Document:

SECURITY AGREEMENT
                               ------------------

     THIS SECURITY AGREEMENT is made and entered into this 30th day of June,
2000, by and between FUELCELL ENERGY, INC., a Delaware corporation, having its
chief executive office at 3 Great Pasture Road, Danbury, Connecticut 06812-1305
(the "Debtor"), and the CONNECTICUT DEVELOPMENT AUTHORITY, a body politic and
corporate constituting a public instrumentality and political subdivision of the
State of Connecticut, having its principal office at 999 West Street, Rocky
Hill, Connecticut 06067-3405 (the "Secured Party").

                                   WITNESSETH:
                                   ----------

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

     1.   DEFINITIONS: In this Security Agreement:

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

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

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

<PAGE>

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

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

     2.   DEBTOR'S COVENANTS: The Debtor warrants, covenants and agrees as
follows:

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

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

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

          d.   To retain possession of the Collateral during the existence of
               this Security Agreement and not to sell, exchange, assign, loan,

                                     - 2 -
<PAGE>

               deliver, lease, transfer or otherwise dispose of same, without
               the prior written consent of the Secured Party in each instance,
               which consent shall not be unreasonably withheld or delayed.

          e.   To keep the Collateral at its present location and not to remove
               same without the prior written consent of the Secured Party in
               each instance; PROVIDED, HOWEVER, that by no later than January
               1, 2001, all of the Collateral shall be moved to and permanently
               installed in Debtor's leased facility located at Technology Park,
               Technology Park Road, Torrington, Connecticut 06790 (the
               "Torrington Facility").

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

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

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

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

          j.   To keep the Collateral insured against loss by fire, theft, flood
               and other hazards (so-called "All Risk" coverage) as the Secured
               Party may require in an amount equal to the full value of the
               Collateral and in no event less than the outstanding Indebtedness
               secured thereby. Policies covering the Collateral shall be
               obtained from responsible insurers authorized to do business in
               the State of Connecticut. Certificates of insurance or policies
               shall name the Secured Party as loss payee and shall have
               attached thereto a loss payable clause making loss payable to the
               Secured Party as its interest may appear, and all such policies
               and renewal policies shall be deposited with the Secured Party.

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<PAGE>

               Each policy or endorsement shall contain a clause requiring the
               insurer to give not less than thirty (30) days' prior written
               notice to the Secured Party in the event of modification or
               cancellation of the policy for any reason whatsoever, and a
               clause that the interest of the Secured Party shall not be
               impaired or invalidated by any act or neglect of the Debtor or
               owner of the Collateral nor by the occupation of the premises
               where the Collateral is located for purposes more hazardous than
               are permitted by said policy. The Debtor shall give immediate
               written notice to the Secured Party and to insurers of loss or
               damage to the Collateral and shall promptly file proofs of loss
               with insurers. The Debtor hereby irrevocably appoints the Secured
               Party the attorney-in-fact, coupled with an interest, of the
               Debtor in obtaining and adjusting any such insurance and
               endorsing settlement drafts and hereby assigns to the Secured
               Party all sums which may become payable under such insurance,
               including return premiums and dividends, as additional security
               for the Indebtedness. In the event of termination or threatened
               termination of insurance, the Secured Party has the right to
               obtain its own insurance covering the Collateral and to add the
               costs of obtaining and maintaining such insurance as an
               additional obligation of the Debtor to the Secured Party. Nothing
               herein shall relieve the Debtor of its duty or obligation to do
               any act for which the Secured Party may be hereby appointed
               attorney-in-fact for the Debtor or otherwise authorized to act.

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

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

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

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<PAGE>

          n.   The sixty (60) day liquidation value of the Collateral, as
               determined by the Secured Party based upon a current appraisal of
               same conducted by a qualified equipment appraiser selected by the
               Secured Party, shall, at each time that the Debtor requests an
               advance from the Secured Party under the Note, be equal to at
               least one hundred fifty percent (150%) of the outstanding balance
               of the Note (including the amount of the requested loan advance).

     3.   DEBTOR'S REPRESENTATIONS AND WARRANTIES: The Debtor represents and
warrants to the Secured Party as follows:

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

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

          c.   The office where Debtor keeps its records concerning Collateral
               and Debtor's chief executive office is and will be located at 3
               Great Pasture Road, Danbury, Connecticut 06812-1305. Prior to
               moving all of the Collateral to the Torrington Facility, the
               Collateral will be kept at the locations described on SCHEDULE
               3(C) attached hereto and made a part hereof (as same may
               hereafter be modified, amended and supplemented from time to time
               by the Secured Party).

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

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

          a.   Failure by the Debtor to comply with or perform within ten (10)
               days from the date required for performance any provision of this
               Security Agreement;

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<PAGE>

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

          c.   Default under the Note, the Loan Agreement or any other document
               or agreement evidencing or securing the Indebtedness secured
               hereby;

          d.   All or substantial part of the Collateral is attached, seized,
               subjected to a writ or distress warrant, or is levied upon, or
               comes within the possession of any receiver, trustee, custodian
               or assignee for the benefit of creditors;

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

          f.   Judgment or other claim in excess of $50,000.00 becomes a lien
               upon the Collateral or any part thereof; or

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

     6.   REMEDIES ON DEFAULT: Upon any default (and during the continuance of
such default) and upon demand by Secured Party, the Debtor agrees immediately to
assemble the Collateral and make it available to the Secured Party at the place
and time designated in the said demand. The Secured Party shall be entitled to
immediate possession of the Collateral and the Secured Party may: (i) enter any
premises where any Collateral may be located for the purpose of assembling or
taking possession of and removing same, and (ii) sell, assign, lease or
otherwise dispose of the Collateral or any part thereof, either at public or
private sale acceptable to the Secured Party, all at the Secured Party's sole
option and as it, in its sole discretion, may deem advisable, and the Secured
Party may bid or become purchaser at any such sale, free from any right of
redemption which is hereby expressly waived by the Debtor. Until sale, the
Secured Party may store the Collateral on the premises where it is located when
seized, and if said premises are the property of the Debtor, the Debtor agrees
not to charge the Secured Party for storage thereof for a period of ninety (90)
days before or after sale or disposition of said Collateral. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold in a recognized market, the Secured Party will give the
Debtor reasonable notice of time and place of any public sale or the time after
which any private sale or other intended disposition will be made. The
requirement of reasonable notice shall be met if such notice is mailed to the
Debtor at least five (5) days before the time of the sale or disposition.

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

                                     - 6 -
<PAGE>

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

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

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

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

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

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

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<PAGE>

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

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

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

     14.  TERM:

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

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

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

     16.  CHOICE OF LAW: THE LAWS OF THE STATE OF CONNECTICUT SHALL GOVERN THE
RIGHTS AND DUTIES OF THE PARTIES HEREIN CONTAINED.

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

                                       FUELCELL ENERGY, INC.

                                       By: /s/ Christopher R. Bentley
                                          -------------------------------
                                             Christopher R. Bentley
                                             Its Executive Vice President
                                             Duly Authorized

                                       CONNECTICUT DEVELOPMENT AUTHORITY

                                       By: /s/ Brien T. Day
                                          -------------------------------
                                             Brien T. Day
                                             Its Vice President
                                             Duly Authorized

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<PAGE>

                                   SCHEDULE A
                                   ----------

           List of Machinery and Equipment Acquired with Loan Proceeds

                         [To be completed Post-Closing]

                                     - 9 -
<PAGE>

                                  SCHEDULE A-1
                                  ------------

                 List of Other Machinery and Equipment of Debtor

                         [To be completed Post-Closing]

                                     - 10 -
<PAGE>

                                   SCHEDULE B
                                   ----------

                         Copy of Loan Agreement and Note

                                     - 11 -
<PAGE>

                                  SCHEDULE 3(C)
                                  -------------

                   List of Locations Where Collateral Located

                         [To be completed Post-Closing]

                                     - 12 -LOAN AGREEMENT
                                 --------------

     THIS LOAN AGREEMENT is made and entered into this 30th day of June, 2000,
by and between FUELCELL ENERGY, INC., a Delaware corporation having its chief
executive office at 3 Great Pasture Road, Danbury, Connecticut 06812-1305 (the
"Borrower"), and the CONNECTICUT DEVELOPMENT AUTHORITY, a body politic and
corporate constituting a public instrumentality and political subdivision of the
State of Connecticut, having an office at 999 West Street, Rocky Hill,
Connecticut 06067 (the "Authority").

                                   WITNESSETH:

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

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

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

                                    SECTION 1

                                    THE LOAN

     1.1.  The Authority shall make the Loan in accordance with the terms and
conditions set forth in this Loan Agreement, which Loan shall be evidenced by a
promissory note from the Borrower to the Authority in the original principal
amount of $4,000,000.00, dated as of the date hereof (the "Note"). The Loan
shall be secured by the machinery and equipment acquired by the Borrower with
the proceeds of the Loan and certain other generally marketable, non-specialized
machinery and equipment owned by the Borrower and acceptable to the Authority,
such that, at the time of each advance under the Loan, the aggregate sixty (60)
day liquidation value of all of such machinery and equipment collateral is equal
to at least 150% of the outstanding balance of the Loan, all as more fully
described in a security agreement of even date herewith, executed by the
Borrower in favor of the Authority (the "Security Agreement"). To the extent
required by Connecticut Public Act 94-231, the Borrower and the Authority, on or
prior to the date hereof, are executing and delivering a joint statement as to
the number of jobs to be created and retained by Borrower in the State of
Connecticut, the Authority's public policy objectives in extending financial

<PAGE>

assistance to the Borrower, and such other information as is required by Public
Act 94-231 (the "Joint Statement"). This Loan Agreement, the Note, the Security
Agreement, the Joint Statement and the other documents set forth in EXHIBIT A
are together sometimes referred to herein as the "Loan Documents".

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

     1.3.  The closing (the "Closing") of the Loan is being conducted by the
Authority's special counsel, Carmody & Torrance LLP of Waterbury and New Haven,
Connecticut. The Closing is being held on the date of execution of this Loan
Agreement (the "Closing Date"), at the offices of Carmody & Torrance LLP in
Waterbury, Connecticut. The proceeds of the Loan shall be advanced by the
Authority to the Borrower in one or more future advances, each in an amount of
not less than $1,000,000.00, over the twelve-month period following the Closing
Date at such time(s) that the Borrower complies, to the full satisfaction of the
Authority, with the conditions to funding set forth in Section 1.4 below with
respect to each such advance; it being understood that the Authority shall have
no obligation to fund any advances to the Borrower on account of the Loan unless
all of the conditions precedent to such advance have been met by the Borrower to
the full satisfaction of the Authority. Each future advance by the Authority to
the Borrower on account of the Loan shall be evidenced by the Note. The
aggregate principal amount of all advances by the Authority to the Borrower on
account of the Loan shall not exceed the sum of $4,000,000.00. The Authority
shall have no obligation to make any future advances to the Borrower on account
of the Loan after June 30, 2001.

     1.4.  To the extent that (i) no Event of Default (as defined below) has
occurred and is continuing as of such date, (ii) no state of facts exist as of
such date which, with the passage of time or the giving of notice, or both,
would constitute an Event of Default, and (iii) there has been no material
adverse change in the financial, business or operating condition of the Borrower
as of such date, the Authority shall make one or more future advances to the
Borrower on account of the Loan, each advance to be in an amount of at least
$1,000,000.00, at such time that the Borrower has satisfied each of the
following conditions precedent (to the full satisfaction of the Authority):

           (a)  The Borrower has purchased machinery and equipment to be used by
it in its manufacturing operations at Technology Park, Technology Park Road,
Torrington, Connecticut 06790 (the "Torrington Facility") (the "Equipment"), and
the Equipment has been installed in and is in working order in the Torrington
Facility or has been installed in another location in the State of Connecticut
which is owned by or leased by the Borrower;

                                     - 2 -
<PAGE>

           (b)  The Borrower has obtained a landlord waiver and consent
agreement, in form and substance reasonably acceptable to the Authority and its
legal counsel, from the landlord of the Torrington Facility or from the landlord
of the leased facility where such machinery and equipment shall be temporarily
located;

           (c)  The amount of the advance on account of the Loan requested by
the Borrower does not exceed eighty percent (80%) of the acquisition cost of
such Equipment (excluding applicable sales tax, delivery and installation
charges for such Equipment);

           (d)  At the time of such requested advance, the sixty (60) day
liquidation value of all machinery and equipment collateral presently securing
the Loan (including the Equipment) (the "Collateral"), based upon a then-current
equipment appraisal prepared by a reputable equipment appraiser acceptable to
the Authority, is equal to at least one hundred fifty percent (150%) of the
outstanding balance of the Loan (including the amount of the requested advance)
as of such date;

           (e)  The Borrower has prepared and delivered to the Authority an
updated Schedule A (and Schedule A-1, as appropriate) to the Security Agreement
and Schedule A (and Schedule A-1, as appropriate) to the UCC-1 financing
statements describing the Equipment acquired by the Borrower with the proceeds
of such advance and the other Collateral securing the Loan, and has executed and
delivered to the Authority any and all UCC-3 amendment statements reasonably
required by the Authority and its legal counsel;

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

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

In addition to the foregoing conditions, and prior to the initial advance under
the Loan, the Borrower shall have obtained and delivered to the Authority all of
the items designated as "post-closing" on EXHIBIT A to this Loan Agreement; it
being understood that the Authority shall have no obligation to fund any portion
of the Loan until all of the items described on EXHIBIT A hereto have been
delivered to the Authority and its legal counsel.

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

                                     - 3 -
<PAGE>

                                    SECTION 2

                         WARRANTIES AND REPRESENTATIONS
                                 OF THE BORROWER

     The Borrower represents and warrants to the Authority as follows:

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

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

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

     2.4.  There has been no material adverse change in the financial condition
of the Borrower since the date of its application to the Authority for the Loan.
All financial statements, including, without limitation, balance sheets, income
statements and cash flow statements, delivered to the Authority in connection
with Borrower's application for the Loan are correct and complete and fairly
present the financial position and results of operations of the Borrower at the

                                     - 4 -
<PAGE>

times of and for the periods reflected by such financial statements. The
financial statements and all other written statements furnished by the Borrower
to the Authority in connection with the Loan do not contain any untrue statement
of material fact or omit a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which the Borrower
has not disclosed to the Authority in writing which materially and adversely
affects nor, as far as the Borrower can reasonably foresee, is reasonably likely
to prove to affect materially and adversely the business operations or financial
condition of the Borrower.

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

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

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

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

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

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

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

                                     - 5 -
<PAGE>

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

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

                                    SECTION 3

                            COVENANTS OF THE BORROWER

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

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

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

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

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

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

     3.6.  The Borrower will not, either directly or indirectly, guarantee,
endorse, become surety for, or otherwise be or become responsible for the
obligations of any other person or entity, whether by agreement to purchase the

                                     - 6 -
<PAGE>

indebtedness of any other person, or agreement for the furnishing of funds to
any other person or entity, directly or indirectly, through the purchase of
goods, supplies or services (or by way of stock purchase, capital contribution,
advance or loan) or for the purpose of paying or discharging the indebtedness of
any other person or entity or otherwise, except for (i) the endorsement by the
Borrower of negotiable instruments for collection in the ordinary course of
business, and (ii) travel, relocation and other minor business expenses incurred
in the ordinary course of business for the benefit of employees of the Borrower;
PROVIDED, HOWEVER, that the Borrower shall be permitted to guarantee the
indebtedness of third parties up to the maximum amount set forth on SCHEDULE 3.5
attached hereto, it being understood that the amount of such guarantee shall be
deemed to constitute direct indebtedness for borrowed money of the Borrower for
purposes of SCHEDULE 3.5 hereof.

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

     3.8.  The Borrower will comply in all material respects with all laws and
regulations applicable to it, its properties and/or its business.

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

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

     3.11.  The Borrower will indemnify and hold harmless the Authority and its
successors, assigns, officers, directors, employees and agents from and against
any liabilities, losses, damages, costs or expenses, including reasonable
attorneys' fees and costs, arising out of or in connection with the presence of
hazardous waste on or in any of the Collateral, or any lien or claim under
Section 22a-452a of the Connecticut General Statutes, as amended, or other
federal, state or municipal statute, regulation, rule, law or proceeding
relating to environmental matters, which indemnity shall survive realization on

                                     - 7 -
<PAGE>

any of the Collateral, payment in full of the Loan, and termination, exercise
and/or release of the Loan Documents, whichever occurs last, at which time such
indemnity shall terminate. This Section 3.11 shall not limit any Environmental
Indemnity Agreement or similar document, however denominated, that the Borrower
may now or hereafter make and/or deliver to the Authority.

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

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

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

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

     3.16.  The Borrower shall deliver to the Authority (a) within ninety (90)
days after the end of each fiscal year, a true and correct copy of its Form 10-K
submitted by the Borrower to the Securities and Exchange Commission ("SEC")

                                     - 8 -
<PAGE>

(together with all schedules and notes attached thereto); and (b) within
forty-five (45) days after the close of each of its first three fiscal quarters,
a true and correct copy of its Form 10-Q submitted by the Borrower to the SEC
(together with all schedules and notes attached thereto). The Borrower will
promptly file when due and deliver to the Authority, within thirty (30) days
after filing same, copies of the Borrower's State of Connecticut Employee
Quarterly Earnings Reports (Form UC-5A).

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

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

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

     3.20.  To induce the Authority to make the Loan to the Borrower, the
Borrower has represented in writing to the Authority that it intends to employ
at least one hundred fifty (150) permanent full-time employees at the Torrington

                                     - 9 -
<PAGE>

Facility (the "Employment Threshold") by December 31, 2002 (the "Employment
Threshold Determination Date"). To the extent that the Borrower fails to attain
the Employment Threshold by the Employment Threshold Determination Date, then
the Borrower shall pay to the Authority a penalty with respect to the Loan equal
to $3,000.00 MULTIPLIED BY that number of permanent full-time employees employed
by the Borrower at the Torrington Facility as of the Employment Threshold
Determination Date which is less than the Employment Threshold. In no event
shall the penalty payable by the Borrower to the Authority under this Section
3.20 exceed the sum of $50,000.00.

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

     3.22.  On or before January 1, 2001, the Borrower shall have (i) executed a
written lease agreement for the Torrington Facility with an initial term of at
least ten (10) years (and with a five year renewal option), and shall have
delivered to the Authority and its legal counsel a true and correct copy of
same, (ii) obtained a certificate of occupancy for the Torrington Facility from
the Town of Torrington, and shall have delivered to the Authority and its legal
counsel a true and correct copy of same, (iii) moved and installed all of the
Equipment and other Collateral to the Torrington Facility, and (iv) obtained and
delivered to the Authority a landlord waiver and consent from the landlord of
the Torrington Facility, in form and substance acceptable to the Authority and
its legal counsel.

                                    SECTION 4

                              DEFAULT AND REMEDIES

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

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

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

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

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

                                     - 10 -
<PAGE>

           (e)  the failure of the Borrower to observe or perform any other
covenant or obligation of the Borrower in this Loan Agreement, including, but
not limited to, Section 3 hereof, or in any of the other Loan Documents, and,
with respect to the covenants set forth in Sections 3.1, 3.2, 3.4, 3.8, 3.11,
3.12, 3.16 and 3.17, such breach or default is not cured by the Borrower within
thirty (30) days after the Borrower becomes aware of such breach or default;

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

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

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

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

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

                                     - 11 -
<PAGE>

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

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

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

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

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

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

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

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

                                     - 12 -
<PAGE>

                                    SECTION 5

                                  MISCELLANEOUS

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

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

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

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

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

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

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

                                     - 13 -
<PAGE>

State of Connecticut with respect to all matters concerning this Loan Agreement
or any of the other Loan Documents, or the enforcement thereof.

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

     5.9.  This Loan Agreement shall be governed by the laws of the State of
Connecticut.

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

                                       CONNECTICUT DEVELOPMENT AUTHORITY

                                       By: /s/ Brien T. Day
                                          ------------------------------
                                            Brien T. Day
                                            Its Vice President
                                            Duly Authorized

                                       FUELCELL ENERGY, INC.

                                       By: /s/ Christopher R. Bentley
                                          ------------------------------
                                            Christopher R. Bentley
                                            Its Executive Vice President
                                            Duly Authorized

                                     - 14 -
<PAGE>

                                    Exhibit A
                                    ---------

LIST OF DOCUMENTS

Loan Agreement

Promissory Note

Security Agreement

UCC-1 Financing Statements (Post-Closing)

Landlord Waiver and Consents (Post-Closing)

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

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

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

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

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

Opinion Letter of Borrower's Legal Counsel

Affirmative Action Plan Approval (Post-Closing)

Joint Statement

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

Financial Statements

                                     - 15 -
<PAGE>

Certificate of No Adverse Change

Certificate of Non-Relocation

Environmental Certificate and Indemnity Agreement

Prejudgment Remedy Waiver

Original Insurance Certificate (Post-Closing)

Copies of Purchase Orders for Equipment purchased with initial advance under
Loan (Post-Closing)

A list of Other Machinery and Equipment, acceptable to the Authority, to be
pledged to the Authority to secure the Loan, together with a copy of the 60-day
liquidation value appraisal of such other machinery and equipment (Post-Closing)

                                     - 16 -
<PAGE>

                                  SCHEDULE 3.5
                                  ------------

                       Schedule of Permitted Indebtedness

         The Borrower's total indebtedness for borrowed money (which shall
         include the amount of indebtedness of third parties hereafter
         guaranteed by the Borrower as prescribed by Section 3.6, but shall
         exclude the Borrower's indebtedness to the Authority on account of the
         Loan and the Borrower's existing indebtedness (but not increases
         thereof) to First Union National Bank) shall not exceed the aggregate
         sum of $16,000,000.00 at any time outstanding.

                                     - 17 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]