Document:

Exhibit 10.3

Exhibit 10.3

LOAN AGREEMENT

THIS LOAN AGREEMENT is made and entered into this 29th day of April, 2008, by and
between FUELCELL ENERGY, INC., a Delaware corporation having its chief executive office and
principal place of business at 3 Great Pasture Road, Danbury, Connecticut 06813 (the “Borrower”),
and the CONNECTICUT DEVELOPMENT AUTHORITY, a body politic and corporate constituting a
public instrumentality and political subdivision of the State of Connecticut, having an office at
999 West Street, Rocky Hill, Connecticut 06067 (the
“Authority”).

WITNESSETH:

WHEREAS, the Borrower has requested that the Authority lend it the sum of up to FOUR MILLION
AND NO/100 DOLLARS ($4,000,000.00) from the Connecticut Works Fund established under Section
32-23ii of the Connecticut General Statutes (the “Loan”); and

WHEREAS, the Authority has agreed to make the Loan upon the terms and conditions hereinafter
set forth in order to stimulate and encourage the growth and development of the economy of the
State of Connecticut; and

WHEREAS, the State of Connecticut Department of Economic and Community Development (the
“DECD”) may purchase a $2,000,000.00 participation interest in the Loan and, to the extent that it
does so, the DECD’s undivided participation interest with respect to the Loan and the other Loan
Documents (as such term is defined below) shall be governed by the terms and provisions of the
Master Participation Agreement described in Section 5 below;

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained,
the Borrower and the Authority agree as follows:

SECTION 1

THE LOAN

1.1. The Authority shall make the Loan in accordance with the terms and conditions set
forth in this Loan Agreement, which Loan shall be evidenced by a promissory note from the Borrower
to the Authority in the original principal amount of $4,000,000.00, dated as of the date hereof
(the “Note”). The Loan shall be secured by (i) the machinery and equipment (including computer and
related equipment) acquired by the Borrower with the proceeds of the Loan and (ii) certain other
machinery and equipment owned by the Borrower and acceptable to the Authority having a fair market
of at least $4,000,000.00 (including, without limitation, all of the machinery and equipment owned
by the Borrower and presently subject to a security interest in favor of the Authority)
(collectively, the “Collateral”), all as more fully described in a security agreement of even date
herewith, executed by the Borrower in favor of the Authority (the “Security Agreement”). To the
extent required by Connecticut Public Act 94-231, the Borrower and
the Authority, on or prior to the date hereof, are executing and delivering a joint statement as to the
number of jobs to be created and retained by Borrower in the State of Connecticut, the Authority’s
public policy objectives in extending financial assistance to the Borrower, and such other
information as is required by Public Act 94-231 (the “Joint Statement”). This Loan Agreement, the
Note, the Security Agreement, the Joint Statement and the other documents set forth in Exhibit
A are together sometimes referred to herein as the “Loan Documents”.

 

 

 

1.2. Contemporaneously with the execution and delivery of this Loan Agreement, the Borrower
will execute and deliver to the Authority the Loan Documents to which it is a party and such other
documents to which it is a party as are requested by the Authority. The Borrower will ensure that
all other documents set forth in Exhibit A will be executed and delivered to the Authority
contemporaneously with the execution and delivery of this Loan Agreement. All of the Loan Documents
shall be in form and content reasonably acceptable to the Authority.

1.3. The closing (the “Closing”) of the Loan is being conducted by the Authority’s special
counsel, Carmody & Torrance LLP of Waterbury and New Haven, Connecticut. The Closing is being held
on the date of execution of this Loan Agreement (the “Closing Date”), at the offices of Carmody &
Torrance LLP in Waterbury, Connecticut. The proceeds of the Loan shall be advanced by the Authority
to the Borrower in one or more future advances, each in an amount of not less than $500,000.00,
over the eighteen (18) month period following the Closing Date at such time(s) that the Borrower
complies, to the full satisfaction of the Authority, with the conditions to funding set forth in
Section 1.4 below with respect to each such advance; it being understood that the Authority shall
have no obligation to fund any advances to the Borrower on account of the Loan unless all of the
conditions precedent to such advance have been met by the Borrower to the full satisfaction of the
Authority. Each future advance by the Authority to the Borrower on account of the Loan shall be
evidenced by the Note. The aggregate principal amount of all advances by the Authority to the
Borrower on account of the Loan shall not exceed the sum of $4,000,000.00. The Authority shall have
no obligation to make any future advances to the Borrower on account of the Loan after October
31, 2009.

1.4. To the extent that (i) no Event of Default (as defined below) has occurred and is
continuing as of such date, (ii) no state of facts exist as of such date which, with the passage of
time or the giving of notice, or both, would constitute an Event of Default, and (iii) there has
been no material adverse change in the financial, business or operating condition of the Borrower
as of such date, the Authority shall make one or more future advances to the Borrower on account
of the Loan, each advance to be in an amount of at least $500,000.00, at such time that the
Borrower has satisfied each of the following conditions precedent (to the full satisfaction of the
Authority):

(a) The Borrower has purchased machinery and equipment (including computer and related
equipment) to be used by it in its manufacturing operations at 539 Technology Park Road,
Torrington, Connecticut 06790 (the “Torrington Facility”) (the “Equipment”), and the Equipment has
been installed in and is in working order in the Torrington Facility;

 

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(b) The amount of the advance on account of the Loan requested by the Borrower does not
exceed ninety percent (90%) of the acquisition cost of such Equipment (excluding applicable
sales tax, delivery and installation charges for such Equipment);

(c) The Borrower has prepared and delivered to the Authority an updated Schedule A to the
Security Agreement and Schedule A to the UCC-1 financing statement describing the Equipment
acquired by the Borrower with the proceeds of such advance, and authorized the Authority to file
any and all UCC-3 amendment statements deemed reasonably necessary by the Authority and its legal
counsel;

(d) The Borrower has reimbursed the Authority for all additional post-Closing reasonable
attorneys’ fees, filing/recording fees and other expenses incurred by the Authority in connection
with funding the requested advance on account of the Loan; and

(e) All of the representations and warranties of the Borrower set forth in Section 2
hereof are true and correct in all material respects as of the date of such requested
advance.

1.5. In the event that the DECD fails to purchase its contemplated $2,000,000.00 participation
interest in the Loan by April 30, 2009, then, effective as of
May 1, 2009, the interest rate on the
Loan shall increase by one percent (1%) to six percent (6%) per annum, and such increased interest
rate per annum shall remain in effect thereafter until the Loan is paid and satisfied in full.

1.6. If at the Closing the Borrower fails to deliver the Note to the Authority, or if any of
the conditions precedent to the closing of the Loan specified herein have not been fulfilled by the
Borrower, then the Authority may thereupon elect to be relieved of all further obligations under
this Agreement, but the Borrower shall remain liable for the costs and expenses set forth in
Section 6.5 hereof.

SECTION 2

WARRANTIES AND REPRESENTATIONS

OF THE BORROWER

The Borrower represents and warrants to the Authority as follows:

2.1. The Borrower is a corporation duly incorporated and validly existing under the laws
of the State of Delaware and is duly qualified to transact business as a foreign corporation in the
State of Connecticut and in each other jurisdiction in which it owns assets or conducts its
business. The Borrower has all requisite power and authority to conduct its business as presently
conducted and to own its property.

 

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2.2. The Borrower has the power and authority to enter into and perform this Loan Agreement
and the other Loan Documents, and to incur the obligations herein or therein provided for. The
execution, delivery and performance by the Borrower of the Loan Documents have been duly authorized
by all necessary corporate action and do not and will not violate any law or the Certificate of
Incorporation or the Bylaws of Borrower or any agreement, instrument or evidence of indebtedness to
which it is a party or by which it is bound or by which any of its properties may be affected. The
Loan Documents, when executed and delivered, will be legal, valid and binding obligations of the
Borrower, enforceable against it in accordance with their respective terms, except as the
enforceability thereof may be limited by the (i) effect of applicable bankruptcy, insolvency,
reorganization and similar laws relating to or affecting creditors’ rights generally and court
decisions with respect thereto, and (ii) application of equitable principles in any proceeding
(regardless of whether such enforceability is considered in a proceeding in equity or at law) and
in the application of which a court, among other things, might require any party hereto to act with
reasonableness and in good faith. The Borrower will deliver at Closing an opinion from its legal
counsel with respect to the foregoing and with respect to such other matters as the Authority may
reasonably require, in form and substance satisfactory to the Authority.

2.3. No consent, license or approval from any governmental authority is or will be necessary
for the valid execution, delivery and performance by the Borrower of the Loan Documents to which
it is a party.

2.4. There has been no material adverse change in the financial condition of the Borrower
since the date of its application to the Authority and the DECD for the Loan, except that the
Borrower has continued to incur losses on its income statement in the period between the date of
application for the Loan and the Closing, consistent with its past history. All financial
statements, including, without limitation, balance sheets, income statements and cash flow
statements, delivered to the Authority and the DECD in connection with Borrower’s application for
the Loan are correct and complete and fairly present the financial position and results of
operations of the Borrower at the times of and for the periods reflected by such financial
statements. The financial statements and all other written statements furnished by the Borrower to
the Authority and the DECD in connection with the Loan do not contain any untrue statement of
material fact or omit a material fact necessary to make the statements contained therein or herein
not misleading. There is no fact which the Borrower has not disclosed to the Authority (or to the
DECD) in writing which materially and adversely affects the business operations or financial
condition of the Borrower.

2.5. There are no actions, suits or proceedings pending or threatened against it before any
court or other federal, state, municipal or other governmental authority or before any
arbitrator(s) that if adversely determined against the Borrower would have a material adverse
effect on the business, operations or financial condition of the Borrower (a “Material Adverse
Effect”). The Borrower is not in default with respect to any order of any court, arbitrator or
governmental body.

 

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2.6. The Borrower is not in default in the performance, observance or fulfillment of any of
the terms, obligations, covenants, conditions or provisions contained in any agreement or
instrument to which the Borrower is a party or to which its property is subject, which default,
together with all such defaults, singly or in the aggregate, will have a Material Adverse Effect on
the Borrower.

2.7. The Borrower has filed all Federal, state and municipal income and other tax returns
which are required to be filed, and has paid, or made provision for the payment of, all taxes
which have become due pursuant to said returns, except such taxes, if any, which are being
contested in good faith and as to which adequate reserves have been provided.

2.8. The Borrower has complied with all applicable statutes, rules, regulations, orders and
restrictions of any governmental entity, instrumentality or agency having jurisdiction over the
conduct of its business or the ownership of its property, the noncompliance with which will have a
Material Adverse Effect.

2.9. No Event of Default (as defined herein) has occurred or is continuing, and the Borrower
does not have any knowledge of any currently existing facts or circumstances which, with the
passage of time or the giving of notice, or both, would constitute an Event of Default.

2.10. The Borrower has all franchises, permits, licenses and other similar authorizations
necessary for the conduct of its business as now being conducted by it, and the Borrower is not in
violation, nor will the transactions contemplated by this Loan Agreement or the other Loan
Documents to which it is a party cause a violation, of the terms or provisions of any such
franchise, permit, license or other similar authorization.

2.11. The Borrower’s chief executive office and principal place of business is at the location
described in the recitals to this Loan Agreement.

2.12. All statements contained in any of the Loan Documents shall constitute
representations and warranties made under this Loan Agreement. All representations and
warranties made under this Loan Agreement shall survive the execution and delivery hereof.

2.13. The Borrower has good and marketable title to its properties and assets. The Collateral
is free and clear of any mortgage, security interest, pledge, lien, lease, encumbrance or charge.

 

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SECTION 3

COVENANTS OF THE BORROWER

The Borrower covenants that on and after the Closing and for so long as any part of the Loan
remains outstanding:

3.1. The Borrower will preserve and maintain its existence as a corporation duly organized and
validly existing under the laws of the State of Delaware and will remain qualified to do business
and in good standing in the State of Connecticut and in each other state or other jurisdiction in
which it conducts its business.

3.2. The Borrower will notify the Authority promptly of any material adverse change in the
financial condition or business operations of the Borrower.

3.3. The Borrower will pay the Note and all other amounts owing under the Loan Documents
according to their terms and comply with each provision of this Loan Agreement and each provision
of the other Loan Documents binding upon it.

3.4. The Borrower will promptly pay and discharge when due and payable all taxes, assessments
and governmental charges levied or imposed upon it, its property, or any part thereof, or upon its
income or profits, or any part thereof, as well as all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a lien or charge upon its property, provided that
such items need not be paid while being contested by the Borrower in good faith and by appropriate
legal proceedings so long as adequate reserves have been established with respect thereto and the
Borrower’s title to, and its right to use, its property is not materially and adversely affected
thereby.

3.5. The Borrower will not create, incur, assume or suffer to exist any indebtedness for
borrowed money except for indebtedness described on Schedule 3.5 hereto (the “Permitted
Indebtedness”). The Borrower will not, without the prior written consent of the Authority, either
directly or indirectly, incur, create, assume or permit to exist any mortgage, pledge, lien,
charge, security interest or other encumbrance of any nature whatsoever on any of the Collateral
now owned or hereafter acquired.

3.6. The Borrower will not, either directly or indirectly, guarantee, endorse, become surety
for, or otherwise be or become responsible for the obligations of any other person or entity,
whether by agreement to purchase the indebtedness of any other person, or agreement for the
furnishing of funds to any other person or entity, directly or indirectly, through the purchase of
goods, supplies or services (or by way of stock purchase, capital contribution, advance or loan) or
for the purpose of paying or discharging the indebtedness of any other person or entity or
otherwise, except for (i) the endorsement by the Borrower of negotiable instruments for collection
in the ordinary course of business, and (ii) travel, relocation and other minor business expenses
incurred in the ordinary course of business for the benefit of employees of the Borrower.

3.7. The Borrower shall pay all of its material debts as they become due.

 

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3.8. The Borrower will comply in all material respects with all laws and regulations
applicable to it, its properties and/or its business. In addition to the foregoing, the Borrower
will comply with, to the extent applicable to the Borrower, the additional requirements set forth
in Schedule 3.8 attached hereto.

3.9. The Borrower covenants and agrees that it will use the proceeds of the Loan for purposes
consistent with the description provided in the Borrower’s application to the Authority and the
DECD for financial assistance.

3.10. The Borrower will maintain fire, extended coverage, and other hazard insurance policies
(including flood insurance if required by the Authority) and maintain liability insurance in form
and amount satisfactory to the Authority. Liability insurance shall be in an amount not less than
$1,000,000.00 for injury to or death of any one person and $1,000,000.00 for each occurrence in
respect of personal injury or death and $250,000.00 for each occurrence of property damage. Without
limiting or qualifying any other provision in this Loan Agreement or in the other Loan Documents,
all insurance shall be maintained in amounts and manner consistent with the practice and policy of
companies engaged in the same or similar businesses in the same or similar locations. Each policy
of insurance shall include a clause that it cannot lapse or be canceled or modified except upon at
least thirty (30) days’ prior written notice to the Authority. Each policy of insurance shall be
issued by a company licensed to provide such insurance in the State of Connecticut and acceptable
to the Authority and shall be satisfactory in form to the Authority. A copy of each policy of
insurance shall be delivered to the Authority at the time of execution of this Loan Agreement. The
Authority shall be named as loss payee and as an additional insured on such liability insurance
policy.

3.11. The Borrower will indemnify and hold harmless the Authority and the State of Connecticut
and its successors, assigns, officers, directors, employees and agents from and against any
liabilities, losses, damages, costs or expenses, including reasonable attorneys’ fees and costs,
arising out of or in connection with the presence of hazardous waste on or in any of the
Collateral, or any lien or claim under Section 22a-452a of the Connecticut General Statutes, as
amended, or other federal, state or municipal statute, regulation, rule, law or proceeding relating
to environmental matters, which indemnity shall survive realization on any of the Collateral,
payment in full of the Loan, and termination, exercise and/or release of the Loan Documents,
whichever occurs last, at which time such indemnity shall terminate. This Section 3.11 shall not
limit any Environmental Indemnity Agreement or similar document, however denominated, that the
Borrower may now or hereafter make and/or deliver to the Authority and the DECD.

3.12. Upon the request of the Authority, the Borrower will execute and deliver or cause to be
executed and delivered such further documents and instruments and do such further acts and things
as the Authority may reasonably request in order to effectuate more fully the purposes of this Loan
Agreement and the express rights of the Authority hereunder to vest more completely in and assure
to the Authority its rights under this Loan Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, the Borrower hereby authorizes the Authority to file
and/or record such financing statements, agreements, notices or other documents or instruments as
the Authority shall deem necessary or desirable to create,
preserve, protect, maintain or enforce its rights and interests in and its liens on the Collateral.
The Borrower shall pay the cost of filing and recording, or refiling and re-recording, such
documents and instruments in all public offices in which such filing or recording, or refiling or
re-recording, is deemed by the Authority to be necessary or desirable.

 

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3.13. The Borrower will notify the Authority promptly of the occurrence of any default
hereunder or under any of the other Loan Documents and of the actions it intends to take in order
to cure such default, and will notify the Authority within thirty (30) days of becoming aware of
any default under any other material document, instrument, or agreement to which the Borrower or
its properties are subject which would have a Material Adverse Effect on the Borrower.

3.14. The Borrower will not discontinue its business, be dissolved or otherwise suffer or
permit any termination of its corporate existence. In particular, the Borrower shall not “relocate”
its business operations outside the State of Connecticut as more fully described in Section 3.19
hereof.

3.15.
Without the Authority’s prior written consent, the Borrower shall not permit the transfer
of shares of its capital stock, nor issue any additional shares of capital stock, nor redeem or
otherwise retire any shares of its capital stock if such event would result in a “change in
control” in the stock ownership of the Borrower. For purposes hereof, a “change in control” of the
stock ownership of the Borrower shall occur if any “person” (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Borrower, is
or becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty-one percent (51%) or more of the capital stock of the Borrower.

3.16. The Borrower shall deliver to the Authority, within the applicable filing period for
each such report, (a) a true and correct copy of its Form 10-K submitted by the Borrower to the
Securities and Exchange Commission (“SEC”) (together with all schedules and notes attached
thereto); and (b) a true and correct copy of its Form 10-Q submitted by the Borrower to the SEC
(together with all schedules and notes attached thereto). The Borrower will promptly file when due
and deliver to the Authority, within thirty (30) days after filing same, copies of the Borrower’s
State of Connecticut Employee Quarterly Earnings Reports (Form UC-5A).

3.17. The Borrower is and will remain in compliance with the Affirmative Action Policy
heretofore approved by the Authority.

3.18. The Authority shall from time to time, in its discretion, during regular business hours
and upon reasonable prior notice to the Borrower, have the right of making an inspection of the
Collateral, and the Borrower shall assist the Authority in said inspection and shall make available
such books and other records relating to the Collateral and the Borrower’s obligations to the
Authority hereunder as the Authority may reasonably request.

 

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3.19. The Borrower hereby acknowledges and agrees that the Loan is extended subject to the
terms of Section 32-5a
 of the Connecticut General Statutes, as amended by Public Act 93-218 and Public Act 93-360, and further hereby covenants and agrees that (a) if the Borrower
relocates its manufacturing operations at the Torrington Facility or its corporate headquarters in
Danbury, Connecticut outside of the State of Connecticut, at any time during the ten (10) year
period following the date hereof (the “Benefit Period”), the Borrower shall immediately pay to the
Authority (i) all outstanding principal of the Note, accrued interest thereon and all other amounts
payable to the Authority under this Loan Agreement, the Note and the other Loan Documents, if any,
plus (ii) a penalty equal to seven and one-half percent (7.5%) of the aggregate principal
amount of the Loan (whether or not any amount then remains outstanding under this Loan Agreement,
the Note or the other Loan Documents), and (b) if the Borrower relocates it manufacturing
operations at the Torrington Facility or its corporate headquarters in Danbury, Connecticut within
the State of Connecticut during the Benefit Period, the Borrower shall offer employment at the new
location(s) to its employees from the prior location(s), if such employment is available. As used
herein, the term “relocate” shall have the meaning given such term by Connecticut General Statutes
Section 32-5a, and regulations related thereto, as the same may be amended from time to time. If
the Borrower decides to relocate its present business operations in the State of Connecticut to one
or more locations outside of the State of Connecticut at any time during the Benefit Period, the
Borrower agrees to provide the Authority with immediate written notice of its intent to relocate
its business operations, together with such other information concerning such relocation as the
Authority may request. The provisions of this Section 3.19 shall survive the payment in full of the
principal of the Note, interest thereon and all other amounts payable under this Loan Agreement,
the Note and the other Loan Documents and termination of this Loan Agreement.

3.20. To induce the Authority to make the Loan to the Borrower, the Borrower has represented
in writing to the Authority that it intends to employ at least five hundred (500) permanent
full-time employees in the State of Connecticut (the “Employment Threshold”) by the third
(3rd) anniversary of the Closing Date (the “Employment Threshold Determination Date”).
To the extent that the Borrower fails to attain the Employment Threshold by the Employment
Threshold Determination Date, then the Borrower shall pay to the Authority a penalty with respect
to the Loan equal to $1,000.00 multiplied by that number of permanent full-time employees employed
by the Borrower in the State of Connecticut as of the Employment Threshold Determination Date which
is less than the Employment Threshold. Any payments by the Borrower to the Authority under this
Section 3.20 shall be treated as a mandatory prepayment of the Loan and shall be applied to the
installment payments on account of the Loan most remotely becoming due.

3.21. The Borrower shall immediately pay to and reimburse the Authority for any and all
reasonable attorneys’ fees incurred by the Authority in connection with the administration of the
Loan and the enforcement of the Authority’s rights and remedies hereunder and under the other Loan
Documents.

3.22. For all state contracts as defined in Public Act 07-1 having a value in a calendar year
of $50,000.00 or more or a combination or series of such agreements or contracts having a value of
$100,000.00 or more, the Borrower’s authorized signatory of this Loan Agreement hereby expressly
acknowledges receipt of the State Elections Enforcement Commission’s notice
advising state contractors of state campaign contribution and solicitation prohibitions, and will
inform its principals of the contents of such notice. A copy of SEEC Form 11 is attached hereto as
Schedule 3.22.

 

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3.23. The Borrower shall deliver to the Authority, at Closing, resolutions adopted by its
directors stating that such governing body has adopted a policy to support the nondiscrimination
agreements and warranties required under Connecticut General Statutes
§ 4a-60(a)(1) and §
4a-60a(a)(1), as amended in State of Connecticut Public Act 07-245
and Sections 9(a)(1) and
10(a)(1) of Public Act 07-142.

SECTION 4

DEFAULT AND REMEDIES

4.1. Each of the following is an Event of Default under this Loan
Agreement:

(a) the failure of the Borrower to make payment of any installment of principal and/or
interest due under the Note within ten (10) days after the same is due;

(b) the failure of the Borrower to pay any other amount due the Authority within ten (10) days
after the same is due;

(c) the inaccuracy in any material respect of any representation made by or on behalf of the
Borrower in the loan application, this Loan Agreement or any of the other Loan Documents;

(d) the material breach by the Borrower of any its warranties in Section 2 of this Loan
Agreement or in any of the other Loan Documents, which is not cured by the Borrower within thirty
(30) days after the Borrower becomes aware of such material breach;

(e) the failure of the Borrower to observe or perform any other covenant or obligation of the
Borrower in this Loan Agreement, including, but not limited to, Section 3 hereof, or in any of the
other Loan Documents, and, with respect to the covenants set forth in Sections
3.2, 3.4, 3.8, 3.11, 3.12 and 3.17, such breach or default is not cured by the Borrower within thirty
(30) days after the Borrower becomes aware of such breach or default;

(f) the failure of the Borrower generally to pay its debts as such debts become due;

(g) the entry of a decree or order for relief by a court having jurisdiction in respect of the
Borrower in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted,
or any other applicable Federal or state bankruptcy, insolvency or other similar law, or the
appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Borrower or for any substantial part of the Borrower’s properties, or the issuance
of an order for the winding-up or liquidation of the affairs of the
Borrower and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) days; or
upon the commencement by the Borrower of a voluntary case under the Federal bankruptcy laws, as now
or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other
similar law, or the consent by the Borrower to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the
Borrower or for any substantial part of the Borrower or the making by the Borrower of any
assignment for the benefit of creditors, or the taking of corporate action by the Borrower in
furtherance of any of the foregoing;

 

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(h) a final, unappealed judgment shall be entered against the Borrower by any court for
the payment of money which is not satisfied within thirty (30) days after judgment and which,
together with all such other outstanding judgments against the Borrower exceeds $50,000.00 in the
aggregate, or a tax lien shall be filed, or a warrant of attachment or execution or similar process
shall be issued or levied, against property of the Borrower, which together with other such
property subject to other such tax liens or process, exceeds a value of $50,000.00 in the
aggregate;

(i) at any time after the Closing, this Loan Agreement or any of the other Loan
Documents shall fail to be the legal, valid, binding, and enforceable obligation of the
Borrower;

(j) the Borrower relocates (as defined in Section 3.19 of this Agreement) its
manufacturing operations at the Torrington Facility and/or its corporate headquarters in Danbury,
Connecticut during the Benefit Period (as defined in Section 3.19 of this Agreement) (A) outside of
the State of Connecticut; or (B) within the State of Connecticut (to different locations) and does
not offer employment at the new location(s) to its employees from the prior location(s) if such
employment is available;

(k) if the Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease
to legally exist, or merge or consolidate, or be merged or consolidated with or into any
corporation or entity without the prior written consent of the Authority; or

(l) a default or an event of default shall occur under any of the other Loan Documents,
and shall not be cured by the Borrower within any applicable cure or grace period.

4.2. In addition to, and not in limitation of, any other term of this Loan Agreement or
any other right or remedy hereunder or under any other Loan Document or in accordance with law,
upon the occurrence of any Event of Default and during the continuance thereof:

(a) the whole of the principal sum and accrued interest on the Note, and all other
amounts owed to the Authority, at the option of the Authority and without notice, demand or legal
process of any kind, shall become and be immediately due and payable;

 

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(b) the Authority may proceed to enforce the performance or observance of any obligations,
agreements or covenants of the Borrower in this Loan Agreement or any of the other Loan Documents,
and to collect the amounts then due and thereafter to become due;

(c) in the event of a default under Section 4.1(j) of this Agreement, in addition to the
other remedies available to the Authority under this Loan Agreement, the other Loan Documents, at
law or in equity, the Authority shall be entitled to recover, in addition to all other sums due and
owing, the seven and one-half percent (7.5%) penalty referenced in Section 3.19 of this Loan
Agreement, which penalty shall be immediately due and payable.

4.3. No failure to exercise or delay in exercising any right, power or remedy of the Authority
under this Loan Agreement or any of the other Loan Documents shall operate as a waiver thereof, nor
shall any partial exercise of any right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The failure of the Authority to insist
upon the strict observance or performance of any provision of this Loan Agreement or of any of the
other Loan Documents shall not be construed as a waiver or relinquishment of such provision. The
rights and remedies provided herein and in the other Loan Documents are cumulative and not
exclusive of any other rights or remedies provided at law or in equity.

4.4. If the Authority should obtain a judgment because of a breach of any covenant contained
in this Loan Agreement or any of the other Loan Documents, or a judgment because of a default in
payment under the Note, then interest shall accrue on said judgment at the interest rate set forth
in the Note or as is provided by statute, whichever rate shall be greater at that time.

SECTION 5

RELATIONSHIP BETWEEN THE AUTHORITY

AND THE DECD

5.1. The Borrower hereby acknowledges that the Authority and the DECD have heretofore
entered into a Master Participation Agreement dated as of
August 22, 1997, a copy of which is on
file at the Authority’s office (the “Master Participation Agreement”). The Borrower further
acknowledges that the relationship between the Authority and the DECD with respect to the DECD’s
potential $2,000,000.00 participation in the Loan, if and when purchased by the DECD from the
Authority, shall be governed by the terms of the Master Participation Agreement.

5.2. The Borrower hereby agrees that the Authority may, in accordance with the terms of
the Master Participation Agreement, furnish to the DECD copies of any and all financial, business
and other information regarding the Borrower and the Borrower’s operations that has been delivered
by the Borrower to the Authority hereunder or under the other Loan Documents or has been prepared
by or on behalf of the Authority, and the Borrower hereby consents to the Authority delivering such
information regarding the Borrower, the Collateral and the Loan to the DECD.

 

- 12 -

 

SECTION 6

MISCELLANEOUS

6.1. This Loan Agreement may not be modified or amended in any manner except in writing
executed by all of the parties hereto.

6.2. This Loan Agreement and any of the documents related hereto and the rights, duties or
obligations thereunder may not be assigned by the Borrower without the written consent of the
Authority.

6.3. All warranties, representations and covenants made by the Borrower herein or in any of
the other Loan Documents or any certificate or instrument delivered to the Authority in connection
with the Loan shall be considered to have been relied upon by the Authority and shall survive until
final and irrevocable payment in full of the Note and all other amounts owing under the Loan
Documents.

6.4. This Loan Agreement and the other Loan Documents shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties;
provided, however, that
nothing in this provision shall imply that the Borrower has the right or authority to assign its
rights, duties or obligations hereunder or under any of the Loan Documents. The provisions of this
Loan Agreement are intended to be for the benefit of any and all holders, from time to time, of the
Notes and shall be enforceable by any such holder.

6.5. Whether or not the transactions contemplated hereby are consummated, the Borrower will
pay all expenses in connection with the closing of the Loan, including the fees and disbursements
of the Authority’s special counsel.

6.6. Any notice given to the Borrower pursuant hereto or pursuant to any of the Loan Documents
may be served in person or by mail. Any such requirement shall be deemed met by any written notice
personally served at the principal place of business of the Borrower, or at such other address as
the Borrower shall notify the Authority, or mailed by depositing it in any post office station or
letter box enclosed in a postage-paid envelope addressed to the Borrower at such principal office
or other address. Any notice served upon the Authority or the Borrower under this Loan Agreement or
any of the other Loan Documents shall be effective only upon receipt by the Authority or the
Borrower, as the case may be.

6.7. The Borrower agrees that the execution of this Loan Agreement and the other Loan
Documents, and the performance of its obligations hereunder and thereunder, shall be deemed to have
a Connecticut situs and the Borrower shall be subject to the personal jurisdiction of the courts of
the State of Connecticut with respect to any action the Authority, its successors or assigns may
commence hereunder or thereunder. Accordingly, the Borrower hereby specifically and irrevocably
consents to the jurisdiction of the courts of the State of Connecticut with respect
to all matters concerning this Loan Agreement or any of the other Loan Documents, or the
enforcement thereof.

 

- 13 -

 

6.8. THE BORROWER ACKNOWLEDGES THAT THIS LOAN AGREEMENT AND THE UNDERLYING TRANSACTIONS GIVING
RISE HERETO CONSTITUTE COMMERCIAL BUSINESS TRANSACTED WITHIN THE STATE OF CONNECTICUT. IN THE EVENT
OF ANY LEGAL ACTION BETWEEN THE BORROWER AND THE AUTHORITY HEREUNDER, THE BORROWER HEREBY EXPRESSLY
WAIVES ANY RIGHTS WITH REGARD TO NOTICE, PRIOR HEARING AND ANY OTHER RIGHTS IT MAY HAVE UNDER THE
CONNECTICUT GENERAL STATUTES, CHAPTER 903a AS NOW CONSTITUTED OR HEREAFTER AMENDED, OR OTHER
STATUTE OR STATUTES, STATE OR FEDERAL, AFFECTING PREJUDGMENT REMEDIES, AND THE AUTHORITY MAY INVOKE
ANY PREJUDGMENT REMEDY AVAILABLE TO IT, INCLUDING, BUT NOT LIMITED TO, GARNISHMENT, ATTACHMENT,
FOREIGN ATTACHMENT AND REPLEVIN, WITH RESPECT TO ANY TANGIBLE OR INTANGIBLE PROPERTY (WHETHER REAL
OR PERSONAL) OF THE BORROWER TO ENFORCE THE PROVISIONS OF THIS AGREEMENT, WITHOUT GIVING THE
BORROWER ANY NOTICE OR OPPORTUNITY FOR A HEARING.

6.9. THIS LOAN AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CONNECTICUT.

IN WITNESS WHEREOF, this Loan Agreement has been duly signed, sealed and delivered by
the Borrower and the Authority as of the date and year first above written.

	 	 	 	 	 
	 	CONNECTICUT DEVELOPMENT AUTHORITY
 
	 	 	 	 	 
	 	By:  	/s/ Robert A. Phelon
 	 
	 	 	Robert A. Phelon 	 
	 	 	Its Vice President
Duly Authorized 	 
	 
	 	FUELCELL ENERGY, INC.

 	 
	 	By:  	/s/ Ross M. Levine
 	 
	 	 	Ross M. Levine 	 
	 	 	Director of Government Contracts

Duly Authorized 	 
	 

 

- 14 -

 

Exhibit A

LIST OF DOCUMENTS

Loan Agreement

Promissory Note

Security Agreement

UCC-1 Financing Statement

Landlord Waiver and Consent

Certificate of the Secretary of the Borrower, certifying: (1) the accuracy of the Corporate
Resolutions attached thereto; (2) that the Certificate of Incorporation attached thereto (certified
by the Secretary of the State of Delaware) has not been amended and is in full force and effect;
(3) that the Bylaws attached thereto are accurate and have not been amended and are in full force
and effect; and, (4) that the named Officers signing any of the Loan Documents are incumbent and
that their signatures are as shown. Attached should be copies of the Corporate Resolutions
authorizing the Borrower to borrow the funds and to take all other actions necessary for the
completion of the Loan and authorizing its Officers to execute all necessary documents on its
behalf.

Certificate of Good Standing/Existence for the Borrower issued by the State of Delaware

Certificate of Existence for the Borrower issued by the State of Connecticut

Tax Clearance Letter (corporate/business tax and sales and use tax) from the State of Connecticut
Department of Revenue Services for the Borrower

Labor Clearance Letter from the State of Connecticut Department of Labor for the Borrower

Opinion Letter of Borrower’s Legal Counsel

Affirmative Action Plan Approval

Joint Statement

 

- 15 -

 

Copy of Borrower’s most recent State of Connecticut Employee Quarterly Earnings Report, Form UC-5a

Financial Statements

Certificate of No Adverse Change

Certificate of Non-Relocation

Environmental Certificate and Indemnity Agreement

Prejudgment Remedy Waiver

Nondiscrimination Certification

Insurance Certificate(s)

Copies of Purchase Orders for Equipment purchased with initial advance under Loan

A detailed list of other machinery and equipment, acceptable to the Authority, to be pledged to the
Authority to secure the Loan (specifying make, model and serial number)

 

- 16 -

 

SCHEDULE 3.5

Schedule of Permitted Indebtedness

     
The “Permitted Indebtedness” of the Borrower shall include the following: (a) all of the Borrower’s
existing and future indebtedness to the Authority in connection with the Loan and the previous loan
made available by the Authority to the Borrower pursuant to that certain Loan Agreement dated as of
June 30, 2000, as amended; (b) all of the Borrower’s existing indebtedness for capital and
operating lease obligations (as of January 31, 2008) in the aggregate amount of $3,806,000.00,
along with future borrowings under the existing lease facilities; (c) all of the Borrower’s
indebtedness (i) with respect to future long-term manufacturing facility leases, so long as such
long-term manufacturing facility lease obligation is not secured by any assets or personal
property of the Borrower, and (ii) with respect to future manufacturing equipment financing, so
long as such manufacturing equipment financing is secured only by the specific item of
equipment being financed and no other assets or personal property of the Borrower are given and/or
granted by the Borrower to such equipment financing lender/lessor as collateral security for such
equipment financing; (d) trade debt incurred by the Borrower in the ordinary course of the
Borrower’s business; and (e) indebtedness of the Borrower with respect to transactions (including,
but not limited to, short-term financing, accounts receivable financing or working capital
financing) relating to power plant sales or other similar sales transactions between the Borrower
and its customers or clients in connection with the sale by the Borrower of its power plant
products to such customers or clients pursuant to the terms of a written sales contract, so long
as, to the extent that such financed sale transactions are secured, such security shall be limited
only to the assets or interests related to such sales transactions.

     
In addition to the foregoing, future equity or similar capital raises by the Borrower shall be
permitted, as well as the conversion by the Borrower (or by the holders thereof) of redeemable
minority interests and redeemable preferred stock to common stock of the Borrower, each without the
consent of the Authority.

 

- 17 -

 

SCHEDULE 3.8

The Borrower agrees to provide each labor union or representative of workers with which the
Borrower has a collective bargaining agreement or other contract or understanding, and each vendor
with which the Borrower has a contract or understanding, a notice to be provided by the Commission
on Human Rights and Opportunities (the “Commission”) advising the labor union or workers’
representative of the Borrower’s commitments under this Loan Agreement, and to post copies of such
notice in conspicuous places to be seen by employees and applicants for employment.

Specifically, but not by way of limitation, the Borrower agrees to the following:

(A) Compliance with Nondiscrimination and Affirmative Action in accordance with
Connecticut General Statutes Section 4a-60.

(1) (a) The contractor agrees and warrants that in the performance of the contract
such contractor will not discriminate or permit discrimination against any person or group of
persons on the grounds of race, color, religious creed, age, marital status, national origin,
ancestry, sex, mental retardation or physical disability, including,
but not limited to, blindness,
unless it is shown by such contractor that such disability prevents performance of the work
involved, in any manner prohibited by the laws of the United States or of the State of Connecticut.
The contractor further agrees to take affirmative action to insure that applicants with job related
qualifications are employed and that employees are treated when employed without regard to their
race, color, religious creed, age, marital status, national origin, ancestry, sex, mental
retardation, or physical disability, including, but not limited to, blindness, unless it is shown
by such contractor that such disability prevents performance of the work involved; (b) the
contractor agrees, in all solicitations or advertisements for employees placed by or on behalf of
the contractor, to state that it is an “affirmative action-equal opportunity employer” in
accordance with regulations adopted by the Commission; (c) the contractor agrees to provide each
labor union or representative of workers with which such contractor has a collective bargaining
agreement or other contract or understanding and each vendor with which such contractor has a
contract or understanding, a notice to be provided by the Commission advising the labor union or
workers’ representative of the contractor’s commitments under this Loan Agreement, and to post
copies of the notice in conspicuous places available to employees and applicants for employment;
(d) the contractor agrees to comply with each provision of this Loan Agreement and Sections 46a-68e
and 46a-68f of the Connecticut General Statutes and with each regulation or relevant order issued
by said Commission pursuant to Sections 46a-56, 46a-68e and 46a-68f of the Connecticut General
Statutes; (e) the contractor agrees to provide the Commission with such information requested by
the Commission, and permit access to pertinent books, records, and accounts, concerning the
employment practices and procedures of the contractor as relate to the provisions of this Loan
Agreement and Section 46a-56 of the Connecticut General Statutes. If the contract is a public works
contract, the contractor agrees and warrants that it will make good faith efforts to employ
minority business enterprises as faith efforts to employ minority business enterprises as
subcontractors and suppliers of materials on such public works project.

 

- 18 -

 

(2) For the purposes of this Loan Agreement, “minority business enterprise” means any small
contractor or supplier of materials fifty-one percent (51%) or more of the capital stock, if any,
or assets of which is owned by a person or persons: (a) who are active in the daily affairs of the
enterprise, (b) who have the power to direct the management and policies of the enterprise and (c)
who are members of a minority, as such term is defined in subsection (a) of Section 32-9n of the
Connecticut General Statutes; and “good faith” means that degree of diligence which a reasonable
person would exercise in the performance of legal duties and obligation. “Good faith efforts” shall
include, but not be limited to, those reasonable initial efforts necessary to comply with statutory
or regulatory requirements and additional or substituted efforts when it is determined that such
initial efforts will not be sufficient to comply with such requirements.

(3) For the purposes of this Loan Agreement, “public works contract” means any agreement
between any individual, firm or corporation and the State or any political subdivision of the State
other than a municipality for construction rehabilitation, conversion, extension, demolition or
repair of a public building, highway or other changes or improvements in real property, or which is
financed in whole or in part by the State, including, but not limited to, matching expenditures,
grants, loans, insurance or guarantees.

(4) Determination of the contractor’s good faith efforts shall include but shall not be
limited to the following factors: the contractor’s employment and subcontracting policies,
patterns, and practices; affirmative advertising, recruitment, and training; technical assistance
activities and such other reasonable activities or efforts as the Commission may prescribe that are
designed to ensure the participation of minority business enterprises in public works projects.

(5) The contractor shall develop and maintain adequate documentation, in a manner prescribed
by the Commission, of its good faith efforts.

(6) The
contractor shall include the provisions of subsection (A)(1) of this Schedule
3.8 in every subcontract or purchase order entered into after the Closing Date in order to
fulfill any obligation of this Loan Agreement with the Authority and such provisions shall be
binding on a subcontractor, vendor, or manufacturer unless exempted by regulations or orders of the
Commission. The contractor shall take such action with respect to any such subcontract or purchase
order as the Commission may direct as a means of enforcing such provisions including sanctions for
noncompliance in accordance with Section 46a-56 of the Connecticut General Statutes; provided if
such contractor becomes involved in, or is threatened with, litigation with a subcontractor or
vendor as a result of such direction by the Commission, the contractor may request the State of
Connecticut to enter into any such litigation or negotiation prior thereto to protect the interests
of the State and the State may so enter.

(7) The contractor agrees to comply with the regulations referred to in this section as they
exist on the date of this Loan Agreement and as they may be adopted or amended from time to time
during the term of this Loan Agreement and any amendments thereto.

 

- 19 -

 

(B) Further Agreements Regarding Compliance with Nondiscrimination.

(1) The contractor agrees and warrants that in the performance of the contract such contractor
will not discriminate or permit discrimination against any person or group of persons on the
grounds of sexual orientation, in any manner prohibited by the laws of the United States or of the
State of Connecticut, and that employees are treated when employed without regard to their sexual
orientation; the contractor agrees to provide each labor union or representative of workers with
which such contractor has a collective bargaining agreement or other contract or understanding and
each vendor with which such contractor has a contract or understanding, a notice to be provided by
the Commission advising the labor union or workers’ representative of the contractor’s commitments
under this section, and to post copies of the notice in conspicuous places available to employees
and applicants for employment; the contractor agrees to comply with each provision of this section
and with each regulation or relevant order issued by said Commission pursuant to Section 46a-56 of
the Connecticut General Statutes; the contractor agrees to provide the Commission with such
information requested by the Commission, and permit access to pertinent books, records and
accounts, concerning the employment practices and procedures of the contractor which relate to the
provisions of this Loan Agreement and Section 46a-56 of the Connecticut General Statutes.

(2) The
contractor shall include the provisions of subsection (B)(1) above in every
subcontract or purchase order entered into after the Closing Date in order to fulfill any
obligation of a contract with the state and such provisions shall be binding on a subcontractor,
vendor or manufacturer unless exempted by regulations or orders of the Commission. The contractor
shall take such action with respect to any such subcontract or
purchase order as the Commission may
direct as a means of enforcing such provisions including sanctions for noncompliance in accordance
with Section 46a-56 of the Connecticut General Statutes; provided, if such contractor becomes
involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such
direction by the Commission, the contractor may request the State of Connecticut to enter into any
such litigation or negotiation prior thereto to protect the interests of the state and the state
may so enter.

 

- 20 -

 

(C) Executive Order No. 3. This Loan Agreement is subject to the provisions of
Executive Order No. Three of Governor Thomas J. Meskill promulgated June 16, 1971 and, as such,
this Loan Agreement may be canceled, terminated or suspended by the State Labor Commissioner for
violation or of noncompliance with said Executive Order No. Three, or any State or Federal law
concerning nondiscrimination, notwithstanding that the Labor Commissioner is not a party to this
Loan Agreement. The parties to this Loan Agreement, as part of the consideration hereof, agree that
said Executive Order No. Three is incorporated herein by reference and made a part hereof. The
parties agree to abide by said Executive Order and agree that the State Labor Commissioner shall
have continuing jurisdiction in respect to the Loan Agreement performance in regard to
nondiscrimination, until the Loan Agreement is completed or terminated prior to completion. The
Applicant agrees as part consideration hereof, that this Loan Agreement is subject to the
guidelines and rules issued by the State Labor Commissioner to implement Executive Order No. Three
and that it will not discriminate in its employment practices or policies, will file all reports as required, and will fully cooperate with the State
and the State Labor Commissioner.

(D) Executive Order Number 17. This Loan Agreement is subject to the provisions of
Executive Order No. Seventeen of Governor Thomas J. Meskill
promulgated February 15, 1973, and, as
such, this Loan Agreement may be canceled, terminated or suspended by the Commissioner or the State
Labor Commissioner for violation of or noncompliance with said Executive Order No. Seventeen,
notwithstanding that the Labor Commissioner may not be a party to this Loan Agreement. The parties
to this Loan Agreement, as a part of the consideration hereof, agree that the Executive Order No.
Seventeen is incorporated herein by reference and made a part hereof. The parties agree to abide by
said Executive Order and agree that the contracting agency and the State Labor Commissioner shall
have joint and several continuing jurisdiction in respect to this Loan Agreement performance in
regard to listing all employment openings with the Connecticut Employment Service.

 

- 21 -

 

SCHEDULE 3.22 

SEEC Form 11 — Attached

 

- 22 -

 

SEEC FORM 11

NOTICE
TO EXECUTIVE BRANCH STATE CONTRACTORS AND PROSPECTIVE STATE

CONTRACTORS OF CAMPAIGN CONTRIBUTION AND SOLICITATION BAN

This
notice is provided under the authority of Connecticut General Statutes 9-612(g)(2), as amended
by P.A. 07-1, and is for the purpose of informing state contractors and prospective state
contractors of the following law (italicized words are defined below):

Campaign Contribution and Solicitation Ban

No state contractor, prospective state contractor, principal of a state contractor or principal of
a prospective state contractor, with regard to a state contract or state contract solicitation
with or from a state agency in the executive branch or a quasi-public agency or a holder, or
principal of a holder of a valid prequalification certificate, shall make a contribution to, or
solicit contributions on behalf of (i) an exploratory committee or candidate committee established
by a candidate for nomination or election to the office of Governor, Lieutenant Governor, Attorney
General, State Comptroller, Secretary of the State or State Treasurer, (ii) a political committee
authorized to make contributions or expenditures to or for the benefit of such candidates, or
(iii) a party committee;

In
addition, no holder or principal of a holder of a valid prequalification certificate, shall
make a contribution to, or solicit contributions on behalf of (i) an exploratory committee or
candidate committee established by a candidate for nomination or election to the office of State
senator or State representative, (ii) a political committee authorized to make contributions or
expenditures to or for the benefit of such candidates, or (iii) a party committee.

Duty to Inform

State contractors and prospective state contractors are required to inform their principals of the
above
prohibitions, as applicable, and the possible penalties and other consequences of any violation
thereof.

Penalties for Violations

Contributions or solicitations of contributions made in violation of the above prohibitions may
result in the following civil and criminal penalties:

Civil
penalties—$2000 or twice the amount of the prohibited contribution, whichever is greater,
against a principal or a contractor. Any state contractor or prospective state contractor which
fails to make reasonable efforts to comply with the provisions requiring notice to its principals
of these prohibitions and the possible consequences of their violations may also be subject to
civil penalties of $2000 or twice the amount of the prohibited contributions made by their
principals.

Criminal
penalties—Any knowing and willful violation of the prohibition is a Class D felony, which
may subject the violator to imprisonment of not more than 5 years, or $5000 in fines, or both.

Contract Consequences

Contributions made or solicited in violation of the above prohibitions may result, in the case of
a state contractor, in the contract being voided.

Contributions made or solicited in violation of the above prohibitions, in the case of a
prospective state contractor, shall result in the contract described in the state contract
solicitation not being awarded to the prospective state contractor, unless the State Elections
Enforcement Commission determines that mitigating circumstances exist concerning such violation.

The State will not award any other state contract to anyone found in violation of the above
prohibitions for a period of one year after the election for which such contribution is made or
solicited, unless the State
Elections Enforcement Commission determines that mitigating circumstances exist concerning such
violation.

Additional information and the entire text of P.A 07-1 may be found on the website of the State
Elections Enforcement Commission, www.ct.gov/seec. Click on the link to “State Contractor
Contribution Ban.”

 

 

 

Definitions:

“State contractor” means a person, business entity or nonprofit organization that enters into a
state contract. Such person, business entity or nonprofit organization shall be deemed to be a
state contractor until December thirty-first of the year in which such contract terminates. “State
contractor” does not include a municipality or any other political subdivision of the state,
including any entities or associations duly created by the municipality or political subdivision
exclusively amongst themselves to further any purpose authorized by statute or charter, or an
employee in the executive or legislative branch of state government or a quasi-public agency,
whether in the classified or unclassified service and full or part-time, and only in such person’s
capacity as a state or quasi-public agency employee.

“Prospective state contractor” means a person, business entity or nonprofit organization that (i)
submits a response to a state contract solicitation by the state, a state agency or a quasi-public
agency, or a proposal in response to a request for proposals by the state, a state agency or a
quasi-public agency, until the contract has been entered into, or (ii) holds a valid
prequalification certificate issued by the Commissioner of Administrative Services under section
4a-100. “Prospective state contractor” does not include a municipality or any other political
subdivision of the state, including any entities or associations duly created by the municipality
or political subdivision exclusively amongst themselves to further any purpose authorized by
statute or charter, or an employee in the executive or legislative branch of state government or a
quasi-public agency, whether in the classified or unclassified service and full or part-time, and
only in such person’s capacity as a state or quasi-public agency employee.

“Principal of a state contractor or prospective state contractor” means (i) any individual who is
a member of the board of directors of, or has an ownership interest of five per cent or more in, a
state contractor or prospective state contractor, which is a business entity, except for an
individual who is a member of the board of directors of a nonprofit organization, (ii) an
individual who is employed by a state contractor or prospective state contractor, which is a
business entity, as president, treasurer or executive vice president, (iii) an individual who is
the chief executive officer of a state contractor or prospective state contractor, which is not a
business entity, or if a state contractor or prospective state contractor has no such officer,
then the officer who duly possesses comparable powers and duties, (iv) an officer or an employee
of any state contractor or prospective state contractor who has managerial or discretionary
responsibilities with respect to a state contract,
(v) the spouse or a dependent child who is
eighteen years of age or older of an individual described in this subparagraph, or (vi) a
political committee established or controlled by an individual described in this subparagraph or
the business entity or nonprofit organization that is the state contractor or prospective state
contractor.

“State contract” means an agreement or contract with the state or any state agency or any
quasi-public agency, let through a procurement process or otherwise, having a value of fifty
thousand dollars or more, or a combination or series of such agreements or contracts having a
value of one hundred thousand dollars or more in a calendar year, for (i) the rendition of
services, (ii) the furnishing of any goods, material, supplies, equipment or any items of any
kind, (iii) the construction, alteration or repair of any public building or public work, (iv) the
acquisition, sale or lease of any land or building, (v) a licensing arrangement, or (vi) a grant,
loan or loan guarantee. “State contract” does not include any agreement or contract with the state,
any state agency or any quasi-public agency that is exclusively federally funded, an education
loan or a loan to an individual for other than commercial purposes.

“State contract solicitation” means a request by a state agency or quasi-public agency, in
whatever form issued, including, but not limited to, an invitation to bid, request for proposals,
request for Information or request for quotes, inviting bids, quotes or other types of submittals,
through a competitive procurement process or another process authorized by law waiving competitive
procurement.

“Managerial or discretionary responsibilities with respect to a state contract” means having
direct, extensive and substantive responsibilities with respect to the negotiation of the state
contract and not peripheral, clerical or ministerial responsibilities.

“Dependent child” means a child residing in an individual’s household who may legally be claimed
as a dependent on the federal income tax of such individual.

“Solicit” means (A) requesting that a contribution be made, (B) participating in any fund-raising
activities for a candidate committee, exploratory committee, political committee or party
committee, including, but not limited to, forwarding tickets to potential contributors, receiving
contributions for transmission to any such committee or bundling contributions, (C) serving as
chairperson, treasurer or deputy treasurer of any such committee, or (D) establishing a political
committee for the sole purpose of soliciting or receiving contributions for any committee. Solicit
does not include: (i) making a contribution that is otherwise permitted by Chapter 155 of the
Connecticut General Statutes; (ii) informing any person of a position taken by a candidate for
public office or a public official, (iii) notifying the person of any activities of, or contact
information for, any candidate for public office; or (iv) serving as a member in any party
committee or as an officer of such committee that is not otherwise prohibited in this section.

 

 

 

PROMISSORY NOTE

			
	 	 	 
	$4,000,000.00
	 	Rocky Hill, Connecticut
	 
	 	April 29, 2008

FOR
VALUE RECEIVED, FUELCELL ENERGY, INC., a Delaware corporation having its chief
executive office and principal place of business at 3 Great Pasture Road, Danbury, Connecticut
06813 (the “Maker”), hereby unconditionally promises to pay to the order of the CONNECTICUT
DEVELOPMENT AUTHORITY, a body politic and corporate, constituting a public instrumentality and
political subdivision of the State of Connecticut (the “Authority”), at its principal office at 999
West Street, Rocky Hill, Connecticut 06067-3405, or at such other place as the Authority may
designate in writing, without notice or offset, the principal sum of FOUR MILLION AND NO/100
DOLLARS ($4,000,000.00), or so much thereof as may be advanced by the Authority to Maker pursuant
to and under the terms of that certain Loan Agreement of even date herewith, by and between Maker
and the Authority (the “Loan Agreement”), together with interest in arrears thereon from the date
hereof at a fixed rate of interest equal to five percent (5.0%) per annum upon the whole of said
principal sum remaining from time to time unpaid, subject to adjustment under the terms and
conditions of Section 1.5 of the Loan Agreement. Interest shall be charged on the principal balance
from time to time outstanding on the basis of the actual number of days elapsed computed on the
basis of a 360-day year. Advances from the Authority to Maker on account of this Note shall be made
by the Authority to Maker in accordance with the terms and conditions set forth in the Loan
Agreement and may, at the Authority’s option, be recorded by the Authority on the grid attached to
this Note. In the event that the Authority elects, in its sole discretion, to record its advances
to Maker hereunder on the attached grid, said grid shall be conclusive evidence of the date and
amount of such advances and shall be binding upon Maker absent manifest error.

Said principal and interest shall be due and payable in monthly installments as follows:

On the date hereof, interest ($172.11) on the amount advanced hereunder on the date hereof
($628,185.00) shall be prepaid for the period from the date hereof
through April 30, 2008.
Commencing on June 1, 2008, accrued interest shall be payable monthly, in arrears, on the first
(1st) day of each month for a period not to exceed eighteen (18) months, through
November 1, 2009. Commencing on December 1, 2009, principal and interest shall be paid in consecutive
monthly installments, payable in arrears and due and payable on the first (1st) day of
each and every calendar month, in an amount sufficient to amortize in full the then-outstanding
principal balance hereof over an eight and one-half
(81/2) year term commencing on the date
thereof. The aforesaid monthly payments shall be first applied to accrued interest and then to
principal.

The
entire principal balance of this Note and all accrued and unpaid interest thereon, shall
be due and payable in full on May 1, 2018.

Maker agrees to pay all taxes or duties levied or assessed against the Authority or other
holder of this Note on account of this Note, or the loan agreement pursuant to which this Note is
issued (the “Loan Agreement”), or the security agreement securing this Note (the “Security
Documents”), or upon the collateral granted under the Security Documents. Maker further agrees to
pay all reasonable costs, expenses and attorneys’ fees incurred by the Authority in any proceeding
for the collection of the debt evidenced hereby, or in any action to enforce its rights in
collateral granted under the Security Documents upon the happening of a default as provided for in
the Security Documents, or in protecting or sustaining the lien of the Security Documents or in any
litigation or controversy arising from or connected with this Note or the Security Documents.

 

 

 

There shall be an event of default hereunder if an Event of Default occurs under the terms of
the Loan Agreement, and is not cured by Maker within the applicable cure period, if any (an “Event
of Default”). Upon the occurrence of an Event of Default, the entire principal sum with accrued
interest thereon due under this Note shall, at the option of Authority, become due and payable and
Authority may proceed to exercise any rights and remedies it has under this Note, the Loan
Agreement, the Security Documents or at law, in equity or otherwise. No failure to exercise such
option shall be deemed to be a waiver on the part of Authority of the right to exercise the same in
the event of any subsequent Event of Default.

The Authority may collect a “late charge” not to exceed an amount equal to five percent
(5.00%) of any installment of interest or principal or both which is not paid within ten (10) days
after the date on which said payment is due (other than after acceleration or maturity). Late
charges shall be separately charged to and collected from Maker and shall be due upon demand by
Authority.

Maker may prepay the principal balance of this Note on any regularly-scheduled monthly
installment payment date in full or in part, in amounts of at least $100,000.00, without premium or
penalty; provided, however, that the $100,000.00 threshold shall not apply to a prepayment
in accordance with the terms and conditions of Section 3.20 of the Loan Agreement. Any and all
permitted partial prepayments made by Maker to the Authority shall be credited to the unpaid
principal installments due under this Note in the inverse order of their maturity.

Maker and each and every endorser, guarantor, and surety of this Note and all others who may
become liable for all or any part of this obligation do hereby waive diligence, demand, presentment
for payment, protest, notice of protest and notice of non-payment of this Note, and do hereby
consent to any number of renewals or extensions of the time of payment hereof and of the time for
advances under the Loan Agreement or the Security Documents, if any, and agree that any such
renewals or extensions may be made without notice to any of said parties and without affecting
their liability herein and further consent to the release of any part or parts or all of the
security for the payment hereof and to the release of any party or parties liable hereon, all
without affecting the liability of the other persons, firms or corporations liable for the payment
of this Note.

Upon the occurrence of an Event of Default hereunder and during the continuance thereof, at
the option of the Authority, the Authority may pay insurance premiums, taxes and assessments, and
any and all other expenses which may be reasonable or necessary to protect the property, real or
personal, securing this Note or to protect or sustain the lien of the Security Documents. Any such
payment made by the Authority pursuant to said option shall be added to the principal balance due
hereunder and shall bear interest as set forth herein from the date of payment by Authority and
shall be payable on demand with interest from the date of payment by Authority.

 

- 2 -

 

Maker agrees that all expenditures incurred by Authority under this Note other than principal,
and the principal of this Note after maturity, upon an event of default or after a judgment hereon,
shall bear interest at a default rate of eighteen percent (18.00%) per annum, from the date of
demand, default or judgment, as applicable.

Any notice to Maker provided for in this Note may be given by telephone (confirmed within 24
hours in writing), or in writing by depositing the same in the United states mail, postage prepaid,
or by notice personally served, or by telefax, telegraph or telex, charges prepaid, addressed to
Maker at 3 Great Pasture Road, Danbury, Connecticut 06813, Attention: President, or to such other
address as Maker may hereinafter furnish to the Authority in writing. Any notice to the Authority
shall be given by mailing such notice by prepaid, first-class mail at the address stated in the
first paragraph of this Note, or at such other person or address as may have been designated by
notice to Maker. Notice to Maker shall be deemed given when sent in accordance with this paragraph.
Notice to Maker or the Authority shall be effective only upon receipt by Maker or the Authority, as
the case may be.

MAKER ACKNOWLEDGES THAT THIS NOTE AND THE UNDERLYING TRANSACTIONS GIVING RISE HERETO
CONSTITUTE COMMERCIAL BUSINESS TRANSACTED WITHIN THE STATE OF CONNECTICUT. IN THE EVENT OF ANY
LEGAL ACTION BETWEEN MAKER AND THE AUTHORITY HEREUNDER, MAKER HEREBY EXPRESSLY WAIVES ANY RIGHTS
WITH REGARD TO NOTICE, PRIOR HEARING AND ANY OTHER RIGHTS IT MAY HAVE UNDER THE CONNECTICUT GENERAL
STATUTES, CHAPTER 903a, AS NOW CONSTITUTED OR HEREAFTER AMENDED, OR OTHER STATUTE OR STATUTES,
STATE OR FEDERAL, AFFECTING PREJUDGMENT REMEDIES, AND THE AUTHORITY MAY INVOKE ANY PREJUDGMENT
REMEDY AVAILABLE TO IT, INCLUDING, BUT NOT LIMITED TO, GARNISHMENT, ATTACHMENT, FOREIGN ATTACHMENT
AND REPLEVIN, WITH RESPECT TO ANY TANGIBLE OR INTANGIBLE PROPERTY (WHETHER REAL OR PERSONAL) OF
MAKER TO ENFORCE THE PROVISIONS OF THIS NOTE, WITHOUT GIVING MAKER ANY NOTICE OR OPPORTUNITY FOR A
HEARING.

ADDITIONALLY, MAKER AND THE AUTHORITY HEREBY EACH WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, DEFENSE, COUNTERCLAIM, CROSSCLAIM AND/OR ANY FORM OF PROCEEDING BROUGHT IN CONNECTION WITH
THIS NOTE OR RELATING TO ANY INDEBTEDNESS EVIDENCED HEREBY AND/OR ANY COLLATERAL NOW OR HEREAFTER
SECURING THIS NOTE.

The term the “Authority” as used in this Note shall include the Authority and any
subsequent holder or holders hereof.

THIS NOTE HAS BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF CONNECTICUT AND SHALL BE
CONSTRUED AND ENFORCED UNDER AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT.

 

- 3 -

 

This Note is issued pursuant to the Loan Agreement, and all terms, conditions and
provisions thereof are deemed incorporated herein as if fully set forth herein.

IN WITNESS WHEREOF, Maker has hereunto set its hand this 29th day of April,
2008.

	 	 	 	 	 
	 	FUELCELL ENERGY, INC.

 	 
	 	By:  	/s/ Ross M. Levine
 	 
	 	 	Ross M. Levine 	 
	 	 	Director of Government Contracts
Duly Authorized 

 

- 4 -

 

GRID

Attached to and made a part of the Promissory Note dated April 29, 2008, in the original
principal amount of $4,000,000.00, made by FUELCELL ENERGY, INC. and payable to the order of the
CONNECTICUT DEVELOPMENT AUTHORITY.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Principal	 	 	Amount of	 	 	Aggregate Unpaid	 	 	 	 
	 	 	Amount of	 	 	Principal of	 	 	Principal Balance	 	 	Notation	 
	Date	 	Advance	 	 	Note Prepaid	 	 	of Note	 	 	Made By	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4/29/08
	 	$	628,185.00	 	 	$	0	 	 	$	628,185.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

 

- 5 -

 

SECURITY AGREEMENT

THIS SECURITY AGREEMENT is made and entered into this 29th day of April, 2008, by
and between FUELCELL ENERGY, INC., a Delaware corporation, having its chief executive
office and principal place of business at 3 Great Pasture Road, Danbury, Connecticut 06813 (the
“Debtor”), and the CONNECTICUT DEVELOPMENT AUTHORITY, a body politic and corporate
constituting a public instrumentality and political subdivision of the State of Connecticut, having
its principal office at 999 West Street, Rocky Hill, Connecticut 06067-3405 (the “Secured Party”).

WITNESSETH:

In consideration of the mutual promises and covenants herein contained, the parties agree as
follows:

1. Definitions: In this Security Agreement:

	 	a.	 	“Collateral” means collectively (i) all machinery and equipment purchased by the
Debtor with the proceeds of the multiple-advance term loan in the principal amount
of up to $4,000,000.00 made available (or to be made available) by the Secured Party
to the Debtor, as such items of machinery and equipment are more fully described in
Schedule A attached hereto and made a part hereof (as Schedule A may
hereafter be modified, amended and supplemented from time to time by the Secured
Party), and (ii) all items of machinery and equipment now or hereafter owned by the
Debtor and described in Schedule A-1 attached hereto and made a part hereof
(as Schedule A-1 may hereafter be modified, amended and supplemented from
time to time by the Secured Party), and the products, accessions and substitutions
therefor, and the accounts and proceeds arising from the sale or disposition thereof
including any returns thereof, including, where applicable, the proceeds of
insurance covering the above. For avoidance of doubt, the term “Collateral” shall
include all machinery and equipment owned by the Debtor and presently subject to a
security interest in favor of the Secured Party.

	 
	 	b.	 	“Indebtedness” means all debts, liabilities and obligations of any kind, whenever
and however incurred, including past, present and future obligations of the Debtor
to the Secured Party, whether or not evidenced by any notes, instruments, documents
or other writing, including, without limitation, all obligations of the Debtor under
the Note and the Loan Agreement (as hereafter defined).

 

 

 

	 	c.	 	“State” means any state or other jurisdiction in which the Debtor carries on
business or in which the Collateral is at any time located, and includes the State
of Connecticut.

	 
	 	d.	 	Any term not defined herein that is defined in the Uniform Commercial Code, as
enacted in the State of Connecticut (the “Code”), shall have the meaning as defined
therein.

To secure the payment of a ten (10) year multiple-advance term loan in the amount of up to
FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) plus interest, made pursuant to that certain loan
agreement of even date herewith by and between Debtor and the Secured Party (the “Loan Agreement”)
and payable in accordance with the terms of that certain promissory note of the Debtor, dated as of
the date hereof, in the original principal amount of $4,000,000.00 (the “Note”), copies of which
Loan Agreement and Note are attached hereto as Schedule B and made a part hereof, and to
secure the performance and payment of all Indebtedness, Debtor hereby grants and conveys to the
Secured Party a security interest in the Collateral.

2. Debtor’s Covenants: The Debtor warrants, covenants and agrees as follows:

	 	a.	 	To pay and perform all of the Indebtedness secured by
this Security Agreement according to its terms.

	 
	 	b.	 	To defend the title to the Collateral against any and all
persons and against all claims.

	 
	 	c.	 	At any time and from time to time, at the request of Secured
Party, to execute and deliver one or more financing statements and/or
continuation statements pursuant to the Code, and any amendments thereof and
supplements thereto, and such other instruments as the Secured Party shall
reasonably require in order to perfect, protect, preserve and maintain the
security interests hereby granted, and to pay the cost of filing and recording
the same or filing and recording this Security Agreement in all public offices
wherever filing or recording is deemed by Secured Party to be necessary or
desirable. Debtor hereby irrevocably appoints Secured Party as Debtor’s
attorney-in-fact, coupled with an interest, to do whatever Secured Party may
deem necessary to perfect or continue perfected its security interest in the
Collateral under this Security Agreement pursuant to the Code. Debtor agrees
that a carbon, photographic or other reproduction of this Security Agreement or
a financing statement is sufficient as a financing statement.

	 
	 	d.	 	To retain possession of the Collateral during the existence of
this Security Agreement and not to sell, exchange, assign, loan, deliver,
lease, transfer or otherwise dispose of same, without the prior written consent
of the Secured Party in each instance, which consent shall not be unreasonably withheld or
delayed.

 

- 2 -

 

	 	e.	 	To keep the Collateral at its present location at Debtor’s leased facility located at 539
Technology Park Road, Torrington, Connecticut 06790 (the “Torrington Facility”), and not to
remove same without the prior written consent of the Secured Party in each instance.

	 
	 	f.	 	To keep the Collateral free and clear of all liens, charges, encumbrances, pledges,
mortgages, and security interests, except for any subsequent encumbrances consented to in
writing by the Secured Party, which consent the Secured Party may withhold in its sole
discretion.

	 
	 	g.	 	To keep its chief executive office and principal place of business at the address set forth
at the beginning of this Security Agreement, and to provide the Authority with at least thirty
(30) days’ prior written notice of its intention to move its chief executive office to another
location.

	 
	 	h.	 	To pay, when due, all taxes, assessments, governmental charges and
license fees relating to, or which could become a lien upon, the Collateral.

	 
	 	i.	 	To keep the Collateral, at the Debtor’s own cost and expense, in good repair and
condition and to use it for the purposes intended and not to misuse, abuse, waste or allow it
to deteriorate, except for normal wear and tear, and to make the same available for inspection
by the Secured Party during normal business hours.

	 
	 	j.	 	To keep the Collateral insured against loss by fire, theft, flood and other hazards
(so-called “All Risk” coverage) as the Secured Party may require in an amount equal to the
full value of the Collateral and in no event less than the outstanding Indebtedness secured
thereby. Policies covering the Collateral shall be obtained from responsible insurers
authorized to do business in the State of Connecticut. Certificates of insurance or policies
shall name the Secured Party as loss payee and shall have attached thereto a loss payable
clause making loss payable to the Secured Party as its interest may appear, and all such
policies and renewal policies shall be deposited with the Secured Party. Each policy or
endorsement shall contain a clause requiring the insurer to give not less than thirty (30)
days’ prior written notice to the Secured Party in the event of modification or cancellation
of the policy for any reason whatsoever, and a clause that the interest of the Secured Party
shall not be impaired or invalidated by any act or neglect of the Debtor or owner of the
Collateral nor by the occupation of the premises where the Collateral is located for purposes
more hazardous than are permitted by said policy. The Debtor shall give immediate written
notice to the Secured Party and to insurers of loss or
damage to the Collateral and shall promptly file proofs of loss with
insurers. The Debtor hereby irrevocably appoints the Secured Party the
attorney-in-fact, coupled with an interest, of the Debtor in obtaining and
adjusting any such insurance and endorsing settlement drafts and hereby
assigns to the Secured Party all sums which may become payable under such
insurance, including return premiums and dividends, as additional security
for the Indebtedness. In the event of termination or threatened termination
of insurance, the Secured Party has the right to obtain its own insurance
covering the Collateral and to add the costs of obtaining and maintaining
such insurance as an additional obligation of the Debtor to the Secured
Party. Nothing herein shall relieve the Debtor of its duty or obligation to
do any act for which the Secured Party may be hereby appointed
attorney-in-fact for the Debtor or otherwise authorized to act.

 

- 3 -

 

	 	k.	 	In the conduct of its business, to materially comply with
all applicable laws, ordinances, rules and regulations of all
governmental authorities having jurisdiction over the Debtor, the
Collateral and/or its business.

	 
	 	l.	 	The Debtor authorizes the Secured Party, if the Debtor
fails to do so, to do all things required of the Debtor herein and charge all
reasonable expenses incurred by the Secured Party to the Debtor together with
interest thereon until repayment to the Secured Party at the interest rate
provided in the Note. Failure to repay any said advance with interest within
ten (10) days from the date of demand by the Secured Party shall constitute a
default hereunder.

	 
	 	m.	 	Not, without thirty (30) days’ prior written notice to
the Secured Party, change its name or make any changes in the tradenames under
which it now operates. In the event that the Debtor so notifies the Secured
Party, the Debtor will execute such financing statements and other documents as
the Secured Party shall deem necessary or desirable in order to maintain the
existence, perfection and priority of its lien on the Collateral.

3. Debtor’s Representations and Warranties: The Debtor represents and warrants
to the Secured Party as follows:

	 	a.	 	All written information heretofore or hereafter furnished by
the Debtor to the Secured Party is or will be true and correct in all material
respects as of the date with respect to which such information was furnished.

	 
	 	b.	 	Except for the security interest of the Secured Party, the
Debtor is, and as to Collateral acquired after the date hereof, the Debtor will
be, the owner of the Collateral free and clear of any lien, security interest,
pledge and encumbrance of any nature, except as otherwise provided herein.

	 
	 	c.	 	 The office where the Debtor keeps its records concerning
Collateral and Debtor’s chief executive office is and will be located at 3
Great Pasture Road, Danbury, Connecticut 06813. All of the Collateral shall
be located at the Torrington Facility.

 

- 4 -

 

4. Non-Waiver: Waiver of or acquiescence in any default by the Debtor or failure of
the Secured Party to insist upon strict performance by the Debtor of any warranties or agreements
in this Security Agreement shall not constitute a waiver of any subsequent or other default or
failure.

5. Default: Any one of the following shall constitute a default by the Debtor:

	 	a.	 	Failure by the Debtor to comply with or perform any provision of this
Security Agreement, and such breach or default is not cured by the Debtor
within thirty (30) days after the Debtor becomes aware of such breach or
default;

	 
	 	b.	 	Any representation or warranty made or given by the Debtor in connection
with this Security Agreement proves to be false or misleading in any
material fashion;

	 
	 	c.	 	Default (and the expiration of any cure and/or grace period) under the
Note, the Loan Agreement or any other document or agreement evidencing or
securing the Indebtedness secured hereby;

	 
	 	d.	 	All or substantial part of the Collateral is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes within the
possession of any receiver, trustee, custodian or assignee for the benefit
of creditors, and same is not removed, dissolved and/or bonded in full by
the Debtor within thirty (30) days after the Debtor becomes aware of the
occurrence of such event or action;

	 
	 	e.	 	Depreciation (except depreciation as reflected for tax or accounting
purposes) or impairment of the Collateral;

	 
	 	f.	 	Judgment or other claim in excess of $50,000.00 becomes a lien upon the
Collateral or any part thereof, and same is not removed, dissolved and/or
bonded in full by the Debtor within thirty (30) days after the Debtor
becomes aware of the attachment of such lien to the Collateral (or any part
thereof); or

	 
	 	g.	 	If any of the Collateral is materially damaged and not covered by
insurance reasonably deemed adequate by the Secured Party.

 

- 5 -

 

6. Remedies on Default: Upon any default (and during the continuance of such
default) and upon demand by the Secured Party, the Debtor agrees immediately to assemble the
Collateral and make it available to the Secured Party at the place and time designated in the said
demand. The Secured Party shall be entitled to immediate possession of the Collateral and the
Secured Party may: (i) enter any premises where any Collateral may be located for the purpose of
assembling or taking possession of and removing same, and (ii) sell, assign, lease or otherwise
dispose of the Collateral or any part thereof, either at public or private sale acceptable to the
Secured Party, all at the Secured Party’s sole option and as it, in its sole discretion, may deem
advisable, and the Secured Party may bid or become purchaser at any such sale, free from any right
of redemption which is hereby expressly waived by the Debtor. Until sale, the Secured Party may
store the Collateral on the premises where it is located when seized, and if said premises are the
property of the Debtor, the Debtor agrees not to charge the Secured Party for storage thereof for a
period of ninety (90) days before or after sale or disposition of said Collateral. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold
in a recognized market, the Secured Party will give the Debtor reasonable notice of time and place
of any public sale or the time after which any private sale or other intended disposition will be
made. The requirement of reasonable notice shall be met if such notice is mailed to the Debtor at
least ten (10) days before the time of the sale or disposition.

The net cash proceeds resulting from the collection, liquidation, sale or other disposition of
the Collateral shall be applied first to the reasonable expenses (including all reasonable
attorneys’ fees) of preparing for sale, storing, processing, selling, collecting, and/or
liquidating the Collateral and the like, and then to the satisfaction of the Indebtedness,
application as to particular obligations or against principal or interest under the Indebtedness to
be in the Secured Party’s sole discretion. The Debtor shall be liable to the Secured Party and
shall pay to the Secured Party on demand any deficiency which may remain after such sale,
disposition, collection or liquidation of Collateral, and the Secured Party in turn agrees to remit
to the Debtor, or other such persons as their interests may appear, any surplus remaining after all
such liabilities have been paid in full.

To facilitate the exercise by the Secured Party of the rights and remedies set forth in this
section, the Debtor hereby irrevocably appoints the Secured Party or any other person whom the
Secured Party may designate, as attorney-in-fact for the Debtor, coupled with an interest, at the
Debtor’s expense, to exercise all or any of the foregoing powers, and other powers incidental to
the foregoing, all of which, being coupled with an interest, shall be irrevocable, shall continue
until all obligations have been paid in full and shall be in addition to any other rights and
remedies that the Secured Party may have.

In the event the Secured Party seeks to take possession of any or all Collateral by court
process, the Debtor hereby irrevocably waives any bonds and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such possession, and waives any
demand for possession prior to the commencement of any suit or action to recover with respect
thereto and waives the right to demand a jury in any action in which the Secured Party is a party.

 

- 6 -

 

7. Attorneys’ Fees, etc.: Upon any default, the Secured Party’s reasonable attorneys’
fees and the legal and other expenses for pursuing, searching for, receiving, taking, keeping,
storing, advertising and selling the Collateral, shall be chargeable to the Debtor.

8. Other Rights: In addition to all rights and remedies herein, upon default,
the Secured Party shall have such other rights and remedies as are set forth in the Code and
the Connecticut General Statutes, as amended.

9. THE DEBTOR ACKNOWLEDGES THAT THIS SECURITY AGREEMENT AND THE UNDERLYING TRANSACTIONS GIVING
RISE HERETO CONSTITUTE COMMERCIAL BUSINESS TRANSACTED WITHIN THE STATE OF CONNECTICUT. IN THE EVENT
OF ANY LEGAL ACTION BETWEEN THE DEBTOR AND THE SECURED PARTY HEREUNDER, DEBTOR HEREBY EXPRESSLY
WAIVES ANY RIGHTS WITH REGARD TO NOTICE, PRIOR HEARING AND ANY OTHER RIGHTS IT MAY HAVE UNDER THE
CONNECTICUT GENERAL STATUTES, CHAPTER 903a, AS NOW CONSTITUTED OR HEREAFTER AMENDED, OR OTHER
STATUTE OR STATUTES, STATE OR FEDERAL, AFFECTING PREJUDGMENT REMEDIES, AND THE SECURED PARTY MAY
INVOKE ANY PREJUDGMENT REMEDY AVAILABLE TO IT, INCLUDING, BUT NOT LIMITED TO, GARNISHMENT,
ATTACHMENT, FOREIGN ATTACHMENT AND REPLEVIN, WITH RESPECT TO ANY TANGIBLE OR INTANGIBLE PROPERTY
(WHETHER REAL OR PERSONAL) OF THE DEBTOR TO ENFORCE THE PROVISIONS OF THIS NOTE, WITHOUT GIVING THE
DEBTOR ANY NOTICE OR OPPORTUNITY FOR A HEARING.

10. Additional Waivers: Demand, presentment, protest and notice of nonpayment are
hereby waived by the Debtor. The Debtor also waives the benefit of all valuation, appraisement and
exemption laws.

11. Binding Effect: The terms, warranties and agreements herein contained shall bind
and inure to the benefit of the respective parties hereto, and their respective legal
representatives, successors and assigns.

12. Assignment: The Secured Party may assign without limitation its security interest
in the Collateral.

13. Amendment: This Security Agreement may not be altered or amended except by an
agreement in writing signed by the parties hereto.

14. Term:

	 	(a)	 	This Security Agreement shall continue in full force and effect until all Indebtedness has
been irrevocably paid in full.

	 
	 	(b)	 	No termination of this Security Agreement shall in any way affect or impair the rights and
liabilities of the parties hereto relating to any transaction or events prior to
such termination date, or to any Collateral in which the Secured Party has a security interest, and
all agreements, warranties and representations of the Debtor shall survive such termination.

 

- 7 -

 

15. No Waiver: The Secured Party’s failure at any time or times hereafter to require
strict performance by the Debtor of any of the provisions, warranties, terms and conditions
contained in this Security Agreement, or in any other agreement, instrument or document now or at
any time or times hereafter executed by the Debtor and delivered to the Secured Party, shall not
waive, affect or diminish any right of the Secured Party at any time or times hereafter to demand
strict performance therewith, and such right shall not be deemed to have been waived by any act or
knowledge of the Secured Party, its agents, officers or employees, unless such waiver is contained
in an instrument in writing signed by an officer of the Secured Party and directed to the Debtor
specifying such waiver. No waiver by the Secured Party of any default hereunder shall operate as a
waiver of any other default or the same default on a future occasion.

16. Choice of Law: THE LAWS OF THE STATE OF CONNECTICUT SHALL GOVERN THE RIGHTS AND
DUTIES OF THE PARTIES HEREIN CONTAINED.

IN WITNESS WHEREOF, the parties have signed and sealed this Security Agreement at Waterbury,
Connecticut as of the day and year first above written.

	 	 	 	 	 
	 	FUELCELL ENERGY, INC.

 	 
	 	By:  	/s/ Ross M. Levine
 	 
	 	 	Ross M. Levine 	 
	 	 	Director of Government Contracts
Duly Authorized 
	 
	 	CONNECTICUT DEVELOPMENT AUTHORITY

 	 
	 	By:  	/s/ Robert A. Phelon
 	 
	 	 	Robert A. Phelon 	 
	 	 	Its Vice President
Duly Authorized 	 
	 

 

- 8 -exhibit10-5_031309.htm

    EXHIBIT
10.5

    
 

    WENDY’S/ARBY’S
GROUP, INC.

    AMENDED
AND RESTATED

    2002
EQUITY PARTICIPATION PLAN

     

    (as
amended through February 3, 2009)

    

    1. Purpose. The purpose
of the Amended and Restated 2002 Equity Participation Plan (as amended through
the date hereof, the “Plan”) of Wendy’s/Arby’s Group, Inc. (the “Company”) is to
promote the interests of the Company and its stockholders by (i) securing for
the Company and its stockholders the benefits of the additional incentive
inherent in the ownership of the capital stock of the Company (the “Capital
Stock”) by selected officers, directors (“Directors”) and key employees of, and
consultants to, the Company and its Subsidiaries and Affiliates (as each is
defined in Section 4 hereof) who are important to the success and growth of the
business of the Company and its Subsidiaries and Affiliates and (ii) assisting
the Company to secure and retain the services of such persons. The Plan provides
for granting such persons (a) options (“Options”) for the purchase of shares of
Capital Stock (the “Shares”), (b) tandem stock appreciation rights (“SARs”), (c)
Shares which are both restricted as to transferability and subject to a
substantial risk of forfeiture (“Restricted Shares”) and (d) restricted share
units, each of which is a hypothetical investment equivalent to one Share
(“Restricted Share Units”). The Plan also provides for automatic grants of
Options to non-employee Directors and permits such non-employee Directors to
elect to receive all or a portion of their annual retainer fees and/or board of
directors or committee meeting attendance fees in Shares.

    

    2. Administration. The
Plan shall be administered by a Committee (the “Committee”) consisting of two or
more Directors appointed by the Board of Directors of the Company (the “Board of
Directors”). It is intended, but not required, that the directors appointed to
serve on the Committee shall be “Non-Employee Directors” (within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the “Act”)), and “outside directors” within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”), to the extent Rule
16b-3 and Section 162(m), respectively, are applicable to the Company and the
Plan; however, the fact that a Committee member shall fail to qualify under
either of the foregoing requirements shall not invalidate any award which is
otherwise validly made under the Plan. The members of the Committee may be
changed at any time and from time to time in the discretion of the Board of
Directors. Subject to the limitations and conditions hereinafter set forth, and
except with respect to automatic grants to non-employee Directors pursuant to
Section 11.1 hereof, the Committee shall have authority to grant Options
hereunder, to determine the number and class of Shares for which each Option
shall be granted and the Option price or prices, to determine any conditions
pertaining to the exercise or to the vesting of each Option, to grant tandem
SARs in connection with any Option either at the time of the Option grant or
thereafter, to make awards of Restricted Shares and/or Restricted Share Units,
to determine the number of Restricted Shares and/or Restricted Share Units to be
granted, and to establish in its discretion the restrictions to which any such
Restricted Shares or Restricted Share Units shall be subject. The Committee
shall have full power to construe and interpret the Plan and any Plan agreement
executed pursuant to the Plan, to establish and amend rules for its
administration, to establish in its discretion terms and conditions applicable
to the exercise of Options and SARs and the grant of Restricted Shares and
Restricted Share Units and to make any other determination and take any other
action that the Committee deems necessary or desirable

    
      
         

      

      
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    for the
administration of the Plan. The determination of the Committee on all matters
relating to the Plan or any Plan agreement shall be conclusive. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award hereunder.

    

    3. Shares Subject to the
Plan. The Shares to be transferred or sold pursuant to the grant of
Restricted Shares, settlement of Restricted Share Units or the exercise of
Options or SARs granted under the Plan or pursuant to the election by a Director
to receive all or a portion of their annual retainer fees and/or board of
directors or committee meeting attendance fees, if any (“Fees”), in Shares shall
be authorized Shares, and may be issued Shares reacquired by the Company and
held in its treasury or may be authorized but unissued Shares. Subject to the
provisions of Section 23 hereof (relating to adjustments in the number and
classes or series of Capital Stock to be delivered pursuant to the Plan), the
maximum aggregate number of Shares to be granted as Restricted Shares, in
respect of which Restricted Share Units may be granted, or to be delivered on
the exercise of Options or SARs or upon a Director’s election to receive Fees in
Shares shall be 22,400,000 shares of the Company’s Class A Common Stock, par
value $0.10 per share (the “Common Stock”).

    

    If an
Option expires or terminates for any reason during the term of the Plan and
prior to the exercise in full of such Option or the related SAR, if any, or if
Restricted Shares or Restricted Share Units are forfeited as provided in the
grant of such Restricted Shares or Restricted Share Units, the number of Shares
previously subject to but not delivered under such Option, related SAR or grant
of Restricted Shares or Restricted Share Units shall be available to be awarded
thereafter. An Option that terminates upon the exercise of a tandem SAR shall be
deemed to have been exercised at the time of the exercise of such tandem SAR,
and the Shares subject thereto shall not be available for further grants under
the Plan.

    

    4. Eligibility. Options,
SARs, Restricted Shares or Restricted Share Units may be granted from time to
time to selected officers, and subject to the provisions of Section 2 hereof,
Directors (including non-employee Directors) and key employees of, and
consultants to, the Company or any consolidated Subsidiary or Affiliate, each as
defined in this Section 4; provided that a consultant shall be eligible for the
grant of Options, SARs, Restricted Shares and Restricted Share Units only if
such person is a consultant to the Company, a Subsidiary or Affiliate who is
entitled to participate in an “employee benefit plan” within the meaning of 17
CFR ss. 230.405 (which, as of the effective date of the Plan, includes those who
(A) are natural persons and (B) provide bona fide services to the Company or a
Subsidiary or Affiliate of the Company other than in connection with the offer
or sale of securities in a capital-raising transaction, and do not directly or
indirectly promote or maintain a market for the Company’s securities). From time
to time, the Committee shall designate from such eligible persons those who will
be granted Options, SARs, Restricted Shares or Restricted Share Units, and in
connection therewith, the number of Shares to be covered by each grant of
Options, Restricted Shares or Restricted Share Units. In addition, Options shall
be granted automatically to non-employee Directors and non-employee Directors
shall be entitled to receive all or a portion of their Fees in Shares as
provided in Section 11 hereof. Persons granted Options or SARs are referred to
hereinafter as “optionees,” and persons granted Restricted Shares or Restricted
Share Units are referred to hereinafter as “grantees.” Nothing in the Plan, or
in any grant of Options, SARs, Restricted Shares or

    
      
         

      

      
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    Restricted
Share Units pursuant to the Plan, shall confer on any person any right to
continue in the employ or service of the Company or any of its Subsidiaries or
Affiliates, nor in any way interfere with the right of the Company or any of its
Subsidiaries or Affiliates to terminate the person’s employment or service at
any time.

    

    The term
“Subsidiary” shall mean, at the time of reference, any entity organized or
acquired (other than the Company) in an unbroken chain of entities beginning
with the Company if each of the entities (including the Company) other than the
last entity in the unbroken chain owns stock or other ownership interests
possessing 50% or more of the total combined voting power of all classes of
stock or other ownership interests in one of the other entities in such chain.
The term “Affiliate” shall mean any person or entity which, at the time of
reference, directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the Company. Notwithstanding
any other provision of the Plan to the contrary, in no event may Restricted
Shares or Restricted Share Units, in each case that are intended to qualify as
“162(m) Performance-Based Awards” (as defined in Section 27), Options and/or
SARs be granted under the Plan to any individual in any one calendar year in an
amount exceeding an aggregate of 3,000,000 shares of Common Stock.

    

    

    PROVISIONS RELATING TO
OPTIONS AND SARs

    

    5. Character of Options.
Options granted hereunder shall not be incentive stock Options as such term is
defined in Section 422 of the Code. Options granted hereunder shall be
“non-qualified” stock options subject to the provisions of Section 83 of the
Code.

    

    6. Stock Option
Agreement. Each Option granted under the Plan, whether or not accompanied
by SARs, shall be evidenced by a written stock option agreement, which shall be
executed by the Company and by the person to whom the Option is granted. The
agreement shall contain such terms and provisions, not inconsistent with the
Plan, as shall be determined by the Committee.

    

    7. Option Exercise
Price. The price per Share to be paid by the optionee on the date an
Option is exercised shall not be less than 100 percent of the fair market value
of one Share on the date the Option is granted. In no event shall the price per
Share to be paid by the optionee on the date an Option is exercised be less than
its par value.

    

    For
purposes of this Plan, the “fair market value” as of any date in respect of any
Shares of Common Stock shall mean either (i) the closing price per share of
Common Stock on such date or (ii) the average of the high and low sales prices
of a share of Common Stock on such date, as determined by the Committee in its
sole discretion. The closing price on any such date shall be (a) as reported on
the composite transactions tape for the principal exchange on which the Common
Stock is listed or admitted to trading (the “Composite Tape”), or if the Common
Stock is not reported on the Composite Tape or if the Composite Tape is not in
use, the last reported sales price regular way on the principal national
securities exchange on which the Common Stock shall be listed or admitted to
trading (which shall be the national securities exchange on which the greatest
number of shares of Common Stock has been traded during the

    
      
         

      

      
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    30
consecutive trading days commencing 45 trading days before such date), or, in
either case, if there is no transaction on any such date, the average of the
closing bid and asked prices regular way on such date, or (b) if the Common
Stock is not listed on any national securities exchange but is quoted in the
Nasdaq National Market (the “Nasdaq”) on a last sale basis, the average between
the high bid price and low ask price reported on such date, or, if there is no
such sale on that date, then on the last preceding date on which a sale was
reported. If on any such date the Common Stock is not listed by or quoted on any
such exchange or the Nasdaq, the fair market value of any Shares of Common Stock
on such date shall be determined by the Committee in its sole discretion. Such
fair market value shall be determined using a reasonable application of a
reasonable valuation method in accordance with the regulations under Section
409A of the Internal Revenue Code.

    

    Except in
connection with a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, or exchange of shares), the terms of outstanding awards
may not be amended to reduce the exercise price of outstanding options or SARs
or cancel outstanding options or SARs in exchange for cash, other awards or
options or SARs with an exercise price that is less than the exercise price of
the original options or SARs without stockholder approval.

    

    8. Option Term. The
period after which Options granted under the Plan (other than Options granted
pursuant to Section 11) may not be exercised shall be determined by the
Committee with respect to each Option granted, but may not exceed ten years from
the date on which the Option is granted, subject to the third paragraph of
Section 9 hereof.

    

    9. Exercise of Options.
The time or times at which or during which Options granted under the Plan may be
exercised, and any conditions pertaining to such exercise or to the vesting in
the optionee of the right to exercise Options or SARs, shall be determined by
the Committee in its sole discretion, except as otherwise specifically set forth
herein. Subsequent to the grant of an Option which is not immediately
exercisable in full, the Committee, at any time before complete termination of
such Option, may accelerate or extend the time or times at which such Option and
the related SAR, if any, may be exercised in whole or part; provided, however,
that any such extension shall not extend the time for exercise later than the
original latest expiration date of the Option and/or SAR.

    

    Except as
provided in this paragraph, no Option or SAR granted under the Plan shall be
assignable or otherwise transferable by the optionee, either voluntarily or
involuntarily, except by will or the laws of descent and distribution and an
Option or SAR shall be exercisable during the optionee’s lifetime only by the
optionee. The Committee may in the applicable Option agreement or at any time
thereafter in an amendment to an Option agreement provide that Options granted
hereunder may be transferred with or without consideration by the Optionee,
subject to such rules as the Committee may adopt to preserve the purposes of the
Plan, (i) pursuant to a domestic relations order or (ii) to one or more
of:

    

    (x) the
optionee’s spouse, children or grandchildren (including adopted children,
stepchildren and grandchildren) (collectively, the “Immediate
Family”);

    
      
         

      

      
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    (y) a
trust solely for the benefit of the optionee and/or his or her Immediate
Family;

    

    (z) a
partnership or limited liability company, the partners or members of which are
limited to the optionee and his or her Immediate Family; or

    

    (aa) any
other person or entity authorized by the Committee

    

    (each
transferee is hereinafter referred to as a “Permitted Transferee”); provided,
however, that the optionee gives the Committee advance written notice describing
the terms and conditions of the proposed transfer and the Committee notifies the
optionee in writing that such a transfer would comply with the requirements of
the Plan, any applicable Option agreement and any amendments
thereto.

    

    The terms
and conditions of any Option transferred in accordance with the immediately
preceding sentence shall apply to the Permitted Transferee and any reference in
the Plan or in an Option agreement or any amendment thereto to an optionee or
grantee shall be deemed to refer to the Permitted Transferee, except that (a)
Permitted Transferees shall not be entitled to transfer any Options, other than
by will or the laws of descent and distribution; (b) Permitted Transferees shall
not be entitled to exercise any transferred Options unless there shall be in
effect a registration statement on an appropriate form covering the shares to be
acquired pursuant to the exercise of such Option if the Committee determines
that such a registration statement is necessary or appropriate; (c) the
Committee or the Company shall not be required to provide any notice to a
Permitted Transferee, whether or not such notice is or would otherwise have been
required to be given to the optionee under the Plan or otherwise; and (d) the
events of termination of employment by, or services to, the Company under clause
(b) of the third paragraph of this Section 9 and Section 11.1, as the case may
be, hereof shall continue to be applied with respect to the original optionee,
following which the Options shall be exercisable by the Permitted Transferee
only to the extent, and for the periods, specified in this Section 9 and Section
11.1, as the case may be.

    

    The
unexercised portion of any Option (other than Options granted pursuant to
Section 11) or SAR granted under the Plan shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:

    

    (a) the
expiration of the period of time determined by the Committee upon the grant of
such Option; provided that such period shall not exceed ten years from the date
on which such Option was granted;

    

    (b) the
termination of the optionee’s employment by, or services to, the Company and its
Subsidiaries or Affiliates if such termination constitutes or is attributable to
a breach by the

    
      
         

      

      
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    optionee
of an employment or consulting agreement with the Company or any of its
Subsidiaries or Affiliates, or if the optionee is discharged or if his or her
services are terminated for cause; or

    

    (c) the
expiration of such period of time or the occurrence of such event as the
Committee in its discretion may provide upon the granting thereof.

    

    The
Committee and the Board of Directors shall have the right to determine what
constitutes cause for discharge or termination of services, whether the optionee
has been discharged or his or her services terminated for cause and the date of
such discharge or termination of services, and such determination of the
Committee or the Board of Directors shall be final and conclusive.

    

    In the
event of the death of an optionee, Options or SARs, if any, exercisable by the
optionee at the time of his or her death may be exercised within one year
thereafter by the person or persons to whom the optionee’s rights under the
Options or SARs, if any, shall pass by will or by the applicable law of descent
and distribution. However, in no event may any Option or SAR be exercised by
anyone after the earlier of (a) the final date upon which the optionee could
have exercised it had the optionee continued in the employment of, or continued
to provide services to, the Company or its Subsidiaries or Affiliates to such
date, or (b) one year after the optionee’s death.

    

    An Option
may be exercised only by a notice in writing complying in all respects with the
applicable Option agreement. Such notice may instruct the Company to deliver
Shares due upon the exercise of the Option to any registered broker or dealer
approved by the Company (an “approved broker”) in lieu of delivery to the
optionee. Such instructions shall designate the account into which the Shares
are to be deposited. The optionee may tender such notice, properly executed by
the optionee, together with the aforementioned delivery instructions, to an
approved broker. The purchase price of the Shares as to which an Option is
exercised shall be paid in cash or by check, except that the Committee may, in
its discretion, allow such payment to be made by surrender of Shares which are
not Restricted Shares subject to the “Transferability Restrictions” set forth in
Section 13 (at their fair market value on the date of exercise); provided,
however, that such Shares are not subject to any pledge or other security
interest and have either been held by the optionee for at least six months,
previously acquired by the optionee on the open market or meet such other
requirements as the Committee may determine necessary in order to avoid an
accounting charge to the earnings of the Company in respect of the Option (such
eligible Shares being referred to herein as “Mature Shares”), or by a
combination of cash, check and Mature Shares.

    

    Payment
in accordance with this Section 9 may be deemed to be satisfied, if and to the
extent provided in the applicable Option agreement, by delivery to the Company
of an assignment of a sufficient amount of the proceeds from the sale of Shares
acquired upon exercise to pay for all of the Shares acquired upon exercise and
an authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be made at the optionee’s direction at the time of
exercise, provided that the Committee may require the optionee to furnish an
opinion of counsel acceptable to the Committee to the effect that such delivery
would not result in the

    
      
         

      

      
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    optionee
incurring any liability under Section 16 of the Act, and does not require the
consent, clearance or approval of any governmental or regulatory body (including
any securities exchange or similar self-regulatory organization).

    

    Wherever
in this Plan or any Option agreement an optionee is permitted to pay the
exercise price of an Option or taxes relating to the exercise of an Option by
delivering Shares, the optionee may, subject to procedures satisfactory to the
Committee, satisfy such delivery requirement by presenting proof of beneficial
ownership of such Shares, in which case the Company shall treat the Option as
exercised without further payment and shall withhold such number of Shares from
the Shares acquired by the exercise of the Option (or if the Option is paid in
cash, cash in an amount equal to the fair market value of such shares on the
date of exercise).

    

    10. Stock Appreciation
Rights. The Committee may in its discretion grant SARs in connection with
any Option, either at the time the Option is granted or at any time thereafter
while the Option remains outstanding, to any person who at that time is eligible
to be granted an Option. The number of SARs granted to a person which shall be
exercisable during any given period of time shall not exceed the number of
Shares which such optionee may purchase upon the exercise of the related Option
or Options during such period of time. Upon the exercise of an Option pursuant
to the Plan, the SARs relating to the Shares covered by such exercise shall
terminate. Upon the exercise of SARs pursuant to the Plan, the related Option to
the extent of an equal number of Shares shall terminate.

    

    Upon an
optionee’s exercise of some or all of such optionee’s SARs, the optionee shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Shares of the
same class as that subject to the related Option or a combination thereof, as
determined in the sole discretion of the Committee. The stock appreciation for
an SAR is the difference between (i) the fair market value, as determined by the
Committee as set forth in the underlying agreement, of the underlying Share on
the date of the exercise of such SAR and (ii) the Option price specified for the
related Option. At the time of such exercise, the optionee shall have the right
to elect the portion of the amount to be received that shall consist of cash and
the portion that shall consist of Shares which, for purposes of calculating the
number of Shares to be received, shall be valued at their fair market value on
the date of the exercise of such SARs. The Committee in its sole discretion
shall have the right to disapprove an optionee’s election to receive cash in
full or partial settlement of the SARs exercised, and to require the Shares to
be delivered in lieu of cash. If Shares are to be received upon exercise of an
SAR, cash shall be delivered in lieu of any fractional share.

    

    An SAR
shall be exercisable only during the period determined by the Committee, which
period shall be within the period that the related Option is
exercisable.

    

    11. Automatic Grants to
Non-Employee Directors; Elective Purchase of Shares.

    

    11.1
Automatic Grants to
Non-Employee Directors.  Notwithstanding any other provision of
the Plan, but subject to Section 11.3, each Director who is initially elected or
appointed as a Director after the date of the adoption of the Plan by the Board
of Directors and who is not then an employee of the Company, any Subsidiary or
any Affiliate shall be granted on the later of (i)

    
      
         

      

      
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    the date
of the approval of the Plan by the stockholders or (ii) the date of such
Director’s initial election or appointment to the Board of Directors, a
non-qualified Option to purchase 45,000 Shares of Common Stock. On the date of
each annual meeting of stockholders of the Company held after the Plan is
adopted by the Board of Directors at which a Director is reelected, such
Director shall be granted a non-qualified Option to purchase 12,000 Shares of
Common Stock. Each such Option shall have a term of ten years, subject to the
provisions of this Section 11.1 below. Each such Option shall become exercisable
to the extent of one-half thereof on each of the two immediately succeeding
anniversaries of the date of grant, subject to continued service on the Board of
Directors. The price per Share to be paid by the holder of such an Option shall
equal the fair market value of one Share on the date the Option is granted. The
purchase price of the Shares as to which such an Option is exercised shall be
paid in cash, by check, by the delivery of Mature Shares, through the cashless
exercise program described in Section 9, or any combination thereof, at the
Director’s election. Any Director holding Options granted under this Section
11.1 who is a member of the Committee shall not participate in any action of the
Committee with respect to any claim or dispute involving such Director’s
Options. Notwithstanding the foregoing, the provisions of this Section 11.1
shall no longer apply with respect to, and shall not provide a basis for, future
option grants after February 3, 2009.

    

    Subject
to the provisions of the applicable Plan agreement, the unexercised portion of
any such Option shall automatically and without notice terminate and become null
and void at the time of the earliest to occur of the following:

    

    (a) the
expiration of ten years from the date on which such Option was
granted;

    

    (b) if
the optionee’s service is terminated for “cause”, the termination of the
optionee’s service to the Company and its Subsidiaries or Affiliates. For
purposes of this section, “cause” shall mean that the optionee’s service is
terminated (i) on account of fraud, embezzlement or other unlawful or tortious
conduct, whether or not involving or against the Company or any Subsidiary or
Affiliate, (ii) for violation of a policy of the Company or any Subsidiary or
Affiliate, (iii) for serious and willful acts or misconduct detrimental to the
business or reputation of the Company or any Subsidiary or Affiliate or (iv) for
“cause” or any like term as defined in any written contract between the Company
and the optionee;

    

    (c) if
the optionee’s service terminates for reasons other than as provided in
subsection (b) or (d) of this Section 11.1, (i) with respect to the portion of
such optionee’s Option that was not exercisable immediately prior to such
termination, the termination of the optionee’s service to the Company and its
Subsidiaries or Affiliates and (ii) with respect to the portion that was
exercisable immediately prior to such termination, 90 days after the termination
of the optionee’s service to the Company and its Subsidiaries or Affiliates,
subject to subsection (a) of this Section 11.1; and

    

    (d) if
the optionee’s service terminates by reason of his death, or if the optionee’s
service terminates in the manner described in subsection (c) of this Section
11.1 and he dies within such period for exercise provided for therein, (i) with
respect to the portion of such optionee’s Option that was not exercisable
immediately prior to such termination, the death of such optionee and (ii) with
respect to the portion that was exercisable immediately prior

    
      
         

      

      
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    to such
optionee’s death, one year after the optionee’s death (and such portion of the
Option shall be exercisable for the period described in clause (ii) by the
person to whom such Option passes under such optionee’s will (or, if applicable,
pursuant to the laws of descent and distribution)), subject to subsection (a) of
this Section 11.1.

    

    11.2
Elective Purchase of
Shares. In addition to any other benefit to which any Director may be
entitled under the terms of the Plan, a Director shall be permitted to elect to
receive all or any portion of the Fees that otherwise would be payable in cash
to such Director in Shares of Common Stock rather than cash in accordance with
the provisions of this Section 11.2.

    

    Any
Director may elect to receive all or any portion of his or her Fees in Shares of
Common Stock rather than cash by delivering a written election (an “Election
Notice,” the election set forth therein being referred to as the “Election”) to
the Secretary of the Company and such Election shall specify the percent of the
Director’s Fees to be received in Shares of Common Stock. An Election shall
continue in effect until it is revoked by delivery to the Secretary of the
Company of a written revocation notice (a “Revocation”) or modified by delivery
to the Secretary of the Company of a new Election Notice. Any Election or
Revocation under this Section 11.2 shall be effective with respect to Fees that
otherwise would be paid after the later of (x) with respect to an Initial
Election (as defined below), the date of receipt by the Secretary of the Company
of the Election Notice or, if later, the date specified in such Election Notice,
and (y) with respect to any Revocation or any Election, other than an Initial
Election, six months after the date of receipt by the Secretary of the Company
of such Revocation or Election Notice. There shall be no limit on the number of
Elections or Revocations that may be made by a Director. A Director who does not
elect that all or a portion of his Fees be paid in Shares shall receive his Fees
in cash on the date that such Fees are otherwise due. Any Shares payable under
this Section 11.2 shall be issued to the Director on the same date that the Fees
would have been paid in cash. The number of Shares to be issued to a Director
who makes an Election under this Section 11.2 shall be determined by
dividing:

    

    (i) the
amount of the Director’s Fees for which such Director has made an Election under
this Section 11.2, by

    

    (ii) the
average of the fair market value of the Shares of Common Stock for the 20
consecutive trading days immediately preceding the date as of which the Fees
otherwise would be payable. Only full Shares shall be issued pursuant to this
Section. If the formula set forth above would result in a Director receiving any
fractional Share, then, in lieu of such fractional Share, the Director shall be
paid cash.

    

    For
purposes of this Section 11.2, an “Initial Election” means an Election received
by the Secretary of the Company from a Director on a date not later than the
later of (a) ten days following approval of the Plan by the stockholders, and
(b) ten days after a Director is first elected a director of the Company;
provided, however, that with respect to Directors who were participants in the
Triarc Companies, Inc. 1993 Equity Participation Plan (the “1993 Plan”) or the
Triarc Companies, Inc. 1998 Equity Participation Plan (the “1998 Plan”), the
most recent outstanding election under the 1993 Plan or the 1998 Plan, if any,
shall be deemed to continue

    
      
         

      

      
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    under
this Plan as an “Initial Election” and shall continue to be effective so long as
no new Election Notice is received within ten days following approval of the
Plan by the stockholders.

    

    11.3.
Effectiveness of
Section 11. Notwithstanding anything in this Plan to the contrary,
Section 11.1 and Section 11.2 shall become effective only when, as and to the
extent that Section 11.1 and 11.2 of the 1998 Plan, respectively, become
ineffective due to (a) there being insufficient shares of Common Stock available
under the 1998 Plan, (b) the expiration of the 1998 Plan or (c) any other
reason.

    

    

    PROVISIONS RELATING TO
RESTRICTED SHARES

    

    12. Granting of Restricted
Shares. The Committee may grant Restricted Shares to eligible persons at
any time. In granting Restricted Shares (and, as further described in Section 18
below, Restricted Share Units), the Committee shall determine in its sole
discretion the period or periods during which the restrictions on
transferability applicable to such Shares will be in force (the “Restricted
Period”). The Restricted Period may be the same for all such Shares granted at a
particular time or to any one grantee or may be different with respect to
different grantees or with respect to various of the Shares granted to the same
grantee, all as determined by the Committee in its sole discretion.

    

    Each
grant of Restricted Shares under the Plan shall be evidenced by an agreement
which shall be executed by the Company and by the person to whom the Restricted
Shares are granted. The agreement shall contain such terms and provisions, not
inconsistent with the Plan, as shall be determined by the
Committee.

    

    13. Restrictions on
Transferability. During the Restricted Period applicable to each grant of
Restricted Shares (and as further described in Section 19 below, Restricted
Share Units), such Shares (or Restricted Share Units, as the case may be) may
not be sold, assigned, transferred or otherwise disposed of, or mortgaged,
pledged or otherwise encumbered. Furthermore, a grantee’s eventual right, if
any, to such Shares (or Restricted Share Units, as the case may be) may not be
assigned or transferred except by will or by the laws of descent and
distribution. The restrictions on the transferability of Restricted Shares (or
Restricted Share Units, as applicable) imposed by this section are referred to
in this Plan as the “Transferability Restrictions.”

    

    14. Determination of Vesting
Restrictions. With respect to each grant of Restricted Shares (and, as
further described in Section 20 below, Restricted Share Units), the Committee
shall determine in its sole discretion the restrictions on vesting which will
apply to the Shares for the Restricted Period, which restrictions as initially
determined and as they may be modified pursuant to the Plan are referred to
hereinafter as the “Vesting Restrictions.” By way of illustration but not by way
of limitation, any such determination of Vesting Restrictions by the Committee
may provide (a) that the grantee will not be entitled to any such Shares unless
he or she is still employed by, or providing services to, the Company or its
Subsidiaries or Affiliates at the end of the Restricted Period; (b) that the
grantee will become vested in such Shares according to such schedule as the
Committee may determine; (c) that the grantee will become vested in such Shares
at the end of or during the Restricted Period based upon the achievement (in
such

    
      
         

      

      
        - 10 -

        
          

        

      

      
         

      

    

    manner as
the Committee may determine) of such performance standards as the Committee may
determine; (d) that the grantee will become vested in such Shares in any
combination of the foregoing or under such other terms and conditions as the
Committee in its sole discretion may determine; and (e) how any such Vesting
Restrictions will be applied, modified or accelerated in the case of the
grantee’s death, total and permanent disability (as determined by the
Committee), retirement or under any other circumstances.

    

    The
performance standards, if any, set by the Committee for any grantee of
Restricted Shares or Restricted Share Units, as applicable, may be individual
performance standards applicable to the grantee, may be performance standards
for the Company or the division, business unit or Subsidiary by which the
grantee is employed or to which the grantee is providing services, may be
performance standards set for the grantee under any other plan providing for
incentive compensation for the grantee, or may be any combination of such
standards. Performance standards set at the time of the grant of any Restricted
Shares or Restricted Share Units may be revised at any time prior to the
beginning of the last year of the applicable Restricted Period, but only to take
into account significant changes in circumstances as determined by the Committee
in its sole discretion.

    

    If the
Committee deems the Vesting Restrictions inappropriate for any grantee, it may
approve the award and delivery to such grantee of all or any portion of the
Restricted Shares then held in escrow pursuant to Section 15. Any Restricted
Shares so awarded and delivered to a grantee shall be delivered free and clear
of the Transferability Restrictions.

    

    15. Manner of Holding and
Delivering Restricted Shares. Each certificate issued for Restricted
Shares granted hereunder will be registered in the name of the grantee, will
contain such legend(s) as the Committee shall determine appropriate, if any, and
will be deposited with the Company or its designee in escrow, accompanied by a
stock power executed in blank by the grantee covering such Shares. The
certificates for such Shares will remain in escrow until the earlier of the end
of the applicable Restricted Period, or, if the Committee has provided for
earlier termination of the Transferability Restrictions following a grantee’s
death, total and permanent disability, retirement or earlier vesting of such
Shares, such earlier termination of the Transferability Restrictions. At
whichever time is applicable, the certificates representing the number of such
Shares to which the grantee is then entitled will be released from escrow and
delivered to the grantee free and clear of the Transferability Restrictions,
provided that in the case of a grantee who is not entitled to receive the full
number of such Shares evidenced by the certificates then being released from
escrow because of the application of the Vesting Restrictions, such certificates
will be returned to the Company and canceled, and a new certificate representing
the Shares, if any, to which the grantee is entitled pursuant to the Vesting
Restrictions, will be issued and delivered to the grantee, free and clear of the
Transferability Restrictions (and, if applicable, a new certificate will also be
issued back into escrow, accompanied by a new stock power executed in blank by
the grantee, covering the Shares to which the grantee is not yet entitled due to
the application of the Vesting Restrictions).

    

    16. Transfer in the Event of
Death, Disability or Retirement. Notwithstanding a grantee’s death, total
and permanent disability or retirement, the certificates for his or her
Restricted Shares will remain in escrow and the Transferability Restrictions
will continue to apply to such

    
      
         

      

      
        - 11 -

        
          

        

      

      
         

      

    

    Shares
unless the Committee determines otherwise. Upon the release of such Shares from
escrow and the termination of the Transferability Restrictions, either upon any
such determination by the Committee or at the end of the applicable Restricted
Period, as the case may be, the portion of such grantee’s Restricted Shares to
which he or she is entitled, determined pursuant to his or her applicable
Vesting Restrictions, will be awarded and delivered to the grantee or to the
person or persons to whom the grantee’s rights, if any, to the Shares shall pass
by will or by the applicable law of descent and distribution, as the case may
be. However, the Committee may, in its sole discretion, award and deliver all or
any greater portion of the Restricted Shares to any such grantee or to such
person or persons.

    

    17. Limitations on Obligation to
Deliver Shares. The Company shall not be obligated to deliver any
Restricted Shares free and clear of the Transferability Restrictions until the
Company has satisfied itself that such delivery complies with all laws and
regulations by which the Company is bound.

    

    

    PROVISIONS RELATING TO
RESTRICTED SHARE UNITS

    

    18. Award of Restricted Share
Units. The Committee may grant Restricted Share Units to eligible persons
at any time. In granting Restricted Share Units, the Committee shall determine
in its sole discretion the Restricted Period. The Restricted Period may be the
same for all such Restricted Share Units granted at a particular time or to any
one grantee or may be different with respect to different grantees or with
respect to various of the Restricted Share Units granted to the same grantee,
all as determined by the Committee in its sole discretion.

    

    Each
grant of Restricted Share Units under the Plan shall be evidenced by an
agreement which shall be executed by the Company and the grantee. The agreement
shall contain such terms and provisions, not inconsistent with the Plan, as
shall be determined by the Committee. No Shares shall be issued at the time a
Restricted Share Unit is granted, and the Company will not be required to set
aside a fund for the payment of any such grant.

    

    At the
discretion of the Committee, each Restricted Share Unit (representing one Share)
may be credited with cash and stock dividends paid by the Company in respect of
one Share (“Dividend Equivalents”). At the discretion of the Committee, Dividend
Equivalents may be either currently paid to the grantee or withheld by the
Company for the grantee’s account, and interest may, at the sole discretion of
the Committee, be credited on the amount of cash Dividend Equivalents withheld
at a rate and subject to such terms as determined by the Committee. Dividend
Equivalents credited to a grantee’s account and attributable to any particular
Restricted Share Unit (and interest thereon, if applicable) shall be distributed
to the grantee upon settlement of such Restricted Share Unit and, if such
Restricted Share Unit is forfeited, the grantee shall have no right to such
Dividends Equivalents (or interest thereon, if applicable).

    

    19. Restrictions on
Transferability. During the Restricted Period applicable to each grant of
Restricted Share Units, such units shall be subject to the Transferability
Restrictions, as described in Section 13 of the Plan.

    
      
         

      

      
        - 12 -

        
          

        

      

      
         

      

    

          20. Determination of Vesting
Restrictions. With respect to each grant of Restricted Share Units, the
Committee shall determine in its sole discretion the Vesting Restrictions, as
described in Section 14 of the Plan. To the extent Restricted Share Units are
forfeited, all rights of the grantee to such Restricted Share Units shall
terminate without further obligation on the part of the Company.

    

    If the
Committee deems the Vesting Restrictions inappropriate for any grantee, it may
approve the settlement of all or any portion of the Restricted Share Units then
held in escrow pursuant to Section 21.

    

    21. Settlement of Restricted
Share Units. Upon the expiration of the Restricted Period and the lapse
of the Vesting Restrictions, if any, with respect to any outstanding Restricted
Share Units, the Company shall deliver to the grantee, or his beneficiary,
without charge, one Share for each such outstanding Restricted Share Unit
(“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect
to each such Vested Unit in accordance with Section 18 hereof and the interest
thereon, if any; provided, however, that, if explicitly provided in the
applicable agreement, the Committee may, in its sole discretion, elect to pay
cash or part cash and part Shares in lieu of delivering only Shares for Vested
Units. If a cash payment is made in lieu of delivering Shares, the amount of
such payment shall be equal to the fair market value of the Shares as of the
date on which the Restricted Period lapsed with respect to such Vested Unit. Any
Shares delivered in settlement of Restricted Share Units shall be delivered free
and clear of the Transferability Restrictions.

    

    

    GENERAL
PROVISIONS

    

    22. Stockholder Rights.
Except for the Transferability Restrictions, a grantee of Restricted Shares
shall have the rights of a holder of the Shares, including the right to receive
dividends paid on such Shares and the right to vote such Shares at meetings of
stockholders of the Company; provided that the Committee may provide at the time
of any grant of Restricted Shares that cash dividends and stock dividends with
respect to the Restricted Shares may be withheld by the Company for the
grantee’s account, and interest may be credited on the amount of cash dividends
withheld at a rate and subject to such terms as determined by the Committee. The
cash dividends or stock dividends so withheld by the Company and attributable to
any particular Restricted Share (and interest thereon, if applicable) shall be
distributed to the grantee upon the release of restrictions on such Restricted
Share and, if such Restricted Share is forfeited, the grantee shall have no
right to such cash dividends or stock dividends. No optionee shall have any of
the rights of a stockholder with respect to any Shares unless and until he or
she has exercised his or her Option with respect to such Shares and has paid the
full purchase price therefor. No grantee of a Restricted Share Unit shall have
any of the rights of a stockholder with respect to any Shares unless and until
his or her Restricted Share Unit has been settled by the Company in
Shares.

    

    23. Changes in Shares. In
the event of (i) any split, reverse split, combination of shares,
reclassification, recapitalization or similar event (including, without
limitation, any spin-off of a Subsidiary) which involves, affects or is made
with regard to any class or series of Capital Stock

    
      
         

      

      
        - 13 -

        
          

        

      

      
         

      

    

    which may
be delivered pursuant to the Plan (“Plan Shares”), (ii) any dividend or
distribution on Plan Shares payable in stock, or extraordinary dividend payable
in cash, or (iii) a merger, consolidation or other reorganization as a result of
which Plan Shares shall be increased, reduced or otherwise changed or affected,
then in each such event the Committee shall, to the extent it deems it to be
consistent with such event and necessary or equitable to carry out the purposes
of the Plan, appropriately adjust (a) the maximum number of shares of Capital
Stock and the classes or series of such Capital Stock which may be delivered
pursuant to the Plan, (b) the number of shares of Capital Stock and the classes
or series of Capital Stock subject to outstanding Options, SARs, Restricted
Share Units or grants of Restricted Shares, (c) the Option price per share of
all Capital Stock subject to outstanding Options, (d) any performance based
Vesting Restrictions in any Plan agreement that are based on stock price and (e)
any other provisions of the Plan; provided, however, that (I) any adjustments
made in accordance with clauses (b) and (c) shall make any such outstanding
Option or SAR, as nearly as practicable, equivalent to such Option or SAR, as
the case may be, immediately prior to such change and (II) no such adjustment
shall give any optionee any additional benefits under any outstanding Option.
Further, with respect to awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, such adjustments or
substitutions shall be made only to the extent that the Committee determines
that such adjustments or substitutions may be made without causing such awards
to fail to qualify as “performance-based compensation” for purposes of Section
162(m) of the Code.

    

    24. Reorganization. In
the event that the Company is merged or consolidated with another corporation,
or in the event that all or substantially all of the assets of the Company are
acquired by another corporation, or in the event of a reorganization or
liquidation of the Company (each such event being hereinafter referred to as a
“Reorganization Event”) or in the event that the Board of Directors shall
propose that the Company enter into a Reorganization Event, then the Committee
may in its discretion take any or all of the following actions: (i) by written
notice to each optionee, provide that his or her Options and/or SARs will be
terminated or repurchased by the Company unless exercised within 30 days (or
such longer period as the Committee shall determine in its sole discretion)
after the date of such notice (without acceleration of the exercisability of
such Options); and (ii) advance the date or dates upon which any or all
outstanding Options shall be exercisable or the Vesting Restrictions or
Restricted Period applicable to any Restricted Shares or Restricted Share Units,
as applicable, shall lapse.

    

    Whenever
deemed appropriate by the Committee, any action referred to in the preceding
paragraph may be made conditional upon the consummation of the applicable
Reorganization Event. The provisions of this Section 24 shall apply
notwithstanding any other provision of the Plan.

    

    25. Change of Control.
Notwithstanding anything in the Plan to the contrary, upon (i) the acquisition
by any person of 50% or more of the combined voting power of the Company’s
outstanding securities entitled to vote generally in the election of directors,
or (ii) a majority of the directors of the Company being individuals who are not
nominated by the Board of Directors (a “Change of Control”), then (a) any
outstanding Options granted under the Plan shall be fully and immediately
exercisable, (b) any Vesting Restrictions applicable to any Restricted Shares
shall lapse and such Restricted Shares shall be delivered free and clear of all
Transferability

    
      
         

      

      
        - 14 -

        
          

        

      

      
         

      

    

    Restrictions
and (c) any Restricted Period and Vesting Restrictions applicable to any
Restricted Share Units shall lapse and such Restricted Share Units (together
with any dividends or Dividend Equivalents, and any interest thereon, being held
by the Company) shall be settled in accordance with Section 21 hereof. The
acquisition of any portion of the combined voting power of the Company by Nelson
Peltz or Peter May or by any person affiliated with such persons (or the
acquisition or disposition by any person or persons who receive any award under
Section 11 hereof) shall in no event constitute a Change of
Control.

    

    26. Withholding Taxes.
Whenever under the Plan Shares are to be delivered pursuant to an award, the
Committee may require as a condition of delivery that the optionee or grantee
remit an amount sufficient to satisfy all federal, state and other governmental
holding tax requirements related thereto. Whenever cash is to be paid under the
Plan (whether upon the exercise of an SAR, payment of dividends or Dividend
Equivalents (and interest thereon, if any), settlement of a Restricted Share
Unit or otherwise), the Company may, as a condition of its payment, deduct
therefrom, or from any salary or other payments due to the optionee or grantee,
an amount sufficient to satisfy all federal, state and other governmental
withholding tax requirements related thereto or to the delivery of any Shares
under the Plan. Notwithstanding any provision of the Plan to the contrary, in
connection with the transfer of an Option to a Permitted Transferee pursuant to
Section 9 of the Plan, the optionee shall remain liable for any withholding
taxes required to be withheld upon the exercise of such Option by the Permitted
Transferee.

    

    Without
limiting the generality of the foregoing, (i) an optionee or grantee may elect
to satisfy all or part of the foregoing withholding requirements by delivery of
Mature Shares having a fair market value (determined as of the date of such
delivery by the optionee or grantee) equal to all or part of the amount to be so
withheld, provided that the Committee may require, as a condition of accepting
any such delivery, the optionee or grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would not result in
the optionee or grantee incurring any liability under Section 16(b) of the Act,
and (ii) the Committee may permit any such delivery to be made by withholding
Shares from the Shares otherwise issuable pursuant to the award giving rise to
the tax withholding obligation (in which event the date of delivery shall be
deemed the date such award was exercised, delivered or settled).

    

    27. 162(m) Performance-Based
Awards. The Committee may determine that an award of Options, SARs,
Restricted Shares or Restricted Share Units that would not otherwise qualify as
“performance-based compensation” under Section 162(m) of the Code shall be made
to so qualify by the implementation of additional vesting conditions based on
the attainment of performance standards in accordance with the rules set forth
below. Such an award is referred to hereunder as a “162(m) Performance-Based
Award.” The performance standards applicable to a 162(m) Performance-Based Award
will be based on objective, quantifiable measures for the Company as a whole, or
the operating units of the Company, with respect to a period established by the
Committee (a “Performance Period”) and may include, and will be limited to, one
or more of the following:

    

    
      	
               
      

            	
              1.

            	
              earnings
      per share;

            

    

    

    
      	
               
      

            	
              2.

            	
              market
      share;

            

    

    
      
         

      

      
        - 15 -

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              3.

            	
              margins
      (limited to gross margin, “Adjusted EBITDA” (as defined below) margin, and
      Adjusted EBITDA (as defined below, but excluding clause (1) thereof)
      margin);

            

    

    

    
      	
               
      

            	
              4.

            	
              productivity
      improvement;

            

    

    

    
      	
               
      

            	
              5.

            	
              costs
      or expenses;

            

    

    

    
      	
               
      

            	
              6.

            	
              successful
      completion of acquisitions, dispositions, recapitalizations, financings or
      refinancings;

            

    

    

    
      	
               
      

            	
              7.

            	
              total
      return on investment portfolio;

            

    

    

    
      	
               
      

            	
              8.

            	
              pre-tax
      net realized capital gains;

            

    

    

    
      	
               
      

            	
              9.

            	
              stock
      price;

            

    

    

    
      	
               
      

            	
              10.

            	
              net
      investment income;

            

    

    

    
      	
               
      

            	
              11.

            	
              consolidated
      net income, plus (without duplication and only to the extent such amount
      was deducted in calculating such consolidated net income) interest
      expense, income taxes, depreciation expense and amortization expense;
      or

            

    

    

    
      	
               
      

            	
              12.

            	
              aggregate
      consolidated net income for the applicable fiscal year determined in
      accordance with United States generally accepted accounting principles as
      in effect from time to time (“GAAP”), applied on a basis consistent with
      past practice, modified as follows (as so modified, “Modified
      EBITDA”):

            

    

    

    plus
(without duplication and only to the extent such amount was deducted in
calculating such consolidated net income) the following items on a consolidated
basis: (a) interest expense; (b) income taxes; (c) depreciation expense; and (d)
amortization expense;

    

    minus
(without duplication and only to the extent such amount was included in
calculating such consolidated net income) the following items on a consolidated
basis: (e) interest income; and (f) other income not included in operating
profit under GAAP;

    

    and
further adjusted to exclude the impact of:

    

    (i)
Annual Operating Plan net expense variances attributable to the financing of new
units (opened during

    
      
         

      

      
        - 16 -

        
          

        

      

      
         

      

    

    the
applicable fiscal year) through capital leases instead of operating leases as
contemplated by the Annual Operating Plan, provided that (A) no adjustment under
this clause (i) shall be made in respect of such new units in excess of the
total number of new units contemplated by the Annual Operating Plan, (B) no
adjustment under this clause (i) shall be made in respect of (1) new units
financed through capital leases, other than such new units in excess of the
total number of new units contemplated by the Annual Operating Plan to be
financed through capital leases or (2) new units financed through operating
leases, other than such new units in excess of the total number of new units
contemplated by the Annual Operating Plan to be financed through operating
leases;

    

    (ii)
acquisitions and dispositions, by (A) disregarding for any portion of the fiscal
year in which any assets are acquired (and any later fiscal years) any portion
of actual Modified EBITDA attributable to any such acquired assets and (B)
reducing the applicable Performance Goal and Cumulative Performance Goal for the
fiscal year in which any assets are disposed (and any later fiscal years) by the
projected amount of Modified EBITDA attributable to any such disposed assets for
the portion of the fiscal year of disposition (and any later fiscal years) that
was reflected in such Performance Goal and Cumulative Performance
Goal;

    

    (iii) all
items of gain, loss or expense determined to be extraordinary or unusual in
nature or infrequent in occurrence, as determined in accordance with standards
established by Opinion No. 30 of the Accounting Principles Board and any
amendment, restatement, modification, supplement or successor thereto (“APB
Opinion No. 30”); and

    

    (iv) all
items of expense related to equity based compensation determined in accordance
with the standards established by Statement of Financial Accounting Standards
No.123(R), and any amendment, modification or successor thereto.

    

    For each
Performance Period, the Committee will, on or before the date as may be required
in order for a 162(m) Performance-Based Award to qualify as “performance-based
compensation” for purposes of Section 162(m) of the Code (the “Performance Goals
Date”), establish (a) the performance standards and (b) if more than one
performance standard is established, the weighting of the

    
      
         

      

      
        - 17 -

        
          

        

      

      
         

      

    

    performance
standards. The Committee may at any time prior to the Performance Goals Date for
a Performance Period or, subject to the next paragraph, at any time thereafter
in its sole and absolute discretion, adjust or modify the calculation of a
performance standard for such period in order to prevent the dilution or
enlargement of the rights of optionees and/or grantees (X) in the event or in
anticipation of any unusual or extraordinary corporate item, transaction, event
or development; (Y) in recognition or in anticipation of any other unusual or
nonrecurring events affecting the Company, or the financial statements of the
Company, or in response to or in anticipation of changes in applicable laws,
regulations, accounting principles or business conditions; and (Z) in view of
the Committee’s assessment of the business strategy of the Company, performance
of comparable organizations, economic and business conditions, and any other
circumstances deemed relevant.

    

    The
Committee may exercise such discretion set forth in the preceding paragraph to
the extent the exercise of such authority after the Performance Goals Date would
not cause the 162(m) Performance-Based Award to fail to qualify as
“performance-based compensation” under Section 162(m) of the Code. If such
discretion would cause such 162(m) Performance-Based Award to fail to qualify as
performance-based compensation, then such authority shall only be exercised with
respect to those optionees or grantees who are determined by the Committee to be
persons not subject to Section 162(m) of the Code.

    

    On or
before the Performance Goals Date as to each applicable Performance Period, the
Committee shall establish a written schedule of the amount of Shares subject to
the 162(m) Performance-Based Award that will vest if the performance standards
are satisfied. As soon as practicable following the end of such the applicable
Performance Period, the Committee will certify in writing the attainment of the
performance standards established for such period and will calculate the number
of Shares subject to the 162(m) Performance-Based Award, if any, that will vest
pursuant to the schedule previously established by the Committee.

    

    Notwithstanding
any provision herein to the contrary, no 162(m) Performance-Based Award will
vest in respect of a period in which performance fails to attain or exceed the
minimum level for any of the performance standards.

    

    For
purposes of this Section 27, “Adjusted EBITDA” for any referenced period shall
mean the Company’s (or with respect to an acquired company, the acquired
company’s) operating income for such period, as reflected on its consolidated
audited financial statements, adjusted to exclude the impact of:

    

    (1)
depreciation and amortization expenses;

    

    (2) any
amounts accrued pursuant to management bonus plans and related employer payroll
taxes for the fiscal year;

    

    (3) any
discretionary or matching contributions to the Company’s 401(k) Plan and other
deferred compensation plans for the applicable fiscal year;

    
      
         

      

      
        - 18 -

        
          

        

      

      
         

      

    

    

    (4) all
items of gain, loss or expense determined to be extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a segment of a
business or related to a change in accounting principles, all as determined in
accordance with standards established by APB Opinion No. 30;

    

    (5) all
items of gain, loss or expense related to restructuring charges of subsidiaries
whose operations are not included in operating income for the fiscal
year;

    

    (6) all
items of gain, loss or expense related to discontinued operations that do not
qualify as a segment of a business as defined under APB Opinion No.
30;

    

    (7) any
profit or loss attributable to the business operations of any entity acquired by
the Company or any consolidated subsidiary during the applicable
period;

    

    (8) the
reduction in carrying value of long-lived assets, in accordance with FASB
Pronouncement No. 121 and/or FASB Pronouncement No. 144, and any amendment,
restatement, modification, supplement or successor thereto; and

    

    (9) all
items of expense related to equity-based compensation determined in accordance
with the standards established by Opinion No. 25 of the Accounting Principles
Board or FASB Pronouncement No. 123, and any amendment, restatement,
modification, supplement or successor thereto.

    

    In
addition, operating income will not be adjusted for a minority interest holder’s
share of a consolidated subsidiary’s operating income or loss.

    

    28. Additional Provisions of an
Award. Awards under the Plan also may be subject to such other provisions
(whether or not applicable to the benefit awarded to any other optionee or
grantee) as the Committee determines appropriate including, without limitation,
provisions to assist the optionee or grantee in financing the purchase of Shares
upon the exercise of Options, provisions for the forfeiture of or restrictions
on resale or other disposition of Shares acquired under any Option or received
in settlement of a Restricted Share Unit or Restricted Shares, provisions giving
the Company the right to repurchase Restricted Shares or Shares acquired under
any Option or received in settlement of a Restricted Share Unit in the event the
optionee or grantee elects to dispose of such Shares and provisions allowing the
optionee or grantee to elect to defer the receipt of payment in respect of
awards for a specified period or until a specified event.

    

    29. Amendment and
Discontinuance. The Board of Directors may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without stockholder approval if such approval is necessary to
comply with any regulatory requirement applicable to the Plan (including as
necessary to prevent awards which are intended to qualify as “performance-based
compensation” for purposes of Section 162(m) of the Code to fail to so qualify)
and provided further that any such amendment, alteration, suspension,
discontinuance or

    
      
         

      

      
        - 19 -

        
          

        

      

      
         

      

    

    termination
that would impair any rights under any award theretofore made under the Plan
shall not to that extent be effective without the consent of the person to whom
such award was made.

    

    30. Applicable Laws. The
obligation of the Company to deliver Shares shall be subject to all applicable
laws, rules and regulations, and to such approvals by governmental agencies as
may be deemed appropriate by the Committee, including, among others, such steps
as counsel for the Company shall deem necessary or appropriate to comply with
requirements of relevant securities laws. Such obligation shall also be subject
to the condition that the Shares reserved for issuance upon the exercise of
Options or settlement of Restricted Share Units granted under the Plan shall
have been duly listed on any national securities exchange which then constitutes
the principal trading market for the Shares.

    

    31. Governing Laws. The
Plan shall be applied and construed in accordance with and governed by the law
of the State of Delaware without regard to the principles of conflicts of law
thereof, or principals of conflicts of laws of any other jurisdiction which
could cause the application of the laws of any jurisdiction other than the State
of Delaware, to the extent such law is not superseded by or inconsistent with
Federal law. This Plan and all awards hereunder are intended to and shall be
construed to comply with the requirements of Section 409A of the Internal
Revenue Code and the regulations thereunder.

    

    32. Effective Date and Duration
of Plan. The Plan shall become effective on the date of its approval by
the stockholders of the Company in a manner intended to comply with the
shareholder approval requirements of Section 162(m) of the Code. The term during
which awards may be granted under the Plan shall expire on June 4,
2012.

    

    33. Amendments to
Agreements. Notwithstanding any other provision of the Plan, the Board of
Directors, or any authorized committee thereof, may amend the terms of any
agreement entered into in connection with any award granted pursuant to the
Plan, provided that the terms of such amendment are not inconsistent with the
terms of the Plan.

    

    
      
         

      

      
        - 20 -

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