Document:

Exhibit 10.1

Exhibit 10.1

SUBSCRIPTION AGREEMENT

FuelCell Energy, Inc.

3 Great Pastures Road

Danbury, CT 06813

Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with FuelCell Energy, Inc., a
Delaware corporation (the “Company”), as follows:

1. This Subscription Agreement, including the Terms and Conditions for Purchase of Units
attached hereto as Annex I (collectively, this “Agreement”) is made as of the date set
forth below between the Company and the Investor.

2. The Company has authorized the offering, sale and issuance (the “Offering”) to certain
investors of up to an aggregate of 10,160,428 units (the “Units”), with each Unit consisting of (i)
one share (the “Share,” collectively, the “Shares”) of its common stock, par value $0.0001 per
share (the “Common Stock”), and (ii) one warrant (the “Warrant,” collectively, the “Warrants”) to
purchase 1.0 share of Common Stock (and the fractional amount being the “Warrant Ratio”), in
substantially the form attached hereto as Exhibit B, for a purchase price of $1.87 per Unit
(the “Purchase Price”). Units will not be issued or certificated. The Shares and Warrants are
immediately separable and will be issued separately. The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the “Warrant Shares” and, together with the
Units, the Shares and the Warrants, are referred to herein as the “Securities”).

3. In addition, subject to the terms and conditions of this Agreement and the satisfaction of
the Equity Conditions (as defined in Section 3.2(c) of Annex I), at any time during the
eleven (11) Trading Days (as defined below) ending on the nine (9) month anniversary of this
Agreement (the “Additional Purchase Right Expiration Date”), or if the nine (9) month anniversary
of this agreement is not a Trading Day, then the eleven (11) Trading Days ending on the last
Trading Day prior to the nine (9) month anniversary of this agreement, (the “Additional Purchase
Right Exercise Period”), the Company will have the right and will exercise such right (the
“Additional Purchase Right”) to require the Investor to purchase up to an additional 10,000,000
shares of Common Stock (the “Additional Shares”) at a price per share equal to the Additional Share
Purchase Price (as defined below), provided, however, in no event shall the Investor be required to
purchase a number of Additional Shares with an aggregate Additional Share Purchase Price in excess
of $20,000,000. The Additional Purchase Right may only be exercised once. In the event that the
Company decides it does not wish to exercise the Additional Purchase Right, it must provide written
notice (“Cancellation Notice”) to the Investor no later than the tenth (10th) Trading
Day prior to the commencement of the Additional Purchase Right Exercise Period (such date being the
“Additional Purchase Right Cancellation Deadline”). In the event that the Company does not issue a
Cancellation Notice relating to its Additional Purchase Right, the Company will provide to the
Investor, with a copy to the Placement Agent, a schedule indicating the number of Additional
Shares and aggregate purchase price for such shares (the “Additional Shares Exercise Notice”), to
be delivered to the email address and facsimile number set forth on the Investor signature page at
any time during the Additional Purchase Right Exercise Period (but no later than the Additional
Purchase Right Expiration Date). The Additional Shares Exercise Notice shall be accompanied by the
Officers’ Certificate (as defined in Section 3.2(c), Annex I, of this Agreement). The computations
set forth in the Additional Shares Exercise Notice shall be subject to the confirmation and
agreement of the Investor.

 

 

 

	 	(a)	 	The “Additional Share Purchase Price” shall be equal to 90% of the lesser
of (1) the VWAP on the date of the Additional Shares Exercise Notice and (2) the
arithmetic average of the daily VWAPs (as defined below) for the ten (10) consecutive
Trading Days ending on the date of the Additional Shares Exercise Notice.

	 	(b)	 	“Trading Day” means any day on which the Common Stock is traded on the
NASDAQ Global Market, or, if the NASDAQ Global Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities
market on which the Common Stock is then traded; provided that a Trading Day shall
not include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market
(or if such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00 p.m., New
York time).

	 	(c)	 	“VWAP” means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted on
the NASADQ Global Market or another Eligible Market (as defined in Section
3.2(c)), the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the NASADQ Global Market or such other
Eligible Market on which the Common Stock is then listed or quoted for trading as
reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:00 p.m. (New York City time)); (b) if the Common stock is not then listed
or quoted on the NASADQ Global Market or another Eligible Market, and if the Common
Stock is listed or quoted on the OTC Bulletin Board, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board; (c) if the Common Stock is not then listed or quoted for trading on
the OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid price
per share of the Common Stock so reported; or (d) in all other cases, the fair market
value of a share of Common Stock as determined by an independent appraiser selected
in good faith by the Investor and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

4. The Closing of the purchase and sale of the Additional Shares shall take place in
accordance with the provisions of Section 6 and Section 3 of Annex I of this Agreement on the
Trading Day immediately following the date of the Additional Shares Exercise Notice, or in the
event no Additional Shares Exercise Notice is sent and no other notice is sent prior to the
Additional Purchase Right Cancellation Deadline, on the Additional Purchase Right Expiration Date.
The offering and sale of the Securities and Additional Shares are being made pursuant to (a) an
effective Registration Statement on Form S-3 — File No. 333-164412 (the “Registration Statement”)
filed by the Company with the Securities and Exchange Commission (the “Commission”), including the
Prospectus contained therein (the “Base Prospectus”), (b) if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the Securities Act of 1933, as amended
(the “Act”)), that have been or will be filed with the Commission and delivered to the Investor on
or prior to the date hereof (the “Issuer Free Writing Prospectus”), containing pricing and related
information, (c) a Preliminary Prospectus Supplement (the “Preliminary Prospectus Supplement”)
containing certain supplemental information regarding the Securities, the terms of the Offering and
the Company and (d) a Prospectus Supplement (the “Prospectus Supplement” and, together with the
Base Prospectus, the “Prospectus”) containing certain supplemental information regarding the Shares
and Warrants included in the Units, the Additional Shares and the terms of the Offering that have
been or will be filed with the Commission and delivered to the Investor (or made available to the
Investor by the filing by the Company of an electronic version thereof with the Commission).

 

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5. The Company and the Investor agree that at the Closing (as defined in Section 3.1 of Annex
I), the Investor will purchase from the Company and the Company will issue and sell to the Investor
the Units set forth below for the aggregate purchase price set forth below. The Units shall be
purchased pursuant to the Terms and Conditions for Purchase of Units attached hereto as Annex
I and incorporated herein by this reference as if fully set forth herein. The Investor
acknowledges that the Offering is not being underwritten by Lazard Capital Markets LLC (the
“Placement Agent” or “LCM”) named in the Prospectus Supplement and that there is no minimum
offering amount.

6. The manner of settlement of the Shares included in the Units and any Additional Shares
purchased by the Investor shall be as follows:

Delivery versus payment (“DVP”) through DTC (i.e., on the Closing Date and any
Additional Closing Date (each as defined in Section 3 of Annex I), the Company
shall issue Shares or Additional Shares, if any, registered in the Investor’s name and
address as set forth below and released by the Transfer Agent to the Investor through DTC
at the Closing directly to the account(s) at LCM identified by the Investor; upon receipt
of such Shares or Additional Shares, if any, LCM shall promptly electronically deliver
such shares to the Investor, and simultaneously therewith payment shall be made by LCM by
wire transfer to the Company). NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF
THIS AGREEMENT
BY THE INVESTOR AND THE COMPANY (OR ANY ADDITIONAL SHARE EXERCISE NOTICE BY THE COMPANY),
THE INVESTOR SHALL:

	 	(I)	 	NOTIFY LCM OF THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE
SHARES OR ADDITIONAL SHARES, AS THE CASE MAY BE, BEING PURCHASED BY SUCH INVESTOR,
AND

	 	(II)	 	CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE
SHARES OR ADDITIONAL SHARES, IF ANY, BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM
BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR ADDITIONAL SHARES, AS
THE CASE MAY BE, BEING PURCHASED BY THE INVESTOR.

 

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IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE
PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DVP IN A TIMELY
MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR
ADDITIONAL SHARES, AS THE CASE MAY BE, OR DOES NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A
TIMELY MANNER, THE SHARES AND WARRANTS OR ADDITIONAL SHARES, AS THE CASE MAY BE, MAY NOT BE
DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE SUBJECT TO LIABILITY.

7. The executed Warrant included in the Units purchased by the Investor shall be delivered in
accordance with the terms thereof.

8. The Investor represents that, except as set forth below, (a) it has had no position, office
or other material relationship within the past three years with the Company or persons known to it
to be affiliates of the Company, (b) it is not a FINRA member or an Associated Person (as such term
is defined under the NASD Membership and Registration Rules Section 1011) as of the Closing, and
(c) neither the Investor nor any group of Investors (as identified in a public filing made with the
Commission) of which the Investor is a part in connection with the Offering of the Units, acquired,
or obtained the right to acquire, 20% or more of the Common Stock (or securities convertible into
or exercisable for Common Stock) or the voting power of the Company on a post-transaction basis.
Exceptions:

 

(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)

9. The Investor represents that it has received (or otherwise had made available to it by the
filing by the Company of an electronic version thereof with the Commission) the Base Prospectus
which is a part of the Company’s Registration Statement, the documents incorporated by reference
therein, any Preliminary Prospectus Supplement and any free writing prospectus (collectively, the
“Disclosure Package”), prior to or in connection with the receipt of this Agreement. The Investor
acknowledges that, prior to the delivery of this Agreement to the Company, the Investor will
receive certain additional pricing and related information regarding the Offering (the “Offering
Information”). Such information may be provided to the Investor by any means permitted under the
Act, including the Prospectus Supplement, a free writing prospectus and oral communications.

10. No offer by the Investor to buy Units will be accepted and no part of the Purchase Price
will be delivered to the Company until the Investor has received the Disclosure Package and the
Company has accepted such offer by countersigning a copy of this Agreement, and any such offer may
be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to the
Company (or LCM on behalf of the Company) sending (orally, in writing or by electronic mail) notice
of its acceptance of such offer. An indication of interest will involve no obligation or
commitment of any kind until the Investor has been delivered the Offering Information and this
Agreement is accepted and countersigned by or on behalf of the Company.

11. The Company acknowledges that the only material non-public information relating to the
Company that it has provided to the Investor in connection with the Offering prior to the date
hereof is the existence of the Offering.

 

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12. For so long as any Warrants remain outstanding, the Company (including its subsidiaries)
shall not, in any manner, (a) issue or sell any rights, warrants or options to subscribe for or
purchase Common Stock, or directly or indirectly convertible into or exchangeable for Common Stock
(i) at a price which resets as a function of the market price of the Common Stock, or (ii) that has
a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such rights, warrants or options or upon the occurrence of specified or
contingent events directly or indirectly related to the business of the Company (or its
subsidiaries) or the market for the Common Stock, other than pursuant to a customary “weighted
average” anti-dilution provision, or (b) enter into any agreement (including, without limitation,
an equity line of credit or at-the-market offering) whereby the Company (or its subsidiaries) may
sell securities at a future determined price (other than standard and customary “preemptive” or
“participation” rights). The Investor shall be entitled to obtain injunctive relief against the
Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.

 

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Number of Units: 10,160,428

Purchase Price Per Unit: $1.87

Aggregate Purchase Price: $19,000,000

Additional Shares up to: 10,000,000

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the
space provided below for that purpose.

	 	 	 	 	 	 	 	 
	 	 	Dated as of: January 10, 2011
	 
	 	 	 	 	 	 	 
	 	 	 	 
	 

	 	INVESTOR	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 	 
	 

	 	Print Name: 
	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	 	 

Agreed and Accepted

this 10th day of January, 2011:

FUELCELL ENERGY, INC.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 

 

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ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF UNITS AND ADDITIONAL SHARES

1. Authorization and Sale of the Units. Subject to the terms and conditions of this
Agreement, the Company has authorized the sale of the Units and the Additional Shares.

2. Agreement to Sell and Purchase the Units; Placement Agent.

2.1 At the Closing (as defined in Section 3.1), the Company will sell to the Investor,
and the Investor will purchase from the Company, upon the terms and conditions set forth herein,
the number of Units set forth on the last page of the Agreement to which these Terms and Conditions
for Purchase of Units are attached as Annex I (the “Signature Page”) for the aggregate
purchase price therefor set forth on the Signature Page. At any Additional Closing (as defined in
Section 3.1), the Company will sell to the Investor, and the Investor will purchase from
the Company, upon the terms and conditions set forth herein, the number of Additional Shares set
forth in the Additional Shares Exercise Notice for the aggregate purchase price of such shares.

2.2 Investor acknowledges that the Company has agreed to pay Lazard Capital Markets LLC (“LCM”
or the “Placement Agent”) a fee (the “Placement Fee”) in respect of the sale of Units to the
Investor, as well as upon the exercise of the Warrants and the sale of any Additional Shares.

2.3 The Company has entered into a Placement Agent Agreement, dated January 10, 2011 (the
“Placement Agreement”), with the Placement Agent that contains representations, warranties,
covenants and agreements of the Company that may be relied upon by the Investor, which shall be a
third party beneficiary thereof. The Company confirms that neither it nor any other Person acting
on its behalf has provided the Investor with any information that constitutes or could reasonably
be expected to constitute material, nonpublic information, except as will be disclosed in the
Prospectus and the Company’s Form 8-K filed with the Commission in connection with the Offering.
The Company understands and confirms that the Investor will rely on the foregoing representations
in effecting transactions in securities of the Company.

3. Closings and Delivery of the Shares, Warrants, Additional Shares and Funds.

3.1 (a) Closing. The completion of the purchase and sale of the Units (the “Closing”)
shall occur at a place and time (the “Closing Date”) to be specified by the Company and the
Placement Agent, and of which the Investors will be notified in advance by the Placement Agent, in
accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). At the Closing, (i) the Company shall cause the Transfer Agent to deliver to the
Investor the number of Shares set forth on the Signature Page registered in the name of the
Investor or, if so indicated on the Investor Questionnaire attached hereto as Exhibit A, in
the name of a nominee designated by the Investor, (ii) the Company shall cause to be delivered to
the Investor a Warrant to purchase a number of whole Warrant Shares determined by multiplying the
number of Shares set forth on the signature page by the Warrant Ratio and rounding down to the
nearest whole number and (iii) the aggregate purchase price for the Units being purchased by the
Investor will be delivered by or on behalf of the Investor to the Company.

 

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(b) Additional Closing. The completion of the purchase and sale of the Additional
Shares (the “Additional Closing”) shall occur on the Trading Date immediately following the date of
the Additional Shares Exercise Notice (the “Additional Closing Date”), and of which the Placement
Agent will be notified in advance by the Company, in accordance with Rule 15c6-1 promulgated under
the Exchange Act. At the Additional Closing, (a) the Company shall cause the Transfer Agent to
deliver to the Investor the number of Additional Shares set forth on the Additional Shares Exercise
Notice delivered by the Company registered in the name of the Investor or, if so indicated on the
Investor Questionnaire attached hereto as Exhibit A, in the name of a nominee designated by
the Investor and (b) 95% of the aggregate purchase price for the Additional Shares being purchased
by the Investor will be delivered by or on behalf of the Investor to the Company, and 5% of the
aggregate purchase price for the Additional Shares will be delivered to the Placement Agent for its
fee related to such Additional Shares.

3.2
Conditions to the Obligations of the Parties.

(a) Conditions to the Company’s Obligation to Sell Units. The Company’s obligation to
issue and sell the Units to the Investor shall be subject to: (i) the receipt by the Company of the
purchase price for the Units being purchased hereunder as set forth on the Signature Page and (ii)
the accuracy of the representations and warranties made by the Investor and the fulfillment of
those undertakings of the Investor to be fulfilled prior to the Closing Date.

(b) Conditions to the Investor’s Obligation to Purchase Units. The Investor’s
obligation to purchase the Units will be subject to the accuracy of the representations and
warranties made by the Company and the fulfillment of those undertakings of the Company to be
fulfilled prior to the Closing Date, including without limitation, those contained in the Placement
Agreement, and to the condition that the Placement Agent shall not have: (i) terminated the
Placement Agreement pursuant to the terms thereof or (ii) determined that the conditions to the
closing in the Placement Agreement have not been satisfied. The Investor understands and agrees
that, in the event that LCM in its reasonable discretion determines that the conditions to closing
in the Placement Agreement have not been satisfied or if the Placement Agent Agreement may be
terminated for any other reason permitted by such Agreement, then the Placement Agent may, but
shall not be obligated to, terminate such Agreement, which shall have the effect of terminating
this Subscription Agreement pursuant to Section 14 below.

 

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(c) Conditions to the Investor’s Obligation to Purchase Additional Shares. The
Company’s Additional Purchase Right will be subject to the satisfaction of the following “Equity
Conditions” at the time of the Additional Share Exercise Notice and on the Additional Closing Date:
(A) the Shareholders of the Company shall have approved, and the Company shall have effected, an
amendment to its Certificate of Incorporation increasing the number of its authorized shares of
Common Stock by not less than 10,000,000 additional common shares, which amount shall be sufficient
to cover all of the Shares, Additional Shares and Warrant Shares to be issued hereunder; (B) on
each day during the period beginning thirty (30) Trading Days prior to the date of the Additional
Shares Exercise Notice and ending on and including the Additional Closing Date (the “Equity
Conditions Measuring Period”), all Additional Shares issuable hereunder and the Warrant Shares
pursuant to the Warrants shall be eligible for sale without restriction or limitation pursuant to
an effective and then usable Registration Statement or without the need for registration under any
applicable federal or state securities laws; (C) on each day during the Equity Conditions Measuring
Period, the Common Stock is designated for listing on the NASDAQ Global Market or another eligible
market (The New York Stock Exchange, Inc., The American Stock Exchange, The NASDAQ Global Select
Market or The NASDAQ Capital Market, each an “Eligible Market”) and shall not have been suspended
from trading from any applicable exchanges or markets nor shall proceedings for such delisting or
suspension from any such exchange or market have been commenced, threatened or pending either (1)
in writing by such relevant exchange and market or (2) by falling below the minimum listing
maintenance requirements of such relevant exchange and market; (D) the Company shall have delivered
Common Stock upon exercise of the Warrants to the holders on a timely basis; (E) any applicable
shares of Common Stock to be issued in connection with the event requiring determination may be
issued in full without violating the rules or regulations of the NASDAQ Global Market;
provided, however, that the foregoing shall not preclude the Company from issuing
such number of shares that does not cause any such violation; (F) during the Equity Conditions
Measuring Period, there shall not have occurred (x) a Triggering Event (as defined below) or an
event that with the passage of time or giving of notice would constitute a Triggering Event or (y)
the public announcement of a pending, proposed or intended sale or merger of the Company which has
not been abandoned, terminated or consummated; (G) the Company shall have no knowledge of any fact
that would cause any Additional Shares or Warrant Shares issuable upon exercise of the Warrants not
to be eligible for sale without restriction or limitation and without the need for registration
under any applicable federal or state securities laws; (H) the Investor shall not be in possession
of any material non-public information received from the Company or its agents or its affiliates,
(I) during the Equity Conditions Measuring Period, there shall exist no material misstatements or
omissions in the Prospectus or any reports required to be filed by the Company with the Commission
pursuant to the Exchange Act; (J) the arithmetic average of the daily VWAPs for the 25 Trading Days
during the Equity Conditions Measuring Period with the lowest daily VWAPs is not less than $1.00
(as adjusted for stock splits, stock dividends, stock combinations or other similar transactions)
and (K) the arithmetic average of the daily trading volume for the 25 Trading Days during the
Equity Conditions Measuring Period with the lowest daily trading volumes (as reported on Bloomberg)
(the “ADTV”) of the Common Stock on the NASDAQ Global Market or other Eligible Market on which the
Common Stock is listed or designated for quotation as of such date of determination is not less
than 1,000,000 shares (adjusted for any stock dividend, stock split, stock combination or other
similar transaction during such period) ); provided, however, if the ADTV during the Equity
Conditions Measuring Period (as reported on Bloomberg) of the Common Stock on the NASDAQ Global
Market or other Eligible Market on which the Common Stock is listed or designated for quotation as
of such date of determination is between 500,000 shares and 1,000,000 shares (adjusted for any
stock dividend, stock split, stock combination or other
similar transaction during such period) this Equity Condition will be deemed to be satisfied
and the number of Additional Shares will be reduced to a number determined by multiplying a)
10,000,000 by b) a fraction with a numerator equal to the ADTV and a denominator equal to
1,000,000.

 

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The Company shall, concurrent with the Additional Share Exercise Notice, deliver to the
Investor a certificate of its Chief Executive Officer and its Chief Financial Officer, each in his
capacity as an officer of the Company (the “Officers’ Certificate”), certifying that (i) the Equity
Conditions are satisfied and (ii) since the date of this Agreement, the Company has timely filed
all reports required to be filed by the Company with the Commission pursuant to the Exchange Act,
and any reports required to be filed by the Company with the Commission pursuant to the Exchange
Act did not include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading, which
untrue statements or omissions, if any, shall have been fully corrected in a subsequent report or
amendment filed by the Company at least ten (10) Trading Days prior to the Additional Closing Date.

A “Triggering Event” shall be deemed to have occurred if there shall have occurred or be
continuing any of the following events:

	 	(a)	 	while the Registration Statement is required to be maintained, the
effectiveness of the Registration Statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the Investor
for the issuance and sale of the Additional Shares issued and issuable hereunder,
and such lapse or unavailability continues for a period of ten (10) consecutive
Trading Days;

	 
	 	(b)	 	the suspension from trading or failure of the Common Stock to be listed
on the NASDAQ Global Market or another Eligible Market for a period of ten (10)
Trading Days;

	 
	 	(c)	 	the entry by a court having jurisdiction in the premises of (i) a decree
or order for relief in respect of the Company or any subsidiary of the Company of a
voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree or order adjudging
the Company or any subsidiary of the Company as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any subsidiary of the Company under
any applicable Federal or State law or (iii) appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company
or any subsidiary of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of any
such decree or order for relief or any such other decree or order unstayed and in
effect for a period of sixty (60) consecutive days; or

	 
	 	(d)	 	the commencement by the Company or any subsidiary of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree
or order for relief in respect of the Company or any subsidiary in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any subsidiary or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the Company
or any subsidiary in furtherance of any such action.

 

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	 	(e)	 	the Company has breached any representation, warranty, covenant or other
term or condition of this Agreement or the Placement Agreement, except, in the case
of a breach of a covenant which is curable, only if such breach remains uncured for
a period of at least five (5) Business Days.

3.3 Delivery of Funds — Units.

Delivery Versus Payment through The Depository Trust Company. No later than one
(1) business day after the execution of this Agreement by the Investor and the Company, the
Investor shall confirm that the account or accounts at LCM to be credited with the Units being
purchased by the Investor have a minimum balance equal to the aggregate purchase price for the
Units being purchased by the Investor.

3.4 Delivery of Shares and Warrants Contained in the Units.

No later than one (1) business day after the execution of this Agreement by the Investor
and the Company, the Investor shall notify LCM of the account or accounts at LCM to be credited
with the Shares being purchased by such Investor. On the Closing Date, the Company shall deliver
the Shares to the Investor through DTC directly to the account(s) at LCM identified by Investor and
simultaneously therewith payment shall be made by LCM by wire transfer to the Company. Also on the
Closing Date, the Company will cause physical certificates of each Warrant purchased by the
Investor to be delivered by overnight courier directly to the Investor or at such other place as
the Investor may direct.

3.5 Delivery of Funds — Additional Shares.

Delivery Versus Payment through The Depository Trust Company. No later than one
(1) business day after the exercise by the Company of its Additional Purchase Right, the
Investor shall confirm that the account or accounts at LCM to be credited with the Additional
Shares being purchased by the Investor have a minimum balance equal to the aggregate purchase price
for the Additional Shares being purchased by the Investor.

3.6 Delivery of Additional Shares.

No later than one (1) business day after the exercise by the Company of its
Additional Purchase Right, the Investor shall notify LCM of the account or accounts at LCM
to be credited with the Additional Shares being purchased by such Investor. On the Additional
Closing Date, the Company shall deliver the Additional Shares to the Investor through DTC directly
to the account(s) at LCM identified by Investor and simultaneously therewith payment shall be made
by LCM by wire transfer to the Company.

 

- 11 -

 

4. Representations, Warranties and Covenants of the Investor.

The Investor acknowledges, represents and warrants to, and agrees with, the Company and the
Placement Agent that:

4.1 The Investor (a) is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Units, including investments in securities
issued by the Company and investments in comparable companies, (b) has answered all questions on
the Signature Page and the Investor Questionnaire and the answers thereto are true and correct as
of the date hereof and will be true and correct as of the Closing Date and (c) in connection with
its decision to purchase the number of Units set forth on the Signature Page, has received (or had
full access to) and is relying only upon the Disclosure Package and the documents incorporated by
reference therein and the Offering Information.

4.2 (a) No action has been or will be taken in any jurisdiction outside the United States by
the Company or the Placement Agent that would permit an offering of the Units, or possession or
distribution of offering materials in connection with the issue of the Securities in any
jurisdiction outside the United States where action for that purpose is required, (b) if the
Investor is outside the United States, it will comply with all applicable laws and regulations in
each foreign jurisdiction in which it purchases, offers, sells or delivers Securities or has in its
possession or distributes any offering material, in all cases at its own expense and (c) the
Placement Agent is not authorized to make and has not made any representation, disclosure or use of
any information in connection with the issue, placement, purchase and sale of the Units, except as
set forth or incorporated by reference in the Base Prospectus or the Prospectus Supplement.

4.3 (a) The Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken all necessary action
to authorize the execution, delivery
and performance of this Agreement, and (b) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as to the
enforceability of any rights to indemnification or contribution that may be violative of the public
policy underlying any law, rule or regulation (including any federal or state securities law, rule
or regulation).

4.4 The Investor understands that nothing in this Agreement, the Prospectus or any other
materials presented to the Investor in connection with the purchase and sale of the Units
constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors and made such investigation as it, in its sole discretion, has deemed necessary
or appropriate in connection with its purchase of Units. The Investor also understands that there
is no established public trading market for the Warrants being offered in the Offering, and that
the Company does not expect such a market to develop. In addition, the Company does not intend to
apply for listing the Warrants on any securities exchange. Without an active market, the liquidity
of the Warrants will be limited.

 

- 12 -

 

4.5 Since the date on which the Placement Agent first contacted the Investor about the
Offering, the Investor has not disclosed any information regarding the Offering to any third
parties (other than its legal, accounting and other advisors) and has not engaged in any purchase
or sales involving the securities of the Company (including, without limitation, any Short Sales
involving the Company’s securities). The Investor covenants that it will not engage in any
purchases or sales in the securities of the Company (including Short Sales) prior to the time that
the transactions contemplated by this Agreement with respect to the sale of the Units are publicly
disclosed. The Investor agrees that it will not use any of the Units acquired pursuant to this
Agreement to cover any short position in the Common Stock if doing so would be in violation of
applicable securities laws. For purposes hereof, “Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act,
whether or not against the box, and all types of direct and indirect stock pledges, forward sales
contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule
16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and
sales and other transactions through non-US broker dealers or foreign regulated brokers.

4.6 During the period beginning on the Additional Purchase Right Cancellation Deadline and
ending on the Additional Purchase Right Expiration Date, the Investor may not sell (long or short)
on any Trading Day during such period a number of shares of Common Stock that is in excess of 7.5%
of the aggregate dollar trading volume (as reported on Bloomberg) of the Common Stock on the NASDAQ
Global Market or such other Eligible Market on such Trading Day; provided that the restriction set
forth in this Section 4.6 shall not apply from and after the date of the Additional Shares
Exercise Notice. During the sixty (60) day period ending on the date of the Additional Shares
Exercise Notice, the Company and each of the Company’s officers and directors shall not directly or
indirectly engage in any purchases of Common Stock or securities convertible into or exchangeable
or exercisable for Common Stock.

5. Survival of Representations, Warranties and Agreements; Third Party Beneficiary.
Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent,
all covenants, agreements, representations and warranties made by the Company and the Investor
herein will survive the execution of this Agreement, the delivery to the Investor of the Shares,
Warrants and any Additional Shares, if any, being purchased and the payment therefor. The
Placement Agent and Lazard Fréres & Co. shall be third party beneficiaries with respect to the
representations, warranties and agreements of the Investor in Section 4 hereof.

6. Notices. All notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile or (b) if delivered from outside the United States, by International Federal Express or
facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed and (iv) if delivered by facsimile, upon electronic
confirmation of receipt and will be delivered and addressed as follows:

	 	(a)	 	if to the Company, to:

	 
	 	 	 	FuelCell Energy, Inc.

3 Great Pastures Road

Danbury, CT 06813

Attention Ross Levine, Esq., Corporate Legal

Facsimile: (203) 825-6069

 

- 13 -

 

	 	 	 	With copies to:

	 
	 	 	 	Patterson Belknap Webb & Tyler LLP

1133 Avenue of the Americas

New York, NY 10036

Attention: Peter Schaeffer, Esq.

Facsimile: (212) 336-1244

	 
	 	 	 	And to:

	 
	 	 	 	Richard A. Krantz, Esq.

Robinson & Cole LLP

1055 Washington Boulevard

Stamford, CT 06901

Facsimile: (203) 462-7599

	 
	 	(b)	 	if to the Investor, at its address on the
Signature Page hereto, or at such other address or addresses as may have
been furnished to the Company in writing.

	 
	 	(c)	 	if to the Placement Agent, to:

	 
	 	 	 	Lazard Capital Markets LLC

30 Rockefeller Plaza

New York, New York 10020

Attention: General Counsel

Facsimile: (212) 830-3615

7. Changes. This Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.

8. Headings. The headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this Agreement.

9. Severability. In case any provision contained in this Agreement should be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions contained herein will not in any way be affected or impaired thereby.

10. Governing Law. This Agreement will be governed by, and construed in accordance with, the
internal laws of the State of New York, without giving effect to the principles of conflicts of law
that would require the application of the laws of any other jurisdiction.

11. Counterparts. This Agreement may be executed in two or more counterparts, each of which
will constitute an original, but all of which, when taken together, will constitute but one
instrument, and will become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties. The Company and the Investor acknowledge and agree that
the Company shall deliver its counterpart to the Investor along with the Prospectus Supplement (or
the filing by the Company of an electronic version thereof with the Commission).

 

- 14 -

 

12. Confirmation of Sale. The Investor acknowledges and agrees that such Investor’s receipt
of the Company’s signed counterpart to this Agreement, together with the Prospectus Supplement (or
the filing by the Company of an electronic version thereof with the Commission), shall constitute
written confirmation of the Company’s sale of Units to such Investor.

13. Press Release. The Company and the Investor agree that the Company shall issue a press
release and file a Form 8-K announcing the Offering and disclosing all material terms and
conditions of the Offering prior to the opening of the financial markets in New York City on the
business day immediately after the date hereof. In addition, in the event that the Company
exercises the Additional Purchase Right, it shall issue a press release and file a Form 8-K
announcing the exercise of the Additional Purchase Right and disclosing all material terms and
conditions of the Additional Purchase Right prior to the opening of the financial markets in New
York City on the business day immediately after the date of the Additional Shares Exercise Notice.

14. Termination. In the event that the Placement Agreement is terminated by the Placement
Agent pursuant to the terms thereof, this Agreement shall terminate without any further action on
the part of the parties hereto.

 

- 15 -

 

Exhibit A

FUELCELL ENERGY, INC.

INVESTOR QUESTIONNAIRE

Pursuant to Section 3 of Annex I to the Agreement, please provide us with the
following information:

	 	 	 	 	 
	1. The exact name that your Shares, Additional Shares and Warrants are
to be registered in. You may use a nominee name if appropriate:
	 	 	                    	 
	 
	 	 	 	 
	2. The relationship between the Investor and the registered holder
listed in response to item 1 above:
	 	 	                    	 
	 
	 	 	 	 
	3. The mailing address of the registered holder listed in response to
item 1 above:
	 	 	                    	 
	 
	 	 	 	 
	4. The Social Security Number or Tax Identification Number of the
registered holder listed in the response to item 1 above:
	 	 	                    	 
	 
	 	 	 	 
	5. Name of DTC Participant (broker-dealer at which the account or
accounts to be credited with the Shares and Additional Shares are
maintained):
	 	 	                    	 
	 
	 	 	 	 
	6. DTC Participant Number:
	 	 	                    	 
	 
	 	 	 	 
	7. Name of Account at DTC Participant being credited with the Shares
and Additional Shares:
	 	 	                    	 
	 
	 	 	 	 
	8. Account Number at DTC Participant being credited with the Shares
and Additional Shares:
	 	 	                    	 

 

 

Exhibit B

Form of WarrantExhibit 10.2

Exhibit 10.2

FUELCELL ENERGY, INC.

Warrant To Purchase Common Stock

Warrant No.:                                        

Number of Shares of Common Stock:                                        

Date of Issuance: January [_____], 2011 (“Issuance Date”)

FuelCell Energy, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
[_____], the registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including
any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the
“Warrant”), at any time or times on or after the six-month and one day anniversary of the date
hereof (the “Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), ten million one hundred sixty thousand four
hundred twenty eight (10,160,428) fully paid nonassessable shares of Common Stock (as defined below)
(the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant
shall have the meanings set forth in Section 15. This Warrant is the Warrant to purchase
Common Stock (this “Warrant”) issued pursuant to (i) Section 2 of that certain Subscription
Agreement (the “Subscription Agreement”), dated as of January 10, 2011 (the “Subscription Date”),
by and between the Company and the Holder (the “Subscription Agreement”) and (ii) the Company‘s
Registration Statement on Form S-3 (File number 333-164412) (the “Registration Statement”).

1. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and conditions hereof, this Warrant
may be exercised by the Holder on any day on or after the Exercisability Date, in whole or in part,
by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the
“Exercise Notice”), of the Holder’s election to exercise this Warrant and (ii) (A) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant
Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by
wire transfer of immediately available funds or (B) provided (x) the conditions for cashless
exercise set forth in Section 1(d) are satisfied, by notifying the Company that this Warrant is
being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)) or (y) if the Exercise
Notice is delivered during a Cashless Exercise Period (as defined in Section 15(d)), the payment
and exercise shall be pursuant to a Cashless Exercise. The Holder shall not be required to deliver
the original Warrant in order to effect an exercise hereunder. Execution and delivery of the
Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares. On or before the first (1st) Business Day
following the date on which the Company has received each of the Exercise Notice and the Aggregate
Exercise Price (or notice of a Cashless Exercise) (the “Exercise Delivery Documents”), the Company
shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise

 

 

 

Delivery
Documents to the Holder and American Stock Transfer & Trust
Company, New York, NY (the Company’s “Transfer Agent”). On or before the third
(3rd) Business Day following the date on which the Company has received all of the
Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, upon the request of the Holder, credit such aggregate number of Warrant Shares to
which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and
dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon
delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes
to have become the holder of record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may
be. If this Warrant is submitted in connection with any exercise pursuant to this Section
1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall
as soon as practicable and in no event later than three Business Days after any exercise and at its
own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right
to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather
the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.
The Company shall pay any and all taxes which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $2.29,
subject to adjustment as provided herein.

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail for any
reason or for no reason to issue to the Holder within three (3) Business Days of receipt of the
Exercise Delivery Documents in compliance with the terms of this Section 1, a certificate
for the number of shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC
for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise of this Warrant, and if on or after such Trading Day the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving
from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the
Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to
deliver such certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor
its obligation to deliver to the Holder a
certificate or certificates representing such Warrant Shares and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.

 

 

 

(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if
either (x) a registration statement covering the Warrant Shares that are the subject of the
Exercise Notice (the “Unavailable Warrant Shares”), or an exemption from registration, is not
available for the resale of such Unavailable Warrant Shares and the Holder so elects or (y) an
Exercise Notice is delivered during a Cashless Exercise Period, then in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in payment of the
Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of
Common Stock determined according to the following formula (a “Cashless Exercise”):

	 	 	 	 	 	 	 
	 

	 	Net Number =
	 	(A x B) - (A x C)
	 	 
	 

	 	 	 	D	 	 
	 
	 	 	For purposes of the foregoing formula:

	 	 	A= the total number of shares with respect to which
this Warrant is then being exercised.

	 
	 	 	B= the arithmetic average of the Closing Sale Prices
of the shares of Common Stock for the five (5) consecutive Trading
Days ending on the date immediately preceding the date of the
Exercise Notice.

	 
	 	 	C= the Exercise Price then in effect for
the applicable Warrant Shares at the time of such
exercise.

	 
	 	 	D= the Closing Sale Price on the date of
the Exercise Notice.

(e) Rule 144. For purposes of Rule 144(d) promulgated under the Securities Act, as in
effect on the date hereof, it is intended that the Warrant Shares issued in a Cashless Exercise
shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the
Subscription Agreement.

(f) Disputes. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder
the number of Warrant Shares that are not disputed.

 

 

 

(g) Beneficial Ownership. The Company shall not effect the exercise of this Warrant,
and the Holder shall not have the right to exercise this Warrant, to the extent that after giving
effect to such exercise, such Person (together with such Person’s affiliates) would beneficially
own in excess of 9.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by
such Person and its affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company beneficially owned by such Person and its affiliates (including, without limitation,
any convertible notes or convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of
this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or
(3) any other notice by the Company or the Transfer Agent setting forth the number of shares of
Common Stock outstanding. For any reason at any time, upon the written or oral request of the
Holder, the Company shall within two (2) Business Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder and its affiliates since the date
as of which such number of outstanding shares of Common Stock was reported. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(g) to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended beneficial ownership limitation herein contained or
to make changes or supplements necessary or desirable to properly give effect to such limitation.

(h) Insufficient Authorized Shares.  If at any time from and after the one hundred and
eightieth (180th) day following the Issuance Date and while any of the Warrants remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of
Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrant at
least 100% of the maximum number of shares of Common Stock as shall from time to time be necessary
to effect the exercise of all of the Warrants then outstanding (without regard to any limitations
on exercise) (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company
shall immediately deliver a notice to the Holder specifying the number of shares unavailable to
satisfy its obligations under this Warrant and shall take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for the Warrants then outstanding. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized
Share Failure, and assuming such Authorized Share Failure still exists, the Company shall hold a
meeting of its stockholders for the approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall provide each stockholder with a
proxy statement and shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common
Stock and to cause its board of directors to recommend to the stockholders that they approve
such proposal.

 

 

 

(i) In the event that upon any exercise of this Warrant at any time from and after the one
hundred and eightieth (180th) day following the Issuance Date, the Company does not
have sufficient authorized shares to deliver in satisfaction of such exercise, then unless the
Holder elects to void such exercise, the Company shall pay to the Holder within three (3) Trading
Days of the applicable exercise, cash in an amount equal to the product of (i) the number of
Warrant Shares that the Company is unable to deliver pursuant hereto and (ii) the value of such
portion of the Warrant relating to such Warrant Shares based on the Black and Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg determined as of the day prior to the
date of the applicable Exercise Notice and reflecting (x) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the
applicable date of determination, (y) an expected volatility equal to 100%, and (z) a 360-day
annualization factor.

(j) In connection with any firm commitment underwritten public offering of the Company’s
Common Stock resulting in gross proceeds to the Company of not less than $15,000,000, the Holder
agrees that it will not, without the prior written consent of the managing underwriter, during the
period commencing on the date of the final prospectus relating to the registration by the Company
of shares of its Common Stock under the Securities Act on a registration statement on Form S-1 or
Form S-3, and ending on the date specified by the Company and the managing underwriter (such period
not to exceed ninety (90) days) sell long any Warrant Shares (such duration of the lock-up period
being referred to herein as the “Lock-Up Period”). The foregoing shall be applicable to the Holder
only if all directors of the Company and the Company are subject to the same restrictions. The
underwriters in connection with such registration are intended third-party beneficiaries of this
Section 1(h) and shall have the right, power, and authority to enforce the provisions hereof as
though they were a party hereto.

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and
the number of Warrant Shares shall be adjusted from time to time as follows:

(a) Adjustment upon Subdivision or Combination of Common Stock. If the Company at any
time on or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the number of Warrant
Shares will be proportionately increased. If the Company at any time on or after the Subscription
Date combines (by any stock split, stock dividend, recapitalization, reorganization, scheme,
arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such combination will
be proportionately increased and the number of Warrant Shares will be proportionately decreased.
Any adjustment under this Section 2(b) shall become effective at the close of business on
the date the subdivision or combination becomes effective.

 

 

 

(b) Other Events. If any event occurs of the type contemplated by the provisions of
this Section 2 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then the Company’s Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided
that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or
decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

3. RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

(a) any Exercise Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding
such record date minus the value of the Distribution (as determined in good faith by the Company’s
Board of Directors) applicable to one share of Common Stock, and (ii) the denominator shall be the
Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such
record date; and

(b) the number of Warrant Shares shall be increased to a number of shares equal to the number
of shares of Common Stock obtainable immediately prior to the close of business on the record date
fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding
paragraph (a); provided that in the event that the Distribution is of shares of Common Stock (or
common stock) (“Other Shares of Common Stock”) of a company whose common shares are traded on a
national securities exchange or a national automated quotation system, then the Holder may elect to
receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of
Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would
have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price equal to the product of
the amount by which the exercise price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding paragraph (a) and the number of
Warrant Shares calculated in accordance with the first part of this paragraph (b).

 

 

 

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2
above, if at any time the Company grants, issues or sells any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase
Rights which the Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

(b) Fundamental Transactions. The Company shall not enter into or be party to a
Fundamental Transaction unless the Successor Entity assumes this Warrant in accordance with the
provisions of this Section (4)(b), including agreements to deliver to each holder of
Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant, including, without
limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected
by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares
of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and satisfactory to the Holder. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant with the same effect as
if such Successor Entity had been named as the Company herein. In addition to and not in
substitution for any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities
or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that the Holder will thereafter have the
right to receive upon an exercise of this Warrant at any time after the consummation of the
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock
(or other securities, cash, assets or other property) purchasable upon the exercise of the Warrant
prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription rights) which the Holder
would have been entitled to receive upon the happening of such Fundamental Transaction had the
Warrant been exercised immediately prior to such Fundamental Transaction. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the consideration it receives
upon any exercise of this Warrant following such Fundamental Transaction. The provisions of this
Section 4 shall apply similarly and equally to successive Fundamental Transactions and
Corporate Events and shall be applied without regard to any limitations on the exercise of this
Warrant. Notwithstanding the foregoing, in the event of a Fundamental Transaction, at the request
of the Holder delivered before the 90th day after such Fundamental Transaction, the Company (or the
Successor Entity) shall purchase this Warrant from the Holder by paying to the Holder, within five
Business Days after such request (or, if later, on the effective date of the
Fundamental Transaction), cash in an amount equal to the Black Scholes Value of the remaining
unexercised portion of this Warrant on the date of such Fundamental Transaction.

 

 

 

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will
not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon
the exercise of this Warrant, and (iii) shall, so long as this Warrant is outstanding, take all
action necessary to reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of
shares of Common Stock issuable upon exercise of this Warrant then outstanding (without regard to
any limitations on exercise).

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise,
prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant
shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company.

7. REISSUANCE OF WARRANTS.

(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon
the order of the Holder a new Warrant (in accordance with
Section 7(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less then the total number of Warrant Shares then underlying this
Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being transferred.

 

 

 

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a
new Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will
represent the right to purchase such portion of such Warrant Shares as is designated by the Holder
at the time of such surrender; provided, however, that no Warrants for fractional shares of Common
Stock shall be given.

(d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase
the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the
Holder which, when added to the number of shares of Common Stock underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new
Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions
as this Warrant.

8. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 7 of Annex
I to the Subscription Agreement. The Company shall provide the Holder with prompt written notice
of all actions taken pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore.

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained the written consent
of the Holder.

10. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.

11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the
Company and the Holder and shall not be construed against any person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.

 

 

 

12. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of
receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If
the Holder and the Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall, within two (2)
Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by the Holder or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the Company and the Holder of
the results no later than ten Business Days from the time it receives the disputed determinations
or calculations. Such investment bank’s or accountant’s determination or calculation, as the case
may be, shall be binding upon all parties absent demonstrable error.

13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant, at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages
for any failure by the Company to comply with the terms of this Warrant.

14. TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company to any entity whose primary business is investing in securities.
Any other sale, transfer or assignment shall require the prior written consent of the Company,
which consent shall not be unreasonably withheld. The Company and the Investor agree that it would
not be unreasonable for the Company to withhold consent to a proposed sale, transfer or assignment
to any entity that competes with the Company’s business. As a condition to any transfer, any
assigns of a Holder must agree to be bound by the terms of this Warrant.

15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have
the following meanings:

(a) “Black Scholes Value” means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg using (i) a price per share of
Common Stock equal to the Weighted Average Price of the Common Stock for the Trading Day
immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining
term of this Warrant as of the date of consummation of the applicable Fundamental Transaction and
(iii) an expected volatility equal to the thirty (30) day volatility obtained from the HVT function
on Bloomberg determined as of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction.

(b) “Bloomberg” means Bloomberg Financial Markets.

 

 

 

(c) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.

(d) “Cashless Exercise Period” means the period beginning on the day following written notice
from the Company to the Holder that it requires that the exercise of the Warrant be pursuant to a
Cashless Exercise and ending on the Expiration Date, provided that in no event shall the Company be
permitted to commence any such Cashless Exercise Period later than the 180th day prior
to the Expiration Date and any such notice shall be irrevocable.

(e) “Change of Control” means any Fundamental Transaction other than (A) any reorganization,
recapitalization or reclassification of the Common Stock, in which holders of the Company’s voting
power immediately prior to such reorganization, recapitalization or reclassification continue after
such reorganization, recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other than a corporation)
of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company.

(f) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or the last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such security, the last closing bid price
or last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Sale Price, as the case may be, of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.

(g) “Common Stock” means (i) the Company’s shares of Common Stock, par value $0.01 per share,
and (ii) any share capital into which such Common Stock shall have been changed or any share
capital resulting from a reclassification of such Common Stock. 

 

 

 

(h) “Convertible Securities” means any stock or securities (other than Options) directly or
indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

(i) “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., The
American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Capital Market.

(j) “Expiration Date” means the date that is twenty-one (21) months following the Date of
Issuance or, if such date falls on a day other than a Business Day or on which trading does not
take place on the Principal Market (a “Holiday”), the next date that is not a Holiday. The
Expiration Date shall be extended day-for-day for any Lock-up Period.

(k) “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or assets of the Company to another Person, or (iii)
allow another Person to make a purchase, tender or exchange offer that is accepted by the holders
of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than the 50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase agreement or other
business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any
“person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by
issued and outstanding Common Stock.

(l) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

(m) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

(n) “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

(o) “Principal Market” means The NASDAQ Global Market.

 

 

 

(p) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected
by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered
into.

(q) “Trading Day” means any day on which the Common Stock are traded on the Principal Market,
or, if the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock are then traded;
provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time).

(r) “Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during the period beginning
at 9:30:01 a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as reported by
Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30:01 a.m., New York City time,
and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated for such security on
such date on any of the foregoing bases, the Weighted Average Price of such security on such date
shall be the fair market value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such security, then such
dispute shall be resolved pursuant to Section 12 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall be appropriately
adjusted for any share dividend, share split or other similar transaction during such period.

[Signature Page Follows]

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.

	 	 	 	 	 
	 	FUELCELL ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	Agreed and Accepted
	this ___ day of January, 2011:
	 
	 	 	 	 
	INVESTOR
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:	 	 
	Title:	 	 

 

 

 

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

FUELCELL ENERGY, INC.

The undersigned holder hereby exercises the right to purchase
 __________ 
of the shares
of Common Stock (“Warrant Shares”) of FuelCell Energy, Inc., a Delaware corporation (the
“Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as:

                    
a “Cash Exercise” with respect to                      Warrant Shares; and/or

                    
a “Cashless Exercise” with respect to                      Warrant Shares.

2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                     to the Company in accordance with the
terms of the Warrant.

3. Delivery of Warrant Shares. The Company shall deliver to the holder
 _____ 
Warrant
Shares in accordance with the terms of the Warrant.

Date: _____________ __, 2011

	 	 	 
	
 

	 	 
	
Name of Registered Holder
	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

 

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs American Stock
Transfer & Trust Company to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated [_____], 2011 from the Company and
acknowledged and agreed to by American Stock Transfer & Trust Company.

	 	 	 	 	 
	 	FUELCELL ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:
Title:

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