Document:

exv4w4

Exhibit 4.4

COMMON STOCK PURCHASE WARRANT

GRAYMARK HEALTHCARE, INC.

			
	 	 	 
	Warrant Shares: [_______]
	 	Issue Date: [____], 2011

          THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, _____________ (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue
Date and on or prior to the close of business on the five-year anniversary of the Issue Date (the
“Termination Date”) but not thereafter, to subscribe for and purchase from Graymark
Healthcare, Inc., an Oklahoma corporation (the “Company”), up to ______ shares (the
“Warrant Shares”) of its common stock, par value $0.0001 per share (the “Common
Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to
the Exercise Price, as defined in Section 2(b).

     Section 1. Definitions. Capitalized terms used herein shall have the meanings
given to them herein. As used herein, (i) “business day” means any day on which the New
York Stock Exchange, Inc. is open for trading, and (ii) “Affiliate” has the meaning
ascribed to it in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).

     Section 2. Exercise.

          a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times on or after the Issue Date and on or before
the Termination Date by delivery to the Company (or such other office or agency of the Company as
it may designate by notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise
Form annexed hereto; and, within three trading days of the date said Notice of Exercise is
delivered to the Company, the Company shall have received payment of the aggregate Exercise Price
of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three trading days of the date the
final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The Company shall maintain in the
Warrant Register (as defined below) records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form
within one business say of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following
the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than the amount stated on the
face hereof.

 

 

          b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $____, subject to adjustment hereunder (the “Exercise Price”).

          c) Mechanics of Exercise.

               i. Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the Company’s transfer agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company (“DTC”)through its
Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in
such system and there is an effective registration statement permitting the issuance of the Warrant
Shares to or resale of the Warrant Shares by Holder, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise by the date that is three trading days
after the latest of (A) the delivery to the Company of the Notice of Exercise Form, (B) surrender
of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above
(such date, the “Warrant Share Delivery Date”). This Warrant shall be deemed to have been
exercised on the first date on which all of the foregoing have been delivered to the Company. The
Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(vi) prior to the
issuance of such shares, having been paid. If the Company fails for any reason to deliver to the
Holder certificates evidencing the Warrant Shares subject to a Notice of Exercise by the Warrant
Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP (as
defined below) of the Common Stock on the date of the applicable Notice of Exercise), $10.00 per
trading day (increasing to $20.00 per trading day on the fifth trading day after such liquidated
damages begin to accrue) for each trading day after such Warrant Share Delivery Date until such
certificates are delivered or Holder rescinds such exercise.

               “VWAP” means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on NYSE Amex, The NASDAQ Capital
Market, The NASDAQ Global Market, The NASDAQ Global Select Market or the New York Stock Exchange
(each, a “Trading Market”), the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a trading day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time), (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) in all other cases, the
fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Warrants then outstanding

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and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the
Company

               ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised
in part, the Company shall, at the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.

               iii. Rescission Rights. If the Company fails to cause its transfer agent to transmit
to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section
2(c)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such
exercise.

               iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.
In addition to any other rights available to the Holder, if the Company fails to cause its transfer
agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the
Holder is required by its broker to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall, within three trading days after the Holder’s request
and in the Holder’s discretion, either (A) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver
such certificate (and to issue such Warrant Shares or credit such Holder’s balance account with
DTC) shall terminate, or (B) promptly honor its obligation to deliver to the Holder a certificate
or certificates representing such Warrant Shares or credit such Holder’s balance account with DTC
and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the
product of (1) such number of shares of Common Stock, times (2) the VWAP on the date of exercise.

               v. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at
its election, either pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price or round up to the next whole share.

               vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the name of the Holder,
this

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Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment
of a sum sufficient to reimburse it for any transfer tax incidental thereto.

               vii. Closing of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

          d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to
Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates,
and any other Persons (as defined below) acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below). For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which would be issuable upon (i)
exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or
any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of
any other securities of the Company (including, without limitation, any other common stock
equivalents) subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder
that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by the
Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in
determining the number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or its transfer agent setting forth the
number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within three trading days confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any

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case, the number of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant, by the Holder or
its Affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice
to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this
Section 2(d) shall continue to apply. Any such increase or decrease will not be effective until
the 61st day after such notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of this Warrant.

     Section 3. Certain Adjustments.

          a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, (iii) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in each case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall
be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

          b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of
its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)),
then in each such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the denominator shall be

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the VWAP determined as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to one outstanding
share of the Common Stock as determined by the Company’s Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the Holder of the portion
of assets or evidences of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock. Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.

          c) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another Person in which the Company is not the surviving
entity or the stockholders of the Company immediately prior to such merger or consolidation do not
own, directly or indirectly, at least 50% of the outstanding voting securities of the surviving
entity, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant to which all or
substantially all of the holders of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, or (iv) the Company, directly or indirectly, in one or more
related transactions effects any reclassification, reorganization or recapitalization of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property (other than as a result of a subdivision
or combination of shares of Common Stock covered by Section 3(a) above), (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary, in
the event of a Fundamental Transaction other than one in which a Successor Entity (as defined
below) that is a publicly traded corporation whose stock is quoted or listed for trading on an

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Eligible Market (as defined below) assumes this Warrant such that the Warrant shall be exercisable
for the publicly traded Common Stock of such Successor Entity, the Company or any Successor Entity
shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after,
the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to
the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion
of this Warrant on the date of the consummation of such Fundamental Transaction. As used herein
(w) “Black Scholes Value” means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental Transaction for pricing
purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the time between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and
the 100 day volatility obtained from the HVT function on Bloomberg as of the trading day
immediately following the public announcement of the applicable Fundamental Transaction, (C) the
underlying price per share used in such calculation shall be the sum of the price per share being
offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time between the date of
the public announcement of the applicable Fundamental Transaction and the Termination Date, (1)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity (as
defined below)) formed by, resulting from or surviving any Fundamental Transaction or the Person
(or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall
have been entered into, (2) “Eligible Market” means the NYSE Amex, The NASDAQ Capital
Market, The NASDAQ Global Market, The NASDAQ Global Select Market, the New York Stock Exchange or
the OTC Bulletin Board (or any successors to any of the foregoing), (3) “Parent Entity” of
a Person means an entity that, directly or indirectly, controls the applicable Person and whose
common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there
is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public
market capitalization as of the date of consummation of the Fundamental Transaction. The terms of
any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring
any such successor or surviving entity to comply with the provisions of this Section 3(e) and
insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction, and (4) “Person” means an
individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any department or agency thereof.

          d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraph (a) and (e) of this Section, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.

          e) Subsequent Equity Sales.

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               i. Except as provided in subsection (e)(iii) hereof, if and whenever the Company shall issue
or sell, or is, in accordance with any of subsections (e)(ii)(l) through (e)(ii)(7) hereof, deemed
to have issued or sold, any shares of Common Stock for no consideration or for a consideration per
share less than the Exercise Price in effect immediately prior to the time of such issue or sale,
then and in each such case (a “Trigger Issuance”) the then-existing Exercise Price shall be
reduced as of the close of business on the effective date of the Trigger Issuance, to a price
determined as follows:

	 	 	 

	Adjusted Exercise Price =

	 	(A x B) + D
	 

	 	 
	 

	 	A+C

where

“A” equals the number of shares of Common Stock outstanding, including
Additional Shares of Common Stock (as defined below) deemed to be issued
hereunder, immediately preceding such Trigger Issuance;

“B” equals the Exercise Price in effect immediately preceding such Trigger
Issuance;

“C” equals the number of Additional Shares of Common Stock issued or deemed
issued hereunder as a result of the Trigger Issuance; and

“D” equals the aggregate consideration, if any, received or deemed to be
received by the Company upon such Trigger Issuance;

               provided, however, that in no event shall the Exercise Price after giving effect to such
Trigger Issuance be greater than the original Exercise Price.

          For purposes of this subsection (e), “Additional Shares of Common Stock” shall mean
all shares of Common Stock issued by the Company or deemed to be issued pursuant to this subsection
(e), other than Exempt Issuances (as defined below).

               ii. For purposes of this subsection 3(e), the following subsections (e)(ii)(l) to (e)(ii)(7)
shall also be applicable:

                    (1) Issuance of Rights or Options. In case at any time the Company shall in any manner
grant (directly and not by assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants, rights or options being
called “Options” and such convertible or exchangeable stock or securities being called
“Convertible Securities”), whether or not such Options or the right to convert or exchange
any such Convertible Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (i) the
sum (which sum shall constitute the applicable consideration) of (x) the total amount, if any,
received or receivable by the Company as consideration for the granting of such Options, plus

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(y)
the aggregate amount of additional consideration payable to the Company upon the exercise of all
such Options, plus (z), in the case of such Options which relate to Convertible Securities, the
aggregate amount of additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be
less than the Exercise Price in effect immediately prior to the time of the granting of such
Options, then the total number of shares of Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of the total amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such price per share as of the
date of granting of such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Exercise Price. Except as otherwise
provided in subsection 3(e)(ii)(3), no adjustment of the Exercise Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options
or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible
Securities.

                    (2) Issuance of Convertible Securities. In case the Company shall in any manner issue
(directly and not by assumption in a merger or otherwise) or sell any Convertible Securities,
whether or not the rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus (y) the aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange thereof, by (ii) the
total number of shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the
time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed to have been issued for
such price per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price, provided
that (a) except as otherwise provided in subsection 3(e)(ii)(3), no adjustment of the Exercise
Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities and (b) no further adjustment of the Exercise Price shall be made by
reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the Exercise Price have been made pursuant to
the other provisions of subsection 3(e).

                    (3) Change in Option Price or Conversion Rate. Upon the happening of any of the
following events, namely, if the purchase price provided for in any Option referred to in
subsection 3(e)(ii)(l), the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subsections 3(e)(ii)(l) or 3(e)(ii)(2), or
the rate at which Convertible Securities referred to in subsections 3(e)(ii)(l) or
3(e)(ii)(2) are convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions designed to protect

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against dilution), the Exercise Price in effect at the time of such event shall forthwith be
readjusted to the Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially granted, issued or
sold. On the termination of any Option for which any adjustment was made pursuant to this
subsection 3(e) or any right to convert or exchange Convertible Securities for which any adjustment
was made pursuant to this subsection 3(e) (including, without limitation, upon the redemption or
purchase for consideration of such Convertible Securities by the Company), the Exercise Price then
in effect hereunder shall forthwith be changed to the Exercise Price which would have been in
effect at the time of such termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such termination, never been issued.

                    (4) Stock Dividends. Subject to the provisions of this Section 3(e), in case the
Company shall declare a dividend or make any other distribution upon any stock of the Company
(other than the Common Stock) payable in Common Stock, Options or Convertible Securities, then any
Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or sold without consideration.

                    (5) Consideration for Stock. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for cash, the consideration received therefor shall
be deemed to be the gross amount received by the Company therefor. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company shall be deemed to be
the fair value of such consideration as determined in good faith by the Board of Directors of the
Company. In case any Options shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined in good faith by the Board of Directors of
the Company. If Common Stock, Options or Convertible Securities shall be issued or sold by the
Company and, in connection therewith, other Options or Convertible Securities (the “Additional
Rights”) are issued, then the consideration received or deemed to be received by the Company
shall be reduced by the fair market value of the Additional Rights (as determined using the
Black-Scholes option pricing model or another method mutually agreed to by the Company and the
Holder). The Board of Directors of the Company shall respond promptly, in writing, to an inquiry
by the Holder as to the fair market value of the Additional Rights. In the event that the Board of
Directors of the Company and the Holder are unable to agree upon the fair market value of the
Additional Rights, the Company and the Holder shall jointly select an appraiser who is experienced
in such matters. The decision of such appraiser shall be final and conclusive, and the cost of
such appraiser shall be borne evenly by the Company and the Holder.

                    (6) Record Date. In case the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe
for or purchase Common Stock, Options or Convertible Securities, then such record date shall be

-10-

 

deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such other distribution or the date
of the granting of such right of subscription or purchase, as the case may be.

                    (7) Treasury Shares. The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the Company or any of its
wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or
retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this
subsection (e).

               iii. Exempt Issuance. Notwithstanding the foregoing, no adjustment will be made under
this paragraph (e) in respect of an Exempt Issuance. For the purposes of this Warrant, “Exempt
Issuance” means the issuance of (a) shares of Common Stock, common stock equivalents,
restricted stock units or other Options to employees, consultants officers or directors of the
Company pursuant to any existing or future stock option, restricted stock, stock purchase or other
equity compensation plan duly adopted for such purpose, by a majority of the non-employee members
of the Board of Directors or a majority of the members of a committee of non-employee directors
established for such purpose, and the issuance of Common Stock in respect of such common stock
equivalents, restricted stock units or other Options, (b) securities (including Common Stock and
common stock equivalents) upon the exercise, conversion or exchange of securities (including
Convertible Securities and Options) issued and outstanding on the date hereof, including the
Warrants, provided that such securities have not been amended since date hereof to increase the
number of such securities or to decrease the exercise price, exchange price or conversion price of
such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved
by a majority of the disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) that the Company’s Board of Directors
determines in good faith is, itself or through its subsidiaries, an operating company or an owner
of an asset in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall not, for the purposes
of this clause (c), include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is investing in securities,
and (d) the issuance of securities in a transaction described in Section 3(a) or 3(b) above.

               iv. Upon any adjustment to the Exercise Price pursuant to this Section 3(e), the number of
Warrant Shares purchasable hereunder shall be adjusted by multiplying such number by a fraction,
the numerator of which shall be the Exercise Price in effect immediately prior to such adjustment
and the denominator of which shall be the Exercise Price in effect immediately thereafter.

          f) Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any)
issued and outstanding.

-11-

 

          g) Notice to Holder.

               i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting
forth the Exercise Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.

               ii. Notice to Allow Exercise by Holder. After the Issue Date, (A) the Company shall
declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or property, or
(E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the
Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20
calendar days prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of
which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close,
and the date as of which it is expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of its subsidiaries, the Company shall simultaneously file
such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth
herein.

     Section 4. Transfer of Warrant.

          a) Transferability. Subject to compliance with any applicable securities laws, this
Warrant and all rights hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the principal office of the
Company or its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its agent or attorney
and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver a new Warrant

-12-

 

or
Warrants in the name of the assignee or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.

          b) New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued, signed by the Holder
or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such
notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date set
forth on the first page of this Warrant and shall be identical with this Warrant except as to the
number of Warrant Shares issuable pursuant thereto.

          c) Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the
record Holder hereof from time to time. The Company may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary. Upon
thirty (30) days notice to the Holder, the Company may appoint a warrant agent to maintain the
Warrant Register.

     Section 5. Miscellaneous.

          a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder
to any voting rights, dividends or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(c)(i).

          b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the
case of the Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver
a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.

          c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a business day,
then, such action may be taken or such right may be exercised on the next succeeding business day.

          d) Authorized Shares. The Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a

-13-

 

sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in
accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges created by the Company in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously with such issue).

          Except and to the extent as waived or consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in par value, (ii)
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and
(iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the
Company to perform its obligations under this Warrant.

          Before taking any action which would result in an adjustment in the number of Warrant Shares
for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

          e) Jurisdiction. All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with
the laws of the State of Oklahoma.

          f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities laws.

          g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise
prejudice Holder’s rights, powers or remedies. Without limiting any other provision of

-14-

 

this
Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

          h) Notices. The Company shall provide Holder with prompt written notice of all
actions taken pursuant to this Warrant. Whenever notice is required to be given under this Warrant,
unless otherwise provided herein, such notice shall be given in writing, will be mailed (i) if
within the domestic United States by first-class registered or certified airmail, or nationally
recognized overnight express courier, postage prepaid, or by facsimile or (ii) if delivered from
outside the United States, by International Federal Express or facsimile, and (iii) will be deemed
given (A) if delivered by first-class registered or certified mail domestic, three business days
after so mailed, (B) if delivered by nationally recognized overnight carrier, one business day
after so mailed, (C) if delivered by International Federal Express, two business days after so
mailed and (D) if delivered by facsimile, upon electronic confirmation of receipt, and will be
delivered and addressed as follows:

(1) if to the Company, to:

Graymark Healthcare, Inc.

210 Park Avenue, Suite 1350

Oklahoma City, Oklahoma 73102

Attention: General Counsel

Facsimile: (405) 601-4550

With Copies to:

Greenberg Traurig, LLP

One International Place

Boston, Massachusetts 021110

Attention: Robert E. Puopolo, Esq.

Facsimile: 617-310-6001

(2) if to the Holder, at the address of the Holder appearing on the books of the

Company.

          i) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.

          j) Remedies. The Holder, in addition to being entitled to exercise all rights granted
by law, including recovery of damages, will be entitled to specific performance of its

-15-

 

rights under
this Warrant. The Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that a remedy at law
would be adequate.

          k) Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

          l) Amendment. This Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and the Holder.

         m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.

          n) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

-16-

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.

	 	 	 	 	 
	 	GRAYMARK HEALTHCARE, INC. 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

NOTICE OF EXERCISE

TO: GRAYMARK HEALTHCARE, INC.

          (1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any. Payment shall be
in lawful money of the United States by wire transfer or cashier’s check.

          (2) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

_____________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:

_____________________

_____________________

_____________________

____________________________

[SIGNATURE OF HOLDER]

Name of Entity:
__________________________________________________

Signature of Authorized Signatory of Entity: _____________________________

Name of Authorized Signatory:
________________________________________

Title of Authorized Signatory:
_________________________________________

Date:
____________________________________________________________

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

          FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

_______________________________________ whose address is

______________________________________________.

_______________________________________________

Dated: ______________, _______

	 	 	 

	Holder’s Signature:

	 	_____________________________
	 
	 	 
	Holder’s Address:

	 	_____________________________
	 
	 	 
	 

	 	_____________________________

Signature Guaranteed: _______________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.exv10w70

Exhibit 10.70

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) made and entered into effective as of February 8, 2011
(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
Arthur Bottone (“Executive”), an individual who resides at
[deleted].

WHEREAS, the Corporation desires to promote Executive to the position of President and Chief
Executive Officer and the Executive desires to accept such promotion, 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; and

WHEREAS, Executive acknowledges that by executing and delivering this Agreement, he will
obtain certain rights, compensation, and benefits greater than those that he previously received
from the Corporation and that, accordingly, such rights, compensation, and benefits constitute
valid consideration to Executive.

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. Employment. The Corporation shall employ Executive in the capacity of President
and Chief Executive Officer (“President & CEO”) of the Corporation during the term of this
Agreement, and Executive hereby accepts such employment on the terms and conditions set forth in
this Agreement. Executive represents that his employment by the Corporation pursuant to this
Agreement does not violate any other agreement, covenant or obligation to which he is a party or by
which he is bound.

2. Duties. During the term of this Agreement, Executive shall perform all duties,
consistent with his position as President & CEO in order to advance the Corporation’s affairs and
related business efforts, assigned or delegated to him by the Board of Directors of the Corporation
(the “Board”) and normally associated with the position of President & CEO. He shall devote all of
his full business time, attention, energies, skills, and efforts to the advancement of the
interests and business of the Corporation. Following the Effective Date of this Agreement,
Executive shall become a member of the Board.

3. Term. The term of this Agreement shall begin on the Effective Date, and shall
expire on February 8, 2012, unless earlier terminated as provided in this Agreement (the “Initial
Term”). Upon expiration of the Initial Term and any subsequent term or extension thereof, this
Agreement shall automatically be extended for an additional term of one (1) year, unless Executive
or the Corporation elect to terminate this Agreement in accordance with the provisions of Section
12 of this Agreement (the “Initial Term,” together with any subsequent terms or extensions, until
termination or expiration in accordance with the provisions of this Agreement, shall be referred to
as the “Employment Term”).

 

 

 

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, 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 $340,000, 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 at least annually by the
Compensation Committee of the Board after the end of each fiscal year of the Corporation and
shall be adjusted by such amount, if any, as Compensation Committee of the Board, in its
sole discretion, shall determine and approve. Any such adjustment of Base Salary shall be
made effective on the date set by the Compensation Committee of the Board.

b. Bonus. Provided Executive first meets the Corporation’s expectations for
his 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 to
fifty percent (50%) of his Base Salary as determined and approved by the Board in its sole
discretion based upon Executive’s achievements in meeting his performance goals and those of
the Corporation for its most recently ended fiscal year. Goals shall be established after
the commencement of the Employment Term and then in the first quarter of any subsequent
fiscal year. Any such Discretionary Bonus may be payable in cash, stock options, and/or
restricted stock upon such terms and conditions as determined by the Board. The Corporation
shall pay any such Discretionary Bonus by the end of the first quarter of the following
fiscal year. Should the Executive no longer be employed by the Corporation on the date such
Discretionary Bonus is paid, such Discretionary Bonus shall be forfeited. As any bonus paid
to Executive is discretionary, the payment of any bonus in a year must not be construed as
requiring the payment of a bonus in any other year.

c. Benefits.

(i) 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 which the Corporation may hereafter in its sole and absolute discretion
make available generally to its senior executives (other than any incentive
compensation or equity ownership plan), but the Corporation shall not be required to
establish or maintain any such program or plan.

(ii) Executive shall be entitled to four (4) weeks paid vacation during each
calendar year, in accordance with the Corporation’s vacation policies. Such vacation
may be taken at such time or times as is reasonably consistent with the Corporation’s
vacation policies and the performance by Executive of his duties and responsibilities
under this Agreement. Up to one week of unused vacation time in one year may be
carried over and used in the subsequent year.

 

 

 

(iii) Executive shall be entitled to participate in the Corporation’s Equity
Incentive Plan (the “Plan”). Effective upon the execution of this Agreement, the
Board of Directors has approved a grant of restricted stock valued at $360,000. The
number of shares will be based upon the dollar value of the award approved by the
Board of Directors divided by the closing market price of the Company’s common stock
on the date of grant. This grant shall not be subject to accelerated vesting in the
event Executive is terminated for Cause pursuant to Section 12c hereof. Executive
understands and agrees that any stock rights granted to Executive shall be subject to
the provisions of the Plan and any separate written agreements embodying the grant of
the rights that are required by the Plan. The rights shall be set forth in a
separate agreement embodying the grant of the rights which shall be otherwise in the
form stipulated in the Plan. To the extent that there is any conflict between the
vesting provisions of this Agreement and the provisions of the Plan, the provisions
of this Agreement shall govern.

d. Taxes. All compensation and benefits are subject to applicable withholding
taxes, 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 or
by any applicable plan documents.

5. 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, 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 no later than the last day of the calendar year following the end of the calendar
year in which such expense is incurred.

6. 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.

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 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 “Invention”), 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 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.

 

 

 

8. Non-Disclosure of Confidential Information.

a. 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)
has been made available generally to the public either by the Corporation or by a third
party with the Corporation’s consent, unless such information became available as a result
of any action by Executive in violation of this Agreement, any other agreement, or his
obligations 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 has
determined 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, 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 Executive first provides the Corporation with notice of any such
requirement(s) as promptly as practicable, but in any case 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.

 

 

 

9. Covenants Against Competition.

a. Non-Solicitation of Employees. While 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 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 9a, specifically excludes any action by the 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.

b. 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 Term 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 (a) for any corporation, partnership, individual or entity which is engaged in a
business competitive with the Corporation or affiliate of the Corporation, or (b) to any
customer 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” 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 noncompete covenant extends throughout North
America, South America, Europe, Asia and Africa;

(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; and

(iii) The term “customer” means any business, company, person, and any other
entity to whom the Corporation or any of its affiliates has provided any product
or service, whether or not for compensation, within a period of two (2) years
prior to the time Executive ceases to be employed by the Corporation.

 

 

 

d. Exclusion for Investments. None of the provisions of this Section 9 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.

10. Reasonableness of Restrictions.

a. Executive has carefully read and considered the provisions of Section 8 and Section
9, and, having done so, agrees that:

(i) The restrictions set forth in Section 8 and Section 9, 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.

b. If, notwithstanding the foregoing, any of the provisions of Section 8 or Section 9
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 Section 8 or Section 9 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 8 and/or Section 9 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.

11. Remedies for Breach of Executive’s Covenants of Non-Disclosure and
Non-Competition. Executive recognizes and agrees that the Corporation’s remedy at law
for any breach of Section 8 or Section 9 would be inadequate as such a breach would 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 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.

 

 

 

12. Termination and Severance.

a. Death. In the event that Executive dies during the Employment Term, this
Agreement shall terminate automatically upon his death, upon which event Executive’s legal
representatives shall be entitled to receive, and the Corporation shall pay or cause to be
paid to Executive’s legal representatives, any Base Salary and other compensation or
benefits accrued but as yet unpaid on the date of Executive’s death.

b. Incapacity or Disability. If during the Employment Term, Executive is
prevented from performing the duties or fulfilling responsibilities of his employment under
this 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 and
reasonably acceptable to Executive (or his representative), then the Corporation may
terminate Executive’s employment hereunder, but Executive shall continue to be eligible to
receive any benefits to which he may be entitled under the terms of any long-term disability
plan or insurance policy maintained by the Corporation for its employees generally or for
Executive specifically. In the event of such incapacity or disability, the Corporation
shall continue to pay full compensation to Executive in accordance with the terms of this
Agreement until the date of such termination of employment.

c. By Corporation for Cause. The Corporation may, upon written notice to
Executive, terminate Executive’s employment hereunder for Cause (as defined hereafter);
provided that the Corporation shall first provide Executive with an opportunity to be heard
by the Board on any proposed termination for Cause by the Board. For purposes of this
Agreement, the term “Cause” shall mean (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 15 days of having received such notice; (ii) 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; (iii) 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; (iv) Executive’s misappropriation (or attempted misappropriation) of any of the
Corporation’s funds or property; (v) 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 of
the Corporation; (vi) Executive’s willful misconduct or insubordination; (vii) Executive’s
physical or mental disability or other inability to perform the essential functions of his
position for a consecutive six (6) month period, with or without reasonable accommodation,
as determined by an independent qualified physician selected by the Corporation and
reasonably acceptable to Executive (or his representative) if Executive is not eligible for
benefits under the terms of any long-term disability policy or insurance policy maintained
by 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 duties
under this Agreement as determined in good faith by the Board; or (ix) any other conduct of
Executive sufficiently detrimental to the Corporation so as to warrant immediate termination
of Executive’s employment with the Corporation.

In the event of termination for Cause of Executive’s employment, Executive’s right to
receive compensation and other benefits hereunder (other than any Base Salary and any
vacation accrued but as yet unpaid on the effective date of such termination) shall
terminate on the effective date of such termination, and Executive shall not be entitled to
any severance payments or other benefits.

 

 

 

d. Termination by the Corporation without Cause. The Corporation may elect to
terminate 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 a
severance payment in an amount equal to two (2) years of (i) Executive’s Base Salary as
of the date of termination plus (ii) the average of the bonuses paid Employee since the
inception of the Agreement. Such severance payment shall be made over the six month period
beginning on the Executive’s date of termination of employment, with payments made to the
Executive in equal installments during each of the Corporation’s usual pay periods during
such 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 upon
the annual rate of pay for services provided to the Corporation for the taxable
year of the Executive preceding the taxable year of the Executive in which the
Executive has a separation from service with the Corporation (adjusted for any
increase during that year that was expected to continue indefinitely if the
Executive had not separated from service), or

	 
	 	(ii)	 	the maximum amount that may be taken into account under a
qualified plan pursuant to Section 401(a)(17) of the Code for the year in which
the Executive has a separation from service

shall be subject to the payment timing restrictions set forth in Section 12(n) of this
Agreement.

For purposes of this Agreement, the Executive’s termination of employment must
constitute a separation from service under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and its accompanying regulations.

e. Nonrenewal of Agreement. The Corporation may elect to not renew or extend this
Agreement 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 the
event of a nonrenewal or non-extension pursuant to this Paragraph, Executive’s rights to
receive compensation and other benefits (other than any Base Salary and vacation accrued but
as yet unpaid on the effective date of such termination) shall terminate at the expiration
of the Initial Term or Employment Term. In the event of such termination, Executive shall
be entitled to a severance payment following the end of such Initial Term or Employment Term
in an amount equal to the amounts specified in Section 12(d).

f. By Executive for Good Reason. Executive may, at his option, upon at least
thirty (30) days written notice to the Corporation, terminate his employment hereunder for
Good Reason. The Executive shall be considered to have terminated his employment for Good
Reason if the separation from service occurs during the one year period following the
initial existence of one or more of the following conditions arising without the
consent of the Executive:

	 	(1)	 	a material diminution in the Executive’s base compensation;

	 
	 	(2)	 	a material diminution in the Executive’s authority, duties, or
responsibilities;

 

 

 

	 	(3)	 	a material diminution in the authority, duties, or
responsibilities of the Executive such that that Executive is required to report
to a corporate officer or employee instead of reporting directly to the board of
directors of Corporation;

	 
	 	(4)	 	a material diminution in the budget over which the Executive
retains authority;

	 
	 	(5)	 	a material change in the geographic location at which the
Executive must perform the services; or

	 
	 	(6)	 	any other action or inaction that constitutes a material breach
by the Corporation of this Agreement.

Upon any termination by Executive under this Paragraph (f), the Corporation shall be
obligated to pay Executive the severance payments specified in Section 12(d).

For this provision to apply, the 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 during which it may
remedy 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 hereunder
for Good Reason (as defined in Section 12(f) above) following a Change of Control of the
Corporation. Upon any termination by Executive under this Paragraph (g), the Corporation
shall be obligated to pay Executive the amounts specified in Section 12(d). Termination by
Executive pursuant to this paragraph shall not be deemed a voluntary termination by
Executive pursuant to Section 12(j) hereof.

h. Change of Control Defined. For purposes of this Agreement, a “Change of
Control” shall be deemed to have occurred if the transaction is of a nature that would be
required to be reported in response to Item l(a) of the Current Report on Form 8-K, as in
effect on January 1, 2003, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (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 is
used in Section 13(d)(3) of the Exchange Act, other than the trustee of any employee benefit
plan of the Corporation, becomes the beneficial owner, directly or indirectly, of 35% or
more of the combined voting power of the Corporation’s outstanding voting securities
ordinarily 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 beginning
of such consecutive twenty-four (24) month period, constitute the Board of Directors of the
Corporation (the “Board”) cease for any reason (other than retirement upon reaching normal
retirement age, disability, or death) to constitute at least a majority of the Board;
provided that any person
becoming a director subsequent to the date hereof whose election, or nomination for
election by the Corporation’s shareholders, was approved by a vote of at least three
quarters of the directors comprising the Incumbent Board shall be, for purposes of this
Agreement, 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 Common
Stock listed on the New York Stock Exchange or quoted in the NASDAQ National or Small Cap
Market System, except where the delisting is related to a private purchase of the
Corporation’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 occurred
where, with respect to any transaction otherwise constituting a “Change of Control,”
Executive is reasonably expected to maintain his existing position as President and CEO with
the 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, if
the Incumbent Board specifically determines that any transaction does not constitute a
Change of Control for purposes of this Agreement such determination shall be conclusive and
binding.

i. Person Defined. For purposes of this Agreement, the term “Person” means any
individual, corporation, association, partnership, limited partnership, limited liability
company, limited liability partnership, organization, business, joint venture, sole
proprietorship, governmental agency, entity or subdivision or other entity of any kind or
nature.

j. Voluntary Termination by Executive. Executive may, at his option, upon
thirty (30) days prior written notice to the Corporation, terminate his employment
hereunder. In the event of a voluntary termination of his employment by the Executive
pursuant to this Paragraph (j), Executive’s rights to receive compensation and other
benefits (other than any Base Salary and vacation accrued but as yet unpaid on the effective
date of such termination) shall terminate on the effective date of such termination, and
Executive shall not be entitled to any severance payments or other benefits.

k. Eligibility for Severance; Requirement of Release. Except as provided in
Sections 12(d), 12(e), 12(f), and 12(g), Executive shall not be eligible for or entitled to
any severance payments in the event of termination of his employment hereunder. No
severance shall be paid under this Agreement unless Executive first executes and agrees to
be bound by a release of all claims, on a form provided by the Corporation, which releases
any and all claims that Executive has or might have against the Corporation and which
contains terms customary in such agreements. If the Corporation does not receive an
executed release prior to the date occurring sixty (60) days after the date of termination
of the Executive’s employment with the Corporation (including within such sixty day period
any applicable revocation period), the Corporation shall have no obligation to make
severance payments to the Executive.

l. Resignation. In the event of termination of his employment other than for
death, 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. 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.

m. Compliance with Section 409A of the Code. 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 12, then 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.

 

 

 

n. Six Month Delay for Specified Employee. In the event that any stock of the
Corporation or any entity within the same controlled group (as defined in Section 414(b) of
the Code), is publicly traded on an established securities market as defined in Section
1.409A-1(i) of the Regulations under Section 409A of the Code, distributions to the
Executive will not be made until the date that is six (6) months plus one day after the
Executive’s date of separation from service, or, if earlier than the end of the six-month
period, 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 on
such 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 the
Corporation or any affiliated organization with employees in the United States. The
Executive will be considered a key employee for the period commencing April 1 and ending on
the March 31 thereafter if he was a key employee on the previous December 31 and such
designation shall be effective solely for that period.

o. Compliance with Section 162(m). In no event shall any payment be made under this
Agreement that shall exceed the limitations of Section 162(m) of the Code and any
regulations thereunder applicable to the Corporation.

13. Vesting upon Change of Control. Any stock options and restricted stock granted to
Executive by the Corporation shall accelerate and immediately vest upon the occurrence of the
following events: if (a) any “person,” as such term is used in Sections 13(d) and 14(e) of the
Securities 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 the
Corporation, or any corporation owned directly or indirectly by the stockholders of the Corporation
in substantially the same proportion as their ownership of stock in the Corporation) is or becomes
the “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 the
Corporation’s then outstanding securities (other than as a result of acquisitions of such
securities from the Corporation); (b) individuals who, as of the date hereof, constitute the Board
of Directors of the Corporation (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a director after the date hereof whose
election, or nomination for election by the Corporation’s stockholders, was approved by a majority
of the directors then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Corporation) shall be, for
purposes of this Agreement, considered to be a member of the Incumbent Board; (c) the stockholders
of 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 the
Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting securities of the
Corporation 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 (or
similar transaction) in which no “person” (as defined above, acquires more than 20% of the combined
voting power of the Corporation’s then outstanding securities; or (d) the stockholders of the
Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale
or disposition of the Corporation of all or substantially all of the Corporation’s assets. To the
extent permitted by applicable law, Executive shall be entitled to exercise, for a period of 12
months from the effective date of termination of his employment, all of his stock options and
restricted grants, which vest pursuant to this Section or were otherwise vested prior to the
termination 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 payment
or benefit received or to be received by the Executive (i) is deemed to be in connection
with a Change of Control (whether payable pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Corporation, its successors, any person whose
actions result in a Change of Control or any corporation (“Affiliates”) affiliated (or
which, as a result of the completion of the transactions causing a Change of Control will
become 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 paid
pursuant to a Change of Control, “Total Payments”) and (ii) is determined by the
Corporation’s independent certified accounting firm (the “Tax Advisor”) that such amount
exceeds 2.99 times the base amount (as such term is defined under Section 280G(b)(3) of the
Code) but that is less than 4 times the base amount and that an excise tax is payable by
Executive under Section 4999 of the Code, then the amount of payments to the Executive shall
be reduced so that the payments do not exceed the limits then set forth in Section 280G of
the 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 in
connection with a Change of Control would be subject (in whole or part), to an excise tax
pursuant 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 Payments
shall be grossed up to the extent necessary to reflect any Excise Taxes due by Executive and
the income taxes attributable thereto so that the Executive will be entitled to a net amount
equal to the Total Payments (the “Grossed-Up Payment”). For purposes of determining whether
and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion
of the Total Payments the receipt or enjoyment of which Executive shall have effectively
waived in writing prior to the date of this termination of employment shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account which in the
opinion 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 Section
280(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total
Payment shall be taken into account which constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the
base amount as defined in Section 280G(b)(3) of the Code allowable to such reasonable
compensation, and (iii) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by Corporation in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code. Prior to the thirtieth day
following the date of Executive’s termination of employment, Corporation shall provide
Executive with its calculation of the amounts referred to in this Section and such
supporting materials as are reasonably necessary for Executive to evaluate Corporation’s
calculations but the Corporation’s calculations shall be used for purposes of any payments
pursuant to this Section.

 

 

 

c. If the Corporation’s Tax Advisor determines that the Total Payments received or to
be received by Executive fall under subparagraph (a) above and upon audit by the Internal
Revenue Service the IRS determines that an Excise Tax is due and payable due to the amount
of the Total Payments received by Executive, then the Corporation agrees to make a
Grossed-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 to
Executive, the Corporation may in its sole discretion choose to respond to the audit. If
the Corporation chooses not to respond, then it shall be the sole responsibility of
Executive to respond to the audit.

e. Any payment for a gross up of taxes made under Paragraph (b) above will be made no
later than by the end of the calendar year next following the calendar taxable year in which
the Executive remits the related taxes.

15. 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.

16. 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

17. Severability. Subject to the provisions of Section 18, 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.

18. Judicial Modification. If a court of competent jurisdiction determines that the
character, 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, 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.

 

 

 

19. 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.

3 Great Pasture Road

Danbury, CT 06813

Attention: Chairman of the Board of Directors

Facsimile No.: (203) 825-6100
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Robinson & Cole LLP

Financial Centre

1055 Washington Boulevard

Stamford, CT 06901-2305

Attention: Richard A. Krantz, Esq.

Facsimile No.: (203) 462-7599
	 
	 	 	 	 
	 

	 	If to Employee:
	 	Arthur Bottone

20. 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.

21. 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.

22. 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
5, 6, 7, 8, and 9 shall be supplemental to any other agreement of Executive with the Corporation
related to the matters identified therein.

23. 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.

24. References to Gender and Number Terms. In construing this Agreement, feminine or
number 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.

25. 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” and “Paragraphs” in this Agreement refer to the various corresponding
sections and paragraphs of this Agreement.

 

 

 

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

27. 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 8 or Section 9. 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 (1) 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 (i) 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 or (ii) Executive
prevails on a claim for breach of this Agreement after the Corporation has terminated Executive
pursuant to Section 12c hereof, in which case, the Corporation will pay for Executive’s
above-described fees and expenses related to such claim). 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 on the
date 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

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