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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from to
COMMISSION FILE NUMBER: 0-27527
PLUG POWER INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 22-3672377
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(State or other jurisdiction (I.R.S. Identification Number)
of incorporation or organization)
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968 ALBANY-SHAKER ROAD, LATHAM, NEW YORK 12110
(Address of principal executive offices, including zip code)
(518) 782-7700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.01 per share.
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or an
amendment to this Form 10-K. [X]
As of March 22, 2000, 43,096,393 shares of the Registrant's Common Stock
were issued and outstanding. The aggregate market value of the voting stock of
the Registrant held by non-affiliates of the Registrant, based upon the
closing sale price of $109.25 on the Nasdaq National Market on March 22, 2000,
was $923,914,483.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement relating to the Registrant's
Annual Meeting of stockholders to be held on May 24, 2000 are incorporated by
reference into Part III of this report to the extent described therein.
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PART I
Item 1. Business
Overview
We are a designer and developer of on-site electricity generation systems
utilizing proton exchange membrane (PEM) fuel cells for residential
applications. Our residential fuel cell system will be an appliance, initially
about the size of a refrigerator, that will produce electricity through a
clean, efficient process without combustion. Our system will receive fuel from
a home's existing natural gas line or propane tank, convert the fuel into a
hydrogen-rich stream, and then combine it with oxygen from the air in a
chemical reaction that produces electric power. Our initial residential
systems will be designed to supply 7 kW of baseload power, 10 kW of peak
power, and 15 kW of surge load capacity, which will provide the full
electricity needs of a home, although the home can remain connected to the
electric grid for back-up purposes. We plan to bring our first residential
fuel cell systems to market in 2001, and, by 2003, we expect to offer
different model sizes designed to meet the specific power needs of various
market segments.
We were formed in June 1997 as a joint venture between Mechanical
Technology Incorporated and Edison Development Corporation to further the
development of fuel cells for electric power generation in residential and
other applications. At formation, Mechanical Technology contributed its fuel
cell business, including 22 people, intellectual property, equipment,
facilities and government contracts and grants related to automotive fuel cell
research, while Edison Development contributed cash, expertise in distributed
generation and the marketplace presence to distribute and sell fuel cell
systems for residential applications.
In November 1999, we completed an initial public offering of 6,782,900
shares of common stock, including 782,900 shares pursuant to the underwriters'
exercise of their over-allotment option, (the "Offering") at an offering price
of $15.00 per share.
Fuel Cells and Fuel Cell Systems
A fuel cell is a device that combines hydrogen, derived from a fuel such as
natural gas, propane, methanol or gasoline, and oxygen from the air to produce
electric power without combustion. Plug Power fuel cells consist principally
of two electrodes, the anode and the cathode, separated by a polymer
electrolyte membrane. Each of the electrodes is coated on one side with a
platinum-based catalyst. Hydrogen fuel is fed into the anode and air enters
through the cathode. Induced by the platinum catalyst, the hydrogen molecule
splits into two protons and two electrons. The electrons are conducted around
the membrane creating an electric current and the protons from the hydrogen
molecule are transported through the polymer electrolyte membrane and combine
at the cathode with the electrons and oxygen from the air to form water and
produce heat.
To obtain the desired level of electric power, individual fuel cells are
combined into a fuel cell stack. Increasing the number of fuel cells in a
stack increases the voltage, while increasing the surface area of each fuel
cell increases the current. Our initial residential systems will provide 7kW
of baseload power, 10kW of peak power and 15kW of surge load capacity.
The components and subsystems of our fuel cell systems include a fuel
reformer or processor, a fuel cell stack, a power conditioner or inverter, a
fuel supply subsystem, an air supply subsystem, a water management loop, a
thermal loop, a thermal management system, a microprocessor-based control unit
and a battery.
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Product Development and Commercialization
To date, we have achieved the following major milestones along our product
development and commercialization schedule:
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Date Milestone
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June 1998...... Powered a three-bedroom home with a hydrogen-fueled
residential fuel cell system
November 1998.. Demonstrated a methanol-fueled residential fuel cell system
December 1998.. Selected to design and manufacture 80 test and evaluation
residential fuel cell systems for the State of New York for
installation at various test sites over the next two years
December 1998.. Demonstrated a natural gas-fueled residential fuel cell system
February 1999.. Entered into an agreement with GE MicroGen, Inc. (formerly, GE
On-Site Power) to distribute and service our residential fuel
cell systems
June 1999...... Hired our 250th employee, up from 22 employees at inception
August 1999.... Powered a three-bedroom home with a residential fuel cell
system connected to its existing natural gas pipeline
December 1999.. Completed 52nd fuel cell system. Of these systems, 37 have
been built to run on natural gas and 15 to operate on
simulated fuel.
February 2000.. Acquired intellectual property and assets related to fuel
processor development from Gastec.
February 2000.. Completed construction of a state-of-the-art, 50,000 square
foot manufacturing facility in Latham, New York
March 2000..... Entered into a joint development agreement with Joh. Vaillant
GmbH u. Co. to develop a combined furnace, hot water heater
and fuel cell system.
March 2000..... Acquired an ownership interest in Advanced Energy Systems
power electronics technology.
March 2000..... Filed our 63rd patent application relating to fuel cell
technology, system designs and manufacturing processes
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We are implementing our product development plan in four phases. Our cash
requirements during this time period will depend on numerous factors,
including the progress of our product commercialization activities, and the
pace at which we hire and train our production staff, develop and expand our
manufacturing capacity and expand our research and development activities. We
believe that our current cash balances will provide us with sufficient capital
to fund operations through the end of the first half of 2001.
. Phase 1--Research, Development and Engineering. Our 50,000 square foot
research and development facility contains over 90 test stations where
we conduct design optimization and verification testing, rapid-aging
testing, failure mode and effects analysis, multiple technology
evaluations, and endurance testing in our effort to accelerate the
development and commercialization of our fuel cell systems. In 1999, we
focused on developing and testing residential fuel cell systems, both in
the laboratory and at selected test sites, to obtain data that can help
us advance the design and construction of low-cost systems. We are
selecting suppliers to provide components and subsystems for our pre-
commercial and commercial systems on a long-term basis. During 1999, we
produced 52 test and evaluation systems built to run on natural gas and
simulated natural gas reformate to test different system design
elements. These systems are evaluated in our laboratories and at
selected test sites. Based on the data we obtain from these field
trials, we will determine the final design of our pre-commercial
product.
. Phase 2--Pre-Commercial Testing. In year 2000, we expect to begin small-
scale production of our pre-commercial systems. GE Fuel Cell Systems,
LLC, a joint venture owned 75% by GE MicroGen, Inc. (formerly GE On-Site
Power) and 25% by Plug Power, has committed to purchase 485 of these
systems and is expected to place them with its local market distribution
partners. All of these partners
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will be expected to participate in field trials and evaluations designed
to test system design and performance, as well as customer preferences.
We intend to use this data to optimize product design and speed
commercialization and mass market acceptance. During this period we also
expect to complete development of a propane-fueled system.
. Phase 3--Manufacturing and Commercialization. In 2001, we intend to
begin producing our first commercial fuel cell systems for residential
use. These systems will include any necessary modifications identified
during pre-commercial testing. During this period, we also intend to
expand our manufacturing capabilities, beginning large scale commercial
production while continuing to refine our manufacturing processes.
. Phase 4--Next Generation Models. In 2003, when we expect to have
achieved mass market production of our basic systems, we intend to
produce new models offering enhanced features, including models with co-
generation capabilities. In March 2000, we entered into a joint
development agreement with Joh. Vaillant GmbH u. Co. and GE MicroGen to
develop a combined furnace, hot water heater and fuel cell system that
will provide both heat and electricity for the home. Vaillant is a
leading European heating technology company and offers its customers a
complete range of products for central heating and hot water.
Manufacturing
Our goal is to mass manufacture reliable and safe residential fuel cell
systems at affordable cost for mass market consumption. We are focusing our
efforts on overall system design, component and subsystem integration,
assembly, and quality control processes. We have also begun to establish a
manufacturing infrastructure by hiring assembly and related support staff,
installing a new management information system, and developing our
manufacturing processes, including defining work centers and related
responsibilities. In February 2000, we completed construction of our
50,000 square foot manufacturing facility, adjacent to our development
laboratories, that will allow us to begin manufacturing of our pre-commercial
and initial commercial systems.
We plan to utilize third-party suppliers who, with our assistance, can
design, develop and/or manufacture subsystems and components that achieve our
cost and reliability targets. We plan to perform significant quality testing
before we integrate any third-party subsystems and components into our final
assembled fuel cell system. As we move toward the commercialization stage we
will begin to shift our focus from research and development to high volume
production.
Based on our commercialization plan, we anticipate that our existing
facilities and our new manufacturing plant will provide sufficient capacity
through 2001, and that we will need to develop or build additional capacity in
order to achieve mass market production by 2003.
Distribution and Marketing
In February 1999, we entered into an agreement with GE MicroGen, Inc.
(formerly GE On-Site Power) to create GE Fuel Cell Systems, LLC, a joint
venture owned 75% by GE MicroGen and 25% by Plug Power, which is dedicated to
marketing, selling, installing and servicing Plug Power fuel cell systems.
Plug Power will serve as GE Fuel Cell Systems' exclusive worldwide supplier of
fuel cell systems designed for residential and commercial applications under
35kW. We believe that most residential applications and many small commercial
applications require less than 35kW. GE Fuel Cell Systems will have the
exclusive worldwide rights to market, distribute, install and service our
systems (other than in the states of Illinois, Indiana, Michigan and Ohio, in
which Edison Development will be our exclusive distributor). Under this
arrangement, we will sell our systems directly to GE Fuel Cell Systems, which,
in turn, will identify qualified resellers who can distribute and service
these systems. Plug Power systems sold through GE Fuel Cell Systems will be
co-branded with both the General Electric and Plug Power names and trademarks,
and may also carry the brand of the local reseller.
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Potential GE Fuel Cell Systems' resellers include natural gas distributors,
propane distributors, rural electric cooperatives, electric utilities and new
market entrants such as gas and power marketers, unregulated affiliates of
utilities, appliance distributors and energy service companies.
Potential reseller agreements will be aimed at requiring distributors to
purchase fuel cell systems only from GE Fuel Cell Systems and to commit to
minimum purchase requirements. To date, GE Fuel Cell Systems has entered into
memoranda of understanding with potential resellers, including NJR Energy
Holdings Corporation, an affiliate of New Jersey Natural Gas Company, and
Flint Energies, a Georgia-based rural electric cooperative. We expect GE Fuel
Cell Systems to enter into similar arrangements with selected resellers around
the world.
Together with GE Fuel Cell Systems, we have conducted a preliminary
evaluation of target markets and potential customers, taking into account such
factors as average household electricity usage, ability to pay, power
availability and quality, availability of fuel, the prices of electricity and
natural gas, penetration of competing distributed generation technologies, new
capacity requirements and the cost of new capacity additions. Based on this
evaluation, we intend to target the following market segments during 2001 and
2002 for our first commercial fuel cell systems: homes served by rural
electric cooperatives, homes in urban and suburban load pockets, high-
consumption households, owners and builders of remote homes and dissatisfied
utility customers.
After introducing our first commercial systems in 2001 to our targeted
early markets, we believe that we will gain the experience and capabilities
necessary to lower the estimated price of our systems to consumers to
approximately $3,000 to $5,000, subject to market demand, expanding our
manufacturing capacity and, through GE Fuel Cell Systems, extending our sales
efforts. Our targeted mass market segments will include: homes utilizing
natural gas, new homes and homes in countries with inadequate or no existing
electric power infrastructure.
Installation, Servicing and Maintenance
We plan to design our fuel cell systems to last approximately 15 to 20
years, with major component maintenance and replacements scheduled to occur
every four to seven years. Items such as air filters will require annual
replacement. GE Fuel Cell Systems has committed to provide complete product
support for Plug Power systems through its own service structure, reseller
service network, and contracts with third party service providers.
GE Fuel Cell Systems' service program is expected to be closely coordinated
with the introduction of Plug Power's fuel cell systems, so that a sufficient
level of installation, maintenance, and customer support service will be
available in all areas where our systems are sold. We also expect that GE Fuel
Cell Systems will provide the warranty service for our products according to
terms to be mutually agreed upon by Plug Power and GE Fuel Cell Systems. We
expect that GE Fuel Cell Systems' service plan will be completed and the
requisite service contracts in place prior to the release of our commercial
units.
Proprietary Rights
Fuel cell technology has existed since the 19th century, and PEM fuel cells
were first developed in the 1950s. Consequently, we believe that neither we
nor our competitors can achieve a significant proprietary position on the
basic technologies used in fuel cell systems. However, we believe the design
and integration of the system and system components, as well as some of the
low-cost manufacturing processes that we have developed, can be protected.
To date, we have 10 issued patents and 53 patents pending. These patents
cover, among other things, fuel cell components that reduce manufacturing part
count, fuel cell system designs that lend themselves to mass manufacturing,
improvements to fuel cell system efficiency, reliability, and longer system
life, and control strategies, such as added safety protections and operation
under extreme conditions. Each of our employees has
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agreed that all inventions made or conceived while an employee of Plug Power
which are related to or result from work or research that Plug Power performs
will remain the sole and exclusive property of Plug Power, whether patented or
not.
Competition
There are a number of companies located in the United States, Canada and
abroad that are developing PEM fuel cell technology. Ballard Power Systems
Inc., a publicly traded company located in Vancouver, British Columbia, has
been developing PEM fuel cell technology since the mid-1980s and has attracted
substantial funding from a number of partners, including DaimlerChrysler AG
and Ford Motor Company. A number of major automotive and manufacturing
companies also have in-house PEM fuel cell development efforts, including
International Fuel Cells Corporation, a subsidiary of United Technologies
Corporation. In addition, we believe approximately 10 companies have
established residential fuel cell system development programs.
We also compete with companies that are developing other types of fuel
cells. There are four types of fuel cells other than PEM fuel cells that are
generally considered to have viable commercial applications: phosphoric acid
fuel cells, molten carbonate fuel cells, solid oxide fuel cells and alkaline
fuel cells. Each of these fuel cells differs in the component materials, as
well as in its overall operating temperature.
Our systems will also compete with other distributed generation
technologies, including microturbines and reciprocating engines, available at
prices competitive with existing forms of power generation. Our systems will
also compete with solar and wind-powered systems.
Once we begin selling our systems, we intend to compete primarily on the
basis of cost, reliability, efficiency and environmental considerations.
Government Regulation
We do not believe that we will be subject to existing federal and state
regulatory commissions governing traditional electric utilities and other
regulated entities. We do believe that our product and its installation will
be subject to oversight and regulation at the local level in accordance with
state and local ordinances relating to building codes, safety, pipeline
connections and related matters. Such regulation may depend, in part, upon
whether a system is placed outside or inside a home. At this time, we do not
know which jurisdictions, if any, will impose regulations upon our product or
installation. We also do not know the extent to which any existing or new
regulations may impact our ability to distribute, install and service our
product. Once our product reaches the commercialization stage and we begin
distributing our systems to our target early markets, federal, state or local
government entities or competitors may seek to impose regulations.
Employees
As of December 31, 1999, we had a total staff of approximately 315,
including approximately 295 full-time employees, of which approximately 175
were engineers, scientists, and other degreed professionals. We consider our
relations with our employees to be good.
Risk Factors
This Annual Report on Form 10-K contains forward-looking statements. You
can identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate" and "continue" or similar words.
You should read statements that contain these words carefully because they
discuss our future expectations, contain projections of our future results of
operations or of our financial condition or state other "forward-looking"
information. We believe that it is important to communicate our future
expectations to our investors. However, there may be events in the future that
we are not able to accurately
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predict or control and that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Investors
are cautioned that all forward-looking statements involve risks and
uncertainties, and actual results may differ materially from those discussed
as a result of various factors, including the risks described below.
We have only been in business for a short time and your basis for evaluating
us is limited
We were formed in June 1997 to further the research and development of
residential fuel cell systems. We do not expect to have a commercially viable
product until at least 2001. Accordingly, there is only a limited basis upon
which you can evaluate our business and prospects. An investor in our common
stock should consider the challenges, expenses and difficulties that we will
face as a development stage company seeking to develop and manufacture a new
product.
We have incurred losses and anticipate continued losses through at least 2003
As of December 31, 1999, we had an accumulated deficit of $49.0 million. We
have not achieved profitability and expect to continue to incur net losses
until we can produce sufficient revenues to cover our costs. We expect the
cost to produce our pre-commercial systems to be higher than their sales price
under the terms of our distribution arrangements with GE Fuel Cell Systems and
Edison Development. Furthermore, even if we achieve our objective of bringing
our first commercial product to market in 2001, we anticipate that we will
continue to incur losses until we can cost-effectively produce and sell our
residential fuel cell systems to the mass market, which we do not expect to
occur until after 2002. Even if we do achieve profitability, we may be unable
to sustain or increase our profitability in the future.
We may never complete the research and development of a commercially viable
residential fuel cell system
We do not know when or whether we will successfully complete research and
development of a commercially viable residential fuel cell system. We have
produced and are currently demonstrating a number of test and evaluation
systems and are continuing our efforts to decrease the costs of our systems'
components and subsystems, improve their overall reliability and efficiency,
and ensure their safety. However, we must complete substantial additional
research and development on our systems before we will have a commercially
viable product. In addition, while we are conducting tests to predict the
overall life of our systems, we will not have run our systems over their
projected useful life prior to commercialization.
A mass market for residential fuel cell systems may never develop or may take
longer to develop than we anticipate
Fuel cell systems for residential use represent an emerging market, and we
do not know whether our targeted distributors and resellers will want to
purchase them or whether end-users will want to use them. If a mass market
fails to develop or develops more slowly than we anticipate, we may be unable
to recover the losses we will have incurred to develop our product and may be
unable to achieve profitability. The development of a mass market for our
systems may be impacted by many factors which are out of our control,
including: the cost competitiveness of fuel cell systems; the future costs of
natural gas, propane and other fuels used by our systems; consumer reluctance
to try a new product; consumer perceptions of our systems' safety; regulatory
requirements; and the emergence of newer, more competitive technologies and
products.
We have no experience manufacturing residential fuel cell systems on a
commercial basis
To date, we have focused primarily on research and development and have no
experience manufacturing fuel cell systems for the residential market on a
commercial basis. We recently completed construction of our 50,000 square foot
manufacturing facility and are continuing to develop our manufacturing
capability and processes. We do not know whether or when we will be able to
develop efficient, low-cost manufacturing
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capability and processes that will enable us to meet the quality, price,
engineering, design and production standards or production volumes required to
successfully mass market our residential fuel cell systems. Even if we are
successful in developing our manufacturing capability and processes, we do not
know whether we will do so in time to meet our product commercialization
schedule or to satisfy the requirements of our distributors or customers.
We are heavily dependent on our relationship with GE Fuel Cell Systems and
General Electric's commitment to develop the residential fuel cell market
Substantially all of our revenue for the foreseeable future will be derived
from sales of our products to GE Fuel Cell Systems. We have granted to GE Fuel
Cell Systems exclusive worldwide rights to market, distribute, install and
service Plug Power fuel cell systems designed for residential and commercial
applications under 35 kW (other than the states of Illinois, Indiana, Michigan
and Ohio, in which Edison Development has exclusive distribution rights).
Under our distribution agreement, we will sell our systems directly to GE Fuel
Cell Systems, which, in turn, will seek to sell them to selected resellers. We
are also obligated under an amendment to our agreement to purchase $12.0
million of technical support services from General Electric during the next
three years. Our distribution agreement expires in 2009, although General
Electric may terminate the agreement earlier if, among other reasons, we fail
to do any of the following: remain in material compliance with the development
schedule toward a January 1, 2001 product release; produce competitive
commercial fuel cell systems; meet commercial production and cost
requirements; produce systems that comply with regulatory requirements; or
obtain all necessary approvals and certifications for our systems.
Our ability to sell our systems to the mass market is heavily dependent
upon General Electric's worldwide sales and distribution network and service
capabilities. Even though we own a minority interest in GE Fuel Cell Systems,
we cannot control its operations or business decisions. Any change in our
relationship with General Electric, whether as a result of market, economic,
or competitive pressures, including any decision by General Electric to alter
its commitment to our fuel cell technology in favor of other fuel cell
technologies, to develop fuel cell systems targeted at different markets than
ours or to focus on different energy product solutions could harm our
potential earnings by depriving us of the benefits of General Electric's
worldwide sales and distribution network and service capabilities.
We may not meet our product development and commercialization milestones
We have established internal product development and commercialization
milestones and dates for achieving development goals related to technology and
design improvements. We use these internal milestones to assess our progress
toward developing a commercially viable residential fuel cell system. For
example, we established a milestone date of June 1998 for powering a home with
a hydrogen-fueled residential fuel cell system and established a milestone
date of October 1998 for demonstrating a methanol-fueled system and a natural
gas-fueled system. While we successfully powered a three-bedroom home in June
1998 using a hydrogen-fueled system, our demonstration of the methanol-fueled
system did not occur until November 1998 and our demonstration of the natural
gas-fueled system did not occur until December 1998, in each case due to our
increased focus during that period on growing our work force and expanding our
physical plant and scope of operations. Neither of these delays, nor any other
missed milestone, has had any material impact on our commercialization
schedule to date. While we have been aggressive in setting our internal
milestones and have been generally successful in meeting them, if we do
experience delays in meeting our development goals or if our systems exhibit
technical defects or are unable to meet cost or performance goals, including
power output, useful life and reliability, our commercialization schedule
could be delayed beyond 2001. In such event, potential purchasers of our
initial commercial systems may choose alternative technologies and any delays
could allow potential competitors to gain market advantages. We cannot
guarantee that we will successfully achieve our milestones in the future.
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We are dependent on third party suppliers for the development and supply of
key components for our products
While we have recently entered into relationships with suppliers of our key
components, we do not know when or whether we will secure relationships with
suppliers of all required components and subsystems for our fuel cell systems,
or whether such relationships will be on terms that will allow us to achieve
our objectives. Our business, prospects, results of operations, or financial
condition could be harmed if we fail to secure relationships with entities who
will supply the required components for our systems.
Once we establish relationships with third party suppliers, we will rely on
them to provide components for our fuel cell systems. A supplier's failure to
develop and supply components in a timely manner, or to supply components that
meet our quality, quantity or cost requirements, or our inability to obtain
substitute sources of these components on a timely basis or on terms acceptable
to us, could harm our ability to manufacture our fuel cell systems. In
addition, to the extent the processes that our suppliers use to manufacture
components are proprietary, we may be unable to obtain comparable components
from alternative suppliers.
We face intense competition and may be unable to compete successfully
The markets for electricity are intensely competitive. There are many
companies engaged in all areas of traditional and alternative electric power
generation in the United States, Canada and abroad, including, among others,
major electric, oil, chemical, natural gas, and specialized electronics firms,
as well as universities, research institutions and foreign government-sponsored
companies. These firms are engaged in forms of power generation such as solar
and wind power, reciprocating diesel engines and microturbines as well as grid-
supplied electricity. Many of these entities have substantially greater
financial, research and development, manufacturing and marketing resources than
we do.
There are a number of companies located in the United States, Canada, and
abroad that are developing PEM fuel cell technology. We also compete with
companies that are developing applications, residential and otherwise, using
other types of fuel cells. Some of our competitors are much larger than we are.
If these larger competitors decide to focus on the development of residential
fuel cell systems, they have the manufacturing, marketing, and sales
capabilities to complete research, development and commercialization of a
commercially viable residential fuel cell system more quickly and effectively
than we can.
Changes in government regulations and electric utility industry restructuring
may affect demand for our fuel cell systems
The market for electricity generation products is heavily influenced by
federal and state governmental regulations and policies concerning the electric
utility industry. The loosening of current regulatory standards could deter
further investment in the research and development of alternative energy
sources, including fuel cells, and could result in a significant reduction in
the potential market demand for our products. We cannot predict how the
deregulation and restructuring of the industry will affect the market for
residential fuel cell systems.
Our business may become subject to future government regulation which may
impact our ability to market our product
We do not believe that our product will be subject to existing federal and
state regulations governing traditional electric utilities and other regulated
entities. We do believe that our product and its installation will be subject
to oversight and regulation at the local level in accordance with state and
local ordinances relating to building codes, safety, pipeline connections and
related matters. Such regulation may depend, in part, upon whether a fuel cell
system is placed outside or inside a home. At this time, we do not know which
jurisdictions, if any, will impose regulations upon our product. We also do not
know the extent to which any existing or new regulations may impact our ability
to distribute, install and service our product. Once our product reaches the
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commercialization stage and we begin distributing our systems to our target
early markets, federal, state or local government entities or competitors may
seek to impose regulations. Any new government regulation of our product,
whether at the federal, state or local level, including any regulations
relating to installation and servicing of our products, may increase our costs
and the price of our systems, and may have a negative impact on our revenue
and profitability, and therefore, harm our business, prospects, results of
operations, or financial condition.
Utility companies could place barriers on our entry into the marketplace
Utility companies commonly charge fees to industrial customers for
disconnecting from the grid, for using less electricity, or for having the
capacity to use power from the grid for back-up purposes. Though these fees
are not currently charged to residential users, it is possible that utility
companies could in the future charge similar fees to residential customers.
The imposition of such fees could increase the cost to residential customers
of using our systems and could make our systems less desirable, thereby
harming our revenue and profitability.
Alternatives to our technology could render our systems obsolete prior to
commercialization
Our system is one of a number of alternative energy products being
developed today as supplements to the electric grid that have potential
residential applications, including microturbines, solar power and wind power,
and other types of fuel cell technologies. Improvements are also being made to
the existing electric transmission system. Technological advances in
alternative energy products, improvements in the electric grid or other fuel
cell technologies may render our systems obsolete.
The hydrocarbon fuels on which our systems rely may not be readily available
or available on a cost-effective basis
Our systems' ability to produce electricity depends on the availability of
natural gas and propane. If these fuels are not readily available to the mass
market, or if their prices are such that electricity produced by our systems
costs more than electricity provided through the grid, our systems would be
less attractive to potential users.
Our residential fuel cell systems use flammable fuels which are inherently
dangerous substances
Our residential fuel cell systems will utilize natural gas or propane in a
catalytic reaction which produces less heat than a typical gas furnace. While
our fuel cell system does not use these fuels in a combustion process, natural
gas and propane are flammable fuels that could leak in a home and combust if
ignited by another source. These dangers are present in any home appliance
that uses natural gas or propane, such as a gas furnace, stove or dryer. Since
our fuel cell systems are a new product, any accidents involving our systems
or other fuel cell-based products could impede demand for our products.
We may be unable to raise additional capital to complete our product
development and commercialization plans
Our product development and commercialization schedule could be delayed if
we are unable to fund our research and development activities or the
development of our manufacturing capabilities. We believe it is likely we will
need to raise additional funds to achieve full commercialization of our
product. We do not know whether we will be able to secure additional funding,
or funding on terms acceptable to us, to pursue our commercialization plans
through the mass market stage.
We may have difficulty managing the expansion of our operations
We are undergoing rapid growth in the number of our employees, the size of
our physical plant and the scope of our operations. For example, we began with
22 employees in June 1997 and had 315 at the end of
10
<PAGE>
1999. Such rapid expansion is likely to place a significant strain on our
senior management team and other resources. Our business, prospects, results
of operations or financial condition could be harmed if we encounter
difficulties in effectively managing the budgeting, forecasting and other
process control issues presented by such a rapid expansion.
We face risks associated with our plans to market, distribute and service our
products internationally
We intend to market, distribute, and service our residential fuel cell
systems internationally through GE Fuel Cell Systems. We have limited
experience developing, and no experience manufacturing, our products to comply
with the commercial and legal requirements of international markets. Our
success in those markets will depend, in part, on GE Fuel Systems' ability to
secure relationships with foreign resellers and our ability to manufacture
products that meet foreign regulatory and commercial requirements. In
addition, our planned international operations are subject to other inherent
risks, including potential difficulties in enforcing contractual obligations
and intellectual property rights in foreign countries and fluctuations in
currency exchange rates.
We may not be able to protect important intellectual property
PEM fuel cell technology was first developed in the 1950s and we do not
believe we can achieve a significant proprietary position on the basic
technologies used in fuel cell systems. However, our ability to compete
effectively against other fuel cell companies will depend, in part, on our
ability to protect our proprietary technology, systems designs and
manufacturing processes. We do not know whether any of our pending patent
applications will issue or, in the case of patents issued or to be issued,
that the claims allowed are or will be sufficiently broad to protect our
technology or processes. Even if all of our patent applications are issued and
are sufficiently broad, they may be challenged or invalidated. We could incur
substantial costs in prosecuting or defending patent infringement suits. While
we have attempted to safeguard and maintain our proprietary rights, we do not
know whether we have been or will be completely successful in doing so.
Further, our competitors may independently develop or patent technologies
or processes that are substantially equivalent or superior to ours. If we are
found to be infringing third party patents, we do not know whether we will be
able to obtain licenses to use such patents on acceptable terms, if at all.
Failure to obtain needed licenses could delay or prevent the development,
manufacture or sale of our fuel cell systems.
We rely, in part, on contractual provisions to protect our trade secrets
and proprietary knowledge. These agreements may be breached, and we may not
have adequate remedies for any breach. Our trade secrets may also be known
without breach of such agreements or may be independently developed by
competitors. Our inability to maintain the proprietary nature of our
technology and processes could allow our competitors to limit or eliminate any
competitive advantages we may have and prevent us from being the first company
to commercialize residential fuel cell systems, thereby harming our business
prospects.
Our government contracts could restrict our ability to effectively
commercialize our technology
Under some of our contracts, government agencies can require us to obtain
or produce components for our systems from sources located in the United
States rather than foreign countries. Our contracts with government agencies
are also subject to the risk of termination at the convenience of the
contracting agency, potential disclosure of our confidential information to
third parties, and the exercise of "march-in" rights by the government. March-
in rights refer to the right of the United States government or government
agency to exercise its non-exclusive, royalty-free, irrevocable worldwide
license to any technology developed under contracts funded by the government
if the contractor fails to continue to develop the technology. The
implementation of restrictions on our sourcing of components or the exercise
of march-in rights could harm our business, prospects, results of operations,
or financial condition.
11
<PAGE>
Our future plans could be harmed if we are unable to attract or retain key
personnel
We have attracted a highly skilled management team and specialized
workforce, including scientists, engineers, researchers, and manufacturing and
marketing professionals. Based on our planned expansion, we will require a
significant increase in the number of our employees and outside contractors.
Our future success, therefore, will depend, in part, on attracting and
retaining additional qualified management and technical personnel. We do not
know whether we will be successful in hiring or retaining qualified personnel.
Our inability to hire qualified personnel on a timely basis, or the departure
of key employees, could harm our expansion and commercialization plans.
Item 2. Properties
Our principal executive offices are located in Latham, New York. At our 36
acre campus, we own a 56,000 square foot research and development center, a
32,000 square foot office building and a 50,000 square foot manufacturing
facility and believe that these facilities are sufficient to accommodate our
anticipated growth through 2001.
Item 3. Legal Proceedings
On January 25, 2000, DCT, Inc. filed a complaint against Plug Power, The
Detroit Edison Company and Edison Development Corporation, alleging that these
entities misappropriated from DCT business and technical trade secrets, ideas,
know-how and strategies relating to fuel cell systems and breached certain
contractual obligations owed to DCT. We believe the allegations made against
us are without merit and we intend to vigorously contest the litigation.
Discovery is currently underway. Due to the early stage of this litigation, we
cannot determine whether any loss will result from the ultimate outcome.
Item 4. Submission of Matters to a Vote of Security Holders
A) On October 28, 1999, Plug Power, LLC, as the sole stockholder of Plug
Power Inc., by unanimous written consent in lieu of a special meeting,
approved and adopted an amendment and restatement of our Certificate of
Incorporation.
B) On October 28, 1999, Plug Power, LLC, as the sole stockholder of Plug
Power Inc., by unanimous written consent in lieu of a special meeting,
approved and adopted the merger of Plug Power Inc. with its parent
corporation, Plug Power, LLC, with Plug Power Inc. surviving the merger
and otherwise upon the terms and conditions of an Agreement and Plan of
Merger.
12
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Market Information. Our Common Stock is traded on the Nasdaq National
Market under the symbol "PLUG." As of December 31, 1999, there were 315
shareholders of record. The following table sets forth high and low last
reported sale prices for the Common Stock for each fiscal quarter since the
effective date of the Offering, October 28, 1999, through March 22, 2000.
<TABLE>
<CAPTION>
Closing sales
prices
--------------
High Low
------- ------
<S> <C> <C>
1999
4th Quarter (from October 28, 1999).......................... $ 34.50 $15.00
2000
1st Quarter (through March 22, 2000)......................... $149.75 $25.75
</TABLE>
Dividend Policy. We have never declared or paid cash dividends on the
Common Stock. Any future determination as to the payment of dividends will
depend upon capital requirements and limitations imposed by our credit
agreements, if any, and such other factors as our board of directors may
consider.
Recent Sales of Unregistered Securities. During the period covered by this
report on Form 10-K, we issued and sold unregistered securities as follows:
In January 1999, we sold 100,000 shares of Common Stock for an aggregate
purchase price of $500,000 to Edison Development Corporation.
In January 1999, we sold 100,000 shares of Common Stock for an aggregate
purchase price of $500,000 to Mechanical Technology Incorporated.
In January 1999, we granted to each of Mechanical Technology and Edison
Development warrants to purchase up to 3 million shares of Common Stock at
an exercise price of $7.50 per share. Each of Mechanical Technology and
Edison Development exercised their warrants in full for a purchase price of
$22.5 million each.
In February 1999, we sold 200,000 shares of Common Stock for an
aggregate purchase price of $1.0 million to Edison Development.
In February 1999, we sold 200,000 shares of Common Stock for an
aggregate purchase price of $1.0 million to Mechanical Technology.
In February 1999, we granted a warrant to Mr. Michael Cudahy, a director
of Plug Power, to purchase up to 400,000 shares of Common Stock at an
exercise price of $8.50 per share and sold to Mr. Cudahy 1,440,000 shares
of Common Stock for $9.6 million. In November 1999, Mr. Cudahy exercised
his warrant in full for a total purchase price of $3.4 million.
In February 1999, we sold 60,000 shares of Common Stock for an aggregate
purchase price of $400,000 to Kevin Lindsey.
In February 1999, we issued to GE MicroGen, a subsidiary of General
Electric Company, 2,250,000 shares of Common Stock in consideration of a
25% interest in GE Fuel Systems, LLC, a joint venture owned by GE MicroGen
and Plug Power.
In February 1999, we issued a warrant to GE MicroGen to purchase 3
million shares of Common Stock at a price of $12.50 per share. In November
1999, GE MicroGen exercised its warrant in full for a total purchase price
of $37.5 million.
13
<PAGE>
In March 1999, we issued 2,250,000 shares of Common Stock to Mechanical
Technology upon the exercise of outstanding options in consideration of the
transfer of non-cash research credits.
In April 1999, we sold 299,850 shares of Common Stock for an aggregate
purchase price of $2.0 million to Antaeus Enterprises, Inc.
In April 1999, we sold 1,000,000 shares of Common Stock for an aggregate
purchase price of $6.67 million to Southern California Gas Company.
In April 1999, we granted warrants to purchase an aggregate of 350,000
shares of Common Stock to Southern California Gas Company at an exercise
price of $8.50 per share. In November 1999, Southern California Gas Company
exercised its warrants in full for a purchase price of $2.975 million.
In June 1999, we issued to Mechanical Technology 704,315 shares of
Common Stock in exchange for Mechanical Technology's 36-acre office
facility in Latham, New York.
In June 1999, we sold to Edison Development 704,315 shares of Common
Stock at $6.67 per share for $4.7 million.
In September 1999, we sold 266,667 shares of Common Stock for an
aggregate purchase price of $2,000,000 to Mechanical Technology.
In September 1999, we sold 266,667 shares of Common Stock for an
aggregate purchase price of $2,000,000 to Edison Development.
The sales and issuances of these securities were exempt from registration
under the Securities Act pursuant to Section 4(2) of the Securities Act on the
basis that the transactions did not involve a public offering.
From January 1, 1999 through December 31, 1999, we granted stock options to
purchase an aggregate of 2,047,039 shares of Common Stock with exercise prices
ranging from $5.00 to $15.00 per share, under our stock option plans. The
sales and issuances of these securities were exempt from registration under
the Securities Act pursuant to Rule 701 promulgated thereunder on the basis
that these options were offered and sold either pursuant to a written
compensatory benefit plan or pursuant to written contracts relating to
compensation, as provided by Rule 701.
Use of Proceeds. The effective date of the Securities Act registration
statement for which the use of proceeds information is being disclosed was
October 28, 1999, and the Commission file number assigned to the registration
statement is 333-86089. The use of proceeds of our initial public offering has
not changed from our quarterly report on Form 10-Q for the three month period
ended September 30, 1999.
14
<PAGE>
Item 6. Selected Financial Data
The following table sets forth selected financial data and other operating
information of the Company. The selected income statement and balance sheet
data for 1999, 1998 and 1997 as set forth below are derived from the audited
financial statements of the Company. The information is only a summary and you
should read it in conjunction with the Company's audited financial statements
and related notes and other financial information included herein and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
Year Ended For the period
------------------------- June 27, 1997 to
December 31, December 31, December 31,
1999 1998 1997
------------ ------------ ----------------
(in thousands, except
per share data)
<S> <C> <C> <C>
Income Statement Data:
Contract revenue................... $ 11,000 $ 6,541 $ 1,194
Cost of contract revenue........... 15,498 8,864 1,226
-------- ------- -------
Loss on contracts.................. (4,498) (2,323) (32)
In-process research and
development....................... -- -- 4,043
Research and development expense... 20,506 4,633 1,301
General and administrative
expense........................... 9,927 2,753 630
Interest expense................... 190 -- --
-------- ------- -------
Operating loss................... (35,121) (9,709) (6,006)
Interest income.................... 3,124 93 103
-------- ------- -------
Loss before equity in losses of
affiliate....................... (31,997) (9,616) (5,903)
Equity in losses of affiliate...... (1,472) -- --
-------- ------- -------
Net loss......................... $(33,469) $(9,616) $(5,903)
======== ======= =======
Loss per share:
Basic and diluted................ $ (1.27) $ (0.71) $ (0.62)
======== ======= =======
Weighted average number of common
shares outstanding................ 26,283 13,617 9,500
======== ======= =======
Balance Sheet Data (at end of the
period):
Working capital.................... $169,212 $ 2,692 $ 2,667
Total assets....................... 216,126 8,093 4,846
Curent portion of long-term
obligations....................... 553 -- --
Long-term obligations.............. 6,517 --
Stockholders' equity............... 201,407 5,493 3,597
</TABLE>
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with our
accompanying Financial Statements and Notes thereto included within this
Annual Report on Form 10-K. In addition to historical information, this Annual
Report on Form 10-K and the following discussion contain forward-looking
statements that reflect our plans, estimates, intentions, expectations and
beliefs. Our actual results could differ materially from those discussed in
the forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those set forth in Item I--
Business under the caption "Risk Factors."
Overview
Plug Power is a designer and developer of on-site, electricity generation
systems utilizing proton exchange membrane (PEM) fuel cells for residential
applications. GE Fuel Cell Systems, LLC, a joint venture 75% owned by General
Electric's GE Power Systems business and 25% owned by Plug Power, will market,
sell, service, and install our product.
Plug Power was formed in June 1997 as a joint venture to further the
development of fuel cells for electric power generation in residential and
other applications. We are a development stage company and expect to bring our
first commercial product to market in 2001.
Since inception, we have devoted substantially all of our resources toward
the development of the PEM fuel cell systems and have derived substantially
all of our revenue from government research and development contracts. Through
December 31, 1999, our stockholders in the aggregate had contributed $223.8
million in cash, including $93.0 million in net proceeds from our initial
public offering of common stock, which closed on November 3, 1999 and $25.5
million in other contributions, consisting of in-process research and
development, real estate, other in-kind contributions and a 25% interest in GE
Fuel Cell Systems.
Since our inception in June 1997, we have formed strategic alliances with
suppliers of key components, developed distributor and customer relationships,
and entered into development and demonstration programs with electric
utilities, government agencies and other energy providers. In 1999, we
produced 52 test and evaluation systems which were installed in laboratory and
field locations for field and market testing. Based on the system performance
and market data provided by these field trials, we will determine the final
design of our first pre-commercial product. During 2000 we expect to
manufacture approximately 500 pre-commercial residential fuel cell systems to
further our field testing activities and prepare for commercial production,
which is planned to begin in 2001. We do not expect significant product sales
until after we begin commercial production.
From inception through December 31, 1999, we incurred losses of $49.0
million. We expect to continue to incur losses as we expand our product
development and commercialization program and prepare for the commencement of
manufacturing operations. We expect that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial as a result of, among
other factors, the number of systems we produce and install for internal and
external testing, the related service requirements necessary to monitor those
systems and potential design changes required as a result of field testing.
There can be no assurance that we will manufacture or sell residential fuel
cell systems successfully or achieve or sustain product revenues or
profitability.
Recent Developments
Initial Public Offering:
In November 1999, the Company completed an initial public offering of
6,782,900 shares of common stock (the "Initial Public Offering") which
includes additional shares purchased pursuant to exercise of the underwriters
overallotment option. We received proceeds of $93.0 million, which was net of
$8.7 million of expenses and underwriting discounts relating to the issuance
and distribution of the securities. In connection with the Initial Public
Offering, we converted from a limited liability company to a C corporation.
16
<PAGE>
Purchase of Assets:
On February 18, 2000, we acquired from Gastec, a leading developer of fuel
processor technology located in the Netherlands, intellectual property and
assets related to fuel processor development for systems ranging up to 100kW
in size. We paid $15 million in cash for the assets.
Equity Investments:
On March 15, 2000, we acquired 28% of the outstanding shares of common
stock of Advanced Energy Systems, Inc., a supplier of power electronic
inverters for fuel cell systems. We paid approximately $1.5 million in cash
and 7,000 shares of our common stock for the shares. In connection with the
transaction, we received an exclusive, worldwide, royalty-free license to use
all of Advanced Energy's intellectual property for power electronic inverters
for any fuel cell application.
Development Agreements:
On March 15, 2000, we entered into a joint development agreement with GE
MicroGen and Joh. Vaillant GmbH u. Co., a leading European heating technology
company, to develop a combined furnace, hot water heater and fuel cell system
that will provide both heat and electricity for the home.
Results of Operations
Comparison of the Year Ended December 31, 1999 and December 31, 1998.
Revenues. Our revenues during this period were derived primarily from cost
reimbursement government contracts relating to the development of PEM fuel
cell technology. These contracts provide for the partial recovery of direct
and indirect costs from the specified government agency, generally requiring
us to absorb from 25% to 50% of contract costs incurred. Total revenues
increased to $11.0 million for the year ended December 31, 1999 from $6.5
million for the year ended December 31, 1998. The increase is the result of
government contract activity in 1999 that was not in place in 1998, combined
with the contract revenue from the delivery of PEM fuel cells and related
engineering and testing support services for other customers. As a result, we
will report losses on these contracts as well as any future government
contracts awarded.
We expect to begin manufacturing pre-commercial residential fuel cell
systems during 2000. GE Fuel Cell Systems has committed to purchase from us,
on a take or pay basis, 485 of the pre-commercial residential fuel cell
systems prior to December 31, 2000. The total sales price for these units will
be approximately $10.3 million.
Cost of revenues. Cost of contract revenue includes compensation and
benefits for the engineering and related support staff, fees paid to outside
suppliers for subcontracted components and services, fees paid to consultants
for services provided, materials and supplies used and other directly
allocable general overhead costs allocated to specific government contracts.
Cost of contract revenue was $15.5 million for the year ended December 31,
1999, as compared to $8.9 million for the year ended December 31, 1998. The
increase in contract costs was related to the additional government grant
activity, combined with the additional staff and related support costs
necessary to earn the additional contract revenue. The result was a loss on
contracts of $4.5 million for the year ended December 31, 1999 compared to a
loss on contracts of $2.3 million for the year ended December 31, 1998.
We expect the cost to produce our initial systems to be higher than their
sales price under the terms of our arrangements with our two distributors, GE
Fuel Cell Systems and Edison Development. We expect to continue to experience
costs in excess of product sales until we achieve higher production levels,
which we do not expect to occur until after 2002.
17
<PAGE>
Research and Development. Research and development expense includes
compensation and benefits for the engineering and related staff, expenses for
contract engineers, materials to build prototype units, fees paid to outside
suppliers for subcontracted components and services, supplies used, facility
related costs, such as computer and network services and other general
overhead costs. Research and development expenses increased to $20.5 million
for the year ended December 31, 1999 from $4.6 million for the year ended
December 31, 1998. The increase was a result of the growth of Plug Power's
research and development activities focused on residential PEM fuel cell
systems.
We expect to significantly increase our spending on research and
development in order to bring our residential PEM fuel cell systems to the
marketplace by 2001.
Interest Expense. Interest expense of $189,586 consists of interest on a
long-term obligation related to a real estate purchase agreement with
Mechanical Technology (see "Liquidity and Capital Resources--Capital
Contributions") and interest paid on capital lease obligations.
General and Administrative. General and administrative expense includes
compensation, benefits and related costs in support of our general corporate
functions, including general management, finance and accounting, human
resources, business development, information and legal services. General and
administrative expenses increased to $9.9 million for the year ended December
31, 1999 from $2.8 million for the year ended December 31, 1998. The increase
was in part due to a $2.3 million charge for non-cash stock-based
compensation, a $1.9 million charge for the write-off of deferred rent, both
further explained below, an $800,000 charge to earnings for the modification
of a stock option agreement and an increase in compensation, benefits and
related costs in support of the Company's overall growth.
The $2.3 million charge for non-cash stock-based compensation represents
the aggregate fair value of stock granted to Mechanical Technology. Our
original formation agreements provided for Mechanical Technology to earn non-
cash credits relating to services it rendered prior to our formation in
connection with securing future government contracts. Upon our formation,
Mechanical Technology contributed its fuel cell operations to us and we
received the right to these government contracts if ever awarded in the
future. When these contracts were awarded to us, Mechanical Technology earned
the non-cash credits, entitling it to receive 2,250,000 shares of common stock
with a fair value at the time of grant of $2.3 million. Accordingly, we
recognized $2.3 million in non-cash stock-based compensation expense during
the year ended December 31, 1999.
In June 1999, we entered into a real estate purchase agreement with
Mechanical Technology to acquire our current facility, a portion of which we
previously leased from Mechanical Technology. As a result, we wrote off
deferred rent expense in the amount of $1.9 million. We originally recorded
$2.0 million for deferred rent in October 1998, representing the value of a
10-year lease agreement with Mechanical Technology at favorable lease rates.
See "Liquidity and Capital Resources--Capital Contributions."
Other Income. Other income consists of interest income earned on our cash
and cash equivalents. Other income increased to $3.1 million for the year
ended December 31, 1999 from $93,000 for the year ended December 31, 1998. The
increase was due to interest earned on higher balances of cash and cash
equivalents available during the fourth quarter of 1999 as a result of our
initial public offering of common stock and the exercise of warrants and stock
purchase commitments by our existing stockholders. See "Liquidity and Capital
Resources."
Equity in losses of affiliate. Equity in losses of affiliate of ($1.5)
million is our proportionate share of the losses of GE Fuel Cell Systems
($440,500) and goodwill amortization ($1,031,250) for the year ended
December 31, 1999, which we account for under the equity method of accounting.
See "Liquidity and Capital Resources--GE Fuel Cell Systems."
Income Taxes. No benefit for federal and state income taxes has been
reported in the financial statements because we were taxed as a partnership
prior to November 3, 1999 and the federal and state income tax benefits
18
<PAGE>
of our losses were recorded by our stockholders. Effective on November 3,
1999, we merged into a C corporation and began accounting for income taxes in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes." The deferred tax asset generated from our
net operating loss for the period from November 3, 1999 through December 31,
1999 has been offset by a full valuation allowance.
Comparison of the Year Ended December 31, 1998 and the Period from June 27,
1997 (Date of Inception) to December 31, 1997
Revenues. Our revenues during this period were derived exclusively from
cost reimbursement government contracts relating to the development of PEM
fuel cell technology. These contracts provide for the partial recovery of
direct and indirect costs from the specified government agency, generally
requiring us to absorb from 25% to 50% of contract costs incurred. Contract
revenues increased to $6.5 million for the year ended December 31, 1998 from
$1.2 million for the period from inception through December 31, 1997. This
increase was due to twelve months of activity in 1998 compared to six months
in the period from inception through December 31, 1997, combined with
increased government contract activities.
Cost of revenues. Cost of contract revenue includes compensation and
benefits for the engineering and related support staff, fees paid to outside
suppliers for subcontracted components and services, fees paid to consultants
for services provided, materials and supplies used and other directly
allocable general overhead costs allocated to specific government contracts.
Cost of contract revenue was $8.9 million for the year ended December 31, 1998
as compared to $1.2 million for the period from inception through December 31,
1997. This increase in costs was due to twelve months of activity in 1998
compared to six months in the period from inception through December 31, 1997,
combined with the additional staff and related support costs necessary to earn
the additional contract revenue as reported. The result was a loss on
contracts of $33,000 for the period from inception to December 31, 1997
compared to a loss on contracts of $2.3 million for the year ended December
31, 1998.
Research and Development. Research and development expense includes
compensation and benefits for the engineering and related staff, expenses for
contract engineers, materials to build prototype units, fees paid to outside
suppliers for subcontracted components and services, supplies used, facility
related costs, such as computer and network services and other general
overhead costs. Research and development expenses increased to $4.6 million
for the year ended December 31, 1998 from $1.3 million in the period from
inception through December 31, 1997, an increase of $3.3 million. This
increase was related to Plug Power's research and development activities
focused on residential PEM fuel cell systems in the year ended December 31,
1998 over that expensed for the period from inception through December 31,
1997.
At inception, we recorded a $4.0 million in-process research and
development expense related to Mechanical Technology's initial equity
contribution. Two unaffiliated parties, Edison Development and Mechanical
Technology, negotiated at arm's length to form Plug Power and determined that
the total value of the in-process research and development, fixed assets, and
trained workforce contributed by Mechanical Technology was $4.8 million.
Accordingly, we have allocated the investment as follows (in thousands):
<TABLE>
<S> <C>
In-process research and development.............................. $4,043
Fixed assets..................................................... 357
Trained workforce................................................ 350
</TABLE>
The in-process research and development contributed by Mechanical
Technology upon our formation related exclusively to the development of PEM
fuel cells and fuel cell systems. This project was the only one in process
when it was contributed and was in its early stages of development.
The Mechanical Technology contribution included research and test results
related to the validation of initial plate and flow field designs, as well as
cooling and humidification schemes and initial designs regarding systems
integration. This initial work provided the framework to facilitate our
continuing efforts to commercialize the
19
<PAGE>
technology. At the time of Mechanical Technology's contribution, neither the
cost nor the time required to complete this project and its successful
commercialization was known. We have produced and are currently demonstrating
a number of test and evaluation systems and are continuing our efforts to
decrease the cost of our system's components and subsystems, improve its
overall reliability and efficiency, and ensure its safety. We must complete
substantial additional research and development on our fuel cell systems and
secure relationships with suppliers of our required components and subsystems
before we will have a commercially viable product.
The amount allocated to the in-process research and development contributed
to us by Mechanical Technology represents its estimated fair value based on
the negotiations of the two parties and is consistent with its value under the
cost valuation approach. Under the cost valuation approach, value is measured
by quantifying the cost of replacing the future service capability of the
acquired property without considering the amount of economic benefits that can
be achieved, or the time period over which they might continue.
The contributed in-process research and development was early development
stage property, which did not and currently does not have commercial viability
or any alternative future use and which will require substantial additional
expenditures to commercialize. Accordingly, we charged the assigned value to
operations at the time of contribution.
General and Administrative. General and administrative expense includes
compensation, benefits and related costs in support of our general corporate
functions, including general management, finance and accounting, human
resources, business development, information and legal services. General and
administrative expenses increased to $2.8 million for the year ended December
31, 1998 from $630,000 for the period from inception through December 31,
1997. The increase was due to twelve months of activity in 1998 compared to
six months in the period from inception through December 31, 1997, combined
with increased personnel cost and general expenses associated with expanding
operations.
Other Income. Other income consists of interest income earned on our cash
and cash equivalents. Other income was $93,000 for the year ended December 31,
1998 and $103,000 for the period from inception through December 31, 1997.
Income Taxes. No benefit for federal and state income taxes is reported in
the financial statements, since before the merger, which occurred immediately
before the closing of the Initial Public Offering, we had elected to be taxed
as a partnership. Therefore, for the periods presented, the federal and state
income tax benefits of our losses were recorded by our stockholders.
Subsequent to our conversion from a limited liability company to a C
corporation, we account for income taxes in accordance with SFAS 109.
Liquidity and Capital Resources
Summary
Our cash requirements depend on numerous factors, including completion of
our product development activities, ability to commercialize our residential
fuel cell systems, market acceptance of our systems and other factors. We
expect to devote substantial capital resources to continue our development
programs directed at commercializing our fuel cell systems for worldwide
residential use, to hire and train our production staff, develop and expand
our manufacturing capacity, begin production activities and expand our
research and development activities. We anticipate incurring substantial
additional losses over at least the next several years and believe that our
current cash balances will provide us with sufficient capital to fund
operations through 2001.
We have financed our operations through December 31, 1999, primarily from
the sale of equity, which has provided us cash of $223.7 million. As of
December 31, 1999, we had cash and cash equivalents totaling $171.5 million.
As a result of our purchase of real estate from Mechanical Technology, we have
escrowed $5.8 million in cash to collateralize the debt assumed on the
purchase. Since inception, net cash used in operating activities has been
$32.5 million and cash used in investing activities has been $13.5 million.
For the reasons stated above, we expect that our cash requirements will
increase in future periods.
20
<PAGE>
Initial Public Offering
In November 1999, the Company completed an initial public offering of
6,782,900 shares of common stock (the "Initial Public Offering") which
includes additional shares purchased pursuant to exercise of the underwriters'
overallotment option. We received proceeds of $93.0 million, which was net of
$8.7 million of expenses and underwriting discounts relating to the issuance
and distribution of the securities.
Capital Contributions
Plug Power was formed in June 1997 as a joint venture between Mechanical
Technology and Edison Development. At formation, Mechanical Technology
contributed assets related to its fuel cell program, including intellectual
property, 22 employees, equipment, and the right to receive government
contracts for research and development of PEM fuel cell systems, if awarded.
Edison Development contributed or committed to contribute $9.0 million in
cash, expertise in distributed power generation and marketplace presence to
distribute and sell stationary fuel cell systems.
In January 1999, we entered into an agreement with Mechanical Technology
and Edison Development pursuant to which we had the right to require Edison
Development and Mechanical Technology to make capital contributions of $22.5
million each, an aggregate of $45 million, through December 31, 2000. The
agreement terminated upon the Initial Public Offering and permitted Mechanical
Technology and Edison Development to contribute any funds not previously
called by us in exchange for shares at a price of $7.50 per share. In
September 1999, we made a capital call of $4.0 million, and Mechanical
Technology and Edison Development each contributed $2.0 million in cash in
exchange for 266,667 shares of common stock. Both Mechanical Technology and
Edison Development contributed the remaining $41.0 million immediately prior
to the Initial Public Offering in exchange for an aggregate of 5,466,666
shares of common stock.
In June 1999 we entered into a real estate purchase agreement with
Mechanical Technology to acquire approximately 36 acres of land, two
commercial buildings, and a residential building located in Latham, New York.
This property is the location of our current facilities including a newly
constructed production facility. As part of the real estate transaction with
Mechanical Technology, we assumed a $6.2 million letter of credit issued by
KeyBank National Association for the express purpose of servicing $6.2 million
of debt related to Industrial Development Revenue Bonds issued by the Town of
Colonie Industrial Development Agency. As consideration for the purchase, we
issued 704,315 shares of common stock to Mechanical Technology, valued at
$6.67 per share. The transaction closed in July 1999 and a receivable for
membership interests of $4.7 million was recorded as shares subscribed as of
June 30, 1999. In connection with this transaction, we wrote off deferred rent
expense in the amount of $1.9 million during the first six months of 1999.
This deferred rent expense related to a 10-year facilities lease, at a
favorable lease rate, on one of the purchased buildings. In connection with
the July 1999 closing, we agreed to lease some of the office and manufacturing
space back to Mechanical Technology on a short-term basis.
Also in June 1999, Edison Development purchased 704,315 shares of common
stock for $4.7 million in cash under provisions of our original formation
documents that allowed Edison Development and Mechanical Technology to
maintain equal ownership percentage in Plug Power.
As of December 31, 1999, Mechanical Technology had made aggregate cash
contributions of $27.0 million plus non-cash contributions of $14.2 million,
while Edison Development had made aggregate cash contributions of $41.2
million.
GE Fuel Cell Systems
In February 1999, we entered into an agreement with GE MicroGen, Inc.
(formerly GE On-Site Power) to create GE Fuel Cell Systems, a joint venture
owned 75% by GE MicroGen and 25% by Plug Power, which is dedicated to
marketing, selling, installing, and servicing Plug Power residential fuel cell
systems on a worldwide basis (other than in the states of Illinois, Indiana,
Michigan and Ohio). See "Business--Distribution and Marketing."
21
<PAGE>
In connection with the formation of GE Fuel Cell Systems, we issued
2,250,000 shares of our common stock to GE MicroGen, Inc. in exchange for a
25% interest in GE Fuel Cell Systems. Of these, 750,000 shares vested
immediately and the remaining 1,500,000 shares vested in August 1999. As of
the date of issuance of such shares, we capitalized $11.3 million, the fair
value of the shares issued, under the caption "Investment in affiliate" in our
financial statements. We also issued a warrant to GE MicroGen to purchase
3,000,000 additional shares of common stock at a price of $12.50 per share
which was exercised by GE MicroGen immediately prior to the Initial Public
Offering, for a total exercise price of $37.5 million in cash.
General Electric has agreed to provide capital to GE Fuel Cell Systems, in
the form of loans, to fund GE Fuel Cell Systems' commitment to purchase 485
pre-commercial systems during the period ending December 31, 2000. General
Electric has also agreed to provide additional capital, in the form of a loan
not to exceed $8.0 million, to fund GE Fuel Cell Systems' ongoing operations.
Southern California Gas Company
In April 1999, Southern California Gas Company purchased 1,000,000 shares
of common stock for $6.7 million and agreed to spend $840,000 for market
research and services related to distributed power generation technologies,
including PEM fuel cell systems. In the event Southern California Gas does not
expend these amounts by April 2002, up to 111,851 previously issued shares may
be returned. Additionally, Southern California Gas received warrants to
purchase an additional 350,000 shares of common stock at an exercise price of
$8.50 per share which was exercised by Southern California Gas immediately
prior to the Initial Public Offering, for a total exercise price of $3.0
million in cash.
Private Investors
In February 1999, two investors, including Michael J. Cudahy, a director of
Plug Power, purchased 1,500,000 shares of common stock for a total of $10.0
million. In addition, Mr. Cudahy received a warrant to purchase 400,000 shares
of common stock at a price of $8.50 per share which was exercised by Mr.
Cudahy immediately prior to our initial public offering, for a total exercise
price of $3.4 million in cash.
In April 1999 an unrelated investor purchased 299,850 common shares for
$2.0 million.
Grant Agreement
The Company was awarded and received $1.0 million under a government grant.
The grant is for the express purpose of promoting employment. Terms of the
grant require the Company to meet certain employment criteria, as defined,
over a five year period. If the Company fails to meet the specified criteria,
the Company shall repay the unearned portion of the grant.
Impact of Year 2000
In late 1999, we completed a review and evaluation of the potential impact
that the change in the date to the Year 2000 will have on our computer systems
and concluded that all of our major computer systems were able to recognize
and appropriately process dates commencing in the Year 2000. As a result of
those planning and implementation efforts, the Company experienced no
significant disruptions in mission critical information technology and non-
information technology systems and believes those systems successfully
responded to the Year 2000 date change.
Our historical cost to assess our Year 2000 readiness has been negligible.
The Company is not aware of any material problems resulting from Year 2000
issues, either with its internal systems, or the products and services of
third parties. We will continue to monitor our mission critical computer
applications and those of our suppliers and vendors throughout the year 2000
to ensure that any latent Year 2000 matters that may arise are addressed
promptly.
22
<PAGE>
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
The index to the Financial Statements of the Company is included in Item 14,
and the financial statements follow the signature page to this Annual Report on
Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
23
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors
Incorporated herein by reference is the information appearing under the
caption "Information Regarding Directors" in the Company's definitive Proxy
Statement for its 2000 Annual Meeting of Stockholders.
(b) Executive Officers
Incorporated herein by reference is the information appearing under the
caption "Executive Officers" in the Company's definitive Proxy Statement for
its 2000 Annual Meeting of Stockholders.
Item 11. Executive Compensation
Incorporated herein by reference is the information appearing under the
caption "Executive Compensation" in the Company's definitive Proxy Statement
for its 2000 Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference is the information appearing under the
caption "Principal Stockholders" in the Company's definitive Proxy Statement
for its 2000 Annual Meeting of Stockholders.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference is the information appearing under the
caption "Certain Relationships and Related Transactions" in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Stockholders.
24
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
14(a)(1) Financial Statements
The financial statements and notes are listed in the Index to Financial
Statements on page F-1 of this report.
14(a)(2) Financial Statement Schedules
None of the schedules for which provision is made in the applicable
accounting regulations under the Securities Exchange Act of 1934, as amended,
are required.
14(a)(3) Exhibits
Exhibits are as set forth in the "Index to Exhibits" which immediately
precedes the Notes to the Financial Statements and the exhibits filed.
14(b) Reports on Form 8-K
On November 16, 1999, we filed a Form 8-K with the Securities and Exchange
Commission to report the receipt of correspondence threatening litigation by
DCT, Inc.
14(c) Exhibits
Exhibits are as set forth in the "Index to Exhibits" which immediately
precedes the Notes to the Financial Statements and the exhibits filed.
14(d) Other Financial Statements
Not applicable.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PLUG POWER INC.
/s/ Gary Mittleman
Date: March 29, 2000 By: _________________________________
Gary Mittleman, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gary Mittleman President, Chief Executive March 29, 2000
____________________________________ Officer and Director
Gary Mittleman (Principal Executive
Officer)
/s/ William H. Largent Chief Financial Officer March 29, 2000
____________________________________ (Principal Financial
William H. Largent Officer and Accounting
Officer)
/s/ Michael J. Cudahy Director March 29, 2000
____________________________________
Michael J. Cudahy
/s/ Anthony F. Earley, Jr. Director March 29, 2000
____________________________________
Anthony F. Earley, Jr.
/s/ Larry G. Garberding Director March 29, 2000
____________________________________
Larry G. Garberding
/s/ George C. McNamee Director March 29, 2000
____________________________________
George C. McNamee
/s/ Robert L. Nardelli Director March 29, 2000
____________________________________
Robert L. Nardelli
/s/ Walter L. Robb Director March 29, 2000
____________________________________
Walter L. Robb
/s/ John M. Shalikashvili Director March 29, 2000
____________________________________
John M. Shalikashvili
</TABLE>
26
<PAGE>
List of Exhibits
Certain exhibits indicated below are incorporated by reference to documents
of Plug Power on file with the Commission. Each exhibit marked by an asterisk
(*) was previously filed as an exhibit to Plug Power's Registration Statement
on Form S-1 (No. 333-86089) and the number in parentheses following the
description of the exhibit refers to the exhibit number in the Form S-1.
Exhibits nos. 10.25, 10.28, 10.29, 10.30, 10.31, 10.32, 10.33 and 10.34
represent the management contracts or compensation plans filed pursuant to Item
14(c) of the Form 10-K.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
2.1* Agreement and Plan of Merger by and between Plug Power and Plug
Power, LLC, a Delaware limited liability company, dated as of
October 7, 1999. (2.1)
3.1 Amended and Restated Certificate of Incorporation of Plug Power.
3.2 Amended and Restated By-laws of Plug Power.
4.1* Specimen certificate for shares of common stock, $.01 par value,
of Plug Power.(4.1)
10.1* Amended and Restated Limited Liability Company Agreement of GE
Fuel Cell Systems, LLC, dated February 3, 1999, between GE On-
Site Power, Inc. and Plug Power, LLC.(10.1)
10.2* Contribution Agreement, dated as of February 3, 1999, by and
between GE On-Site Power, Inc. and Plug Power, LLC.(10.2)
10.3* Trademark and Trade Name Agreement, dated as of February 2,
1999, between General Electric Company and GE Fuel Cell
Systems, LLC.(10.3)
10.4* Trademark Agreement, dated as of February 2, 1999, between Plug
Power LLC and GE Fuel Cell Systems, LLC.(10.4)
10.5* Distributor Agreement, dated as of February 2, 1999, between GE
Fuel Cell Systems, LLC and Plug Power, LLC.(10.5)
10.6* Side letter agreement, dated February 3, 1999, between General
Electric Company and Plug Power LLC.(10.6)
10.7* Mandatory Capital Contribution Agreement, dated as of January
26, 1999, between Edison Development Corporation, Mechanical
Technology Incorporated and Plug Power, LLC and amendments
thereto, dated August 25, 1999 and August 26, 1999.(10.7)
10.8* LLC Interest Purchase Agreement, dated as of February 16, 1999,
between Plug Power, LLC and Michael J. Cudahy.(10.8)
10.9* Warrant Agreement, dated as of February 16, 1999, between Plug
Power, LLC and Michael J. Cudahy and amendment thereto, dated
July 26, 1999.(10.9)
10.10* LLC Interest Purchase Agreement, dated as of February 16, 1999,
between Plug Power, LLC and Kevin Lindsey.(10.10)
10.11* LLC Interest Purchase Agreement, dated as of April 1, 1999,
between Plug Power, LLC and Antaeus Enterprises, Inc.(10.11)
10.12* LLC Interest Purchase Agreement, dated as of April 9, 1999,
between Plug Power, LLC and Southern California Gas
Company.(10.12)
10.13* Warrant Agreement, dated as of April 9, 1999, between Plug
Power, LLC and Southern California Gas Company and amendment
thereto, dated August 26, 1999.(10.13)
10.14* Agreement, dated as of June 26, 1997, between the New York State
Energy Research and Development Authority and Plug Power LLC,
and amendments thereto dated as of December 17, 1997 and March
30, 1999.(10.14)
10.15* Agreement, dated as of January 25, 1999, between the New York
State Energy Research and Development Authority and Plug Power
LLC.(10.15)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
------- ----------- --------
<C> <S> <C>
10.16* Agreement, dated as of September 30, 1997, between Plug
Power LLC and the U.S. Department of Energy.(10.16)
10.17* Cooperative Agreement, dated as of September 30, 1998,
between the National Institute of Standards and Technology
and Plug Power, LLC, and amendment thereto dated May 10,
1999.(10.17)
10.18* Joint venture agreement, dated as of June 14, 1999 between
Plug Power, LLC, Polyfuel, Inc., and SRI
International.(10.18)
10.19* Cooperative Research and Development Agreement, dated as of
February 12, 1999, between Plug Power, LLC and U.S. Army
Benet Laboratories.(10.19)
10.20* Nonexclusive License Agreement, dated as of April 30, 1993,
between Mechanical Technology Incorporated and the Regents
of the University of California.(10.20)
10.21* Development Collaboration Agreement, dated as of July 30,
1999, by and between Joh. Vaillant GmbH. u. CO. and Plug
Power, LLC.(10.21)
10.22* Agreement of Sale, dated as of June 23, 1999, between
Mechanical Technology, Incorporated and Plug Power
LLC.(10.22)
10.23* Assignment and Assumption Agreement, dated as of July 1,
1999, between the Town of Colonie Industrial Development
Agency, Mechanical Technology, Incorporated, Plug Power,
LLC, KeyBank, N.A., and First Albany Corporation.(10.23)
10.24* Replacement Reimbursement Agreement, dated as of July 1,
1999, between Plug Power, LLC and KeyBank, N.A.(10.24)
10.25* 1997 Membership Option Plan and amendment thereto dated
September 27, 1999.(10.25)
10.26* Trust Indenture, dated as of December 1, 1998, between the
Town of Colonie Industrial Development Agency and
Manufacturers and Traders Trust Company, as
trustee.(10.26)
10.27* Distribution Agreement, dated as of June 27, 1997, between
Plug Power, LLC and Edison Development Corporation and
amendment thereto dated September 27, 1999.(10.27)
10.28* Agreement, dated as of June 27, 1999, between Plug Power,
LLC and Gary Mittleman.(10.28)
10.29* Agreement, dated as of June 8, 1999, between Plug Power,
LLC and Louis R. Tomson.(10.29)
10.30* Agreement, dated as of August 6, 1999, between Plug Power,
LLC and Gregory A. Silvestri.(10.30)
10.31* Agreement, dated as of August 12, 1999, between Plug Power,
LLC and William H. Largent.(10.31)
10.32* Agreement, dated as of August 20, 1999, between Plug Power,
LLC and Dr. Manmohan Dhar.(10.32)
10.33* 1999 Stock Option and Incentive Plan.(10.33)
10.34* Employee Stock Purchase Plan(10.34)
10.35* Agreement, dated as of August 27, 1999, by Plug Power, LLC,
Plug Power Inc., GE On-Site Power, Inc., GE Power Systems
Business of General Electric Company, and GE Fuel Cell
Systems, L.L.C.(10.35)
10.36 Registration Rights Agreement between the Registrant and
the stockholders of the Registrant.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
10.37 Registration Rights Agreement between Plug Power, L.L.C. and GE On-Site Power, Inc.
21.1 Schedule of Subsidiaries of the Company
23.1 Consent of PricewaterhouseCoopers LLP
27.1 Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of independent accountants....................................... F-2
Balance sheets as of December 31, 1999 and 1998......................... F-3
Statements of operations for the years ended December 31, 1999 and 1998
and for the period from June 27, 1997 (date of inception) to December
31, 1997, and cumulative amounts from inception........................ F-4
Statements of stockholders' equity for the years ended December 31, 1999
and 1998 and the period from June 27, 1997 (date of inception) to
December 31, 1997...................................................... F-5
Statements of cash flows for the years ended December 31, 1999 and 1998
and the period from June 27, 1997 (date of inception) to December 31,
1997 and cumulative amounts from inception............................. F-6
Notes to financial statements........................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
In our opinion, the accompanying balance sheets and the related statements
of operations, stockholders' equity and cash flows present fairly, in all
material respects, the financial position of Plug Power Inc. (a development
stage enterprise) at December 31, 1999 and 1998, and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998
and for the period from June 27, 1997 (date of inception) to December 31,
1997, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Albany, New York
February 8, 2000
F-2
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents, principally commercial
paper........................................... $171,496,286 $ 3,993,122
Restricted cash.................................. 275,000 --
Accounts receivable.............................. 5,212,943 599,955
Inventory........................................ 304,711 14,647
Other current assets............................. 124,380 --
Due from investor................................ -- 685,306
------------ ------------
Total current assets........................... 177,413,320 5,293,030
Restricted cash.................................... 5,600,274 --
Property, plant and equipment, net................. 23,333,791 2,753,492
Investment in affiliate............................ 9,778,250 --
Other assets....................................... -- 46,913
------------ ------------
Total assets................................... $216,125,635 $ 8,093,435
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable................................. $ 4,644,496 $ 568,007
Acrrued expenses................................. 3,004,126 1,746,239
Deferred grant revenue........................... 200,000 --
Due to investor.................................. -- 286,492
Current portion of capital lease obligation and
long-term debt.................................. 353,175 --
------------ ------------
Total current liabilities...................... 8,201,797 2,600,738
Long-term debt................................... 5,600,274 --
Deferred grant revenue........................... 800,000 --
Capital lease obligation......................... 117,030 --
------------ ------------
Total liabilities.............................. 14,719,101 2,600,738
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value per share;
5,000,000 shares authorized; none issued and
outstanding..................................... -- --
Common stock, $0.01 par value per share;
95,000,000 shares authorized; 43,015,508 shares
issued and outstanding, December 31, 1999 and
17,150,000 December 31, 1998.................... 430,155 171,500
Paid-in capital.................................. 249,964,994 20,840,500
Deficit accumulated during the development
stage........................................... (48,988,615) (15,519,303)
------------ ------------
Total stockholders' equity..................... 201,406,534 5,492,697
------------ ------------
Total liabilities and stockholders' equity..... $216,125,635 $ 8,093,435
============ ============
</TABLE>
F-3
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
For the years ended December 31, 1999 and 1998, the period from June 27, 1997
(date of inception)
to December 31, 1997, and cumulative amounts from inception
<TABLE>
<CAPTION>
Cumulative
December 31, December December Amounts from
1999 31, 1998 31, 1997 Inception
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Contract revenue........ $ 11,000,344 $ 6,541,040 $ 1,193,530 $ 18,734,914
Cost of contract
revenue................ 15,497,837 8,863,845 1,226,443 25,588,125
------------ ----------- ----------- ------------
Loss on contracts....... (4,497,493) (2,322,805) (32,913) (6,853,211)
In-process research and
development............ -- -- 4,042,640 4,042,640
Research and development
expense................ 20,506,156 4,632,729 1,300,877 26,439,762
General and
administrative
expense................ 9,928,282 2,753,645 630,033 13,311,960
Interest expense........ 189,586 -- -- 189,586
------------ ----------- ----------- ------------
Operating loss........ (35,121,517) (9,709,179) (6,006,463) (50,837,159)
Interest income......... 3,123,955 93,216 103,123 3,320,294
------------ ----------- ----------- ------------
Loss before equity in
losses of affiliate.. (31,997,562) (9,615,963) (5,903,340) (47,516,865)
Equity in losses of
affiliate.............. (1,471,750) -- -- (1,471,750)
------------ ----------- ----------- ------------
Net loss.............. $(33,469,312) $(9,615,963) $(5,903,340) $(48,988,615)
============ =========== =========== ============
Loss per share:
Basic and diluted..... $ (1.27) $ (0.71) $ (0.62)
============ =========== ===========
Weighted average number
of common shares
outstanding............ 26,282,705 13,616,986 9,500,000
============ =========== ===========
</TABLE>
F-4
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1999 and 1998, and the
period from June 27, 1997 (date of inception) to December 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Common stock Additional During the Total
------------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
---------- -------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, June 27, 1997.. -- $ -- $ -- $ -- $ --
Capital contributions... 9,500,000 95,000 9,405,000 9,500,000
Net loss................ (5,903,340) (5,903,340)
---------- -------- ------------ ------------ ------------
Balance, December 31,
1997................... 9,500,000 95,000 9,405,000 (5,903,340) 3,596,660
Capital contributions... 7,650,000 76,500 13,173,500 13,250,000
Deferred rent expense... (2,000,000) (2,000,000)
Amortization of deferred
rent expense........... 50,000 50,000
Compensatory options.... 212,000 212,000
Net loss................ (9,615,963) (9,615,963)
---------- -------- ------------ ------------ ------------
Balance, December 31,
1998................... 17,150,000 171,500 20,840,500 (15,519,303) 5,492,697
Initial public
offering--net.......... 6,782,900 67,829 92,904,049 92,971,878
Capital contributions... 19,058,480 190,585 119,749,979 119,940,564
Stock issued for equity
in affiliate........... 11,250,000 11,250,000
Stock based
compensation........... 2,250,000 2,250,000
Amortization of deferred
rent expense........... 100,000 100,000
Write-off deferred rent
expense................ 1,850,000 1,850,000
Compensatory stock
options................ 978,800 978,800
Stock option exercises.. 24,128 241 41,666 41,907
Net loss................ (33,469,312) (33,469,312)
---------- -------- ------------ ------------ ------------
Balance, December 31,
1999................... 43,015,508 $430,155 $249,964,994 $(48,988,615) $201,406,534
========== ======== ============ ============ ============
</TABLE>
F-5
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999 and 1998, the period from June 27, 1997
(date of inception)
to December 31, 1997, and cumulative amounts from inception
<TABLE>
<CAPTION>
Cumulative
December 31, December December Amounts from
1999 31, 1998 31, 1997 Inception
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Cash Flows From
Operating Activities:
Net loss................ $(33,469,312) $(9,615,963) $(5,903,340) $(48,988,615)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization......... 1,352,186 499,142 187,708 2,039,036
In-process research
and development...... -- -- 4,042,640 4,042,640
Equity in losses of
affiliate............ 1,471,750 -- -- 1,471,750
Amortization of
deferred rent........ 100,000 50,000 -- 150,000
Write-off of deferred
rent................. 1,850,000 -- -- 1,850,000
In-kind services...... -- 500,000 -- 500,000
Stock based
compensation......... 2,250,000 -- -- 2,250,000
Compensatory options.. 978,800 212,000 -- 1,190,800
Changes in assets and
liabilities:
Accounts receivable... (4,612,988) 203,602 (803,557) (5,212,943)
Inventory............. (290,064) 18,903 (33,550) (304,711)
Due from investor..... 685,306 (685,306) -- --
Other assets.......... (102,466) -- -- (102,466)
Accounts payable and
accrued expenses..... 5,334,376 1,081,587 1,184,551 7,600,514
Deferred grant
revenue.............. 1,000,000 -- -- 1,000,000
Due to investor....... (286,492) 269,245 17,247 --
------------ ----------- ----------- ------------
Net cash used in
operating
activities......... (23,738,904) (7,466,790) (1,308,301) (32,513,995)
------------ ----------- ----------- ------------
Cash Flows From
Investing Activities:
Purchase of property,
plant and equipment.... (10,788,262) (2,370,269) (361,518) (13,520,049)
------------ ----------- ----------- ------------
Cash used in
investing
activities......... (10,788,262) (2,370,269) (361,518) (13,520,049)
------------ ----------- ----------- ------------
Cash Flows From
Financing Activities:
Contributed capital... 115,242,782 10,750,000 4,750,000 130,742,782
Proceeds from initial
public offering,
net.................. 94,611,455 -- -- 94,611,455
Stock issuance costs.. (1,639,577) -- -- (1,639,577)
Proceeds from stock
option exercises..... 41,907 -- -- 41,907
Cash placed in
escrow............... (5,875,274) -- -- (5,875,274)
Principal payments on
capital lease
obligations.......... (65,963) -- -- (65,963)
Principal payments on
long-term debt....... (285,000) -- -- (285,000)
------------ ----------- ----------- ------------
Net cash provided by
financing
activities......... 202,030,330 10,750,000 4,750,000 217,530,330
------------ ----------- ----------- ------------
Increase in cash and
cash equivalents....... 167,503,164 912,941 3,080,181 171,496,286
Cash and cash
equivalents, beginning
of period.............. 3,993,122 3,080,181 -- --
------------ ----------- ----------- ------------
Cash and cash
equivalents, end of
period................. $171,496,286 $ 3,993,122 $ 3,080,181 $171,496,286
============ =========== =========== ============
</TABLE>
F-6
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
1. Nature of Operations
Plug Power Inc. (the Company), was originally formed as a joint venture
between Edison Development Corporation (EDC) and Mechanical Technology
Incorporated (MTI) in the State of Delaware on June 27, 1997 and succeeded by
merger of all of the assets, liabilities and equity of Plug Power, L.L.C. in
November 1999. The Company is a development stage enterprise formed to
research, develop, manufacture and distribute fuel cells for electric power
generation.
2. Initial Public Offering
In November 1999, the Company completed an initial public offering of
6,782,900 shares of common stock, including 782,900 shares pursuant to the
underwriters' exercise of their over-allotment option (the Initial Public
Offering). The Company received proceeds of $93.0 million, which was net of
$8.7 million of expenses and underwriting discounts relating to the issuance
and distribution of the securities. In connection with this offering, the
Company was converted to a C corporation from a limited liability corporation.
The financial statements and related footnotes have been restated to present
the Company as a C corporation for all periods presented.
3. Significant Accounting Policies
Use of estimates:
The financial statements of the Company have been prepared in conformity
with generally accepted accounting principles which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents:
Cash and cash equivalents includes cash on hand and short term investments
with original maturities of three months or less.
The Company has restricted cash in the amount of $5,875,274 which the
Company was required to place in escrow to collateralize debt related to its
purchase of real estate. The escrowed amount is recorded under the balance
sheet captions Restricted cash.
Inventory:
Inventory is stated at lower of cost (first-in, first-out) or market, and
consists of raw materials not yet issued to research projects.
Property, plant and equipment, and long-lived assets:
Property, plant and equipment are stated at cost and are depreciated using
the straight-line method over their estimated useful lives ranging from 2 to
20 years.
The Company reviews long-lived assets for impairment whenever any events or
changes in circumstances indicate that the carrying amount of these assets may
not be recoverable.
F-7
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Revenue recognition:
The Company's contract revenue is derived from cost reimbursement
government contracts which generally require the Company to absorb from 25% to
50% of the total costs incurred. Such contracts require the Company to deliver
research and tangible developments in fuel cell technology and system design
and prototype fuel cell systems for test and evaluation by the government
agency. Revenues are recognized in proportion to the costs incurred. Included
in accounts receivable are billed and unbilled work-in-progress on cost
reimbursed government contracts. Total estimated cost to complete a contract
in excess of the awarded contract amounts are charged to operations during the
period such costs are estimated. While the Company's accounting for these
contract costs are subject to audit by the sponsoring agency, in the opinion
of management, no material adjustments are expected as a result of such
audits. At December 31, 1999, the Company had been awarded approximately $40
million of such government contracts to be earned in the future periods.
Deferred revenue:
The Company's deferred grant revenue consists of a government grant
received to promote employment. The agreement requires that the Company meet
certain employment criteria, as defined, over a five year period. If the
Company fails to meet the specified criteria, the Company shall repay the
unearned portion of the grant.
4. Property, Plant and Equipment
Property, plant and equipment at December 31, 1999 and 1998 consists of the
following:
<TABLE>
<CAPTION>
December December 31,
31, 1999 1998
----------- ------------
<S> <C> <C>
Land.............................................. $ 90,000 $ --
Buildings......................................... 14,757,080 --
Construction in progress.......................... 58,373 --
Leasehold improvements............................ 2,768,190 97,889
Machinery and equipment........................... 7,436,619 3,104,887
----------- ----------
25,110,262 3,202,776
Less accumulated depreciation and amortization.... (1,776,471) (449,284)
----------- ----------
Property, plant and equipment, net................ $23,333,791 $2,753,492
=========== ==========
</TABLE>
Depreciation expense was approximately $1,327,187 for the year ended
December 31, 1999, $332,476 for the year ended December 31, 1998, and $29,375
for the period from June 27, 1997 (date of inception) to December 31, 1997.
5. Debt
In connection with the Company's purchase of real estate in July, 1999, the
Company assumed a $6.2 million letter of credit issued by KeyBank National
Association for the express purpose of servicing $6.2 million of debt related
to Industrial Development Revenue Bonds issued by the Town of Colonie
Industrial Development Agency in favor of the acquired property. The debt
matures in 2013 and accrues interest at a variable rate of interest which was
approximately 6% at December 31, 1999. Simultaneous with the assumption, the
Company was required to escrow $6.2 million to collateralize the debt. The
escrowed amount is recorded under the balance sheet captions Restricted cash.
Principal payments due on long-term debt are: 2000, $275,000; 2001, $290,000;
2002, $310,000; 2003 $325,000; 2004 and thereafter, $4,675,275. Interest paid
in 1999 was $189,586.
F-8
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Income Taxes
The Company was a Limited Liability Company (LLC) until its merger into
Plug Power Inc. effective November 3, 1999. For the LLC period the Company was
treated as a partnership for federal and state income tax purposes and
accordingly the Company's income taxes or credits resulting from earnings or
losses were payable by, or accrued to its members. Therefore, no provision was
made for income taxes for financial statements prior to November 3, 1999. The
amount of LLC losses for the period January 1, 1999 to November 2, 1999 was
approximately $28.0 million.
Effective November 3, 1999, the Company is taxed as a corporation for
Federal and State income tax purposes and the effect of deferred taxes
recognized as a result of the change in tax status of the Company have been
included in operations. Deferred tax assets and liabilities are determined
based on the temporary differences between the financial statement and tax
bases of assets and liabilities as measured by the enacted tax rates.
There was no current income tax expense in 1999. The significant components
of deferred income tax expense (benefit) for the year ended December 31, 1999
was as follows:
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Deferred tax expense recognized as a result of change in tax
status...................................................... $ 1,739,000
Deferred tax benefit......................................... (491,000)
Net operating loss carryforward.............................. (1,695,000)
Valuation allowance.......................................... 447,000
-----------
$ --
===========
</TABLE>
The Company's effective income tax rate differed from the Federal statutory
rate as follows:
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Federal statutory tax rate...................................... (35)%
Effect of LLC losses............................................ 33
Effect of change in tax status.................................. 2
Other, net ..................................................... (1)
Change in valuation allowances.................................. 1
---
-- %
===
</TABLE>
The deferred tax assets and liabilities as of December 31, 1999 consist of
the following tax effects relating to temporary differences and carryforwards:
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Deferred tax assets (liabilities):
Inventory valuation............................................ $ 30,000
Non-employee stock option...................................... 334,000
Other reserves and accruals.................................... 314,000
Net operating loss............................................. 1,695,000
Property, plant and equipment.................................. (1,926,000)
-----------
447,000
Valuation allowance............................................ (447,000)
-----------
$ --
===========
</TABLE>
F-9
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
The valuation allowance at the year end December 31, 1999 is approximately
$447,000. During the year ended December 31, 1999, the valuation allowance
increased by approximately $447,000.
At December 31, 1999, the Company has unused Federal and State net
operating loss carryforwards of approximately $4.2 million. The federal net
operating loss carryforwards if unused will begin to expire during the year
ended December 31, 2019.
7. Loss Per Share
Loss per share for the Company is as follows:
<TABLE>
<CAPTION>
For the period
June 27, 1997
Year Ended Year Ended to
December 31, December December 31,
1999 31, 1998 1997
------------ ----------- --------------
<S> <C> <C> <C>
Numerator:
Net loss....................... $(33,469,312) $(9,615,963) $(5,903,340)
Denominator:
Weighted average number of
common shares outstanding..... 26,282,782 13,616,986 9,500,000
</TABLE>
No options or warrants outstanding were included in the calculation of
diluted loss per share because their impact would have been anti-dilutive. The
calculation also excludes 111,851 contingently returnable shares in 1999.
8. Stockholders' Equity
The Company has one class of common stock, par value $.01. Each share of
the Company's common stock is entitled to one vote on all matters submitted to
stockholders. At the inception of the Company, in exchange for EDC's initial
cash contribution of $4,750,000, the Company issued 4,750,000 shares. MTI made
noncash contributions of $4,750,000 consisting of in-process research and
development ($4,042,640), and certain net assets, in exchange for 4,750,000
shares. The amount allocated to the in-process research and development
contributed to the Company by MTI represents its estimated fair value based on
the negotiations of two parties and is consistent with its value under the
cost valuation approach. Under the cost valuation approach, value is measured
by quantifying the cost of replacing the future service capability of the
acquired property without considering the amount of economic benefits that can
be achieved, or the time period over which they might continue.
Contributed in-process research and development was early development stage
property, which did not and currently does not have commercial viability or
any alternative future use and which will require substantial additional
expenditures to commercialize. Accordingly, the assigned value was charged to
operations at the time the Company was formed.
During the year ended December 31, 1998, EDC and MTI made additional total
contributions of $13,250,000 in exchange for 7,650,000 shares. EDC contributed
$7,750,000 in cash for 4,950,000 shares. MTI contributed $3,000,000 in cash,
$2,000,000 of deferred rent related to a below market lease for office and
manufacturing facilities, and $500,000 of in-kind services ($5,500,000 in
total) for 2,700,000 shares. In 1998, MTI purchased options for $191,250,
which entitled MTI to acquire 2,250,000 shares by June, 1999 for $2,250,000.
F-10
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
According to the joint venture agreement, MTI could earn non-cash credits
which will be applied toward the purchase price of shares under option. MTI
could earn these credits based on the Company obtaining certain defined levels
of research contracts. In March 1999, all parties to the agreement mutually
agreed that MTI had earned $2,250,000 of non-cash credit which were used to
acquire 2,250,000 shares.
Accordingly, these shares were issued in March 1999, a charge to operations
of $2,250,000 was recorded under the caption "General and Administrative
Expense," and $191,250 was returned to MTI in accordance with the terms of the
option agreement.
In January 1999, the Company entered into an agreement with MTI and EDC
pursuant to which, the Company had the right to require MTI and EDC to
contribute $7.5 million each in 1999 and $15.0 million each in 2000 in
exchange and for which each would receive common stock valued at $7.50 per
share. The agreement also permitted MTI and EDC to contribute any funds not
previously called by the Company on the termination date of the agreement (the
earlier of December 31, 2000 or upon an initial public offering of the
Company's shares at a price greater than $7.50 per share) in exchange for
shares at a price of $7.50 per share.
During January and February of 1999 MTI and EDC each purchased 300,000
shares of common stock for $1.5 million each.
In September 1999, the Company made a capital call of $4.0 million, and MTI
and EDC each contributed $2.0 million in cash in exchange for 266,667 shares
of common stock. In November 1999, MTI and EDC contributed the remaining $41.0
million in exchange for an aggregate of 5,466,666 shares of common stock.
On June 23, 1999, EDC purchased 704,315 shares of the Company's common
stock for $4,697,782. Also, the Company entered into a purchase agreement with
MTI to acquire approximately 36 acres of land, two commercial buildings and a
residential building located in Latham, New York in exchange for
704,315 shares of common stock.
In February 1999, two investors purchased 1,500,000 shares of common stock
for $10.0 million. In addition, one of the investors received a warrant to
purchase 400,000 shares at a price of $8.50 per share. These warrants were
exercised at the time of the initial public offering.
In April 1999 an investor purchased 299,850 shares of common stock for $2.0
million.
In April 1999, an investor purchased 1,000,000 shares of common stock for
$6.7 million. In connection with the purchase agreement, the investor is
required to spend an aggregate of $840,000 for market research and related
services on behalf of the Company. In the event such amounts are not expended
by April, 2002, up to 111,851 of the previously issued shares may be returned
to the Company. The Company will account for these services by recording a
charge to earnings and a credit to paid-in capital as these services are
rendered. As of December 31, 1999, no services had been provided.
Additionally, the investor received warrants to purchase an additional 350,000
shares of common stock at an exercise price of $8.50 per share. These warrants
were exercised at the time of the initial public offering.
F-11
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
9. Employee Benefit Plans
Stock Option Plans (the Plans):
Effective July 1, 1997, the Company established a stock option plan to
provide employees, consultants, and members of the Board of Directors the
ability to acquire an ownership interest in the Company. Options for employees
generally vest 20% per year and expire ten years after issuance. Options
granted to members of the Board vest 50% upon grant and 25% per year
thereafter. Options granted to consultants vest one-third on the expiration of
the consultant's initial contract term, with an additional one-third vesting
on each anniversary thereafter. At December 31, 1999, there were a total of
3,395,215 options granted and outstanding under this plan. Although no further
options will be granted under this plan, the options previously granted will
continue to vest in accordance with this plan and vested options will be
exercisable for shares of common stock.
In August 1999, our Board of Directors and stockholders adopted the 1999
Stock Option and Incentive Plan. At December 31, 1999 there were 285,500
options granted and outstanding, and an additional 3,409,251 options available
to be issued under the plan. Additionally, the number of shares of common
stock available for issuance under the plan will increase by the amount of any
forfeitures under the 1999 Stock Option and Incentive Plan and under the 1997
Stock Option Plan. The number of shares of common stock under the plan will
further increase January 1 and July 1 of each year by an amount equal to 16.4%
of any net increase in the total number of shares of stock outstanding. The
1999 Stock Option and Incentive Plan permits the Company to: grant incentive
stock options; grant non-qualified stock options; grant stock appreciation
rights; issue or sell common stock with vesting or other restrictions, or
without restrictions; grant rights to receive common stock in the future with
or without vesting; grant common stock upon the attainment of specified
performance goals; and grant dividend rights in respect of common stock.
To date, options granted under this plan generally vest 20% per year and
expire ten years after issuance. These grants may be made to officers,
employees, non-employee directors, consultants, advisors and other key persons
of the Company.
The following table summarizes information about the stock options
outstanding under the Plans at December 31, 1999:
<TABLE>
<CAPTION>
Outstanding
----------------------------
Weighted
Average Average
Remaining Exercise
Exercise price Shares Life Price
-------------- --------- --------- --------
<S> <C> <C> <C>
$1.00........................................... 1,413,400 8.1 $ 1.00
$5.00........................................... 575,275 9.0 $ 5.00
$6.67........................................... 584,040 9.2 $ 6.67
$11.00.......................................... 775,200 9.6 $11.00
$15.00.......................................... 332,800 9.8 $15.00
--------- --- ------
3,680,715 9.0 $ 5.90
</TABLE>
F-12
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table summarizes activity under the Plan:
<TABLE>
<CAPTION>
Weighted
Number of Average
Shares Exercise
Subject Price
to Option per Share
--------- ---------
<S> <C> <C>
Option Activity
Balance, June 27, 1997.................................. -- $ --
Granted at fair value................................... 1,132,500 1.00
Forfeited or terminated................................. (18,500) 1.00
---------
Balance December 31, 1997............................... 1,114,000 1.00
Granted at fair value................................... 460,650 3.09
Granted below fair value................................ 197,000 1.00
Forfeited or terminated................................. (96,450) 1.03
---------
Balance December 31, 1998............................... 1,675,200 1.57
Granted at fair value................................... 2,047,039 9.39
Forfeited or terminated................................. (17,396) 7.24
Exercised............................................... (24,128) 1.74
---------
Balance December 31, 1999............................... 3,680,715 $5.90
=========
</TABLE>
At December 31, 1999, 3,409,251 shares of common stock were reserved for
issuance under future stock option exercises.
Accounting for Stock Based Compensation:
The per share weighted average fair value of the options granted during
1999, 1998 and 1997 was $7.19, $0.58 and $0.26, respectively, using the
minimum value method of valuing stock options, for the options granted prior
to the Company's initial public offering and the Black-Scholes pricing model
subsequent to the offering.
The dividend yield was assumed to be zero for all periods. The risk free
interest rate ranged from 5.1% to 6.3% in 1999, 4.5% to 5.6% in 1998 and 5.8%
to 6.1% in 1997. An expected life of 5 years was assumed for each year.
Expected volatility of 114% was used in determining fair value under the
Black-Scholes pricing model and was excluded using the minimum value method.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" in accounting for its stock options plans and
does not record compensation cost for options granted at fair value. Had the
Company determined compensation cost based on fair value in accordance with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," net loss would have increased to the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
June 27,
Year ended Year ended 1997 to
December 31, December December 31,
1999 31, 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
Net loss, as reported.............. $(33,469,312) $(9,615,963) $(5,903,340)
Proforma net loss.................. (34,716,991) (9,775,441) (6,000,628)
Proforma loss per share, basic and
diluted........................... $ (1.32) $ (0.72) $ (0.71)
</TABLE>
F-13
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
During 1998 the Company awarded 197,000 options to key employees for which
issuance was contingent upon the attainment of specified performance
objectives. Of those awarded, 51,500 were forfeited. The difference between
the fair value of the options at the measurement date and the exercise price
of the options was $582,000, and will be charged to expense over the four year
vesting period of the options. The charge to operations was $126,800 and
$212,000 for the years ended December 31, 1999 and 1998 respectively.
Additionally in 1999 the Company modified the terms of certain stock
options. The impact of this modification resulted in a charge to earnings of
$800,000 in 1999.
1999 Employee Stock Purchase Plan:
In 1999, the Company adopted the 1999 Employee Stock Purchase Plan (the
Plan) under which employees will be eligible to purchase shares of the
Company's common stock at a discount through periodic payroll deductions. The
Plan is intended to meet the requirements of Section 423 of the Internal
Revenue Code. After the initial period, purchases will occur at the end of six
month offering periods at a purchase price equal to 85% of the market value of
the Company's common stock at either the beginning of the offering period or
the end of the offering period, whichever is lower. The first offering period
under the plan will begin on January 1, 2000 and will end on April 30, 2000.
Participants may elect to have from 1% to 10% of their pay withheld for
purchase of common stock at the end of the offering period, up to a maximum of
$12,500 within any offering period. The Company has reserved 1,000,000 shares
of common stock for issuance under the Plan. At December 31, 1999, the Company
had not issued any shares under the Plan.
401(k) Savings & Retirement Plan:
The Company offers a 401(k) Savings & Retirement Plan to eligible employees
meeting certain age and service requirements. This plan permits participants
to contribute up to 15% of their salary, up to the maximum allowable by the
Internal Revenue Service regulations. Participants are immediately vested in
their voluntary contributions plus actual earnings thereon. Participants are
vested in the Company's matching contribution based on the years of service
completed. Participants are fully vested upon completion of four years of
service. The Company's expense for this plan was $224,000 and $95,000 for
years ended December 31, 1999 and 1998, respectively, and $23,000 for the
period from June 27, 1997 (date of inception) to December 31, 1997.
10. Related Party Transactions
On June 27, 1997, the Company entered into a distribution agreement with
the EDC. Under the agreement, EDC was appointed the Company's exclusive
independent distributor in Michigan, Ohio, Indiana and Illinois to promote and
assist in the sale of products developed by the Company, subject to certain
terms and conditions.
On June 27, 1997, the Company entered into a management services agreement
with MTI to obtain certain services and lease certain facilities for a period
of one year. At the expiration of this agreement, the Company extended the
existing facilities lease through September 30, 1998. In June 1998, the
Company entered into a new facilities lease which commenced on October 1,
1998, and had a term of ten years with an option for an additional five years.
Rental expense was $231,000 and $378,000 for the years ended December 31, 1999
and 1998, respectively. Rental expense was $79,000 for the period from June
27, 1997 (date of inception) to December 31, 1997. The total amount due MTI
was $0 and $286,492 at December 31, 1999 and 1998, respectively. As part of
the new facilities lease, MTI agreed to reimburse the Company up to $2.0
million for improvements made to the Company's facilities. At December 31,
1998, $685,306 in Company expenditures had not been reimbursed by MTI, and is
included in due from investor. This lease and the management agreement with
MTI have been terminated.
F-14
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
In 1999, the Company entered into a purchase agreement with MTI to acquire
approximately 36 acres of land, two commercial buildings and a residential
building located in Latham, New York in exchange for 704,315 shares of common
stock. In connection with the transaction with MTI, the Company has written
off deferred rent expense in the amount of $1,850,000 relating to a 10-year
facilities lease associated with the property. Simultaneous with the closing,
the Company agreed to lease back to MTI certain office and manufacturing space
on a short-term basis through November, 1999.
11. Investment in affiliate
In February 1999, the Company entered into an agreement with GE MicroGen,
Inc. (formerly GE On-Site Power, Inc.), a wholly owned subsidiary of General
Electric Co., to create GE Fuel Cell Systems, L.L.C. (GEFCS) a limited
liability company created to market and distribute fuel cell systems world-
wide. GE MicroGen, Inc. owns 75% of GEFCS and the Company owns 25% of GEFCS.
In connection with the formation of GEFCS, the Company issued 2,250,000 shares
of common stock to GE MicroGen valued at $11,250,000. The Company accounts for
its interest in GEFCS on the equity method of accounting and adjusts its
investment by its proportionate share of income or losses under the caption
"Equity in losses of affiliate". From inception through December 31, 1999,
GEFCS had no revenue and an operating and net loss of approximately
$1,762,000. At December 31, 1999 the difference between the amount at which
the investment is carried and the amount of the underlying equity in net
assets of GEFCS is $9,778,250. Such amount is being amortized on a straight
line basis over a ten year period. For the year ended December 31, 1999,
equity in losses of affiliate was $1,471,750 including goodwill amortization
of $1,031,250.
The Company also issued warrants to GE MicroGen to purchase 3 million
shares at $12.50 per share. These warrants were exercised for a total purchase
price of $37.5 million.
As part of the agreement, the Company will work closely with General
Electric's Corporate Research and Development Center for product development
and manufacturing support. GEFCS will market, sell, install and service fuel
cells systems, designed and manufactured by the Company, world-wide (with the
exception of EDC's exclusive four state territory of Michigan, Ohio, Indiana
and Illinois) for residential and small business power applications up to
35kW. In addition, the Company entered into a ten year distribution agreement
with GEFCS that requires GEFCS purchase from the Company a specified number of
pre- commercial units by December 31, 2000.
In accordance with the terms of the agreement, General Electric will
provide capital, in the form of loans, to fund the purchase of pre-commercial
units during the period ending December 31, 2000. General Electric will also
provide additional capital, in the form of a loan not to exceed $8.0 million,
to fund the operations of GEFCS. The Company has agreed to purchase at least
$11.5 million of additional technical support services over a three year
period.
12. Commitments and contingencies
Litigation:
The Company has disclosed on a Form 8-K filed January 25, 2000 with the
Securities and Exchange Commission that a legal complaint was filed against
the Company, The Detroit Edison Company and EDC alleging the entities
misappropriated business and technical trade secrets, ideas, know-how and
strategies relating to fuel cell systems and breached certain contractual
obligations owed to DCT, Inc. The Company believes the allegations made
against it are without merit and intends to vigorously contest the litigation,
but the ultimate outcome is of course uncertain.Due to the early stage of this
litigation, we cannot determine whether any loss will result from the ultimate
outcome.
F-15
<PAGE>
PLUG POWER INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Concentrations of credit risk:
The Company has cash deposits in excess of federally insured limits. The
amount of such deposits is approximately $5.7 million at December 31, 1999.
Capital leases:
The Company leased certain equipment under capital lease transactions
during the year with an original cost of $291,443, which had a net book value
at December 31, 1999 of $195,205 and which is included in machinery and
equipment.
Future minimum non-cancelable lease payments are as follows:
<TABLE>
<S> <C>
2000.............................................................. $ 93,022
2001.............................................................. 93,022
2002.............................................................. 34,068
2003.............................................................. 5,368
---------
225,480
Less amounts representing interest................................ (30,275)
---------
$ 195,205
=========
</TABLE>
13. Subsequent events (unaudited)
Purchase of assets:
On February 18, 2000, the Company signed a definitive agreement with
Gastec, a leading developer of fuel processor technology, located in the
Netherlands, to acquire certain intellectual property and assets related to
fuel processor development for systems ranging up to 100kW in size for $15
million in cash.
Equity investments:
On March 15, 2000, the Company acquired 28% of the aggregate shares of
common stock of Advanced Energy Systems, Inc., a supplier of power electronic
inverters for fuel cell systems for approximately $1.5 million in cash and
7,000 shares of the Company's common stock. In connection with the
transaction, the Company received an exclusive, worldwide, royalty-free
license to use all of Advanced Energy's intellectual property for power
electronic inverters for any fuel cell application.
Development agreements:
On March 15, 2000, the Company finalized a joint development agreement with
GE MicroGen and Joh. Vaillant GmbH u. Co. to develop a combined furnace, hot
water heater, and fuel cell system that will provide both heat and electricity
for the home.
F-16
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PLUG POWER INC.
PLUG POWER INC., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Plug Power Inc. The date of the filing of
its original Certificate of Incorporation (the "Original Certificate") with
the Secretary of State of the State of Delaware was August 13, 1999.
2. This Amended and Restated Certificate of Incorporation amends, restates
and integrates the provisions of the Original Certificate, and (i) was duly
adopted by the Board of Directors in accordance with the provisions of
Sections 242 and 245 of the Delaware General Corporation Law (the "DGCL"),
(ii) was declared by the Board of Directors of the Corporation (the "Board of
Directors") to be advisable and in the best interests of the Corporation and
was directed by the Board of Directors to be submitted to and be considered by
the stockholders of the Corporation entitled to vote thereon for approval by
the affirmative vote of such stockholders in accordance with Section 242 of
the DGCL and (iii) was duly adopted by the stockholders, with the holders of a
majority of the outstanding shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), adopting this Amended and Restated
Certificate of Incorporation in accordance with the provisions of Section 242
of the DGCL and the terms of the Original Certificate.
3. The text of the Original Certificate is hereby amended and restated in
its entirety to provide as herein set forth in full.
ARTICLE I
The name of the Corporation is Plug Power Inc.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is c/o The Corporation Trust Company, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the DGCL.
1
<PAGE>
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is One Hundred Million (100,000,000) shares, of which
(i) Ninety-Five Million (95,000,000) shares shall be Common Stock, par value
$.01 per share, and (ii) Five Million (5,000,000) shares shall be undesignated
preferred stock, par value $.01 per share (the "Undesignated Preferred
Stock").
Except as otherwise restricted by this Amended and Restated Certificate of
Incorporation, the Board of Directors may, at any time and from time to time,
if all of the shares of capital stock which the Corporation is authorized by
this Amended and Restated Certificate of Incorporation to issue have not been
issued, subscribed for, or otherwise committed to be issued, issue or take
subscriptions for additional shares of its capital stock up to the amount
authorized in this Amended and Restated Certificate of Incorporation to such
person or persons and for such lawful consideration as it may deem
appropriate, and generally in its absolute discretion to determine the terms
and the manner of disposition of such authorized but unissued capital stock.
Any and all such shares issued for which the full consideration has been
paid or delivered shall be deemed fully paid shares of capital stock, and the
holder of such shares shall not be liable for any further call or assessment
or any other payment thereon.
The number of authorized shares of the class of Undesignated Preferred
Stock may from time to time be increased or decreased (but not below the
number of shares outstanding) by the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote, without a
vote of the holders of the Undesignated Preferred Stock (except as otherwise
provided in any certificate of designation of any series of Undesignated
Preferred Stock).
The designations, powers, preferences and rights of, and the
qualifications, limitations and restrictions upon, each class or series of
stock shall be determined in accordance with, or as set forth below in, this
Article IV.
A. Common Stock
Subject to all the rights, powers and preferences of the Undesignated
Preferred Stock, and except as provided by law or in this Article IV (or in
any certificate of designation of any series of Undesignated Preferred Stock);
(a) the holders of the Common Stock shall have the exclusive right to
vote for the election of Directors and on all other matters requiring
stockholder action, each share being entitled to one vote;
(b) dividends may be declared and paid or set apart for payment upon the
Common Stock out of any assets or funds of the Corporation legally
available for the payment of dividends, but only when and as declared by
the Board of Directors or any authorized committee thereof; and
(c) upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the net assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock.
B. Preferred Stock
1. Authority to Issue. The total number of shares of Undesignated Preferred
Stock which the Corporation shall have authority to issue is Five Million
(5,000,000) shares. Subject to any limitations prescribed by law, the Board of
Directors or any authorized committee thereof is expressly authorized to
provide for the issuance of the shares of Undesignated Preferred Stock in one
or more series of such stock, and by filing a certificate pursuant to
applicable law of the State of Delaware, to establish or change from time to
time the number of shares to be included in each such series, and to fix the
designations, powers, preferences and the relative,
2
<PAGE>
participating, optional or other special rights of the shares of each series
and any qualifications, limitations and restrictions thereof.
2. Powers, Preferences, Rights, Qualifications, Limitations and Restriction
of Each Series of Undesignated Preferred Stock. The Board of Directors or any
authorized committee thereof shall have the right to determine or fix one or
more of the following with respect to each series of Undesignated Preferred
Stock to the fullest extent permitted by law:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rates or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so,
from which date or dates, the payment date or dates for dividends, and the
participating and other rights, if any, with respect to dividends;
(c) The voting rights and powers, full or limited, if any, of the shares
of such series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price or prices at which, and the terms and conditions on which, such
shares may be redeemed;
(e) The amount or amounts payable upon the shares of such series and any
preferences applicable thereto in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(f) Whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption
of such shares, and if so entitled, the amount of such fund and the manner
of its application, including the price or prices at which such shares may
be redeemed or purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the
Corporation and, if so convertible or exchangeable, the conversion price or
prices, or the rate or rates of exchange, and the adjustments thereof, if
any, at which such conversion or exchange may be made, and any other terms
and conditions of such conversion or exchange;
(h) The consideration for which the shares of such series shall be
issued;
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of Undesignated
Preferred Stock (or series thereof) and whether such shares may be reissued
as shares of the same or any other class or series of stock; and
(j) Such other powers, preferences, rights, qualifications, limitations
and restrictions thereof as the Board of Directors or any authorized
committee thereof may deem advisable.
ARTICLE V
STOCKHOLDER ACTION
1. Action without Meeting. Except as otherwise provided herein, any action
required or permitted to be taken by the stockholders of the Corporation at
any annual or special meeting of stockholders of the Corporation must be
effected at a duly called annual or special meeting of stockholders and may
not be taken or effected by a written consent of stockholders in lieu thereof.
2. Special Meetings. Except as otherwise required by law and subject to the
rights, if any, of the holders of any series of Undesignated Preferred Stock,
special meetings of the stockholders of the Corporation may be called only by
the President, the Chief Executive Officer, the Chairman of the Board, if one
is elected, or the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the directors then in office.
3
<PAGE>
ARTICLE VI
DIRECTORS
1. General. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors except as otherwise provided
herein or required by law.
2. Election of Directors. Election of Directors need not be by written
ballot unless the By-laws of the Corporation shall so provide.
3. Terms of Directors. The number of Directors of the Corporation shall be
fixed solely by resolution duly adopted from time to time by the Board of
Directors. The Directors, other than those who may be elected by the holders
of any series of Undesignated Preferred Stock, shall be classified, with
respect to the term for which they severally hold office, into three classes,
as nearly equal in number as possible. The initial Class I Directors of the
Corporation shall be Gary Mittleman, Walter L. Robb and Anthony F. Earley,
Jr.; the initial Class II Directors of the Corporation shall be George C.
McNamee and Michael J. Cudahy; and the initial Class III Directors of the
Corporation shall be General John M. Shalikashvili, Larry G. Garberding and
Robert L. Nardelli. The initial Class I Directors shall serve for a term
expiring at the annual meeting of stockholders to be held in 2000, the initial
Class II Directors shall serve for a term expiring at the annual meeting of
stockholders to be held in 2001, and the initial Class III Directors shall
serve for a term expiring at the annual meeting of stockholders to be held in
2002. At each annual meeting of stockholders, the successor or successors of
the class of Directors whose term expires at that meeting shall be elected by
a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of Directors, except
where a larger vote is required by law, by this Amended and Restated
Certificate of Incorporation or the By-laws, and shall hold office for a term
expiring at the annual meeting of stockholders held in the third year
following the year of their election. The Directors elected to each class
shall hold office until their successors are duly elected and qualified or
until their earlier resignation or removal.
4. Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV of this Amended and Restated Certificate of Incorporation, the
holders of any one or more series of Undesignated Preferred Stock shall have
the right, voting separately as a series or together with holders of other
such series, to elect Directors at an annual or special meeting of
stockholders, the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of this Amended
and Restated Certificate of Incorporation and any certificate of designation
applicable thereto, and such Directors so elected shall not be divided into
classes pursuant to this Article VI.3.
5. Vacancies. Subject to the rights, if any, of the holders of any series
of Undesignated Preferred Stock to elect Directors and to fill vacancies in
the Board of Directors relating thereto, any and all vacancies in the Board of
Directors, however occurring, including, without limitation, by reason of an
increase in size of the Board of Directors, or the death, resignation,
disqualification or removal of a Director, shall be filled solely by the
affirmative vote of a majority of the remaining Directors then in office, even
if less than a quorum of the Board of Directors. Any Director appointed in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of Directors in which the new directorship was
created or the vacancy occurred and until such Director's successor shall have
been duly elected and qualified or until his or her earlier resignation or
removal. Subject to the rights, if any, of the holders of any series of
Undesignated Preferred Stock to elect Directors, when the number of Directors
is increased or decreased, the Board of Directors shall determine the class or
classes to which the increased or decreased number of Directors shall be
apportioned; provided, however, that no decrease in the number of Directors
shall shorten the term of any incumbent Director. In the event of a vacancy in
the Board of Directors, the remaining Directors, except as otherwise provided
by law, may exercise the powers of the full Board of Directors until the
vacancy is filled.
6. Removal. Subject to the rights, if any, of any series of Undesignated
Preferred Stock to elect Directors and to remove any Director whom the holders
of any such stock have the right to elect, any Director (including persons
elected by Directors to fill vacancies in the Board of Directors) may be
removed from office (i) only
4
<PAGE>
with cause and (ii) only by the affirmative vote of the holders of two-thirds
of the shares then entitled to vote at an election of Directors. At least
thirty (30) days prior to any meeting of stockholders at which it is proposed
that any Director be removed from office, written notice of such proposed
removal shall be sent to the Director whose removal will be considered at the
meeting.
ARTICLE VII
LIMITATION OF LIABILITY
A Director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (a) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the Director derived an improper personal benefit. If
the DGCL is amended after the effective date of this Amended and Restated
Certificate of Incorporation to authorize corporate action further eliminating
or limiting the personal liability of Directors, then the liability of a
Director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended.
Any repeal or modification of this Article VII by either of (i) the
stockholders of the Corporation or (ii) an amendment to the DGCL, shall not
adversely affect any right or protection existing at the time of such repeal
or modification with respect to any acts or omissions occurring before such
repeal or modification of a person serving as a Director at the time of such
repeal or modification.
ARTICLE VIII
AMENDMENT OF BY-LAWS
1. Amendment by Directors. Except as otherwise provided by law, the By-laws
of the Corporation may be amended or repealed by the Board of Directors by the
affirmative vote of a majority of the Directors then in office.
2. Amendment by Stockholders. The By-laws of the Corporation may be amended
or repealed at any annual meeting of stockholders, or special meeting of
stockholders called for such purpose as provided in the By-laws, by the
affirmative vote of at least two-thirds of the shares present in person or
represented by proxy at such meeting and entitled to vote on such amendment or
repeal, voting together as a single class; provided, however, that if the
Board of Directors recommends that stockholders approve such amendment or
repeal at such meeting of stockholders, such amendment or repeal shall only
require the affirmative vote of the majority of the shares present in person
or represented by proxy at such meeting and entitled to vote on such amendment
or repeal, voting together as a single class.
ARTICLE IX
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend or repeal this Amended and
Restated Certificate of Incorporation in the manner now or hereafter
prescribed by statute and this Amended and Restated Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation. No amendment or repeal of this Amended and
Restated Certificate of Incorporation shall be made unless the same is first
approved by the Board of Directors pursuant to a resolution adopted by the
Board of Directors in accordance with Section 242 of the DGCL, and, except as
otherwise provided by law, thereafter approved by the stockholders. Whenever
any vote of the holders of voting stock is required to amend or repeal any
provision of this Amended and Restated Certificate of Incorporation, and in
addition to any other vote of holders of voting stock that is required by this
Amended and Restated Certificate of Incorporation or by law, such amendment or
5
<PAGE>
repeal shall require the affirmative vote of the majority of the outstanding
shares entitled to vote on such amendment or repeal, and the affirmative vote
of the majority of the outstanding shares of each class entitled to vote
thereon as a class, at a duly constituted meeting of stockholders called
expressly for such purpose; provided, however, that the affirmative vote of
not less than 80% of the outstanding shares entitled to vote on such amendment
or repeal, and the affirmative vote of not less than 80% of the outstanding
shares of each class entitled to vote thereon as a class, shall be required to
amend or repeal any provision of Article V, Article VI, Article VII or Article
IX of this Amended and Restated Certificate of Incorporation.
THIS AMENDED AND RESTATED CERTIFICATE OF INCORPORATION is executed as of
this 28th day of October, 1999.
PLUG POWER INC.
By: /s/ Gary Mittleman
__________________
Name: Gary Mittleman
Title: Chief Executive Officer
and President
6
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
OF
PLUG POWER INC.
(the "Corporation")
ARTICLE I
---------
Stockholders
------------
SECTION 1. Annual Meeting. The annual meeting of stockholders (any such
meeting being referred to in these By-laws as an "Annual Meeting") shall be held
at the hour, date and place within or without the United States which is fixed
by the majority of the Board of Directors, the Chairman of the Board, if one is
elected, or the President, which time, date and place may subsequently be
changed at any time by vote of the Board of Directors. If no Annual Meeting has
been held for a period of thirteen months after the Corporation's last Annual
Meeting, a special meeting in lieu thereof may be held, and such special meeting
shall have, for the purposes of these By-laws or otherwise, all the force and
effect of an Annual Meeting. Any and all references hereafter in these By-laws
to an Annual Meeting or Annual Meetings also shall be deemed to refer to any
special meeting(s) in lieu thereof.
SECTION 2. Special Meetings. Except as otherwise required by law and
subject to the rights, if any, of the holders of any series of preferred stock,
special meetings of the stockholders of the Corporation may be called only by
the President, the Chief Executive Officer, the Chairman of the Board, if one is
elected, or the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the directors then in office.
SECTION 3. Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the
stockholders may be made at an Annual Meeting (a) pursuant to the
Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of notice provided for in this
By-law, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this By-law.
<PAGE>
(2) For nominations or other business to be properly brought before an
Annual Meeting by a stockholder pursuant to clause (c) of paragraph (a)(1)
of this By-law, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation, such other business must be a
proper matter for stockholder action, and such stockholder be present at
such meeting, either in person or by representative. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business
on the 90th day nor earlier than the close of business on the 120th day
prior to the first anniversary of the preceding year's Annual Meeting;
provided, however, that in the event that the date of the Annual Meeting is
more than 30 days before or more than 60 days after such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier
than the close of business on the 120th day prior to such Annual Meeting
and not later than the close of business on the later of the 90th day prior
to such Annual Meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. Notwithstanding
anything to the contrary provided herein, for the first Annual Meeting
following the initial public offering of common stock of the Corporation, a
stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Corporation at its principal executive office not later
than the close of business on the later of the 90th day prior to the
scheduled date of such Annual Meeting or the 10th day following the day on
which public announcement of the date of such Annual Meeting is first made
or sent by the Corporation. In no event shall the public announcement of
an adjournment of an Annual Meeting commence a new time period for the
giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes
to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations
of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if
elected); (b) as to any other business that the stockholder proposes to
bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting, any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made, and the
names and addresses of other stockholders known by the stockholder
proposing such business to support such proposal, and the class and number
of shares of the Corporation's capital stock beneficially owned by such
other stockholders; and (c) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is
made (i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, and (ii) the class and
number of shares of the Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner.
2
<PAGE>
(3) Notwithstanding anything in the second sentence of paragraph
(a)(2) of this By-law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees
for director or specifying the size of the increased Board of Directors
made by the Corporation at least 100 days prior to the first anniversary of
the preceding year's Annual Meeting, a stockholder's notice required by
this By-law shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th day following
the day on which such public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this By-law, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-law. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the Corporation's
notice of meeting, if the stockholder's notice required by paragraph (a)(2) of
this By-law shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the close of business on the 120th
day prior to such special meeting and not later than the close of business on
the later of the 90th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(c) General.
(1) Only such persons who are nominated in accordance with the procedures
set forth in this By-law shall be eligible to serve as directors and only
such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth
in this By-law. If the Board of Directors or a designated committee
thereof determines that any stockholder proposal or nomination was not made
in a timely fashion in accordance with the provisions of this By-law or
that the information provided in a stockholder's notice does not satisfy
the information requirements of this By-law in any material respect, such
proposal or nomination shall not be presented for action at the Annual
Meeting in question. If neither the Board of Directors nor such committee
makes a determination as to the
3
<PAGE>
validity of any stockholder proposal or nomination in the manner set forth
above, the presiding officer of the Annual Meeting shall determine whether
the stockholder proposal or nomination was made in accordance with the
terms of this By-law. If the presiding officer determines that any
stockholder proposal or nomination was not made in a timely fashion in
accordance with the provisions of this By-law or that the information
provided in a stockholder's notice does not satisfy the information
requirements of this By-law in any material respect, such proposal or
nomination shall not be presented for action at the Annual Meeting in
question. If the Board of Directors, a designated committee thereof or the
presiding officer determines that a stockholder proposal or nomination was
made in accordance with the requirements of this By-law, the presiding
officer shall so declare at the Annual Meeting and ballots shall be
provided for use at the meeting with respect to such proposal or
nomination.
(2) For purposes of this By-law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission (including, without limitation, a Form 8-K) pursuant to Section
13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this By-law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-law. Nothing in this By-law shall be deemed to
affect any rights of (i) stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act or (ii) the holders of any series of preferred stock to elect directors
under specified circumstances.
SECTION 4. Matters to be Considered at Special Meetings. Only those
matters set forth in the notice of the special meeting may be considered or
acted upon at a special meeting of stockholders of the Corporation, unless
otherwise provided by law.
SECTION 5. Notice of Meetings; Adjournments. A written notice of each
Annual Meeting stating the hour, date and place of such Annual Meeting shall be
given by the Secretary or an Assistant Secretary (or other person authorized by
these By-laws or by law) not less than 10 days nor more than 60 days before the
Annual Meeting, to each stockholder entitled to vote thereat and to each
stockholder who, by law or under the Certificate of Incorporation of the
Corporation (as the same may hereafter be amended and/or restated, the
"Certificate") or under these By-laws, is entitled to such notice, by delivering
such notice to him or by mailing it, postage prepaid, addressed to such
stockholder at the address of such stockholder as it appears on the
Corporation's stock transfer books. Such notice shall be deemed to be given
when hand delivered to such address or deposited in the mail so addressed, with
postage prepaid.
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<PAGE>
Notice of all special meetings of stockholders shall be given in the same
manner as provided for Annual Meetings, except that the written notice of all
special meetings shall state the purpose or purposes for which the meeting has
been called.
Notice of an Annual Meeting or special meeting of stockholders need not be
given to a stockholder if a written waiver of notice is signed before or after
such meeting by such stockholder or if such stockholder attends such meeting,
unless such attendance was for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting was not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any Annual Meeting or special meeting of stockholders need be
specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously scheduled
Annual Meeting or special meeting of stockholders and any record date with
respect thereto, regardless of whether any notice or public disclosure with
respect to any such meeting has been sent or made pursuant to Section 3 of this
Article I of these By-laws or otherwise. In no event shall the public
announcement of an adjournment, postponement or rescheduling of any previously
scheduled meeting of stockholders commence a new time period for the giving of a
stockholder's notice under Section 3 of this Article I of these By-laws.
When any meeting is convened, the presiding officer may adjourn the meeting
if (a) no quorum is present for the transaction of business, (b) the Board of
Directors determines that adjournment is necessary or appropriate to enable the
stockholders to consider fully information which the Board of Directors
determines has not been made sufficiently or timely available to stockholders,
or (c) the Board of Directors determines that adjournment is otherwise in the
best interests of the Corporation. When any Annual Meeting or special meeting
of stockholders is adjourned to another hour, date or place, notice need not be
given of the adjourned meeting other than an announcement at the meeting at
which the adjournment is taken of the hour, date and place to which the meeting
is adjourned; provided, however, that if the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote thereat and each stockholder who, by law or under the
Certificate or these By-laws, is entitled to such notice.
SECTION 6. Quorum. A majority of the shares entitled to vote, present in
person or represented by proxy, shall constitute a quorum at any meeting of
stockholders. If less than a quorum is present at a meeting, the holders of
voting stock representing a majority of the voting power present at the meeting
or the presiding officer may adjourn the meeting from time to time, and the
meeting may be held as adjourned without further notice, except as provided in
Section 5 of this Article I. At such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally noticed. The stockholders present at a duly constituted
meeting may continue to
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transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 7. Voting and Proxies. Stockholders shall have one vote for each
share of stock entitled to vote owned by them of record according to the books
of the Corporation, unless otherwise provided by law or by the Certificate.
Stockholders may vote either in person or by written proxy, but no proxy shall
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. Proxies shall be filed with the Secretary of the
meeting before being voted. Except as otherwise limited therein or as otherwise
provided by law, proxies shall entitle the persons authorized thereby to vote at
any adjournment of such meeting, but they shall not be valid after final
adjournment of such meeting. A proxy with respect to stock held in the name of
two or more persons shall be valid if executed by or on behalf of any one of
them unless at or prior to the exercise of the proxy the Corporation receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a stockholder shall be deemed valid, and the
burden of proving invalidity shall rest on the challenger.
SECTION 8. Action at Meeting. When a quorum is present, any matter before
any meeting of stockholders shall be decided by the affirmative vote of the
majority of shares present in person or represented by proxy at such meeting and
entitled to vote on such matter, except where a larger vote is required by law,
by the Certificate or by these By-laws. Any election by stockholders shall be
determined by a plurality of the votes (of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors), except where a larger vote is required by law, by the Certificate or
by these By-laws. The Corporation shall not directly or indirectly vote any
shares of its own stock; provided, however, that the Corporation may vote shares
which it holds in a fiduciary capacity to the extent permitted by law.
SECTION 9. Stockholder Lists. The Secretary or an Assistant Secretary (or
the Corporation's transfer agent or other person authorized by these By-laws or
by law) shall prepare and make, at least 10 days before every Annual Meeting or
special meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least 10 days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the hour, date and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 10. Presiding Officer. The Chairman of the Board, if one is
elected, or if not elected or in his or her absence, the President, shall
preside at all Annual Meetings or
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special meetings of stockholders and shall have the power, among other things,
to adjourn such meeting at any time and from time to time, subject to Sections 5
and 6 of this Article I. The order of business and all other matters of
procedure at any meeting of the stockholders shall be determined by the
presiding officer.
SECTION 11. Voting Procedures and Inspectors of Elections. The
Corporation shall, in advance of any meeting of stockholders, appoint one or
more inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at
a meeting of stockholders, the presiding officer shall appoint one or more
inspectors to act at the meeting. Any inspector may, but need not, be an
officer, employee or agent of the Corporation. Each inspector, before entering
upon the discharge of his or her duties, shall take and sign an oath faithfully
to execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall perform such duties as are
required by the General Corporation Law of the State of Delaware, as amended
from time to time (the "DGCL"), including the counting of all votes and ballots.
The inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of the inspectors. The presiding
officer may review all determinations made by the inspectors, and in so doing
the presiding officer shall be entitled to exercise his or her sole judgment and
discretion and he or she shall not be bound by any determinations made by the
inspectors. All determinations by the inspectors and, if applicable, the
presiding officer, shall be subject to further review by any court of competent
jurisdiction.
ARTICLE II
----------
Directors
---------
SECTION 1. Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors except as otherwise
provided by the Certificate or required by law.
SECTION 2. Number and Terms. The number of directors of the Corporation
shall be fixed by resolution duly adopted from time to time by the Board of
Directors. The directors shall hold office in the manner provided in the
Certificate.
SECTION 3. Qualification. No director need be a stockholder of the
Corporation.
SECTION 4. Vacancies. Subject to the rights, if any, of the holders of
any series of preferred stock to elect directors and to fill vacancies in the
Board of Directors relating thereto, any and all vacancies in the Board of
Directors, however occurring, including, without limitation, by reason of an
increase in size of the Board of Directors, or the death, resignation,
disqualification or removal of a director, shall be filled solely by the
affirmative vote of a
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majority of the remaining directors then in office, even if less than a quorum
of the Board of Directors. Any director appointed in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been duly elected and
qualified or until his or her earlier resignation or removal. Subject to the
rights, if any, of the holders of any series of preferred stock to elect
directors, when the number of directors is increased or decreased, the Board of
Directors shall determine the class or classes to which the increased or
decreased number of directors shall be apportioned; provided, however, that no
decrease in the number of directors shall shorten the term of any incumbent
director. In the event of a vacancy in the Board of Directors, the remaining
directors, except as otherwise provided by law, may exercise the powers of the
full Board of Directors until the vacancy is filled.
SECTION 5. Removal. Directors may be removed from office in the manner
provided in the Certificate.
SECTION 6. Resignation. A director may resign at any time by giving
written notice to the Chairman of the Board, if one is elected, the President or
the Secretary. A resignation shall be effective upon receipt, unless the
resignation otherwise provides.
SECTION 7. Regular Meetings. The regular annual meeting of the Board of
Directors shall be held, without notice other than this Section 7, on the same
date and at the same place as the Annual Meeting following the close of such
meeting of stockholders. Other regular meetings of the Board of Directors may
be held at such hour, date and place as the Board of Directors may by resolution
from time to time determine without notice other than such resolution.
SECTION 8. Special Meetings. Special meetings of the Board of Directors
may be called, orally or in writing, by or at the request of a majority of the
directors, the Chairman of the Board, if one is elected, or the President. The
person calling any such special meeting of the Board of Directors may fix the
hour, date and place thereof.
SECTION 9. Notice of Meetings. Notice of the hour, date and place of all
special meetings of the Board of Directors shall be given to each director by
the Secretary or an Assistant Secretary, or in case of the death, absence,
incapacity or refusal of such persons, by the Chairman of the Board, if one is
elected, or the President or such other officer designated by the Chairman of
the Board, if one is elected, or the President. Notice of any special meeting
of the Board of Directors shall be given to each director in person, by
telephone, or by facsimile, telex, telecopy, telegram, or other written form of
electronic communication, sent to his or her business or home address, at least
24 hours in advance of the meeting, or by written notice mailed to his or her
business or home address, at least 48 hours in advance of the meeting. Such
notice shall be deemed to be delivered when hand delivered to such address, read
to such director by telephone, deposited in the mail so addressed, with postage
thereon
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prepaid if mailed, dispatched or transmitted if faxed, telexed or telecopied, or
when delivered to the telegraph company if sent by telegram.
When any Board of Directors meeting, either regular or special, is
adjourned for 30 days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. It shall not be necessary to give any
notice of the hour, date or place of any meeting adjourned for less than 30 days
or of the business to be transacted thereat, other than an announcement at the
meeting at which such adjournment is taken of the hour, date and place to which
the meeting is adjourned.
A written waiver of notice signed before or after a meeting by a director
and filed with the records of the meeting shall be deemed to be equivalent to
notice of the meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because such meeting is not lawfully called or
convened. Except as otherwise required by law, by the Certificate or by these
By-laws, neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
SECTION 10. Quorum. At any meeting of the Board of Directors, a majority
of the directors then in office shall constitute a quorum for the transaction of
business, but if less than a quorum is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time, and the meeting may
be held as adjourned without further notice, except as provided in Section 9 of
this Article II. Any business which might have been transacted at the meeting
as originally noticed may be transacted at such adjourned meeting at which a
quorum is present.
SECTION 11. Action at Meeting. At any meeting of the Board of Directors
at which a quorum is present, a majority of the directors present may take any
action on behalf of the Board of Directors, unless otherwise required by law, by
the Certificate or by these By-laws.
SECTION 12. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
all members of the Board of Directors consent thereto in writing. Such written
consent shall be filed with the records of the meetings of the Board of
Directors and shall be treated for all purposes as a vote at a meeting of the
Board of Directors.
SECTION 13. Manner of Participation. Directors may participate in
meetings of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting for purposes of
these By-laws.
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SECTION 14. Committees. The Board of Directors, by vote of a majority of
the directors then in office, may elect from its number one or more committees,
including, without limitation, an Executive Committee, a Compensation Committee,
a Stock Option Committee and an Audit Committee, and may delegate thereto some
or all of its powers except those which by law, by the Certificate or by these
By-laws may not be delegated. Except as the Board of Directors may otherwise
determine, any such committee may make rules for the conduct of its business,
but unless otherwise provided by the Board of Directors or in such rules, its
business shall be conducted so far as possible in the same manner as is provided
by these By-laws for the Board of Directors. All members of such committees
shall hold such offices at the pleasure of the Board of Directors. The Board of
Directors may abolish any such committee at any time. Any committee to which
the Board of Directors delegates any of its powers or duties shall keep records
of its meetings and shall report its action to the Board of Directors. The
Board of Directors shall have power to rescind any action of any committee, to
the extent permitted by law, but no such rescission shall have retroactive
effect.
SECTION 15. Compensation of Directors. Directors shall receive such
compensation for their services as shall be determined by a majority of the
Board of Directors provided that directors who are serving the Corporation as
employees and who receive compensation for their services as such, shall not
receive any salary or other compensation for their services as directors of the
Corporation.
ARTICLE III
-----------
Officers
--------
SECTION 1. Enumeration. The officers of the Corporation shall consist of
a President, a Treasurer, a Secretary and such other officers, including,
without limitation, a Chairman of the Board of Directors, a Chief Executive
Officer and one or more Vice Presidents (including Executive Vice Presidents or
Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and
Assistant Secretaries, as the Board of Directors may determine.
SECTION 2. Election. At the regular annual meeting of the Board of
Directors following the Annual Meeting, the Board of Directors shall elect the
President, the Treasurer and the Secretary. Other officers may be elected by
the Board of Directors at such regular annual meeting of the Board of Directors
or at any other regular or special meeting.
SECTION 3. Qualification. No officer need be a stockholder or a director.
Any person may occupy more than one office of the Corporation at any time. Any
officer may be required by the Board of Directors to give bond for the faithful
performance of his or her duties in such amount and with such sureties as the
Board of Directors may determine.
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SECTION 4. Tenure. Except as otherwise provided by the Certificate or by
these By-laws, each of the officers of the Corporation shall hold office until
the regular annual meeting of the Board of Directors following the next Annual
Meeting and until his or her successor is elected and qualified or until his or
her earlier resignation or removal.
SECTION 5. Resignation. Any officer may resign by delivering his or her
written resignation to the Corporation addressed to the President or the
Secretary, and such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
SECTION 6. Removal. Except as otherwise provided by law, the Board of
Directors may remove any officer with or without cause by the affirmative vote
of a majority of the Directors then in office.
SECTION 7. Absence or Disability. In the event of the absence or
disability of any officer, the Board of Directors may designate another officer
to act temporarily in place of such absent or disabled officer.
SECTION 8. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
SECTION 9. President. The President shall, subject to the direction of
the Board of Directors, have general supervision and control of the
Corporation's business. If there is no Chairman of the Board or if he or she is
absent, the President shall preside, when present, at all meetings of
stockholders and of the Board of Directors. The President shall have such other
powers and perform such other duties as the Board of Directors may from time to
time designate.
SECTION 10. Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside, when present, at all meetings of the stockholders and of
the Board of Directors. The Chairman of the Board shall have such other powers
and shall perform such other duties as the Board of Directors may from time to
time designate.
SECTION 11. Chief Executive Officer. The Chief Executive Officer, if one
is elected, shall have such powers and shall perform such duties as the Board of
Directors may from time to time designate.
SECTION 12. Vice Presidents and Assistant Vice Presidents. Any Vice
President (including any Executive Vice President or Senior Vice President) and
any Assistant Vice President shall have such powers and shall perform such
duties as the Board of Directors or the Chief Executive Officer may from time to
time designate.
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SECTION 13. Treasurer and Assistant Treasurers. The Treasurer shall,
subject to the direction of the Board of Directors and except as the Board of
Directors or the Chief Executive Officer may otherwise provide, have general
charge of the financial affairs of the Corporation and shall cause to be kept
accurate books of account. The Treasurer shall have custody of all funds,
securities, and valuable documents of the Corporation. He or she shall have
such other duties and powers as may be designated from time to time by the Board
of Directors or the Chief Executive Officer.
Any Assistant Treasurer shall have such powers and perform such duties as
the Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 14. Secretary and Assistant Secretaries. The Secretary shall
record all the proceedings of the meetings of the stockholders and the Board of
Directors (including committees of the Board) in books kept for that purpose.
In his or her absence from any such meeting, a temporary secretary chosen at the
meeting shall record the proceedings thereof. The Secretary shall have charge
of the stock ledger (which may, however, be kept by any transfer or other agent
of the Corporation). The Secretary shall have custody of the seal of the
Corporation, and the Secretary, or an Assistant Secretary, shall have authority
to affix it to any instrument requiring it, and, when so affixed, the seal may
be attested by his or her signature or that of an Assistant Secretary. The
Secretary shall have such other duties and powers as may be designated from time
to time by the Board of Directors or the Chief Executive Officer. In the
absence of the Secretary, any Assistant Secretary may perform his or her duties
and responsibilities.
Any Assistant Secretary shall have such powers and perform such duties as
the Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 15. Other Powers and Duties. Subject to these By-laws and to such
limitations as the Board of Directors may from time to time prescribe, the
officers of the Corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the Board of Directors or the Chief Executive
Officer.
ARTICLE IV
----------
Capital Stock
-------------
SECTION 1. Certificates of Stock. Each stockholder shall be entitled to a
certificate of the capital stock of the Corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall be
signed by the Chairman of the Board of Directors, the President or a Vice
President and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary. The Corporation seal and the signatures by the
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Corporation's officers, the transfer agent or the registrar may be facsimiles.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the time of its issue. Every
certificate for shares of stock which are subject to any restriction on transfer
and every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall contain such legend with respect thereto
as is required by law.
SECTION 2. Transfers. Subject to any restrictions on transfer and unless
otherwise provided by the Board of Directors, shares of stock may be transferred
only on the books of the Corporation by the surrender to the Corporation or its
transfer agent of the certificate theretofore properly endorsed or accompanied
by a written assignment or power of attorney properly executed, with transfer
stamps (if necessary) affixed, and with such proof of the authenticity of
signature as the Corporation or its transfer agent may reasonably require.
SECTION 3. Record Holders. Except as may otherwise be required by law, by
the Certificate or by these By-laws, the Corporation shall be entitled to treat
the record holder of stock as shown on its books as the owner of such stock for
all purposes, including the payment of dividends and the right to vote with
respect thereto, regardless of any transfer, pledge or other disposition of such
stock, until the shares have been transferred on the books of the Corporation in
accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the Corporation of his
or her post office address and any changes thereto.
SECTION 4. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date: (a) in the case of
determination of stockholders entitled to vote at any meeting of stockholders,
shall, unless otherwise required by law, not be more than sixty nor less than
ten days before the date of such meeting and (b) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (i) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held and (ii) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
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SECTION 5. Replacement of Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
ARTICLE V
---------
Indemnification
---------------
SECTION 1. Definitions. For purposes of this Article:
-----------
(a) "Director" means any person who serves or has served the Corporation as
a director on the Board of Directors of the Corporation;
(b) "Officer" means any person who serves or has served the Corporation as
an officer appointed by the Board of Directors of the Corporation;
(c) "Non-Officer Employee" means any person who serves or has served as an
employee of the Corporation, but who is not or was not a Director or Officer;
(d) "Proceeding" means any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, inquiry, investigation,
administrative hearing or other proceeding, whether civil, criminal,
administrative, arbitrative or investigative;
(e) "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of expert witnesses, private investigators and
professional advisors (including, without limitation, accountants and investment
bankers), travel expenses, duplicating costs, printing and binding costs, costs
of preparation of demonstrative evidence and other courtroom presentation aids
and devices, costs incurred in connection with document review, organization,
imaging and computerization, telephone charges, postage, delivery service fees,
and all other disbursements, costs or expenses of the type customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, settling or otherwise
participating in, a Proceeding;
(f) "Corporate Status" describes the status of a person who (i) in the case
of a Director, is or was a director of the Corporation and is or was acting in
such capacity, (ii) in the case of an Officer, is or was an officer, employee,
trustee or agent of the Corporation or is or was a director, officer, employee
or agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such Officer is or was serving at the
request of the Corporation, and (iii) in the case of a Non-Officer Employee, is
or was an employee of the Corporation or is or was a director, officer, employee
or agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such Non-Officer Employee is or was
serving at the request of the Corporation. For purposes of
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subsection (ii) of this Section 1(f), an officer or director of the Corporation
who is serving as a director, partner, trustee, officer, employee or agent of a
Subsidiary shall be deemed to be serving at the request of the Corporation;
(g) "Disinterested Director" means, with respect to each Proceeding in
respect of which indemnification is sought hereunder, a Director of the
Corporation who is not and was not a party to such Proceeding; and
(h) "Subsidiary" shall mean any corporation, partnership, limited liability
company, joint venture, trust or other entity of which the Corporation owns
(either directly or through or together with another Subsidiary of the
Corporation) either (i) a general partner, managing member or other similar
interest or (ii) (A) 50% or more of the voting power of the voting capital
equity interests of such corporation, partnership, limited liability company,
joint venture or other entity, or (B) 50% or more of the outstanding voting
capital stock or other voting equity interests of such corporation, partnership,
limited liability company, joint venture or other entity.
SECTION 2. Indemnification of Directors and Officers. Subject to the
operation of Section 4 of this Article V, each Director and Officer shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the DGCL, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment) against any and
all Expenses, judgments, penalties, fines and amounts reasonably paid in
settlement that are incurred by such Director or Officer or on such Director's
or Officer's behalf in connection with any threatened, pending or completed
Proceeding or any claim, issue or matter therein, which such Director or Officer
is, or is threatened to be made, a party to or participant in by reason of such
Director's or Officer's Corporate Status, if such Director or Officer acted in
good faith and in a manner such Director or Officer reasonably believed to be in
or not opposed to the best interests of the Corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The rights of indemnification provided by this Section 2 shall
continue as to a Director or Officer after he or she has ceased to be a Director
or Officer and shall inure to the benefit of his or her heirs, executors,
administrators and personal representatives. Notwithstanding the foregoing, the
Corporation shall indemnify any Director or Officer seeking indemnification in
connection with a Proceeding initiated by such Director or Officer only if such
Proceeding was authorized by the Board of Directors of the Corporation, unless
such Proceeding was brought to enforce an Officer or Director's rights to
Indemnification under these by-laws.
SECTION 3. Indemnification of Non-Officer Employees. Subject to the
operation of Section 4 of this Article V, each Non-Officer Employee may, in the
discretion of the Board of Directors of the Corporation, be indemnified by the
Corporation to the fullest extent authorized by the DGCL, as the same exists or
may hereafter be amended, against any or all Expenses,
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judgments, penalties, fines and amounts reasonably paid in settlement that are
incurred by such Non-Officer Employee or on such Non-Officer Employee's behalf
in connection with any threatened, pending or completed Proceeding, or any
claim, issue or matter therein, which such Non-Officer Employee is, or is
threatened to be made, a party to or participant in by reason of such
Non-Officer Employee's Corporate Status, if such Non-Officer Employee acted in
good faith and in a manner such Non-Officer Employee reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The rights of indemnification provided by this Section 3 shall
exist as to a Non-Officer Employee after he or she has ceased to be a
Non-Officer Employee and shall inure to the benefit of his or her heirs,
personal representatives, executors and administrators. Notwithstanding the
foregoing, the Corporation may indemnify any Non-Officer Employee seeking
indemnification in connection with a Proceeding initiated by such Non-Officer
Employee only if such Proceeding was authorized by the Board of Directors of the
Corporation.
SECTION 4. Good Faith. Unless ordered by a court, no indemnification
shall be provided pursuant to this Article V to a Director, to an Officer or to
a Non-Officer Employee unless a determination shall have been made that such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect to
any criminal Proceeding, such person had no reasonable cause to believe his or
her conduct was unlawful. Such determination shall be made by (a) a majority
vote of the Disinterested Directors, even though less than a quorum of the Board
of Directors, (b) a committee comprised of Disinterested Directors, such
committee having been designated by a majority vote of the Disinterested
Directors (even though less than a quorum), (c) if there are no such
Disinterested Directors, or if a majority of Disinterested Directors so directs,
by independent legal counsel in a written opinion, or (d) by the stockholders of
the Corporation.
SECTION 5. Advancement of Expenses to Directors Prior to Final
Disposition. The Corporation shall advance all Expenses incurred by or on behalf
of any Director in connection with any Proceeding in which such Director is
involved by reason of such Director's Corporate Status within ten (10) days
after the receipt by the Corporation of a written statement from such Director
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by such Director and shall be preceded
or accompanied by an undertaking by or on behalf of such Director to repay any
Expenses so advanced if it shall ultimately be determined that such Director is
not entitled to be indemnified against such Expenses.
SECTION 6. Advancement of Expenses to Officers and Non-Officer Employees
Prior to Final Disposition.
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(a) Advancement to Officers. The Corporation may, at the discretion of the
Board of Directors of the Corporation, advance any or all Expenses incurred by
or on behalf of any Officer in connection with any Proceeding in which such is
involved by reason of such Officer's Corporate Status upon the receipt by the
Corporation of a statement or statements from such Officer requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by such Officer and shall be preceded or
accompanied by an undertaking by or on behalf of such to repay any Expenses so
advanced if it shall ultimately be determined that such Officer is not entitled
to be indemnified against such Expenses.
(b) Advancement to Non-Officer Employees. The Corporation may, at the
discretion of the Board of Directors or of any Officer who is authorized to act
on behalf of the Corporation, advance any or all Expenses incurred by or on
behalf of any Non-Officer Employee in connection with any Proceeding in which
such Non-Officer Employee is involved by reason of such Non-Officer Employee's
Corporate Status upon the receipt by the Corporation of a statement or
statements from such Non-Officer Employee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by such Non-Officer Employee and shall be preceded or accompanied by an
undertaking by or on behalf of such Non-Officer Employee to repay any Expenses
so advanced if it shall ultimately be determined that such Non-Officer Employee
is not entitled to be indemnified against such Expenses.
SECTION 7. Contractual Nature of Rights. The foregoing provisions of this
Article V shall be deemed to be a contract between the Corporation and each
Director and Officer entitled to the benefits hereof at any time while this
Article V is in effect, and any repeal or modification thereof shall not affect
any rights or obligations then existing with respect to any state of facts then
or theretofore existing or any Proceeding theretofore or thereafter brought
based in whole or in part upon any such state of facts. If a claim for
indemnification or advancement of Expenses hereunder by a Director or Officer is
not paid in full by the Corporation within (a) 60 days after receipt by the
Corporation's of a written claim for indemnification, or (b) in the case of a
Director, 10 days after receipt by the Corporation of documentation of Expenses
and the required undertaking, such Director or Officer may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, such Director or Officer shall
also be entitled to be paid the expenses of prosecuting such claim. The failure
of the Corporation (including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) to make a determination concerning
the permissibility of such indemnification or, in the case of a Director,
advancement of Expenses, under this Article V shall not be a defense to the
action and shall not create a presumption that such indemnification or
advancement is not permissible.
SECTION 8. Non-Exclusivity of Rights. The rights to indemnification and
advancement of Expenses set forth in this Article V shall not be exclusive of
any other right
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which any Director, Officer, or Non-Officer Employee may have or hereafter
acquire under any statute, provision of the Certificate or these By- laws,
agreement, vote of stockholders or Disinterested Directors or otherwise.
SECTION 9. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, Officer or Non-Officer Employee
against any liability of any character asserted against or incurred by the
Corporation or any such Director, Officer or Non-Officer Employee, or arising
out of any such person's Corporate Status, whether or not the Corporation would
have the power to indemnify such person against such liability under the DGCL or
the provisions of this Article V.
ARTICLE VI
----------
Miscellaneous Provisions
------------------------
SECTION 1. Fiscal Year. Except as otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall end on the last day of
December of each year.
SECTION 2. Seal. The Board of Directors shall have power to adopt and
alter the seal of the Corporation.
SECTION 3. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without director action may
be executed on behalf of the Corporation by the Chairman of the Board, if one is
elected, the President or the Treasurer or any other officer, employee or agent
of the Corporation as the Board of Directors or Executive Committee may
authorize.
SECTION 4. Voting of Securities. Unless the Board of Directors otherwise
provides, the Chairman of the Board, if one is elected, the President or the
Treasurer may waive notice of and act on behalf of this Corporation, or appoint
another person or persons to act as proxy or attorney in fact for this
Corporation with or without discretionary power and/or power of substitution, at
any meeting of stockholders or shareholders of any other corporation or
organization, any of whose securities are held by this Corporation.
SECTION 5. Resident Agent. The Board of Directors may appoint a resident
agent upon whom legal process may be served in any action or proceeding against
the Corporation.
SECTION 6. Corporate Records. The original or attested copies of the
Certificate, By-laws and records of all meetings of the incorporators,
stockholders and the Board of Directors and the stock transfer books, which
shall contain the names of all stockholders, their record addresses and the
amount of stock held by each, may be kept outside the State of Delaware and
shall be kept at the principal office of the Corporation, at the office of its
counsel or at an office of its
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transfer agent or at such other place or places as may be designated from time
to time by the Board of Directors.
SECTION 7. Certificate. All references in these By-laws to the
Certificate shall be deemed to refer to the Amended and Restated Certificate of
Incorporation of the Corporation, as amended and in effect from time to time.
SECTION 8. Amendment of By-laws.
(a) Amendment by Directors. Except as provided otherwise by law, these By-
laws may be amended or repealed by the Board of Directors by the affirmative
vote of a majority of the Directors then in office.
(b) Amendment by Stockholders. These By-laws may be amended or repealed at
any Annual Meeting, or special meeting of stockholders called for such purpose,
by the affirmative vote of at least two-thirds of the shares present in person
or represented by proxy at such meeting and entitled to vote on such amendment
or repeal, voting together as a single class; provided, however, that if the
Board of Directors recommends that stockholders approve such amendment or repeal
at such meeting of stockholders, such amendment or repeal shall only require the
affirmative vote of the majority of the shares present in person or represented
by proxy at such meeting and entitled to vote on such amendment or repeal,
voting together as a single class. Notwithstanding the foregoing, stockholder
approval shall not be required unless mandated by the Certificate, these By-
laws, or other applicable law.
Adopted August 16, 1999 and effective as of August 16, 1999.
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Exhibit 10.36
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into as of
November 3, 1999 by and among Plug Power Inc., a Delaware corporation (the
"Company"), and each of the parties executing a signature page hereto (each a
"Holder" and collectively the "Holders").
WHEREAS, the Holders are the owners of the number of shares of the common
stock, par value $.01 per share, of the Company (the "Common Stock") set forth
opposite their respective names on Exhibit A attached hereto (collectively,
the "Shares").
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions.
As used in this Agreement, the following terms have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, and
by all other amendments and supplements to the prospectus, including post-
effective amendments, and in each case including all material incorporated by
reference or deemed to be incorporated by reference in such prospectus.
"Registrable Securities" means the Shares and any shares of Common Stock
issued or issuable with respect to the Shares by reason of a stock dividend or
stock split, recapitalization or similar transaction, but excludes (i) Shares
the sale of which is covered by a Registration Statement that has been
declared effective under the Securities Act, (ii) Shares eligible for sale by
a Holder pursuant to Rule 144 (or any similar provision then in force, but not
Rule 144A) under the Securities Act, including a sale pursuant to the
provisions of Rule 144(k), but only if all of the Registrable Securities held
by such Holder can be sold without any volume limitations, and (iii) Shares
sold pursuant to Rule 144 (or any similar provision then in force, but not
Rule 144A) under the Securities Act, including a sale pursuant to the
provisions of Rule 144(k).
"Registration Statement" means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of
this Agreement, and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
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Section 2. Piggyback Registration
(a) If at any time or times after the date hereof while any Registrable
Securities are outstanding the Company proposes to register under the
Securities Act any shares of Common Stock (other than (i) a registration on
Form S-8 or any successor form or in connection with any employee or director
welfare, benefit or compensation plan, (ii) a registration on Form S-4 or any
successor form or in connection with an exchange offer, (iii) a registration
in connection with a securities or rights offering exclusively to the
Company's security holders, (iv) a registration in connection with an offering
solely to employees of the Company or its affiliates, (v) a registration
relating to a transaction pursuant to Rule 145 or any other similar rule of
the Commission under the Securities Act or (vi) a shelf registration), then
the Company will give written notice of such proposed registration to the
Holders at least twenty (20) days before the filing of any Registration
Statement with respect thereto. If within ten (10) days after such notice is
given, the Company receives a written request from any Holder for the
inclusion in such Registration Statement of some or all of the Registrable
Securities held by such Holder (which request will specify the number of
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution therefore), the Company will (subject to the
provisions of paragraphs (b) and (c) of this Section 2) include such
Registrable Securities in such Registration Statement. The Company may
withdraw a Registration Statement filed under this Section 2 at any time prior
to the time it becomes effective, provided that the Company will give prompt
notice of such withdrawal to the Holders which requested to be included in
such Registration Statement. Each Holder shall have the right to request
inclusion of such Holder's Registrable Securities in up to three Registration
Statements pursuant to this Section 2(a). The rights of the Holders under this
Section 2(a) will terminate on the date on which the third Registration
Statement to which such rights apply is declared effective by the Commission.
(b) In connection with any registration under this Section 2 involving an
underwriting (an "Underwritten Offering"), the Company will not be required to
include a Holder's Registrable Securities in such Underwritten Offering unless
such Holder accepts the terms of the underwriting as agreed upon between the
Company and the underwriters selected by the Company. If the managing
underwriter(s) of an Underwritten Offering advises the Company that the number
of securities to be sold in such Underwritten Offering, including by Persons
other than the Company (including the Holders) (collectively, the "Selling
Stockholders"), is greater than the number which can be offered without
adversely affecting such Underwritten Offering, including, without limitation,
the price range or probability of success of such Underwritten Offering, then
the Company will include in such Underwritten Offering in the following
priority: (i) first, all shares the Company proposes to sell and (ii) second,
that number of shares of Common Stock proposed to be sold by (A) the Selling
Stockholders (including Registrable Securities proposed to be sold by the
Holders) and (B) any holders of Common Stock exercising piggyback registration
rights under the Registration Rights Agreement dated as of November 3, 1999
between the Company and GE On-Site Power, Inc. which, in the opinion of such
managing underwriter(s), can be sold without adversely affecting such
Underwritten Offering, including, without limitation, the price range or
probability of success of such Underwritten Offering, which shares shall be
allocated among the Selling Stockholders (including the Holders requesting
registration) and such other holders on a pro rata basis according to the
relationship that the number of shares requested to be included by each
Selling Stockholder (including the Registrable Securities requested to be
included in each Holder) and each such other holder in such Underwritten
Offering bears to the total number of shares requested to be registered by all
Selling Stockholders (including the total number of Registrable Securities
requested to be registered by all Holders) and such other holders.
(c) Each Holder hereby agrees that such Holder may not participate in any
Underwritten Offering unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in the underwriting arrangements
applicable to such Underwritten Offering and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of the underwriting
arrangements for such Underwritten Offering.
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<PAGE>
Section 3. Registration Procedures.
(a) The Company will notify each Holder whose Registrable Securities are
included in a Registration Statement of the effectiveness of such Registration
Statement and will furnish to each such Holder, without charge, such number of
conformed copies of such Registration Statement and any post-effective
amendment thereto and such number of copies of the Prospectus (including each
preliminary Prospectus) and any amendments or supplements thereto, as such
Holder may reasonably request in order to facilitate the sale of such Holder's
Registrable Securities.
(b) The Company will promptly notify each Holder requesting registration
of, and confirm in writing, any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus related threreto
or for additional information. In addition, the Company will promptly notify
each such Holder of, and confirm in writing, the filing of the Registration
Statement, any Prospectus supplement related thereto or any post-effective
amendment to the Registration Statement and the effectiveness of any post-
effective amendment.
(c) The Company will use commercially reasonable efforts to register or
qualify the Registrable Securities covered by any Registration Statement under
such other securities or "blue sky" laws of such states of the United States
as any Holder requesting registration reasonably requests; provided, however,
that the Company will not be required (i) to qualify as a foreign corporation
to do business in any jurisdiction in which it is not then qualified, (ii) to
file any general consent to service of process, or (iii) to subject itself to
taxation in any jurisdiction where it would not otherwise be subject to
taxation.
(d) At any time when a Prospectus relating to the Registration Statement is
required to be delivered under the Securities Act, the Company will promptly
notify each Holder holding Registrable Securities covered by such Registration
Statement of the happening of any event as a result of which the Prospectus
included in the Registration Statement includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In such event, the
Company will promptly prepare and file with the Commission and furnish to each
such Holder a reasonable number of copies of a supplement or amendment to such
Prospectus so that, as thereafter deliverable to the purchasers of Registrable
Securities, such Prospectus will not contain any untrue statements of a
material fact of omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 4. Registration Expenses.
The Company will bear all expenses incurred in connection with the
registration of the Registrable Securities pursuant to Section 2 of this
Agreement; provided, however, that the Holders will be responsible and will
pay for (i) any brokerage or underwriting discounts and commissions and taxes
of any kind (including, without limitation, transfer taxes) with respect to
any disposition, sale or transfer of Registrable Securities, (ii) any fees or
expenses of any counsel, accountants or other persons retained or employed by
the Holders and (iii) out-of-pocket expenses of the Holders and their agents,
including, without limitation, any travel costs.
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<PAGE>
Section 5. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Holder, its officers,
directors, employees and agents and each Person, if any, which controls such
Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, (Collectively, "Controlling Persons"), from
and against all losses, claims, damages, liabilities and expenses (including
without limitation any legal or other fees and expenses reasonably incurred by
any Holder or any such Controlling Person in connection with defending or
investigating any action or claim in respect thereof) (collectively,
"Damages") to which any of them may become subject under the Securities Act or
otherwise, insofar as such Damages arise out of or are based upon (i) any
untrue or alleged untrue statement of material fact contained in any
Registration Statement (including any related preliminary or final Prospectus)
pursuant to which Registrable Securities of such Holder were registered under
the Securities Act, (ii) any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"), except insofar as and to the extent that such Violation arose
out of or was based upon information regarding such Holder or its plan of
distribution which was furnished to the Company by such Holder for use therin,
provided, further that the Company will not be liable to any person who
participates as an underwriter in the offering or sale of Registrable
Securities or any Controlling person of such underwriter, in any such case to
the extent that any such Damages arise out of or are based upon (A) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement (including any related preliminary or final
Prospectus) in reliance upon and in conformity with information furnished to
the Company for use in connection with the Registration Statement or the
Prospectus contained therein by such underwriter or Controlling Person or
(B) the failure of such underwriter or Controlling Person to send or give a
copy of the final Prospectus furnished to it by the Company at or prior to the
time such action is required by the Securities Act to the person claiming an
untrue statement or alleged untrue statement or omission or alleged omission
if such statement or omission was corrected in such final prospectus. The
obligations of the Company under this Section 5(a) shall survive the
completion of any offering of Registrable Securities pursuant to Registration
Statement under this Agreement or otherwise and shall survive the termination
of this Agreement.
(b) Indemnification by the Holders. Each Holder agrees to indemnify and
hold harmless, to the full extent permitted by law, the Company, its
directors, officers, employees and agents and each Controlling Person of the
Company, from and against any and all Damages to which any of them may become
subject under the Securities Act or otherwise to the extent such Damages arise
out of or are based upon any Violation, in each case to the extent that such
Violation occurs as a result of (i) any untrue statement or alleged untrue
statement of material fact contained in any Registration Statement (including
any related preliminary or final Prospectus), or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, no misleading, if and to the extent that such statement
or omission arose out of or was based upon information regarding such Holder
or its plan of distribution which was furnished to the Company by such Holder
for use therein, or (ii) the failure by such Holder to deliver or cause to be
delivered to any purchaser of the shares covered by the Registration Statement
the Prospectus contained in the Registration Statement (as amended or
supplemented, if applicable) furnished by the Company to such Holder.
Notwithstanding the foregoing, (A) in no event will a Holder have any
obligation under this Section 5(b) for amounts the Company pays in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder (which consent shall not be
unreasonably withheld) and (B) the total amount for which a Holder shall be
liable under this Section 5(b) shall not in any event exceed the aggregate net
proceeds received by such Holder from the sale of the Holder's Registrable
Securities in such registration. The obligations of the Holders under this
Section 5(b) shall survive the completion of any offering of Registrable
Securities pursuant to a Registration Statement under this Agreement or
otherwise and shall survive the termination of this Agreement.
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<PAGE>
(c) Contribution. To the extent that the indemnification provided for in
paragraph (a) or (b) of this Section 5 is held by a court of competent
jurisdiction to be unavailable to an indemnified party in respect of any
Damages, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, will contribute to the amount
paid or payable by such indemnified party as a result of such Damages (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand, and each Holder on the other, from the offering
of the Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Holders, on
the other, in connection with the statements or omissions which resulted in
such Damages, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Holders on the other
hand will be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Holders and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided, however, that in no event shall the obligation of any
indemnifying party to contribute under this Section 5(c) exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under paragraph (a) or (b)
of this Section 5 had been available under the circumstances.
If indemnification is available under paragraph (a) or (b) of this Section
5, the indemnifying parties will indemnify each indemnified party to the full
extent provided in such paragraphs without regard to the relative benefits to
or relative fault of said indemnifying party or indemnified party to any other
equitable consideration provided of in this Section 5(c)
The Company and each Holder agrees that it would not be just or equitable
if contribution pursuant to this Section 5(c) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to herein.
No indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such fraudulent
misrepresentation.
(d) Notice. Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to made against any indemnifying party under this Section 5,
deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the
indemnified party, as the case may be; provided however, that an indemnified
party shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the indemnified party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The Company shall pay reasonable fees for only one separate legal
counsel for the Holders. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 5, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
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Section 6. Market Stand-off.
Each Holder whose Registrable Securities are covered by a Registration
Statement filed pursuant to Section 2 hereof agrees, if requested by the
Company in the case of a nonunderwritten offering (a "Nonunderwritten
Offering" and, together with an Underwritten Offering, an "Offering") or if
requested by the managing underwriter(s) in an Underwritten Offering, not to
effect any public sale or distribution of any of any securities of the Company
of any class included in such Offering, including a sale pursuant to Rule 144
or Rule 144A under the Securities Act (except as part of such Offering),
during the 15-day period prior to, and during the 180-day period (or such
longer period as may be required by the managing underwriter(s)) beginning on,
the date of pricing of each Offering, to the extent timely notified in writing
by the Company or the managing underwriter(s).
Section 7. Covenants of Holders.
Each Holder will (a) furnish to the Company such information regarding such
Holder and such Holder's intended method of distribution of the Registrable
Securities as the Company may from time to time reasonably request in writing
in order to comply with the Securities Act and the provisions of this
Agreement, (b) to the extent required by the Securities Act, deliver or cause
delivery of the Prospectus contained in the Registration Statement to any
purchaser of such Holder's Registrable Securities covered by the Registration
Statement, (c) promptly notify the Company of any sale of Registrable
Securities by such Holder and (d) notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished by
the Holder to the Company or of the occurrence of any event, in either case as
a result of which any Prospectus contains or would contain an untrue statement
of a material fact regarding the Holder or the Holder's intended method of
distribution of the Registrable Securities or omits or would omit to state any
material fact regarding the Holder or the Holder's intended method of
distribution of the Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that the Prospectus will not contain, with respect
to the Holder or the Holder's intended method of distribution of the
Registrable Securities, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
Section 8. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement, including
this Section 8(a), may not be amended, modified or supplemented, and waivers
or consents to departures from the provisions hereof will not be effective,
unless the Company has obtained the written consent of the Holders of a
majority in interest of the Registrable Securities then outstanding; provided,
however, that any such amendment, modification, supplement or waiver which
materially adversely affects the rights of any Holder shall require the prior
written consent of such Holder.
(b) Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
facsimile, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the Company at the
following address and to each Holder at the address set forth below such
Holder's signature to this Agreement (or at such other address for any party
as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof), and further provided
that in case of directions to amend the Registration Statement pursuant to
Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt;
If to the Company:Plug Power Inc.
968 Albany-Shaker Road
Latham, New York 12110
Attention: General Counsel
Facsimile No.: 518-782-7914
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In addition to the manner of notice permitted above, notices given pursuant to
Sections 1 and 6 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
(c) Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the successors of each of the parties. No Holder may assign
any of its rights hereunder without the prior written consent of the Company
and any attempted assignment by any Holder without such consent will be void
of no effect and will terminate all obligations of the Company hereunder with
respect to such Holder.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law.
(g) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions contained herein will not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders will be enforceable to the fullest extent permitted by law.
(h) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and is intended to be the complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter, including such agreements and
understandings contained in the Limited Liability Company Agreement of Plug
Power, LLC dated as of June 27, 1997, as amended to date.
(i) Rule 144. The Company will file with the Commission in a timely manner
all reports and other documents required under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements and
the filing of such reports and other documents is required for purposes of
meeting the public information provisions of Rule 144.
[Remainder of Page Intentionally Left Blank]
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first set forth above.
PLUG POWER INC.
/s/ Gary Mittleman
-------------------------------------
Gary Mittleman
President and Chief Executive
Officer
8
<PAGE>
Registration Rights Agreement
Holder Signature Page
EDISON DEVELOPMENT CORPORATION
/s/ Larry G. Garberding
-------------------------------------
Name: Larry G. Garberding
Title:
Address for Notice:
2000 Second Avenue
-------------------------------------
Detroit, MI
-------------------------------------
48226
-------------------------------------
MECHANICAL TECHNOLOGY INCORPORATED
/s/ Cynthia A. Schever
-------------------------------------
Name: Cynthia A. Schever
Title:
Address for Notice:
325 Washington Avenue Extension
-------------------------------------
Albany, NY
-------------------------------------
12205
-------------------------------------
/s/ Michael J. Cudahy
-------------------------------------
Michael J. Cudahy
Address for Notice:
10850 West Park Place
-------------------------------------
Suite 980
-------------------------------------
Milwaukee, WI 53224
-------------------------------------
9
<PAGE>
ANTAEUS ENTERPRISES, INC.
/s/ John B. Beinecke
-------------------------------------
Name: John B. Beinecke
Title:
Address for Notice:
99 Park Avenue
-------------------------------------
Suite 2200
-------------------------------------
New York, NY 10016
-------------------------------------
ANTAEUS RETIREMENT BENEFITS PLAN
/s/ John B. Beinecke
-------------------------------------
Name: John B. Beinecke
Title:
Address for Notice:
99 Park Avenue
-------------------------------------
Suite 2200
-------------------------------------
New York, NY 10016
-------------------------------------
/s/ Jeffrey L. Lindsay
-------------------------------------
Jeffrey L. Lindsay
Address for Notice:
5024 N. Hollywood Avenue
-------------------------------------
Whitefish Bay, WI
-------------------------------------
53217
-------------------------------------
10
<PAGE>
RENEE M. LINDSAY 1999 GIFT TRUST
/s/ Jeffrey L. Lindsay
-------------------------------------
Michael Lindsay
________________________ , as Trustee
Address for Notice:
5024 N. Hollywood Avenue
-------------------------------------
Whitefish Bay, WI
-------------------------------------
53217
-------------------------------------
DAWN T. LINDSAY 1999 GIFT TRUST
/s/ Jeffrey L. Lindsay
-------------------------------------
Michael Lindsay
________________________ , as Trustee
Title:
Address for Notice:
5024 N. Hollywood Avenue
-------------------------------------
Whitefish Bay, WI
-------------------------------------
53217
-------------------------------------
SOUTHERN CALIFORNIA GAS COMPANY
/s/ Lee M. Stewart
-------------------------------------
Address for Notice:
c/o Sempra Energy
-------------------------------------
101 Ash Street
-------------------------------------
San Diego, CA 92101
-------------------------------------
11
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Number of
Holder Shares
- ------ ----------
<S> <C>
Edison Development Corporation....................................... 13,704,315
Mechanical Technology Incorporated................................... 13,704,315
Michael J. Cudahy.................................................... 1,840,000
Southern California Gas Company...................................... 1,350,000
Antaeus Enterprises, Inc............................................. 296,850
Antaeus Retirement Benefits Plan..................................... 3,000
Jeffrey L. Lindsay................................................... 30,000
Renee M. Lindsay 1999 Gift Trust..................................... 15,000
Dawn T. Lindsay 1999 Gift Trust...................................... 15,000
</TABLE>
12
<PAGE>
EXHIBIT 10.37
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of November 3, 1999 between Plug Power Inc., a Delaware corporation
("Plug Power"), and GE On-Site Power, Inc., a Delaware corporation ("GEOSP").
WHEREAS:
As of the date hereof and immediately prior to the closing of Plug Power's
initial public offering, Plug Power, LLC, a Delaware limited liability company
("LLC"), merged with and into Plug Power and all of LLC's outstanding Class A
membership interests were converted on a one-for-one basis into shares of
common stock, par value $.01 per share, of Plug Power ("Common Stock");
GEOSP currently owns an aggregate of 5,250,000 shares of Common Stock (the
"Shares");
To induce GEOSP to execute and deliver the agreement dated as of August 27,
1999 by and among GEOSP, LLC, GE Power Systems business of General Electric
Company and GE Fuel Cell Systems, L.L.C., Plug Power has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute
(collectively, the "1933 Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Plug Power and GEOSP hereby
agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Cutback Registration" means any Demand Registration or Piggyback
Registration to be effected as an underwritten offering in which the managing
underwriter(s) with respect thereto advises that a limit be placed on the
number of shares of Registrable Securities which may be included in such
registration because, in such underwriter(s)' judgment, marketing or other
factors dictate such limitation is necessary to facilitate public
distribution.
"Investor" means GEOSP and any transferee or assignee thereof who agrees to
become bound by the provisions of this Agreement in accordance with Section 9
hereof.
"Investor Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 3, 1999 by and among Plug Power, Edison
Development Corporation, Mechanical Technology Incorporated, Michael J.
Cudahy, Southern California Gas Company, Anteaus Enterprises, Inc., Anteaus
Retirement Benefits Plan, Jeffrey L. Lindsay, Renee M. Lindsay 1999 Gift Trust
and Dawn T. Lindsay 1999 Gift Trust.
"register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Registration
Statements in compliance with the 1933 Act and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
"Registration Period" means, with regard to any Investor and the shares of
Registrable Securities then held by such Investor, that period beginning on
November 3, 2001 and ending on the date on which such shares of Registrable
Securities may be publicly sold (without restriction as to the number of
shares that may be sold) pursuant to Rule 144 of the SEC under the 1933 Act.
It is understood and agreed that the termination of the Registration Period
applicable to one or more Investors shall not necessarily result in the
termination of the Registration Period applicable to other Investors.
1
<PAGE>
"Registrable Securities" means (A) the Shares and (B) any Common Stock
issued or issuable with respect to Registrable Securities by reason of a stock
dividend or stock split or in connection with a confirmation of shares,
recapitalization, merger, consolidation or other reorganization.
"Registration Statement" means a registration statement of Plug Power under
the 1933 Act.
2. Registration.
a. Demand Registration.
(i) If, on any one occasion during the Registration Period, either (A)
Investors holding at least 50% of the Registrable Securities then
outstanding or (B) GEOSP, propose to dispose of all or part of their shares
of the Registrable Securities, then such Investors or GESOP may request
Plug Power in writing to effect such registration under the 1933 Act,
stating the number of shares of Registrable Securities to be disposed of
and the intended method(s) of disposition of such shares. Holders of
Registrable Securities which request registration pursuant to this Section
2(a)(i) are referred to herein as the "Initiating Holders". In the event
that a Demand Registration becomes a Cutback Registration, each Investor
and GEOSP shall be permitted to withdraw all, but not less than all, of
their respective shares of Registrable Securities from the Registration
Statement relating to such Demand Registration by giving written notice to
Plug Power at least 5 days before the expected effective date of such
Registration Statement. In the event that each Investor and GEOSP withdraws
all of its shares of Registrable Securities from a Demand Registration
pursuant to the preceding sentence such that no shares of Registrable
Securities are included in such Demand Registration, such Demand
Registration shall not count as the one Demand Registration to which the
Investors and GEOSP are entitled under this Section 2(a) (but shall count
as the first and only Demand Registration for which Plug Power is to bear
expenses pursuant to Section 5 hereof) and such parties shall continue to
be entitled to request one Demand Registration pursuant to this Section
2(a).
(ii) Upon receipt of a request pursuant to Section 2(a)(i) above, Plug
Power shall give prompt written notice thereof to all other Investors who
hold Registrable Securities. Upon receipt of such request, Plug Power shall
use its best efforts to promptly effect the registration under the 1933 Act
of all shares of Registrable Securities specified in the requests of the
Initiating Holders and the written requests (stating the number of shares
of Registrable Securities to be disposed of and the intended method of
disposition of such shares) of other holders of shares of Registrable
Securities given within 20 days after receipt of such notice from Plug
Power, all to the extent requisite to permit the disposition (in accordance
with the intended methods of disposition) of the Registrable Securities to
be registered; provided that in no event will Plug Power be obligated to
(A) register a number of shares of Registrable Securities pursuant to this
Section 2(a) in excess of (x) 3,000,000 (as appropriately adjusted for
stock splits, stock dividends, mergers, recapitalizations and similar
transactions) less (y) the aggregate number of shares of Registrable
Securities included in Registration Statements pursuant to Section 2(c)
below (the "Registration Limit") or (B) effect more than one registration
pursuant to this Section 2(a). In the event that the aggregate number of
shares of Registrable Securities for which registration is requested in
accordance with this Section 2(a) exceeds the Registration Limit, such
aggregate number will be reduced to the Registration Limit and will be
allocated among the holders requesting registration on a pro rata basis in
proportion to the number of Registrable Securities requested to be
registered by such holders.
(iii) Notwithstanding the foregoing, Plug Power may postpone taking
action with respect to a Demand Registration for a reasonable period of
time after receipt of the request (not exceeding 60 days) if, in the good
faith opinion of Plug Power's Board of Directors, effecting the
registration would adversely affect a material financing, acquisition,
disposition of assets or stock, merger or other comparable transaction or
would require Plug Power to make public disclosure of information the
public disclosure of which would have a material adverse effect upon Plug
Power; provided that Plug Power shall not delay such action pursuant to
this sentence more than twice in any twelve (12) month period. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to and
approved by GEOSP and its counsel prior to its filing or other submission,
such approval not to be unreasonably withheld.
2
<PAGE>
b. Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering,
GEOSP shall have the right to select one legal counsel and an investment
banker or bankers and manager or managers to administer its interest in the
offering, which investment banker or bankers or manager or managers shall be
reasonably satisfactory to Plug Power.
c. Piggy-Back Registrations. If at any time after the date hereof and prior
to the expiration of the Registration Period Plug Power proposes to file with
the SEC a Registration Statement relating to an offering for its own account
or the account of others under the 1933 Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans) Plug Power shall send to GEOSP written
notice of such proposed filing and, if within twenty (20) days after receipt
of such notice, GEOSP shall so request in writing, Plug Power shall include in
such Registration Statement all or any part of the Registrable Securities
GEOSP requests to be registered, except that if any underwritten public
offering for the account of Plug Power is a Cutback Registration, then Plug
Power shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which GEOSP has
requested inclusion hereunder; provided, that no portion of the equity
securities which Plug Power is offering for its own account shall be excluded.
Any exclusion of Registrable Securities shall be made pro rata among the
Investors seeking to include Registrable Securities, in proportion to the
number of Registrable Securities sought to be included by such Investors;
provided, however, that Plug Power shall not exclude any Registrable
Securities unless Plug Power has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and provided, further, however, that, after giving
effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right hereunder or under the Investor Registration Rights Agreement to include
such securities in the Registration Statement. No right to registration of
Registrable Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a) hereof. The obligations of Plug Power
under this Section 2(c) may be waived by GEOSP. If an offering in connection
with which GEOSP is entitled to registration under this Section 2(c) is an
underwritten offering, then GEOSP shall, unless otherwise agreed by Plug
Power, offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common
Stock included in such underwritten offering.
GEOSP and each Investor shall have the right to request inclusion of their
Registrable Securities in up to three Registration Statements (excluding for
purposes of determining such number of Registration Statements any
Disqualified Registration Statement (as defined below)) pursuant to this
Section 2(c). The rights of GEOSP and each other holder of Registrable
Securities under this Section 2(c) will terminate on the date on which the
third Registration Statement (excluding any Disqualified Registration
Statement) to which such rights apply has been declared effective by the SEC.
The term "Disqualified Registration Statement" means any Registration
Statement with respect to which Registrable Securities are requested to be
included pursuant to this Section 2(c) where the aggregate number of shares of
Registrable Securities actually included in such Registration Statement is
reduced pursuant to a Cutback Registration to a number of shares which is less
than the lower of (x) 750,000 or (y) 80% of the aggregate number of shares of
Registrable Securities requested to be included in such Registration
Statement.
d. Eligibility for Form S-3. Plug Power shall file all reports required to
be filed by Plug Power with the SEC in a timely manner so as to establish
eligibility for the use of Form S-3. In the event that Form S-3 is not
available for sale by GEOSP of the Registrable Securities, Plug Power shall
register the sale on another appropriate form reasonably acceptable to GEOSP.
e. Cutback Registration.
(i) If a Demand Registration becomes a Cutback Registration, Plug Power
will include in any such registration to the extent of the number which the
managing underwriter of such offering advises Plug Power can be sold in
such offering (i) first, Registrable Securities requested to be included in
such registration by
3
<PAGE>
GEOSP and (ii) second, other securities of Plug Power proposed to be
included in such registration, allocated among the holders thereof in
accordance with the priorities then existing among Plug Power and the
holders of such other securities; and any securities so excluded shall be
withdrawn from and shall not be included in such Demand Registration.
(ii) If a Piggyback Registration becomes a Cutback Registration, Plug
Power will include in such registration to the extent of the amount of the
securities which the managing underwriter advises Plug Power can be sold in
such offering:
(A) if such registration as initially proposed by Plug Power was
solely a primary registration of its securities, (x) first, the
securities proposed by Plug Power to be sold for its own account, (y)
second, any Registrable Securities requested to be included in such
registration by GEOSP and any other securities of Plug Power proposed
to be included in such registration by the holders thereof pursuant to
the Investor Registration Rights Agreement, allocated among GEOSP and
such holders on a pro rata basis in proportion to the number of
Registrable Securities requested to be registered by each, and
(z) third, any other securities of Plug Power proposed to be included
in such registration, allocated among the holders thereof in accordance
with the priorities then existing among Plug Power and such holders;
and
(B) if such registration as initially proposed by Plug Power was in
whole or in part requested by holders of securities of Plug Power,
other than holders of Registrable Securities in their capacities as
such, pursuant to a Demand Registration, (x) first, such securities
held by the holders initiating such registration and, if applicable,
any securities proposed by Plug Power to be sold for its own account,
allocated in accordance with the priorities then existing among Plug
Power any such holders, (y) second, any Registrable Securities
requested to be included in such registration by GEOSP and any other
securities of Plug Power proposed to be included in such registration
by the holders thereof pursuant to the Investor Registration Rights
Agreement, allocated among GEOSP and such holders on a pro rata basis
in proportion to the number of Registrable Securities requested to be
registered by each, and (z) third, any other securities of Plug Power
proposed to be included in such registration, allocated among the
holders thereof in accordance with the priorities then existing among
Plug Power and such holders; and any securities so excluded shall be
withdrawn from and shall not be included in such Piggyback
Registration.
3. Obligations of the Company.
In connection with the registration of the Registrable Securities, Plug
Power shall have the following obligations:
a. Plug Power shall prepare promptly, and file with the SEC as required by
Section 2(a), a Registration Statement with respect to the number of
Registrable Securities specified as provided in Section 2(a), and thereafter
shall use its best efforts to cause such Registration Statement relating to
Registrable Securities to become effective as soon as possible after such
filing, and keep the Registration Statement effective at all times until the
earlier of (i) which is 180 days after the effective date of the Registration
Statement, or (ii) the date on which all Investors with Registrable Securities
included in the Registration Statement have sold such Registrable Securities,
which Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Each Investor shall
give notice to Plug Power when it has sold all of its Registrable Securities.
b. Plug Power shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective for
as long as such Registration Statement is required to remain effective
pursuant to this Agreement and, during such period, comply with the
4
<PAGE>
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of Plug Power covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement.
c. Plug Power shall furnish to GEOSP and its legal counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by Plug Power, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, and (ii) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as GEOSP may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
GEOSP.
d. In the case of the Registration Statement referred to in Section 2(a),
Plug Power shall furnish to the counsel of GEOSP each letter written by or on
behalf of Plug Power to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which Plug Power has sought confidential treatment).
e. Plug Power shall use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as
GEOSP reasonably requests (or obtain exemption therefrom), (ii) prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the period in which
Plug Power is required to keep the Registration Statement effective (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications (or obtain exemptions therefrom) in effect at all times during
the period in which Plug Power is required to keep the Registration Statement
effective, and (iv) take all other actions reasonably necessary or advisable
to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that Plug Power shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (b) subject itself to general taxation in any such jurisdiction,
or (c) file a general consent to service of process in any such jurisdiction.
f. In the event GEOSP selects underwriters for the offering, Plug Power
shall enter into and perform its obligations under an underwriting agreement,
in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering. Plug Power shall not be required to provide such Underwriter with
rights of first refusal with respect to any subsequent offerings, including
debt and equity financing, or any requirements with respect to mergers,
acquisitions or other business combinations.
g. As promptly as practicable after becoming aware of such event, Plug
Power shall notify GEOSP of the happening of any event, of which Plug Power
has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and shall promptly
(under the circumstances) prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to GEOSP as it
may reasonably request.
h. Plug Power shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, shall use its best efforts to obtain the
withdrawal of such order at the earliest possible moment and to notify GEOSP
(or, in the event of an underwritten offering, the managing underwriters) of
the issuance of such order and the resolution thereof.
5
<PAGE>
i. Plug Power shall permit a single firm of counsel, designated as selling
stockholders' counsel by GEOSP, to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior to their
filing with the SEC, and not file any document in a form to which such counsel
reasonably objects.
j. Plug Power shall make generally available to its security holders as
soon as practicable, but not later than ninety (90) days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of Plug Power's fiscal quarter next
following the effective date of the Registration Statement, which requirement
will be deemed to be satisfied if Plug Power timely files complete and
accurate information on Forms 10-Q, 10-K and 8-K under the 1934 Act.
k. At the request of GEOSP, Plug Power shall furnish, on the date that
Registrable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement (i) if required by an underwriter,
a "comfort" letter, dated such date, from Plug Power's independent certified
public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, and (ii) an opinion, dated as
of such date, from counsel representing Plug Power for purposes of such
Registration Statement and the underwriting agreement, in form, scope and
substance as is customarily given in an underwritten public offering,
addressed to the underwriters and GEOSP.
l. Plug Power shall make available for inspection by (i) GEOSP, (ii) any
underwriter participating in any disposition pursuant to the Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by GEOSP, and (iv) one firm of attorneys retained by all such
underwriters (collectively, the "Inspectors") all pertinent financial and
other records, and pertinent corporate documents and properties of Plug Power
(collectively, the "Records"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause Plug Power's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to GEOSP and to other
Inspectors) of any Record or other information which Plug Power determines in
good faith to be confidential, and of which determination the Inspectors are
so notified, unless (a) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a subpoena or other order from
a court or government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement. Plug Power shall not
be required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to Plug Power)
with Plug Power with respect thereto, substantially in the form of this
Section 3(l). GEOSP agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to Plug Power and
allow Plug Power, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.
m. Plug Power shall hold in confidence and not make any disclosure of
information concerning GEOSP provided to Plug Power unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. Plug Power agrees that it shall,
upon learning that disclosure of such information concerning GEOSP is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to GEOSP and allow GEOSP, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.
6
<PAGE>
n. Plug Power shall either (i) cause all the Registrable Securities covered
by the Registration Statement to be listed on the New York Stock Exchange or
the American Stock Exchange and on each additional national securities
exchange on which securities of the same class or series issued by Plug Power
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange and Plug Power meets the objective
listing criteria of such exchange, or (ii) secure designation and quotation of
all the Registrable Securities covered by the Registration Statement on the
Nasdaq National Market or Nasdaq SmallCap Market, if the designation and
quotation of such Registrable Securities is then permitted under the rules of
the Nasdaq National Market or Nasdaq SmallCap Market, as the case may be, and
Plug Power meets the objective listing criteria of the Nasdaq National Market
or Nasdaq SmallCap Market, as the case may be.
o. Plug Power shall provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities, and shall provide CUSIP numbers
for the Registrable Securities, not later than the effective date of the
Registration Statement.
p. Plug Power shall cooperate with GEOSP and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be offered pursuant to
the Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing underwriter or
underwriters, if any, or GEOSP may reasonably request and registered in such
names as the managing underwriter or underwriters, if any, or GEOSP may
request. No later than the effective date of any Registration Statement
registering the resale of Registrable Securities, Plug Power shall deliver to
its transfer agent instructions, accompanied by any reasonably required
opinion of counsel, that permit sales of legended securities in a timely
fashion that complies with then mandated securities settlement procedures for
regular way market transactions.
q. Plug Power shall take all other reasonable actions necessary to expedite
and facilitate disposition by GEOSP of Registrable Securities pursuant to the
Registration Statement.
4. Obligations of Geosp.
In connection with the registration of the Registrable Securities, GEOSP
shall have the following obligations:
a. It shall be a condition precedent to the obligations of Plug Power to
complete the registration pursuant to this Agreement and to make payments
under Section 2(c) hereof with respect to the Registrable Securities of GEOSP
that GEOSP shall furnish to Plug Power such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and shall execute such
documents in connection with such registration as Plug Power may reasonably
request. At least five (5) days prior to the first anticipated filing date of
the Registration Statement, Plug Power shall notify GEOSP in writing of the
information Plug Power requires from GEOSP if it elects to have any of its
Registrable Securities included in the Registration Statement. GEOSP agrees to
notify Plug Power as promptly as practicable of any inaccuracy or change in
information previously furnished by GEOSP to Plug Power or of the occurrence
of any event in either case as a result of which any prospectus relating to
the registration contains or would contain an untrue statement of a material
fact regarding GEOSP or GEOSP's intended method of distribution of the
Registrable Securities or omits or would omit to state any material fact
regarding GEOSP or GEOSP's intended method of distribution of the Registrable
Securities required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and
promptly to furnish to Plug Power any additional information required to
correct and update any previously furnished information or required so that
the prospectus shall not contain, with respect to GEOSP or the distribution of
the Registrable Securities, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
b. GEOSP by its acceptance of the Registrable Securities agrees to
cooperate with Plug Power as reasonably requested by Plug Power in connection
with the preparation and filing of the Registration Statement
7
<PAGE>
hereunder, unless GEOSP has notified Plug Power in writing of its election to
exclude all of its Registrable Securities from the Registration Statement.
c. In the event GEOSP determines to engage the services of an underwriter,
GEOSP agrees to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable
Securities, unless GEOSP has notified Plug Power in writing of GEOSP's
election to exclude all of its Registrable Securities from the Registration
Statement.
d. GEOSP agrees that, upon receipt of any notice from Plug Power of the
happening of any event of the kind described in Section 3(g) or 3(h), GEOSP
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until GEOSP's
receipt of the copies of the supplemented or amended prospectus contemplated
by Section 3(g) or 3(h) and, if so directed by Plug Power, GEOSP shall deliver
to Plug Power (at the expense of Plug Power) or destroy (and deliver to Plug
Power a certificate of destruction) all copies in GEOSP's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
e. An Investor may not participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell its Registrable Securities
on the basis provided in any underwriting arrangements approved by such
Investor, (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii) agrees to pay its
pro rata share of all underwriting discounts and commissions.
5. Expenses of Registration.
All reasonable expenses (other than underwriting fees, discounts, selling
concessions and commissions) incurred in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for Plug Power, the
fees and disbursements of one counsel for GEOSP, and the costs incident to an
underwritten offering shall be borne by Plug Power, subject to Section 3(f)
hereof.
6. Indemnification.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, Plug Power will indemnify, hold harmless
and defend (i) each Investor who has Registrable Securities included in the
Registration Statement, (ii) the directors, officers and each person who
controls such Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), if any, and (iii) any
underwriter (as defined in the 1933 Act) for such Investor; and the directors,
officers and each person who controls any such underwriter within the meaning
of the 1933 Act or the 1934 Act, if any, (each, an "Indemnified Person"),
against any losses, claims, damages, liabilities or expenses (joint or
several) (collectively, "Claims") to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state a material fact therein
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if Plug Power files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading, or (iii) any violation or alleged violation by Plug
Power of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the
8
<PAGE>
offer or sale of the Registrable Securities pursuant to a Registration
Statement (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
6(d) with respect to the number of legal counsel, Plug Power shall reimburse
GEOSP and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i)
shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in
writing to Plug Power by any Indemnified Person or underwriter for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available to GEOSP by Plug Power pursuant to
Section 3(c) hereof; (ii) with respect to any preliminary prospectus, shall
not inure to the benefit of any such person from whom the person asserting any
such Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by Plug Power pursuant to Section 3(c)
hereof; (iii) shall not be available to the extent such Claim is based on a
failure of GEOSP to deliver or to cause to be delivered the prospectus made
available by Plug Power; and (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of Plug Power, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by GEOSP pursuant to
Section 9.
b. In connection with any Registration Statement in which an Investor is
participating, such Investor, severally and not jointly, agrees to indemnify,
hold harmless and defend, to the same extent and in the same manner set forth
in Section 6(a), Plug Power, each of its directors, each of its officers who
signs the Registration Statement, each person, if any, who controls Plug Power
within the meaning of the 1933 Act or the 1934 Act, any underwriter and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such stockholder
or underwriter within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an indemnified Person, an "Indemnified
Party"), against any Claim to which any of them may become subject, under the
1933 Act, the 1934 Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such violation occurs in reliance upon and in conformity with written
information furnished to Plug Power by such Investor expressly for use in
connection with such Registration Statement; and such Investor will reimburse
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that such Investor shall be
liable under this Section 6(b) for only that amount of a Claim as does not
exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by such Investor pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus
shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. Plug Power shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including
any governmental action), such Indemnified Person or Indemnified
9
<PAGE>
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume control
of the defense thereof with counsel mutually satisfactory to the indemnifying
party and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. Plug Power shall pay reasonable fees for only one separate legal
counsel for GEOSP, and such legal counsel shall be selected by GEOSP;
provided, that legal fees of such firm shall be reasonable. The failure to
deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in
its ability to defend such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
7. Contribution.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that (i)
no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount
of proceeds received by such seller from the sale of such Registrable
Securities.
8. Reports under the 1934 Act.
With a view to making available to holders of Registrable Securities the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule
or regulation of the SEC that may at any time permit GEOSP to sell securities
of Plug Power to the public without registration ("Rule 144"), Plug Power
agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents
required of Plug Power under the 1933 Act and the 1934 Act so long as Plug
Power remains subject to such requirements and the filing of such reports and
other documents is required for the applicable provisions of Rule 144; and
c. furnish to GEOSP so long as it owns Registrable Securities, promptly
upon request, (i) a written statement by Plug Power as to whether it has
complied with the current public information and reporting requirements of
Rule 144, the 1933 Act and the 1934 Act and (ii) such other information as may
be reasonably requested to permit GEOSP to sell such securities pursuant to
Rule 144 without registration.
9. Assignment of Registration Rights.
The rights to have Plug Power register Registrable Securities pursuant to
this Agreement shall be automatically assignable by GEOSP to any transferee of
all or any portion of Registrable Securities if: (i) GEOSP agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to Plug Power within a reasonable time after such
assignment, (ii) Plug Power is, promptly following such
10
<PAGE>
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned,
(iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted
under the 1933 Act and applicable state securities laws, (iv) at or before the
time Plug Power receives the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with Plug Power to
be bound by all of the obligations of GEOSP contained herein, and (v) in the
event the assignment occurs subsequent to the date of effectiveness of the
Registration Statement required to be filed pursuant to Section 2(a)(i), the
transferee agrees to pay all reasonable expenses of amending or supplementing
such Registration Statement to reflect such assignment. Until the requirements
of this Section 9 have been satisfied with respect to any transfer or
assignment, such transfer or assignment, as the case may be, will not be
effective and the proposed transferee or assignee will not be entitled to any
benefits of or rights under this Agreement.
10. Amendment of Registration Rights.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Plug Power
and GEOSP. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon GEOSP and Plug Power.
11. Miscellaneous.
a. A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
Plug Power receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, Plug
Power shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Notices. Any notices required or permitted to be given under the terms
of this Agreement shall be in writing and shall be deemed given (a) when
delivered personally, (b) five days after deposit, postage prepaid, if mailed
by registered or certified mail, return receipt requested, or (c) upon
transmission if transmitted by telex or facsimile (with an electronic
confirmation thereof to the transmitter). The addresses for such
communications shall be:
<TABLE>
<C> <S>
If to Plug Power: Plug Power Inc.
968 Albany-Shaker Road
Latham, New York 12110
Attn: Mr. Gary Mittleman Goodwin, Procter & Hoar LLP Exchange Place
Telecopy: (518) 782-7884 Boston, Massachusetts 02109
Attn: Robert P. Whalen, Jr., P.C.
Telecopy: (617) 523-1231
With a copy to: If to GEOSP: GE On-Site Power, Inc.
968 Albany-Shaker Road, Building 1
Latham, New York 12110
Attn: Mr. Barry Glickman
Telecopy: (518) 785-2831
With a copy to: Long Aldridge & Norman LLP
One Peachtree Center, Suite 5300
Atlanta, Georgia 30308
Jonathan H. Short, Esq.
Telecopy: (404) 527-4198
</TABLE>
11
<PAGE>
Each party shall provide notice to the other party of any change in
address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. In the event that any provision
of this Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
e. This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
g. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical counterparts,
each of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
PLUG POWER INC.
By: /s/ Gary Mittleman
-------------------------------------
Gary Mittleman
President and Chief Executive
Officer
GE ON-SITE POWER, INC.
By: /s/ Barry Glickman
-------------------------------------
Name: Barry Glickman
-------------------------------------
Its: President
-------------------------------------
12
<PAGE>
Exhibit 21.1
Schedule of Subsidiaries
As of December 31, 1999
Name State of Incorporation
Plug Power Holding Inc. Delaware
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-90275 and No. 333-90277) of Plug Power, Inc.
of our report dated February 8, 2000 relating to the financial statements,
which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Albany, New York
March 29, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PLUG POWER'S
BALANCE SHEETS AND STATEMENTS OF OPERATIONS, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 171,496,286
<SECURITIES> 0
<RECEIVABLES> 5,212,943
<ALLOWANCES> 0
<INVENTORY> 304,711
<CURRENT-ASSETS> 177,413,320
<PP&E> 25,110,262
<DEPRECIATION> (1,776,471)
<TOTAL-ASSETS> 216,125,635
<CURRENT-LIABILITIES> 8,201,797
<BONDS> 0
0
0
<COMMON> 430,155
<OTHER-SE> 200,976,379
<TOTAL-LIABILITY-AND-EQUITY> 216,125,635
<SALES> 0
<TOTAL-REVENUES> 11,000,344
<CGS> 0
<TOTAL-COSTS> 15,497,837
<OTHER-EXPENSES> 28,782,233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 189,586
<INCOME-PRETAX> (33,469,312)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,469,312)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,469,312)
<EPS-BASIC> (1.27)
<EPS-DILUTED> (1.27)
</TABLE>
