this Agreement or anyother plan, arrangement or agreement with the Corporation, its successors, any person whoseactions result in a Change of Control or any corporation (“Affiliates”) affiliated (orwhich, as a result of the completion of the transactions causing a Change of Control willbecome affiliated) with the Corporation within the meaning of Section 1504 of the Code(collectively with the payments and benefits pursuant to this Agreement if deemed to be paidpursuant to a Change of Control, “Total Payments”) and (ii) is determined by theCorporation’s independent certified accounting firm (the “Tax Advisor”) that such amountexceeds 2.99 times the base amount (as such term is defined under Section 280G(b)(3) of theCode) but that is less than 4 times the base amount and that an excise tax is payable byExecutive under Section 4999 of the Code, then the amount of payments to the Executive shallbe reduced so that the payments do not exceed the limits then set forth in Section 280G ofthe Code.b. Notwithstanding any other provisions of this Agreement or the provisions of Section(a) above, in the event that the Total Payments received or to be received by Executive inconnection with a Change of Control would be subject (in whole or part), to an excise taxpursuant to Section 4999 of the Code (such tax hereinafter referred to as the “Excise Tax”)because the amount of the Total Payments equals or exceeds four (4) times the base amount(as such term is defined under Section 280G(b)(3) of the Code), then the Total Paymentsshall be grossed up to the extent necessary to reflect any Excise Taxes due by Executive andthe income taxes attributable thereto so that the Executive will be entitled to a net amountequal to the Total Payments (the “Grossed-Up Payment”). For purposes of determining whetherand the extent to which the Total Payments will be subject to the Excise Tax, (i) no portionof the Total Payments the receipt or enjoyment of which Executive shall have effectivelywaived in writing prior to the date of this termination of employment shall be taken intoaccount, (ii) no portion of the Total Payments shall be taken into account which in theopinion of tax counsel selected by Corporation does not constitute a “parachute payment”within the meaning of Section 280G(b)(2) of the Code, (including by reason of Section280(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such TotalPayment shall be taken into account which constitutes reasonable compensation for servicesactually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of thebase amount as defined in Section 280G(b)(3) of the Code allowable to such reasonablecompensation, and (iii) the value of any non-cash benefit or any deferred payment orbenefit included in the Total Payments shall be determined by Corporation in accordance withthe principles of Sections 280G(d)(3) and (4) of the Code. Prior to the thirtieth dayfollowing the date of Executive’s termination of employment, Corporation shall provideExecutive with its calculation of the amounts referred to in this Section and suchsupporting materials as are reasonably necessary for Executive to evaluate Corporation’scalculations but the Corporation’s calculations shall be used for purposes of any paymentspursuant to this Section.
 
 

 
c. If the Corporation’s Tax Advisor determines that the Total Payments received or tobe received by Executive fall under subparagraph (a) above and upon audit by the InternalRevenue Service the IRS determines that an Excise Tax is due and payable due to the amountof the Total Payments received by Executive, then the Corporation agrees to make aGrossed-Up Payment calculated in the same manner as provided in subparagraph (b).d. In the event of any IRS audit concerning to the Total Payments payable or paid toExecutive, the Corporation may in its sole discretion choose to respond to the audit. Ifthe Corporation chooses not to respond, then it shall be the sole responsibility ofExecutive to respond to the audit.e. Any payment for a gross up of taxes made under Paragraph (b) above will be made nolater than by the end of the calendar year next following the calendar taxable year in whichthe Executive remits the related taxes.15. Waiver. A party’s failure to insist on compliance or enforcement of any provisionof this Agreement shall not affect the validity or enforceability or constitute a waiver of futureenforcement of that provision or of any other provision of this Agreement by that party or anyother party.16. Governing Law. This Agreement shall in all respects be subject to, and governedby, the laws of the State of Connecticut without reference to its conflict of laws17. Severability. Subject to the provisions of Section 18, Executive and theCorporation agree that the invalidity or unenforceability of any provision in the Agreement shallnot in any way affect the validity or enforceability of any other provision and this Agreementshall be construed in all respects as if such invalid or unenforceable provision had never been inthe Agreement.18. Judicial Modification. If a court of competent jurisdiction determines that thecharacter, duration, geographic scope, activity and/or subject of the provisions in Sections 8, 9,or 10 of this Agreement is or are unreasonable under the circumstances as they then exist, thenExecutive and the Corporation agree that such provisions should be limited and reduced, and requestthat any reviewing court limit and reduce such provisions, so as to make them enforceable underapplicable law to assure the Corporation of the intended maximum benefit of such provisions underthis Agreement.
 
 

 
19. Notice. Any and all notices required or permitted herein shall be in writing andshall be deemed to have been duly given (a) when delivered if delivered personally, (b) on thefifth day following the date of deposit in the United States mail if sent first class, postageprepaid, or by certified mail, or (c) one day after delivery to a nationally recognized overnightcourier service. Theparties’ respective addresses for such notices shall be those set forth below, or such otheraddress or addresses as either party may hereafter designate in writing to the other.       If to the Corporation: FuelCell Energy, Inc.3 Great Pasture RoadDanbury, CT 06813Attention: Chairman of the Board of DirectorsFacsimile No.: (203) 825-6100       With a copy to: Robinson & Cole LLPFinancial Centre1055 Washington BoulevardStamford, CT 06901-2305Attention: Richard A. Krantz, Esq.Facsimile No.: (203) 462-7599       If to Employee: Arthur Bottone20. Assignment. This Agreement shall inure to the benefit of, and shall be bindingupon, the parties hereto and their respective successors, assigns, heirs, and legalrepresentatives, including any entity with which the Corporation may merge or consolidate or towhich all or substantially all of its assets may be transferred. The duties and covenants ofExecutive under this Agreement, being personal, may not be delegated.21. Amendments. This Agreement may be amended at any time by mutual consent of theparties hereto, with any such amendment to be invalid unless in writing and signed by theCorporation and Executive and expressly referring to this Agreement.22. Entire Agreement. This Agreement contains the entire agreement and understandingby and between Executive and the Corporation with respect to the employment of Executive andsupersedes all existing agreements between the Corporation and Executive with respect to suchsubject 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, Sections5, 6, 7, 8, and 9 shall be supplemental to any other agreement of Executive with the Corporationrelated to the matters identified therein.23. No Undue Influence; Construction. This Agreement is executed voluntarily andwithout any duress or undue influence. Executive acknowledges that he has read this Agreement andexecuted it with his full and free consent. No provision of this Agreement shall be construedagainst any party by virtue of the fact that such party or its counsel drafted such provision orthe entirety of this Agreement.24. References to Gender and Number Terms. In construing this Agreement, feminine ornumber pronouns shall be substituted for those masculine in form and vice versa, and plural termsshall be substituted for singular and singular for plural in any place in which the context sorequires.25. Counterparts; Headings; Sections. This Agreement may be executed in multiplecounterparts, each of which shall be considered to have the force and effect of any original butall of which taken together shall constitute but one and the same instrument. The various headingsin this Agreement are inserted for convenience only and are not part of the Agreement. Allreferences to “Sections” and “Paragraphs” in this Agreement refer to the various correspondingsections and paragraphs of this Agreement.
 
 

 
26. Survival. The covenants and agreements contained in Sections 5 through 10 shallsurvive any termination of Executive’s employment with the Corporation.27. Arbitration; Waiver of Trial by Jury. Executive and the Corporation shall submitany disputes arising under this Agreement to an arbitration panel conducting a binding arbitrationin Hartford, Connecticut or at such other location as may be agreeable to the parties, inaccordance with the National Rules for the Resolution of Employment Disputes of the AmericanArbitration Association in effect on the date of such arbitration (the “Rules”), and judgment uponthe award rendered by the arbitrator or arbitrators may be entered in any court having jurisdictionthereof; provided, however, that nothing herein shall impair the Corporation’s right to seekequitable relief in any court for any breach or threatened breach of Section 8 or Section 9. Theaward of the arbitrators shall be final and shall be the sole and exclusive remedy between theparties regarding any claims, counterclaims, issues or accountings presented to the arbitrationpanel. The parties hereto further agree that the arbitration panel shall consist of one (1) personmutually acceptable to the Corporation and Executive, provided that if the parties cannot agree onan arbitrator within thirty (30) days of filing a notice of arbitration, the arbitrator shall beselected by the manager of the principal office of the American Arbitration Association servingHartford County in the State of Connecticut. Each party will pay for the fees and expenses of itsown attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearingbriefs (unless (i) the party prevails on a claim for which attorney’s fees and expenses arerecoverable under the Rules and those amounts are included as part of the award or (ii) Executiveprevails on a claim for breach of this Agreement after the Corporation has terminated Executivepursuant to Section 12c hereof, in which case, the Corporation will pay for Executive’sabove-described fees and expenses related to such claim). Any action to enforce or vacate thearbitrator’s award shall be governed by the federal Arbitration Act, if applicable, and otherwiseby applicable state law. If either the Corporation or Executive pursues any claim, dispute orcontroversy against the other in a proceeding other than the arbitration provided for herein, theresponding party shall be entitled to dismissal or injunctive relief regarding such action andrecovery of all costs, losses and attorney’s fees related to such action. Executive acknowledgesand expressly agrees that this arbitration provision constitutes a knowing and voluntary waiver oftrial by jury in any action or proceeding to which Executive and the Corporation may be partiesarising 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 on thedate set forth below.       CORPORATION:             FUELCELL ENERGY, INC.   WITNESS:         By: /s/ R. Daniel Brdar**Name:**   /s/ Darrell Bradford **Name:**  **Its:**             Date: 2/8/11             EXECUTIVE:   WITNESS:         /s/ Arthur Bottone   /s/ Darrell Bradford         *Name: Arthur Bottone*   *Name:*         Date: 2/8/11