Registration No. 333-215530
We are offering 33,500 shares of our Series C Convertible
Preferred Stock, par value $0.01 per share (the “Series C Preferred Shares”), initially convertible into
18,206,522 shares of our common stock, par value $0.0001 per share (without regard to any limitation on conversion
set forth in the Certificate of Designations). This prospectus also covers the shares of common stock issuable from time to
time upon conversion or amortization of the Series C Preferred Shares.
Our common stock is traded on the NASDAQ Global Market
under the symbol “FCEL.” On September 1, 2017, the last reported sale price of our common stock on the NASDAQ
Global Market was $1.60 per share. There is no established trading market for the Series C Preferred Shares, and we
do not expect a market to develop. We do not intend to apply for a listing of the Series C Preferred Shares on any national
securities exchange.
We expect that delivery of the Series C Preferred Shares being
offered pursuant to this prospectus supplement and the accompanying prospectus will be made on or about September 8, 2017,
subject to customary closing conditions.
DESCRIPTION
OF CAPITAL STOCK
General
The following is a summary of the rights
of our common stock and preferred stock and related provisions of our certificate of incorporation and bylaws. For more detailed
information, please see our certificate of incorporation and bylaws, as amended.
Authorized and Outstanding Capital Stock
Our authorized capital stock consists of
125,000,000 shares of common stock, par value $0.0001 per share, and 250,000 shares of preferred stock, par value $0.01 per share,
issuable in one or more series designated by our board of directors, of which 105,875 shares of our preferred stock have been designated
as 5% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B preferred stock”). On July 31,
2017, 64,020 shares of our Series B preferred stock were issued and outstanding. In connection with this offering, our board of
directors will designate 33,500 shares of preferred stock as Series C Preferred Shares and issue such 33,500 Series C Preferred
Shares. No other shares of our preferred stock are issued and outstanding. There are 1,000,000 Series 1 preferred shares of our
Canadian subsidiary, FCE FuelCell Energy, Ltd., issued and outstanding and convertible into shares of FuelCell Energy, Inc. common
stock.
On December 3, 2015, we filed the December
2015 Certificate of Amendment with the Secretary of State of the State of Delaware to effect a 1-for-12 reverse stock split of
our common stock. Our board of directors, in consultation with counsel, has determined that the description of the authority of
brokers/nominees to vote on the Reverse Stock Split proposal without instruction in the 2015 Proxy Statement may create some uncertainty
as to the effect of the vote obtained on the Reverse Stock Split proposal at the 2015 Annual Meeting of Stockholders. We are in
the process of seeking stockholder approval to ratify the December 2015 Certificate of Amendment and the 2015 Reverse Stock Split
pursuant to Section 204 of the DGCL in order to eliminate any uncertainty related to the effectiveness of these corporate acts.
If the ratification of the filing and effectiveness of the December 2015 Certificate of Amendment and the 2015 Reverse Stock Split,
which is referred to herein as the “Amendment Ratification,” is validly approved by the stockholders and becomes effective,
the ratification will be retroactive to December 3, 2015, which was the date of the filing of the December 2015 Certificate of
Amendment with the Secretary of State of the State of Delaware and the date the 2015 Reverse Stock Split became effective.
Assuming the validity of the December 2015
Certificate of Amendment and the 2015 Reverse Stock Split, on July 31, 2017, 60,972,037 shares of our common stock were issued
and outstanding.
In addition, as of July 31, 2017, there
were outstanding options to purchase 316,330 shares of our common stock under our equity incentive plans, 200,828 shares of our
common stock were available for future issuance under our equity incentive plans, 70 shares of our common stock were available
for future issuance under our employee stock purchase plan and 30,302,460 shares of our common stock were issuable upon exercise
of outstanding warrants. In addition, as of July 31, 2017, we were obligated, if and when the holder exercises its conversion rights,
to issue approximately 15,166 shares of our common stock upon conversion of the Series 1 preferred shares. As of July 31, 2017,
there were 179 holders of record of our common stock.
Common Stock
Voting Rights
The holders of our common stock have one
vote per share. Holders of our common stock are not entitled to vote cumulatively for the election of directors. Generally, all
matters to be voted on by shareholders (including the election of directors in uncontested elections) must be approved by a majority
of the votes entitled to be cast at a meeting at which a quorum is present by all shares of our common stock present in person
or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any then outstanding
preferred stock. A plurality voting standard applies in contested director elections (i.e., when the number of nominees for election
as directors exceeds the number of directors to be elected at such meeting).
Dividends
Holders of our common stock will share ratably
in any dividends declared by the board of directors, subject to the preferential rights of any of our preferred stock then outstanding.
Dividends consisting of shares of our common stock may be paid to holders of shares of our common stock. We have never paid a cash
dividend on our common stock and do not anticipate paying any cash dividends on common stock in the foreseeable future.
Other Rights
In the event of our liquidation, dissolution
or winding up, after payment of liabilities and liquidation preferences on any of our preferred stock then outstanding, the holders
of shares of our common stock are entitled to share ratably in all assets available for distribution. Holders of shares of our
common stock have no preemptive rights or rights to convert their shares of our common stock into any other securities. There are
no redemption or sinking fund provisions applicable to the common stock.
Preferred Stock
This section describes the general terms
of our preferred stock, $0.01 par value. The following description of the terms of our preferred stock is a summary. You should
refer to our amended certificate of incorporation (including the Certificate of Designations of Series A Preferred Stock and the
Amended Certificate of Designations of 105,875 Shares of 5% Series B Cumulative Convertible Perpetual Preferred Stock incorporated
therein, the “Charter”) and any certificate of amendment to our Charter or certificate of designations filed with the
SEC in connection with an issuance of preferred stock for a full description of the terms of the preferred stock. The terms of
the Series C Preferred Shares are described under “Description of Series C Convertible Preferred Stock.”
Under our Charter, our board of directors
has the authority, without further shareholder action, to issue from time to time, preferred stock in one or more series and for
such consideration as may be fixed from time to time by our board of directors. Our board also has the authority to fix and determine,
in the manner provided by law, the relative rights and preferences of the shares of any series so established, such as dividend
and voting rights. Our Charter authorizes 250,000 shares of preferred stock. Prior to the issuance of each series of preferred
stock, our board will adopt resolutions creating and designating the series as a series of preferred stock. The board of directors
may, without shareholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power
and other rights of the holders of our common stock and could have anti-takeover effects.
Our preferred stock will have the dividend,
liquidation, redemption, voting and conversion rights set forth below unless otherwise specified in the applicable prospectus supplement.
You should read the prospectus supplement relating to the particular series of preferred stock offered thereby for specific terms,
including:
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the number of shares to constitute such series and the distinctive designation of such series;
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the dividend rate on the shares of such series and preferences, if any, and the special and relative rights of such shares
of such series as to dividend;
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whether or not the shares of such series shall be redeemable, and, if redeemable, the price, terms and manner of redemption;
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the preferences, if any, and the special and relative rights of the shares of such series upon liquidation;
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whether or not the shares of such series shall be subject to the operation of a sinking or purchase fund and, if so, the terms
and provisions of such fund;
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whether or not the shares of such series shall be convertible into shares of any other class or of any other series of the
same or any other class of stock and, if so, the conversion price or ratio and other conversion rights;
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the conditions under which the shares of such series shall have separate voting rights or no voting rights; and
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Such other designations, preferences and relative, participating, optional or other special rights and qualifications, limitations
or restrictions of such series of preferred stock.
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Unless otherwise specified in the applicable
prospectus supplement, the shares of each series of preferred stock will upon issuance rank equally in all respects with each other
then outstanding series of preferred stock.
Preferred stock could be issued quickly
with terms that could delay or prevent a change of control or make the removal of management more difficult. Additionally, the
issuance of preferred stock may decrease the market price of our common stock and may adversely affect the voting and other rights
of the holders of our common stock.
Ranking
Any series of our preferred stock will,
with respect to dividend rights and rights on liquidation, winding up or dissolution, rank:
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senior to all classes of our common stock and to all equity securities issued by us, the terms of which specifically provide
that the equity securities will rank junior to that preferred stock;
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equally with all equity securities issued by us, the terms of which specifically provide that the equity securities will rank
equally with that preferred stock; and
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junior to all equity securities issued by us, the terms of which specifically provide that the equity securities will rank
senior to that preferred stock.
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Dividends
The holders of our preferred stock will
be entitled to receive, when, as and if declared by our board of directors, dividends at such rates and on such dates as will be
specified in the applicable prospectus supplement. Such rates may be fixed or variable or both. If variable, the formula used for
determining the dividend rate for each dividend period will be specified in the applicable prospectus supplement. Dividends will
be payable to the holders of record as they appear on our stock books on such record dates as will be fixed by our board. Dividends
may be paid in the form of cash, preferred stock (of the same or a different series) or our common stock, in each case as specified
in the applicable prospectus supplement.
Dividends on any series of our preferred
stock may be cumulative or noncumulative, as specified in the applicable prospectus supplement. If the dividends on a series of
our preferred stock are noncumulative (“Noncumulative Preferred Stock”), and our board of directors fails to declare
a dividend payable on a dividend payment date, then the holders of such preferred stock will have no right to receive a dividend
in respect to the dividend period relating to such dividend payment date, and we will not be obligated to pay the dividend accrued
for such period, whether or not dividends on such preferred stock are declared or paid on any future dividend payment dates. Dividends
on shares of any cumulative series of preferred stock (“Cumulative Preferred Stock”) shall accumulate from and after
the day on which such shares are issued, but arrearages in the payment thereof shall not bear interest.
If we have not declared and paid or set
apart when due all accrued dividends on each series of our preferred stock through the last preceding dividend date of each such
series, we may not declare or pay any dividends on, or make other distributions on, our common stock other than a dividend payable
in our common stock. No restriction applies to our repurchase or redemption of our capital stock while there is any arrearage in
the payment or dividends or any applicable sinking fund installments.
Redemption
A series of our preferred stock may be redeemable,
in whole or in part, at our option, and may be subject to mandatory redemption pursuant to a sinking fund or otherwise, in each
case upon terms, at the times and at the redemption prices specified in the applicable prospectus supplement. Redeemed shares of
our preferred stock will become authorized but unissued shares of preferred stock that we may issue in the future.
The terms and conditions under which all
or any part of any series of our preferred stock may be redeemed will be established by our board of directors before we issue
such series of preferred stock. All shares of our preferred stock that we redeem, or which have been surrendered for conversion
or exchange or for cancellation pursuant to any sinking or purchase fund, will return to the status of authorized but unissued
shares.
Conversion Rights
The prospectus supplement relating to a
series of convertible preferred stock will describe the terms on which shares of such series are convertible into our common stock.
Rights Upon Liquidation
Unless the applicable prospectus supplement
states otherwise, if we voluntarily or involuntarily liquidate, dissolve or wind up our business, the holders of our preferred
stock will be entitled to receive out of our assets available for distribution to stockholders, before any distribution of assets
is made to holders of our common stock or any other class or series of shares ranking junior to such preferred stock upon liquidation,
liquidating distributions in the amount of the liquidation preference of such preferred stock plus accrued and unpaid dividends
(which will not, if such preferred stock is Noncumulative Preferred Stock, include any accumulation in respect of unpaid dividends
for prior dividend periods). If we voluntarily or involuntarily liquidate, dissolve or wind up our business and the amounts payable
with respect to our preferred stock of any series and any of our other securities ranking equal as to any such distribution are
not paid in full, the holders of such preferred stock and of such other shares will share ratably in any such distribution of our
assets in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount of
the liquidating distribution to which they are entitled, the holders of our preferred stock of any series will not be entitled
to any further participation in any distribution of our assets.
Voting Rights
Except as described in this section or in
the applicable prospectus supplement, or except as expressly required by applicable law, the holders of our preferred stock will
not be entitled to vote. If the holders of a series of our preferred stock are entitled to vote and the applicable prospectus supplement
does not state otherwise, each such share will be entitled to one vote on matters on which holders of such series of preferred
stock are entitled to vote. For any series of our preferred stock having one vote per share, the voting power of such series, on
matters on which holders of such series and holders of other series of our preferred stock are entitled to vote as a single class,
will depend on the number of shares in such series, not the aggregate stated value, liquidation preference or initial offering
price of the shares of such series of preferred stock.
Series B Preferred Stock
On November 11, 2004, we entered into
a purchase agreement with Citigroup Global Markets Inc., RBC Capital Markets Corporation, Adams Harkness, Inc., and Lazard
Freres & Co., LLC (the “Initial Purchasers”) for the private placement under Rule 144A of up to 135,000
shares of our 5% Series B Cumulative Convertible Perpetual Preferred Stock (Liquidation Preference $1,000). On November 17,
2004 and January 25, 2005, we closed on the sale of 100,000 shares and 5,875 shares, respectively, of Series B preferred
stock to the Initial Purchasers.
As of July 31, 2017, there were
250,000 preferred shares authorized, of which 105,875 shares were designated as Series B preferred shares, and 64,020 Series B
preferred shares were issued and outstanding.
The following is a summary of certain provisions
of our Series B preferred stock. The resale of the shares of our Series B preferred stock and the resale of the shares of our common
stock issuable upon conversion of the shares of our Series B preferred stock are covered by a registration rights agreement.
Ranking
Shares of our Series B preferred stock rank
with respect to dividend rights and rights upon our liquidation, winding up or dissolution:
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senior to shares of our common stock;
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junior to our debt obligations; and
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effectively junior to our subsidiaries’ (i) existing and future liabilities and (ii) capital stock held by others.
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Dividends
The Series B preferred stock pays cumulative
annual dividends of $50 per share which are payable quarterly in arrears on February 15, May 15, August 15 and November 15. Dividends
will be paid on the basis of a 360-day year consisting of twelve 30-day months. Dividends on the shares of our Series B preferred
stock will accumulate and be cumulative from the date of original issuance. Accumulated dividends on the shares of our Series B
preferred stock will not bear any interest.
The dividend rate on the Series B preferred
stock is subject to upward adjustment as set forth in the Certificate of Designations of the Series B preferred stock if we fail
to pay, or to set apart funds to pay, dividends on the shares of our Series B preferred stock for any quarterly dividend period.
The dividend rate on the Series B preferred stock is also subject to upward adjustment as set forth in the registration rights
agreement entered into with the Initial Purchasers if we fail to satisfy our registration obligations with respect to the Series
B preferred stock (or the underlying common shares) set forth in the Registration Rights Agreement.
No dividends or other distributions may
be paid or set apart for payment upon our common shares (other than a dividend payable solely in shares of a like or junior ranking)
unless all accumulated and unpaid dividends have been paid or funds or shares of common stock therefore have been set aside for
payment of accumulated and unpaid Series B preferred stock dividends.
The dividend on the Series B preferred stock
may be paid in cash; or at the option of the holder, in shares of our common stock, which will be registered pursuant to a registration
statement to allow for the immediate sale of these common shares in the public market. Dividends of $3.2 million were paid in each
of the years ended October 31, 2016, 2015 and 2014.
Liquidation
The Series B preferred stock stockholders
are entitled to receive, in the event that we are liquidated, dissolved or wound up, whether voluntarily or involuntarily, $1,000
per share plus all accumulated and unpaid dividends to the date of that liquidation, dissolution, or winding up (“Liquidation
Preference”). Until the holders of Series B preferred stock receive their Liquidation Preference in full, no payment will
be made on any junior shares, including shares of our common stock. After the Liquidation Preference is paid in full, holders of
the Series B preferred stock will not be entitled to receive any further distribution of our assets. As of October 31, 2016, the
Series B preferred stock had a Liquidation Preference of $64.0 million.
Conversion Rights
Each Series B Preferred Stock share may
be converted at any time, at the option of the holder, into 7.0922 shares of our common stock (which is equivalent to an initial
conversion price of $141.00 per share) plus cash in lieu of fractional shares. The conversion rate is subject to adjustment upon
the occurrence of certain events, as described below, but will not be adjusted for accumulated and unpaid dividends. If converted,
holders of Series B Preferred Stock do not receive a cash payment for all accumulated and unpaid dividends; rather, all accumulated
and unpaid dividends are cancelled.
We may, at our option, cause shares of Series
B Preferred Stock to be automatically converted into that number of shares of our common stock that are issuable at the then prevailing
conversion rate. We may exercise our conversion right only if the closing price of our common stock exceeds 150% of the then prevailing
conversion price ($141.00 as of October 31, 2016) for 20 trading days during any consecutive 30 trading day period, as described
in the Certificate of Designations.
If holders of Series B Preferred Stock elect
to convert their shares in connection with certain fundamental changes (as described below and in the Certificate of Designations),
we will in certain circumstances increase the conversion rate by a number of additional shares of common stock upon conversion
or, in lieu thereof, we may in certain circumstances elect to adjust the conversion rate and related conversion obligation so that
shares of our Series B Preferred Stock are converted into shares of the acquiring or surviving company, in each case as described
in the Certificate of Designations.
The adjustment of the conversion price is
to prevent dilution of the interests of the holders of the Series B Preferred Stock from the following:
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Issuances of common stock as a dividend or distribution to holders or our common stock;
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Common stock share splits or share combinations;
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Issuances to holders of our common stock of any rights, warrants or options to purchase our common stock for a period of less
than 60 days; and
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Distributions of assets, evidences of indebtedness or other property to holders of our common stock.
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Redemption
We do not have the option to redeem the
shares of Series B Preferred Stock. However, holders of the Series B Preferred Stock can require us to redeem all or part of their
shares at a redemption price equal to the Liquidation Preference of the shares to be redeemed in the case of a “fundamental
change.” A fundamental change will be deemed to have occurred if any of the following occurs:
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any “person” or “group” is or becomes the beneficial owner, directly or indirectly, of 50% or more
of the total voting power of all classes of our capital stock then outstanding and normally entitled to vote in the election of
directors;
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during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by our Board of Directors or whose nomination for election by our shareholders
was approved by a vote of two-thirds of our directors then still in office who were either directors at the beginning of such period
or whose election of nomination for election was previously so approved) cease for any reason to constitute a majority of our directors
then in office;
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the termination of trading of our common stock on the NASDAQ Stock Market and such shares are not approved for trading or quoted
on any other U.S. securities exchange; or
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we consolidate with or merge with or into another person or another person merges with or into us or the sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of our assets and certain of our subsidiaries, taken
as a whole, to another person and, in the case of any such merger or consolidation, our securities that are outstanding immediately
prior to such transaction and which represent 100% of the aggregate voting power of our voting stock are changed into or exchanged
for cash, securities or property, unless pursuant to the transaction such securities are changed into securities of the surviving
person that represent, immediately after such transaction, at least a majority of the aggregate voting power of the voting stock
of the surviving person.
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Notwithstanding the foregoing, holders of
shares of Series B Preferred Stock will not have the right to require us to redeem their shares if:
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the last reported sale price of shares of our common stock for any five trading days within the 10 consecutive trading days
ending immediately before the later of the fundamental change or its announcement equaled or exceeded 105% of the conversion price
of the shares of Series B Preferred Stock immediately before the fundamental change or announcement;
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at least 90% of the consideration (excluding cash payments for fractional shares) and, in respect of dissenters’ appraisal
rights, if the transaction constituting the fundamental change consists of shares of capital stock traded on a U.S. national securities
exchange, or which will be so traded or quoted when issued or exchanged in connection with a fundamental change, and as a result
of the transaction, shares of Series B Preferred Stock become convertible into such publicly traded securities; or
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in the case of fundamental change event in the fourth bullet above, the transaction is affected solely to change our jurisdiction
of incorporation.
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We may, at our option, elect to pay the
redemption price in cash or, in shares of our common stock valued at a discount of 5% from the market price of shares of our common
stock, or any combination thereof. Notwithstanding the foregoing, we may only pay such redemption price in shares of our common
stock that are registered under the Securities Act and eligible for immediate sale in the public market by non-affiliates of the
Company.
Voting Rights
Holders of Series B Preferred Stock currently
have no voting rights; however, holders may receive certain voting rights, as described in the Certificate of Designations, if (1)
dividends on any shares of Series B Preferred Stock, or any other class or series of stock ranking on a parity with the Series
B Preferred Stock with respect to the payment of dividends, shall be in arrears for dividend periods, whether or not consecutive,
for six calendar quarters or (2) we fail to pay the redemption price, plus accrued and unpaid dividends, if any, on the redemption
date for shares of Series B Preferred Stock following a fundamental change.
So long as any shares of Series B Preferred
Stock remain outstanding, we will not, without the consent of the holders of at least two-thirds of the shares of Series B Preferred
Stock outstanding at the time (voting separately as a class with all other series of preferred stock, if any, on parity with our
Series B Preferred Stock upon which like voting rights have been conferred and are exercisable) issue or increase the authorized
amount of any class or series of shares ranking senior to the outstanding shares of the Series B Preferred Stock as to dividends
or upon liquidation. In addition, we will not, subject to certain conditions, amend, alter or repeal provisions of our Charter,
including the Certificate of Designations relating to the Series B Preferred Stock, whether by merger, consolidation or otherwise,
so as to adversely amend, alter or affect any power, preference or special right of the outstanding shares of Series B Preferred
Stock or the holders thereof without the affirmative vote of not less than two-thirds of the issued and outstanding Series B Preferred
Stock.
Series 1 Preferred Shares
In connection with our acquisition of Global
Thermoelectric Inc. (“Global”) in November 2003, we acquired the obligations of Global pursuant to its outstanding
1,000,000 Series 2 Preferred Shares (“Series 2 Preferred Shares”) which continued to be held by Enbridge, Inc. With
the sale of Global in May of 2004, the Series 2 Preferred Shares were cancelled, and replaced with substantially equivalent Series
1 Preferred Shares (“Series 1 Preferred Shares”) issued by FCE FuelCell Energy, Ltd. (“FCE Ltd”).
On March 31, 2011, the Company entered into
an agreement with Enbridge, Inc. (“Enbridge”) to modify the Class A Cumulative Redeemable Exchangeable Preferred Shares
agreement (the “Series 1 preferred share agreement”) between FCE Ltd, a wholly-owned subsidiary of FuelCell Energy,
and Enbridge, the sole holder of the Series 1 preferred shares. Consistent with the previous Series 1 preferred share agreement,
FuelCell continues to guarantee the return of principal and dividend obligations of FCE Ltd to the Series 1 preferred shareholders
under the modified agreement.
The modified terms of the Series 1 Preferred
Shares provide for payments of (i) annual dividend of Cdn. $500,000 and (ii) annual return of capital of Cdn. $750,000. These payments
commenced on March 31, 2011 and will end on December 31, 2020. Additional dividends accrue on cumulative unpaid dividends at a
1.25% quarterly rate, compounded quarterly, until payment thereof. On December 31, 2020 the amount of all accrued and unpaid dividends
on the Series 1 Preferred Shares of Cdn. $21.1 million and the balance of the principal redemption price of Cdn. $4.4 million shall
be paid to the holders of the Series 1 Preferred Shares. FCE Ltd has the option of making dividend payments in the form of common
stock or cash under the Series 1 Preferred Shares provisions.
The Company assessed the accounting guidance
related to the classification of the preferred shares after the modification on March 31, 2011 and concluded that the preferred
shares should be classified as a mandatorily redeemable financial instrument, and presented as a liability on the consolidated
balance sheet.
The Company made its scheduled payments
of Cdn. $1.3 million during each of fiscal years 2016, 2015 and 2014, under the terms of the modified agreement, including the
recording of interest expense, which reflects the fair value discount of approximately Cdn. $2.4 million, Cdn. $2.3 million and
Cdn. $2.1 million, respectively.
In addition to the above, the significant
terms of the Series 1 Preferred Shares include the following:
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Voting Rights — The holders of the Series 1 Preferred Shares are not entitled to any voting rights.
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Dividends — Dividend payments can be made in cash or common stock of the Company, at the option of FCE Ltd, and if common
stock is issued it may be unregistered. If FCE Ltd elects to make such payments by issuing common stock of the Company, the number
of common shares is determined by dividing the cash dividend obligation by 95% of the volume weighted average price in US dollars
at which board lots of the common shares have been traded on NASDAQ during the 20 consecutive trading days preceding the end of
the calendar quarter for which such dividend in common shares is to be paid converted into Canadian dollars using the Bank of Canada’s
noon rate of exchange on the day of determination.
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Redemption — The Series 1 Preferred Shares are redeemable by FCE Ltd for Cdn.$25 per share less any amounts paid as a
return of capital in respect of such share plus all unpaid dividends and accrued interest. Holders of the Series 1 Preferred Shares
do not have any mandatory or conditional redemption rights.
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Liquidation or Dissolution — In the event of the liquidation or dissolution of FCE Ltd, the holders of Series 1 Preferred
Shares will be entitled to receive Cdn.$25 per share less any amounts paid as a return of capital in respect of such share plus
all unpaid dividends and accrued interest. The Company has guaranteed any liquidation obligations of FCE Ltd.
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Exchange Rights — A holder of Series 1 Preferred Shares has the right to exchange such shares for fully paid and non-assessable
common stock of the Company at the following exchange prices:
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Cdn$1,664.52 per share of common stock after July 31, 2015 until July 31, 2020; and
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at any time after July 31, 2020, at a price equal to 95% of the then current market price (in Cdn.$) of the Company’s
common stock at the time of conversion.
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The exchange rates set forth above shall
be adjusted if the Company: (i) subdivides or consolidates the common stock; (ii) pays a stock dividend; (iii) issues rights, options
or other convertible securities to the Company’s common stockholders enabling them to acquire common stock at a price less
than 95% of the then-current price; or (iv) fixes a record date to distribute to the Company’s common stockholders shares
of any other class of securities, indebtedness or assets.
Anti-Takeover Provisions
Provisions of our Charter and By-Laws
A number of provisions of our Charter and
By-laws concern matters of corporate governance and the rights of shareholders. Some of these provisions, including, but not limited
to, the inability of shareholders to take action by unanimous written consent, certain advance notice requirements for shareholder
proposals and director nominations, supermajority voting provisions with respect to any amendment of voting rights provisions,
the filling of vacancies on the board of directors by the affirmative vote of a majority of the remaining directors, and the ability
of the board of directors to issue shares of preferred stock and to set the voting rights, preferences and other terms thereof,
without further shareholder action, may be deemed to have anti-takeover effect and may discourage takeover attempts not first approved
by the board of directors, including takeovers which shareholders may deem to be in their best interests. If takeover attempts
are discouraged, temporary fluctuations in the market price of shares of our common stock, which may result from actual or rumored
takeover attempts, may be inhibited. These provisions, together with the ability of the board of directors to issue preferred stock
without further shareholder action, could also delay or frustrate the removal of incumbent directors or the assumption of control
by shareholders, even if the removal or assumption would be beneficial to our shareholders. These provisions could also discourage
or inhibit a merger, tender offer or proxy contest, even if favorable to the interests of shareholders, and could depress the market
price of our common stock. The board of directors believes these provisions are appropriate to protect our interests and the interests
of our shareholders. The board of directors has no present plans to adopt any further measures or devices which may be deemed to
have an “anti-takeover effect.”
Delaware Anti-Takeover Provisions
We are subject to Section 203 of the DGCL,
which prohibits a publicly-held Delaware corporation from engaging in a “business combination,” except under certain
circumstances, with an “interested shareholder” for a period of three years following the date such person became an
“interested shareholder” unless:
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before such person became an interested shareholder, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the interested shareholder becoming an interested shareholder;
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upon the consummation of the transaction that resulted in the interested shareholder becoming an interested shareholder, the
interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding shares held by directors who are also officers of the corporation and shares held by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender
or exchange offer; or
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at or following the time such person became an interested shareholder, the business combination is approved by the board of
directors of the corporation and authorized at an annual or special meeting of shareholders (and not by written consent) by the
affirmative vote of the holders of at least 66 2/3% of the outstanding voting stock of the corporation which is not owned by the
interested shareholder.
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The term “interested shareholder”
generally is defined as a person who, together with affiliates and associates, owns, or, within the three years prior to the determination
of interested shareholder status, owned, 15% or more of a corporation’s outstanding voting stock. The term “business
combination” includes mergers, asset or stock sales and other similar transactions resulting in a financial benefit to an
interested shareholder. Section 203 makes it more difficult for an “interested shareholder” to effect various business
combinations with a corporation for a three-year period. The existence of this provision would be expected to have an anti-takeover
effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of our common stock held by shareholders. A Delaware corporation may “opt
out” of Section 203 with an express provision in its original Charter or any amendment thereto. Our Charter does not contain
any such exclusion.
Exclusive Forum
The By-laws provide that unless we consent
in writing to an alternative forum, a state court located within the State of Delaware (or, if no state court located within the
State of Delaware has jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum
for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary
duty owed by any of our directors or officers or other employees or our stockholders; (iii) any action asserting a claim against
us or any of our directors or officers or other employees arising pursuant to any provision of the DGCL or our Charter or the By-laws
(as either may be amended from time to time), or (iv) any action asserting a claim against us or any of our directors or other
officers or other employees governed by the internal affairs doctrine.
Limitations of Directors’ Liability
Our Charter provides that none of our directors
will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for
liability:
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for any breach of the director’s duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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under Section 174 of the DGCL; or
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for any transaction from which the director derived an improper personal benefit.
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The effect of these provisions is to eliminate
our rights and the rights of our stockholders (through stockholders’ derivative suits on behalf of us) to recover monetary
damages against a director for breach of fiduciary duty as a director (including breaches resulting from grossly negligent behavior),
except in the situations described above. These provisions do not limit the liability of directors under federal securities laws
and do not affect the availability of equitable remedies such as an injunction or rescission based upon a director’s breach
of his duty of care.
Listing on the NASDAQ Global Market
Our common stock is listed on the NASDAQ
Global Market under the symbol “FCEL”.
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. Our SEC filings are available to the public through the Internet at the SEC’s
web site at
http:// www.sec.gov
. You may also read and copy any document we file with the SEC at the SEC’s
public reference room at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information
about its public reference facilities and their copy charges. Our common stock is quoted on The Nasdaq Global Market, and you may
also inspect and copy our SEC filings at the offices of the National Association of Securities Dealers, Inc. located at 1735 K
Street, N.W., Washington D.C. 20006.
The SEC allows us to incorporate by reference
the information we file with them. This allows us to disclose important information to you by referencing those filed documents.
We have previously filed the following documents with the SEC and are incorporating them by reference into this prospectus supplement
(other than information deemed furnished and not filed in accordance with SEC rules, including Items 2.02 and 7.01 of Form 8-K):
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Our Annual Report on Form 10-K for the year ended October 31, 2016;
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Our Quarterly Reports on Form 10-Q for the periods ended January 31, 2017 and April 30, 2017;
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Our Current Reports on Form 8-K filed November 4, 2016, December 1, 2016, December 20, 2016, March 21, 2017, April 10, 2017,
April 12, 2017, April 21, 2017, April 28, 2017 and May 3, 2017; and
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the description of our common stock included in our registration statement on Form 8-A filed with the SEC on June 6, 2000,
including any amendment or reports filed for the purpose of updating such description, and in any other registration statement
or report filed by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any amendment
or report filed for the purpose of updating such description.
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We also are incorporating by reference any
future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the termination of this
offering. The most recent information that we file with the SEC automatically updates and supersedes more dated information.
You can obtain a copy of any documents which
are incorporated by reference in this prospectus supplement or the accompanying prospectus, at no cost, by writing or telephoning
us at:
FuelCell Energy, Inc.
Attention: Corporate Secretary
3 Great Pasture Road
Danbury, Connecticut 06801
(203) 825-6000
This prospectus supplement is part of a
registration statement we filed with the SEC. This prospectus supplement and the accompanying prospectus omit some information
contained in the registration statement in accordance with SEC rules and regulations. You should review the information and exhibits
in the registration statement for further information about us and our consolidated subsidiaries and the securities we are offering.
Statements in this prospectus supplement and in the accompanying prospectus concerning any document we filed as an exhibit to the
registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference
to these filings. You should review the complete document to evaluate these statements.
Annex
A
FORM OF CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
THE SERIES C CONVERTIBLE PREFERRED STOCK OF
FUELCELL ENERGY, INC.
FuelCell Energy, Inc.
(the “
Company
”), a corporation incorporated and existing under the General Corporation Law of the State of Delaware
(the “
DGCL
”) does hereby certify:
That pursuant to the
authority expressly conferred upon the Board of Directors of the Company (the “
Board
”) by the Company’s
Certificate of Incorporation, as amended (the “
Certificate of Incorporation
”), and Section 151(g) of the DGCL,
the Board on [●], 2017 adopted the following resolution determining it desirable and in the best interests of the Company
and its stockholders for the Company to create a series of thirty three thousand five hundred (33,500) shares of preferred stock
designated as “Series C Convertible Preferred Stock”, none of which shares have been issued:
RESOLVED, that pursuant
to the authority vested in the Board, in accordance with the provisions of the Certificate of Incorporation, a series of preferred
stock, par value $0.01 per share, of the Company be and hereby is created, and that the designation and number of shares thereof
and the voting and other powers, preferences and relative, participating, optional or other rights of the shares of such series
and the qualifications, limitations and restrictions thereof are as follows:
SERIES C CONVERTIBLE PREFERRED STOCK
1.
Designation
and Number of Shares
. There shall hereby be created and established a series of preferred stock of the Company designated as
“Series C Convertible Preferred Stock” (the “
Preferred Shares
”). The authorized number of Preferred
Shares shall be thirty three thousand five hundred (33,500) shares. Each Preferred Share shall have a par value of $0.01. Capitalized
terms not defined herein shall have the meaning as set forth in
Section 34
below.
2.
Ranking
.
Except to the extent that the holders of at least a majority of the outstanding Preferred Shares (the “
Required Holders
”)
expressly consent to the creation of Parity Stock (as defined below) or Senior Preferred Stock (as defined below) in accordance
with
Section 19
, all shares of capital stock of the Company shall be junior in rank to all Preferred Shares with respect
to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company
(such junior stock is referred to herein collectively as “
Junior Stock
”). The rights of all such shares of capital
stock of the Company shall be subject to the rights, powers, preferences and privileges of the Preferred Shares. Without limiting
any other provision of this Certificate of Designations, without the prior express consent of the Required Holders, voting separately
as a single class, the Company shall not hereafter authorize or issue any additional or other shares of capital stock that is (i)
of senior rank to the Preferred Shares in respect of the preferences as to dividends, distributions and payments upon the liquidation,
dissolution and winding up of the Company (collectively, the “
Senior Preferred Stock
”), (ii) of
pari passu
rank to the Preferred Shares in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution
and winding up of the Company (collectively, the “
Parity Stock
”) or (iii) any Junior Stock having a maturity
or other date requiring redemption or repayment of such shares of Junior Stock that is prior to the Maturity Date. In the event
of the merger or consolidation of the Company with or into another corporation, the Preferred Shares shall maintain their relative
rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation shall result inconsistent
therewith.
3.
Dividends
.
In addition to
Section 18
below, from and after the first date of issuance of any Preferred Shares (the “
Initial
Issuance Date
”), each holder of a Preferred Share (each, a “
Holder
” and collectively, the “
Holders
”)
shall be entitled to receive dividends (“
Dividends
”) (i) if no Triggering Event (as defined below) has occurred
and is continuing, when and as declared by the Board, from time to time, in its sole and absolute discretion, which Dividends,
if any, shall be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other terms
hereof, in cash on the Stated Value of such Preferred Share, or (ii) if a Triggering Event has occurred and until such Triggering
Event has been cured, a Dividend of 15% per annum based on the Holder’s outstanding number of Preferred Shares multiplied
by the Stated Value (the “
Default Dividend Rate
”). Such Dividends, if any, that accrue shall be paid on each
Installment Date (as defined below) occurring after the accrual of such Dividends, or such earlier time as the Board may in its
sole discretion determine.
4.
Conversion
.
Subject to the provisions of
Section 4(d)
, at any time after the date the Company obtains the Stockholder Ratification,
each Preferred Share shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined
below), on the terms and conditions set forth in this
Section 4
.
(a)
Holder’s
Conversion Right
. Subject to the provisions of
Section 4(d)
, at any time or times on or after the date the Company obtains
the Stockholder Ratification, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by
such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with
Section 4(c)
at
the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion.
If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of
a share of Common Stock to the nearest whole share. The Company shall pay any and all actual transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may
be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Shares;
provided
,
however
, that if any such tax, cost or expense is due solely because the Holder requested such shares to be issued in a
name other than the Holder’s name, then the Holder will pay such tax, cost or expense.
(b)
Conversion
Rate
. The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to
Section 4(a)
shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the “
Conversion
Rate
”):
(i) “
Conversion
Amount
” means, with respect to each Preferred Share, as of the applicable date of determination, the sum of (1) the Stated
Value thereof plus (2) the Additional Amount thereon and any accrued and unpaid Late Charges (as defined below in
Section 27(c))
with respect to such Stated Value and Additional Amount as of such date of determination.
(ii) “
Conversion
Price
” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $1.84,
subject to adjustment as provided herein.
(c)
Mechanics
of Conversion
. The conversion of each Preferred Share shall be conducted in the following manner:
(i)
Optional
Conversion
. To convert a Preferred Share into shares of Common Stock on any date (a “
Conversion Date
”),
a Holder shall deliver (via electronic mail), for receipt on or prior to 4:59 p.m., New York time, on such date, a copy of an executed
notice of conversion of the share(s) of Preferred Shares subject to such conversion in the form attached hereto as
Exhibit I
(the “
Conversion Notice
”) to the Company. If required by
Section 4(c)(iii)
, within second (2) Trading
Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight
delivery service for delivery to the Company the original certificates, if any, representing the Preferred Shares (the “
Preferred
Share Certificates
”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares
in the case of its loss, theft or destruction as contemplated by
Section 21(b)
). On or before the first (1
st
)
Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by electronic mail an acknowledgment
of confirmation, in the form attached hereto as
Exhibit II
, of receipt of such Conversion Notice to such Holder and
the Company’s transfer agent (the “
Transfer Agent
”), which confirmation shall constitute an instruction
to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the second (2nd) Trading
Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the 1934 Act or other applicable
law, rule or regulation for the settlement of a trade on the Principal Market initiated on the applicable Conversion Date of such
shares of Common Stock issuable pursuant to such Conversion Notice) (the “
Share Delivery Deadline
”), the Company
shall (1) provided that the Transfer Agent is participating in The Depository Trust Company’s (“
DTC
”)
Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be
entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system,
or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via
reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such
Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred
Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant to
Section 4(c)(iii)
is greater
than the number of Preferred Shares being converted, then the Company shall, as soon as practicable and in no event later than
five (5) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder
(or its designee) a new Preferred Share Certificate (in accordance with
Section 21(d)
) representing the number of Preferred
Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred
Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
In connection with any conversion of Preferred Shares by a Holder, the number of Preferred Shares converted by such Holder shall
be deducted from the Installment Amount(s) of such Holder relating to the Installment Date(s) as set forth in the applicable Conversion
Notice.
(ii)
Company’s
Failure to Timely Convert
. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share
Delivery Deadline, to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled
and register such shares of Common Stock on the Company’s share register or to credit such Holder’s or its designee’s
balance account with DTC for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion
of any Conversion Amount (as the case may be) (a “
Conversion Failure
”), and if on or after such Share Delivery
Deadline (provided that such Holder places an order to purchase such shares before the time the Company remedies such failure)
such Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by such Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal
to all or any portion of the number of shares of Common Stock, issuable upon such conversion that such Holder so anticipated receiving
from the Company, then, in addition to all other remedies available to such Holder, the Company shall, within two (2) Business
Days after receipt of such Holder’s request and in such Holder’s discretion, either: (I) pay cash to such Holder in
an amount equal to such Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf,
of such Holder) (the “
Buy-In Price
”), at which point the Company’s obligation to so issue and deliver
such certificate or credit such Holder’s balance account with DTC for the number of shares of Common Stock to which such
Holder is entitled upon such Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock)
shall terminate, or (II) promptly honor its obligation to so issue and deliver to such Holder a certificate or certificates representing
such shares of Common Stock or credit such Holder’s balance account with DTC for the number of shares of Common Stock to
which such Holder is entitled upon such Holder’s conversion hereunder (as the case may be) and pay cash to such Holder in
an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied
by (y) the VWAP of the Common Stock on the attempted Conversion Date. For the avoidance of doubt, to the extent that the Company
makes a payment contemplated by the foregoing sentence, the applicable portion of the shares of Preferred Stock to which the Conversion
Failure applied shall no longer be outstanding.
(iii)
Registration;
Book-Entry
. At the time of issuance of any Preferred Shares hereunder, the applicable Holder may, by written request (including
by electronic-mail) to the Company, elect to receive such Preferred Shares in the form of one or more Preferred Share Certificates
or in Book-Entry form. The Company (or the Transfer Agent, as custodian for the Preferred Shares) shall maintain a register (the
“
Register
”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated
Value of the Preferred Shares and whether the Preferred Shares are held by such Holder in Preferred Share Certificates or in Book-Entry
form (the “
Registered Preferred Shares
”). The entries in the Register shall be conclusive and binding for all
purposes absent manifest error. The Company and each Holder of the Preferred Shares shall treat each Person whose name is recorded
in the Register as the owner of a Preferred Share for all purposes (including, without limitation, the right to receive payments
and Dividends hereunder) notwithstanding notice to the contrary. A Registered Preferred Share may be assigned, transferred or sold
only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell
one or more Registered Preferred Shares by such Holder thereof, the Company shall record the information contained therein in the
Register and issue one or more new Registered Preferred Shares in the same aggregate Stated Value as the Stated Value of the surrendered
Registered Preferred Shares to the designated assignee or transferee pursuant to
Section 21
, provided that if the Company
does not so record an assignment, transfer or sale (as the case may be) of such Registered Preferred Shares within two (2) Business
Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as
the case may be). Notwithstanding anything to the contrary set forth in this
Section 4
, following conversion of any
Preferred Shares in accordance with the terms hereof, the applicable Holder shall not be required to physically surrender such
Preferred Shares held in the form of a Preferred Share Certificate to the Company unless (A) the full or remaining number of Preferred
Shares represented by the applicable Preferred Share Certificate are being converted (in which event such certificate(s) shall
be delivered to the Company as contemplated by this
Section 4(c)(iii)
) or (B) such Holder has provided the Company with
prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of Preferred Shares upon physical
surrender of the applicable Preferred Share Certificate. Each Holder and the Company shall maintain records showing the Stated
Value, Dividends and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments
(as the case may be) or shall use such other method, reasonably satisfactory to such Holder and the Company, so as not to require
physical surrender of a Preferred Share Certificate upon conversion. If the Company does not update the Register to record such
Stated Value, Dividends and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments
(as the case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to
reflect such occurrence. In the event of any dispute or discrepancy as to the number of Preferred Shares to which the record holder
is entitled such dispute shall be resolved in accordance with Section 27. Notwithstanding the foregoing, if the number of Preferred
Shares set forth on the face of a Preferred Share Certificate is greater than the number of Preferred Shares then outstanding under
such Preferred Share Certificate, the applicable Holder may not transfer such Preferred Share Certificate into the name of any
other Person (other than an Affiliate of such Holder) unless such Holder first physically surrenders such Preferred Share Certificate
to the Company pursuant to
Section 21
below (or delivers a lost certificate affidavit to the Company, if applicable, pursuant
to
Section 21(b)
below), whereupon the Company will forthwith issue and deliver to such Holder (or to such other Person
as designated by such Holder to the Company in writing) a new Preferred Share Certificate of like tenor, representing, in the aggregate,
the remaining number of Preferred Shares outstanding under such Preferred Share Certificate. A Holder and any transferee or assignee,
by acceptance of a certificate, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion
of any Preferred Shares, the number of Preferred Shares represented by such certificate may be less than the number of Preferred
Shares stated on the face thereof. Each Preferred Share Certificate shall bear the following legend:
ANY TRANSFEREE OR ASSIGNEE OF THIS
CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF
SERIES C PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING
SECTION 4(c)(iii)
THEREOF. THE NUMBER OF SHARES OF SERIES
C PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK STATED ON THE
FACE HEREOF PURSUANT TO
SECTION 4(c)(iii)
OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES C PREFERRED
STOCK REPRESENTED BY THIS CERTIFICATE.
(iv)
Pro
Rata Conversion; Disputes
. In the event that the Company receives a Conversion Notice from more than one Holder for the same
Conversion Date and the Company can convert some, but not all, of such Preferred Shares submitted for conversion, the Company shall
convert from each Holder electing to have Preferred Shares converted on such date a pro rata amount of such Holder’s Preferred
Shares submitted for conversion on such date based on the number of Preferred Shares submitted for conversion on such date by such
Holder relative to the aggregate number of Preferred Shares submitted for conversion on such date. In the event of a dispute as
to the number of shares of Common Stock issuable to a Holder in connection with a conversion of Preferred Shares, the Company shall
issue to such Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with
Section
26
.
(d)
Limitation
on Beneficial Ownership
.
(i) The Company
shall not effect the conversion of any of the Preferred Shares held by a Holder, and such Holder shall not have the right to convert
any of the Preferred Shares held by such Holder pursuant to the terms and conditions of this Certificate of Designations and any
such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion,
such Holder together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (the “
Maximum
Percentage
”) of the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and the other Attribution
Parties shall include the number of shares of Common Stock held by such Holder and all other Attribution Parties plus the number
of shares of Common Stock issuable upon conversion of the Preferred Shares with respect to which the determination of such sentence
is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted
Preferred Shares beneficially owned by such Holder or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes,
convertible preferred stock or warrants) beneficially owned by such Holder or any other Attribution Party subject to a limitation
on conversion or exercise analogous to the limitation contained in this
Section 4(d)(i)
. For purposes of this
Section
4(d)(i)
, beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining
the number of outstanding shares of Common Stock a Holder may acquire upon the conversion of such Preferred Shares without exceeding
the Maximum Percentage, such Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the
SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or
the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “
Reported Outstanding
Share Number
”). If the Company receives a Conversion Notice from a Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify such Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause such Holder’s
beneficial ownership, as determined pursuant to this
Section 4(d)(i)
, to exceed the Maximum Percentage, such Holder must
notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason
at any time, upon the written or oral request of any Holder, the Company shall within two (2) Business Days confirm orally and
in writing or by electronic mail to such 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 such Preferred Shares by such Holder and any other Attribution Party, since the date as of which the Reported
Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to a Holder upon conversion of
such Preferred Shares results in such Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate,
more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the
1934 Act), the number of shares so issued by which such Holder’s and the other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the “
Excess Shares
”) shall be deemed null and void and shall be cancelled
ab initio
, and such Holder shall not have the power to vote or to transfer the Excess Shares. For the avoidance of doubt,
the determination of whether an issuance would result in the creation of Excess Shares shall be based upon the determination made
by the Holder of its and its Attribution Parties’ beneficial ownership based on the Reported Outstanding Share Number provided
by the Company. Upon delivery of a written notice to the Company, any Holder may from time to time increase (with such increase
not effective until the sixty-first (61
st
) day after delivery of such notice) or decrease the Maximum Percentage of
such Holder to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in
the Maximum Percentage will not be effective until the sixty-first (61
st
) day after such notice is delivered to the
Company and (ii) any such increase or decrease will apply only to such Holder and the other Attribution Parties and not to any
other Holder. For purposes of clarity, the shares of Common Stock issuable to a Holder pursuant to the terms of this Certificate
of Designations in excess of the Maximum Percentage shall not be deemed to be beneficially owned by such Holder for any purpose
including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert such Preferred Shares
pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent
determination of convertibility. The provisions of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this
Section 4(d)(i)
to the extent necessary to correct this paragraph (or any portion
of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this
Section
4(d)(i)
or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation
contained in this paragraph may not be waived and shall apply to a successor holder of such Preferred Shares.
(ii)
Principal
Market Regulation
. The Company shall not issue any shares of Common Stock upon conversion of any Preferred Shares or otherwise
pursuant to the terms of this Certificate of Designations if the issuance of such shares of Common Stock would exceed the aggregate
number of shares of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the Preferred
Shares without breaching the Company’s obligations under the rules or regulations of the Principal Market (the number of
shares which may be issued without violating such rules and regulations, the “
Exchange Cap
”), except that such
limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable
rules of the Principal Market for issuances of shares of Common Stock in excess of such amount. Until such approval is obtained,
no Holder shall be issued in the aggregate, upon conversion or exercise (as the case may be) of any Preferred Shares, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii) the
quotient of (1) the aggregate number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by (2) the
aggregate number of Preferred Shares issued to all Holders on the Initial Issuance Date (with respect to each Holder, the “
Exchange
Cap Allocation
”). In the event that any Holder shall sell or otherwise transfer any of such Holder’s Preferred
Shares, the transferee shall be allocated a pro rata portion of such Holder’s Exchange Cap Allocation with respect to such
portion of such Preferred Shares so transferred, and the restrictions of the prior sentence shall apply to such transferee with
respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon conversion in full of a holder’s
Preferred Shares, the difference (if any) between such holder’s Exchange Cap Allocation and the number of shares of
Common Stock actually issued to such holder upon such holder’s conversion in full of such Preferred Shares shall be allocated,
to the respective Exchange Cap Allocations of the remaining Holders on a pro rata basis in proportion to the shares of Common Stock
underlying the Preferred Shares then held by each such holder of Preferred Shares. In the event that the Company is prohibited
from issuing any shares of Common Stock pursuant to this
Section 4(d)(ii)
(the “
Exchange Cap Shares
”)
to a Holder at any time after the later of (i) the Stockholders Meeting Outside Date and (ii) the date the Company obtains the
Stockholder Ratification, the Company shall pay cash to such Holder in exchange for the redemption of such number of Preferred
Shares held by the Holder that are not convertible into such Exchange Cap Shares at a price equal to the product of (x) such number
of Exchange Cap Shares and (y) the Closing Sale Price on the Trading Day immediately preceding the date such Holder delivers the
applicable Conversion Notice with respect to such Exchange Cap Shares to the Company.
(e)
Triggering
Event Conversion
.
(i)
General
.
Subject to
Section 4(d)
, at any time during the period commencing on the date of the occurrence of a Triggering Event (as
defined in
Section 5(a)
) and ending on the later to occur of (x) the date of the cure of such Triggering Event and
(y) ten (10) Trading Days after the date the Company delivers written notice to such Holder of such Triggering Event, a Holder
may, at such Holder’s option, by delivery of a Conversion Notice to the Company (the date of any such Conversion Notice,
each an “
Triggering Event Conversion Date
”), convert all, or any number of Preferred Shares (such Conversion
Amount of the Preferred Shares to be converted pursuant to this
Section 4(e)
, the “
Triggering Event Conversion
Amount
”) into shares of Common Stock at the Triggering Event Conversion Price (each, a “
Triggering Event Conversion
”).
(ii)
Mechanics
of Triggering Event Conversion
. On any Triggering Event Conversion Date, a Holder may voluntarily convert any Triggering Event
Conversion Amount pursuant to
Section 4(c)
(with “Triggering Event Conversion Price” replacing “Conversion
Price” for all purposes hereunder with respect to such Triggering Event Conversion and “Triggering Event Conversion
Amount” replacing “Conversion Amount” in clause (x) of the definition of Conversion Rate above with respect to
such Triggering Event Conversion) by designating in the Conversion Notice delivered pursuant to this
Section 4(e)
of this
Certificate of Designations that such Holder is electing to use the Triggering Event Conversion Price for such conversion. Notwithstanding
anything to the contrary in this
Section 4(e)
, but subject to
Section 4(d)
, until the Company delivers shares of
Common Stock representing the applicable Triggering Event Conversion Amount to such Holder, such Triggering Event Conversion Amount
may be converted by such Holder into shares of Common Stock pursuant to
Section 4(c)
without regard to this
Section 4(e)
.
5.
Triggering
Event Redemptions
.
(a)
Triggering
Event
. Each of the following events shall constitute a “
Triggering Event
” and each of the events in clauses
(viii), (ix) and (x) shall constitute a “
Bankruptcy Triggering Event
”:
(i) any
of the Preferred Shares or shares of Common Stock issuable upon conversion of the Preferred Shares are not freely tradable without
restriction by any of the Holders (subject to any restrictions imposed on any Holder due to such Holder’s Affiliate status
with respect to the Company);
(ii) the
suspension from trading or failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period
of five (5) consecutive Trading Days;
(iii) the
failure to receive the Stockholder Ratification on or before the 30
th
calendar date following the Initial Issuance Date;
(iv) other
than with respect to any Authorized Share Failure (as defined in Section 11(b)), the Company’s notice, written or oral, to
any Holder, including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention
not to comply, as required, with a request for conversion of any Preferred Shares into shares of Common Stock that is requested
in accordance with the provisions of this Certificate of Designations, other than pursuant to
Section 4(d)
hereof;
(v) at
any time after the date the Company obtains the Stockholder Ratification, following the tenth (10
th
) consecutive day
that a Holder’s Authorized Share Allocation (as defined in
Section 11(a)
below) is less than 150% of the number of
shares of Common Stock that such Holder would be entitled to receive upon a conversion, in full, of all of the Preferred Shares
then held by such Holder (without regard to any limitations on conversion set forth in this Certificate of Designations) at any
time after the Company’s obtains the Stockholder Ratification, except, solely with respect to the first occurrence of an
Authorized Share Failure hereunder, to the extent the Company is complying with the terms set forth in Section 11(b) below;
(vi) the
Company’s failure to pay to any Holder any amount when and as due under this Certificate of Designations (including, without
limitation, the Company’s failure to pay any redemption payments or amounts hereunder), (whether or not permitted pursuant
to the DGCL), except, in each such case only if such failure remains uncured for a period of at least five (5) Trading Days;
(vii) the
Company, on two or more occasions, either (A) fails to cure a Conversion Failure by delivery of the required number of shares of
Common Stock within five (5) Trading Days after the applicable Conversion Date or (B) fails to remove any restrictive legend on
any certificate at a time when such restrictive legend is no longer required under applicable federal or state securities laws,
and such failure remains uncured for at least five (5) Trading Days;
(viii) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Significant Subsidiary and, if instituted against the Company or any Significant Subsidiary by a third
party, shall not be dismissed within sixty (60) days of their initiation;
(ix) the
commencement by the Company or any Significant Subsidiary of a voluntary case or proceeding under any applicable federal, state
or foreign 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, order, judgment or other similar document in respect of the Company
or any Significant Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign 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, state or foreign
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 Significant Subsidiary or of any substantial
part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Significant Subsidiary in furtherance
of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other
similar action under federal, state or foreign law with respect to a material portion of the Company’s or any Significant
Subsidiary’s assets;
(x) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Significant Subsidiary
of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Significant Subsidiary
as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment
or composition of or in respect of the Company or any Significant Subsidiary under any applicable federal, state or foreign law
or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or any Significant Subsidiary 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, order, judgment or other similar document
or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive
days;
(xi) a
final judgment or judgments for the payment of money aggregating in excess of $750,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged, settled
or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, any
judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $750,000
amount set forth above so long as the Company provides each Holder a written statement from such insurer or indemnity provider
(which written statement shall be reasonably satisfactory to the Required Holders) to the effect that such judgment is covered
by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance
or indemnity within thirty (30) days of the issuance of such judgment;
(xii) the Company
and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period,
any payment with respect to any Indebtedness in excess of $750,000 due to any third party (other than, with respect to unsecured
Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings
and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise
in default, breach or violation of any agreement for monies owed or owing in an amount in excess of $750,000, which breach or violation
permits the other party thereto to declare a default or otherwise redeem or accelerate amounts due thereunder, or (ii) suffer to
exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is reasonably
expected to have a Material Adverse Effect
(xiii) the
Company’s failure to receive payments of at least $25,000,000 with respect to the Korea contract, as described in the Company’s
press release issued on September 5, 2017, on or prior to the earlier of (A) Company’s public announcement of its fiscal 2017
fourth quarter earnings and (B) January 15, 2018;
(xiv) other
than as specifically set forth in another clause of this
Section 5(a)
, the Company or any Subsidiary breaches any covenant
or other term of this Certificate of Designations in any material respect (other than covenants subject to material adverse effect
or materiality, which may not be breached in any respect), except, in the case of a breach of a covenant or other term that is
curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days;
(xv) a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity
Conditions are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Triggering Event has occurred;
(xvi) any breach
or failure in any respect by the Company to comply with any provision of
Section 15
of this Certificate of Designations,
except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for
a period of five (5) consecutive Trading Days; and
(xvii) any
provision of this Certificate of Designations shall at any time for any reason (other than pursuant to the express terms hereof)
cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be
contested, directly or indirectly, by the Company or any Subsidiary, or a proceeding shall be commenced by the Company or any Subsidiary
seeking to establish the invalidity or unenforceability thereof.
(b)
Notice
of a Triggering Event; Redemption Right
. Upon the occurrence of a Triggering Event with respect to the Preferred Shares, the
Company shall within two (2) Business Days deliver written notice thereof via electronic mail and overnight courier (with next
day delivery specified) (an “
Triggering Event Notice
”) to each Holder. At any time after the earlier of a Holder’s
receipt of a Triggering Event Notice and such Holder becoming aware of a Triggering Event (such earlier date, the “
Triggering
Event Right Commencement Date
”) and ending (such ending date, the “
Triggering Event Right Expiration Date
”,
and each such period, an “
Triggering Event Redemption Right Period
”) on the twentieth (20
th
) Trading
Day after the later of (x) the date such Triggering Event is cured and (y) such Holder’s receipt of a Triggering Event
Notice that includes (I) a reasonable description of the applicable Triggering Event, (II) a certification as to whether, in the
opinion of the Company, such Triggering Event is capable of being cured and, if applicable, a reasonable description of any existing
plans of the Company to cure such Triggering Event and (III) a certification as to the date the Triggering Event occurred and,
if cured on or prior to the date of such Triggering Event Notice, the applicable Triggering Event Right Expiration Date, such
Holder may require the Company to redeem (regardless of whether such Triggering Event has been cured on or prior to the Triggering
Event Right Expiration Date), subject to Section 5(c), all or any of the Preferred Shares by delivering written notice thereof
(the “
Triggering Event Redemption Notice
”) to the Company, which Triggering Event Redemption Notice shall indicate
the number of the Preferred Shares such Holder is electing to redeem. Each of the Preferred Shares subject to redemption by the
Company pursuant to this
Section 5(b)
shall be redeemed by the Company at a price equal to the greater of (i) the product
of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion
Rate with respect to the Conversion Amount in effect at such time as such Holder delivers a Triggering Event Redemption Notice
multiplied by (Y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date
immediately preceding such Triggering Event and ending on the date the Company makes the entire payment required to be made under
this
Section 5(b)
(the “
Triggering Event Redemption Price
”). Redemptions required by this
Section
5(b)
shall be made in accordance with the provisions of
Section 12
. To the extent redemptions required by this
Section
5(b)
are deemed or determined by a court of competent jurisdiction to be prepayments of the Preferred Shares by the Company,
such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this
Section 5(b)
,
but subject to
Section 4(d)
, until the Triggering Event Redemption Price (together with any Late Charges thereon) is paid
in full, the Conversion Amount submitted for redemption under this
Section 5(b)
(together with any Late Charges thereon)
may be converted, in whole or in part, by such Holder into Common Stock pursuant to the terms of this Certificate of Designations.
In the event of a partial redemption of the Preferred Shares held by a Holder pursuant hereto, the number of Preferred Shares
of such Holder redeemed shall be deducted from the Installment Amount(s) of such Holder relating to the applicable Installment
Date(s) as set forth in the Triggering Event Redemption Notice. In the event of the Company’s redemption of any of the Preferred
Shares under this
Section 5(b)
, a Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for such Holder. Accordingly, any redemption premium due under this
Section 5(b)
is intended by the parties to be, and
shall be deemed, a reasonable estimate of such Holder’s actual loss of its investment opportunity and not as a penalty.
(c)
Redemption
upon Failure to Receive Stockholder Ratification
. Notwithstanding anything to the contrary herein, in the event of the occurrence
of a Triggering Event pursuant to
Section 5(a)(iii)
hereof, (i) the maximum number of Preferred Shares that shall be redeemable
solely as a result thereof shall be the maximum number of whole Preferred Shares such that the aggregate Triggering Event Redemption
Price paid in connection with such Triggering Event shall not exceed $30,000,000 (“
Stockholder Ratification Failure Redemption
Cap
”) and (ii) any Preferred Shares which shall not have been redeemed as a result of the Stockholder Ratification Failure
Redemption Cap shall remain outstanding. In the event that not all outstanding Preferred Shares subject to a Triggering Event Redemption
Notice delivered to the Company within the applicable Triggering Event Redemption Right Period may be redeemed due to the operation
of the Stockholder Ratification Failure Redemption Cap, each Holder shall be entitled to elect to redeem up to such portion of
the Stockholder Ratification Failure Redemption Cap based upon such Holder’s pro rata ownership of the total number of Preferred
Shares outstanding at the time the Triggering Event Notice with respect to such Triggering Event is received (the “
Basic
Stockholder Ratification Failure Redemption Amount
”) and to indicate in writing to the Company at the time of such election
such additional number of Preferred Shares (the “
Additional Stockholder Ratification Failure Redemption Amount”
)
which such Holder would elect to redeem if all Holders do not elect to redeem their entire Basic Stockholder Ratification Failure
Redemption Amounts or if any Holder fails to deliver a Triggering Event Redemption Notice during the applicable Triggering Event
Redemption Right Period. In the event that any Holder elects to redeem less than such Holder’s Basic Stockholder Ratification
Failure Redemption Amount or fails to deliver a Triggering Event Redemption Notice during the applicable Triggering Event Redemption
Right Period, the Company shall also redeem Preferred Shares of Holders who have indicated an Additional Stockholder Ratification
Failure Redemption Amount, in amount up to the number of Preferred Shares for which such Holder(s) have submitted an Additional
Stockholder Ratification Failure Redemption Amount; provided that if the redemption of the aggregate Additional Stockholder Ratification
Failure Redemption Amount would result in the redemption of Preferred Shares in an amount in excess of the Stockholder Ratification
Failure Redemption Cap, the Preferred Shares shall be redeemed from each Holder that has indicated an Additional Stockholder Ratification
Failure Redemption Amount pro rata based on the Additional Stockholder Ratification Failure Redemption Amount indicated by such
Holder compared to the Additional Stockholder Ratification Failure Redemption Amounts indicated by all Holders. For the avoidance
of doubt, in no event shall the Triggering Event Redemption Price paid in redemption of the total number of Preferred Shares being
redeemed upon a Triggering Event caused by
Section 5(a)(iii)
exceed the Stockholder Ratification Failure Redemption Cap.
(d)
Mandatory
Redemption upon Bankruptcy Triggering Event
. Notwithstanding anything to the contrary herein, and notwithstanding any conversion
that is then required or in process, upon any Bankruptcy Triggering Event occurring prior or following to the Maturity Date, the
Company shall immediately redeem, in cash, each of the Preferred Shares then outstanding at a redemption price equal to the applicable
Triggering Event Redemption Price (calculated as if such Holder shall have delivered the Triggering Event Redemption Notice immediately
prior to the occurrence of such Bankruptcy Triggering Event), without the requirement for any notice or demand or other action
by any Holder or any other Person, provided that a Holder may, in its sole discretion, waive such right to receive payment upon
a Bankruptcy Triggering Event, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any
other Holder hereunder, including any other rights in respect of such Bankruptcy Triggering Event, any right to conversion, and
any right to payment of such Triggering Event Redemption Price to another Holder or any other Redemption Price, as applicable.
6.
Rights
Upon Fundamental Transactions
.
(a)
Assumption
.
The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Certificate of Designations in accordance with the provisions of this
Section 6(a)
pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders, including agreements to deliver
to each Holder in exchange for such Preferred Shares a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Certificate of Designations, including, without limitation, having a stated value and dividend
rate equal to the Stated Value and Default Dividend Rate and having similar ranking to the Preferred Shares, and reasonably satisfactory
to the Required Holders. 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 Certificate of Designations 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 Certificate of Designations with the same effect as if such Successor
Entity had been named as the Company herein and therein. In addition to the foregoing, upon consummation of a Fundamental Transaction,
the Successor Entity shall deliver to each Holder confirmation that there shall be issued upon conversion or redemption of the
Preferred Shares at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items still issuable under
Sections 7(b)
and
18
, which
shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Preferred Shares prior to such Fundamental
Transaction, such shares of common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which each
Holder would have been entitled to receive upon the happening of such Fundamental Transaction had all the Preferred Shares held
by each Holder been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion
of the Preferred Shares contained in this Certificate of Designations), as adjusted in accordance with the provisions of this Certificate
of Designations. Notwithstanding the foregoing, any Holder may elect, at its sole option, by delivery of written notice to the
Company to waive this
Section 6(a)
to permit the Fundamental Transaction without the assumption of the Preferred Shares.
The provisions of this
Section 6
shall apply similarly and equally to successive Fundamental Transactions and shall be applied
without regard to any limitations on the conversion or redemption of the Preferred Shares.
(b)
Change
of Control Redemption Right
. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation
of a Change of Control (the “
Change of Control Date
”), but not prior to the public announcement of such Change
of Control, the Company shall deliver written notice thereof via electronic mail and overnight courier (next day delivery selected)
to each Holder (a “
Change of Control Notice
”). At any time during the period beginning after a Holder’s
receipt of a Change of Control Notice or such Holder becoming aware of a Change of Control if a Change of Control Notice is not
delivered to such Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty
(20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice,
such Holder may require the Company to redeem all or any portion of such Holder’s Preferred Shares by delivering written
notice thereof (“
Change of Control Redemption Notice
”) to the Company, which Change of Control Redemption Notice
shall indicate the number of Preferred Shares such Holder is electing to have the Company redeem. Each Preferred Share subject
to redemption pursuant to this
Section 6(b)
shall be redeemed by the Company in cash at a price equal to the greatest of
(i) the product of (x) the Redemption Premium multiplied by (y) the Conversion Amount being redeemed, (ii) the product of (x) the
Conversion Amount being redeemed multiplied by (y) the quotient determined by dividing (I) the greatest Closing Sale Price of the
shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur of (1) the consummation
of the applicable Change of Control and (2) the public announcement of such Change of Control and ending on the date such Holder
delivers the Change of Control Redemption Notice by (II) the Conversion Price then in effect and (iii) the product of (x)
the Conversion Amount being redeemed multiplied by (y) the quotient of (A) the aggregate cash consideration and the aggregate
cash value of any non-cash consideration per share of Common Stock to be paid to such holders of the shares of Common Stock upon
consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued
at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such
Change of Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of
such proposed Change of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public
announcement of such proposed Change of Control) divided by (B) the Conversion Price then in effect (the “
Change of Control
Redemption Price
”). Redemptions required by this
Section 6(b)
shall have priority to payments to all other stockholders
of the Company in connection with such Change of Control. To the extent redemptions required by this
Section 6(b)
are deemed
or determined by a court of competent jurisdiction to be prepayments of the Preferred Shares by the Company, such redemptions shall
be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this
Section 6(b)
, but subject to
Section
4(d)
, until the applicable Change of Control Redemption Price (together with any Late Charges thereon) is paid in full to the
applicable Holder, the Preferred Shares submitted by such Holder for redemption under this
Section 6(b)
may be converted,
in whole or in part, by such Holder into Common Stock pursuant to
Section 4
or in the event the Conversion Date is after
the consummation of such Change of Control, stock or equity interests of the Successor Entity substantially equivalent to the Company’s
shares of Common Stock pursuant to
Section 4
. In the event of a partial redemption of the Preferred Shares held by a Holder
pursuant hereto, the number of Preferred Shares of such Holder redeemed shall be deducted from the Installment Amount(s) of such
Holder relating to the applicable Installment Date(s) as set forth in the Change of Control Redemption Notice. In the event of
the Company’s redemption of any of the Preferred Shares under this
Section 6(b)
, such Holder’s damages would
be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty
of the availability of a suitable substitute investment opportunity for a Holder. Accordingly, any redemption premium due under
this
Section 6(b)
is intended by the parties to be, and shall be deemed, a reasonable estimate of such Holder’s
actual loss of its investment opportunity and not as a penalty. The Company shall make payment of the applicable Change of Control
Redemption Price concurrently with the consummation of such Change of Control if a Change of Control Redemption Notice is received
prior to the consummation of such Change of Control and within two (2) Trading Days after the Company’s receipt of such notice
otherwise (the “
Change of Control Redemption Date
”). Redemptions required by this
Section 6
shall be
made in accordance with the provisions of
Section 12
.
7.
Right
of Participation; Rights Upon Issuance of Purchase Rights and Other Corporate Events
.
(a)
Right
of Participation
.
(i) From the
date hereof until first (1
st
) anniversary of the Initial Issuance Date, the Company will not (A) directly or indirectly,
file any registration statement with the SEC with respect to any Subsequent Placement (as defined below) and shall not file any
prospectus supplement with respect to any Subsequent Placement or (B) directly or indirectly, offer, sell, grant any option
to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any
of its or its Subsidiaries’ equity or equity equivalent securities, including without limitation any debt, preferred stock
or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable
or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition or announcement
being referred to as a “
Subsequent Placement
”) unless the Company shall have first complied with this
Section
7(a)
.
(ii) The Company
shall deliver to each Holder an irrevocable written notice (the “
Offer Notice
”) of any proposed or intended
issuance or sale (the “
Offer
”) of the securities being offered (the “Offered Securities”) in a Subsequent
Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the anticipated price and other
material terms upon which they are to be issued or sold, and the number or amount of the Offered Securities to be issued or sold,
(C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued or sold and (D) offer
to issue and sell to such Holders at least thirty-five percent (35%) of the Offered Securities, allocated among such Holders (a)
based on such Holder’s pro rata ownership of the total number of Preferred Shares outstanding at the time of the Offer Notice
(the “
Basic Amount
”) and (b) with respect to each Holder that elects to purchase its Basic Amount, any additional
portion of the Offered Securities attributable to the Basic Amounts of other Holders as such Holder shall indicate it will purchase
or acquire should the other Holders subscribe for less than their Basic Amounts (the “
Undersubscription Amount
”),
which process shall be repeated until the Holders shall have an opportunity to subscribe for any remaining Undersubscription Amount;
provided that (i) the Company shall promptly notify each Holder of any changes to the anticipated price and other material terms
of the Offered Securities after the Offer Notice is sent and (ii) the Company shall provide each Holder reasonable notice (which
shall not be less than four (4) hours) of the final price (or formula therefor) of the Offered Securities before the Holders are
required to provide the Company any notice of their election to accept such Offer pursuant to
Section 7(a)(iii)
below.
(iii) To accept
an Offer, in whole or in part, such Holder must deliver a written notice to the Company prior to the end of the tenth (10th) Business
Day after such Holder’s receipt of the Offer Notice (the “
Offer Period
”), setting forth the portion of
such Holder’s Basic Amount that such Holder elects to purchase and, if such Holder shall elect to purchase all of its Basic
Amount, the Undersubscription Amount, if any, that such Holder elects to purchase (in either case, the “
Notice of Acceptance
”).
For the avoidance of doubt, in the event a Holder fails to timely deliver a Notice of Acceptance, such Holder shall be deemed to
have declined to participate in such Subsequent Placement. If the Basic Amounts elected to be subscribed for by all Holders are
less than the total of all of the Basic Amounts, then each Holder who has set forth an Undersubscription Amount in its Notice of
Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has
elected to be subscribed for; provided, however, that if the Undersubscription Amounts elected to be subscribed for exceed the
difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “
Available Undersubscription
Amount
”), each Holder who has elected to be subscribed for any Undersubscription Amount shall be entitled to purchase
only that portion of the Available Undersubscription Amount as the Basic Amount of such Holder bears to the total Basic Amounts
of all Holder that have elected to be subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent
its deems reasonably necessary. Notwithstanding anything to the contrary contained herein, if the Company desires to modify or
amend the terms and conditions of the Offer in any material respect, prior to the expiration of the Offer Period, the Company may
deliver to the Holders a new Offer Notice and the Offer Period shall expire on the second (2nd) Business Day after such Holder’s
receipt of such new Offer Notice.
(iv) The Company
shall have five (5) Business Days from the expiration of the Offer Period above (i) to offer, issue or sell all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given by the Holders (the “
Refused Securities
”)
pursuant to a definitive agreement (the “
Subsequent Placement Agreement
”), but only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons
or less favorable to the Company than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such
Subsequent Placement Agreement, if any and (b) either (x) the consummation, or the expected consummation, of the transactions contemplated
by such Subsequent Placement Agreement or (y) if a Subsequent Placement Agreement is executed, the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement
and any material documents contemplated therein filed as exhibits thereto.
(v) In the
event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms
specified in
Section 7(a)(iv)
above), then each Holder may, at its sole option and in its sole discretion, reduce the number
or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or
amount of the Offered Securities that such Holder elected to purchase pursuant to
Section 7(a)(iii)
above multiplied by
a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue
or sell (including Offered Securities to be issued or sold to Holders pursuant to
Section 7(a)(iv)
above prior to such reduction)
and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Holder so
elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue or
sell more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered
to the Holders in accordance with
Section 7(a)(ii)
above.
(vi) Upon the
closing of the issuance or sale of all or less than all of the Refused Securities, the Holders shall acquire from the Company,
and the Company shall issue to the Holders, the number or amount of Offered Securities specified in the Notices of Acceptance,
as reduced pursuant to
Section 7(a)(iv)
above if the Holders have so elected, upon the terms and conditions specified in
the Offer. The purchase by the Holders of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and the Holders of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and
substance to the Holders and their respective counsel;
provided
that, for the avoidance of doubt, this paragraph shall not
create any obligation on the Company to amend or modify, or seek to amend or modify, any of the terms or provisions of the Subsequent
Placement Agreement, or otherwise prohibit the Company from consummating the respective Subsequent Placement of Refused Securities
in accordance with the applicable Subsequent Placement Agreement.
(vii) Any Offered
Securities not acquired by the Holders or other Persons in accordance with
Section 7(a)(iv)
above may not be issued or sold
until they are again offered to the Holders under the procedures specified in this
Section 7(a)
.
(viii) The
Company and the Holders agree that if any Holder elects to participate in the Offer, (x) neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provisions whereby any Holder shall be required to agree to any restrictions in trading as to any securities
of the Company owned by such Holder prior to such Subsequent Placement and (y) the Holders shall be entitled to the same registration
rights provided to other investors in the Subsequent Placement.
(ix) Notwithstanding
anything to the contrary in this
Section 7(a)
and unless otherwise agreed to by the Holders, the Company shall either confirm
in writing to the Holders that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case in such a manner such that the Holders will not be in possession
of material non-public information, by the fifteenth (15th) Business Day following delivery of the Offer Notice. If by the fifteenth
(15th) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment of such transaction has been received by the Holders, such transaction
shall be deemed to have been abandoned and the Holders shall not be deemed to be in possession of any material, non-public information
with respect to the Company. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company
shall provide each Holder with another Offer Notice and each Holder will again have the right of participation set forth in this
Section 7(a)
. The Company shall not be permitted to deliver more than one such Offer Notice to the Holders in any 60 day
period (other than the Offer Notices contemplated by the last sentence of
Section 7(a)(iii)
of this Certificate of Designations).
Notwithstanding anything to the contrary herein, in no event shall delivery of any notice
in accordance with the requirements of this
Section 7(a)
constitute or be deemed to constitute a breach of the Company’s
obligation not to provide material non-public information regarding the Company to any Holder or any other Person;
provided
the Company then complies with the applicable requirement to publicly disclose such material, nonpublic information pursuant to
this
Section 7(a)(ix)
.
(x) This
Section
7(a)
shall not apply in connection with the issuance or deemed issuance of any Common Stock by the Company: (A) under any employee
benefit plan which has been approved by the Board, pursuant to which the Company’s securities may be issued to any employee,
officer or, director or consultant for services provided to the Company; (B) with respect to the Preferred Shares pursuant to the
terms of this Certificate of Designations; (C) upon conversion, exercise or exchange of any Options or Convertible Securities which
are outstanding on the day immediately preceding the Subscription Date, provided that such issuance of Common Stock upon exercise
of such Options or Convertible Securities is made pursuant to the terms of such Options or Convertible Securities in effect on
the date immediately preceding the Subscription Date and such Options or Convertible Securities are not amended, modified or changed
on or after the Subscription Date to increase the number of such securities or to decrease the exercise price, exchange price or
conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such
securities; or (D) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries,
an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities for the purpose of raising capital or to an entity whose primary business is investing in securities.
(b)
Purchase
Rights
. In addition to any adjustments pursuant to
Section 8
below, 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 all of
the record holders of any class of Common Stock (the “
Purchase Rights
”), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired
if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of all the Preferred Shares (without
taking into account any limitations or restrictions on the convertibility of the Preferred Shares) held by such Holder immediately
prior to 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 (provided, however, to the extent that such Holder’s right to participate in any such Purchase Right would
result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, then such Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall
be held in abeyance for such Holder until the earlier of (i) such time or times, if ever, as its right thereto would not result
in such Holder and the other Attribution Parties exceeding the Maximum Percentage) and (ii) the expiration date, the termination
date, the maturity date or other similar provision of such Purchase Rights, at which time or times such Holder shall be granted
such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to
be held similarly in abeyance) to the same extent as if there had been no such limitation.
(c)
Other
Corporate Events
. 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 ensure that each Holder will thereafter have the right to receive upon a conversion of all the Preferred Shares held by such
Holder (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which
such Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by such
Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility
of the Preferred Shares contained in this Certificate of Designations) or (ii) in lieu of the shares of Common Stock otherwise
receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection
with the consummation of such Corporate Event in such amounts as such Holder would have been entitled to receive had the Preferred
Shares held by such Holder initially been issued with conversion rights for the form of such consideration (as opposed to shares
of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant the
proceeding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this
Section 7
shall
apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion
or redemption of the Preferred Shares contained in this Certificate of Designations.
8.
Rights
Upon Issuance of Other Securities
.
(a)
Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock
. Without limiting any provision of
Section 7
or
Section 18
, if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
Without limiting any provision of
Section 7
or
Section 18
, if the Company at any time on or after the Subscription
Date combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more
classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior
to such combination will be proportionately increased. Any adjustment pursuant to this
Section 8(a)
shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this
Section
8(a)
occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price
shall be adjusted appropriately to reflect such event.
(b)
Holder’s
Right of Adjusted Conversion Price
. In addition to and not in limitation of the other provisions of this
Section 8(b)
,
at any time any Preferred Shares remain outstanding, if the Company in any manner issues or sells or enters into any agreement
to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “
Variable Price Securities
”)
that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock pursuant
to such Options or Convertible Securities, as applicable, at a price which varies or may vary with the market price of the shares
of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary
anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations
for such variable price being herein referred to as, the “
Variable Price
”), the Company shall provide written
notice thereof via electronic mail and overnight courier (next day delivery selected) to each Holder on the date of such agreement
and/or the issuance of such shares of Common Stock, Convertible Securities or Options, as applicable. From and after the date the
Company enters into such agreement or issues any such Variable Price Securities, each Holder shall have the right, but not the
obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of the Preferred Shares
by designating in the Conversion Notice delivered upon any conversion of Preferred Shares that solely for purposes of such conversion
such Holder is relying on the Variable Price rather than the Conversion Price then in effect. A Holder’s election to rely
on a Variable Price for a particular conversion of Preferred Shares shall not obligate such Holder to rely on a Variable Price
for any future conversions of Preferred Shares.
(c)
Calculations
.
All calculations under this
Section 8
shall be made by rounding to the nearest cent or the nearest 1/100
th
of
a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(d)
Voluntary
Adjustment by Company
. The Company may at any time any Preferred Shares remain outstanding reduce the then current Conversion
Price to any amount and for any period of time deemed appropriate by the Board.
9.
Installment
Conversion or Installment Redemption
.
(a)
General
.
On each applicable Installment Date, provided there has been no Equity Conditions Failure, the Company shall pay to each Holder
the applicable Installment Amount due on such date by converting such Installment Amount in accordance with this
Section 9
(an “
Installment Conversion
”); provided, however, that the Company may, at its option following notice to each
Holder as set forth below, pay the Installment Amount by redeeming such Installment Amount in cash (an “
Installment Redemption
”)
or by any combination of an Installment Conversion and an Installment Redemption so long as all of the outstanding applicable Installment
Amount due on any Installment Date shall be converted and/or redeemed by the Company on the applicable Installment Date, subject
to the provisions of this
Section 9
. On or prior to the date which is the eleventh (11
th
) Trading Day prior to
each Installment Date, but not earlier than the fifteenth (15
th
) Trading Day prior to the applicable Installment Date
(each, an “
Installment Notice Due Date
”), the Company shall deliver written notice (each, an “
Installment
Notice
” and the date all Holders receive such notice is referred to as to the “
Installment Notice Date
”),
to each Holder and such Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of such Holder shall
be converted in whole pursuant to an Installment Conversion or (B) (1) state that the Company elects to redeem for cash,
or is required to redeem for cash in accordance with the provisions of this Certificate of Designations, in whole or in part, the
applicable Installment Amount pursuant to an Installment Redemption and (2) specify the portion of such Installment Amount which
the Company elects or is required to redeem pursuant to an Installment Redemption (such amount to be redeemed in cash, the “
Installment
Redemption Amount
”) and the portion of the applicable Installment Amount, if any, with respect to which the Company will,
and is permitted to, effect an Installment Conversion (such amount of the applicable Installment Amount so specified to be so converted
pursuant to this
Section 9
is referred to herein as the “
Installment Conversion Amount
”), which amounts
when added together, must equal the entire applicable Installment Amount and (ii) if the applicable Installment Amount is to be
paid, in whole or in part, pursuant to an Installment Conversion, certify that there is not then an Equity Conditions Failure as
of the applicable Installment Notice Date. Each Installment Notice shall be irrevocable. If the Company does not timely deliver
an Installment Notice in accordance with this
Section 9
with respect to a particular Installment Date, then the Company
shall be deemed to have delivered an irrevocable Installment Notice confirming an Installment Conversion of the entire Installment
Amount payable on such Installment Date and shall be deemed to have certified that there is not then an Equity Conditions Failure
in connection with such Installment Conversion. The applicable Installment Conversion Amount (whether set forth in the applicable
Installment Notice or by operation of this
Section 9
) shall be converted in accordance with
Section 9(b)
and the
applicable Installment Redemption Amount shall be redeemed in accordance with
Section 9(c)
.
(b)
Mechanics
of Installment Conversion
. Subject to
Section 4(d)
, if the Company delivers an Installment Notice or is deemed to have
delivered an Installment Notice certifying that such Installment Amount is being paid, in whole or in part, in an Installment
Conversion in accordance with
Section 9(a)
, then the remainder of this
Section 9(b)
shall apply. The applicable
Installment Conversion Amount, if any, shall be converted on the applicable Installment Date at the applicable Installment Conversion
Price and the Company shall, on such Installment Date, deliver to each Holder’s account with DTC such shares of Common Stock
issued upon such conversion (subject to the reduction contemplated by the immediately following sentence and, if applicable, the
penultimate sentence of this
Section 9(b)
), provided that the Equity Conditions are then satisfied (or waived in writing
by such Holder) on such Installment Date and an Installment Conversion is not otherwise prohibited under any other provision of
the Certificate of Designations. If the Company confirmed (or is deemed to have confirmed by operation of
Section 9(a)
)
the conversion of the applicable Installment Conversion Amount, in whole or in part, and there was no Equity Conditions Failure
as of the applicable Installment Notice Date (or is deemed to have certified that the Equity Conditions in connection with any
such conversion have been satisfied by operation of
Section 9(a)
) but an Equity Conditions Failure occurred between the
applicable Installment Notice Date and any time through the applicable Installment Date (the “
Interim Installment Period
”),
the Company shall provide each Holder a subsequent notice to that effect. If there is an Equity Conditions Failure (which is not
waived in writing by such Holder) during such Interim Installment Period, then, at the option of such Holder designated in writing
to the Company, such Holder may require the Company to do any one or more of the following (but without duplication): (i) the
Company shall redeem all or any part designated by such Holder of the unconverted Installment Conversion Amount (such designated
amount is referred to as the “
Designated Redemption Amount
”) and the Company shall pay to such Holder within
three (3) days of such Installment Date, by wire transfer of immediately available funds, an amount in cash equal to 108% of such
Designated Redemption Amount, and/or (ii) the Installment Conversion shall be null and void with respect to all or any part designated
by such Holder of the unconverted Installment Conversion Amount and such Holder shall be entitled to all the rights of a holder
of the Preferred Shares with respect to such designated part of the Installment Conversion Amount;
provided
,
however
,
the Conversion Price for such Designated Redemption Amount shall thereafter be adjusted to equal the Installment Conversion Price
(determined as if the date of such designation were an Installment Date and conversions required by this
Section 9(b)
shall
be made in accordance with the provisions of
Section 4(c)
;
provided
,
further
, that in the event that the
sole cause of an Equity Conditions Failure during the applicable Equity Conditions Measuring Period was due to the Company’s
inability to deliver to such Holder Common Stock due to
Section 4(d)(i)
, which constitutes an Equity Conditions Failure
pursuant to clause (iii) of the definition of “Equity Conditions”, then, the Company may, at its option, elect to
either (x) pay (i) in cash the portion of the Installment Amount the payment of which would otherwise result in an Equity Conditions
Failure due to the Company’s inability to deliver to such Holder shares of Common Stock due to
Section 4(d)(i)
(irrespective
of any prior election or notice to pay such amount by converting all or some of the applicable Installment Amount into Common
Stock) pursuant to an Installment Redemption as if it had elected in the applicable Installment Notice to pay the applicable Installment
Amount pursuant to an Installment Redemption and (ii) the remainder of such Installment Amount in an Installment Conversion in
accordance with this
Section 9(b)
or (y) by (i) deferring the portion of such Installment Payment the payment of which
would otherwise result in an Equity Conditions Failure due to the Company’s inability to deliver to such Holder shares of
Common Stock due to
Section 4(d)(i)
to the immediately subsequent Installment, if any, and (ii) paying the remainder of
such Installment Amount in an Installment Conversion in accordance with this
Section 9(b)
and the Company shall deliver
a written notice to the Holders setting forth its election pursuant to this proviso at least one (1) Trading Day prior to the
applicable Installment Date. For the avoidance of doubt, subject to
Section 9(f)
, the Holder may waive the Equity Conditions
Failure and receive the Installment Conversion Amount through the conversion of the Installment Amount in an Installment Conversion.
If the Company fails to redeem any Designated Redemption Amount by the third (3
rd
) day following the applicable Installment
Date by payment of such amount by such date for any reason (including, without limitation, to the extent such payment is prohibited
pursuant to the DGCL), then such Holder shall have the rights set forth in
Section 12(a)
as if the Company failed to pay
the applicable Installment Redemption Price (as defined below) and all other rights under this Certificate of Designations (including,
without limitation, such failure constituting a Triggering Event described in
Section 5(a)(vi)
). Notwithstanding anything
to the contrary in this
Section 9(b)
, but subject to
Section 4(d)
, until the Company delivers Common Stock representing
the Installment Conversion Amount to such Holder, the Installment Conversion Amount may be converted by such Holder into Common
Stock pursuant to
Section 4
. In the event that a Holder elects to convert the Installment Conversion Amount prior to the
applicable Installment Date as set forth in the immediately preceding sentence, the Installment Conversion Amount so converted
shall be deducted from the Installment Amount(s) of such Holder relating to the applicable Installment Date(s) as set forth in
the applicable Conversion Notice. The Company shall pay any and all actual transfer, stamp, issuance and similar taxes that may
be payable with respect to the issuance and delivery of any shares of Common Stock in any Installment Conversion hereunder;
provided
,
however
, that if any such tax is due solely because the Holder requested such shares to be issued in a name other than
the Holder’s name, then the Holder will pay such tax.
(c)
Mechanics
of Installment Redemption
. If the Company elects or is required to effect an Installment Redemption, in whole or in part, in
accordance with
Section 9(a)
, then the Installment Redemption Amount, if any, shall be redeemed by the Company in cash on
the applicable Installment Date by wire transfer to each Holder of immediately available funds in an amount equal to 108% of the
applicable Installment Redemption Amount (the “
Installment Redemption Price
”). If the Company fails to redeem
such Installment Redemption Amount on such Installment Date by payment of the Installment Redemption Price for any reason (including,
without limitation, to the extent such payment is prohibited pursuant to the DGCL), then, at the option of such Holder designated
in writing to the Company (any such designation shall be a “Conversion Notice” for purposes of this Certificate of
Designations), such Holder may require the Company to convert all or any part of the Installment Redemption Amount at the Installment
Conversion Price (determined as if the date of such designation were an Installment Date). Notwithstanding anything to the contrary
in this
Section 9(c)
, but subject to
Section 4(d)
, until the Installment Redemption Price (together with any Late
Charges thereon) is paid in full, the Installment Redemption Amount (together with any Late Charges thereon) may be converted,
in whole or in part, by a Holder into Common Stock pursuant to
Section 4
. In the event a Holder elects to convert all or
any portion of the Installment Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding
sentence, the Installment Redemption Amount so converted shall be deducted from the Installment Amounts relating to the applicable
Installment Date(s) as set forth in the applicable Conversion Notice. Redemptions required by this
Section 9(c)
shall be
made in accordance with the provisions of
Section 12
.
(d)
Deferred
Installment Amount
. Notwithstanding any provision of this
Section 9(d)
to the contrary, each Holder may, at its option
and in its sole discretion, deliver a written notice to the Company no later than the second (2
nd
) Trading Day immediately
prior to the applicable Installment Date electing to have the payment of all or any portion of an Installment Amount of such Holder
payable on such Installment Date deferred (such amount deferred, the “
Deferral Amount
”, and such deferral, each
a “
Deferral
”) until any subsequent Installment Date selected by such Holder, in its sole discretion, in which
case, the Deferral Amount shall be added to, and become part of, such subsequent Installment Amount. Any notice delivered by such
Holder pursuant to this
Section 9(d)
shall set forth (i) the Deferral Amount requested by such Holder and (ii) the date
on which such Holder requests that such Deferral Amount shall now be payable. Notwithstanding anything herein to the contrary,
in no event shall a Holder be entitled to elect deferral pursuant to this
Section 9(d)
if such deferral would defer an Installment
Amount beyond the Maturity Date.
(e)
Acceleration
of Installment Amounts
. Notwithstanding any provision of this
Section 9
to the contrary, but subject to
Section 4(d)
,
with respect to any given Installment Date (the “
Current Installment Date
”), during the period commencing on
the Installment Notice Due Date immediately prior to such Current Installment Date and ending on the Trading Day immediately prior
to the next Installment Date (each, an “
Installment Period
”), each Holder may elect, at its option and in its
sole discretion, at one or more times in such Installment Period, to convert other Preferred Shares (each, an “
Acceleration
”,
and such aggregate number of Preferred Shares in an Acceleration, each, an “
Acceleration Amount
”), in whole
or in part, at the Installment Conversion Price of such Current Installment Date in accordance with the conversion procedures set
forth in
Section 4
hereunder,
mutatis mutandis
. Notwithstanding the foregoing, with respect to any given Installment
Period, the Holder may not elect to effect any Acceleration during such Installment Period if (i) the Conversion Amount of the
aggregate number of Preferred Shares subject to Acceleration in such Installment Period exceeds in the aggregate 300% of the Installment
Amount (not including any Deferral Amounts or Acceleration Amounts) for such Current Installment Date (which, for the avoidance
of doubt, assuming the Company elects an Installment Conversion for the full Installment Amount, could result in an Installment
Conversion and Accelerations that, collectively, represent 400% of the Installment Amount (not including any Deferral Amounts or
Acceleration Amounts)), or (ii) the Conversion Amount of the aggregate number of Preferred Shares subject to prior Accelerations
exceeds in the aggregate twelve (12) times the Installment Amount (not including any Deferral Amounts or Acceleration Amounts)
for such Current Installment Date.
(f)
Waiver
of Equity Conditions Failure
. Notwithstanding anything herein to the contrary, in no event shall a Holder be entitled to
waive an Equity Conditions Failure due to the failure of the Equity Conditions set forth in clauses (iii), (iv), (ix)(C)
and/or (xii) of such definition.
10.
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 Certificate of
Designations, and will at all times in good faith carry out all the provisions of this Certificate of Designations and take all
action as may be required to protect the rights of the Holders hereunder. Without limiting the generality of the foregoing or any
other provision of this Certificate of Designations, the Company (a) shall not increase the par value of any shares of Common
Stock receivable upon the conversion of any Preferred Shares above the Conversion Price then in effect, (b) shall take all such
actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the conversion of Preferred Shares and (c) shall, after the date the Company obtains the Stockholder
Ratification and so long as any Preferred Shares are outstanding, take all action reasonably necessary to reserve and keep available
out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Preferred
Shares at the Conversion Price then in effect, the Required Reserve Amount (as defined in
Section 11(a)
). Notwithstanding
anything herein to the contrary, if after the date that is one hundred twenty (120) calendar days after the Initial Issuance Date,
each Holder is not permitted to convert such Holder’s Preferred Shares in full for any reason (other than pursuant to restrictions
set forth in
Section 4(d)(i)
hereof), the Company shall use its reasonable best efforts to promptly remedy such failure,
including, without limitation, seeking to obtain such consents or approvals as necessary to effect such conversion into shares
of Common Stock.
11.
Authorized
Shares
.
(a)
Reservation
.
So long as any Preferred Shares remain outstanding, the Company shall at all times after the date the Company obtains the Stockholder
Ratification, reserve at least 150% of the number of shares of Common Stock as shall from time to time be necessary to effect the
conversion of the Preferred Shares that then remain outstanding (without regard to any limitations on conversions), including without
limitation, pursuant to Installment Conversions, Triggering Event Conversion, if any, and Accelerations (the “
Required
Reserve Amount
”). The Required Reserve Amount (including, without limitation, each increase in the number of shares so
reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the
Initial Issuance Date or increase in the number of reserved shares, as the case may be (the “
Authorized Share Allocation
”).
In the event that a Holder shall sell or otherwise transfer any of such Holder’s Preferred Shares, each transferee shall
be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any Preferred Shares shall be allocated to the remaining Holders, pro rata based on the number
of the Preferred Shares then held by the Holders.
(b)
Insufficient
Authorized Shares
. If, notwithstanding
Section 11(a)
and not in limitation thereof, while any of the Preferred Shares
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 conversion of the Preferred Shares at least a number of shares of Common Stock equal
to the Required Reserve Amount (an “
Authorized Share Failure
”), then the Company shall immediately 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 Preferred Shares 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 seventy-five
(75) days after the occurrence of such Authorized Share Failure, the Company shall either (x) obtain the written consent of its
stockholders for the approval of an increase in the number of authorized shares of Common Stock and provide each stockholder with
an information statement with respect thereto or (y) seek to obtain stockholder approval at a meeting of its stockholders for an
increase in the number of authorized shares of Common Stock and, in each case, file an amendment to the Company’s Certificate
of Incorporation making effective the necessary increase in the number of authorized shares of Common Stock within such seventy-five
(75) day period. 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. Notwithstanding the foregoing, if during
any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of
its issued and outstanding Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company
may satisfy this obligation by obtaining such consent, submitting for filing with the SEC an Information Statement on Schedule
14C and filing an amendment to the Company’s Certificate of Incorporation making effective the necessary increase in the
number of authorized shares of Common Stock. In the event that the Company is prohibited from issuing shares of Common Stock to
a Holder upon any conversion due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized
but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “
Authorized Failure Shares
”),
in lieu of delivering such Authorized Failure Shares to such Holder, the Company shall pay cash within five (5) Trading Days in
exchange for the redemption of such portion of the Conversion Amount convertible into such Authorized Failure Shares at a price
equal to the sum of (i) the product of (x) such number of Authorized Failure Shares and (y) the highest sale price of the Common
Stock on the attempted Conversion Date; and (ii) to the extent such Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Holder of Authorized Failure Shares, any reasonable and documented
brokerage commissions and other out-of-pocket expenses, if any, of such Holder incurred in connection therewith. For the avoidance
of doubt, to the extent that the Company makes a payment contemplated by the foregoing sentence, the applicable portion of the
shares of Preferred Stock to which the Authorized Failure Shares applied shall no longer be outstanding.
12.
Redemptions.
(a)
General
.
If a Holder has submitted a Triggering Event Redemption Notice in accordance with
Section 5(b)
, the Company shall
deliver the applicable Triggering Event Redemption Price to such Holder in cash within two (2) Business Days after the
Company’s receipt of such Holder’s Triggering Event Redemption Notice. If a Holder has submitted a Change of
Control Redemption Notice in accordance with
Section 6(b)
, the Company shall deliver the applicable Change of Control
Redemption Price to such Holder in cash concurrently with the consummation of such Change of Control if such notice is
received prior to the consummation of such Change of Control and within five (5) Business Days after the Company’s
receipt of such notice otherwise. The Company shall deliver the applicable Installment Redemption Price to each Holder in
cash on the applicable Installment Date. If a Holder has submitted a Maturity Redemption Notice in accordance with
Section
13
below, the Company shall deliver the applicable Maturity Redemption Price to such Holder on the applicable Maturity
Redemption Date. Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time a
Holder is entitled to receive a cash payment under any other provision of this Certificate of Designations, at the option of
such Holder delivered in writing to the Company, the applicable Redemption Price hereunder shall be increased by the amount
of such cash payment owed to such Holder under such other provision of this Certificate of Designations and, upon payment in
full or conversion in accordance herewith, shall satisfy the Company’s payment obligation under such other provision of
this Certificate of Designations. In the event of a redemption of less than all of the Preferred Shares, the Company shall
promptly cause to be issued and delivered to such Holder a new Preferred Share Certificate (in accordance with
Section
21
) (or evidence of the creation of a new Book-Entry) representing the number of Preferred Shares which have not been
redeemed. In the event that the Company does not pay the applicable Redemption Price to a Holder within the time
period required for any reason (including, without limitation, to the extent such payment is prohibited pursuant to the
DGCL), at any time thereafter and until the Company pays such unpaid Redemption Price in full, such Holder shall have the
option, in lieu of redemption, to require the Company to promptly return to such Holder all or any of the Preferred Shares
that were submitted for redemption and for which the applicable Redemption Price (together with any Late Charges thereon) has
not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void
with respect to such Preferred Shares, (y) the Company shall promptly and in any event within five (5) Trading Days return
the applicable Preferred Share Certificate, or issue a new Preferred Share Certificate (in accordance with
Section
21(d)
), to such Holder, (unless the Preferred Shares are held in Book-Entry form, in which case the Company shall deliver
evidence to such Holder that a Book-Entry for such Preferred Shares then exists) and in each case the Additional Amount of
such Preferred Shares shall be increased by an amount equal to the difference between (1) the applicable Redemption Price (as
the case may be, and as adjusted pursuant to this
Section 12
, if applicable) minus (2) the Stated Value portion of the
Conversion Amount submitted for redemption and (z) the Conversion Price of such Preferred Shares shall be automatically
adjusted with respect to each conversion effected thereafter by such Holder to the lowest of (A) the Conversion Price as in
effect on the date on which the applicable Redemption Notice is voided, (B) 85% of the lowest Closing Bid Price of the Common
Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the
Company and ending on and including the date on which the applicable Redemption Notice is voided, and (C) 85% of the quotient
of (I) the sum of the five (5) lowest VWAPs of the Common Stock during the twenty (20) consecutive Trading Day period ending
and including the Trading Day immediately preceding the applicable Conversion Date divided by (II) five (5) (it being
understood and agreed that all such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period). For the avoidance of doubt, if the Conversion Price is subject
to adjustment pursuant to the immediately preceding clause (z), the Conversion Price shall not also be subject to
adjustment pursuant to
Section 4(e)
. A Holder’s delivery of a notice voiding a Redemption Notice and exercise of
its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges which
have accrued prior to the date of such notice with respect to the Preferred Shares subject to such notice.
(b)
Redemption
by Multiple Holders
. Upon the Company’s receipt of a Redemption Notice from any Holder for redemption or repayment as
a result of an event or occurrence substantially similar to the events or occurrences described in
Section 5(b)
or
Section
6(b)
, the Company shall promptly, but no later than one (1) Business Day of its receipt thereof, forward to each other Holder
by electronic mail a copy of such notice. If the Company receives one or more Redemption Notices, during the seven (7) Business
Day period beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the initial
Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt of the
initial Redemption Notice and the Company is unable to redeem all amounts designated in such initial Redemption Notice and such
other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata amount from
each Holder based on the Stated Value of the Preferred Shares submitted for redemption pursuant to such Redemption Notices received
by the Company during such seven (7) Business Day period.
13.
Holder
Optional Redemption after Maturity Date
. At any time from and after the tenth (10th) Business Day prior to the Maturity Date,
any Holder may by delivery of written notice thereof to the Company require the Company to redeem (a “
Maturity Redemption
”)
all or any number of Preferred Shares then held by such Holder. The Company shall then deliver a written notice (the “
Maturity
Redemption Notice
”) to such Holder within two (2) Trading Days of receipt thereof (the date the Company delivers such
notice, a “
Maturity Redemption Notice Date
”) electing to redeem such remaining Preferred Shares either (i) by
paying cash at a purchase price equal to 108% of the Conversion Amount of such Preferred Shares or (ii) provided that no Equity
Conditions Failure occurs from the Maturity Redemption Notice Date through the Maturity Redemption Date (as defined below), by
paying a number of Common Stock calculated by dividing the Conversion Amount of such remaining Preferred Shares by the Installment
Conversion Price determined as if the Maturity Redemption Date was an Installment Date (the “
Maturity Redemption Price
”).
If the Company elects to redeem such remaining Preferred Shares in cash, such cash shall be paid on the same day as the delivery
of the Maturity Redemption Notice (such date, in such event, being “the
Maturity Redemption Date
”). If the Company
elects instead to redeem such remaining Preferred Shares in shares of Common Stock in accordance with clause (ii) of the second
sentence of this
Section 13
, the Maturity Redemption Notice shall state the date the Company is required to pay to such
Holder such Maturity Redemption Price (such date, in such case, being the Maturity Redemption Date), which date shall be on the
twelfth (12
th
) Trading Date following the Maturity Redemption Notice Date. Redemptions required by this
Section 13
shall be made in accordance with the provisions of
Section 12
.
14.
Voting
Rights
. Holders shall have no voting rights, except on matters required by law (including without limitation, the DGCL) or
by this Certificate of Designations to be submitted to a class vote of the holders of the Preferred Shares. To the extent that
under the DGCL the vote of the holders of the Preferred Shares, voting separately as a class or series, as applicable, is required
to authorize a given action of the Company, the affirmative vote or consent of the Required Holders of the shares of the Preferred
Shares, voting together in the aggregate and not in separate series unless required under the DGCL, represented at a duly held
meeting at which a quorum is presented or by written consent of the Required Holders (except as otherwise may be required under
the DGCL), voting together in the aggregate and not in separate series unless required under the DGCL, shall constitute the approval
of such action by both the class or the series, as applicable. Subject to
Section 4(d)
, to the extent that under the DGCL
holders of the Preferred Shares are entitled to vote on a matter with holders of shares of Common Stock, voting together as one
class, each Preferred Share shall entitle the holder thereof to cast that number of votes per share as is equal to the number of
shares of Common Stock into which it is then convertible (subject to the ownership limitations specified in
Section 4(d)
hereof) on the record date for determining the stockholders of the Company eligible to vote on such matters as the date as of which
the Conversion Price is calculated. Holders of the Preferred Shares shall be entitled to written notice of all stockholder meetings
or written consents (and copies of proxy materials and other information sent to stockholders) with respect to which they would
be entitled to vote, which notice would be provided pursuant to the Company’s bylaws and the DGCL.
15.
Covenants
.
(a)
Restriction
on Transfer of Assets
. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the
Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other
than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company
and its Subsidiaries in the ordinary course of business consistent with its past practice, (ii) sales of inventory and product
in the ordinary course of business or (iii) sales, leases, licenses, assignments, transfers, conveyances and other dispositions
of such assets or rights by the Company and/or its wholly-owned Subsidiaries to the Company and/or any of its wholly-owned Subsidiaries.
(b)
Change
in Nature of Business
. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly
contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially
related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, modify its or their corporate structure or purpose.
(c)
Preservation
of Existence, Etc
. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, except as could not reasonably be expected to result in a Material Adverse
Effect.
(d)
Maintenance
of Properties, Etc
. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases
to which it is a party as lessee or under which it occupies property, except as could not reasonably be expected to result in a
Material Adverse Effect.
(e)
Maintenance
of Intellectual Property
. The Company will, and will cause each of its Subsidiaries to, take all action reasonably necessary
or advisable to maintain all of the Intellectual Property Rights of the Company and/or any of its Subsidiaries that are necessary
or material to the conduct of its business in full force and effect, except as could not reasonably be expected to result in a
Material Adverse Effect.
(f)
Maintenance
of Insurance
. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such
amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in similar businesses similarly situated, except as could
not reasonably be expected to result in a Material Adverse Effect.
(g)
Transactions
with Affiliates
. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of
business in a manner and to an extent consistent with past practice or otherwise necessary or desirable for the prudent operation
of its business, in each case, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable
in a comparable arm’s length transaction with a Person that is not an Affiliate thereof.
(h)
Restricted
Issuances
.
(i) The Company
shall not, directly or indirectly, without the prior written consent of the Required Holders of the Preferred Shares then outstanding,
(A) issue any Preferred Shares (other than as contemplated by this Certificate of Designations) or (B) issue any other securities
that would cause a breach or default under this Certificate of Designations.
(ii) For so
long as any Preferred Shares are outstanding, except with the prior approval of the Required Holders (whether at a duly called
meeting or by written consent), the Company shall not, and shall not permit or suffer its Subsidiaries to, incur Indebtedness or
enter into any other agreement, contract or understanding, if such Indebtedness, agreement, contract or understanding prohibits
the Company from making any cash redemptions of the Preferred Shares or cash payments on or in respect of the Preferred Shares;
provided that no such approval shall be required for incurring (a) trade payables in the ordinary course of business consistent
with past practice, or (b) Indebtedness incurred by special purpose Subsidiaries created by the Company for the purpose of financing
individual projects undertaken by the Company for the direct benefit of specific customers of the Company, including without limitation
FuelCell Energy Finance, LLC and any subsidiaries thereof; provided the Company provides three (3) Business Days’ notice
to the Holders prior to incurring such Indebtedness (such Indebtedness described in this proviso, “
Permitted Indebtedness
”).
Notwithstanding anything in this Certificate of Designations to the contrary, the Company and its Subsidiaries shall be permitted
to incur Permitted Indebtedness.
16.
Stockholder
Approval and Stockholder Ratification
.
(a) The
Company shall provide each stockholder entitled to vote at a special meeting of the stockholders of the Company (the
“
Stockholder Meeting
”) which shall be held as soon as reasonably possible following the mailing of the
proxy statement to the stockholders of the Company in respect thereof (the “
Approval Proxy Statement
”),
but not later than three (3) Business Days prior to the 120th calendar day following the Initial Issuance Date (the
“
Stockholder Meeting Outside Date
”), a copy of the Approval Proxy Statement, at the expense of the
Company, soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of a proposal
providing for issuance of the maximum number of shares of Common Stock issuable upon conversion of the Preferred Shares, in
each case in compliance with the rules and regulations of the Principal Market, the Certificate of Incorporation of the
Company, the Bylaws of the Company and applicable law (collectively, the “
Stockholder Approval
”, and the
date the Stockholder Approval is obtained, the “
Stockholder Approval Date
”). As reasonably promptly as
practicable after effectiveness of this Certificate of Designations, but in no event later than November 7, 2017, the Company
shall, in consultation with the Holders, prepare and file with the SEC, the preliminary Approval Proxy Statement and related
proxy materials in compliance with Section 14 of the 1934 Act. As reasonably promptly as practicable after comments, if any,
are received from the SEC thereon and after the furnishing by the Company and the Holders of all information required to be
contained therein, the Company shall, in consultation with the Holders, prepare and the Company shall file any required
amendments to the Approval Proxy Statement with the SEC. The Company shall notify the Holders reasonably promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to
the Approval Proxy Statement or for additional information and shall consult with the Holders regarding, and supply the
Holders with copies of, all correspondence between the Company or any of its representatives, on the one hand, and the SEC or
its staff, on the other hand, with respect to the Approval Proxy Statement. Prior to filing or mailing the initial Approval
Proxy Statement or any proposed amendment of or supplement to the Approval Proxy Statement, the Company shall provide the
Holders a reasonable opportunity to review and comment on such document and shall incorporate therein any reasonable comments
of the Holders thereto. The Company shall use its best efforts to have the Approval Proxy Statement cleared by the SEC and
shall thereafter mail to the stockholders of the Company as reasonably promptly as possible the Approval Proxy Statement and
all other proxy materials for the Stockholder Meeting.
(b) The
Company hereby covenants and agrees that (a) the Approval Proxy Statement will, when filed, comply as to form in all material respects
with the applicable requirements of the 1934 Act and (b) none of the information included or incorporated by reference in the Approval
Proxy Statement will, at the date it is first mailed to the stockholders of the Company or at the time of the Stockholder Meeting
or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(c) The
Company shall take, in accordance with applicable law and its Certificate of Incorporation and Bylaws, all action reasonably
necessary to convene the Stockholder Meeting as promptly as reasonably practicable but no later than January 5, 2018 and to
submit at the Stockholder Meeting for approval by the requisite vote of the stockholders of the Company the matters subject
to Stockholder Approval. In connection with the Stockholder Meeting and any adjournment or postponement thereof, (i) the
Board shall recommend that its stockholders vote in favor of all matters submitted thereto at such meeting
and (ii) neither the Board nor any committee thereof shall withdraw or modify, or propose or resolve to withdraw or
modify in a manner adverse to the Holders, such recommendation. The Company shall take all lawful action to solicit from
the stockholders of the Company proxies in favor of the Stockholder Approval and take all other action reasonably necessary
or advisable to secure the vote or consent of the stockholders that are required by the rules of Principal Market and
applicable law, including, if necessary or appropriate or if requested by the Holders, adjourning the Stockholder Meeting to
solicit additional proxies. The Company will enforce any and all voting agreements in respect of the matters subject to
the Stockholder Meeting.
(d) The
Company shall use its reasonable best efforts to obtain the Stockholder Ratification as contemplated by the preliminary proxy statement
filed by the Company on August 25, 2017 (the “
Ratification Proxy Statement
”). As reasonably promptly as practicable
after comments, if any, are received from the SEC thereon and after the furnishing by the Company and the Holders of all information
required to be contained therein, the Company shall, in consultation with the Holders, prepare and the Company shall file any required
amendments to the Ratification Proxy Statement with the SEC. The Company shall notify the Holders reasonably promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Ratification
Proxy Statement or for additional information and shall consult with the Holders regarding, and supply the Holders with copies
of, all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Ratification Proxy Statement.
(e) In
the event the Company fails to receive the Stockholder Approval or the Stockholder Ratification at the time such proposals are
considered by the Company’s stockholders, the Company shall use its reasonable best efforts to seek such Stockholder Approval
or Stockholder Ratification, as applicable, at a subsequent special meeting of the Company’s stockholders as soon as reasonably
practicable, but no later than 75 days following the special meeting at which the Company’s stockholders failed to provide
the Stockholder Approval or Stockholder Ratification. The Company shall continue to seek Stockholder Approval or Stockholder Ratification
at special meetings of the Company’s stockholders until such Stockholder Approval or Stockholder Ratification is obtained
with each new special meeting to be held as soon as reasonably practicable but no later than 75 days following the date of the
prior special meeting at which such proposal was considered by the Company’s stockholders.
(f) Notwithstanding
Section 33
to the contrary, in no event shall the Company be required to publicly disclose any material, nonpublic information
provided to the Holders pursuant to this
Section 16
prior to such time, if ever, it is required to do so under applicable
securities laws;
provided
,
however
, that the Company’s rights under this
Section 16(f)
shall not serve
to cure any facts or circumstances that would otherwise result in an Equity Conditions Failure.
17.
Liquidation,
Dissolution, Winding-Up
. In the event of a Liquidation Event, the Holders shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings available for distribution to its stockholders (the “
Liquidation
Funds
”), after any amount that is required to be paid to Senior Preferred Stock, if any, and before any amount shall
be paid to the holders of any of shares of Junior Stock, but
pari passu
with any Parity Stock then outstanding, an amount
per Preferred Share equal to the greater of (i) the Conversion Amount thereof on the date of such payment and (ii) the amount per
share such Holder would receive if such Holder converted such Preferred Shares into Common Stock immediately prior to the date
of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders
of shares of Parity Stock, then each Holder and each holder of Parity Stock shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such Holder and such holder of Parity Stock as a liquidation preference,
in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation
Funds payable to all Holders and all holders of shares of Parity Stock. To the extent necessary, the Company shall cause such actions
to be taken by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation
Event to be distributed to the Holders in accordance with this
Section 17
. All the preferential amounts to be paid to the
Holders under this
Section 17
shall be paid or set apart for payment before the payment or setting apart for payment of
any amount for, or the distribution of any Liquidation Funds of the Company to the holders of shares of Junior Stock in connection
with a Liquidation Event as to which this
Section 17
applies.
18.
Distribution
of Assets
. In addition to any adjustments pursuant to
Section 8
, if the Company shall declare or make any dividend or
other distributions of its assets (or rights to acquire its assets) to any or all 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)
(the “
Distributions
”), then each Holder, as holders of Preferred Shares, will be entitled to such Distributions
as if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Preferred Shares (without
taking into account any limitations or restrictions on the convertibility of the Preferred Shares) immediately prior to the date
on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common
Stock are to be determined for such Distributions (
provided
,
however
, that to the extent that such Holder’s
right to participate in any such Distribution would result in such Holder and the other Attribution Parties exceeding the Maximum
Percentage, then such Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent)
and the portion of such Distribution shall be held in abeyance for such Holder until such time or times as its right thereto would
not result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times, if any, such
Holder shall be granted such rights (and any rights under this
Section 18
on such initial rights or on any subsequent such
rights to be held similarly in abeyance) to the same extent as if there had been no such limitation).
19.
Vote
to Change the Terms of or Issue Preferred Shares
. In addition to any other rights provided by law, except where the vote or
written consent of the holders of a greater number of shares is required by law or by another provision of the Certificate of Incorporation,
without first obtaining the affirmative vote at a meeting duly called for such purpose or the written consent without a meeting
of the Required Holders, voting together as a single class, the Company shall not: (a) amend or repeal any provision of, or add
any provision to, its Certificate of Incorporation or bylaws, or file any certificate of designations or articles of amendment
of any series of shares of preferred stock, if such action would adversely alter or change the preferences, rights, privileges
or powers, or restrictions provided for the benefit, of the Preferred Shares hereunder, regardless of whether any such action shall
be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise; (b) increase or decrease
(other than by conversion) the authorized number of Preferred Shares; (c) without limiting any provision of
Section 2
, create
or authorize (by reclassification or otherwise) any new class or series of Senior Preferred Stock or Parity Stock; (d) purchase,
repurchase or redeem any shares of Junior Stock (other than pursuant to the terms of the Company’s equity incentive plans
and options and other equity awards granted under such plans (that have in good faith been approved by the Board)); (e) without
limiting any provision of
Section 3
, pay dividends or make any other distribution on any shares of any Junior Stock; or
(f) without limiting any provision of
Section 10
, whether or not prohibited by the terms of the Preferred Shares, circumvent
a right of the Preferred Shares hereunder.
20.
Transfer
of Preferred Shares
. A Holder may transfer some or all of its Preferred Shares without the consent of the Company. No Preferred
Shares may be sold or transferred other than to a U.S. person as described in section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended.
21.
Reissuance
of Preferred Share Certificates and Book Entries
.
(a)
Transfer
.
If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate
to the Company (or, if the Preferred Shares are held in Book-Entry form, a written instruction letter to the Company), whereupon
the Company will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate (in accordance with
Section 21(d)
) (or evidence of the transfer of such Book-Entry), registered as such Holder may request, representing the
outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred
Shares is being transferred, a new Preferred Share Certificate (in accordance with
Section 21(d)
) to such Holder representing
the outstanding number of Preferred Shares not being transferred (or evidence of such remaining Preferred Shares in a Book-Entry
for such Holder). Such Holder and any assignee, by acceptance of the Preferred Share Certificate or evidence of Book-Entry issuance,
as applicable, acknowledge and agree that, by reason of the provisions of
Section 4(c)(iii)
following conversion or redemption
of any of the Preferred Shares, the outstanding number of Preferred Shares represented by the Preferred Shares may be less than
the number of Preferred Shares stated on the face of the Preferred Shares.
(b)
Lost,
Stolen or Mutilated Preferred Share Certificate
. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of a Preferred Share Certificate (as to which a written certification and the indemnification
contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking
by the applicable Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation
of such Preferred Share Certificate, the Company shall execute and deliver to such Holder a new Preferred Share Certificate (in
accordance with
Section 21(d)
) representing the applicable outstanding number of Preferred Shares.
(c)
Preferred
Share Certificate and Book-Entries Exchangeable for Different Denominations and Forms
. Each Preferred Share Certificate is
exchangeable, upon the surrender hereof by the applicable Holder at the principal office of the Company, for a new Preferred Share
Certificate or Preferred Share Certificate(s) or new Book-Entry (in accordance with
Section 21(d)
) representing, in the
aggregate, the outstanding number of the Preferred Shares in the original Preferred Share Certificate, and each such new Preferred
Share Certificate and/or new Book-Entry, as applicable, will represent such portion of such outstanding number of Preferred Shares
from the original Preferred Share Certificate as is designated in writing by such Holder at the time of such surrender. Each Book-Entry
may be exchanged into one or more new Preferred Share Certificates or split by the applicable Holder by delivery of a written notice
to the Company into two or more new Book-Entries (in accordance with
Section 21(d)
) representing, in the aggregate, the
outstanding number of the Preferred Shares in the original Book-Entry, and each such new Book-Entry and/or new Preferred Share
Certificate, as applicable, will represent such portion of such outstanding number of Preferred Shares from the original Book-Entry
as is designated in writing by such Holder at the time of such surrender.
(d)
Issuance
of New Preferred Share Certificate or Book-Entry
. Whenever the Company is required to issue a new Preferred Share Certificate
or a new Book-Entry pursuant to the terms of this Certificate of Designations, such new Preferred Share Certificate or new Book-Entry
(i) shall represent, as indicated on the face of such Preferred Share Certificate or in such Book-Entry, as applicable, the
number of Preferred Shares remaining outstanding (or in the case of a new Preferred Share Certificate or new Book-Entry being issued
pursuant to
Section 21(a)
or
Section 21(c)
, the number of Preferred Shares designated by such Holder) which, when
added to the number of Preferred Shares represented by the other new Preferred Share Certificates or other new Book-Entry, as applicable,
issued in connection with such issuance, does not exceed the number of Preferred Shares remaining outstanding under the original
Preferred Share Certificate or original Book-Entry, as applicable, immediately prior to such issuance of new Preferred Share Certificate
or new Book-Entry, as applicable, and (ii) shall have an issuance date, as indicated on the face of such new Preferred Share
Certificate or in such new Book-Entry, as applicable, which is the same as the issuance date of the original Preferred Share Certificate
or in such original Book-Entry, as applicable.
22.
Remedies,
Other Obligations, Breaches and Injunctive Relief.
The remedies provided in this Certificate of Designations shall be cumulative
and in addition to all other remedies available at law or in equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit any Holder’s right to pursue actual for any failure by the Company to comply with
the terms of this Certificate of Designations. Amounts set forth or provided for herein with respect to payments, conversion and
the like (and the computation thereof) shall be the amounts to be received by a Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any such breach may
be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, each Holder shall be entitled,
in addition to all other available remedies, to seek an injunction restraining any such breach or any such threatened breach, without
the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information
and documentation to a Holder that is reasonably requested by such Holder to enable such Holder to confirm the Company’s
compliance with the terms and conditions of this Certificate of Designations.
23.
Payment
of Collection, Enforcement and Other Costs
. If (a) any Preferred Shares are placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or a Holder otherwise takes action to collect amounts due
under this Certificate of Designations with respect to the Preferred Shares or to enforce the provisions of this Certificate of
Designations or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company
creditors’ rights and involving a claim under this Certificate of Designations, then the Company shall pay the reasonable
and documented costs incurred by such Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, reasonable and documented attorneys’ fees
and disbursements.
24.
Construction;
Headings
. This Certificate of Designations shall be deemed to be jointly drafted by the Company and the Holders and shall not
be construed against any such Person as the drafter hereof. The headings of this Certificate of Designations are for convenience
of reference and shall not form part of, or affect the interpretation of, this Certificate of Designations. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like import shall
be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Certificate of Designations instead of just the provision in
which they are found. Unless expressly indicated otherwise, all section references are to sections of this Certificate of Designations.
25.
Failure
or Indulgence Not Waiver
. No failure or delay on the part of a Holder in the exercise of any power, right or privilege hereunder
within the applicable time periods provided herein shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No
waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. Notwithstanding
the foregoing, nothing contained in this
Section 25
shall permit any waiver of any provision of
Section 4(d)
.
26.
Dispute
Resolution
.
(a) In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Installment Conversion Price,
a Triggering Event Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, or the applicable
Redemption Price (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing),
the Company or the applicable Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if
by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by
such Holder at any time after such Holder learned of the circumstances giving rise to such dispute. If such Holder and the Company
are unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price,
such Installment Conversion Price, such Triggering Event Conversion Price, such VWAP or such fair market value, or the arithmetic
calculation of such Conversion Rate or such applicable Redemption Price (as the case may be), at any time after the third (3
rd
)
Business Day following such initial notice by the Company or such Holder (as the case may be) of such dispute to the Company or
such Holder (as the case may be), then such Holder may, at its sole option, select an independent, reputable investment bank to
resolve such dispute, which investment bank shall be approved by the Company (such approval not to be unreasonably delayed, withheld
or conditioned).
(b) Such
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this
Section 26
and (B) written documentation supporting its position with respect
to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5
th
) Business Day immediately following
the date on which such Holder selected such investment bank (the “
Dispute Submission Deadline
”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “
Required Dispute
Documentation
”) (it being understood and agreed that if either such Holder or the Company fails to so deliver all of
the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required
Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and such Holder or otherwise requested by such investment bank, neither
the Company nor such Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).
(c) The
Company and such Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
such Holder in writing of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
Absent bad faith by such Holder, the fees and expenses of such investment bank shall be borne solely by the Company, and such investment
bank’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
27.
Notices;
Currency; Payments
.
(a)
Notices
.
The Company shall provide each Holder with prompt written notice of all actions taken pursuant to the terms of this Certificate
of Designations, including in reasonable detail a description of such action and the reason therefor. Any notices, consents, waivers
or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the sending party) or by electronic mail (provided
that the sending party does not receive an automated rejection notice); or (iii) one Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same as follows:
(i) if
to the Company, to:
FuelCell Energy, Inc.
3 Great Pasture Road
Danbury, CT 06810
Attention: Michael Bishop &
Jennifer D. Arasimowicz, Esq.
Email: mbishop@fce.com
jarasimowicz@fce.com
with a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attention: Eleazer N. Klein, Esq. & Antonio Diaz-Albertini,
Esq.
Email: Eleazer.Klein@srz.com
Antonio.Diaz-Albertini@srz.com
Facsimile: (212) 593-5955
(ii) if
to a Holder, in accordance with the address, facsimile number and/or e-mail address of such Holder set forth on the books and records
of the Company; or to such other address, facsimile number and/or e-mail address and/or to the attention of such Person as the
recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine or e-mail containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively. The
Company shall provide each Holder with prompt written notice of all actions taken pursuant to this Certificate of Designations,
including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing,
the Company shall give written notice to each Holder (i) promptly upon any adjustment of the Conversion Price, setting forth in
reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B)
with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities
or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to such Holder.
(b)
Currency
.
All dollar amounts referred to in this Certificate of Designations are in United States Dollars (“
U.S. Dollars
”),
and all amounts owing under this Certificate of Designations shall be paid in U.S. Dollars. All amounts denominated in other currencies
(if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation.
“
Exchange Rate
” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this
Certificate of Designations, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation
(it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation
shall be the final date of such period of time).
(c)
Payments
.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Certificate of Designations, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately
available funds pursuant to wire transfer instructions that Holder shall provide to the Company in writing from time to time with
no less than two (2) Business Days prior written notice. Whenever any amount expressed to be due by the terms of this Certificate
of Designations is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is
a Business Day. Any amount due under this Certificate of Designations which is not paid within five (5) Business Days of when due
shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate
of fifteen percent (15%) per annum from the date such amount was due until the same is paid in full (“
Late Charge
”).
28.
Waiver
of Notice
. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all
other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Certificate
of Designations.
29.
Governing
Law
. This Certificate of Designations shall be construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Certificate of Designations shall be governed by, the internal laws
of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State
of Delaware. The Company and each Holder hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein
shall be deemed or operate to preclude any Holder from bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Holder, or to enforce a judgment or other court ruling in favor
of such Holder.
THE COMPANY AND EACH HOLDER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS CERTIFICATE OF DESIGNATIONS
OR ANY TRANSACTION CONTEMPLATED HEREBY.
30.
Severability
.
If any provision of this Certificate of Designations is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Certificate of Designations so long as this Certificate
of Designations as so modified continues to express, without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid
or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
31.
Maximum
Payments
. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed
by the Company to the applicable Holder and thus refunded to the Company.
32.
Stockholder
Matters; Amendment
.
(a)
Stockholder
Matters
. Any stockholder action, approval or consent required, desired or otherwise sought by the Company pursuant to the DGCL,
the Certificate of Incorporation, this Certificate of Designations or otherwise with respect to the issuance of Preferred Shares
may be effected by written consent of the Company’s stockholders or at a duly called meeting of the Company’s stockholders,
all in accordance with the applicable rules and regulations of the DGCL. This provision is intended to comply with the applicable
sections of the DGCL permitting stockholder action, approval and consent affected by written consent in lieu of a meeting.
(b)
Amendment
.
This Certificate of Designations or any provision hereof may be amended by obtaining the affirmative vote at a meeting duly called
for such purpose, or written consent without a meeting in accordance with the DGCL, of the Required Holders, voting separate as
a single class, and with such other stockholder approval, if any, as may then be required pursuant to the DGCL and the Certificate
of Incorporation.
33.
Disclosure
.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Certificate of Designations, unless
the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within two (2) Business Days after any such receipt or delivery
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise, unless any provision of this
Certificate of Designations provides otherwise with respect to the public disclosure of a particular notice, then such public disclosure
shall be in accordance with the terms and conditions of such provision. In the event that the Company believes that a notice contains
material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder
contemporaneously with delivery of such notice, and in the absence of any such indication, such Holder shall be allowed to presume
that all matters relating to such notice do not constitute material, non-public information relating to the Company or any of its
Subsidiaries.
34.
Certain
Defined Terms
. For purposes of this Certificate of Designations, the following terms shall have the following meanings:
(a) “
1934
Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(b) “
Additional
Amount
” means, as of the applicable date of determination, with respect to each Preferred Share, all declared and unpaid
Dividends on such Preferred Share.
(c) “
Affiliate
”
or “
Affiliated
” means, with respect to any Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.
(d) “
Attribution
Parties
” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Initial Issuance Date, directly or indirectly managed or advised
by a Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of such Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with such Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with such Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively such Holder and all other Attribution Parties to the Maximum Percentage.
(e) “
Bloomberg
”
means Bloomberg, L.P.
(f) “
Book-Entry
”
means each entry on the Register evidencing one or more Preferred Shares held by a Holder in lieu of a Preferred Share Certificate
issuable hereunder.
(g) “
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.
(h) “
Change
of Control
” means any Fundamental Transaction other than (i) 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, are, in all material respects, the holders of the voting power of the surviving entity (or entities
with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation)
of such entity or entities) after such reorganization, recapitalization or reclassification, (ii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of the Company, (iii) a merger in connection with
a bona fide acquisition by the Company of any Person in which such merger does not contemplate a change to the identity of a majority
of the board of directors of the Company, or (iv) as a result of the transactions contemplated by this Certificate of Designations.
(i) “
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 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 OTC Markets Group Inc. (formerly Pink Sheets LLC). 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 Required Holder. If the Company and the Required Holders are unable to agree upon the fair market value of
such security, then such dispute shall be resolved in accordance with the procedures in
Section 26
. All such determinations
shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions
during such period.
(j) “
Common
Stock
” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(k) “
Common
Stock Equivalents
” means, collectively, Options and Convertible Securities.
(l) “
Contingent
Obligation
” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect
to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring
such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will
be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will
be protected (in whole or in part) against loss with respect thereto.
(m) “
Convertible
Securities
” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any
shares of Common Stock.
(n) “
Current
Subsidiary
” means any Person in which the Company on the Subscription Date, directly or indirectly, (i) owns any of the
outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of
the business, operations or administration of such Person, and all of the foregoing, collectively, “
Current Subsidiaries
”.
(o) “
Eligible
Market
” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Capital Market or
the Principal Market.
(p) “
Equity
Conditions
” means, with respect to an given date of determination: (i) on each day during the applicable Equity Conditions
Measuring Period, the Common Stock is listed or designated for quotation (as applicable) on an Eligible Market and shall not have
been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to
the applicable date of determination due to business announcements by the Company); (ii) during the applicable Equity Conditions
Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of the Preferred Shares
on a timely basis as set forth in
Section 4
hereof; (iii) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating
Section 4(d)(i)
hereof; (iv) any 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 Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (v) on each day during
the applicable Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction
shall have occurred which has not been abandoned, terminated or consummated; (vi) on each day during the applicable Equity Conditions
Measuring Period, such Holder shall not be in possession of any material, non-public information regarding the Company provided
to it by the Company, any of its Subsidiaries or any of their respective Affiliates, employees, officers, representatives, agents
or the like; (vii) on each day during the applicable Equity Conditions Measuring Period, the Company otherwise shall not have
breached any covenant or other term of this Certificate of Designations in any material respect (other than covenants subject to
material adverse effect or materiality, which may not be breached in any respect), including, without limitation, the Company shall
not have failed to timely make any payment pursuant to this Certificate of Designations; (viii) on at least seven (7) Trading Days
during the applicable Equity Conditions Measuring Period, including each of the final three (3) Trading Days during such Equity
Conditions Measuring Period, there shall not have occurred any Volume Failure or Price Failure; (ix) on each day during the applicable
Equity Conditions Measuring Period, on the applicable date of determination after the date the Company obtains the Stockholder
Ratification (A) no Authorized Share Failure shall exist or be continuing and 100% of the maximum number of shares of Common Stock
then issuable upon conversion of the Preferred Shares (without regard to any limitations on conversion) are available under the
certificate of incorporation of the Company and reserved by the Company to be issued pursuant to this Certificate of Designations,
(B) all shares of Common Stock to be issued in connection with the event requiring this determination may be issued in full without
resulting in an Authorized Share Failure and (C) all shares of Common Stock to be issued in connection with the event requiring
this determination are duly authorized and may be issued in full; (x) on each day during the applicable Equity Conditions
Measuring Period, there shall not have occurred and there shall not exist a Triggering Event or an event that with the passage
of time or giving of notice would constitute a Triggering Event; (xi) the shares of Common Stock issuable pursuant to the event
requiring the satisfaction of the Equity Conditions are eligible for trading without restriction on an Eligible Market; and (xii)
the Company shall have obtained the Stockholder Ratification.
(q) “
Equity
Conditions Failure
” means that as of the applicable date of determination the Equity Conditions have not been satisfied
(or waived in writing by the applicable Holder).
(r) “
Equity
Conditions Measuring Period
” means the period beginning twelve (12) Trading Days immediately prior to the applicable
date of determination and ending on and including the applicable date of determination.
(s) “
Fundamental
Transaction
” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of
the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be
subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Certificate of Designations calculated as if any shares of Common Stock held by all such
Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory
short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without
approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise,
in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner
to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(t) “
GAAP
”
means United States generally accepted accounting principles, consistently applied.
(u) “
Group
”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(v) “
Holder
Pro Rata Amount
” means, with respect to any Holder, a fraction (i) the numerator of which is the number of Preferred
Shares issued to such Holder on the Initial Issuance Date and (ii) the denominator of which is the number of Preferred Shares
issued to all Holders on the Initial Issuance Date.
(w) “
Indebtedness
”
means of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken
or assumed as the deferred purchase price of property or services, including, without limitation, “capital leases”
in accordance with GAAP for the periods covered thereby (other than trade payables entered into in the ordinary course of business
consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and
other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with United States generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, deed of trust, lien, pledge, charge, security interest or other encumbrance of any nature whatsoever in or upon any
property or assets (including accounts and contract rights) with respect to any asset or property owned by any Person, even though
the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G)
above.
(x) “
Installment
Amount
” means, as of the applicable date of determination, with respect to a particular Holder, (A) the Stated Value
of a number of Preferred Shares equal to (i) the product of (1) $1,015,151.52 multiplied by (2) such Holder’s Pro Rata Amount
(rounded to the nearest whole number) or (ii) all Preferred Shares then held by such Holder only if such number of Preferred Shares
then held by such Holder is less than the amount determined under the immediately preceding clause (i), (B) any Deferral Amount
deferred pursuant to
Section 9(d)
to such applicable Installment Date and included in such Installment Amount in accordance
therewith, and (C) any Acceleration Amount accelerated pursuant to
Section 9(e)
for such Current Installment Date and included
in such Installment Amount in accordance therewith.
(y) “
Installment
Conversion Price
” means, with respect to a particular date of determination, the lesser of (i) the Conversion Price then
in effect, and (ii) 87.5% of the Installment Market Price then in effect. All such determinations to be appropriately adjusted
for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.
(z) “
Installment
Date
” means each of the first (1
st
) and sixteenth (16
th
) calendar day of each month commencing
on (and including) November 1, 2017 and ending on (and including) the Maturity Date; provided that if a given Installment Date
is not a Trading Day, such Installment Date shall be the next Trading Day.
(aa) “
Installment
Market Price
” means the lesser of (i) the VWAP on the Trading Day immediately prior to the applicable Installment Date
and (ii) the quotient of (A) the sum of the two (2) lowest daily VWAPs of the Common Stock during the ten (10) consecutive Trading
Day period ending and including the Trading Day immediately prior to the applicable Installment Date, divided by (B) two (2).
(bb) “
Intellectual
Property Rights
” means, with respect to the Company and its Subsidiaries, all of their rights or licenses to use all
trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor.
(cc) “
Liquidation
Event
” means, whether in a single transaction or series of transactions, the voluntary or involuntary liquidation, dissolution
or winding up of the Company or such Subsidiaries the assets of which constitute all or substantially all of the assets of the
business of the Company and its Subsidiaries, taken as a whole.
(dd) “
Material
Adverse Effect
” means one or more material adverse effect(s). individually or in the aggregate, on the business, properties,
assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby, or on the authority or ability of the Company
to perform its obligations under this Certificate of Designations.
(ee) “
Maturity
Date
” shall mean March 1, 2019; provided, however, the Maturity Date may be extended at the option of a Holder (i) in
the event that, and for so long as, a Triggering Event shall have occurred and be continuing or (ii) through the date that is twenty
(20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly
announced or a Change of Control Notice is delivered prior to the Maturity Date;
provided
,
however
, that if a Holder
elects to convert some or all of its Preferred Shares pursuant to
Section 4
hereof, and the Conversion Amount would be limited
pursuant to
Section 4(d)
hereunder, the Maturity Date shall automatically be extended until such time as such provision
shall not limit the conversion of such Preferred Shares.
(ff) “
New
Subsidiary
” means, as of any date of determination, any Person in which the Company after the Subscription Date, directly
or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest of such Person
or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing,
collectively, “
New Subsidiaries
.”
(gg) “
Options
”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(hh) “
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, if any, 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 Change
of Control.
(ii) “
Person
”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(jj)
“Price
Failure
” means, with respect to each Trading Day of the applicable Equity Conditions Measuring Period, the VWAP of the
Common Stock fails to be $0.75 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar
transactions occurring after the Subscription Date) or more. All such determinations to be appropriately adjusted for any stock
splits, stock dividends, stock combinations, recapitalizations or other similar transactions during any such measuring period.
(kk) “
Principal
Market
” means the Nasdaq Global Market.
(ll) “
Redemption
Notices
” means, collectively, the Triggering Events Redemption Notices, the Maturity Redemption Notice, the Installment
Notices with respect to any Installment Redemption and the Change of Control Redemption Notices, and each of the foregoing, individually,
a “
Redemption Notice
.”
(mm) “
Redemption
Premium
” means 125%.
(nn) “
Redemption
Prices
” means, collectively, Triggering Event Redemption Prices, the Change of Control Redemption Prices, the Maturity
Redemption Price and the Installment Redemption Prices, and each of the foregoing, individually, a “
Redemption Price
.”
(oo) “
SEC
”
means the Securities and Exchange Commission or the successor thereto.
(pp) “
Significant
Subsidiary
” shall have the meaning ascribed to such term in Rule 1-02 of Regulation S-X.
(qq) “
Stated
Value
” shall mean $1,000 per share, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations,
reclassifications, combinations, subdivisions or other similar events occurring after the Initial Issuance Date with respect to
the Preferred Shares.
(rr) “
Stockholder
Ratification
” means (i) the valid ratification by the requisite stockholders of the Company or (ii) the approval by the
Delaware Chancery Court pursuant to Section 205 of the DGCL, in each case, of the filing and effectiveness of the certificate of
amendment to the Company’s amended and restated certificate of incorporation filed with the Secretary of State of Delaware
on December 3, 2015 and the 1-for-12 reverse stock split of the Company’s Common Stock that was effected thereby and became
effective on December 3, 2015.
(ss) “
Subscription
Date
” means September 5, 2017.
(tt)
“Subject
Entity
” means any Person, Persons or Group or any Affiliate of any such Person, Persons or Group.
(uu) “
Subsidiaries
”
means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing,
individually, a “
Subsidiary
.”
(vv) “
Successor
Entity
” means the Person (or, if so elected by the Required Holders, the Parent Entity) formed by, resulting from or
surviving any Change of Control or the Person (or, if so elected by the Required Holders, the Parent Entity) with which such Change
of Control shall have been entered into.
(ww) “
Trading
Day
” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
any day on which the Common Stock is 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 is then traded,
provided that “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 entire 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) unless such day is otherwise designated as a Trading Day
in writing by the Holder or (y) with respect to all determinations other than price or trading volume determinations relating to
the Common Stock, any day on which the Principal Market or other then applicable Eligible Market is open for trading of securities.
(uu) “
Triggering
Event Conversion Price
” means, with respect to any Triggering Event Conversion that price which shall be the lower of
(i) the applicable Conversion Price as in effect on the Trading Day immediately preceding the time of the delivery or deemed delivery
of the applicable Conversion Notice, and (ii) 85% of the lowest VWAP of the Common Stock on any Trading Day during the five (5)
consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the
applicable Conversion Notice (as adjusted for any share dividend, share split, share combination, reclassification or similar transaction
that proportionately decreases or increases the Common Stock during such period).
(yy) “
Volume
Failure
” means, with respect to each Trading Day of the applicable Equity Conditions Measuring Period, the aggregate
daily dollar trading volume (as reported on Bloomberg) of the Common Stock fails to be $150,000 or more.
(zz) “
VWAP
”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York 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 time, and ending at 4:00:00 p.m., New York 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 OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined
by the Company and the Required Holders. If the Company and the Required Holders are unable to agree upon the fair market value
of such security, then such dispute shall be resolved in accordance with the procedures in
Section 26
. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction
during such period.
* * * * *
IN WITNESS WHEREOF,
the Company has caused this Certificate of Designations of Series C Convertible Preferred Stock of FuelCell Energy, Inc. to be
signed by its __________ on this ___ day of September, 2017.
EXHIBIT I
FUELCELL ENERGY, INC.
CONVERSION NOTICE
Reference is made to
the Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of FuelCell Energy, Inc. (the
“
Certificate of Designations
”). In accordance with and pursuant to the Certificate of Designations, the undersigned
hereby elects to convert the number of shares of Series C Convertible Preferred Stock, $0.01 par value per share (the “
Preferred
Shares
”), of FuelCell Energy, Inc., a Delaware corporation (the “
Company
”), indicated below into shares
of common stock, $0.0001 value per share (the “
Common Stock
”), of the Company, as of the date specified below.
|
Aggregate number of Preferred Shares to be converted
|
|
|
|
|
|
Aggregate Stated Value of such Preferred Shares to be converted:
|
|
|
|
|
|
Aggregate accrued and unpaid Dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such Aggregate Dividends to be converted:
|
|
|
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:
|
|
This Conversion Notice shall constitute
a representation by the Holder submitting this Conversion Notice that after giving effect to the conversion provided for in this
Conversion Notice, the Holder (together with its Attribution Parties) will not have beneficial ownership (together with the beneficial
ownership of such Person’s Attribution Parties) of a number of shares of Common Stock which exceeds the Maximum Percentage
of the total outstanding shares of Common Stock of the Company as determined based on the Reported Outstanding Share Number provided
by the Company and otherwise pursuant to the provisions of
Section 4(d)(i)
of the Note. By submitting this Conversion Notice
to the Company, the Holder agrees and acknowledges that the Company shall be entitled rely on the foregoing representation.
Please confirm the following information:
|
Conversion Price:
|
|
|
|
|
|
Number of shares of Common Stock to be issued:
|
|
|
|
|
|
Installment Amount(s) to be reduced (and corresponding Installment Date(s)) and amount of reduction:
|
|
¨
If
this Conversion Notice is being delivered with respect to an Triggering Event Conversion, check here if Holder is electing to use
the following Triggering Event Conversion Price:____________
|
¨
|
If this Conversion Notice is being delivered with respect to an Acceleration, check here if Holder
is electing to use the following Installment Conversion Price:____________
|
Please issue the Common Stock into which
the applicable Preferred Shares are being converted
to Holder, or for its benefit,
as follows:
|
¨
|
Check here if requesting delivery as a certificate to the following name and to the following address:
|
|
¨
|
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
|
|
DTC Participant:
|
|
|
|
|
|
DTC Number:
|
|
|
|
|
|
Account Number:
|
|
Date: _____________ __,___
|
|
Name of Registered Holder
|
Tax ID:_____________________
Facsimile:___________________
E-mail Address:
EXHIBIT II
ACKNOWLEDGMENT
The Company hereby
acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common
Stock.
PROSPECTUS
$150,000,000
Debt Securities
Preferred Stock
Common
Stock
Warrants
Units
We may from
time to time offer and sell any combination of debt securities, preferred stock, warrants and/or common stock described in this prospectus, either individually or in units, in one or more offerings. The aggregate initial offering price of all
securities sold under this prospectus will not exceed $150,000,000.
The securities may be offered to or through underwriters, through
agents or dealers, through market sales directly to one or more purchasers or through a combination of such methods. See Plan of Distribution.
This prospectus provides a general description of the securities we may offer. In certain cases, we specify in an accompanying prospectus
supplement the specific terms of the securities offered and the offering price and terms of an offering of the securities, including, but not limited to, the names of any underwriters, agents or dealers. The prospectus supplement may also add,
update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement, if any, carefully before you invest in any securities.
We will use the net proceeds received from the sale of the securities by the Company for general corporate purposes.
Our common stock is quoted on the NASDAQ Global Market under the symbol FCEL. No public market currently exists for the other
securities offered hereby. The applicable prospectus supplement will contain information, where applicable, as to any other listing on any securities exchange of the securities covered by the prospectus supplement.
Our principal executive offices are located at 3 Great Pasture Road, Danbury, Connecticut 06813, and our telephone number is
(203) 825-6000.
Investing in our securities involves risks that are described in the
Risk Factors
section beginning
on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved
or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of
this prospectus is February 24, 2017
TABLE OF CONTENTS
2
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the information incorporated herein by reference include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements relate to future
events and expectations and can be identified by the use of predictive, future-tense or forward-looking terminology, such as expects, anticipates, estimates, should, will,
could, would, and may. Such statements relate to the development and commercialization by FuelCell Energy, Inc. and its subsidiaries (FuelCell Energy, Company, we,
us and our) of fuel cell technology and products and the market for such products, future funding under government research and development contracts, the expected cost competitiveness of our technology, and our ability to
achieve our sales plans and cost reduction targets. These and other forward-looking statements contained in this prospectus are subject to risks and uncertainties, known and unknown, that could cause actual results to differ materially from those
forward-looking statements, including, without limitation, general risks associated with product development and manufacturing, changes in the utility regulatory environment, potential volatility of energy prices, government appropriations, the
ability of the government to terminate its development contracts at any time, rapid technological change, and competition and changes in accounting policies or practices adopted voluntarily or as required by accounting principles generally accepted
in the United States, as well as other risks contained in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended October 31, 2016, as well as those discussed elsewhere in this
prospectus, any accompanying prospectus supplement or in any document incorporated by reference herein or therein. We cannot assure you that we will be able to meet any of our development or commercialization schedules, that the government will
appropriate the funds anticipated by us under our government contracts, that the government will not exercise its right to terminate any or all of our government contracts, that any of our products or technology, once developed, will be commercially
successful, or that we will be able to achieve any other result anticipated in any other forward-looking statement contained herein. The forward-looking statements contained herein speak only as of the date of this prospectus. Except for ongoing
obligations to disclose material information under the federal securities laws, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any
change in events, conditions or circumstances on which any such statement is based.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (SEC)
utilizing a shelf registration process. By using a shelf registration statement, we are registering an unspecified amount of each class of securities described in this prospectus, and we may sell any combination of the securities
described in this prospectus in one or more offerings. In addition, we may use this prospectus and the applicable prospectus supplement in a remarketing or other resale transaction involving the securities after their initial sale. This
prospectus provides you with a general description of the securities that we may offer. Each time we sell securities under this shelf registration, we will provide a prospectus supplement, if required, that will contain specific information about
the terms of the offering. The prospectus supplement may also add, update or change information contained in this prospectus. The rules of the SEC allow us to incorporate by reference information into this prospectus and any prospectus supplement.
Any information incorporated by reference is considered to be a part of this prospectus and any applicable prospectus supplement, and information that we file later with the SEC will automatically update and supersede this information. See
Where You Can Find More Information. You should read both this prospectus and any applicable prospectus supplement together with additional information described under the heading Where You Can Find More Information, and any
free writing prospectus with respect to an offering filed by us with the SEC.
We are responsible for the information contained and
incorporated by reference in this prospectus. We have not authorized anyone to give you any other information, and we take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you.
We are not making an offer to
3
sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained or incorporated by reference in this prospectus or any
prospectus supplement is accurate as of any date other than the date of the document containing the information.
FUELCELL ENERGY, INC.
Overview
We are an integrated
fuel cell company with an expanding global presence on three continents. We design, manufacture, sell, install, operate and service ultra-clean, highly efficient stationary fuel cell power plants for distributed power generation. Our power plants
provide megawatt-class scalable on-site power and utility grid support, helping customers solve their energy, environmental and business challenges. Our plants are operating in more than 50 locations in nine countries on three different
continents and have generated more than three billion kilowatt hours (kWh) of electricity, which is equivalent to powering more than 270,000 average size U.S. homes for one year. Our growing installed base and backlog exceeds 300 megawatts
(MW).
FuelCell Energy was founded in Connecticut in 1969 as an applied research organization, providing contract research and
development. The Company went public in 1992, raising capital to develop and commercialize fuel cells, and reincorporated in Delaware in 1999. We began selling stationary fuel cell power plants commercially in 2003. Today we develop turn-key
distributed generation combined heat and power solutions for our customers and provide comprehensive service for the life of the asset.
Our principal executive offices are located at 3 Great Pasture Road, Danbury, Connecticut 06813. Our telephone number is (203) 825-6000.
We maintain a web site at the following Internet address:
www.fuelcellenergy.com
. The information on, or that can be accessed through, our web site is not incorporated by reference in this prospectus or any prospectus supplement, and you
should not consider it to be a part of this prospectus or any prospectus supplement. Our web site address is included as an inactive textual reference only.
DESCRIPTION OF CAPITAL STOCK
The following descriptions set forth certain general terms of our common stock and our preferred stock. While we believe that the following
descriptions cover the material terms of our capital stock, the descriptions may not contain all of the information that is important to you. The descriptions set forth below are not complete and are subject to, and qualified in their entirety by,
our amended certificate of incorporation (including the Certificate of Designation of Series A Preferred Stock and the Amended Certificate of Designation of 105,875 Shares of 5% Series B Cumulative Convertible Perpetual Preferred Stock incorporated
therein, the Charter), our amended and restated by-laws (By-laws), the Delaware General Corporation Law (DGCL), and, for any other series of preferred stock, the certificate of designations relating to such
particular series of preferred stock. The particular terms of any series of preferred stock offered by any prospectus supplement and the extent, if any, to which these general provisions may apply to that series of preferred stock will be described
in the prospectus supplement relating to that series of preferred stock. Copies of the Charter and the By-laws have been filed with the SEC. You are urged to read the Charter and the By-laws in their entirety.
Authorized and Outstanding Capital Stock
Our authorized capital stock consists of 75,000,000 shares of common stock, par value $0.0001 per share, and 250,000 shares of preferred
stock, par value $0.01 per share, issuable in one or more series designated by our board of directors, of which 250,000 shares of our preferred stock have been designated as 5% Series B Cumulative Convertible Perpetual Preferred Stock
(Series B preferred stock). On October 31, 2016, 35,174,424 shares of our common stock were issued and outstanding and 64,020 shares of our Series B preferred stock were issued and outstanding. No other shares of our
preferred stock are issued and outstanding. There are 1,000,000 Series 1 preferred shares of our Canadian subsidiary, FCE FuelCell Energy, Ltd., issued and outstanding and convertible into shares of FuelCell Energy, Inc. common stock.
In addition, as of October 31, 2016, there were outstanding options to purchase 246,923 shares of our common stock under our equity
incentive plans, 990,035 shares of our common stock were available for future issuance under our equity incentive plans, 62,226 shares of our common stock were available for future issuance under our employee stock purchase plan and 11,706,000
shares of our common stock were available for future issuance under warrants. In addition, as of October 31, 2016, we were obligated, if and when the holder exercises its conversion rights, to issue approximately 1,042,000 shares of our
common stock upon conversion of the Series 1 preferred shares. As of October 31, 2016, Series B Preferred Stock may be converted to 454,043 shares of our common stock. As of December 30, 2016, there were 169 holders of record of our
common stock. This does not include the number of persons whose stock is in nominee or street name accounts through brokers.
Common
Stock
Voting Rights
The holders of our common stock have one vote per share. Holders of our common stock are not entitled to vote cumulatively for the election of
directors. Generally, all matters to be voted on by shareholders (including the election of directors in uncontested elections) must be approved by a majority of the votes entitled to be cast at a meeting at which a quorum is present by all shares
of our common stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any then outstanding preferred stock. A plurality voting standard applies in contested director
elections (i.e., when the number of nominees for election as directors exceeds the number of directors to be elected at such meeting).
Dividends
Holders
of our common stock will share ratably in any dividends declared by the board of directors, subject to the preferential rights of any of our preferred stock then outstanding. Dividends consisting of shares of our common stock may be paid to holders
of shares of our common stock. We have never paid a cash dividend on our common stock and do not anticipate paying any cash dividends on common stock in the foreseeable future.
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Other Rights
In the event of our liquidation, dissolution or winding up, after payment of liabilities and liquidation preferences on any of our preferred
stock then outstanding, the holders of shares of our common stock are entitled to share ratably in all assets available for distribution. Holders of shares of our common stock have no preemptive rights or rights to convert their shares of our common
stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.
Preferred Stock
This section describes the general terms of our preferred stock, $0.01 par value, to which any prospectus supplement may relate. Certain terms
of any series of our preferred stock offered by any prospectus supplement will be described in such prospectus supplement. If so indicated in the prospectus supplement, the terms of that series may differ from the terms described below. The
following description of the terms of our preferred stock is a summary. You should refer to our Charter and any certificate of amendment to our Charter or certificate of designations filed with the SEC in connection with the offering of our
preferred stock for a full description of the terms of the preferred stock.
Under our Charter, our board of directors has the authority,
without further shareholder action, to issue from time to time, preferred stock in one or more series and for such consideration as may be fixed from time to time by our board of directors. Our board also has the authority to fix and determine, in
the manner provided by law, the relative rights and preferences of the shares of any series so established, such as dividend and voting rights. Our Charter authorizes 250,000 shares of preferred stock. Prior to the issuance of each series of
preferred stock, our board will adopt resolutions creating and designating the series as a series of preferred stock. The board of directors may, without shareholder approval, issue preferred stock with voting and other rights that could adversely
affect the voting power and other rights of the holders of our common stock and could have anti-takeover effects.
Our preferred stock
will have the dividend, liquidation, redemption, voting and conversion rights set forth below unless otherwise specified in the applicable prospectus supplement. You should read the prospectus supplement relating to the particular series of
preferred stock offered thereby for specific terms, including:
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the number of shares to constitute such series and the distinctive designation of such series;
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the dividend rate on the shares of such series and preferences, if any, and the special and relative rights of such shares of such series as to dividend;
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whether or not the shares of such series shall be redeemable, and, if redeemable, the price, terms and manner of redemption;
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the preferences, if any, and the special and relative rights o the shares of such series upon liquidation;
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whether or not the shares of such series shall be subject to the operation of a sinking or purchase fund and, if so, the terms and provisions of such fund;
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whether or not the shares of such series shall be convertible into shares of any other class or of any other series of the same or any other
class of stock and, if so, the conversion price or ratio and other conversion rights;
the conditions under which the shares of such series
shall have separate voting rights or no voting rights; and
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Such other designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of such series of preferred stock.
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Unless otherwise specified in the applicable prospectus supplement, the shares of each series of preferred stock will upon issuance rank
equally in all respects with each other then outstanding series of preferred stock.
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Preferred stock could be issued quickly with terms that could delay or prevent a change of
control or make the removal of management more difficult. Additionally, the issuance of preferred stock may decrease the market price of our common stock and may adversely affect the voting and other rights of the holders of our common stock.
Ranking
Any
series of our preferred stock will, with respect to dividend rights and rights on liquidation, winding up or dissolution, rank:
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senior to all classes of our common stock and to all equity securities issued by us, the terms of which specifically provide that the equity securities will rank junior to that preferred stock;
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equally with all equity securities issued by us, the terms of which specifically provide that the equity securities will rank equally with that preferred stock; and
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junior to all equity securities issued by us, the terms of which specifically provide that the equity securities will rank senior to that preferred stock.
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Dividends
The
holders of our preferred stock will be entitled to receive, when, as and if declared by our board of directors, dividends at such rates and on such dates as will be specified in the applicable prospectus supplement. Such rates may be fixed or
variable or both. If variable, the formula used for determining the dividend rate for each dividend period will be specified in the applicable prospectus supplement. Dividends will be payable to the holders of record as they appear on our stock
books on such record dates as will be fixed by our board. Dividends may be paid in the form of cash, preferred stock (of the same or a different series) or our common stock, in each case as specified in the applicable prospectus supplement.
Dividends on any series of our preferred stock may be cumulative or noncumulative, as specified in the applicable prospectus supplement. If
the dividends on a series of our preferred stock are noncumulative (Noncumulative Preferred Stock), and our board of directors fails to declare a dividend payable on a dividend payment date, then the holders of such preferred stock will
have no right to receive a dividend in respect to the dividend period relating to such dividend payment date, and we will not be obligated to pay the dividend accrued for such period, whether or not dividends on such preferred stock are declared or
paid on any future dividend payment dates. Dividends on shares of any cumulative series of preferred stock (Cumulative Preferred Stock) shall accumulate from and after the day on which such shares are issued, but arrearages in the
payment thereof shall not bear interest.
If we have not declared and paid or set apart when due all accrued dividends on each series of
our preferred stock through the last preceding dividend date of each such series, we may not declare or pay any dividends on, or make other distributions on, our common stock other than a dividend payable in our common stock. No restriction applies
to our repurchase or redemption of our capital stock while there is any arrearage in the payment or dividends or any applicable sinking fund installments.
Redemption
A
series of our preferred stock may be redeemable, in whole or in part, at our option, and may be subject to mandatory redemption pursuant to a sinking fund or otherwise, in each case upon terms, at the times and at the redemption prices specified in
the applicable prospectus supplement. Redeemed shares of our preferred stock will become authorized but unissued shares of preferred stock that we may issue in the future.
The terms and conditions under which all or any part of any series of our preferred stock may be redeemed will be established by our board of
directors before we issue such series of preferred stock. All shares of our preferred stock that we redeem, or which have been surrendered for conversion or exchange or for cancellation pursuant to any sinking or purchase fund, will return to
the status of authorized but unissued shares.
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Conversion Rights
The prospectus supplement relating to a series of convertible preferred stock will describe the terms on which shares of such series are
convertible into our common stock.
Rights Upon Liquidation
Unless the applicable prospectus supplement states otherwise, if we voluntarily or involuntarily liquidate, dissolve or wind up our business,
the holders of our preferred stock will be entitled to receive out of our assets available for distribution to stockholders, before any distribution of assets is made to holders of our common stock or any other class or series of shares ranking
junior to such preferred stock upon liquidation, liquidating distributions in the amount of the liquidation preference of such preferred stock plus accrued and unpaid dividends (which will not, if such preferred stock is Noncumulative Preferred
Stock, include any accumulation in respect of unpaid dividends for prior dividend periods). If we voluntarily or involuntarily liquidate, dissolve or wind up our business and the amounts payable with respect to our preferred stock of any series and
any of our other securities ranking equal as to any such distribution are not paid in full, the holders of such preferred stock and of such other shares will share ratably in any such distribution of our assets in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full amount of the liquidating distribution to which they are entitled, the holders of our preferred stock of any series will not be entitled to any further participation in any
distribution of our assets.
Voting Rights
Except as described in this section or in the applicable prospectus supplement, or except as expressly required by applicable law, the holders
of our preferred stock will not be entitled to vote. If the holders of a series of our preferred stock are entitled to vote and the applicable prospectus supplement does not state otherwise, each such share will be entitled to one vote on matters on
which holders of such series of preferred stock are entitled to vote. For any series of our preferred stock having one vote per share, the voting power of such series, on matters on which holders of such series and holders of other series of our
preferred stock are entitled to vote as a single class, will depend on the number of shares in such series, not the aggregate stated value, liquidation preference or initial offering price of the shares of such series of preferred stock.
Series B Preferred Stock
On November 11, 2004, we entered into a purchase agreement with Citigroup Global Markets Inc., RBC Capital Markets Corporation, Adams
Harkness, Inc., and Lazard Freres & Co., LLC (the Initial Purchasers) for the private placement under Rule 144A of up to 135,000 shares of our 5% Series B Cumulative Convertible Perpetual Preferred Stock
(Liquidation Preference $1,000). On November 17, 2004 and January 25, 2005, we closed on the sale of 100,000 shares and 5,875 shares, respectively, of Series B preferred stock to the Initial Purchasers.
As of October 31, 2016, there were 250,000 preferred shares authorized, of which 250,000 shares were designated as Series B
preferred shares, and 64,020 Series B preferred shares were issued and outstanding.
The following is a summary of certain provisions
of our Series B preferred stock. The resale of the shares of our Series B preferred stock and the resale of the shares of our common stock issuable upon conversion of the shares of our Series B preferred stock are covered by a
registration rights agreement.
Ranking
Shares of our Series B preferred stock rank with respect to dividend rights and rights upon our liquidation, winding up or dissolution:
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senior to shares of our common stock;
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junior to our debt obligations; and
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effectively junior to our subsidiaries (i) existing and future liabilities and (ii) capital stock held by others.
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Dividends
The
Series B preferred stock pays cumulative annual dividends of $50 per share which are payable quarterly in arrears on February 15, May 15, August 15 and November 15. Dividends will be paid on the basis of a
360-day
year consisting of twelve 30-day months. Dividends on the shares of our Series B preferred stock will accumulate and be cumulative from the date of original issuance. Accumulated dividends on the shares
of our Series B preferred stock will not bear any interest.
The dividend rate on the Series B preferred stock is subject to
upward adjustment as set forth in the certificate of designation of the Series B preferred stock if we fail to pay, or to set apart funds to pay, dividends on the shares of our Series B preferred stock for any quarterly dividend period.
The dividend rate on the Series B preferred stock is also subject to upward adjustment as set forth in the registration rights agreement entered into with the Initial Purchasers if we fail to satisfy our registration obligations with respect to
the Series B preferred stock (or the underlying common shares) set forth in the Registration Rights Agreement.
No dividends or other
distributions may be paid or set apart for payment upon our common shares (other than a dividend payable solely in shares of a like or junior ranking) unless all accumulated and unpaid dividends have been paid or funds or shares of common stock
therefore have been set aside for payment of accumulated and unpaid Series B preferred stock dividends.
The dividend on the
Series B preferred stock may be paid in cash; or at the option of the holder, in shares of our common stock, which will be registered pursuant to a registration statement to allow for the immediate sale of these common shares in the public
market. Dividends of $3.2 million were paid in each of the years ended October 31, 2016, 2015 and 2014. There were no cumulative unpaid dividends as of October 31, 2016.
Liquidation
The
Series B preferred stock stockholders are entitled to receive, in the event that we are liquidated, dissolved or wound up, whether voluntarily or involuntarily, $1,000 per share plus all accumulated and unpaid dividends to the date of that
liquidation, dissolution, or winding up (Liquidation Preference). Until the holders of Series B preferred stock receive their Liquidation Preference in full, no payment will be made on any junior shares, including shares of our common
stock. After the Liquidation Preference is paid in full, holders of the Series B preferred stock will not be entitled to receive any further distribution of our assets. As of October 31, 2016, the Series B preferred stock had a
Liquidation Preference of $64.0 million.
Conversion Rights
Each Series B Preferred Stock share may be converted at any time, at the option of the holder, into 7.0922 shares of our common stock
(which is equivalent to an initial conversion price of $141.00 per share) plus cash in lieu of fractional shares. The conversion rate is subject to adjustment upon the occurrence of certain events, as described below, but will not be adjusted for
accumulated and unpaid dividends. If converted, holders of Series B Preferred Stock do not receive a cash payment for all accumulated and unpaid dividends; rather, all accumulated and unpaid dividends are cancelled.
We may, at our option, cause shares of Series B Preferred Stock to be automatically converted into that number of shares of our common
stock that are issuable at the then prevailing conversion rate. We may exercise our conversion right only if the closing price of our common stock exceeds 150% of the then prevailing conversion price ($141.00 as of October 31, 2016) for
20 trading days during any consecutive 30 trading day period, as described in the Certificate of Designation.
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If holders of Series B Preferred Stock elect to convert their shares in connection with certain
fundamental changes (as described below and in the Certificate of Designation), we will in certain circumstances increase the conversion rate by a number of additional shares of common stock upon conversion or, in lieu thereof, we may in certain
circumstances elect to adjust the conversion rate and related conversion obligation so that shares of our Series B Preferred Stock are converted into shares of the acquiring or surviving company, in each case as described in the Certificate of
Designation.
The adjustment of the conversion price is to prevent dilution of the interests of the holders of the Series B Preferred
Stock from the following:
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Issuances of common stock as a dividend or distribution to holders or our common stock;
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Common stock share splits or share combinations;
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Issuances to holders of our common stock of any rights, warrants or options to purchase our common stock for a period of less than 60 days; and
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Distributions of assets, evidences of indebtedness or other property to holders of our common stock.
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Redemption
We do
not have the option to redeem the shares of Series B Preferred Stock. However, holders of the Series B Preferred Stock can require us to redeem all or part of their shares at a redemption price equal to the Liquidation Preference of the
shares to be redeemed in the case of a fundamental change. A fundamental change will be deemed to have occurred if any of the following occurs:
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any person or group is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of all classes of our capital stock then outstanding and normally entitled
to vote in the election of directors;
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during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by our Board of Directors or whose
nomination for election by our shareholders was approved by a vote of two-thirds of our directors then still in office who were either directors at the beginning of such period or whose election of nomination for election was previously so approved)
cease for any reason to constitute a majority of our directors then in office;
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the termination of trading of our common stock on the NASDAQ Stock Market and such shares are not approved for trading or quoted on any other U.S. securities exchange; or
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we consolidate with or merge with or into another person or another person merges with or into us or the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of our assets and
certain of our subsidiaries, taken as a whole, to another person and, in the case of any such merger or consolidation, our securities that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power
of our voting stock are changed into or exchanged for cash, securities or property, unless pursuant to the transaction such securities are changed into securities of the surviving person that represent, immediately after such transaction, at least a
majority of the aggregate voting power of the voting stock of the surviving person.
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Notwithstanding the foregoing, holders
of shares of Series B Preferred Stock will not have the right to require us to redeem their shares if:
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the last reported sale price of shares of our common stock for any five trading days within the 10 consecutive trading days ending immediately before the later of the fundamental change or its announcement equaled
or exceeded 105% of the conversion price of the shares of Series B Preferred Stock immediately before the fundamental change or announcement;
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at least 90% of the consideration (excluding cash payments for fractional shares) and, in respect of dissenters appraisal rights, if the transaction constituting the fundamental change consists of shares of
capital stock traded on a U.S. national securities exchange, or which will be so traded or quoted when issued or exchanged in connection with a fundamental change, and as a result of the transaction, shares of Series B Preferred Stock become
convertible into such publicly traded securities; or
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in the case of fundamental change event in the fourth bullet above, the transaction is affected solely to change our jurisdiction of incorporation.
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We may, at our option, elect to pay the redemption price in cash or, in shares of our common stock valued at a discount of 5% from the market
price of shares of our common stock, or any combination thereof. Notwithstanding the foregoing, we may only pay such redemption price in shares of our common stock that are registered under the Securities Act and eligible for immediate sale in the
public market by non-affiliates of the Company.
Voting Rights
Holders of Series B Preferred Stock currently have no voting rights; however, holders may receive certain voting rights, as described in the
Certificate of Designation, if (1) dividends on any shares of Series B Preferred Stock, or any other class or series of stock ranking on a parity with the Series B Preferred Stock with respect to the payment of dividends, shall be in
arrears for dividend periods, whether or not consecutive, for six calendar quarters or (2) we fail to pay the redemption price, plus accrued and unpaid dividends, if any, on the redemption date for shares of Series B Preferred Stock
following a fundamental change.
So long as any shares of Series B Preferred Stock remain outstanding, we will not, without the
consent of the holders of at least two-thirds of the shares of Series B Preferred Stock outstanding at the time (voting separately as a class with all other series of preferred stock, if any, on parity with our Series B Preferred Stock
upon which like voting rights have been conferred and are exercisable) issue or increase the authorized amount of any class or series of shares ranking senior to the outstanding shares of the Series B Preferred Stock as to dividends or upon
liquidation. In addition, we will not, subject to certain conditions, amend, alter or repeal provisions of our Charter, including the certificate of designation relating to the Series B Preferred Stock, whether by merger, consolidation or
otherwise, so as to adversely amend, alter or affect any power, preference or special right of the outstanding shares of Series B Preferred Stock or the holders thereof without the affirmative vote of not less than two-thirds of the issued and
outstanding Series B Preferred Stock shares.
Series 1 Preferred Shares
In connection with our acquisition of Global Thermoelectric Inc. (Global) in November 2003, we acquired the obligations of Global
pursuant to its outstanding 1,000,000 Series 2 Preferred Shares (Series 2 Preferred Shares) which continued to be held by Enbridge, Inc. With the sale of Global in May of 2004, the Series 2 Preferred Shares were cancelled,
and replaced with substantially equivalent Series 1 Preferred Shares (Series 1 Preferred Shares) issued by FCE FuelCell Energy Ltd. (FCE Ltd).
On March 31, 2011, the Company entered into an agreement with Enbridge, Inc. (Enbridge) to modify the Class A Cumulative
Redeemable Exchangeable Preferred Shares agreement (the Series 1 preferred share agreement) between FCE Ltd, a wholly-owned subsidiary of FuelCell Energy, and Enbridge, the sole holder of the Series 1 preferred shares.
Consistent with the previous Series 1 preferred share agreement, FuelCell continues to guarantee the return of principal and dividend obligations of FCE Ltd. to the Series 1 preferred shareholders under the modified agreement.
The modified terms of the Series 1 Preferred Shares provides for payments of (i) annual dividend payments of Cdn. $500,000 and
(ii) annual return of capital payments of Cdn. $750,000. These payments commenced on
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March 31, 2011 and will end on December 31, 2020. Additional dividends accrue on cumulative unpaid dividends at a 1.25% quarterly rate, compounded quarterly, until payment thereof. On
December 31, 2020 the amount of all accrued and unpaid dividends on the Series 1 Preferred Shares of Cdn. $21.1 million and the balance of the principal redemption price of Cdn. $4.4 million shall be paid to the holders of
the Series 1 Preferred Shares. FCE Ltd. has the option of making dividend payments in the form of common stock or cash under the Series 1 Preferred Shares provisions.
The Company assessed the accounting guidance related to the classification of the preferred shares after the modification on March 31,
2011 and concluded that the preferred shares should be classified as a mandatorily redeemable financial instrument, and presented as a liability on the consolidated balance sheet.
The Company made its scheduled payments of Cdn. $1.3 million during each of fiscal years 2016, 2015 and 2014, under the terms of the
modified agreement, including the recording of interest expense, which reflects the fair value discount of approximately Cdn. $2.4 million, Cdn. $2.3 million and Cdn. $2.1 million, respectively.
In addition to the above, the significant terms of the Series 1 Preferred Shares include the following:
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Voting Rights
The holders of the Series 1 Preferred Shares are not entitled to any voting rights.
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Dividends
Dividend payments can be made in cash or common stock of the Company, at the option of FCE Ltd, and if common stock is issued it may be unregistered. If FCE Ltd elects to make such payments
by issuing common stock of the Company, the number of common shares is determined by dividing the cash dividend obligation by 95% of the volume weighted average price in US dollars at which board lots of the common shares have been traded on NASDAQ
during the 20 consecutive trading days preceding the end of the calendar quarter for which such dividend in common shares is to be paid converted into Canadian dollars using the Bank of Canadas noon rate of exchange on the day of
determination.
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Redemption
The Series 1 Preferred Shares are redeemable by FCE Ltd for Cdn.$25 per share less any amounts paid as a return of capital in respect of such share plus all unpaid dividends and accrued
interest. Holders of the Series 1 Preferred Shares do not have any mandatory or conditional redemption rights.
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Liquidation or Dissolution
In the event of the liquidation or dissolution of FCE Ltd, the holders of Series 1 Preferred Shares will be entitled to receive Cdn.$25 per share less any amounts paid
as a return of capital in respect of such share plus all unpaid dividends and accrued interest. The Company has guaranteed any liquidation obligations of FCE Ltd.
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Exchange Rights
A holder of Series 1 Preferred Shares has the right to exchange such shares for fully paid and non-assessable common stock of the Company at the following exchange prices:
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Cdn$1,664.52 per share of common stock after July 31, 2015 until July 31, 2020; and
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at any time after July 31, 2020, at a price equal to 95% of the then current market price (in Cdn.$) of the Companys common stock at the time of conversion.
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The exchange rates set forth above shall be adjusted if the Company: (i) subdivides or consolidates the common stock; (ii) pays a stock dividend;
(iii) issues rights, options or other convertible securities to the Companys common stockholders enabling them to acquire common stock at a price less than 95% of the then-current price; or (iv) fixes a record date to distribute to
the Companys common stockholders shares of any other class of securities, indebtedness or assets.
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Anti-Takeover Provisions
Provisions of our Charter and By-Laws
A number of provisions of our Charter and By-laws concern matters of corporate governance and the rights of shareholders. Some of these
provisions, including, but not limited to, the inability of shareholders to take action by unanimous written consent, certain advance notice requirements for shareholder proposals and director nominations, supermajority voting provisions with
respect to any amendment of voting rights provisions, the filling of vacancies on the board of directors by the affirmative vote of a majority of the remaining directors, and the ability of the board of directors to issue shares of preferred stock
and to set the voting rights, preferences and other terms thereof, without further shareholder action, may be deemed to have anti-takeover effect and may discourage takeover attempts not first approved by the board of directors, including takeovers
which shareholders may deem to be in their best interests. If takeover attempts are discouraged, temporary fluctuations in the market price of shares of our common stock, which may result from actual or rumored takeover attempts, may be inhibited.
These provisions, together with the ability of the board of directors to issue preferred stock without further shareholder action, could also delay or frustrate the removal of incumbent directors or the assumption of control by shareholders, even if
the removal or assumption would be beneficial to our shareholders. These provisions could also discourage or inhibit a merger, tender offer or proxy contest, even if favorable to the interests of shareholders, and could depress the market price of
our common stock. The board of directors believes these provisions are appropriate to protect our interests and the interests of our shareholders. The board of directors has no present plans to adopt any further measures or devices which may be
deemed to have an anti-takeover effect.
Delaware Anti-Takeover Provisions
We are subject to Section 203 of the DGCL, which prohibits a publicly-held Delaware corporation from engaging in a business
combination, except under certain circumstances, with an interested shareholder for a period of three years following the date such person became an interested shareholder unless:
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before such person became an interested shareholder, the board of directors of the corporation approved either the business combination or the transaction that resulted in the interested shareholder becoming an
interested shareholder;
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upon the consummation of the transaction that resulted in the interested shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding shares held by directors who are also officers of the corporation and shares held by employee stock plans in which employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer; or
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at or following the time such person became an interested shareholder, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of shareholders
(and not by written consent) by the affirmative vote of the holders of at least 66 2/3% of the outstanding voting stock of the corporation which is not owned by the interested shareholder.
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The term interested shareholder generally is defined as a person who, together with affiliates and associates, owns, or, within
the three years prior to the determination of interested shareholder status, owned, 15% or more of a corporations outstanding voting stock. The term business combination includes mergers, asset or stock sales and other similar
transactions resulting in a financial benefit to an interested shareholder. Section 203 makes it more difficult for an interested shareholder to effect various business combinations with a corporation for a three-year period. The
existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for
the shares of our common stock held by shareholders. A Delaware corporation may opt out of Section 203 with an express provision in its original Charter or any amendment thereto. Our Charter does not contain any such exclusion.
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Exclusive Forum
The By-laws provide that unless we consent in writing to an alternative forum, a state court located within the State of Delaware (or, if no
state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any
action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers or other employees or our stockholders; (iii) any action asserting a claim against us or any of our directors or officers or other employees arising
pursuant to any provision of the DGCL or our Charter or the By-laws (as either may be amended from time to time), or (iv) any action asserting a claim against us or any of our directors or other officers or other employees governed by the
internal affairs doctrine.
Limitations of Directors Liability
Our Charter provides that none of our directors will be personally liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability:
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for any breach of the directors duty of loyalty to us or our stockholders;
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for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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under Section 174 of the DGCL; or
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for any transaction from which the director derived an improper personal benefit.
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The effect
of these provisions is to eliminate our rights and the rights of our stockholders (through stockholders derivatives suits on behalf of us) to recover monetary damages against a director for breach of fiduciary duty as a director (including
breaches resulting from grossly negligent behavior), except in the situations described above. These provisions do not limit the liability of directors under federal securities laws and do not affect the availability of equitable remedies such as an
injunction or rescission based upon a directors breach of his duty of care.
Listing on the NASDAQ Global Market
Our common stock is listed on the NASDAQ Global Market under the symbol FCEL.
Transfer Agent and Registrar
The
transfer agent and registrar for our common stock and preferred stock is American Stock Transfer & Trust Company, New York, New York.
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