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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the fiscal year ended December 31, 2020
For the transition period from to
Commission file number: 1-34392
Plug Power Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or other Jurisdiction
of incorporation or organization)
Securities registered pursuant to Section 12(b) of the act:
22-3672377
(i.R.S. identification
number)
Title of Each Class
Common Stock, par value $.01 per share
Trading Symbol(s)
PluG
Name of Each Exchange on Which Registered
the naSdaQ Capital Market
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(g) of the Act: None
indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities act. Yes ☐No ☒
indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the act. Yes ☐ no ☒
indicate by 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 such 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 ☐ no ☒
indicate by check mark whether the registrant has submitted electronically every interactive data File required to be submitted pursuant to Rule 405 of Regulation S-t (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ no ☒
indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the exchange act.
large accelerated filer ☒ accelerated Filer ☐
non-accelerated filer ☐
Smaller reporting company ☐
emerging growth company ☐
if an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the exchange act. ☐
indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-oxley act (15 u.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒ no ☐
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the exchange act). Yes ☐ no ☒
the aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant was approximately $2,733,184,540 based on the last
reported sale of the common stock on the naSdaQ Capital Market on June 30, 2020, the last business day of the registrant's most recently completed second fiscal quarter.
as of May 6, 2021, 568,317,504 shares of the registrant’s common stock were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
none.
table of Contents
item 1.
item 1a.
item 1B.
item 2.
item 3.
item 4.
Business
Risk Factors
unresolved Staff Comments
Properties
legal Proceedings
Mine Safety disclosures
INDEX TO FORM 10-K
PART I
PART II
item 5.
Market for Registrant’s Common equity, Related Stockholder Matters and issuer Purchases of
item 6.
item 7.
item 7a.
item 8.
item 9.
item 9a.
item 9B.
item 10.
item 11.
item 12.
item 13.
item 14.
equity Securities
Selected Financial data
Management’s discussion and analysis of Financial Condition and Results of operations
Quantitative and Qualitative disclosures about Market Risk
Financial Statements and Supplementary data
Changes in and disagreements with accountants on accounting and Financial disclosure
Controls and Procedures
other information
PART III
directors, executive officers and Corporate Governance
executive Compensation
Security ownership of Certain Beneficial owners and Management and Related Stockholder Matters
Certain Relationships and Related transactions, and director independence
Principal accounting Fees and Services
PART IV
item 15.
item 16.
exhibits, Financial Statement Schedules
Form 10-K Summary
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General
Explanatory Note
References in this annual Report on Form 10-K to “Plug Power,” the “Company,” “we,” “our” or “us” refer to Plug Power inc.,
including as the context requires, its subsidiaries.
in this annual Report on Form 10-K, the Company:
● Restates its Consolidated Balance Sheet as of december 31, 2019 and the related Consolidated Statements of
operations, Consolidated Statements of Comprehensive loss, Consolidated Statements of Stockholders’ equity
(deficit), and Consolidated Statements of Cash Flows for the fiscal years ended december 31, 2019 and 2018;
● amends its Management’s discussion and analysis of Financial Condition and Results of operations (“Md&a”) as it
relates to the fiscal years ended december 31, 2019 and 2018;
● Restates its “Selected Financial data” in Part ii, item 6 for fiscal years 2019, 2018, 2017 and 2016; and
● Restates its unaudited Quarterly Financial Statements for the first three fiscal quarters in the fiscal year ended
december 31, 2020 and each fiscal quarter in the fiscal year ended december 31, 2019.
Restatement Background
as described in our Current Report on Form 8-K filed with the u.S. Securities and exchange Commission (“SeC”) on
March 16, 2021, the Company and the audit Committee of the Company’s Board of directors (the “audit Committee”)
concluded that, because of errors identified in the Company’s previously issued financial statements, the Company is restating its
financial statements as of and for the years ended december 31, 2019 and 2018 and for each of the quarterly periods ended
March 31, 2020 and 2019, June 30, 2020 and 2019, September 30, 2020 and 2019, in its Form 10-K for the year ended december
31, 2020 (collectively, the “Prior Period Financial Statements”). in addition, we have restated the statement of operations for the
three months ended december 31, 2019, which was previously disclosed as a note in its form 10-K for the year ended december
31, 2019.
these errors were identified after the Company reported its 2020 fourth quarter and year end results on February 25,
2021 during the course of the audit with respect to the Company’s financial statements for the year ended december 31, 2020, as
well as during preparation of this annual Report on Form 10-K. we have determined that these errors were the result of a
material weakness in internal control over financial reporting that is reported in management’s report on internal control over
financial reporting as of december 31, 2020 in Part ii, item 9a, “Controls and Procedures” of this annual Report on Form 10-K.
the restated financial statements as of and for the years ended december 31, 2019 and 2018 correct the following errors
(the “Restatement items”) (for impacts to the quarterly periods, see note 3, “unaudited Quarterly Financial data and Restatement
of Previously issued unaudited interim Condensed Consolidated Financial Statements”):
(a) $112.7 million overstatement of the right of use assets related to operating lease liabilities at december 31, 2019,
due to the Company incorrectly calculating the operating lease liability associated with certain sale/ leaseback
transactions;
(b)
($1.6) million understatement of benefit for loss contracts related to service on the Statement of operations for the
year ended december 31, 2019, inclusive of the partial release of the 2018 accrual to the cost of services performed
on fuel cells and related infrastructure, and a $5.3 million understatement of the provision for loss contracts for the
year ended december 31, 2018, due to the Company not properly estimating the loss accrual related to extended
maintenance contracts;
(c) $19.5 million and $21.2 million, overstatement of gross profit (loss) for the years ended december 31, 2019 and
2018, respectively, due to the Company not properly presenting certain costs related to research and development
activities and cost of revenues;
(d) $1.8 million recording of a deemed dividend for certain conversions of the Company’s Series e Convertible
Preferred Stock settled in common stock during the year ended december 31, 2019;
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(e) the Company determined that the amount recorded to accumulated deficit as of January 1, 2018 for a cumulative
adjustment of approximately $3.4 million was the correction of an error in prior lease accounting. as a result of the
correction of this error, the $3.4 million charge to accumulated deficit is now reflected in the beginning
accumulated deficit for the 12 months ended december 31, 2018; and
(f) $5.3 million understatement of bonus expense and related payroll taxes for the three months ended September 30,
2020, due to the Company not properly estimating bonus expense for the nine month period ended September 30,
2020.
in addition to the errors described above, the Prior Period Financial Statements also include adjustments to correct
certain other errors, including previously unrecorded immaterial adjustments identified in audits of prior years’ financial
statements (the “other adjustments”). the accounting for the Restatement items and the other adjustments in this annual
Report on Form 10-K does not materially impact revenue and does not impact cash and cash equivalents or the economics of the
Company’s existing or future commercial arrangements.
Restatement, Revision and Recasting of Previously Issued Consolidated Financial Statements
this annual Report on Form 10-K restates and revises amounts included in the Company’s previously issued financial
statements as of and for the years ended december 31, 2019 and 2018, and as of and for each of the quarterly periods ended
March 31, 2020 and 2019, June 30, 2020 and 2019, September 30, 2020 and 2019 and december 31, 2019.
See note 2, “Restatement of Previously issued Consolidated Financial Statements,” and note 3, “unaudited Quarterly
Financial data and Restatement of Previously issued unaudited interim Condensed Consolidated Financial Statements,” in Part
ii, item 8, “Financial Statements and Supplementary data” for additional information. to further review the effects of the
accounting errors identified and the restatement adjustments, see Part ii, item 7, “Management’s discussion and analysis of
Financial Condition and Results of operations” included in this annual Report on Form 10-K.
Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q for the periods affected by the
restatement have not been amended. accordingly, investors should no longer rely upon the Company’s previously
released financial statements for these periods and any earnings releases or other communications relating to these
periods, and, for these periods, investors should rely solely on the financial statements and other financial data for
the relevant periods included in this annual Report on Form 10-K. See note 3, “unaudited Quarterly Financial data and
Restatement of Previously issued unaudited interim Condensed Consolidated Financial Statements,” for the impact of these
adjustments on each of the first three quarters of fiscal 2019 and fiscal 2020. in addition, we have restated the statement of
operations for the three months ended december 31, 2019, which was previously disclosed as a note in Form 10-K for the year
ended december 31, 2019. Quarterly reports for fiscal 2021 will include restated results for the corresponding interim periods of
fiscal 2020.
Internal Control Considerations
in connection with the restatement, our management has assessed the effectiveness of our internal control over financial
reporting. Based on this assessment, management identified a material weakness in our internal control over financial reporting,
resulting in the conclusion by our Chief executive officer and Chief Financial officer that our internal control over financial
reporting and our disclosure controls and procedures were not effective as of december 31, 2020. Management is taking steps to
remediate the material weakness in our internal control over financial reporting, as described in Part ii, item 9a, “Controls and
Procedures.”
See Part ii, item 9a, “Controls and Procedures,” for additional information related to the identified material weakness in internal
control over financial reporting and the related remediation measures.
PART I
Forward-Looking Statements
the following discussion should be read in conjunction with our consolidated financial statements and notes thereto
included within this annual Report on Form 10-K. in addition to historical information, this annual Report on
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Form 10-K and the following discussion contain statements that are not historical facts and are considered forward-looking
within the meaning of Section 27a of the Securities act of 1933, as amended (the “Securities act”), and Section 21e of the
Securities exchange act of 1934, as amended (the “exchange act”). these forward-looking statements contain projections of our
future results of operations or of our financial position or state other forward-looking information. in some cases you can identify
these statements by forward-looking words such as “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,”
“may,” “should,” “will,” “would,” “plan,” “projected” or the negative of such words or other similar words or phrases. 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 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 not to unduly rely on forward-looking
statements because they involve risks and uncertainties, and actual results may differ materially from those discussed as a result
of various factors, including, but not limited to:
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the risk that we continue to incur losses and might never achieve or maintain profitability;
the risk that we will need to raise additional capital to fund our operations and such capital may not be available to us;
the risk of dilution to our stockholders and/or stock price should we need to raise additional capital;
the risk that our lack of extensive experience in manufacturing and marketing products may impact our ability to
manufacture and market products on a profitable and large-scale commercial basis;
the risk that unit orders may not ship, be installed and/or converted to revenue, in whole or in part;
the risk that a loss of one or more of our major customers, or if one of our major customers delays payment of or is
unable to pay its receivables, a material adverse effect could result on our financial condition;
the risk that a sale of a significant number of shares of stock could depress the market price of our common stock;
the risk that our convertible senior notes, if settled in cash, could have a material effect on our financial results;
the risk that our convertible note hedges may affect the value of our convertible senior notes and our common stock;
the risk that negative publicity related to our business or stock could result in a negative impact on our stock value and
profitability;
the risk of potential losses related to any product liability claims or contract disputes;
the risk of loss related to an inability to remediate the material weakness identified in internal control over financial
reporting as of december 31, 2020, or inability to otherwise maintain an effective system of internal control;
the risk that the determination to restate the Prior Period Financial Statements could negatively affect investor
confidence and raise reputational issues;
the risk of loss related to an inability to maintain an effective system of internal controls;
our ability to attract and maintain key personnel;
the risks related to the use of flammable fuels in our products;
the risk that pending orders may not convert to purchase orders, in whole or in part;
the cost and timing of developing, marketing and selling our products;
the risks of delays in or not completing our product development goals;
the risks involved with participating in joint ventures;
our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers;
our ability to successfully pursue new business ventures;
our ability to achieve the forecasted gross margin on the sale of our products;
the cost and availability of fuel and fueling infrastructures for our products;
the risks, liabilities, and costs related to environmental, health and safety matters;
the risk of elimination of government subsidies and economic incentives for alternative energy products;
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● market acceptance of our products and services, including Gendrive, GenSure and GenKey systems;
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our ability to establish and maintain relationships with third parties with respect to product development, manufacturing,
distribution and servicing, and the supply of key product components;
the cost and availability of components and parts for our products;
the risk that possible new tariffs could have a material adverse effect on our business;
our ability to develop commercially viable products;
our ability to reduce product and manufacturing costs;
our ability to successfully market, distribute and service our products and services internationally;
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our ability to improve system reliability for our products;
competitive factors, such as price competition and competition from other traditional and alternative energy companies;
our ability to protect our intellectual property;
the risk of dependency on information technology on our operations and the failure of such technology;
the cost of complying with current and future federal, state and international governmental regulations;
our subjectivity to legal proceedings and legal compliance;
the risks associated with past and potential future acquisitions; and
the volatility of our stock price.
the risks included here are not exhaustive, and additional factors could adversely affect our business and financial
performance, including factors and risks included in other sections of this annual Report on Form 10-K, including under item
1a, “Risk Factors”. Moreover, we operate in a very competitive and rapidly changing environment. new risk factors emerge
from time to time and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such
risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ
materially from these contained in any forward-looking statements. while forward-looking statements reflect our good faith
beliefs, they are not guarantees of future performance. these forward-looking statements speak only as of the date on which the
statements were made. except as may be required by applicable law, we do not undertake or intend to update any forward-
looking statements after the date of this annual Report on Form 10-K.
Summary of Risk Factors
the risk factors detailed in item 1a titled “Risk Factors” in this annual Report on Form 10-K are the risks that we
believe are material to our investors and a reader should carefully consider them. those risks are not all of the risks we face and
other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. the
following is a summary of the risk factors detailed in item 1a:
● our products and performance depend largely on the availability of hydrogen gas and an insufficient supply of hydrogen
could negatively affect our sales and deployment of our products and services;
● we will continue to be dependent on certain third-party key suppliers for components in our products and failure of a
supplier to develop and supply components in a timely manner or at all, or our inability to substitute sources of these
components on a timely basis or on terms acceptable to us, could impair our ability to manufacture our products or
increase our cost of production;
● Volatility in commodity prices and product shortages may adversely affect our gross margins;
● we depend on a concentration of anchor customers for the majority of our revenues and the loss of any of these
customers would adversely affect our business, financial condition, results of operations and cash flows;
● our ability to source parts and raw materials from our suppliers could be disrupted or delayed in our supply chain which
could adversely affect our results of operations;
● weakness in the economy, market trends and other conditions affecting the profitability and financial stability of our
customers could negatively impact our sales growth and results of operations;
● we face risks associated with our plans to market, distribute and service our products and services internationally.
● our investments in joint ventures may involve numerous risks that may affect the ability of such joint ventures to make
distributions to us;
● our products and services face intense competition and technological advances in alternative energy companies, battery
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systems or other fuel cell technologies may make our products less attractive or render them obsolete;
if we cannot obtain financing to support the sale of our products and service to customers or our power purchase
agreements with customers, such failure may adversely affect our liquidity and financial position;
● we may require additional capital funding and such capital may not be available to us;
● we have incurred losses and anticipate continuing to incur losses;
● our indebtedness could adversely affect our liquidity, financial condition and our ability to fulfill our obligations and
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operate our business;
the agreement governing our term loan Facility with Generate lending, llC contains covenant restrictions that may
limit our ability to operate our business;
● Convertible debt securities that may be settled in cash could have a material effect on our reported financial results;
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● we may not be able to expand our business or manage our future growth effectively;
● delays in or not completing our product development goals may adversely affect our revenue and profitability;
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● we are subject to counterparty risk with respect to the convertible note hedge transactions;
● Certain component quality issues have resulted in adjustments to our warranty reserves and the accrual for loss
the convertible note hedges may affect the value of our common stock;
contracts;
● our products use flammable fuels that are inherently dangerous substances and an actual or perceive problem with our
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products could adversely affect the market’s perception of our products;
if our unit orders do not ship, are not installed and/or converted to revenue, in whole or in part, we may have to
compensate customers, by either reimbursement, forfeiting portions of associated revenue, or other methods depending
on the terms of the customer contracts, which could have an adverse impact on our revenue and cash flow;
● we are dependent on information technology in our operations and the failure of such technology may adversely affect
our business;
● our future plans could be harmed if we are unable attract or retain key personnel;
● we may not be able to protect important intellectual property and we could incur substantial costs defending against
claims that our products infringe on the proprietary rights of others;
● we are subject to legal proceedings and legal compliance risks that could harm our business;
● our financial results may be adversely affected by changes in accounting principles generally accepted in the united
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if our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove
to be incorrect, our operating results could fall below expectations of investors, resulting in a decline in our stock price;
if we do not effectively remediate the material weakness identified in internal control over financial reporting as of
december 31, 2020, or if we otherwise fail to maintain an effective system of internal control, we may not be able to
accurately report our financial results or prevent fraud;
● our determination to restate the Prior Period Financial Statements as a result of the identification of accounting errors
may affect investor confidence and raise reputational issues;
● we are in the process of resolving SeC comments relating to our annual Report on Form 10-K for the fiscal year ended
december 31, 2019 and Form 8-K filed with the SeC on november 9, 2020 regarding certain accounting and financial
disclosure matters, which could possibly result in changes in our existing accounting and financial disclosure;
the reduction or elimination of government subsidies and economic incentives for alternative energy technologies, or
the failure to renew such subsidies and incentives, could reduce demand for our products, lead to a reduction in our
revenues and adversely impact our operating results and liquidity re may be a risk of;
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● we are subject to various federal, state and local environmental and human health and safety laws and regulations that
could impose significant costs and liabilities on us;
trade policies, treaties and tariffs could have a material adverse effect on our business;
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● our business may become subject to increased government regulation;
● Changes in tax laws or regulations or adverse outcomes resulting from examination of our income or other tax returns
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could adversely affect our operating results and financial condition;
the changes in the carryforward/carryback periods as well as the new limitations on use of net operating losses may
significantly impact our valuation allowance assessments for net operating losses;
● we may be unable to establish or maintain relationships with third parties for certain aspects of continued product
developments, manufacturing, distribution and servicing and the supply of key components for our products;
● we may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and
any ability to do so may disrupt our business and hinder our ability to grow, divert the attention of key personnel,
disrupt our business and impair our financial results;
● we may be unable to successfully pursue new business ventures;
● our stock price and stock trading volume have been and could remain volatile, and the value of your investment could
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decline;
Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur,
could reduce the price that our common stock might otherwise attain and may dilute your voting power and your
ownership interest in us;
if securities analysts do not publish research or reports or if they publish unfavorable or inaccurate research about our
business and our stock, the price of our stock and the trading volume could decline;
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Provisions in our charter documents and delaware law may discourage or delay an acquisition of the Company by a
third party that stockholders may consider favorable;
● we do not anticipate paying any dividends on our common stock; and
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the choice of forum provisions in our amended and restated bylaws may limit a stockholder’s ability to bring a claim in
a judicial forum that it finds favorable for disputes with us or any of our current or former director, officer, other
employee, agent, or stockholder.
Item 1. Business
Background
as a leading provider of comprehensive hydrogen fuel cell turnkey solutions, Plug Power is driving the hydrogen
economy. the Company is focused on green hydrogen (hydrogen fuel produced using renewable resources and electrolysis) and
fuel cell solutions used to power electric motors primarily in the electric mobility and stationary power markets, responding to the
ongoing paradigm shift in the power, energy, and transportation industries to address climate change and energy security and to
meet sustainability goals. Plug Power created the first commercially viable market for hydrogen fuel cell. the Company has
deployed over 40,000 fuel cell systems and accelerated its vertical integration through acquisitions, making it a global leader in
green hydrogen solutions.
we are focused on proton exchange membrane (“PeM”), fuel cell and fuel processing technologies, fuel cell/battery
hybrid technologies, and associated hydrogen and green hydrogen generation, storage and dispensing infrastructure. a fuel cell is
an electrochemical device that combines hydrogen and oxygen to produce electricity and heat without combustion.
Plug Power delivers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics
applications, on-road electric vehicles, the stationary power market, and more. our largest market today is material handling; we
support customers at multi-shift high volume manufacturing and high throughput distribution sites where we believe our products
and services provide a unique combination of productivity, flexibility, and environmental benefits. in June 2020, Plug Power
completed the acquisitions of united hydrogen Group inc. (“uhG”) and Giner elX, inc. (“Giner elX”), in line with the
Company’s vertical integration strategy. these acquisitions further enhance Plug Power’s position in the hydrogen industry, with
capabilities in generation, liquefaction and distribution of hydrogen fuel, complementing the Company’s industry-leading
position in the design, construction, and operation of customer-facing hydrogen fueling stations. these acquisitions establish a
pathway for Plug Power to transition from low-carbon to zero-carbon hydrogen solutions.
additionally, we manufacture and sell fuel cell products to replace batteries and diesel generators in stationary backup
power applications. these products have proven valuable with telecommunications, transportation, and utility customers as
robust, reliable, and sustainable power solutions.
we were organized as a corporation in the State of delaware on June 27, 1997.
unless the context indicates otherwise, the terms “Company,” “Plug Power,” “we,” “our” or “us” as used herein refer to
Plug Power inc. and its subsidiaries.
Business Strategy
Plug Power is a leading provider of cost-effective, reliable, clean hydrogen and zero-emission fuel cell solutions. we are
committed to developing effective, economical, and reliable fuel cell related products, systems and services allowing users to
operate sustainably, consistently, and efficiently. Building on our substantial fuel cell application and product integration
experience, we are focused on generating strong relationships with customers who value high-asset utilization, increased
reliability, efficiency, and zero-emission power solutions.
our business strategy leverages our unique fuel cell application and integration knowledge to identify high-asset
utilization markets in an increasingly electrified world, for which we seek to design and develop innovative systems and customer
solutions that provide superior value, ease-of-use and environmentally-friendly design.
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our primary marketing strategy is to focus our resources on high growth markets such as on-road/e-mobility
applications as well as material handling, supply chain/logistics and stationary power around the world. through established
customer relationships, we have proven ourselves as a trusted partner with a reliable hydrogen and fuel cell solution. Plug
Power’s vertically integrated GenKey solution ties together all critical elements to power, fuel, and service customers such as
amazon, the home depot, the Southern Company, BMw, Carrefour, and walmart. we have made significant progress in
penetrating the material handling market, supported through the deployment of over 40,000 Gendrive units into commercial
applications. we believe we have developed reliable products which allow the end customers to eliminate incumbent lead-acid
battery power sources from their operations and realize their sustainability objectives through adoption of zero-emission clean
energy alternatives. in addition, we have deployed our GenKey hydrogen and fuel cell solution to multiple customer sites.
we have an established foundation as a major player in the green hydrogen economy – needing not only the fuel cell
systems but the ability to generate green hydrogen. we expect that Plug Power green hydrogen generation plants will be among
the first green hydrogen generation networks in north america, with plans to expand globally.
we expect to leverage our manufacturing prowess at our Rochester innovation Center, which is currently under
development, and will serve as Plug Power's fuel cell and electrolyzer gigafactory, driving industry scale in manufacturing.
our operating strategy objectives include decreasing product and service costs, and expanding system reliability.
our longer-term strategic objectives are to deliver economic, social, and environmental benefits in terms of reliable,
clean, cost-effective fuel cell solutions and, ultimately, productivity.
we believe continued investment in research and development is critical to the development and enhancement of
innovative products, technologies, and services. in addition to evolving our direct hydrogen fueled systems, we continue to
capitalize on our investment and expertise in power electronics, controls, and software design.
we continue to develop and monitor future fuel cell solutions that align with our evolving product roadmap. By
leveraging our current Gendrive architecture, we are continuously evaluating adjacent markets such as ProGen electric vehicles,
ground support equipment and further expansion in on-road fuel cell vehicles.
Business Organization
we manage our business as a single operating segment, emphasizing shared learning across end-user applications and
common supplier/vendor relationships.
Products and Services
Plug Power is facilitating the paradigm shift to an increasingly electrified world by innovating cutting-edge hydrogen
and fuel cell solutions. in our core business, we provide and continue to develop commercially-viable hydrogen and fuel cell
product solutions to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some of the world’s
largest retail-distribution and manufacturing businesses. we are focusing our efforts on industrial mobility applications, including
electric forklifts and electric industrial vehicles, at multi-shift high volume manufacturing and high throughput distribution sites
where we believe our products and services provide a unique combination of productivity, flexibility, and environmental benefits.
additionally, we manufacture and sell fuel cell products to replace batteries and diesel generators in stationary backup power
applications. these products have proven valuable with telecommunications, transportation, and utility customers as robust,
reliable, and sustainable power solutions.
Part of our long-term plan includes Plug Power penetrating the on-road vehicle market and large-scale stationary
market. Plug Power’s announcements to form joint ventures with Renault in europe and SK Group in asia not only support this
goal but are expected to provide us with a more global footprint. Plug has been successful with acquisitions, strategic partnerships
and joint ventures, and we plan to continue this mix. For example, we expect our relationships with Brookfield and apex to
provide us access to low-cost renewable energy, which is critical to low-cost green hydrogen.
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our current products and services include:
Gendrive: Gendrive is our hydrogen fueled PeM fuel cell system providing power to material handling electric
vehicles, including class 1, 2, 3 and 6 electric forklifts, automated Guided Vehicles (“aGVs”) and ground support
equipment;
GenFuel: GenFuel is our liquid hydrogen fueling delivery, generation, storage, and dispensing system;
GenCare: GenCare is our ongoing ‘internet of things’-based maintenance and on-site service program for Gendrive fuel
cell systems, GenSure fuel cell systems, GenFuel hydrogen storage and dispensing products and ProGen fuel cell
engines;
GenSure: GenSure is our stationary fuel cell solution providing scalable, modular PeM fuel cell power to support the
backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; GenSure
high Power Fuel Cell Platform will support large scale stationary power and data center markets;
GenKey: GenKey is our vertically integrated “turn-key” solution combining either Gendrive or GenSure fuel cell power
with GenFuel fuel and GenCare aftermarket service, offering complete simplicity to customers transitioning to fuel cell
power;
ProGen: ProGen is our fuel cell stack and engine technology currently used globally in mobility and stationary fuel cell
systems, and as engines in electric delivery vans. this includes the Plug Power membrane electrode assembly (“Mea”),
a critical component of the fuel cell stack used in zero-emission fuel cell electric vehicle engines; and
GenFuel electrolyzers: GenFuel electrolyzers are modular, scalable hydrogen generators optimized for clean hydrogen
production. electrolyzers generate hydrogen from water using electricity and a special membrane and “green” hydrogen
is generated by using renewable energy inputs, such as solar or wind power.
we provide our products worldwide through our direct product sales force, and by leveraging relationships with original
equipment manufacturers (“oeMs”) and their dealer networks. Plug Power is targeting asia and europe for expansion in
adoption. europe has rolled out ambitious targets for the hydrogen economy and Plug Power is executing on its strategy to
become one of the european leaders. this includes a targeted account strategy for material handling as well as securing strategic
partnerships with european oeMs, energy companies, utility leaders and accelerating our electrolyzer business. we manufacture
our commercially viable products in latham, new York, Rochester, new York and Spokane, washington and support liquid
hydrogen generation and logistics in Charleston, tennessee.
Markets/Geography & Order Status
the Company’s products and services predominantly serve the north american and european material handling
markets, and primarily support large to mid-sized fleet, multi-shift operations in high-volume manufacturing and high-throughput
distribution centers. Based on recent market experience, it appears there may be some seasonality to sales stemming from varied
customer appropriation cycles.
orders for the Company’s products and services approximated $367.4 million at december 31, 2020. the Company’s
orders at any given time are comprised of fuel cells, hydrogen installations, maintenance services, and hydrogen fuel deliveries.
the specific elements of the orders will vary in terms of timing of delivery and can vary between 90 days to 10 years, with fuel
cells and hydrogen installations being delivered near term and maintenance services and hydrogen fuel deliveries being delivered
over a longer period of time. historically, shipments made against product orders have generally occurred between ninety days
and twenty-four months from the date of acceptance of the order.
on december 31, 2020, the Company waived the remaining vesting conditions under the warrant that was issued to
amazon.com nV investment holdings llC, a wholly owned subsidiary of amazon.com inc. (“amazon”), in april 2017 (the
“amazon warrant”), which resulted in a reduction to revenue of $399.7 million, resulting in negative consolidated revenue of
$93.2 million for the year ended december 31, 2020. See note 18, “warrant transaction agreements” to the consolidated
financial statements for further information. total revenue in 2020 for this customer was negative $310.1 million. For the year
ended december 31, 2020, this customer accounted for (332.4)% of our total
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consolidated revenues which included a provision for warrant charge of $420.0 million, which was recorded as a reduction of
revenue. additionally, 156.2% of our total consolidated revenues were associated primarily with two other customers. For the
years ended 2019 and 2018, 49.7% and 66.8%, respectively, of our total consolidated revenues were associated primarily with
two customers. For purposes of assigning a customer to a sale/leaseback transaction completed with a financial institution, the
Company considers the end user of the assets to be the ultimate customer. a loss or decline in business with any of these
customers could have an adverse impact on our business, financial condition, and results of operations.
we assemble our products at our manufacturing facilities in latham, new York, Rochester, new York and Spokane,
washington, and provide our services and installations at customer locations and service centers in Romeoville, illinois and
dayton, ohio. in addition, we have a hydrogen production plant in Charleston, tennessee.
Working Capital Items
we currently maintain inventory levels adequate for our short-term needs based upon present levels of production. we
consider the component parts of our different products to be generally available and current suppliers to be reliable and capable
of satisfying anticipated needs.
Distribution, Marketing and Strategic Relationships
we have developed strategic relationships with well-established companies in key areas including distribution, service,
marketing, supply, technology development and product development. we sell our products worldwide, with a primary focus on
north america, europe, and asia, through our direct product sales force, oeMs, and their dealer networks. we operate in europe
under the name hyPulsion, to develop and sell hydrogen fuel cell systems for the european material handling market.
Environmental Issues
no significant pollution or other types of hazardous emission result from the Company’s operations and it is not
anticipated that our operations will be materially affected by federal, state, or local provisions concerning environmental
controls. our costs of complying with environmental, health and safety requirements have not been material.
we do not believe that existing or pending climate change legislation, regulation, or international treaties or accords are
reasonably likely to have a material effect in the foreseeable future on our business or markets that we serve, nor on our results of
operations, capital expenditures or financial position. we will continue to monitor emerging developments in this area.
Competition
we experience competition in all areas of our business. the markets we address for motive and backup power are
characterized by the presence of well-established battery and combustion generator products. we believe the principal
competitive factors in the markets in which we operate include product features, including size and weight, relative price and
performance, lifetime operating cost, including any maintenance and support, product quality and reliability, safety, ease of use,
rapid integration with existing equipment and processes, customer support design innovation, marketing and distribution
capability, service and support and corporate reputation.
Intellectual Property
we believe that neither we nor our competitors can achieve a significant proprietary position on the basic technologies
currently used in PeM fuel cell systems. however, we believe the design and integration of our system and system components,
as well as some of the low-cost manufacturing processes that we have developed, are intellectual property that can be protected.
our intellectual property portfolio covers, 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
system life; and control strategies, such as added safety protections and operation under extreme conditions. in general, our
employees are party to agreements providing that all inventions, whether patented or not, made or conceived while being our
employee, which are related to or result from work or research that we perform, will remain our sole and exclusive property.
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we have a total of 120 issued patents currently active with the united States Patent and trademark office (“uSPto”)
and at the close of 2020, we had six u.S. patent applications pending. additionally, we have 20 trademarks registered with the
uSPto and two trademark applications pending.
Government Regulation
our products, their installations and the operations at our facilities are subject to oversight and regulation at the federal,
state and local level in accordance with statutes and ordinances relating to, among others, building codes, fire codes, public
safety, electrical and gas pipeline connections and hydrogen siting. the level of regulation may depend, in part, upon where a
system is located.
in addition, product safety standards have been established by the american national Standards institute (“anSi”),
covering the overall fuel cell system. the class 1, 2 and 3 Gendrive products are designed with the intent of meeting the
requirements of ul 2267 “Fuel Cell Power Systems for installation in industrial electric trucks” and nFPa 505 “Fire Safety
Standard for Powered industrial trucks.” the hydrogen tanks used in these systems have been either certified to anSi/CSa
nGV2-2007 “Compressed natural Gas Vehicle Fuel Containers” or iSo/tS 15869 “Gaseous hydrogen and hydrogen blends—
land vehicle fuel tanks.” we will continue to design our Gendrive products to meet anSi and/or other applicable standards. we
certified several models of Class 1, 2 and 3 Gendrive products to the requirements of the Ce mark with guidance from a
european certified body. the hydrogen tanks used in these systems are certified to the Pressure equipment directive by a
european certified body.
the GenFuel hydrogen storage and dispensing products are designed with the intent of meeting the requirements of
nFPa 2 “hydrogen technologies Code.”
other than these requirements, at this time we do not know what additional requirements, if any, each jurisdiction will
impose on our products or their installation. we also do not know the extent to which any new regulations may impact our ability
to distribute, install and service our products. as we continue distributing our systems to our target markets, the federal, state,
local or foreign government entities may seek to impose regulations or competitors may seek to influence regulations through
lobbying efforts.
See item 1a, “Risk Factors,” for a discussion of these governmental regulations and other material risks to us,
including, to the extent material, to our competitive position.
Raw Materials and Suppliers
Most components essential to our business are generally available from multiple sources. we believe there are
component suppliers and manufacturing vendors whose loss to us could have a material adverse effect upon our business and
financial condition. we are mitigating these potential risks by introducing alternate system architectures which we expect will
allow us to diversify our supply chain with multiple fuel cell stack and air supply component vendors. we are also working
closely with these vendors and other key suppliers on coordinated product introduction plans, strategic inventories, and internal
and external manufacturing schedules and levels. historically, we have not experienced significant delays in the supply or
availability of our key raw materials or components provided by our suppliers, nor have we experienced a significant price
increase for raw materials or components.
Research and Development
Because the fuel cell industry is still in the early state of adoption, our ability to compete successfully is heavily
dependent upon our ability to ensure a continual and timely flow of competitive products, services, and technologies to the
marketplace. we continue to develop new products and technologies and to enhance existing products in the areas of cost, size,
weight, and in supporting service solutions in order to drive further commercialization.
we reviewed the composition of our research and development expenses and corrected errors in the presentation of
these expenses (See note 2, “Restatement of Previously issued Consolidated Financial Statements” and note 3, “unaudited
Quarterly Financial data and Restatement of Previously issued unaudited interim Condensed Consolidated Financial
Statements”). we may also expand the range of our product offerings and intellectual property through licensing and/or
acquisition of third-party business and technology. our research and development expense totaled $27.8 million,
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$15.1 million, and $12.8 million during the years ended december 31, 2020, 2019, and 2018, respectively, as restated. we also
had cost of research and development contract revenue of $0, $0.2 million, and $0 during the years ended december 31, 2020,
2019, and 2018, respectively, as restated. these expenses represent the cost of research and development programs that are
partially funded under cost reimbursement research and development arrangements with third parties and are reported within
other cost of revenue on the consolidated statements of operations.
Employees and Human Capital Resources
as of december 31, 2020, we had 1,285 employees, with 1,253 located in the united States and 32 located outside of
the united States, as well as 300 temporary employees. in order to facilitate talent attraction and retention, we strive to make Plug
Power a safe, rewarding, and challenging workplace with competitive salaries.
our employees are critical to the Company’s growth, expansion and success, and we consider our relationship with our
employees to be positive. the Company is dedicated to fostering a culture of diversity and committed to hiring talented
individuals from all backgrounds and perspectives to which the Company’s ultimate success is linked.
COVID 19 Health Measures
in response to the CoVid-19 pandemic, we implemented measures to help ensure the health, safety, and security of our
employees, while constantly monitoring the rapidly evolving situation and adapting our efforts and responses. we are
endeavoring to follow guidance from authorities and health officials. this includes having the majority of our back-office
employees work remotely, imposing travel restrictions and implementing safety measures for employees continuing critical on-
site work including, but not limited to, social distancing practices, temperature checks, health symptoms attestations when
entering our facilities, and the use of personal protective equipment as appropriate and in accordance with local laws and
regulations. our system and production facilities have also implemented additional cleaning and sanitization routines and split
shifts to ensure that we can continue to keep our brands in supply.
Diversity
the Company is committed to promoting and supporting diversity. the Company believes that behaving inclusively is
the right thing to do. the Company also believes that hearing different voices, seeking different perspectives and ideas, leads to
better results. the Company stives to promote diversity on its Board of directors (the “Board” or “Board of directors”) and in
leadership roles throughout the Company. Currently, two of the Company’s 10 directors are female. the Company’s
commitment to diversity throughout the organization is further enhanced by policies related to various aspects of employment,
including but not limited to, recruiting, selecting, hiring employment placement, job assignment, compensation, access to
benefits, selection for training, use of facilities and participation in Company-sponsored employee activities.
Performance Management and Incentives
our full-year performance management process begins with setting annual goals for the Company, which guide the
development of functional and individual employee goals. employees and their managers are accountable for goals and must
review performance against the goals on an ongoing basis. we provide employee base wages that are competitive and consistent
with employee positions, skill levels, experience, and location. additionally, we believe that individual performance and the
results of the Company are directly linked to payment of annual short-term incentive compensation. employees may also be
granted equity compensation awards with multi-year vesting for retention.
Compensation and Benefits
in addition to salaries, the Company also offers compensation and benefits programs such as: potential annual
discretionary bonuses, stock awards, a 401(k) Savings & Retirement Plan, healthcare and insurance benefits, health savings and
flexible spending accounts, paid time off and flexible work schedules, among others. we offer comprehensive health, welfare and
retirement benefit. we also offer supplemental benefits programs designed to enhance the daily life and well-being of our
employees, including wellness and paid time-off.
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the Company believes that identifying and developing the next generation of business leaders is important to its long-
term success, and is proud to support it employees in furthering their education with tuition reimbursement plans and training.
Financial Information About Geographic Areas
Please refer to our Geographic information included in our consolidated financial statements and notes thereto included
in Part ii, item 8, “Financial Statements and Supplementary data” of this annual Report on Form 10-K.
Available Information
our annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the exchange act are available free of charge, other than an
investor’s own internet access charges, on the Company’s website at www.plugpower.com as soon as reasonably practicable after
the Company electronically files such material with, or furnishes it to, the SeC. the information contained on our website is not
included as a part of, or incorporated by reference into, this annual Report on Form 10-K. the SeC also maintains an internet
site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SeC. the SeC’s website address is http://www.sec.gov.
Item 1A. Risk Factors
the following risk factors should be considered carefully in addition to the other information in this annual Report on
Form 10-K. the occurrence of any of the following material risks could harm our business and future results of operations and
could result in the trading price of our common stock declining and a partial or complete loss of your investment. these risks are
not the only ones that we face. additional risks not presently known to us or that we currently consider immaterial may also
impair our business operations and trading price of our common stock. the discussion contained in this annual Report on
Form 10-K contains “forward-looking statements” within the meaning of Section 27a of the Securities act and Section 21e of
the exchange act, that involve risks and uncertainties. Please refer to the section entitled “Forward-looking Statements.”
A. MARKET RISKS
Our products and performance depend largely on the availability of hydrogen gas and an insufficient supply of hydrogen
could negatively affect our sales and deployment of our products and services.
our products and services depend largely on the availability of hydrogen gas. we are dependent upon hydrogen
suppliers for success with the profitable commercialization of our products and services. if these fuels are not readily available or
if their prices are such that energy produced by our products costs more than energy provided by other sources, then our products
could be less attractive to potential users and our products’ value proposition could be negatively affected. if hydrogen suppliers
elect not to participate in the material handling market, there may be an insufficient supply of hydrogen for this market that could
negatively affect our sales and deployment of our products and services.
We will continue to be dependent on certain third-party key suppliers for components in our products. The failure of a
supplier to develop and supply components in a timely manner or at all, or our inability to obtain substitute sources of these
components on a timely basis or on terms acceptable to us, could impair our ability to manufacture our products or could
increase our cost of production.
we rely on certain key suppliers for critical components in our products, and there are numerous other components for
our products that are sole sourced. if we fail to maintain our relationships with our suppliers or build relationships with new
suppliers, or if suppliers are unable to meet our demand, we may be unable to manufacture our products, or our products may be
available only at a higher cost or after a delay. in addition, to the extent that our supply partners use technology or manufacturing
processes that are proprietary, we may be unable to obtain comparable components from alternative sources.
the failure of a supplier to develop and supply components in a timely manner or at all, or to develop or supply
components that meet our quality, quantity and cost requirements, or our inability to obtain substitute sources of these
components on a timely basis or on terms acceptable to us, could impair our ability to manufacture our products or could
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increase our cost of production. if we cannot obtain substitute materials or components on a timely basis or on acceptable terms,
we could be prevented from delivering our products to our customers within required timeframes. any such delays could result
in sales and installation delays, cancellations, penalty payments or loss of revenue and market share, any of which could have a
material adverse effect on our business, results of operations, and financial condition.
We depend on a concentration of anchor customers for the majority of our revenues and the loss of any of these customers
would adversely affect our business, financial condition, results of operations and cash flows.
we sell most of our products to a range of customers that include a few anchor customers, and while we are continually
seeking to expand our customer base, we expect this will continue for the next several years. on december 31, 2020, the
Company waived the vesting conditions under the amazon warrant, which resulted in a reduction in revenue of $399.7 million,
resulting in negative consolidated revenue of $93.2 million for the year ended december 31, 2020. See note 18, “warrant
transaction agreements” to the consolidated financial statements for further information. total revenue in 2020 for this customer
was negative $310.1 million. For the year ended december 31, 2020, this customer accounted for (332.4)% of our total
consolidated revenues which included a provision for warrant charge of $420.0 million, which was recorded as a reduction of
revenue. additionally, 156.2% of our total consolidated revenues were associated primarily with two other customers. For the
year ended december 31, 2019 and 2018, 49.7% and 66.8% of our total consolidated revenues were associated primarily with
two customers, respectively. any decline in business with significant customers could have an adverse impact on our business,
financial condition, and results of operations. our future success is dependent upon the continued purchases of our products by a
small number of customers. if we are unable to broaden our customer base and expand relationships with potential customers, our
business will continue to be impacted by demand fluctuations due to our dependence on a small number of customers. demand
fluctuations can have a negative impact on our revenues, business, financial condition, results of operations and cash flows. our
dependence on a small number of major customers exposes us to additional risks. a slowdown, delay or reduction in a
customer’s orders could result in excess inventories or unexpected quarterly fluctuations in our operating results and liquidity.
each of our major customers has significant purchasing leverage over us to require changes in sales terms including pricing,
payment terms and product delivery schedules, which could adversely affect our business, financial condition, results of
operations and cash flows. at december 31, 2020, three customers comprised approximately 73.9% of the total accounts
receivable balance. at december 31, 2019, two customers comprised approximately 62.6% of the total accounts receivable
balance. if one of our major customers delays payment of or is unable to pay their receivables, that could have a material adverse
effect on our business, financial condition, results of operations and cash flows.
Volatility in commodity prices and product shortages may adversely affect our gross margins.
Some of our products contain commodity-priced materials. Commodity prices and supply levels affect our costs. For
example, platinum is a key material in our PeM fuel cells. Platinum is a scarce natural resource, and we are dependent upon a
sufficient supply of this commodity.
any shortages could adversely affect our ability to produce commercially viable fuel cell systems and significantly raise
our cost of producing our fuel cell systems. while we do not anticipate significant near- or long-term shortages in the supply of
platinum, a shortage could adversely affect our ability to produce commercially viable PeM fuel cells or raise our cost of
producing such products. our ability to pass on such increases in costs in a timely manner depends on market conditions, and the
inability to pass along cost increases could result in lower gross margins.
Our ability to source parts and raw materials from our suppliers could be disrupted or delayed in our supply chain which
could adversely affect our results of operations.
our operations require significant amounts of necessary parts and raw materials. we deploy a continuous, companywide
process to source our parts and raw materials from fewer suppliers, and to obtain parts from suppliers in low-cost countries where
possible. if we are unable to source these parts or raw materials, our operations may be disrupted, or we could experience a delay
or halt in certain of our manufacturing operations. we believe that our supply management and production practices are based on
an appropriate balancing of the foreseeable risks and the costs of alternative practices. nonetheless, reduced availability or
interruption in supplies, whether resulting from more stringent regulatory requirements, supplier financial condition, increases in
duties and tariff costs, disruptions in transportation, an outbreak of a severe public health pandemic, such as the CoVid-19
pandemic, severe weather, or the occurrence or threat of wars or other conflicts, could have an adverse effect on our financial
condition, results of operations and cash flows.
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Weakness in the economy, market trends and other conditions affecting the profitability and financial stability of our
customers could negatively impact our sales growth and results of operations.
the demand for our products and services is sensitive to the production activity, capital spending and demand for
products and services of our customers. Many of our customers operate in markets that are subject to cyclical fluctuations
resulting from market uncertainty, trade and tariff policies, costs of goods sold, currency exchange rates, central bank interest rate
changes, foreign competition, offshoring of production, oil and natural gas prices, geopolitical developments, labor shortages,
inflation, deflation, and a variety of other factors beyond our control. any of these factors could cause customers to idle or close
facilities, delay purchases, reduce production levels, or experience reductions in the demand for their own products or services.
any of these events could also reduce the volume of products and services these customers purchase from us or impair
the ability of our customers to make full and timely payments and could cause increased pressure on our selling prices and terms
of sale. accordingly, a significant or prolonged slowdown in activity in the united States or any other major world economy, or a
segment of any such economy, could negatively impact our sales growth and results of operations.
We face risks associated with our plans to market, distribute and service our products and services internationally.
we have begun to market, distribute, sell and service our product offerings internationally and expect to continue
investing in our international operations. we have limited experience operating internationally, including developing and
manufacturing our products to comply with the commercial and legal requirements of international markets. our success in
international markets will depend, in part, on our ability and that of our partners to secure relationships with foreign sub-
distributors, and our ability to manufacture products that meet foreign regulatory and commercial requirements. additionally, 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 could be adversely affected due to fluctuations in currency
exchange rates, political and economic instability, acts or threats of terrorism, changes in governmental policies or policies of
central banks, expropriation, nationalization and/or confiscation of assets, price controls, fund transfer restrictions, capital
controls, exchange rate controls, taxes, unfavorable political and diplomatic developments, changes in legislation or regulations
and other additional developments or restrictive actions over which we will have no control.
doing business in foreign markets requires us to be able to respond to rapid changes in market, legal, and political
conditions in these countries. as we expand in international markets, we may face numerous challenges, including unexpected
changes in regulatory requirements; potential conflicts or disputes that countries may have to deal with; required compliance with
anti-bribery laws, such as the u.S. Foreign Corrupt Practices act or the uK anti-Bribery act of 2010, data privacy requirements,
labor laws and anti-competition regulations; export or import restrictions; laws and business practices favoring local companies;
fluctuations in currency exchange rates; longer payment cycles and difficulties in collecting accounts receivables; difficulties in
managing international operations; potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and
other trade barriers; restrictions on repatriation of earnings and the burdens of complying with a wide variety of international
laws. any of these factors could adversely affect our results of operations and financial condition. the success of our
international expansion will depend, in part, on our ability to succeed in navigating the different legal, regulatory, economic,
social, and political environments. For example, in June 2016, voters in the united Kingdom approved a reference to withdraw
the united Kingdom’s membership from the european union, which is commonly known as “Brexit.” the united Kingdom
formally left the european union on January 31, 2020, but the united Kingdom remained in the european union’s customs union
and single market for a transition period that expired on december 31, 2020. on december 24, 2020, the united Kingdom and
the european union entered into a trade and Cooperation agreement which was applied on a provisional basis from January 1,
2021. while the economic integration does not reach the level that existed during the time the united Kingdom was a member
state of the european union, the trade and Cooperation agreement sets out preferential arrangements in areas such as trade in
goods and in services, digital trade and intellectual property. negotiations between the united Kingdom and the european
union are expected to continue in relation to the relationship between the united Kingdom and the european union in certain
other areas which are not covered by the trade and Cooperation agreement. the long term effects of Brexit will depend on the
effects of the implementation and application of the trade and Cooperation agreement and any other relevant agreements
between the united Kingdom and the european union. we cannot predict the effect of Brexit nor do we have control over
whether and to which effect any other member state will decide to exit the european union
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in the future. these developments, as well as potential crises and forms of political instability arising therefrom or any other as of
yet unforeseen development, may harm our business.
Our investments in joint ventures may involve numerous risks that may affect the ability of such joint ventures to make
distributions to us.
in the future we plan to conduct some of our operations through joint ventures in which we share control with our joint
venture participants. our joint venture participants may have economic, business or legal interests or goals that are inconsistent
with ours, or those of the joint venture. Furthermore, our joint venture participants may be unable to meet their economic or other
obligations, and we may be required to fulfill those obligations alone. Failure by us, or an entity in which we have a joint venture
interest, to adequately manage the risks associated with such joint ventures could have a material adverse effect on the financial
condition or results of operations of our joint ventures and, in turn, our business and operations. in addition, should any of these
risks materialize, it could have a material adverse effect on the ability of the joint venture to make future distributions to us.
Our products and services face intense competition.
the markets for energy products are intensely competitive. Some of our competitors in the motive power sector
(predominantly incumbent technologies) are much larger than we are and may have the manufacturing, marketing and sales
capabilities to complete research, development, and commercialization of profitable, commercially viable products more quickly
and effectively than we can. there are many companies engaged in all areas of traditional and alternative energy generation in the
united States and abroad, including, among others, major electric, oil, chemical, natural gas, battery, generator 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 advanced battery technologies, generator sets, fast charged technologies and other
types of fuel cell technologies. in addition, the primary current value proposition for our customers stems from productivity gains
in using our solutions. longer term, given evolving market dynamics and changes in alternative energy tax credits, if we are
unable to successfully develop future products that are competitive with competing technologies in terms of price, reliability and
longevity, customers may not buy our products. technological advances in alternative energy products, battery systems or other
fuel cell technologies may make our products less attractive or render them obsolete.
B. FINANCIAL AND LIQUIDITY RISKS
If we cannot obtain financing to support the sale of our products and service to our customers or our power purchase
agreements with customers, such failure may adversely affect our liquidity and financial position.
Customers representing most of our revenue access our products through Power Purchase agreements (“PPas”), rather
than a direct purchase. these PPa arrangements require us to finance the purchase of such products, either ourselves or through
third-party financing sources. to date, we have been successful in obtaining or providing the necessary financing arrangements.
there is no certainty, however, that we will be able to continue to obtain or provide adequate financing for these arrangements on
acceptable terms, or at all, in the future. Failure to obtain or provide such financing may result in the loss of material customers
and product sales, which could have a material adverse effect on our business, financial condition, and results of operations.
Further, if we are required to continue to pledge or restrict substantial amounts of our cash to support these financing
arrangements, such cash will not be available to us for other purposes, which may have a material adverse effect on our liquidity
and financial position. For example, as of december 31, 2020, approximately $321.4 million of our cash is restricted to support
such leasing arrangements, which prevents us from using such cash for other purposes.
We may require additional capital funding and such capital may not be available to us.
as of december 31, 2020, we had cash and cash equivalents of $1.3 billion, restricted cash of $321.9 million and net
working capital of $1.4 billion (which is comprised of the net amount of current assets of $1.6 billion and current liabilities of
$222.4 million). this compares to $139.5 million, $230.0 million, and $179.7 million, of cash and cash equivalents, restricted
cash, and net working capital (which is comprised of the net amount of current assets of $313.7 million and current liabilities of
$134.0 million), respectively, on december 31, 2019, as restated.
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our cash requirements relate primarily to working capital needed to operate and grow our business, including funding
operating expenses, growth in inventory to support both shipments of new units and servicing the installed base, growth in
equipment leased and equipment related to PPas for customers under long-term arrangements, funding the growth in our
GenKey “turn-key” solution, which includes the installation of our customers’ hydrogen infrastructure as well as delivery of the
hydrogen fuel, continued expansion of our markets, such as europe and asia, continued development and expansion of our
products, such as ProGen, payment of lease obligations under sale/leaseback financings, mergers and acquisitions, liquid
hydrogen plant construction, expanding production facilities and the repayment or refinancing of our long-term debt. our ability
to meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of
product orders and shipments; attaining and expanding positive gross margins across all product lines; the timing and amount of
our operating expenses; the timing and costs of working capital needs; the timing and costs of building a sales base; the ability of
our customers to obtain financing to support commercial transactions; our ability to obtain financing arrangements to support the
sale or leasing of our products and services to customers, including financing arrangements to repay or refinance our long-term
debt, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these
financing arrangements; the timing and costs of developing marketing and distribution channels; the timing and costs of product
service requirements; the timing and costs of hiring and training product staff; the extent to which our products gain market
acceptance; the timing and costs of product development and introductions; the extent of our ongoing and new research and
development programs; and changes in our strategy or our planned activities. if we are unable to fund our operations with
positive cash flows and cannot obtain external financing, we may not be able to sustain future operations. as a result, we may be
required to delay, reduce and/or cease our operations and/or seek bankruptcy protection.
we cannot assure you that any necessary additional financing will be available on terms favorable to us, or at all. we
believe that it could be difficult to raise additional funds and there can be no assurance as to the availability of additional
financing or the terms upon which additional financing may be available. additionally, even if we raise sufficient capital through
additional equity or debt financings, strategic alternatives or otherwise, there can be no assurance that the revenue or capital
infusion will be sufficient to enable us to develop our business to a level where it will be profitable or generate positive cash
flow. if we incur additional debt, a substantial portion of our operating cash flow may be dedicated to the payment of principal
and interest on such indebtedness, thus limiting funds available for our business activities. the terms of any debt securities issued
could also impose significant restrictions on our operations. Broad market and industry factors may seriously harm the market
price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional
funds. if we raise additional funds through collaborations and/or licensing arrangements, we might be required to relinquish
significant rights to our technologies or grant licenses on terms that are not favorable to us.
We have incurred losses and anticipate continuing to incur losses.
we have not achieved operating profitability in any quarter since our formation and we will continue to incur net losses
until we can produce sufficient revenue to cover our costs. our net losses attributable to common stockholders were
approximately $596.2 million in 2020, $85.6 million in 2019 and $85.7 million in 2018, as restated for 2019 and 2018. as of
december 31, 2020, we had an accumulated deficit of $1.9 billion. we anticipate that we will continue to incur losses until we
can produce and sell our products and services on a large-scale and cost-effective basis. we cannot guarantee when we will
operate profitably, if ever. in order to achieve profitability, we must successfully execute our planned path to profitability in the
early adoption markets on which we are focused. the profitability of our products depends largely on material and manufacturing
costs and the market price of hydrogen. the hydrogen infrastructure that is needed to support our growth readiness and cost
efficiency must be available and cost efficient. we must continue to shorten the cycles in our product roadmap with respect to
improvement in product reliability and performance that our customers expect. we must execute on successful introduction of
our products into the market. we must accurately evaluate our markets for, and react to, competitive threats in both other
technologies (such as advanced batteries) and our technology field. Finally, we must continue to lower our products’ build costs
and lifetime service costs. if we are unable to successfully take these steps, we may never operate profitably, and, even if we do
achieve profitability, we may be unable to sustain or increase our profitability in the future.
Our indebtedness could adversely affect our liquidity, financial condition and our ability to fulfill our obligations and operate
our business.
at december 31, 2020, our total outstanding indebtedness was approximately $442.6 million, consisting of $127
thousand of the $100.0 million in aggregate principal amount of the 5.5% Convertible Senior notes due on March
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15, 2023 (the “5.5% Convertible Senior notes”), $85.5 million of the $200.0 in aggregate principal amount of 3.75% Convertible
Senior notes due June 1, 2025 (the “3.75% Convertible Senior notes”), $175.4 million of long-term debt primarily associated
with our term loan Facility with Generate lending, llC, or the term loan Facility, and other long-term debt, and $181.6
million of finance obligations consisting primarily of debt associated with sale of future revenues and sale/leaseback financings.
our high level of indebtedness could have negative consequences on our future operations, including:
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we may have difficulty satisfying our obligations with respect to our outstanding debt;
we may have difficulty obtaining financing in the future for working capital, capital expenditures, acquisitions or
other purposes;
we may need to use all, or a substantial portion, of our available cash flow to pay interest and principal on our
debt, which will reduce the amount of money available to finance our operations and other business activities;
our vulnerability to general economic downturns and adverse industry conditions could increase;
our flexibility in planning for, or reacting to, changes in our business and in our industry in general could be
limited;
our amount of debt and the amount we must pay to service our debt obligations could place us at a competitive
disadvantage compared to our competitors that may have less debt; and
our failure to comply with the covenants in the agreement governing our term loan Facility which, among other
things, limit our ability to incur debt and sell assets, could result in an event of default that, if not cured or waived,
could have a material adverse effect on our business or prospects.
our level of indebtedness will require that we use a substantial portion of our cash flow from operations to pay principal
of, and interest on, our indebtedness, which will reduce the availability of cash to fund working capital requirements, capital
expenditures, research and development and other general corporate or business activities. our ability to generate cash to repay
our indebtedness is subject to the performance of our business, as well as general economic, financial, competitive and other
factors that are beyond our control. if our business does not generate sufficient cash flow from operating activities or if future
borrowings are not available to us in amounts sufficient to enable us to fund our liquidity needs, our operating results and
financial condition may be adversely affected.
The agreement governing our Term Loan Facility contains covenant restrictions that may limit our ability to operate our
business.
we may be unable to respond to changes in business and economic conditions, engage in transactions that might
otherwise be beneficial to us, or obtain additional financing, because the agreement governing our term loan Facility contains
covenant restrictions that limit our ability to, among other things: incur additional debt, create liens, make acquisitions, make
loans, pay dividends, dissolve, or enter into leases and asset sale. in addition, the agreement requires that we comply with a
collateral coverage covenant that was first measured on december 31, 2020. our ability to comply with these covenants is
dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including
prevailing economic conditions. in addition, our failure to comply with this covenant could result in a default under our other
debt instruments, which could permit the holders to accelerate such debt. if any of our debt is accelerated, we may not have
sufficient funds available to repay such debt, which could materially and negatively affect our financial condition and results of
operations.
although we are currently in compliance with, or have obtained waivers for, the covenants contained in the agreement
governing our term loan Facility, we cannot assure you that we will be able to remain in compliance with such covenants in the
future. an event of default under the agreement governing our term loan Facility could have a material adverse effect on our
liquidity, financial condition, and results of operations.
Convertible debt securities that may be settled in cash could have a material effect on our reported financial results.
under accounting Standards Codification (“aSC”) 470-20, Debt with Conversion and Other Options, or aSC 470-20,
an entity must separately account for the liability and equity components of the convertible debt instruments (such as the 3.75%
Convertible Senior notes and the 5.5% Convertible Senior notes) that may be settled entirely or partially in cash upon
conversion in a manner that reflects the issuer’s economic interest cost. the effect of aSC 470-20 on the accounting for the
convertible senior notes is that the equity component is required to be included in the additional paid-
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in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity
component would be treated as debt discount for purposes of accounting for the debt component of the convertible senior notes.
as a result, we are required to record a non-cash interest expense as a result of the amortization of the discounted carrying value
of the convertible senior notes to their face amount over the term of the convertible senior notes. as a result, we report larger net
losses (or lower net income) in our financial results because aSC 470-20 requires interest to include the amortization of the debt
discount, which could adversely affect our reported or future financial results or the trading price of our common stock.
in august 2020, the Financial accounting Standards Board (“FaSB”) issued aSu 2020-06, “debt - debt with
Conversion and other options (Subtopic 470-20) and derivatives and hedging - Contracts in entity's own equity (Subtopic 815-
40): accounting for Convertible instruments and Contracts in an entity's own equity (“aSu 2020-06”).” this accounting
Standards update (“aSu”) simplifies the complexity associated with applying generally accepted accounting principles in the
united States (“GaaP”) for certain financial instruments with characteristics of liabilities and equity. More specifically, the
amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own
equity. under aSu 2020-06, the embedded conversion features are no longer separated from the host contract for convertible
instruments with conversion features that are not required to be accounted for as derivatives under topic 815, or that do not result
in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument, such as the 3.75%
Convertible Senior notes and the 5.5% Convertible Senior notes, will be accounted for as a single liability measured at its
amortized cost, as long as no other features require bifurcation and recognition as derivatives. the new guidance also requires the
if-converted method to be applied for all convertible instruments and requires additional disclosures. this guidance is required to
be adopted by January 1, 2022, and early adoption is permitted, but no earlier than fiscal years beginning after december 15,
2020. the Company has elected to early adopt this guidance on January 1, 2021 using the modified retrospective method. under
this transition method, the cumulative effect of accounting change will remove the impact of recognizing the equity component of
the Company’s convertible notes (at issuance and the subsequent accounting impact of additional interest expense from debt
discount amortization). the cumulative effective of the accounting change will increase the carrying amount of the convertible
notes by $120.7 million, accumulated deficit will be reduced by $9.5 million and additional paid-in capital will be reduced by
$130.2 million. Future interest expense of the convertible notes will be lower as a result of adoption of this guidance and net loss
per share will be computed using the if-converted method for these securities.
The convertible note hedges may affect the value of our common stock.
in conjunction with the pricing of the 3.75% Convertible Senior notes, the Company entered into privately negotiated
capped call transactions (the “3.75% notes Capped Call”) with certain counterparties at a price of $16.3 million. the 3.75%
notes Capped Call cover, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock
that underlie the initial 3.75% Convertible Senior notes and is generally expected to reduce potential dilution to the Company’s
common stock upon any conversion of the 3.75% Convertible Senior notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of the converted notes, as the case may be, with such reduction and/or offset
subject to a cap based on the cap price. the cap price of the 3.75% notes Capped Call is initially $6.7560 per share, which
represents a premium of approximately 60% over the last then-reported sale price of the Company’s common stock of $4.11 per
share on the date of the transaction and is subject to certain adjustments under the terms of the 3.75% notes Capped Call. the
3.75% notes Capped Call becomes exercisable if the conversion option is exercised.
the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock in secondary
market transactions prior to the maturity of the 3.75% Convertible Senior notes (and are likely to do so during any observation
period related to a conversion of 3.75% Convertible Senior notes or following any repurchase of 3.75% Convertible Senior
notes by us on any fundamental change repurchase date or otherwise). this activity could also cause or avoid an increase or a
decrease in the market price of our common stock. in addition, if any such convertible note hedge transaction fails to become
effective, the option counterparties may unwind their hedge positions with respect to our common stock, which could adversely
affect the value of our common stock. the potential effect, if any, of these transactions and activities on the market price of our
common stock will depend in part on market conditions and cannot be ascertained at this time. any of these activities could
adversely affect the value of our common stock.
We are subject to counterparty risk with respect to the convertible note hedge transactions.
the option counterparties are financial institutions or affiliates of financial institutions and are subject to the risk that
one or more of such option counterparties may default under the convertible note hedge transactions. our exposure to the credit
risk of the option counterparties is not secured by any collateral. if any option counterparty becomes subject to
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bankruptcy or other insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our
exposure at that time under our transactions with that option counterparty. our exposure will depend on many factors but,
generally, an increase in our exposure will be correlated to an increase in our common stock market price and in the volatility of
the market price of our common stock. in addition, upon a default by an option counterparty, we may suffer adverse tax
consequences and dilution with respect to our common stock. we can provide no assurance as to the financial stability or
viability of any option counterparty.
C. OPERATIONAL RISKS
We may not be able to expand our business or manage our future growth effectively.
we may not be able to expand our business or manage future growth. we plan to continue to improve our manufacturing
processes and build additional manufacturing production over the next five years, which will require successful execution of:
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expanding our existing customers and expanding to new markets;
ensuring manufacture, delivery and installation of our products;
implementing and improving additional and existing administrative, financial and operations systems, procedures and
controls;
hiring additional employees;
expanding and upgrading our technological capabilities;
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● managing relationships with our customers and suppliers and strategic partnerships with other third parties;
● maintaining adequate liquidity and financial resources; and
continuing to increase our revenues from operations.
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ensuring delivery of our products is subject to many market risks, including scarcity, significant price fluctuations and
competition. Maintaining adequate liquidity is dependent upon a variety of factors, including continued revenues from
operations, working capital improvements, and compliance with our debt instruments. we may not be able to achieve our
growth strategy and increase production capacity as planned during the foreseeable future. if we are unable to manage our growth
effectively, we may not be able to take advantage of market opportunities, develop new products, satisfy customer requirements,
execute our business plan, or respond to competitive pressures. For further information on risks associated with new business
ventures, see item i.3.e, “Risk Factors” (“Strategic Risks – we may be unable to successfully pursue new business ventures.”).
Delays in or not completing our product development goals may adversely affect our revenue and profitability.
if we experience delays in meeting our development goals, our products exhibit technical defects, or if we are unable to
meet cost or performance goals, including power output, useful life and reliability, the profitable commercialization of our
products will be delayed. in this event, potential purchasers of our products may choose alternative technologies and any delays
could allow potential competitors to gain market advantages. we cannot assure that we will successfully meet our
commercialization schedule in the future.
Periodically, we may enter into contracts with our customers for certain products that have not been developed or
produced. there can be no assurance that we will complete the development of these products and meet the specifications
required to fulfill customer agreements and deliver products on schedule. Pursuant to such agreements, the customers would have
the right to provide notice to us if, in their good faith judgment, we have materially deviated from such agreements. Should a
customer provide such notice, and we cannot mutually agree to a modification to the agreement, then the customer may have the
right to terminate the agreement, which could adversely affect our future business.
other than our current products, which we believe to be commercially viable at this time, we do not know when or
whether we will successfully complete research and development of other commercially viable products that could be critical to
our future. if we are unable to develop additional commercially viable products, we may not be able to generate sufficient
revenue to become profitable. the profitable commercialization of our products depends on our ability to reduce the costs of our
components and subsystems, and we cannot assure you that we will be able to sufficiently reduce these costs. in addition, the
profitable commercialization of our products requires achievement and verification of their overall reliability, efficiency and
safety targets, and we cannot assure you that we will be able to develop, acquire or license the technology necessary to achieve
these targets. we must complete additional research and development to fill our product
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portfolios and deliver enhanced functionality and reliability in order to manufacture additional commercially viable products in
commercial quantities. in addition, while we continue to conduct tests to predict the overall life of our products, we may not have
run our products over their projected useful life prior to large-scale commercialization. as a result, we cannot be sure that our
products will last as long as predicted, resulting in possible warranty claims and commercial failures.
Certain component quality issues have resulted in adjustments to our warranty reserves and the accrual for loss contracts.
in the past, quality issues have arisen with respect to certain components in certain products that are currently being
used at customer sites. under the terms of our extended maintenance contracts, we have had to retrofit units subject to component
quality issues with replacement components to improve the reliability of our products for our customers. we recorded a provision
for loss contracts related to service in the current and prior years. though we continue to work with our vendors on these
component issues to improve quality and reliability, unanticipated additional quality issues or warranty claims may arise, and
additional material charges may be incurred in the future. Quality issues also could cause profitable maintenance contracts to
become unprofitable.
in addition, from time to time we experience other unexpected design, manufacturing or product performance issues.
we make significant investment in the continued improvement of our products and maintain appropriate warranty reserves for
known and unexpected issues; however, unknown malfunctions or defects could result in unexpected material liabilities and
could adversely affect our business, financial condition, results of operation, cash flows and prospects. For example, in 2019, we
commenced a field replacement program for certain composite fuel tanks that did not meet the supply contract standard, as
determined by us and the manufacturer. the manufacturer of the tanks is funding the entire incremental cost of the replacement
program and we are working with our customers to ensure an efficient, minimally disruptive process for the exchange. in
addition, an actual or perceived problem could adversely affect the market’s perception of our products resulting in a decline in
demand for our products and could divert the attention of our management, which may materially and adversely affect our
business, financial condition, results of operations, cash flows and prospects.
Our products use flammable fuels that are inherently dangerous substances.
our fuel cell systems use hydrogen gas in catalytic reactions. while our products do not use this fuel in a combustion
process, hydrogen gas is a flammable fuel that could leak and combust if ignited by another source. Further, any such accidents
involving our products or other products using similar flammable fuels could materially suppress demand for, or heighten
regulatory scrutiny of, our products.
the risk of product liability claims and associated adverse publicity is inherent in the development, manufacturing,
marketing and sale of fuel cell products, including products fueled by hydrogen, a flammable gas. any liability for damages
resulting from malfunctions or design defects could be substantial and could materially adversely affect our business, financial
condition, results of operations and prospects. in addition, an actual or perceived problem with our products could adversely
affect the market’s perception of our products resulting in a decline in demand for our products, which may materially and
adversely affect our business, financial condition, results of operations and prospects.
Our purchase orders may not ship, be commissioned or installed, or convert to revenue.
Some of the orders we accept from customers require certain conditions or contingencies to be satisfied, or may be
cancelled, prior to shipment or prior to commissioning or installation, some of which are outside of our control. historically,
shipments made against these orders have generally occurred between 90 days and 24 months from the date of acceptance of the
order. orders for the Company’s products and services approximated $367.4 million for the year ended december 31, 2020. the
time periods from receipt of an order to shipment date and installation vary widely and are determined by a number of factors,
including the terms of the customer contract and the customer’s deployment plan. there may also be product redesign or
modification requirements that must be satisfied prior to shipment of units under certain of our agreements. if the redesigns or
modifications are not completed, some or all of our orders may not ship or convert to revenue. in certain cases, we publicly
disclose anticipated, pending orders with prospective customers; however, those prospective customers may require certain
conditions or contingencies to be satisfied prior to entering into a purchase order with us, some of which are outside of our
control. Such conditions or contingencies that may be required to be satisfied before we receive a purchase order may include,
but are not limited to, successful product demonstrations or field
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trials. Converting orders into revenue is also dependent upon our customers’ ability to obtain financing. Some conditions or
contingencies that are out of our control may include, but are not limited to, government tax policy, government funding
programs, and government incentive programs. additionally, some conditions and contingencies may extend for several years.
we may have to compensate customers, by either reimbursement, forfeiting portions of associated revenue, or other methods
depending on the terms of the customer contract, based on the failure on any of these conditions or contingencies. while not
probable, this could have an adverse impact on our revenue and cash flow.
We are dependent on information technology in our operations and the failure of such technology may adversely affect our
business.
we may experience problems with the operation of our current information technology systems or the technology
systems of third parties on which we rely, as well as the development and deployment of new information technology systems,
that could adversely affect, or even temporarily disrupt, all or a portion of our operations until resolved. inabilities and delays in
implementing new systems can also affect our ability to realize projected or expected cost savings. despite the implementation of
network security measures, our information technology could be penetrated by outside parties (such as computer hackers or cyber
terrorists) intent on extracting information, corrupting information or disrupting business processes. Such unauthorized access
could disrupt our business and could result in a loss of assets or reputational damage. additionally, any systems failures could
impede our ability to timely collect and report financial results in accordance with applicable laws.
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, manufacturing, marketing and sales professionals. our future success will depend, in part, on our ability to attract
and retain 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
materially and adversely affect our development and profitable commercialization plans and, therefore, our business prospects,
results of operations and financial condition.
We may not be able to protect important intellectual property and we could incur substantial costs defending against claims
that our products infringe on the proprietary rights of others.
PeM fuel cell technology was first developed in the 1950s, and fuel processing technology has been practiced on a large
scale in the petrochemical industry for decades. accordingly, we do not believe that we can establish a significant proprietary
position in the fundamental component technologies in these areas. however, our ability to compete effectively will depend, in
part, on our ability to protect our proprietary system-level technologies, systems designs and manufacturing processes. we rely
on patents, trademarks, and other policies and procedures related to confidentiality to protect our intellectual property. however,
some of our intellectual property is not covered by any patent or patent application. Moreover, 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, our patents may be challenged or invalidated. we could incur substantial costs in prosecuting or defending patent
infringement suits or otherwise protecting our intellectual property rights. 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. Moreover, patent
applications filed in foreign countries may be subject to laws, rules and procedures that are substantially different from those of
the united States, and any resulting foreign patents may be difficult and expensive to obtain and enforce. in addition, we do not
know whether the uSPto will grant federal registrations based on our pending trademark applications. even if federal
registrations are granted to us, our trademark rights may be challenged. it is also possible that our competitors or others will
adopt trademarks similar to ours, thus impeding our ability to build brand identity and possibly leading to customer confusion.
we could incur substantial costs in prosecuting or defending trademark infringement suits.
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 could be required to pay substantial royalties and/or
damages, and 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 products, and could necessitate the
expenditure of significant resources to develop or acquire non-infringing intellectual property.
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we may need to pursue lawsuits or legal action in the future to enforce our intellectual property rights, to protect our
trade secrets and domain names, and to determine the validity and scope of the proprietary rights of others. if third parties prepare
and file applications for trademarks used or registered by us, we may oppose those applications and be required to participate in
proceedings to determine the priority of rights to the trademark. Similarly, competitors may have filed applications for patents,
may have received patents and may obtain additional patents and proprietary rights relating to products or technology that block
or compete with ours. we may have to participate in interference proceedings to determine the priority of invention and the right
to a patent for the technology. litigation and interference proceedings, even if they are successful, are expensive to pursue and
time consuming, and we could use a substantial amount of our management and financial resources in either case.
Confidentiality agreements to which we are party 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.
We are subject to legal proceedings and legal compliance risks that could harm our business.
we are currently, and in the future may continue to be, subject to commercial disputes and litigation. in connection with
any disputes or litigation in which we are involved, we may incur costs and expenses in connection with defending ourselves or
in connection with the payment of any settlement or judgment or compliance with any ruling in connection therewith. the
expense of defending litigation may be significant. the amount of time to resolve lawsuits is unpredictable and defending
ourselves may divert management’s attention from the day-to-day operations of our business, which could adversely affect our
business, financial condition, results of operations and cash flows. in addition, an unfavorable outcome in any such litigation
could have a material adverse effect on our business, results of operations, financial condition and cash flows. See Part i, item 3,
“legal Proceedings.”
Our financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
GaaP is subject to interpretation by the FaSB, the american institute of Certified Public accountants, the SeC and
various bodies formed to promulgate and interpret appropriate accounting principles. See note 4, “Summary of Significant
accounting Policies,” to our consolidated financial statements included in this annual Report on Form 10-K regarding the effect
of new accounting pronouncements on our financial statements. any difficulties in implementing these pronouncements could
cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’
confidence in us. Further, the implementation of new accounting pronouncements or a change in other principles or
interpretations could have a significant effect on our financial results.
If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be
incorrect, our operating results could fall below expectations of investors, resulting in a decline in our stock price.
in connection with our determination to restate certain of our previously issued consolidated financial statements, we
determined that certain of the estimates and judgment underlying certain of the Restatement items were in error. See note 2,
“Restatement of Previously issued Consolidated Financial Statements,” and note 3, “unaudited Quarterly Financial data and
Restatement of Previously issued unaudited interim Condensed Consolidated Financial Statements,” to the consolidated
financial statements. the preparation of financial statements in conformity with GaaP requires management to make estimates
and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. For example,
our revenue recognition and impairment of long-lived assets policies are complex, and we often must make estimates and
assumptions that could prove to be incorrect. we base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. Significant assumptions and estimates used in preparing our
consolidated financial statements include those related to revenue recognition, loss accrual for service, impairment of long-lived
assets, leases and provision for common stock warrants. our operating results may be adversely affected if our assumptions
change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the
expectations of investors, resulting in a decline in our stock price.
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We recently identified a material weakness in our internal control over financial reporting related to the accounting for the
Restatement Items. If we do not effectively remediate the material weakness or if we otherwise fail to maintain effective
internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
effective internal controls over financial reporting are necessary for us to provide reliable and accurate financial reports
and effectively prevent fraud.
Management identified the following deficiency in internal control over financial reporting as of december 31, 2020:
the Company did not maintain a sufficient complement of trained, knowledgeable resources to execute their responsibilities with
respect to internal control over financial reporting for certain financial statement accounts and disclosures. as a consequence, the
Company did not conduct an effective risk assessment process that was responsive to changes in the Company's operating
environment and did not design and implement effective process-level controls activities in the following areas: presentation of
operating expenses; accounting for lease-related transactions; identification and evaluation of impairment, loss-contract accrual,
certain expense accruals, and deemed dividends; and timely identification of adjustments to physical inventory in interim periods.
See item 9a, “Controls and Procedures,” in this annual Report on Form 10-K for additional information regarding the identified
material weakness and our actions to date to remediate the material weakness.
We reached a determination to restate certain of our previously issued consolidated financial statements as a result of the
identification of accounting errors in previously issued financial statements, which resulted in unanticipated costs and may
affect investor confidence and raise reputational issues.
as discussed in the explanatory note above, in this annual Report on Form 10-K for the year ended december 31,
2020, we reached a determination to restate our consolidated financial statements and related disclosures for the periods disclosed
in those notes after identifying accounting errors in connection with the Restatement items. the restatement also included
corrections for previously identified immaterial items in the Company’s previously issued financial statements and other financial
data. as a result, we have incurred unanticipated costs for accounting and legal fees in connection with or related to the
restatement and have become subject to a number of additional risks, uncertainties, and litigation (see Part i, item 3, “legal
Proceedings”), which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational risks
for our business, both of which could harm our business and financial results.
We are in the process of resolving SEC comments relating to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and Form 8-K filed with the SEC on November 9, 2020 regarding certain accounting and financial
disclosure matters, which could possibly result in changes to our existing accounting and financial disclosure.
we received comment letters from the staff of the SeC's division of Corporation Finance (the "Staff") relating to our
annual Report on Form 10-K for the fiscal year ended december 31, 2019 (the “2019 10-K”) and the Form 8-K filed with the
SeC on november 9, 2020. until these comments are resolved, or until any additional comments raised by the Staff during this
process are resolved, we cannot provide assurance that we will not be required to amend the 2019 Form 10-K, the Form 8-K or
make any material changes to the accounting or financial disclosures contained in the 2019 Form 10-K, the Form 8-K or similar
disclosures made in our other filings, including this annual Report on Form 10-K for the year ended december 31, 2020.
D. REGULATORY RISKS
The reduction or elimination of government subsidies and economic incentives for alternative energy technologies, or the
failure to renew such subsidies and incentives, could reduce demand for our products, lead to a reduction in our revenues and
adversely impact our operating results and liquidity.
we believe that the near-term growth of alternative energy technologies is affected by the availability and size of
government and economic incentives. Many of these government incentives expire, phase out over time, may exhaust the
allocated funding, or require renewal by the applicable authority. in addition, these incentive programs could be reduced or
discontinued for other reasons. the investment tax credit under the u.S. tax code was renewed in February 2018. the renewal
allows for a 30% investment tax credit which declines to 26% for 2021 and 2022, 22% in 2023, and zero for 2024 and later. the
reduction, elimination, or expiration of the investment tax credit or other government subsidies and
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economic incentives, or the failure to renew such tax credit, governmental subsidies, or economic incentives, may result in the
diminished economic competitiveness of our products to our customers and could materially and adversely affect the growth of
alternative energy technologies, including our products, as well as our future operating results and liquidity.
We are subject to various federal, state and local environmental and human health and safety laws and regulations that could
impose significant costs and liabilities on us.
our operations are subject to federal, state, and local environmental and human health and safety laws and regulations,
including laws and regulations relating to the use, handling, storage, transportation, disposal and human exposure to hazardous
substances and wastes, product safety, emissions of pollution into the environment and human health and safety. we have
incurred and expect to continue to incur, costs to comply with these laws and regulations. Violation of these laws or regulations
or the occurrence of an explosion or other accident in connection with our fuel cell systems at our properties or at third party
locations could lead to substantial liabilities and sanctions, including fines and penalties, cleanup costs or the requirement to
undertake corrective action. Further, environmental laws and regulations, and the administration, interpretation and enforcement
thereof, are subject to change and may become more stringent in the future, each of which could materially adversely affect our
business, financial condition and results of operations.
additionally, certain environmental laws impose liability, which can be joint, several and strict, on current and previous
owners and operators of real property for the cost of removal or remediation of hazardous substances and damage to natural
resources. these laws often impose liability even if the owner or operator did not know of, or was not responsible for, the release
of such hazardous substances. they can also assess liability on persons who arrange for hazardous substances to be sent to
disposal or treatment facilities when such facilities are found to be contaminated, and such persons can be responsible for cleanup
costs even if they never owned or operated the contaminated facility. our liabilities arising from past or future releases of, or
exposure to, hazardous substances may adversely affect our business, financial condition and results of operations.
Trade policies, treaties and tariffs could have a material adverse effect on our business.
our business is dependent on the availability of raw materials and components for our products, particularly electrical
components common in the semiconductor industry. there is currently significant uncertainty about the future relationship
between the united States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and
taxes. the new u.S. presidential administration and u.S. Congress is in the process of revisiting and, in some cases, reversing
changes made by the prior u.S. presidential administration. these developments, or the perception that any of them could occur,
could have a material adverse effect on global economic conditions and the stability of global financial markets, and could
significantly reduce global trade and, in particular, trade between the impacted nations and the united States.
this uncertainty includes the possibility of imposing tariffs or penalties on products manufactured outside the united
States, including the u.S. government’s institution of a 25% tariff on a range of products from China and subsequent tariffs
imposed by the united States as well as tariffs imposed by trading partners on u.S. goods. the institution of trade tariffs both
globally and between the united States and China specifically carries the risk of negatively affecting the overall economic
conditions of both China and the united States, which could have a negative impact on us.
we cannot predict whether, and to what extent, there may be changes to international trade agreements or whether
quotas, duties, tariffs, exchange controls or other restrictions on our products will be changed or imposed. although we currently
maintain alternative sources for raw materials,, if we are unable to source our products from the countries where we wish to
purchase them, either because of regulatory changes or for any other reason, or if the cost of doing so increases, it could have a
material adverse effect on our business, financial condition and results of operations. disruptions in the supply of raw materials
and components could temporarily impair our ability to manufacture our products for our customers or require us to pay higher
prices to obtain these raw materials or components from other sources, which could affect our business and our results of
operations. Furthermore, the imposition of tariffs on items imported by us from China or other countries could increase our costs
and could have a material adverse effect on our business and our results of operations.
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Our business may become subject to increased government regulation.
our products are subject to certain federal, local, and non-u.S. laws and regulations, including, for example, state and
local ordinances relating to building codes, public safety, electrical and gas pipeline connections, hydrogen transportation and
siting and related matters. See item 1, “Business—Government Regulations” for additional information. in certain jurisdictions,
these regulatory requirements may be more stringent than those in the united States. Further, as products are introduced into the
market commercially, governments may impose new regulations. we do not know the extent to which any such regulations may
impact our ability to manufacture, distribute, install and service our products. any regulation of our products, whether at the
federal, state, local or foreign level, including any regulations relating to the production, operation, installation, and servicing of
our products may increase our costs and the price of our products, and noncompliance with applicable laws and regulations could
subject us to investigations, sanctions, enforcement actions, fines, damages, civil and criminal penalties or injunctions. if any
governmental sanctions are imposed, our business, operating results, and financial condition could be materially adversely
affected. in addition, responding to any action will likely result in a significant diversion of management’s attention and
resources and an increase in professional fees. enforcement actions and sanctions could harm our business, operating results and
financial condition.
Changes in tax laws or regulations or adverse outcomes resulting from examination of our income or other tax returns could
adversely affect our operating results and financial condition.
we are subject to income taxes in the united States and various foreign jurisdictions. a number of factors may
adversely affect our future effective tax rates, such as the jurisdictions in which our profits are determined to be earned and taxed;
changes in the valuation of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax
returns; changes in available tax credits, grants and other incentives; changes in stock-based compensation expense; the
availability of loss or credit carryforwards to offset taxable income; changes in tax laws, regulations, accounting principles or
interpretations thereof; or examinations by uS federal, state or foreign jurisdictions that disagree with interpretations of tax rules
and regulations in regard to positions taken on tax filings. a change in our effective tax rate due to any of these factors may
adversely affect the carrying value of our tax assets and our future results from operations.
in addition, as our business grows, we are required to comply with increasingly complex taxation rules and practices.
we are subject to tax in multiple u.S. tax jurisdictions and in foreign tax jurisdictions as we expand internationally. the
development of our tax strategies requires additional expertise and may impact how we conduct our business. if our tax strategies
are ineffective or we are not in compliance with domestic and international tax laws, our financial position, operating results and
cash flows could be adversely affected.
The changes in the carryforward/carryback periods as well as the new limitation on use of net operating losses (“NOLs”) may
significantly impact our valuation allowance assessments for NOLs.
as of december 31, 2020, we had federal nol carryforwards of $464.3 million, which begin to expire in various
amounts and at various dates in 2032 through 2037 (other than federal nol carryforwards generated after december 31, 2017,
which are not subject to expiration). as of december 31, 2020, we also had federal research and development tax credit
carryforwards of $4.4 million as restated, which begin to expire in 2033. under Sections 382 and 383 of the internal Revenue
Code of 1986, as amended (the “Code”), changes in our ownership may limit the amount of our nol carryforwards and research
and development tax credit carryforwards that could be utilized annually to offset our future taxable income, if any. this
limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50 percentage
points within a three-year period. Based on studies of the changes in ownership of the Company, it has been determined that a
Section 382 ownership change occurred in 2013 that limited the amount of pre-change nols that can be used in future years.
nols incurred after the most recent ownership change are not subject to Section 382 of the Code and are available for use in
future years. if we undergo an ownership change, our ability to utilize our nol carryforwards or research and development tax
credit carryforwards could be further limited by Sections 382 and 383 of the Code. in addition, future changes in our stock
ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the
Code. any such limitation may significantly reduce our ability to utilize our nol carryforwards and research and development
tax credit carryforwards before they expire. our nol carryforwards and research and development tax credit carryforwards may
also be impaired under state law. accordingly, we may not be able to utilize a material portion of our nol carryforwards or
research and development tax credit carryforwards.
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the Coronavirus aid, Relief and economic Security act modifies, among other things, rules governing nols. nols
arising in tax years beginning after december 31, 2017 are subject to an 80% of taxable income limitation (as calculated before
taking the nols into account) for tax years beginning after december 31, 2020. in addition, nols arising in tax years 2018,
2019, and 2020 are subject to a five year carryback and indefinite carryforward, while nols arising in tax years beginning after
december 31, 2020 also are subject to indefinite carryforward but cannot be carried back. in future years, if and when the
valuation allowance related to our nols is partially or fully released, the changes in the carryforward/carryback periods as well
as the new limitation on use of nols may significantly impact our valuation allowance assessments for nols generated after
december 31, 2017.
E. STRATEGIC RISKS
We may be unable to establish or maintain relationships with third parties for certain aspects of continued product
development, manufacturing, distribution and servicing and the supply of key components for our products.
we will need to maintain and may need to enter into additional strategic relationships in order to complete our current
product development and commercialization plans. we may also require partners to assist in the sale, servicing and supply of
components for our current products and anticipated products, which are in development. if we are unable to identify, enter into,
and maintain satisfactory agreements with potential partners, including those relating to the supply, distribution, service and
support of our current products and anticipated products, we may not be able to complete our product development and
commercialization plans on schedule or at all. we may also need to scale back these plans in the absence of needed partners,
which could adversely affect our future prospects for development and commercialization of future products. while we have
entered into relationships with suppliers of some key components for our products, we do not know when or whether we will
secure supply relationships for all required components and subsystems for our products, or whether such relationships will be on
terms that will allow us to achieve our objectives. our business prospects, results of operations and financial condition could be
harmed if we fail to secure relationships with entities that can develop or supply the required components for our products and
provide the required distribution and servicing support. additionally, the agreements governing our current relationships allow
for termination by our partners under certain circumstances, some of which are beyond our control. if any of our current strategic
partners were to terminate any of its agreements with us, there could be a material adverse impact on the continued development
and profitable commercialization of our products and the operation of our business, financial condition, results of operations and
prospects.
We may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and any
ability to do so may disrupt our business and hinder our ability to grow, divert the attention of key personnel, disrupt our
business and impair our financial results.
as part of our business strategy, we intend to consider acquisitions of companies, technologies and products. we may
not be able to identify such attractive acquisition opportunities. acquisitions, involve numerous risks, any of which could harm
our business, including, among other things:
●
difficulty in integrating the technologies, products, operations and existing contracts of a target company and realizing
the anticipated benefits of the combined businesses;
● mistaken assumptions about volumes or the timing of those volumes, revenues or costs, including synergies;
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negative perception of the acquisition by customers, financial markets or investors;
difficulty in supporting and transitioning customers, if any, of the target company;
inability to achieve anticipated synergies or increase the revenue and profit of the acquired business;
the assumption of unknown liabilities;
exposure to potential lawsuits;
limitations on rights to indemnity from the seller;
the diversion of management’s and employees’ attention from other business concerns;
unforeseen difficulties operating in new geographic areas;
customer or key employee losses at the acquired businesses;
the price we pay or other resources that we devote may exceed the value we realize; or
the value we could have realized if we had allocated the purchase price or other resources to another opportunity and
inability to generate sufficient revenue to offset acquisition costs.
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in addition, if we finance acquisitions by issuing equity securities, our existing stockholders may be diluted. as a result,
if our forecasted assumptions for these acquisitions and investments are not accurate, we may not achieve the anticipated benefits
of any such acquisitions, and we may incur costs in excess of what we had anticipated.
We may be unable to successfully pursue new business ventures.
we have recently begun pursuing the development of hydrogen production plants across the united States and building
relationships with green hydrogen suppliers. in June 2020, we acquired uhG, one of the largest privately held hydrogen
producers in north america. there can be no assurances that we will be able to successfully implement our new business
ventures or successfully operate within this industry. For further information on risks associated with acquisitions, see item i.3.F
“Risk Factors (“Strategic Risks – we may be unable to make attractive acquisitions or successfully integrate acquired businesses,
assets or properties, and any ability to do so may disrupt our business and hinder our ability to grow, divert the attention of key
personnel, disrupt our business and impair our financial results”).
F. RISKS RELATED TO THE OWNERSHIP OF OUR COMMON STOCK
Our stock price and stock trading volume have been and could remain volatile, and the value of your investment could
decline.
the market price of our common stock has historically experienced and may continue to experience significant
volatility. in 2020, the sales price of our common stock fluctuated from a high of $37.51 per share to a low of $2.53 per share,
and closed as high as $73.18 in January 2021. our progress in developing and commercializing our products, our quarterly
operating results, announcements of new products by us or our competitors, our perceived prospects, changes in securities
analysts’ recommendations or earnings estimates, changes in general conditions in the economy or the financial markets, adverse
events related to our strategic relationships, significant sales of our common stock by existing stockholders, including one or
more of our strategic partners, events relating to our determination to restate certain of our previously issued consolidated
financial statements, and other developments affecting us or our competitors could cause the market price of our common stock
to fluctuate substantially. in addition, in recent years, the stock market has experienced significant price and volume fluctuations.
this volatility has affected the market prices of securities issued by many companies for reasons unrelated to their operating
performance and may adversely affect the price of our common stock. Such market price volatility could adversely affect our
ability to raise additional capital. Furthermore, technical factors in the public trading market for our common stock may produce
price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without
limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites), the
amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our
common stock and any related hedging or other technical trading factors. in addition, we are subject to securities class action
litigation filed after a drop in the price in our common stock in March 2021, which could result in substantial costs and diversion
of management’s attention and resources and could harm our stock price, business, prospects, results of operations and financial
condition.
Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could
reduce the price that our common stock might otherwise attain and may dilute your voting power and your ownership interest
in us.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales
could occur, could adversely affect the market price of our common stock and may make it more difficult for you to sell your
common stock at a time and price that you deem appropriate. as of december 31, 2020, there were approximately 42,186,802
shares of common stock issuable upon conversion of the 3.75% Convertible Senior notes at a conversion price of $5.03 per
share. in addition, as of december 31, 2020, we had outstanding options exercisable for an aggregate of 10,284,498 shares of
common stock at a weighted average exercise price of $5.78 per share and 104,753,740 shares of common stock issuable upon
the exercise of warrants, 68,380,913 of which were vested as of december 31, 2020.
Moreover, subject to market conditions and other factors, we may conduct future offerings of equity or debt securities.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could
reduce the market price of our common stock to decline. in addition, the conversion of the notes or preferred stock or the
exercise of outstanding options and warrants and future equity issuances will result in dilution to investors. the market price of
our common stock could fall as a result of resales of any of these shares of common stock due to an increased number of shares
available for sale in the market.
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If securities analysts do not publish research or reports or if they publish unfavorable or inaccurate research about our
business and our stock, the price of our stock and the trading volume could decline.
we expect that the trading market for our common stock will be affected by research or reports that industry or financial
analysts publish about us or our business. there are many large, well-established companies active in our industry and portions of
the markets in which we compete, which may mean that we receive less widespread analyst coverage than our competitors. if one
or more of the analysts who covers us downgrades their evaluations of our company or our stock, the price of our stock could
decline. if one or more of these analysts cease coverage of our company, our stock may lose visibility in the market, which in
turn could cause our stock price to decline.
Provisions in our charter documents and Delaware law may discourage or delay an acquisition of the Company by a third
party that stockholders may consider favorable.
our certificate of incorporation, our bylaws, and delaware corporate law contain provisions that could have an anti-
takeover effect and make it harder for a third party to acquire us without the consent of our Board. these provisions may also
discourage proxy contests and make it more difficult for our stockholders to take some corporate actions, including the election
of directors. these provisions include: the ability of our Board to issue shares of preferred stock in one or more series and to
determine the terms of those shares, including preference and voting rights, without a stockholder vote; the exclusive right of our
Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director,
which prevents stockholders from being able to fill vacancies on our Board; the inability of stockholders to call a special meeting
of stockholders; the prohibition on stockholder action by written consent, which forces stockholder action to be taken at an
annual or special meeting of our stockholders; advance notice requirements for nominations for election to our Board or for
proposing matters that can be acted on by stockholders at stockholder meetings, which may discourage or deter a potential
acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain
control of us; the ability of our Board of directors, by majority vote, to amend the bylaws, which may allow our Board to take
additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an
unsolicited takeover attempt; and staggered terms for our directors, which effectively prevents stockholders from electing a
majority of the directors at any one annual meeting of stockholders.
in addition, as a delaware corporation, we are subject to Section 203 of the delaware General Corporation law. these
provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from
merging or combining with us for a certain period of time.
We do not anticipate paying any dividends on our common stock.
we do not anticipate paying any cash dividends on our common stock in the foreseeable future. if we do not pay cash
dividends, you would receive a return on your investment in our common stock only if the market price of our common stock is
greater at the time you sell your shares than the market price at the time you bought your shares.
Our amended and restated bylaws provide for an exclusive forum in the Court of Chancery of the State of Delaware for
certain disputes between us and our stockholders, and the exclusive forum in the Delaware federal courts for the resolution of
any complaint asserting a cause of action under the Securities Act.
our amended and restated bylaws provide that unless the Company consents in writing to the selection of an alternative
forum, the Court of Chancery of the State of delaware will be the sole and exclusive forum for any state law claims for: (i) any
derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of, or a claim based on, a
breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s
stockholders, (iii) any action asserting a claim arising pursuant to any provision of the delaware General Corporation law or the
Company’s certificate of incorporation or bylaws, or (iv) any other action asserting a claim governed by the internal affairs
doctrine. the amended and restated bylaws further provide that unless the Company consents in writing to the selection of an
alternative forum, the federal district courts of the united States of america will be the sole and exclusive forum for the
resolution of any complaint asserting a cause of action arising under the Securities act and any person or entity purchasing or
otherwise acquiring or holding any interest in shares of capital stock of the Company will be deemed to have notice of and
consented to these provisions.
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we believe these provisions may benefit us by providing increased consistency in the application of delaware law and
federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient
administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum
litigation. if a court were to find the choice of forum provision that is contained in our amended and restated bylaws to be
inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other
jurisdictions, which could materially adversely affect our business, results of operations, and financial condition. For example,
Section 22 of the Securities act provides that state and federal courts have concurrent jurisdiction over claims to enforce any duty
or liability created by the Securities act or the rules and regulations promulgated thereunder. accordingly, there is uncertainty as
to whether a court would enforce such a forum selection provision as written in connection with claims arising under the
Securities act.
Because the choice of forum provisions in our amended and restated bylaws may have the effect of severing certain
causes of action between federal and state courts, stockholders seeking to assert claims against us or any of our current or former
director, officer, other employee, agent, or stockholder, may be discouraged from bringing such claims due to a possibility of
increased litigation expenses arising from litigating multiple related claims in two separate courts. the choice of forum
provisions may therefore limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with
us or any of our current or former director, officer, other employee, agent, or stockholder.
Item 1B. Unresolved Staff Comments
on december 16, 2020, the Company received a comment letter from the Staff of the SeC’s division of Corporation
Finance relating to its annual Report on Form 10-K for the fiscal year ended december 31, 2019 and Form 8-K filed with the
SeC on november 9, 2020 regarding certain accounting and financial disclosure matters. the process to resolve these comments
with the SeC is continuing.
there are no unresolved comments regarding our periodic or current reports from the staff of the SeC that were issued
180 days or more preceding the end of our fiscal year ended december 31, 2020.
Item 2. Properties
our principal offices are located in latham, new York, where we lease a 159,000 square foot facility that includes our
headquarter office building, our manufacturing facility, and our primary research and development center. we lease a 150,000
square foot facility in Rochester, new York that includes additional office and research and development space, a 29,200 square
foot facility in Spokane, washington that includes an office building and a manufacturing facility, and a 38,400 square foot
warehousing space in Clifton Park, new York. we also lease service centers in dayton, ohio and Romeoville, illinois. See
note 22, “Commitments and Contingencies, as restated,” to the consolidated financial statements, Part ii, item 8, Financial
Statements and Supplementary data,” of this annual Report on Form 10-K for further discussion of the leases. we believe that
our facilities are sufficient to accommodate our anticipated production volumes for at least the next two years.
Item 3. Legal Proceedings
on august 28, 2018, a lawsuit was filed on behalf of multiple individuals against the Company and five corporate co-
defendants in the 9th Judicial district Court, Rapides Parish, louisiana. the lawsuit relates to the previously disclosed May 2018
accident involving a forklift powered by the Company’s fuel cell at a Procter & Gamble facility in louisiana. the lawsuit alleges
claims against the Company and co-defendants, including Structural Composites industries, deep South equipment Co., air
Products and Chemicals, inc., and hyster-Yale Group, inc. for claims under the louisiana Product liability act (“lPla”)
including defect in construction and/or composition, design defect, inadequate warning, breach of express warranty and
negligence for wrongful death and personal injuries, among other damages. Procter & Gamble has intervened in that suit to
recover worker’s compensation benefits paid to or for the employees/dependents. Procter & Gamble has also filed suit for
property damage, business interruption, loss of revenue, expenses, and other damages. Procter & Gamble alleges theories under
the lPla, breach of warranty and quasi-contractual claims under louisiana law. defendants include the Company and several of
the same co-defendants from the august 2018 lawsuit, including Structural Composites industries, deep South equipment Co.,
and hyster-Yale Group, inc.
on March 8, 2021, Company stockholder dawn Beverly, individually and on behalf of all persons who purchased or
otherwise acquired Plug securities between november 9, 2020 and March 1, 2021 (the “Class”), filed a complaint in
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the u.S. district Court for the Southern district of new York against the Company, Plug Chief executive officer andrew Marsh,
and Plug Chief Financial officer Paul Middleton (together, the “defendants”), captioned Dawn Beverly et al. v. Plug Power Inc.
et al., Case no. 1:21-cv-02004 (S.d.n.Y.) (the “Class action Complaint”). the Class action Complaint includes two claims, for
(1) violation of Section 10(b) of the exchange act and Rule 10b5 promulgated thereunder (against all defendants); and (2)
violation of Section 20(a) of the exchange act (against Mr. Marsh and Mr. Middleton). the Class action Complaint alleges that
defendants failed to disclose that the Company (i) “would be unable to timely file its 2020 annual report due to delays related to
the review of classification of certain costs and the recoverability of the right to use assets with certain leases”; and (ii) “was
reasonably likely to report material weaknesses in its internal control over financial reporting[.]” the Class action Complaint
alleges that, a result, “positive statements about the Company’s business, operations, and prospects were materially misleading
and/or lacked a reasonable basis,” causing Class members losses and damages. the Class action Complaint seeks compensatory
damages “in an amount to be proven at trial, including interest thereon”; “reasonable costs and expenses incurred in th[e] action”;
and “[s]uch other and further relief as the [c]ourt may deem just and proper.”
on March 18, 2021, Company stockholder Branislav Smolíček, individually and on behalf of all persons who purchased
or otherwise acquired Plug securities between november 9, 2020 and March 1, 2021, filed in u.S. district Court for the Central
district of California a complaint captioned Smolíček v. Plug Power Inc. et al., Case no. 2:21-cv-02402 (C.d. Cal.) (the
“Smolíček Complaint”). the Smolíček Complaint is substantially similar to the Class action Complaint, asserting the same
claims, for the same damages, against the same defendants as the Class action Complaint. the Company anticipates that the
Smolíček Complaint will be consolidated with the Class action Complaint under the Private Securities litigation Reform act of
1995.
on March 31, 2021, Company stockholder Junwei liu, derivatively and on behalf of nominal defendant Plug, filed a
complaint in the u.S. district Court for the Southern district of new York against certain Company directors and officers (the
“derivative defendants”), captioned Liu v. Marsh et al., Case no. 1:21-cv-02753 (S.d.n.Y.) (the “Liu derivative Complaint”).
the Liu derivative Complaint alleges that, between november 9, 2020 and March 1, 2021, the derivative defendants “made, or
caused the Company to make, materially false and misleading statements concerning Plug Power’s business, operations, and
prospects” by “issu[ing] positive financial information and optimistic guidance, and made assurances that the Company’s internal
controls were effective,” when, “[i]n reality, the Company’s internal controls suffered from material deficiencies that rendered
them ineffective.” the Liu derivative Complaint asserts claims for (1) breach of fiduciary duties, (2) unjust enrichment, (3) abuse
of control, (4) gross mismanagement, (5) waste of corporate assets, and (6) contribution under Sections 10(b) and 21d of the
exchange act (as to the named officer defendants). the Liu derivative Complaint seeks a judgment “[d]eclaring that Plaintiff
may maintain this action on behalf of Plug”; “[d]eclaring that the [derivative] defendants have breached and/or aided and
abetted the breach of their fiduciary duties”; “awarding to Plug Power the damages sustained by it as a result of the violations”
set forth in the Liu derivative Complaint, “together with pre-judgment and post-judgment interest thereon”; “[d]irecting Plug
Power and the [derivative] defendants to take all necessary actions to reform and improve Plug Power’s corporate governance
and internal procedures to comply with applicable laws”; and “[a]warding Plaintiff the costs and disbursements of this action,
including reasonable attorneys’ and experts’ fees, costs, and expenses”; and “[s]uch other and further relief as the [c]ourt may
deem just and proper.”
on april 5, 2021, Company stockholders elias levy and Camerohn X. withers, derivatively and on behalf of nominal
defendant Plug, filed a complaint in the u.S. district Court for the Southern district of new York against the derivative
defendants named in the Liu derivative Complaint, captioned Levy et al. v. McNamee et al., Case no. 1:21-cv-02891 (S.d.n.Y.)
(the “Levy derivative Complaint”). the Levy derivative Complaint alleges that, from november 9, 2020 to april 5, 2021, the
derivative defendants “breached their duties of loyalty and good faith” by failing to disclose “(1) that the Company would be
unable to timely file its 2020 annual report due to delays related to the review of classification of certain costs and the
recoverability of the right to use assets with certain leases; (2) that the Company was reasonably likely to report material
weaknesses in its internal control over financial reporting; and (3) that, as a result of the foregoing, defendants’ positive
statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable
basis.” the Levy derivative Complaint asserts claims for (1) breach of fiduciary duty (as to the named director defendants), (2)
unjust enrichment (as to certain named director defendants), (3) waste of corporate assets (as to the named director defendants),
and (4) violations of Sections 10(b) and 21d of the exchange act (as to the named officer defendants). the Levy derivative
Complaint seeks a judgment “declaring that Plaintiffs may maintain this action on behalf of the Company”; finding the
derivative defendants “liable for breaching their fiduciary duties owed to the Company”; directing the derivative defendants “to
take all necessary actions to reform and improve the Company’s corporate governance, risk management, and internal operating
procedures to comply with applicable
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laws”; “awarding damages to the Company for the harm the Company suffered as a result of defendants’ wrongful conduct”;
“awarding damages to the Company for [the named officer derivative defendants’] violations of Sections 10(b) and 21d of the
exchange act”; “awarding Plaintiffs the costs and disbursements of this action, including attorneys’, accountants’, and experts’
fees”; and “awarding such other and further relief as is just and equitable.”
on May 4, 2021, Company stockholder laxman tank, individually and on behalf of all persons who purchased or
otherwise acquired Plug securities between november 9, 2020 and March 16, 2021, filed in u.S. district Court for the Southern
district of new York a complaint captioned Tank v. Plug Power Inc. et al., Case no. 1:21-cv-03985 (S.d.n.Y.) (the “Tank
Complaint”). the Tank Complaint is substantially similar to the Class action Complaint, asserting the same claims, for the same
damages, against the same defendants as the Class action Complaint. the Company anticipates that the Tank Complaint will be
consolidated with the Class action Complaint under the Private Securities litigation Reform act of 1995.
Item 4. Mine Safety Disclosures
not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information and Holders of Record. our common stock is traded on the naSdaQ Capital Market under the
symbol “PluG.” as of april 28, 2021, there were approximately 974 record holders of our common stock. however,
management believes that a significant number of shares are held by brokers in “street name” and that the number of beneficial
stockholders of our common stock exceeds 670,867.
Dividend Policy. we have never declared or paid cash dividends on our common stock and do not anticipate paying
cash dividends in the foreseeable future. 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 may consider.
Five-Year Performance Graph. Below is a line graph comparing the percentage change in the cumulative total return of
the Company’s common stock, based on the market price of the Company’s common stock, with the total return of companies
included within the naSdaQ Clean edge Green energy index (“CelS index”) and the companies included within the Russell
2000 index (“Rut index”) for the period commencing december 31, 2015 and ending december 31, 2020. the calculation of
the cumulative total return assumes a $100 investment in the Company’s common stock, the CelS index and the Rut index on
december 31, 2015 and the reinvestment of all dividends, if any.
Index
Plug Power inc.
naSdaQ Clean edge Green energy index
Russell 2000 index
2015
2016
2017
2018
2019
2020
$ 100.00 $ 56.87 $ 111.85 $ 58.77 $ 149.76 $ 1,607.11
434.93
173.86
$ 152.61
$ 146.15
$ 109.45
$ 118.72
$ 100.00
$ 100.00
$ 96.38
$ 119.48
$ 126.05
$ 135.18
$
$
●
this graph and the accompanying text are not “soliciting material,” are not deemed filed with the SeC and are not to be
incorporated by reference in any filing by us under the Securities act or the exchange act, whether made before or after
the date hereof and irrespective of any general incorporation language in any such filing.
the stock price performance shown on the graph is not necessarily indicative of future price performance.
●
● assuming the investment of $100 on december 31, 2015 and the reinvestment of dividends. the common stock price
performance shown on the graph only reflects the change in our company’s common stock price relative to the noted
indices and is not necessarily indicative of future price performance.
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Item 6. Selected Financial Data
the following tables set forth selected financial data and other operating information of the Company. the selected
statement of operations and balance sheet data for 2020, 2019, 2018, 2017 and 2016, as restated (in thousands, except share and
per share data). the information is only a summary and you should read it in conjunction with the Company’s audited
consolidated financial statements and related notes and other financial information included herein, and item 7, “Management’s
discussion and analysis of Financial Condition and Results of operations.”
Statements Of Operations:
net revenue (1):
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
Gross (loss) profit
operating expenses:
Research and development expense
Selling, general and administrative expenses
impairment of long-lived assets
Change in fair value of contingent consideration
total operating expenses
operating loss
interest and other expense, net
Gain (loss) on extinguishment of debt
Change in fair value of common stock warrant liability
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of discount
net loss attributable to common stockholders
loss per share:
Basic and diluted
weighted average number of common stock outstanding
Balance Sheet Data:
(at end of the period)
unrestricted cash and cash equivalents
total assets (2)
noncurrent liabilities (2)
Stockholders’ equity (deficit)
working capital
2020
2019
as restated
Year ended December 31,
2018
as restated
2017
as restated (3)
2016
as restated (3)
$
(94,295) $
(9,801)
26,620
(16,072)
311
(93,237)
149,920 $
25,217
25,553
29,099
186
229,975
107,175 $
22,002
22,569
22,469
—
174,215
171,404
42,524
35,473
64,640
61,815
323
376,179
(469,416)
27,848
79,348
6,430
1,160
114,786
(584,202)
(60,484)
17,686
—
(627,000)
30,845
(596,155)
(26)
(596,181)
(1.68)
354,790,106
1,312,404
2,251,282
561,997
1,466,919
1,380,830
97,915
34,582
(394)
41,777
45,247
200
219,327
10,648
15,059
43,202
—
—
58,261
(47,613)
(35,691)
(518)
79
(83,743)
$
—
(83,743)
(1,812)
(85,555)
(0.36)
237,152,780
139,496
659,513
394,497
129,904
179,698
$
$
$
$
$
$
$
$
$
$
$
85,205
32,271
5,345
41,361
36,037
—
200,219
(26,004)
12,750
37,685
—
—
50,435
(76,439)
(22,750)
—
4,286
(94,903)
9,295
(85,608)
(52)
(85,660)
(0.39)
218,882,337
38,602
353,455
173,509
(3,588)
2,801
$
$
$
$
62,631 $
16,202
12,869
8,167
284
100,153
55,204
23,782
—
33,544
30,613
308
143,451
(43,298)
13,484
45,010
—
—
58,494
(101,792)
(25,288)
—
—
(127,080)
$
—
(127,080)
(3,098)
(130,178)
(0.60)
216,343,985
24,828
270,810
80,734
70,229
3,886
$
$
$
39,985
17,347
13,687
10,916
884
82,819
30,076
21,263
(1,071)
17,498
19,095
865
87,726
(4,907)
12,324
34,288
—
—
46,612
(51,519)
(6,360)
—
—
(57,879)
392
(57,487)
(104)
(57,591)
(0.32)
180,619,860
46,014
240,832
79,637
85,088
44,448
(1) during the fourth quarter of 2019, the Company early adopted aSu 2019-08, Compensation – Stock Compensation (topic 718) and Revenue from
Contracts with Customers (topic 606) (aSu 2019-08) with retrospective adoption as of January 1, 2019 resulting in changes to previously reported
2019 interim financial information.
(2) effective January 1, 2018, the Company early adopted aSC topic 842, Leases (aSC topic 842). the most significant impact was the recognition
of right of use assets and finance obligations for operating leases on the consolidated balance sheet, as well as recognition of gross profit on
sale/leaseback transactions. the Company corrected its adoption calculation (See note 2, “Restatement of Previously issued Consolidated Financial
Statements,” to the consolidated financial statements and see note 4, “Summary of Significant accounting Policies,” to the consolidated financial
statements.
(3) Certain corrections related to Research and development expenses that should have been reflected as cost of sales have been made to the 2017 and
2016 information. this resulted in $15.2 million and $8.9 million of Research and development expenses being reclassified to cost of sales in 2017
and 2016, respectively. also, as discussed in note 2, “Restatement of Previously issued Consolidated Financial Statements,” to the Consolidated
Financial Statements, a correction of an error related to lease accounting has been recorded in stockholder’s equity in the 2017 information above.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
the discussion contained in this Form 10-K contains “forward-looking statements” within the meaning of Section 27a
of the Securities act and Section 21e of the exchange act, that involve risks and uncertainties. our actual results could differ
materially from those discussed in this annual Report on Form 10-K. in evaluating these statements, you should review Part i,
Forward-looking Statements, Part i, item 1a, “Risk Factors” and our consolidated financial statements and notes thereto
included in Part ii, item 8, “Financial Statements and Supplementary data,” of this annual Report on Form 10-K.
Restatement
this Md&a gives effect to certain adjustments made to our previously reported consolidated financial statements as of
and for the years ended december 31, 2019 and 2018. due to the restatement of these periods, the data set forth in this Md&a
may not be comparable to discussions and data included in our previously filed annual Reports on Form 10-K for 2019 and
2018. Refer to note 2, “Restatement of Previously issued Consolidated Financial Statements,” of the accompanying audited
financial statements for further details related to the Restatement and immaterial correction of errors and the impact on our
consolidated financial statements.
Overview
Plug Power is facilitating the paradigm shift to an increasingly electrified world by innovating cutting-edge hydrogen
and fuel cell solutions. in our core business, we provide and continue to develop commercially-viable hydrogen and fuel cell
product solutions to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some of the world’s
largest retail-distribution and manufacturing businesses. we are focusing our efforts on industrial mobility applications, including
electric forklifts and electric industrial vehicles, at multi-shift high volume manufacturing and high throughput distribution sites
where we believe our products and services provide a unique combination of productivity, flexibility, and environmental benefits.
additionally, we manufacture and sell fuel cell products to replace batteries and diesel generators in stationary backup power
applications. these products have proven valuable with telecommunications, transportation, and utility customers as robust,
reliable, and sustainable power solutions.
Part of our long-term plan includes Plug Power penetrating the on-road vehicle market and large-scale stationary
market. Plug Power’s announcements to form joint ventures with Renault in europe and SK Group in asia not only support this
goal but are expected to provide us with a more global footprint. Plug has been successful with acquisitions, strategic partnerships
and joint ventures, and we plan to continue this mix. For example, we expect our relationships with Brookfield and apex to
provide us access to low-cost renewable energy, which is critical to low-cost green hydrogen.
our current products and services include:
Gendrive: Gendrive is our hydrogen fueled PeM fuel cell system providing power to material handling electric
vehicles, including class 1, 2, 3 and 6 electric forklifts, aGVs and ground support equipment;
GenFuel: GenFuel is our liquid hydrogen fueling delivery, generation, storage, and dispensing system;
GenCare: GenCare is our ongoing ‘internet of things’-based maintenance and on-site service program for Gendrive fuel
cell systems, GenSure fuel cell systems, GenFuel hydrogen storage and dispensing products and ProGen fuel cell
engines;
GenSure: GenSure is our stationary fuel cell solution providing scalable, modular PeM fuel cell power to support the
backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; GenSure
high Power Fuel Cell Platform will support large scale stationary power and data center markets.
GenKey: GenKey is our vertically integrated “turn-key” solution combining either Gendrive or GenSure fuel cell power
with GenFuel fuel and GenCare aftermarket service, offering complete simplicity to customers transitioning to fuel cell
power;
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ProGen: ProGen is our fuel cell stack and engine technology currently used globally in mobility and stationary fuel cell
systems, and as engines in electric delivery vans. this includes the Plug Power Mea, a critical component of the fuel
cell stack used in zero-emission fuel cell electric vehicle engines; and
GenFuel electrolyzers: GenFuel electrolyzers are modular, scalable hydrogen generators optimized for clean hydrogen
production. electrolyzers generate hydrogen from water using electricity and a special membrane and “green” hydrogen
is generated by using renewable energy inputs, such as solar or wind power.
we provide our products worldwide through our direct product sales force, and by leveraging relationships with oeMs
and their dealer networks. Plug Power is targeting asia and europe for expansion in adoption. europe has rolled out ambitious
targets for the hydrogen economy and Plug Power is executing on its strategy to become one of the european leaders. this
includes a targeted account strategy for material handling as well as securing strategic partnerships with european oeMs, energy
companies, utility leaders and accelerating our electrolyzer business. we manufacture our commercially viable products in
latham, new York, Rochester, new York and Spokane, washington and support liquid hydrogen generation and logistics in
Charleston, tennessee.
Recent Developments
COVID-19 Update
as a result of the CoVid-19 pandemic, state governments—including those in new York and washington, where our
manufacturing facilities are located—have issued orders requiring businesses that do not conduct essential services to temporarily
close their physical workplaces to employees and customers. we are currently deemed an essential business and, as a result, are
exempt from these state orders, in their current form. in March 2020, we put in place a number of protective measures in response
to the CoVid-19 outbreak. these measures include the canceling of all commercial air travel and all other non-critical travel,
requesting that employees limit non-essential personal travel, eliminating all but essential third-party access to our facilities,
enhancing our facilities’ janitorial and sanitary procedures, encouraging employees to work from home to the extent their job
function enables them to do so, encouraging the use of virtual employee meetings, and providing staggered shifts and social
distancing measures for those employees associated with manufacturing and service operations.
we cannot predict at this time the full extent to which CoVid-19 will impact our business, results and financial
condition, which will depend on many factors. we are staying in close communication with our manufacturing facilities,
employees, customers, suppliers and partners, and acting to mitigate the impact of this dynamic and evolving situation, but there
is no guarantee that we will be able to do so. although as of the date hereof, we have not observed any material impacts to our
supply of components, the situation is fluid. Many of the parts for our products are sourced from suppliers in China and the
manufacturing situation in China remains variable. Supply chain disruptions could reduce the availability of key components,
increase prices or both. Certain of our customers, such as walmart, significantly increased their use of units and hydrogen fuel
consumption as a result of CoVid-19. in the twelve months ended december 31, 2020, our services and PPa margins were
negatively impacted by incremental service costs associated with increased usage of units at some of our primary customer sites.
in addition, future changes in applicable government orders or regulations, or changes in the interpretation of existing orders or
regulations, could result in further disruptions to our business that may materially and adversely affect our financial condition and
results of operations.
Borrowings, Capital Raises and Strategic Investments
on February 24, 2021, the Company completed the previously announced sale of its common stock in connection with a
strategic partnership with SK holdings Co., ltd. (“SK holdings”) to accelerate the use of hydrogen as an alternative energy
source in asian markets. the Company sold 54,966,188 shares of its common stock to a subsidiary of SK holdings at a
purchase price of $29.2893 per share, or an aggregate purchase price of approximately $1.6 billion.
in January and February 2021, the Company issued and sold in a registered equity offering an aggregate of 32.2 million
shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $1.8 billion.
in november 2020, the Company issued and sold in a registered equity offering an aggregate of 43,700,000 shares of its
common stock at a purchase price of $22.25 per share for net proceeds of approximately $927.3 million.
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in each of July and September 2020, the Company borrowed an additional $25.0 million under an amended loan and
security agreement (the “loan agreement”) with Generate lending, llC (“Generate Capital”).
in august 2020, the Company issued and sold in a registered equity offering an aggregate of 35,276,250 shares of its
common stock at a purchase price of $10.25 per share for net proceeds of approximately $344.4 million.
in May 2020, the Company issued $212.5 million in aggregate principal amount of 3.75% Convertible Senior notes.
the total net proceeds from this offering after deducting costs of the issuance were $205.1 million. See note 15, “Convertible
Senior notes, as restated” for more details. the Company used $90.2 million of the net proceeds to purchase $66.3 million of its
5.5% Convertible Senior notes.
Governance
on February 18, 2021, the Company’s Board appointed Kimberly a. harriman as a director and as a member of the
audit Committee of the Board. on February 24, 2021, in connection with the closing of the SK holdings investment, the Board
appointed Kyungyeol Song as a director of the Company. each of Ms. harriman and Mr. Song has been designated as a Class iii
director to serve until the Company's 2023 annual Meeting of Stockholders.
on May 13, 2021, the Board amended and restated the Company’s third amended and Restated Bylaws in order to
clarify and update certain provisions as well as to (i) expressly provide for virtual stockholder meetings by remote
communication (article i, Section 4), (ii) eliminate the requirement to provide notice of any adjourned meeting of the Board
(article ii, Section 9), (iii) provide that shares of all classes or series of the Company’s stock may be uncertificated (article iV,
Section 1), and (iv) designate the federal district courts of the united States of america as the exclusive jurisdiction for any
litigation arising under the Securities act (article Vi, Section 8) (the “amended and Restated Bylaws”). the Board approved the
amended and Restated Bylaws, among other reasons, to align them with current governance practices and, in respect of the
exclusive federal forum provision, in order to seek to reduce any potential expenses that the Company may incur in connection
with any actions or proceedings by seeking to avoid the Company being required to defend any such potential actions or
proceedings in multiple jurisdictions and in parallel proceedings in federal and state courts simultaneously.
Amazon Warrant
in 2017, the Company issued the amazon warrant to acquire up to 55,286,696 shares of the Company’s common stock
(the “amazon warrant Shares”). on december 31, 2020, the Company waived the remaining vesting conditions under the
amazon warrant, which resulted in the immediate vesting of the 20,368,784 unvested third tranche of amazon warrant Shares
and recognition of a $399.7 million reduction to revenue associated with 18,085,395 of the third tranche of amazon warrant
Shares for which reduction of revenue had not been previously recognized as a reduction of revenue.
the $399.7 million reduction to revenue resulting from the december 31, 2020 waiver was determined based upon a
probability assessment of whether the amazon warrant Shares would vest under the terms of the original amazon warrant.
Based upon the Company’s projections of probable future cash collections from amazon (i.e., a type i share based payment
modification), a reduction of revenue of $56.6 million associated with 5,354,905 amazon warrant Shares was recognized at their
previously measured november 2, 2020 fair value of $10.57 per share. a reduction of revenue of $343.1 associated with the
remaining 12,730,490 amazon warrant Shares was recognized at their december 31, 2020 fair value of $26.95 each, based upon
the Company’s assessment that associated future cash collections from amazon were not deemed probable (i.e., a type iii share
based payment modification).
the $399.7 million reduction to revenue was recognized during the year ended december 31, 2020 because the
Company concluded such amount was not recoverable from the margins expected under probable future revenues attributable to
amazon, and no exclusivity or other rights were conferred to the Company in connection with the december 31, 2020 waiver.
additionally, for the year ended december 31, 2020, the Company recorded a reduction to the provision for warrants of $12.8
million in connection with the release of the service loss accrual.
Provision for Common Stock Warrants
in 2017, in separate transactions, the Company issued to each of amazon.com nV investment holdings llC and
walmart, inc. (“walmart”) warrants to purchase shares of the Company’s common stock. the Company recorded a portion
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of the estimated fair value of the warrants as a reduction of revenue based upon the projected number of shares of common stock
expected to vest under the warrants, the proportion of purchases by amazon, walmart and their affiliates within the period
relative to the aggregate purchase levels required for vesting of the respective warrants, and the then-current fair value of the
warrants. during the fourth quarter of 2019, the Company adopted aSu 2019-08, with retrospective adoption as of January 1,
2019. as a result, the amount recorded as a reduction of revenue was measured based on the grant-date fair value of the
warrants. Previously, this amount was measured based on vesting date fair value with estimates of fair value determined at each
financial reporting date for unvested warrant shares considered to be probable of vesting. except for the third tranche, all existing
unvested warrants are measured using a measurement date of January 1, 2019, the adoption date, in accordance with aSu 2019-
08. For the third tranche of the shares under walmart’s warrant, the exercise price will be determined once the second tranche
vests. For the third tranche of the amazon warrant Shares, see above for the exercise price and measurement dates used.
the amount of provision for common stock warrants recorded as a reduction of revenue during the years ended
december 31, 2020, 2019 and 2018 respectively, is shown in the table below (in thousands):
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related
infrastructure
Power Purchase agreements
Fuel delivered to customers
total
Results of Operations
Year ended December 31,
2020
$ (331,135)
(35,972)
(2,777)
(55,163)
$ (425,047)
$
$
2019
(2,037)
(814)
(1,465)
(2,197)
(6,513)
$
$
2018
(4,877)
(1,951)
(262)
(3,100)
(10,190)
our primary sources of revenue are from sales of fuel cell systems and related infrastructure, services performed on fuel
cell systems and related infrastructure, PPas, and fuel delivered to customers. Revenue from sales of fuel cell systems and
related infrastructure represents sales of our Gendrive units, GenSure stationary backup power units, as well as hydrogen fueling
infrastructure. Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our
service and maintenance contracts and sales of spare parts. Revenue from PPas primarily represents payments received from
customers who make monthly payments to access the Company’s GenKey solution. Revenue associated with fuel delivered to
customers represents the sale of hydrogen to customers that has been purchased by the Company from a third party or generated
on site.
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net revenue, cost of revenue, gross profit/(loss) and gross margin for the years ended december 31, 2020, 2019 as
restated, and 2018, as restated, were as follows (in thousands):
For the year ended December 31, 2020:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total
For the year ended December 31, 2019 (as restated):
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total
For the year ended December 31, 2018 (as restated):
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total
Net Revenue
Net
Revenue
Cost of
Revenue
Gross
Profit/(Loss)
Gross
Margin
$
$
$
$
$
$
$
$
$
$
(94,295)
(9,801)
—
26,620
(16,072)
311
(93,237)
149,920
25,217
—
25,553
29,099
186
229,975
107,175
22,002
—
22,569
22,469
$
$
$
$
$
171,404
42,524
35,473
64,640
61,815
323
376,179
97,915
34,582
(394)
41,777
45,247
200
219,327
85,205
32,271
5,345
41,361
36,037
—
—
$
174,215
$
200,219
$
(265,699)
(52,325)
(35,473)
(38,020)
(77,887)
(12)
(469,416)
52,005
(9,365)
394
(16,224)
(16,148)
(14)
10,648
21,970
(10,269)
(5,345)
(18,792)
(13,568)
—
(26,004)
(281.8)%
(533.9)%
— %
(142.8)%
(484.6)%
(3.9)%
(503.5)%
34.7 %
(37.1)%
— %
(63.5)%
(55.5)%
(7.5)%
4.6 %
20.5 %
(46.7)%
— %
(83.3)%
(60.4)%
— %
14.9 %
Revenue – sales of fuel cell systems and related infrastructure. Revenue from sales of fuel cell systems and related
infrastructure represents revenue from the sale of our fuel cells, such as Gendrive units and GenSure stationary backup power
units, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Revenue from sales of fuel
cell systems and related infrastructure for the year ended december 31, 2020 decreased $244.2 million, or 162.9%, to ($94.3)
million from $149.9 million for the year ended december 31, 2019, as restated for 2019. included within revenue was provision
for common stock warrants of $331.1 million and $2.0 million for the years ended december 31, 2020 and 2019, respectively.
the main driver for the decrease in revenue was the increase in provision for common stock warrants which resulted from the
accelerated vesting of the third tranche of the amazon warrant Shares. See “amazon transaction agreement”, below. this
increased level of provision for common stock warrants is not expected to continue because the amazon warrant is fully vested.
offsetting the decrease in revenue was an increase in hydrogen installations related to one significant customer. there were 27
hydrogen fueling infrastructure sites during the year ended december 31, 2020 as compared to four in 2019. also partially
offsetting the revenue decrease was an increase in Gendrive units recognized as revenue. there were 9,418 Gendrive units
recognized as revenue in 2020 as compared to 6,058 in 2019. we continue to enhance our Gendrive units, resulting in lower
maintenance costs, higher run times, and greater efficiency. these enhancements have resulted in higher demand for our
Gendrive product as well as higher sales prices. in addition, the Company continues to broaden its customer portfolio. Pricing
varies amongst customers depending on application and in general the Company has been able to increase average selling prices
for Gendrive units by broadening small to medium size customers, resulting in fewer volume discounts.
Revenue from sales of fuel cell systems and related infrastructure for the year ended december 31, 2019 increased $42.7
million (as restated), or 39.9% (as restated), to $149.9 million (as restated) from $107.2 million (as restated) for the year ended
december 31, 2018. included within revenue was provision for common stock warrants of $2.0 million and $4.9 million for the
years ended december 31, 2019 and 2018, respectively. the main drivers for the increase in revenue were the increase in
Gendrive units recognized as revenue, change in product mix and variations in customer programs, as well as a decrease in the
aforementioned provision for common stock warrants. there were 6,058 Gendrive units
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recognized as revenue during the year ended december 31, 2019, compared to 4,426 for the year ended december 31, 2018. the
increase in Gendrive revenue was partially offset by a decrease in hydrogen fueling infrastructure installations. there were four
sites associated with hydrogen fueling infrastructure revenue during the year ended december 31, 2019, compared to 17 during
the year ended december 31, 2018.
Revenue – services performed on fuel cell systems and related infrastructure. Revenue from services performed on fuel
cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare
parts. Revenue from services performed on fuel cell systems and related infrastructure for the year ended december 31, 2020
decreased $35.0 million, or 138.9%, to ($9.8) million from $25.2 million for the year ended december 31, 2019, as restated for
2019. included within revenue from services was provision for common stock warrants of $36.0 million and $0.8 million for the
years ended december 31, 2020 and 2019, respectively. the main driver for the decrease in revenue was the increase in provision
for common stock warrants which resulted from the accelerated vesting of the third tranche of the amazon warrant Shares. See
“amazon transaction agreement” below. this increased level of provision for common stock warrants is not expected to
continue because the amazon warrant is fully vested. Partially offsetting the decrease in revenue was an increase in average
number of Gendrive units under maintenance contracts. the average number of Gendrive units under maintenance contracts
during the year ended december 31, 2020 was 12,417 compared to 11,485 in 2019. we continue to enhance our Gendrive units,
which has resulted in higher demand for our Gendrive product, as well as higher sales prices.
Revenue from services performed on fuel cell systems and related infrastructure for the year ended december 31, 2019
increased $3.2 million, or 14.6%, to $25.2 million (as restated) from $22.0 million (as restated) for the year ended december 31,
2018. included within revenue from services was provision for common stock warrants of $0.8 million and $2.0 million for the
years ended december 31, 2019 and 2018, respectively, contributing to the increase in revenue. the average number of units
under extended maintenance contracts during the year ended december 31, 2019 was 11,485, compared to 11,035 during the year
ended december 31, 2018. this increase in the average number of units serviced in 2019 coupled with favorable changes in mix
drove the increase in revenue during the period.
Revenue – Power Purchase Agreements. Revenue from PPas represents payments received from customers for power
generated through the provision of equipment and service. Revenue from PPas for the year ended december 31, 2020 increased
$1.1 million, or 4.2%, to $26.6 million from $25.6 million for the year ended december 31, 2019 (as restated). included within
revenue was provision for common stock warrants of $2.8 million and $1.5 million for the years ended december 31, 2020 and
2019, respectively. the increase in revenue was a result of an increase in the average number of units and customer sites party to
these agreements. there was an average of 15,469 units under PPas generating revenue in 2020, compared to 10,478 in 2019.
the average number of sites under PPa arrangements was 39 in 2020, compared to 33 in 2019. the revenue increase from
additional units and sites was partially offset by the increase in provision for common stock warrants. we continue to enhance
our Gendrive units, which has resulted in higher demand for our Gendrive product. in addition, the Company continues to
broaden its customer portfolio. we added a significant customer that uses PPa for our equipment in the second half of 2020, also
contributing to an increase in revenue year over year.
Revenue from PPas for the year ended december 31, 2019 increased $3.0 million (as restated), or 13.2% (as restated),
to $25.6 million (as restated) from $22.6 million (as restated) for the year ended december 31, 2018. included within revenue
was provision for common stock warrants of $1.5 million and $0.3 million for the years ended december 31, 2019 and 2018,
respectively. the increase in revenue from PPas for the year ended december 31, 2019 as compared to the year ended december
31, 2018 was attributable to the increase in the number of units under PPa arrangements, partially offset by the increase in
provision for common stock warrants. the remaining increase was due to the increased number of sites the Company had
deployed under PPa arrangements. the average number of sites under PPa arrangements was 39 in 2019, as compared to 30 in
2018. the 18.2% increase in the average number of sites under PPa arrangements for the year december 31, 2019 compared to
the year ended december 31, 2018 was relatively consistent with the increase in revenue during the same period, partially offset
by the increase in provision for common stock warrants.
Revenue – fuel delivered to customers. Revenue associated with fuel delivered to customers represents the sale of
hydrogen to customers that has been purchased by the Company from a third party or generated on site. Revenue associated with
fuel delivered to customers for the year ended december 31, 2020 decreased $45.2 million, or 155.2%, to ($16.1) million from
$29.1 million for the year ended december 31, 2019 (as restated). included within revenue was provision for common stock
warrants of $55.2 million and $2.2 million for the years ended december 31, 2020 and 2019,
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respectively. the main driver for the decrease in revenue was the increase in provision for common stock warrants which resulted
from the accelerated vesting of the third tranche of the amazon warrant Shares. See “amazon warrant transaction agreement”
above. this increased level of provision for common stock warrants is not expected to continue because the amazon warrant is
fully vested. Partially offsetting the provision of common stock warrants was an increase in fueling sites under contracts. there
were 103 sites associated with fuel contracts at december 31, 2020, compared to 76 at december 31, 2019. this is consistent
with the increased sales of fuel cell systems and related infrastructure sales as well as increases in the level of deployment of PPa
sites.
Revenue associated with fuel delivered to customers for the year ended december 31, 2019 increased $6.6 million, or
29.5%, to $29.1 million (as restated) from $22.5 million (as restated) for the year ended december 31, 2018. included within
revenue was provision for common stock warrants of $2.2 million and $3.1 million for the years ended december 31, 2019 and
2018, respectively, contributing to the increase in revenue. the remaining increase in revenue was primarily due to an increase in
sites taking fuel deliveries in 2019, compared to 2018, as well as an increase in the price of fuel. the average number of sites
receiving fuel deliveries was 76 for the year ended december 31, 2019, as compared to 62 for the year ended december 31, 2018.
Cost of Revenue
Cost of revenue – sales of fuel cell systems and related infrastructure. Cost of revenue from sales of fuel cell systems
and related infrastructure includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our
fuel cells such as Gendrive units and GenSure stationary backup power units, as well as hydrogen fueling infrastructure referred
to at the site level as hydrogen installations.
Cost of revenue from sales of fuel cell systems and related infrastructure for the year ended december 31, 2020
increased $73.5 million, or 75.1%, to $171.4 million, compared to $97.9 million for the year ended december 31, 2019 (as
restated). this increase was primarily driven by an increase in the number of Gendrive units recognized as revenue, as well as an
increase in hydrogen infrastructure installations recognized as revenue. there were 9,418 Gendrive units recognized as revenue
during the year ended december 31, 2020, compared to 6,058 for the year ended december 31, 2019. there were 27 sites
associated with hydrogen fueling infrastructure revenue for the year ended december 31, 2020 compared to 4 for the year ended
december 31, 2019. Gross margin generated from sales of fuel cell systems and related infrastructure was (281.8)% for the year
ended december 31, 2020, down from 34.7% for the year ended december 31, 2019 (as restated), due primarily to the increase in
provision for common stock warrants which resulted from the accelerated vesting of the third tranche of the amazon warrant
Shares. See “amazon transaction agreement” below. this increased level of provision for common stock warrants is not
expected to continue because the amazon warrant is fully vested.
Cost of revenue from sales of fuel cell systems and related infrastructure for the year ended december 31, 2019
increased $12.7 million (as restated), or 14.9% (as restated), to $97.9 million (as restated), compared to $85.2 million (as
restated) for the year ended december 31, 2018. this increase was primarily driven by an increase in the number of Gendrive
units recognized as revenue, partially offset by the decrease in hydrogen infrastructure installations recognized as revenue. there
were 6,058 Gendrive units recognized as revenue during the year ended december 31, 2019, compared to 4,426 for the year
ended december 31, 2018. there were 4 sites associated with hydrogen fueling infrastructure revenue for the year ended
december 31, 2019 compared to 17 for the year ended december 31, 2018. Gross margin generated from sales of fuel cell
systems and related infrastructure was 34.7% (as restated) for the year ended december 31, 2019, up from 20.5% (as restated) for
the year ended december 31, 2018, primarily due to an increase in Gendrive units recognized as revenue and decrease in the
number of hydrogen infrastructure sites deployed, as well as a reduction of provision for common stock warrants.
Cost of revenue – services performed on fuel cell systems and related infrastructure. Cost of revenue from services
performed on fuel cell systems and related infrastructure includes the labor, material costs and allocated overhead costs incurred
for our product service and hydrogen site maintenance contracts and spare parts. Cost of revenue from services performed on fuel
cell systems and related infrastructure for the year ended december 31, 2020 increased $7.9 million, or 23.0%, from $34.6
million to $42.5 million for the year ended december 31, 2019 (as restated) primarily due to an increase in the number of units
under maintenance contracts. there were 12,417 units under maintenance contracts generating revenue during the year ended
december 31, 2020, compared to 11,485 for the year ended december 31, 2019, on average. Gross margin declined to (533.9)%
for the year ended december 31, 2020 compared to (37.1)% for the year ended december 31, 2019 primarily due to the increase
in provision for common stock warrants which resulted from the
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accelerated vesting of the third tranche of the amazon warrant Shares. See “amazon transaction agreement” below. this
increased level of provision for common stock warrants is not expected to continue because the amazon warrant is fully vested.
additionally, there were increased costs as a result of additional usage due to CoVid-19 run hour requirements at customer sites,
as well as increased costs due to investments related to stack performance. these stack enhancements are expected to decrease
service costs in the future.
Cost of revenue from services performed on fuel cell systems and related infrastructure for the year ended december 31,
2019 increased $2.3 million, or 7.2% (as restated), from $32.3 million (as restated) to $34.6 million (restated) for the year ended
december 31, 2018. Gross margin improved to (37.1%) (as restated) for the year ended december 31, 2019 compared to (46.7%)
(as restated) for the year ended december 31, 2018 primarily due to program investments targeting performance improvement
and variation in maintenance cycles.
Cost of revenue – provision for loss accrual. the Company recorded a provision for loss accrual during 2020 of $35.5
million, an increase of $35.9 million over the net benefit for loss contracts related to service recorded in 2019 of $394 thousand
(as restated). the increase in the provision for loss accrual during 2020 was driven primarily by an increase in estimated
projected costs to service units and an increase in the number of service contracts during 2020. the Company determined during
2020, based on historical experience, that certain cost down initiatives were taking longer to achieve than originally estimated.
as a result, the Company increased its estimated projected costs to service fuel cell systems and related infrastructure.
additionally, the Company determined during the third quarter of 2020 that the projected provision for the amazon warrant
would be significantly higher than previously experienced (see discussion of the amazon transaction agreement). lastly, the
Company entered into 19 new service contracts during 2020, compared to one new service contract in 2019.
the Company recorded a net benefit for loss accrual during 2019 of $394 thousand (as restated), a decrease of $5.7
million (as restated) over the provision recorded in 2018 of $5.3 million (as restated). the decrease in the provision for loss
accrual during 2019 was driven primarily by the passage of time on the contract portfolio and limited number of new contracts in
2019. the Company entered into one new service contract during 2019, compared to five new service contracts in 2018.
Cost of revenue – Power Purchase Agreements. Cost of revenue from PPas includes depreciation of assets utilized and
service costs to fulfill PPa obligations and interest costs associated with certain financial institutions for leased equipment. Cost
of revenue from PPas for the year ended december 31, 2020 increased $22.9 million, or 54.7%, to $64.6 million from $41.8
million for the year ended december 31, 2019, as restated. the increase in cost was a result of an increase in the average number
of units and customer sites party to these agreements. there was an average of 15,469 units under PPas recognized as revenue in
2020, compared to 10,478 in 2019. the average number of sites under PPa arrangements was 39 in 2020, compared to 33 in
2019. Gross margin declined to (142.8)% for the year ended december 31, 2020 compared to (63.5)% for the year ended
december 31, 2019, primarily due to the increase in provision for common stock warrants and increase in costs related to greater
utilization of Gendrive units at a significant customer site, due to higher demand on customer warehouse equipment as a result of
CoVid-19.
Cost of revenue from PPas for the year ended december 31, 2019 increased $0.4 million (as restated), or 1.0% (as
restated), to $41.8 million (as restated) from $41.4 million (as restated) for the year ended december 31, 2018. the increase was
a result of an increase in the number of customer sites party to these agreements. Gross margin improved to (63.5%) (as restated)
for the year ended december 31, 2019 compared to (83.3%) (as restated) for the year ended december 31, 2018, primarily due to
reliability improvements and increased labor leverage on a growing fleet, which resulted in improved service cost per unit.
Cost of revenue – fuel delivered to customers. Cost of revenue from fuel delivered to customers represents the purchase
of hydrogen from suppliers that ultimately is sold to customers. Cost of revenue from fuel delivered to customers for the year
ended december 31, 2020 increased $16.6 million, or 36.6%, to $61.8 million from $45.2 million for the year ended december
31, 2019, as restated. the increase was due primarily to higher volume of liquid hydrogen delivered to customer sites as a result
of an increase in the number of hydrogen installations completed under GenKey agreements and higher fuel costs. there were
103 sites associated with fuel contracts at december 31, 2020, compared to 76 at december 31, 2019. Gross margin declined to
(484.6)% during the year ended december 31, 2020 compared to (55.5)% during the year ended december 31, 2019 (as restated),
primarily due to the increase in provision for common stock warrants which resulted from the accelerated vesting of the third
tranche of the amazon warrant Shares. See “amazon transaction agreement” below. this increased level of provision for
common stock warrants is not expected to continue because the amazon warrant is fully vested. the Company also experienced
an increase in the cost of fuel purchased during the second
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half of 2020 given issues with a particular supplier. this trend is not expected to continue beyond 2021 as the Company
transitions to its own hydrogen production capabilities.
Cost of revenue from fuel delivered to customers for the year ended december 31, 2019 increased $9.2 million (as
restated), or 25.6% (as restated), to $45.2 million (as restated) from $36.0 million (as restated) for the year ended december 31,
2018. the increase was due primarily to higher volume of liquid hydrogen delivered to customer sites as a result of an increase
in the number of hydrogen installations completed under GenKey agreements and higher fuel costs. Gross margin improved to
(55.5%) (as restated) during the year ended december 31, 2019 compared to (60.4%) (as restated) during the year ended
december 31, 2018 given certain efficiency investments and reduction in customer warrant provisions offset somewhat by
increases in fuel costs and incremental depreciation on tanks and related fuel equipment stemming from investments made to
improve fuel system efficiency.
Expenses
Research and development expense. Research and development expense includes: materials to build development and
prototype units, cash and non-cash compensation and benefits for the engineering and related staff, expenses for contract
engineers, fees paid to consultants for services provided, materials and supplies consumed, facility related costs such as computer
and network services, and other general overhead costs associated with our research and development activities.
Research and development expense for the year ended december 31, 2020 increased $12.8 million, or 84.9%, to $27.8
million from $15.1 million for the year ended december 31, 2019, as restated. the increase was primarily due to additional
research and development for improvement of fuel efficiency, Gendrive unit performance, and new product development such as
on-road delivery trucks, and drone applications.
Research and development expense for the year ended december 31, 2019 increased $2.3 million (as restated), or 18.1%
(as restated), to $15.1 million (as restated) from $12.8 million (as restated) for the year ended december 31, 2019. the increase
was primarily due to additional research and development for fuel efficiency, Gendrive unit performance, and new product
development such as on-road delivery trucks, drone applications.
Selling, general and administrative expenses. Selling, general and administrative expenses includes cash and non-cash
compensation, benefits, amortization of intangible assets and related costs in support of our general corporate functions, including
general management, finance and accounting, human resources, selling and marketing, information technology and legal services.
Selling, general and administrative expenses for the year ended december 31, 2020 increased $36.1 million, or 83.7%,
to $79.3 million from $43.2 million for the year ended december 31, 2019 (as restated). this increase was primarily related to
acquisition and debt restructuring charges in addition to increases in compensation and headcount.
Selling, general and administrative expenses for the year ended december 31, 2019 increased $5.5 million (as restated),
or 14.6% (as restated), to $43.2 million (as restated) from $37.7 million (as restated) for the year ended december 31, 2018. this
increase was primarily related to an increase in performance and stock-based compensation during the year ended december 31,
2019, offset by a decrease in a certain legal accrual recorded during the year ended december 31, 2018.
Contingent Consideration. in the second quarter of 2020, the Company recorded on its consolidated balance sheet a
liability of $8.9 million representing the fair value of contingent consideration issued in the acquisitions of Giner elX and uhG.
the fair value of this contingent consideration was remeasured as of december 31, 2020 and was estimated to be $10.2 million.
this change in fair value of $1.2 million was recorded as an expense in the consolidated statement of operations for the year
ended december 31, 2020. See note 5, “acquisitions,” to the consolidated financial statements for further details.
Interest and other expense, net. interest and other expense, net consists of interest and other expenses related to our
long-term debt, convertible senior notes, obligations under finance leases and our finance obligations, as well as foreign currency
exchange losses, offset by interest and other income consisting primarily of interest earned on our cash and cash equivalents,
restricted cash, foreign currency exchange gains and other income. the Company entered into a series of finance leases with
Generate Capital during 2018. approximately $50.0 million of these finance leases were terminated and replaced with long-term
debt with Generate Capital in March 2019. additionally, in September of 2019 and March of
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2018, the Company issued convertible senior notes in a private placement to qualified institutional buyers pursuant to Rule 144a
under the Securities act. Since december 31, 2019, the Company assumed approximately $100 million of additional long-term
debt at 9.50% interest, issued $212.5 million convertible senior notes at 3.75% interest, and entered into additional sale/leaseback
finance obligation arrangements at an incremental borrowing rates ranging from 10.75% to 12.00%.
net interest and other expense for the year ended december 31, 2020, increased $24.8 million or 69.5%, as compared to
the year ended december 31, 2019 (as restated). this increase was attributable to an increase in interest expense associated with
the Company’s increased finance obligations, long-term debt and the issuance of the convertible senior notes, as mentioned
above.
net interest and other expense for the year ended december 31, 2019, increased $12.9 million (as restated) or 56.9% (as
restated), as compared to the year ended december 31, 2018 (as restated). this increase was attributed to the increase in finance
leases and long-term debt during 2019 and the issuance of convertible senior notes in September 2019 and March 2018, as
mentioned above.
Common Stock Warrant Liability
the Company accounts for certain common stock warrants, other than the amazon warrant and the warrant issued to
walmart, as common stock warrant liability with changes in the fair value reflected in the consolidated statement of operations as
change in the fair value of common stock warrant liability.
all remaining common stock warrants were fully exercised in the fourth quarter of 2019. as such, there was no change
in fair value of common stock warrant liability for the year ended december 31, 2020.
the change in fair value of common stock warrant liability for the year ended december 31, 2019 resulted in a decrease
in the associated warrant liability of $79 thousand as compared to a decrease of $4.3 million for the year ended december 31,
2018. these variances were primarily due to changes in the average remaining term of the warrants, an increase in Company’s
common stock price, and changes in volatility of our common stock, which are significant inputs to the Black-Scholes valuation
model used to calculate the fair value of these warrants at each financial reporting date. all of these warrants were exercised on
october 15, 2019 for net proceeds of $14.1 million.
Gain (Loss) on Extinguishment of Debt
during the fourth quarter of 2020, the Company issued an aggregate of 14,615,615 shares in connection with the
conversion of approximately $33.5 million of its 5.5% Convertible Senior notes. the resulting gain of approximately $4.5
million is reflected in the consolidated statement of operations for the year ended december 31, 2020.
in May 2020, the Company used a portion of the net proceeds from the issuance of the 3.75% Convertible Senior notes
to repurchase approximately $66.3 million of the 5.5% Convertible Senior notes which resulted in a $13.2 million gain on early
debt extinguishment.
in March 2019, the Company restructured its long-term debt with nY Green Bank, a division of the new York State
energy Research & development authority (“nY Green Bank”), which resulted in a loss on early debt extinguishment of $0.5
million.
Income Tax
the Company recognized an income tax benefit for the year ended december 31, 2020 of $30.8 million resulting from a
source of future taxable income attributable to the net credit to additional paid-in capital of $25.6 million related to the issuance
of the 3.75% Convertible Senior notes, offset by the partial extinguishment of the 5.5% Convertible Senior notes and $5.2
million of income tax benefit for the year ended december 31, 2020 related to the recognition of net deferred tax liabilities in
connection with the acquisition of Giner elX. this resulted in a corresponding reduction in our deferred tax asset valuation
allowance. the Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net
deferred tax assets, which remain fully reserved.
the net deferred tax asset generated from the Company’s current period nol has been offset by a full valuation
allowance because it is more likely than not that the tax benefits of the nol carry forward will not be realized. the
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Company recognizes interest and penalties on the interest and other expense, net line in the accompanying consolidated
statements of operations.
the Company recognized an income tax benefit for the years ended december 31, 2019 and 2018 of $0 and $9.3 million
(as restated), respectively. the 2018 income tax benefit resulted from a source of future taxable income attributable to the net
credit to additional paid-in capital related to the issuance of the $100 million Convertible Senior notes discussed in note 15,
“Convertible Senior notes, as restated.” the Company has not changed its overall conclusion with respect to the need for a
valuation allowance against its net deferred tax assets, which remain fully reserved.
Liquidity and Capital Resources
during 2020, the Company issued and sold 79.0 million shares in two separate, registered equity offerings, resulting in
net proceeds of approximately $1.3 billion. See note 16, “Stockholders’ equity.” in May 2020, the Company issued $212.5
million in aggregate principal amount of 3.75% Convertible Senior notes due June 1, 2025, in a private placement to qualified
institutional buyers. See note 15, “Convertible Senior notes.”
as of december 31, 2020, the Company had $1.3 billion of cash and cash equivalents and $321.9 million of restricted
cash. in January and February 2021, the Company issued and sold in another registered equity offering an aggregate of
32,200,000 shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $1.8 billion.
Furthermore in February 2021, the Company completed the previously announced sale of its common stock in connection with a
strategic partnership with SK holdings to accelerate the use of hydrogen as an alternative energy source in asian markets. the
Company sold 54,996,188 shares of its common stock to a subsidiary of SK holdings at a purchase price of $29.2893 per share,
or an aggregate purchase price of approximately $1.6 billion. See note 23, “Subsequent events.”
the Company has continued to experience negative cash flows from operations and net losses. the Company incurred
net losses attributable to common stockholders of $596.2 million, $85.6 million and $85.7 million for the years ended december
31, 2020, 2019, and 2018, respectively (2019 and 2018 as restated). the Company’s cash used in operations totaled $155.5
million, $53.3 million, and $58.4 million for the year ended december 31, 2020, 2019 and 2018, and had an accumulated deficit
of $1.9 billion at december 31, 2020.
the Company’s significant obligations consisted of the following as of december 31, 2020:
(i)
(ii)
(iii)
operating and finance leases totaling $113.9 million and $5.4 million, respectively, of which $14.3 million
and $903 thousand, respectively, are due within the next 12 months. these leases are primarily related to
sale/leaseback agreements entered into with various financial institutions to facilitate the Company’s
commercial transactions with key customers.
Finance obligations totaling $181.6 million of which approximately $32.7 million are due within the next 12
months. Finance obligations consist primarily of debt associated with sale of future revenues and failed sale-
leaseback financings.
long-term debt, primarily related to the Company’s loan agreement with Generate Capital, totaling $175.4
million of which $25.4 million is classified as short term on the consolidated balance sheets.
(iv)
Convertible senior notes totaling $85.6 million at december 31, 2020
the Company believes that its current working capital of $1.4 billion at december 31, 2020, which includes cash and
cash equivalents of $1.3 billion, together with proceeds from the January 2021 registered equity offering and SK Group
investment, will provide sufficient liquidity to fund operations for a least one year after the date the financial statements are
issued.
the Company plans to invest a portion of its available cash to expand its current production and manufacturing capacity
and to fund strategic acquisitions and partnerships and capital projects. Future use of the Company’s funds is discretionary and
the Company believes that its future working capital and cash position will be sufficient to fund operations even after these
growth investments.
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Public and Private Offerings of Equity and Debt
Common Stock Issuances
in February 2021, the Company completed the previously announced sale of its common stock in connection with a
strategic partnership with SK holdings to accelerate the use of hydrogen as an alternative energy source in asian markets. the
Company sold 54,966,188 shares of its common stock to a subsidiary of SK holdings at a purchase price of $29.2893 per share,
or an aggregate purchase price of approximately $1.6 billion
in January and February 2021, the Company issued and sold in a registered equity offering an aggregate of 32,200,000
shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $1.8 billion. See note 23,
“Subsequent events.”
in november 2020, the Company issued and sold in a registered direct offering an aggregate of 43,700,000 shares of its
common stock at a purchase price of $22.25 per share for net proceeds of approximately $927.3 million.
in august 2020, the Company issued and sold in a registered direct offering an aggregate of 35,276,250 shares of its
common stock at a purchase price of $10.25 per share for net proceeds of approximately $344.4 million.
on april 13, 2020, the Company entered into the at Market issuance Sales agreement with B. Riley Financial (“B.
Riley”), as sales agent, pursuant to which the Company may offer and sell, from time to time through B. Riley, shares of
Company common stock having an aggregate offering price of up to $75.0 million. as of the date of this filing, the Company has
not issued any shares of common stock pursuant to the at Market issuance Sales agreement.
in december 2019, the Company issued and sold in a registered public offering an aggregate of 46 million shares of its
common stock at a purchase price of $2.75 per share for net proceeds of approximately $120.4 million.
in March 2019, the Company issued and sold in a registered direct offering an aggregate of 10 million shares of its
common stock at a purchase price of $2.35 per share. the net proceeds to the Company were approximately $23.5 million.
Prior to december 31, 2019, the Company entered into a previous at Market issuance Sales agreement with B. Riley,
which was terminated in the fourth quarter of 2019. under this at Market issuance Sales agreement, for the year ended
december 31, 2019, the Company issued 6.3 million shares of common stock, resulting in net proceeds of $14.5 million and for
the year ended december 31, 2018, the Company issued 3.8 million shares of common stock, resulting in net proceeds of $7.0
million.
Convertible Senior Notes
in May 2020, the Company issued $212.5 million in aggregate principal amount of 3.75% Convertible Senior notes.
the total net proceeds from this offering, after deducting costs of the issuance, were $205.1 million. the Company used $90.2
million of the net proceeds from the offering of the 3.75% Convertible Senior notes to repurchase $66.3 million of the $100
million in aggregate principal amount of the 5.5% Convertible Senior notes. in addition, the Company used approximately $16.3
million of the net proceeds from the offering of the 3.75% Convertible Senior notes to enter into privately negotiated capped
called transactions. in the fourth quarter of 2020, $33.5 million of the remaining 5.5% Convertible Senior notes were converted
into 14.6 million shares of common stock, resulting in a gain of approximately $4.5 million which was recorded on the
consolidated statement of operations on the gain (loss) on extinguishment of debt line. as of december 31, 2020, approximately
$160 thousand aggregate principal amount of the 5.5% Convertible Senior notes remained outstanding, all of which were
converted to common stock in January 2021.
in September 2019, the Company issued $40.0 million in aggregate principal amount of 7.5% convertible senior note
due 2023, which we refer to herein as the 7.5% Convertible Senior note. the Company’s total obligation, net of interest
accretion, due to the holder was $48.0 million. the total net proceeds from this offering, after deducting costs of the issuance,
were $39.1 million. on July 1, 2020, the note automatically converted fully into 16.0 million shares of common stock.
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Secured Debt
in March 2019, the Company entered into a loan and security agreement, as amended (the “loan agreement”), with
Generate lending, llC (“Generate Capital”), providing for a secured term loan facility in the amount of $100 million (the “term
loan Facility”). the Company used the proceeds to pay off in full the Company’s previous loan with nY Green Bank a division
of the new York State energy Research & development (“Green-Bank loan”) and terminate and re-purchase certain equipment
leases with Generate Plug Power SlB ii, llC. in connection with this transaction, the Company recognized a loss on
extinguishment of debt of approximately $0.5 million during the year ended december 31, 2019. this loss was recorded in gain
(loss) on extinguishment of debt, in the Company’s consolidated statement of operations. the Company borrowed an incremental
$20 million in november 2019.
additionally, during the year ended december 31, 2020, the Company, under another series of amendments to the loan
agreement, borrowed an incremental $100 million. as part of the amendment to the loan agreement, the Company’s interest
rate on the secured term loan facility was reduced to 9.50% from 12.00% per annum, and the maturity date was extended to
october 31, 2025 from october 6, 2022. on december 31, 2020, the outstanding balance under the term loan Facility was
$165.8 million.
the loan agreement includes covenants, limitations, and events of default customary for similar facilities. interest and
a portion of the principal amount is payable on a quarterly basis. Principal payments are funded in part by releases of restricted
cash, as described in note 22, “Commitments and Contingencies, as restated.” Based on the amortization schedule as of
december 31, 2020, the loan balance under the term loan Facility will be fully paid by october 31, 2025.
the term loan Facility is secured by substantially all of the Company’s and the guarantor subsidiaries’ assets,
including, among other assets, all intellectual property, all securities in domestic subsidiaries and 65% of the securities in foreign
subsidiaries, subject to certain exceptions and exclusions.
the loan agreement provides that if there is an event of default due to the Company’s insolvency or if the Company
fails to perform in any material respect the servicing requirements for fuel cell systems under certain customer agreements, which
failure would entitle the customer to terminate such customer agreement, replace the Company or withhold the payment of any
material amount to the Company under such customer agreement, then Generate Capital has the right to cause Proton Services
inc., a wholly owned subsidiary of the Company, to replace the Company in performing the maintenance services under such
customer agreement.
additionally, $1.75 million was paid to an escrow account related to additional fees due in connection with the
GreenBank loan if the Company does not meet certain new York State employment and fuel cell deployment targets by March
2021. during the year ended december 31, 2020, the Company received $250 thousand from escrow related to the new York
state employment targets. the Company received an additional $700 thousand in March 2021 for meeting the employment
targets and this amount was recorded in short-term other assets on the Company’s consolidated balance sheet as of december 31,
2020. the Company did not meet the deployment targets and charged-off the balance of $800 thousand to interest expense as of
december 31, 2020.
as of december 31, 2020 the term loan Facility requires the principal balance as of each of the following dates not to
exceed the following (in thousands):
december 31, 2021
december 31, 2022
december 31, 2023
december 31, 2024
december 31, 2025
127,317
93,321
62,920
33,692
—
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Several key indicators of liquidity are summarized in the following table (in thousands):
Cash and cash equivalents at end of period
Restricted cash at end of period
working capital at end of period
net loss attributable to common stockholders
net cash (used in) provided by operating activities
net cash used in investing activities
net cash provided by financing activities
2020
$ 1,312,404
321,880
1,380,830
(596,181)
(155,476)
(95,334)
1,515,529
2019
(as restated)
$ 139,496
230,004
179,698
(85,555)
(53,324)
(14,244)
326,974
$
2018
(as restated)
38,602
71,551
2,801
(85,660)
(58,350)
(19,572)
120,077
3.75% Convertible Senior Notes
on May 18, 2020, the Company issued $200.0 million in aggregate principal amount of 3.75% Convertible Senior
notes, in a private placement to qualified institutional buyers pursuant to Rule 144a under the Securities act. on May 29, 2020,
the Company issued an additional $12.5 million in aggregate principal amount of 3.75% Convertible Senior notes.
at issuance in May 2020, the total net proceeds from the 3.75% Convertible Senior notes were as follows:
Principal amount
less initial purchasers' discount
less cost of related capped calls
less other issuance costs
net proceeds
Amount
(in thousands)
212,463
(6,374)
(16,253)
(617)
189,219
$
$
the 3.75% Convertible Senior notes bear interest at a rate of 3.75% per year, payable semi-annually in arrears on June
1 and december 1 of each year, beginning on december 1, 2020. the notes will mature on June 1, 2025, unless earlier
converted, redeemed or repurchased in accordance with their terms.
the 3.75% Convertible Senior notes are senior, unsecured obligations of the Company and rank senior in right of
payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the notes, equal in right of
payment to any of the Company’s existing and future liabilities that are not so subordinated, including the Company’s $100
million in aggregate principal amount of the 5.5% Convertible Senior notes due 2023 (the “5.5% Convertible Senior notes”),
effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the collateral
securing such indebtedness, and structurally subordinated to all indebtedness and other liabilities, including trade payables, of its
current or future subsidiaries.
holders of the 3.75% Convertible Senior notes may convert their notes at their option at any time prior to the close of
the business day immediately preceding december 1, 2024 in the following circumstances:
1)
2)
during any calendar quarter commencing after december 31, 2020, if the last reported sale price of the Company’s
common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not
consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the
immediately preceding calendar quarter;
during the five business days after any five consecutive trading day period (such five consecutive trading day
period, the measurement period) in which the trading price per $1,000 principal amount of the 3.75% Convertible
Senior notes for each trading day of the measurement period was less than 98% of the product of the last reported
sale price of the Company’s common stock and the conversion rate on each such trading day;
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3)
4)
if the Company calls any or all of the 3.75% Convertible Senior notes for redemption, any such notes that have
been called for redemption may be converted at any time prior to the close of business on the second scheduled
trading day immediately preceding the redemption date; or
upon the occurrence of specified corporate events, as described in the indenture governing the 3.75% Convertible
Senior notes.
on or after december 1, 2024, the holders of the 3.75% Convertible Senior notes may convert all or any portion of their
notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date
regardless of the foregoing conditions.
the initial conversion rate for the 3.75% Convertible Senior notes is 198.6196 shares of the Company’s common stock
per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $5.03 per share of the
Company’s common stock, subject to adjustment upon the occurrence of specified events. upon conversion, the Company will
pay or deliver, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the
Company’s common stock, at the Company’s election. during January and February of 2021, $15.2 million of the 3.75%
Convertible Senior notes were converted and the Company has issued 3.0 million shares in conjunction with these conversions.
in addition, following certain corporate events or following issuance of a notice of redemption, the Company will
increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or convert its
notes called for redemption during the related redemption period in certain circumstances.
the 3.75% Convertible Senior notes will be redeemable, in whole or in part, at the Company’s option at any time, and
from time to time, on or after June 5, 2023 and before the 41st scheduled trading day immediately before the maturity date, at a
cash redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if
any, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price then
in effect for at least 20 trading days (whether or not consecutive), including at least one of the three trading days immediately
preceding the date the Company sends the related redemption notice, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on which the Company sends such redemption notice.
if the Company undergoes a “fundamental change” (as defined in the indenture), holders may require the Company to
repurchase their notes for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the
principal amount of the notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change
repurchase date.
in accounting for the issuance of the 3.75% Convertible Senior notes, the Company separated the notes into liability
and equity components. the initial carrying amount of the liability component of approximately $75.2 million, net of costs
incurred, was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. the
carrying amount of the equity component of approximately $130.3 million, net of costs incurred, representing the conversion
option, was determined by deducting the fair value of the liability component from the par value of the 3.75% Convertible Senior
notes. the difference between the principal amount of the 3.75% Convertible Senior notes and the liability component (the debt
discount) is amortized to interest expense using the effective interest method over the term of the 3.75% Convertible Senior
notes. the effective interest rate is approximately 29.0%. the equity component of the 3.75% Convertible Senior notes is
included in additional paid-in capital in the consolidated balance sheets and is not remeasured as long as it continues to meet the
conditions for equity classification.
we incurred transaction costs related to the issuance of the 3.75% Convertible Senior notes of approximately $7.0
million, consisting of initial purchasers’ discount of approximately $6.4 million and other issuance costs of $0.6 million. in
accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same
proportions as the proceeds from the 3.75% Convertible Senior notes. transaction costs attributable to the liability component
were approximately $2.6 million, were recorded as debt issuance cost (presented as contra debt in the consolidated balance
sheets) and are being amortized to interest expense over the term of the 3.75% Convertible Senior notes. the transaction costs
attributable to the equity component were approximately $4.4 million and were netted with the equity component in
stockholders’ equity.
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the 3.75% Convertible Senior notes consisted of the following (in thousands):
Principal amounts:
Principal
unamortized debt discount (1)
unamortized debt issuance costs (1)
net carrying amount
Carrying amount of the equity component (2)
December 31,
2020
$
$
$
212,463
(124,655)
(2,295)
85,513
130,249
1)
2)
included in the consolidated balance sheets within the 3.75% Convertible Senior notes, net and amortized over the
remaining life of the notes using the effective interest rate method.
included in the consolidated balance sheets within additional paid-in capital, net of the associated income tax benefit
of $29.8 million.
Based on the closing price of the Company’s common stock of $33.91 on december 31, 2020, the if-converted value of
the notes was greater than the principal amount. the estimated fair value of the note at december 31, 2020 was approximately
$1.3 billion. Fair value estimation was primarily based on a stock exchange, active trade on december 29, 2020 of the 3.75%
Senior Convertible note. the Company considers this a level 1 fair value measurement. Refer to note 4, “Summary of
Significant accounting Policies.”
Capped Call
in conjunction with the pricing of the 3.75% Convertible Senior notes, the Company entered into privately negotiated
capped call transactions (the “3.75% notes Capped Call”) with certain counterparties at a price of $16.3 million. the 3.75%
notes Capped Call covers, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock
that underlie the initial 3.75% Convertible Senior notes and is generally expected to reduce potential dilution to the Company’s
common stock upon any conversion of the 3.75% Convertible Senior notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of the converted notes, as the case may be, with such reduction and/or offset
subject to a cap based on the cap price. the cap price of the 3.75% notes Capped Call is initially $6.7560 per share, which
represents a premium of approximately 60% over the last then-reported sale price of the Company’s common stock of $4.11 per
share on the date of the transaction and is subject to certain adjustments under the terms of the 3.75% notes Capped Call. the
3.75% notes Capped Call becomes exercisable if the conversion option is exercised.
the net cost incurred in connection with the 3.75% notes Capped Call has been recorded as a reduction to additional
paid-in capital in the consolidated balance sheet.
7.5% Convertible Senior Note
in September 2019, the Company issued $40.0 million aggregate principal amount of 7.5% Convertible Senior note, in
exchange for net proceeds of $39.1 million, in a private placement to an accredited investor pursuant to Rule 144a under the
Securities act. there were no required principal payments prior to the maturity of the 7.5% Convertible Senior note. upon
maturity of the 7.5% Convertible Senior note, the Company was required to repay 120% of $40.0 million, or $48.0 million. the
7.5% Convertible Senior note bore interest at 7.5% per year, payable quarterly in arrears on January 5, april 5, July 5 and
october 5 of each year beginning on october 5, 2019 and was to mature on January 5, 2023 unless earlier converted or
repurchased in accordance with its terms. the 7.5% Convertible Senior note was unsecured and did not contain any financial
covenants or any restrictions on the payment of dividends, or the issuance or repurchase of common stock by the Company.
on July 1, 2020, the 7.5% Convertible Senior note automatically converted into 16.0 million shares of common stock.
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5.5% Convertible Senior Notes
in March 2018, the Company issued $100.0 million in aggregate principal amount of the 5.5% Convertible Senior notes
due on March 15, 2023 in a private placement to qualified institutional buyers pursuant to Rule 144a under the Securities act.
in May 2020, the Company used a portion of the net proceeds from the issuance of the 3.75% Convertible Senior notes
to finance the cash portion of the partial repurchase of the 5.5% Convertible Senior notes, which consisted of a repurchase of
approximately $66.3 million in aggregate principal amount of the 5.5% Convertible Senior notes in privately-negotiated
transactions for aggregate consideration of $128.9 million, consisting of approximately $90.2 million in cash and approximately
9.4 million shares of the Company’s common stock. of the $128.9 million in aggregate consideration, $35.5 million and $93.4
million were allocated to the debt and equity components, respectively, utilizing an effective discount rate of 29.8% to determine
the fair value of the liability component. as of the repurchase date, the carrying value of the 5.5% Convertible Senior notes that
were repurchased, net of unamortized debt discount and issuance costs, was $48.7 million. the partial repurchase of the 5.5%
Convertible Senior notes resulted in a $13.2 million gain on early debt extinguishment. in the fourth quarter of 2020, $33.5
million of the remaining 5.5% Convertible Senior notes converted into 14.6 million shares of common stock which resulted in a
gain of approximately $4.5 million which was recorded on the consolidated statement of operations on the gain (loss) on
extinguishment of debt line. as of december 31, 2020, approximately $160 thousand aggregate principal amount of the 5.5%
Convertible Senior notes remained outstanding, all of which were converted to common stock in January 2021.
Capped Call
in conjunction with the pricing of the 5.5% Convertible Senior notes, the Company entered into the 5.5% notes Capped
Call with certain counterparties at a price of $16.0 million to reduce the potential dilution to the Company’s common stock upon
any conversion of the 5.5% Convertible Senior notes and/or offset any cash payments the Company is required to make in excess
of the principal amount of the converted 5.5% Convertible Senior notes, as the case may be. the net cost incurred in connection
with the 5.5% notes Capped Call has been recorded as a reduction to additional paid-in capital in the consolidated balance sheets.
in conjunction with the partial repurchase of the 5.5% Convertible Senior notes, the Company terminated 100% of the
5.5% notes Capped Call on June 5, 2020. as a result of the termination, the Company received $24.2 million which was
recorded in additional paid-in capital.
Common Stock Forward
in connection with the issuance of the 5.5% Convertible Senior notes, the Company also entered into a forward stock
purchase transaction, or the Common Stock Forward, pursuant to which the Company agreed to purchase 14,397,906 shares of its
common stock for settlement on or about March 15, 2023. in connection with the issuance of the 3.75% Convertible Senior notes
and the partial payoff of the 5.5% Convertible Senior notes, the Company amended and extended the maturity of the Common
Stock Forward to June 1, 2025. the number of shares of common stock that the Company will ultimately repurchase under the
Common Stock Forward is subject to customary anti-dilution adjustments. the Common Stock Forward is subject to early
settlement or settlement with alternative consideration in the event of certain corporate transactions.
the net cost incurred in connection with the Common Stock Forward of $27.5 million has been recorded as an increase
in treasury stock in the consolidated balance sheets during 2018. the related shares were accounted for as a repurchase of
common stock.
the book value of the Common Stock Forward is not remeasured.
during the fourth quarter of 2020, the Common Stock Forward was partially settled and, as a result, the Company
received 4.4 million shares of its common stock.
Amazon Transaction Agreement
on april 4, 2017, the Company and amazon entered into a transaction agreement (the “amazon transaction
agreement”), pursuant to which the Company agreed to issue to amazon.com nV investment holdings llC, a wholly
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owned subsidiary of amazon, a warrant (the “amazon warrant”) to acquire up to 55,286,696 shares of the Company’s common
stock (the “amazon warrant Shares”), subject to certain vesting events described below. the Company and amazon entered into
the amazon transaction agreement in connection with existing commercial agreements between the Company and amazon with
respect to the deployment of the Company’s GenKey fuel cell technology at amazon distribution centers. the existing
commercial agreements contemplate, but do not guarantee, future purchase orders for the Company’s fuel cell technology. the
vesting of the amazon warrant Shares was conditioned upon payments made by amazon or its affiliates (directly or indirectly
through third parties) pursuant to the existing commercial agreements.
under the terms of the original amazon warrant, the first tranche of 5,819,652 of the amazon warrant Shares vested
upon execution, and the remaining amazon warrant Shares vest based on amazon’s payment of up to $600.0 million to the
Company in connection with amazon’s purchase of goods and services from the Company. the $6.7 million fair value of the
first tranche of amazon warrant Shares, was recognized as selling, general and administrative expense upon execution of the
amazon warrant during 2017.
Provision for the second and third tranches of amazon warrant Shares is recorded as a reduction of revenue, because
they represent consideration payable to a customer.
the fair value of the second tranche of amazon warrant Shares was measured at January 1, 2019, upon adoption of
aSu 2019-08. the second tranche of 29,098,260 amazon warrant Shares cliff-vested in four equal installments, as amazon or
its affiliates, directly or indirectly through third parties, made an aggregate of $50.0 million in payments for goods and services to
the Company, up to payments totaling $200.0 million in the aggregate. the last installment of the second tranche vested on
november 2, 2020. Revenue reductions of $9.0 million, $4.1 million and $9.8 million associated with the second tranche of
amazon warrant Shares were recorded in 2020, 2019 and 2018, respectively, under the terms of the original amazon warrant.
under the terms of the original amazon warrant, the third tranche of 20,368,784 amazon warrant Shares vests in eight
equal installments, as amazon or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in
payments for goods and services to the Company, up to payments totaling $400.0 million in the aggregate. the measurement date
for the third tranche of amazon warrant Shares was november 2, 2020, when their exercise price was determined, as discussed
further below. the fair value of the third tranche of amazon warrant Shares on that date was determined to be $10.57 each.
during 2020, revenue reductions of $24.1 million associated with the third tranche of amazon warrant Shares were recorded
under the terms of the original amazon warrant, prior to the december 31, 2020 waiver described below.
on december 31, 2020, the Company waived the remaining vesting conditions under the amazon warrant, which
resulted in the immediate vesting of the 20,368,784 unvested third tranche of amazon warrant Shares and recognition of an
additional $399.7 million reduction to revenue.
the $399.7 million reduction to revenue resulting from the december 31, 2020 waiver was determined based upon a
probability assessment of whether the underlying shares would have vested under the terms of the original amazon warrant.
Based upon the Company’s projections of probable future cash collections from amazon (i.e., a type i share based payment
modification), a reduction of revenue associated with 5,354,905 amazon warrant Shares was recognized at their previously
measured november 2, 2020 fair value of $10.57 per warrant. a reduction of revenue associated with the remaining 12,730,490
amazon warrant Shares was recognized at their december 31, 2020 fair value of $26.95 each, based upon the Company’s
assessment that associated future cash collections from amazon were not deemed probable (i.e., a type iii share based payment
modification).
the $399.7 million reduction to revenue was recognized during the year ended december 31, 2020 because the
Company concluded such amount was not recoverable from the margins expected from probable future revenues attributable to
amazon, and no exclusivity or other rights were conferred to the Company in connection with the december 31, 2020 waiver.
at december 31, 2020 and december 31, 2019, 55,286,696 and 20,368,782 of the amazon warrant Shares had vested,
respectively. the total amount of provision for common stock warrants recorded as a reduction of revenue for the amazon
warrant during the years ended december 31, 2020, and 2019 and 2018 was $420.0 million, $4.1 million, and $9.8 million,
respectively.
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the exercise price for the first and second tranches of amazon warrant Shares is $1.1893 per share. the exercise price
of the third tranche of amazon warrant Shares is $13.81 per share, which was determined pursuant to the terms of the amazon
warrant as an amount equal to ninety percent (90%) of the 30-day volume weighted average share price of the Company’s
common stock as of november 2, 2020, the final vesting date of the second tranche of amazon warrant Shares. the amazon
warrant is exercisable through april 4, 2027. the amazon warrant provides for net share settlement that, if elected by the
holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. the amazon warrant
provides for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon
exercise due to customary anti-dilution provisions based on future events. the amazon warrant is classified as an equity
instrument.
Walmart Transaction Agreement
on July 20, 2017, the Company and walmart entered into a transaction agreement (the “walmart transaction
agreement”), pursuant to which the Company agreed to issue to walmart a warrant (the “walmart warrant”) to acquire up to
55,286,696 shares of the Company’s common stock, subject to certain vesting events (the “walmart warrant Shares”). the
Company and walmart entered into the walmart transaction agreement in connection with existing commercial agreements
between the Company and walmart with respect to the deployment of the Company’s GenKey fuel cell technology across
various walmart distribution centers. the existing commercial agreements contemplate, but do not guarantee, future purchase
orders for the Company’s fuel cell technology. the vesting of the walmart warrant Shares is conditioned upon payments made
by walmart or its affiliates (directly or indirectly through third parties) pursuant to transactions entered into after January 1, 2017
under existing commercial agreements.
the majority of the walmart warrant Shares will vest based on walmart’s payment of up to $600.0 million to the
Company in connection with walmart’s purchase of goods and services from the Company. the first tranche of 5,819,652
walmart warrant Shares vested upon the execution of the walmart transaction agreement and was fully exercised as of
december 31, 2020. accordingly, $10.9 million, the fair value of the first tranche of walmart warrant Shares, was recorded as a
provision for common stock warrants and presented as a reduction to revenue on the consolidated statements of operations during
2017. all future provision for common stock warrants is measured based on their grant-date fair value and recorded as a charge
against revenue. the second tranche of 29,098,260 walmart warrant Shares vests in four installments of 7,274,565 walmart
warrant Shares each time walmart or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million
in payments for goods and services to the Company, up to payments totaling $200.0 million in the aggregate. the exercise price
for the first and second tranches of walmart warrant Shares is $2.1231 per share. after walmart has made payments to the
Company totaling $200.0 million, the third tranche of 20,368,784 walmart warrant Shares will vest in eight installments of
2,546,098 walmart warrant Shares each time walmart or its affiliates, directly or indirectly through third parties, make an
aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $400.0 million in the
aggregate. the exercise price of the third tranche of walmart warrant Shares will be an amount per share equal to ninety percent
(90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche
of walmart warrant Shares, provided that, with limited exceptions, the exercise price for the third tranche will be no lower than
$1.1893. the walmart warrant is exercisable through July 20, 2027.
the walmart warrant provides for net share settlement that, if elected by the holder, will reduce the number of shares
issued upon exercise to reflect net settlement of the exercise price. the walmart warrant provides for certain adjustments that
may be made to the exercise price and the number of shares of common stock issuable upon exercise due to customary anti-
dilution provisions based on future events. the walmart warrant is classified as an equity instrument.
at december 31, 2020 and december 31, 2019, 13,094,217 and 5,819,652 of the walmart warrant Shares had vested,
respectively. the total amount of provision for common stock warrants recorded as a reduction of revenue for the walmart
warrant during the years ended december 31, 2020, 2019 and 2018 was $5.0 million, $2.4 million and $0.4 million, respectively.
Lessee Obligations
as of december 31, 2020, the Company had operating leases, as lessee, primarily associated with sale/leaseback
transactions that are partially secured by restricted cash, security deposits and pledged escrows (see also note 1, “nature of
operations”) as summarized below. these leases expire over the next one to nine years. Minimum rent payments under
operating leases are recognized on a straight-line basis over the term of the lease.
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leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to
be remote. at the end of the lease term, the leased assets may be returned to the lessor by the Company, the Company may
negotiate with the lessor to purchase the assets at fair market value, or the Company may negotiate with the lessor to renew the
lease at market rental rates. no residual value guarantees are contained in the leases. no financial covenants are contained
within the lease, however there are customary operational covenants such as assurance the Company properly maintains the
leased assets and carries appropriate insurance, etc. the leases include credit support in the form of either cash, collateral or
letters of credit. See note 22, “Commitments and Contingencies, as restated,” for a description of cash held as security
associated with the leases.
the Company has finance leases associated with its property and equipment in latham, new York and at fueling
customer locations. the fair value of this finance obligation approximated the carrying value as of december 31, 2020.
Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of
one year) as of december 31, 2020 were as follows (in thousands):
2021
2022
2023
2024
2025 and thereafter
total future minimum payments
less imputed interest
total
Operating Lease
Liability
Finance
Lease
Liability
Total
Lease
Liabilities
$
$
28,536
27,138
26,464
25,947
50,362
158,447
(44,509)
113,938
$
$
1,261
1,234
1,210
1,293
1,721
6,719
(1,323)
5,396
$
$
29,797
28,372
27,674
27,240
52,083
165,166
(45,832)
119,334
Rental expense for all operating leases was $22.3 million, $14.6 million and $10.2 million for the years ended december
31, 2020, 2019 and 2018, respectively.
the gross profit on sale/leaseback transactions for all operating leases was $61.0 million, $26.2 million and $16.4
million for the years ended december 31, 2020, 2019 and 2018, respectively. Right of use assets obtained in exchange for new
operating lease liabilities was $58.5 million and $37.7 million for the years ended december 31, 2020 and 2019, respectively.
at december 31, 2020 and 2019, the right of use assets associated with operating leases was $117.0 million and $63.3
million, respectively. the accumulated depreciation for these right of use assets was $48.6 million and $23.6 million at december
31, 2019 and 2018, respectively.
at december 31, 2020 and 2019, the right of use assets associated with finance leases was $5.7 million and $1.7
million, respectively. the accumulated depreciation for these right of use assets was $102 thousand and $32 thousand at
december 31, 2019 and 2018, respectively.
at december 31, 2020 and 2019, security deposits associated with sale/leaseback transactions were $5.8 million and
$6.0 million, respectively, and were included in other assets in the consolidated balance sheet.
other information related to the operating leases are presented in the following table:
Cash payments (in thousands)
weighted average remaining lease term (years)
weighted average discount rate
$
Year ended
Year ended
December 31, 2020
December 31, 2019
$
22,626
6.0
11.7%
14,055
5.0
12.1%
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Finance lease costs include amortization of the right of use assets (i.e., depreciation expense) and interest on lease
liabilities (i.e., interest and other expense, net in the consolidated statement of operations), and were immaterial for the years
ended december 31, 2019 and 2018.
Right of use assets obtained in exchange for new finance lease liabilities were $4.1 million and $5.9 million for the
years ended december 31, 2020 and 2019, respectively.
other information related to the finance leases are presented in the following table:
Cash payments (in thousands)
weighted average remaining lease term (years)
weighted average discount rate
$
Year ended
Year ended
December 31, 2020
December 31, 2019
$
471
5.6
8.2%
255
7.7
8.8%
the Company has sold future services to be performed associated with certain sale/leaseback transactions and recorded
the balance as a finance obligation. the outstanding balance of this obligation at december 31, 2020 was $157.7 million, $24.2
million and $133.5 million of which was classified as short-term and long-term, respectively, on the accompanying consolidated
balance sheet. the outstanding balance of this obligation at december 31, 2019 was $112.4 million, $16.8 million and $95.6
million (as restated) of which was classified as short-term and long-term, respectively. the amount is amortized using the
effective interest method. the fair value of this finance obligation approximated the carrying value as of december 31, 2020.
in prior periods, the Company entered into sale/leaseback transactions that were accounted for as financing transactions
and reported as part of finance obligations. the outstanding balance of finance obligations related to sale/leaseback transactions
at december 31, 2020 and december 31, 2019 was $23.9 million and $31.7 million (as restated), respectively. the fair value of
this finance obligation approximated the carrying value as of both december 31, 2020 and december 31, 2019.
Future minimum payments under finance obligations noted above as of december 31, 2020 were as follows (in
thousands):
2021
2022
2023
2024
2025 and thereafter
total future minimum payments
less imputed interest
total
Sale of Future
Sale/leaseback
revenue - debt
41,670
39,268
39,268
39,268
53,385
212,859
(55,158)
157,701
$
$
$
$
financings
9,327
4,975
3,149
16,154
—
33,605
(9,753)
23,852
Total
Finance
Obligations
50,997
44,243
42,417
55,422
53,385
246,464
(64,911)
181,553
$
$
other information related to the above finance obligations are presented in the following table:
Cash payments (in thousands)
weighted average remaining term (years)
weighted average discount rate
$
Year ended
Year ended
December 31, 2020
December 31, 2019
$
44,245
5.0
11.3%
76,244
5.3
11.2%
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the Company has outstanding obligations to wells Fargo under several Master lease agreements totaling $93.2 million
at december 31, 2020. these outstanding obligations are included in operating lease liabilities, finance lease liabilities, and
finance obligations.
Restricted Cash
in connection with certain of the above noted sale/leaseback agreements, cash of $170.4 million was required to be
restricted as a security deposit as of december 31, 2020, which restricted cash will be released over the lease term. as of
december 31, 2020, the Company also had certain letters of credit backed by security deposits totaling $152.4 million that are
security for the above noted sale/leaseback agreements, for which the requirements wind down over the lease terms and
commensurately the restricted cash will be released.
the Company also had letters of credit in the aggregate amount of $0.5 million at december 31, 2020 associated with a
finance lease of its building. we consider cash collateralizing this letter of credit as restricted cash.
Contractual Obligations
Contractual obligations as of december 31, 2020, under agreements with non-cancelable terms are as follows (in
thousands):
operating lease obligations (a)
Finance lease obligations (B)
other finance obligations (C)
Purchase obligations (d)
long-term debt (e)
Convertible Senior notes (F)
Total
113,938 $
5,396
181,463
38,794
175,402
212,660
727,653
$
$
$
<1 year
1 - 3 Years
3 - 5 Years
> 5 Years
14,314
903
32,717
38,794
25,389
—
112,117
$
38,807
1,863
60,360
—
73,754
160
174,944
$
43,022
2,082
70,045
—
75,819
212,500
403,468
$
17,795
548
18,341
—
440
—
37,124
(a) the Company has several non-cancelable operating leases that generally have six to seven year terms, primarily
associated with sale/leaseback transactions and are partially secured with restricted cash, security deposits and pledged
escrows. in addition, the Company provides its products and services to certain customers in the form of a PPa that
generally have six to seven year terms. the Company accounts for these non-cancelable sale/leaseback transactions as
operating leases in accordance with (aSC) Subtopic 842, Leases, which was adopted in 2018. the liability for operating
leases recognized is presented separately on the Company’s consolidated balance sheet. See note 12, “operating and
Finance leases” to the consolidated financial statements for more detail.
(B) during the years ended december 31, 2020, 2017 and 2016, the Company entered into a series of project financings,
which are accounted for as finance leases and reported as part of the finance obligations on the Company’s consolidated
balance sheet. these obligations are secured with restricted cash, security deposits and pledged escrows. the Company
also has a finance obligation related to a sale/leaseback transaction involving its building.
(C) the Company has received cash for future services to be performed associated with certain sale/leaseback transactions,
which are treated as a finance obligation.
(d) the Company has purchase obligations related to inventory build to meet its sales plan, stack and stack components for
new units and servicing existing units.
(e) the Company has entered into a long-term debt agreement with Generate Capital. we expect to make principal and
interest payments using the proceeds from the release of restricted cash.
(F) the Company issued Convertible Senior notes in March of 2018 and May of 2020. See “7.5% Convertible Senior
note” and “5.5% Convertible Senior notes” above for details.
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Off-Balance Sheet Arrangements
the Company does not have off-balance sheet arrangements that are likely to have a current or future significant effect
on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with GaaP. the preparation of these consolidated
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities at the date of and during the reporting period. on an on-
going basis, we evaluate our estimates and judgments, including those related to revenue recognition, bad debts, inventories,
intangible assets, valuation of long-lived assets, accrual for loss contracts on service, operating and finance leases, product
warranty reserves, unbilled revenue, common stock warrants, income taxes, stock-based compensation, and contingencies. we
base our estimates and judgments on historical experience and on various other factors and assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about (1) the carrying values of
assets and liabilities and (2) the amount of revenue and expenses realized that are not readily apparent from other sources. actual
results may differ from these estimates under different assumptions or conditions.
we believe that the following are our most critical accounting estimates and assumptions the Company must make in
the preparation of our consolidated financial statements and related notes thereto.
Revenue Recognition
the Company enters into contracts that may contain one or a combination of fuel cell systems and infrastructure,
installation, maintenance, spare parts, fuel delivery and other support services. Contracts containing fuel cell systems and related
infrastructure may be sold directly to customers or provided to customers under a PPa, discussed further below.
the Company does not include a right of return on its products other than rights related to standard warranty provisions
that permit repair or replacement of defective goods. the Company accrues for anticipated standard warranty costs at the same
time that revenue is recognized for the related product, or when circumstances indicate that warranty costs will be incurred, as
applicable. any prepaid amounts would only be refunded to the extent services have not been provided or the fuel cell systems
or infrastructure have not been delivered.
Revenue is measured based on the transaction price specified in a contract with a customer, subject to the allocation of
the transaction price to distinct performance obligations as discussed below. the Company recognizes revenue when it satisfies a
performance obligation by transferring a product or service to a customer.
Promises to the customer are separated into performance obligations, and are accounted for separately if they are (1)
capable of being distinct and (2) distinct in the context of the contract. the Company considers a performance obligation to be
distinct if the customer can benefit from the good or service either on its own or together with other resources readily available to
the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other
promises in the contract. the Company allocates revenue to each distinct performance obligation based on relative standalone
selling prices.
Payment terms for sales of fuel cells, infrastructure and service to customers are typically 30 to 90 days. Sale/leaseback
transactions with financial institutions are invoiced and collected upon transaction closing. Service is prepaid upfront in a
majority of the arrangements. the Company does not adjust the transaction price for a significant financing component when the
performance obligation is expected to be fulfilled within a year.
in 2017, in separate transactions, the Company issued to each of amazon.com nV investment holdings llC and
walmart warrants to purchase shares of the Company’s common stock. the Company presents the provision for common stock
warrants within each revenue-related line item on the consolidated statements of operations. this presentation reflects a discount
that those common stock warrants represent, and therefore revenue is net of these non-cash charges.
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the provision of common stock warrants is allocated to the relevant revenue-related line items based upon the expected mix of
the revenue for each respective contract. See note 18, “warrant transaction agreements,” for more details.
Nature of goods and services
the following is a description of principal activities from which the Company generates its revenue.
(i) Sales of Fuel Cell Systems and Related infrastructure
Revenue from sales of fuel cell systems and related infrastructure represents sales of our Gendrive units, GenSure
stationary backup power units, as well as hydrogen fueling infrastructure.
the Company uses a variety of information sources in determining standalone selling prices for fuel cells systems and
related infrastructure. For Gendrive fuel cells, given the nascent nature of the Company’s market, the Company considers several
inputs, including prices from a limited number of standalone sales as well as the Company’s negotiations with customers. the
Company also considers its costs to produce fuel cells as well as comparable list prices in estimating standalone selling prices.
the Company uses applicable observable evidence from similar products in the market to determine standalone selling prices for
GenSure stationary backup power units and hydrogen fueling infrastructure. the determination of standalone selling prices of the
Company’s performance obligations requires significant judgment, including periodic assessment of pricing approaches and
available observable evidence in the market. once relative standalone selling prices are determined, the Company proportionately
allocates the transaction price to each performance obligation within the customer arrangement based upon standalone selling
price. the allocated transaction price related to fuel cell systems and spare parts is recognized as revenue at a point in time which
usually occurs at shipment (and occasionally upon delivery). Revenue on hydrogen infrastructure installations is generally
recognized at the point at which transfer of control passes to the customer, which usually occurs upon customer acceptance of the
hydrogen infrastructure. in certain instances, control of hydrogen infrastructure installations transfers to the customer over time,
and the related revenue is recognized over time as the performance obligation is satisfied. the Company uses an input method to
determine the amount of revenue to recognize during each reporting period when such revenue is recognized over time, based on
the costs incurred to satisfy the performance obligation.
(ii)
Services performed on fuel cell systems and related infrastructure
Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our
service and maintenance contracts and sales of spare parts. the Company uses an adjusted market assessment approach to
determine standalone selling prices for services. this approach considers market conditions and constraints, the Company’s
market share, pricing strategies and objectives while maximizing the use of available observable inputs obtained from a limited
number of historical standalone service renewal prices and negotiations with customers. the transaction price allocated to
services as discussed above is generally recognized as revenue over time on a straight-line basis over the expected service period,
as customers simultaneously receive and consume the benefits of routine, recurring maintenance performed throughout the
contract period.
in substantially all of its commercial transactions, the Company sells extended maintenance contracts that generally
provide for a five-to-ten-year service period from the date of product installation in exchange for an up-front payment. Services
include monitoring, technical support, maintenance and services that provide for 97% to 98% uptime of the fleet. these services
are accounted for as a separate performance obligation, and accordingly, revenue generated from these transactions, subject to the
proportional allocation of transaction price, is deferred and recognized as revenue over the term of the contract, generally on a
straight-line basis. additionally, the Company may enter into annual service and extended maintenance contracts that are billed
monthly. Revenue generated from these transactions is recognized as revenue on a straight-line basis over the term of the
contract. Costs are recognized as incurred over the term of the contract. when costs are projected to exceed revenues over the life
of the extended maintenance contract, an accrual for loss contracts is recorded. as of december 31, 2020 and 2019, the
Company recorded a loss accrual of $24.0 million and $3.7 million respectively (2019 restated). Costs are estimated based upon
historical experience and consider the estimated impact of the Company’s cost reduction initiatives. the actual results may differ
from these estimates. See “extended Maintenance Contracts” below.
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extended maintenance contracts generally do not contain customer renewal options. upon expiration, customers may
either negotiate a contract extension or switch to purchasing spare parts and maintaining the fuel cell systems on their own.
(iii)
Power Purchase agreements
Revenue from PPas primarily represents payments received from customers who make monthly payments to access for
the Company’s GenKey solution.
Revenue associated with these agreements is recognized on a straight-line basis over the life of the agreements as the
customers receive the benefits from the Company’s performance of the services. the customers receive services ratably over the
contract term.
in conjunction with entering into a PPa with a customer, the Company may enter into transactions with third-party
financial institutions in which it receives proceeds from the sale/leaseback transactions of the equipment and the sale of future
service revenue. the proceeds from the financial institution are allocated between the sale of equipment and the sale of future
service revenue based on the relative standalone selling prices of equipment and service. the proceeds allocated to the sale of
future services are recognized as finance obligations. the proceeds allocated to the sale of the equipment are evaluated to
determine if the transaction meets the criteria for sale/leaseback accounting. to meet the sale/leaseback criteria, control of the
equipment must transfer to the financial institution, which requires among other criteria the leaseback to meet the criteria for an
operating lease and the Company must not have a right to repurchase the equipment (unless specific criteria are met). these
transactions typically meet the criteria for sale/leaseback accounting and accordingly, the Company recognizes revenue on the
sale of the equipment, and separately recognizes the leaseback obligations.
the Company recognizes a lease liability for the equipment leaseback obligation based on the present value of the future
payments to the financial institutions that are attributed to the equipment leaseback. the discount rate used to determine the lease
liability is the Company’s incremental borrowing rate, which is based on an analysis of the interest rates on the Company’s
secured borrowings. adjustments that considered the Company’s actual borrowing rate, inclusive of securitization, as well as
borrowing rates for companies of similar credit quality, were applied in the determination of the incremental borrowing rate. the
Company also records a right of use asset which is amortized over the term of the leaseback. Rental expense is recognized on a
straight-line basis over the life of the leaseback and is included as a cost of PPa revenue on the consolidated statements of
operations.
Certain of the Company’s transactions with financial institutions do not meet the criteria for sale/leaseback accounting
and accordingly, no equipment sale is recognized. all proceeds from these transactions are accounted for as finance obligations.
the right of use assets related to these transactions are classified as equipment related to the PPas and fuel delivered to the
customers, net in the consolidated balance sheets. Costs to service the property, depreciation of the assets related to PPas and
fuel delivered to the customers, and other related costs are included in cost of PPa revenue in the consolidated statements of
operations. the Company uses its transaction-date incremental borrowing rate as the interest rate for its finance obligations that
arise from these transactions. no additional adjustments to the incremental borrowing rate have been deemed necessary for the
finance obligations that have resulted from the failed sale/leaseback transactions.
in determining whether the sales of fuel cells and other equipment to financial institutions meet the requirements for
revenue recognition under sale/leaseback accounting, the Company, as lessee, determines the classification of the lease. the
Company estimates certain key inputs to the associated calculations such as: 1) discount rate used to determine the present value
of future lease payments, 2) fair value of the fuel cells and equipment, and 3) useful life of the underlying asset(s):
● aSC topic 842 requires a lessee to discount its future lease payments using the interest rate implicit in the lease or,
if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine
the interest rate implicit in its leases because it does not have access to the lessor’s estimated residual value or the
amount of the lessor’s deferred initial direct costs. therefore, the Company generally uses its incremental
borrowing rate to estimate the discount rate for each lease. adjustments that considered the Company’s actual
borrowing rate, inclusive of securitization, as well as borrowing rates for companies of similar credit quality were
applied in the determination of the incremental borrowing rate.
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●
●
in order for the lease to be classified as an operating lease, the present value of the future lease payments cannot
exceed 90% of the fair value of the leased assets. the Company estimates the fair value of the lease assets using the
sales prices.
in order for a lease to be classified as an operating lease, the lease term cannot exceed 75% (major part) of the
estimated useful life of the leased asset. the average estimated useful life of the fuel cells is 10 years, and the
average estimated useful life of the hydrogen infrastructure is 20 years. these estimated useful lives are compared
to the term of each lease to determine the appropriate lease classification.
(iv)
Fuel delivered to Customers
Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been
purchased by the Company from a third party or generated on site. the stand-alone selling price is not estimated because it is sold
separately and therefore directly observable.
the Company purchases hydrogen fuel from suppliers in most cases (and sometimes produces hydrogen onsite) and
sells to its customers. Revenue and cost of revenue related to this fuel is recorded as dispensed and is included in the respective
“Fuel delivered to customers” lines on the consolidated statements of operations.
Contract costs
the Company expects that incremental commission fees paid to employees as a result of obtaining sales contracts are
recoverable and therefore the Company capitalizes them as contract costs.
Capitalized commission fees are amortized on a straight-line basis over the period of time which the transfer of goods or
services to which the assets relate occur, typically ranging from 5 to 10 years. amortization of the capitalized commission fees is
included in selling, general and administrative expenses.
the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization
period of the assets that the Company otherwise would have recognized is one year or less. these costs are included in selling,
general and administrative expenses.
Impairment of Long-Lived Assets and PPA Executory Contract Considerations
we evaluate long-lived assets on a quarterly basis to identify events or changes in circumstances (“triggering events”)
that indicate the carrying value of certain assets may not be recoverable. long-lived assets that we evaluate include right of use
lease assets, equipment deployed to our PPas, assets related primarily to our fuel delivery business and other company owned
long-lived assets.
upon the occurrence of a triggering event, long-lived assets are evaluated to determine if the carrying amounts are
recoverable. the determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets
grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups. For
operating assets, the Company has generally determined that the lowest level of identifiable cash flows is based on the customer
sites. the assets related primarily to our fuel delivery business are considered to be their own asset group. the cash flows are
estimated based on the remaining useful life of the primary asset within the asset group.
For assets related to our PPa agreements, we consider all underlying cash inflows related to our contract revenues and
cash outflows relating to the costs incurred to service the PPas. our cash flow estimates used in the recoverability test, are based
upon, among other things, historical results adjusted to reflect our best estimate of future cash flows and operating performance.
development of future cash flows also requires us to make assumptions and to apply judgment, including timing of future
expected cash flows, future cost savings initiatives, and determining recovery values. Changes to our key assumptions related to
future performance and other economic and market factors could adversely affect the outcome of our recoverability tests and
cause more asset groups to be tested for impairment.
if the estimated undiscounted future net cash flows for a given asset group are less than the carrying amount of the
related asset group, an impairment loss is determined by comparing the estimated fair value with the carrying amount of the asset
group. the impairment loss is then allocated to the long-lived assets in the asset group based on the asset’s
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relative carrying amounts. however, assets are not impaired below their then estimated fair values. Fair value is generally
determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party
independent appraisals, as well as year-over-year trends in pricing of our new equipment and overall evaluation of our industry
and market, as considered necessary. the Company considers these indicators with certain of its own internal indices and metrics
in determining fair value in light of the nascent state of the Company’s market and industry. the estimate of fair value represents
our best estimates of these factors and is subject to variability. Changes to our key assumptions related to future performance and
other economic and market factors could adversely affect our impairment evaluation.
the Company has determined that the assets deployed for certain PPa arrangements are not recoverable based on the
undiscounted estimated future cash flows of the asset group. however, the estimated fair value of the assets in the asset group
equal or exceed the carrying amount of the assets or otherwise limit the amount of impairment that would have been recognized.
the Company has identified the primary source of the losses as the maintenance components of the PPa arrangements and the
impact of customer warrant non-cash provisions. as the PPa arrangements are considered to be executory contracts and there is
no specific accounting guidance that permits loss recognition for these revenue contracts, the Company has not recognized a
provision for the expected future losses under these revenue arrangements. the Company expects that it will recognize future
losses for these arrangements as it continues its efforts to reduce costs of delivering the maintenance component of these
arrangements. the Company has estimated total future revenues and costs for these types of arrangements based on existing
contracts and leverage of the related assets. For the future estimates, the Company used service cost estimates for extended
maintenance contracts and customer warrant provisions at rates consistent with experience to date. the terms for the underlying
estimates vary but the average residual term on the existing contracts is 5 years. Based on the future estimates with these
assumptions, the losses could approximate $120 million. this estimate includes $75 million in non-cash charges for depreciation
and provision for customer warrants. actual results could be significantly different than these estimates.
Extended Maintenance Contracts
on a quarterly basis, we evaluate any potential losses related to our extended maintenance contracts for fuel cell systems
and related infrastructure that has been sold. we measure impairment losses at the customer contract level. the expected
revenues and expenses for these contracts include all applicable expected costs of providing services over the remaining term of
the contracts and the related unearned net revenue. a loss is recognized if the sum of expected costs of providing services under
the contract exceeds related unearned net revenue and is recorded as a provision for loss contracts related to service in the
consolidated statement of operations. a key component of these estimates is the expected future service costs. in estimating the
expected future costs, the Company considers its current service cost level and applies significant judgment related to expected
cost saving initiatives. the expected future cost savings will be primarily dependent upon the success of the Company’s
initiatives related to increasing stack life, achieving better economies of scale for service labor, and improvements in design and
operations of infrastructure. if the expected cost saving initiatives are not realized, this will increase the costs of providing
services and could adversely affect our estimated contract loss accrual. if actual service costs over the remaining term of existing
extended maintenance contracts are 10% more than estimated in the determination of the loss accrual for fuel cell systems and
related infrastructure at december 31, 2020, the loss accrual would have been approximately $7.1 million higher.
the following table shows the rollforward of balance in the accrual for loss contracts, including changes due to the
passage of time, additions and changes in estimates (in thousands):
Beginning Balance
Provision (benefit) for loss accrual
Released to Service Cost of Sales
Released to Provision for warrants
ending Balance
Equity Instruments
December 31, 2020
December 31, 2019
(as restated)
December 31, 2018
(as restated)
$
$
3,702
35,473
(2,348)
(12,814)
24,013
$
$
5,345
(394)
(1,249)
—
3,702
$
$
—
5,345
—
—
5,345
Common stock warrants that meet certain applicable requirements of aSC Subtopic 815-40, Derivatives and Hedging –
Contracts in Entity’s Own Equity, and other related guidance, including the ability of the Company to settle the warrants without
the issuance of registered shares or the absence of rights of the grantee to require cash settlement, are
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accounted for as equity instruments. the Company classifies these equity instruments within additional paid-in capital on the
consolidated balance sheets.
Common stock warrants accounted for as equity instruments represent the warrants issued to amazon and walmart as
discussed in note 18, “warrant transaction agreements.” the Company adopted FaSB accounting Standards update 2019-08,
Compensation – Stock Compensation (topic 718) and Revenue from Contracts with Customers (topic 606) (aSu 2019-08),
which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance
under topic 718, as of January 1, 2019.
in order to calculate warrant charges, the Company used the Black-Scholes pricing model, which required key inputs
including volatility and risk-free interest rate and certain unobservable inputs for which there is little or no market data, requiring
the Company to develop its own assumptions. the Company estimated the fair value of unvested warrants, considered to be
probable of vesting, at the time. Based on that estimated fair value, the Company determined warrant charges, which are recorded
as a reduction of revenue in the consolidated statement of operations.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
in June 2016, aSu 2016-13, Financial instruments – Credit losses (topic 326): Measurement of Credit losses on
Financial instruments, was issued. also, in april 2019, accounting Standards update (aSu) 2019-04, Codification
improvements to topic 326, Financial instruments – Credit losses, topic 815, derivatives and hedging, and topic 825,
Financial instruments, was issued to make improvements to updates 2016-01, Financial instruments – overall (Subtopic 825-10),
2016-13, Financial instruments – Credit losses (topic 326) and 2017-12, derivatives and hedging (topic 815). aSu 2016-13
significantly changes how entities account for credit losses for financial assets and certain other instruments, including trade
receivables and contract assets, that are not measured at fair value through net income. the aSu requires a number of changes to
the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a
broader range of information to estimate expected credit losses over the entire lifetime of the asset, including losses where
probability is considered remote. additionally, the standard requires the estimation of lifetime expected losses for trade
receivables and contract assets that are classified as current. the Company adopted these standards effective January 1, 2020 and
determined the impact of the standards to be immaterial to the consolidated financial statements.
in January 2017, aSu 2017-04, intangibles – Goodwill and other (topic 350), was issued to simplify how an entity is
required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill
impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.
the Company adopted this standard effective January 1, 2020 and determined there to be no impact to the consolidated financial
statements.
Recently Issued and Not Yet Adopted Accounting Pronouncements
in august 2020, the FaSB issued aSu 2020-06, debt - debt with Conversion and other options (Subtopic 470-20) and
derivatives and hedging – Contracts in entity's own equity (Subtopic 815-40): accounting for Convertible instruments and
Contracts in an entity's own equity (“aSu 2020-06”). this aSu simplifies the complexity associated with applying GaaP for
certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the
guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity. under aSu 2020-06,
the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion
features that are not required to be accounted for as derivatives under topic 815, or that do not result in substantial premiums
accounted for as paid-in capital. Consequently, a convertible debt instrument, such as the Company’s 3.75% Convertible Senior
notes, will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation
and recognition as derivatives. the new guidance also requires the if-converted method to be applied for all convertible
instruments and requires additional disclosures. this guidance is required to be adopted by January 1, 2022, and early adoption is
permitted, but no earlier than fiscal years beginning after december 15, 2020. the Company has elected to early adopt this
guidance on January 1, 2021 using the modified retrospective method. under this transition method, the cumulative effect of
accounting change removed the impact of recognizing the equity component of the Company’s convertible notes at issuance and
the subsequent accounting impact of additional interest expense from debt discount amortization. the cumulative effect of the
accounting change
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upon adoption on January 1, 2021 increased the carrying amount of the convertible notes by $120.7 million, reduced accumulated
deficit by $9.5 million and reduced additional paid-in capital by $130.2 million. Future interest expense of the convertible notes
will be lower as a result of adoption of this guidance and net loss per share will be computed using the if-converted method for
convertible instruments.
in March 2020, aSu 2020-04, Reference Rate Reform (topic 848): Facilitation of the effects of Reference Rate
Reform on Financial Reporting, was issued to provide temporary optional expedients and exceptions to the GaaP guidance on
contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from
the london interbank offered Rate (liBoR) and other interbank offered rates to alternative reference rates. this update was
effective starting March 12, 2020 and the Company may elect to apply the amendments prospectively through december 31,
2022. the adoption of this standard does not have a material impact on the Company’s consolidated financial statements.
in March 2020, aSu 2020-03, Codification improvements to Financial instruments, was issued to make various
codification improvements to financial instruments to make the standards easier to understand and apply by eliminating
inconsistencies and providing clarifications. this update will be effective at various dates beginning with date of issuance of this
aSu. the adoption of this standard does not have a material impact on the Company’s consolidated financial statements.
in december 2019, aSu 2019-12, Simplifying the accounting for income taxes, was issued to identify, evaluate, and
improve areas of GaaP for which cost and complexity can be reduced while maintaining or improving the usefulness of the
information provided to users of financial statements. this update will be effective beginning after december 15, 2020. the
adoption of this standard does not have a material impact on the Company’s consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
From time to time, we may invest our cash in government, government backed and interest-bearing investment-grade
securities that we generally hold for the duration of the term of the respective instrument. we do not utilize derivative financial
instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any
material fashion, except for the Capped Call purchased in May 2020, and March 2018, respectively, related to the issuance of the
3.75% Convertible Senior notes and 5.5% Convertible Senior notes. additionally, the Company purchased a Common Stock
forward in March 2018 in conjunction with the issuance of the 5.5% Convertible Senior notes. that Common Stock Forward was
extended upon issuance of the 3.75% Convertible Senior notes. we are not subject to any material risks arising from changes in
interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk
sensitive instruments.
our exposure to changes in foreign currency rates is primarily related to sourcing inventory from foreign locations and
operations of hyPulsion, S.a.S., our French subsidiary that develops and sells hydrogen fuel cell systems for the european
material handling market. this practice can give rise to foreign exchange risk resulting from the varying cost of inventory to the
receiving location. the Company reviews the level of foreign content as part of its ongoing evaluation of overall sourcing
strategies and considers the exposure to be not significant. our hyPulsion exposure presently is mitigated by low levels of
operations and its sourcing is primarily intercompany in nature and denominated in u.S. dollars.
Item 8. Financial Statements and Supplementary Data
the Company’s consolidated financial statements and related notes, together with the report of independent registered
public accounting firm, appear at pages F-1 through F-83 of this annual Report on Form 10-K for the year ended december 31,
2020 and are incorporated by reference in this item 8.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
none.
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Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
we maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports that we file or submit under the exchange act, is recorded, processed, summarized and reported within the time periods
specified in SeC rules and forms, and that such information is accumulated and communicated to our management, including our
Chief executive officer (our principal executive officer) and Chief Financial officer (our principal financial officer) as
appropriate, to allow for timely decisions regarding required disclosure.
our management, with the participation of our Chief executive officer and Chief Financial officer, has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the exchange act), as
of december 31, 2020. Based on such evaluation, our Chief executive officer and Chief Financial officer have concluded that as
of december 31, 2020, our disclosure controls and procedures were not effective because of the material weakness in internal
control over financial reporting described below.
notwithstanding such material weakness in internal control over financial reporting, our management, including our Chief
executive officer and Chief Financial officer, has concluded that our consolidated financial statements as of and for the year
ended december 31, 2020 and our restated consolidated balance sheets as of december 31, 2019 and the related consolidated
statements of operations and consolidated statements of cash flows for the fiscal years ended december 31, 2019 and 2018,
present fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods
presented in this annual Report on Form 10-K, in conformity with GaaP.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the exchange act). our internal control over financial reporting includes controls and
procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with GaaP.
the Company’s management, with the participation of our Chief executive officer and Chief Financial officer, under the
oversight of our Board, conducted an evaluation of the effectiveness of our internal control over financial reporting as of
december 31, 2020, based on the criteria established in internal Control -- integrated Framework (2013) issued by the Committee
of Sponsoring organizations of the treadway Commission. the Company acquired Giner elX and uhG (together, the
“acquired Companies”) during 2020, and management excluded from its assessment of the effectiveness of the Company’s
internal control over financial reporting as of december 31, 2020, the acquired Companies’ internal control over financial
reporting associated with total assets of $58.0 million, excluding goodwill and intangible assets of $94.9 million and total
revenues of $7.8 million included in the consolidated financial statements of the Company as of and for the year ended december
31, 2020. Based on such evaluation, management concluded that, as of december 31, 2020, our internal control over financial
reporting was not effective because of the material weakness described below.
a company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GaaP, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or
detected on a timely basis.
Management identified the following deficiency in internal control over financial reporting as of december 31, 2020: the
Company did not maintain a sufficient complement of trained, knowledgeable resources to execute its responsibilities with
respect to internal control over financial reporting for certain financial statement accounts and
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disclosures. as a consequence, the Company did not conduct an effective risk assessment process that was responsive to changes
in the Company's operating environment and did not design and implement effective process-level controls activities in the
following areas:
(a) presentation of operating expenses;
(b) accounting for lease-related transactions;
(c)
identification and evaluation of impairment, accrual for loss contracts, certain expense accruals, and deemed dividends;
and
(d)
timely identification of adjustments to physical inventory in interim periods.
Certain of these deficiencies resulted in material misstatements that were identified and corrected in the consolidated
financial statements as of and for each of the three years in the period ended december 31, 2020 and other historical periods, as
further described in note 2, “Restatement of Previously issued Consolidated Financial Statements,” and note 3, “unaudited
Quarterly Financial data and Restatement of Previously issued unaudited interim Condensed Consolidated Financial
Statements,” to the consolidated financial statements. Because there is a reasonable possibility that material misstatement of the
consolidated financial statements will not be prevented or detected on a timely basis, we concluded the deficiency represents a
material weakness in our internal control over financial reporting and our internal control over financial reporting was not
effective as of december 31, 2020.
the Company’s independent registered public accounting firm, KPMG llP, who audited the consolidated financial
statements included in this annual Report on Form 10-K issued an adverse opinion on the effectiveness of the Company’s
internal control over financial reporting. KPMG llP’s report appears on page F-2 of this annual Report on Form 10-K.
Remediation Activities
we take this material weakness seriously. we have already taken steps to remediate this material weakness and will
continue to take further steps until such remediation is complete. these steps include the following:
a) hiring additional resources, including third-party resources, with the appropriate technical accounting expertise, and
strengthening internal training, to assist us in identifying and addressing any complex technical accounting issues that
affect our consolidated financial statements.
b) we will design and implement a comprehensive and continuous risk assessment process to identify and assess risks of
material misstatements and ensure that the impacted financial reporting processes and related internal controls are
properly designed, maintained, and documented to respond to those risks in our financial reporting.
c) we will implement more structured analysis and review procedures and documentation for the application of GaaP,
complex accounting matters, and key accounting policies.
d) we will augment our current estimation policies and procedures to be more robust and in-line with overall market
dynamics including an evaluation of our operating environment in order to ensure operating effectiveness of certain
process-level control activities.
e) we also intend to deploy new tools and tracking mechanisms to help enhance and maintain the appropriate
documentation surrounding our classification of operating expenses.
f) we will report regularly to the Company’s audit Committee on the progress and results of the remediation plan,
including the identification, status, and resolution of internal control deficiencies.
as we work to improve our internal control over financial reporting, we may modify our remediation plan and may
implement additional measures as we continue to review, optimize and enhance our financial reporting controls and procedures in
the ordinary course. the material weakness will not be considered remediated until the remediated controls have been operating
for a sufficient period of time and can be evidenced through testing that they are operating effectively.
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(c) Changes in Internal Control Over Financial Reporting
exclusive of the steps taken in remediation activities, there were no changes in the Company’s internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the exchange act) occurred during the quarter ended
december 31, 2020 that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Item 9B. Other Information
on May 13, 2021, the Board amended and restated the Company’s third amended and Restated Bylaws in order to
clarify and update certain provisions as well as to (i) expressly provide for virtual stockholder meetings by remote
communication (article i, Section 4), (ii) eliminate the requirement to provide notice of any adjourned meeting of the Board
(article ii, Section 9), (iii) provide that shares of all classes or series of the Company’s stock may be uncertificated (article iV,
Section 1), and (iv) designate the federal district courts of the united States of america as the exclusive jurisdiction for any
litigation arising under the Securities act (article Vi, Section 8). the Board approved the amended and Restated Bylaws,
among other reasons, to align them with current governance practices and, in respect of the exclusive federal forum provision, in
order to seek to reduce any potential expenses that the Company may incur in connection with any actions or proceedings by
seeking to avoid the Company being required to defend any such potential actions or proceedings in multiple jurisdictions and in
parallel proceedings in federal and state courts simultaneously.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Directors
Set forth below is certain information regarding the directors of the Company as of april 28, 2021. the biographies of
each of the directors below contains information regarding the person’s service as a director, business experience, director
positions held currently or at any time during the last five years, and information regarding the experiences, qualifications,
attributes or skills that caused the Corporate Governance and nominating Committee and the Board to determine that the person
should serve as a director.
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Class I Directors
Andrew J. Marsh
Age: 65
Director since 2008
Board Committee:
None
Class I Director:
Continuing in office
until the 2021 annual
meeting
andy Marsh joined the Company as President and Chief executive officer in april 2008 and has
been our director since 2008. as President and Chief executive officer, Mr. Marsh plans and
directs all aspects of the organization’s policies and objectives, and is focused on building a
company that leverages Plug Power’s combination of technological expertise, talented people
and focus on sales growth to continue the Company’s leadership stance in the future alternative
energy economy. Mr. Marsh continues to spearhead hydrogen fuel cell innovations, and his
ability to drive revenue growth landed Plug Power on deloitte’s technology Fast 500tM list in
2015 and 2016.
Previously, Mr. Marsh was a co-founder of Valere Power, where he served as chief executive
officer and board member from the company’s inception in 2001, through its sale to eltek aSa
in 2007. under his leadership, Valere grew into a profitable global operation with over 200
employees and $90 million in revenue derived from the sale of dC power products to the
telecommunications sector. during Mr. Marsh’s tenure, Valere Power received many awards
such as the tech titan award as the fastest growing technology company in the dallas Fort
worth area and the Red herring top 100 innovator award. Prior to founding Valere, he spent
almost 18 years with lucent Bell laboratories in a variety of sales and technical management
positions.
Mr. Marsh is a prominent voice leading the hydrogen and fuel cell industry. nationally, he is the
Chairman of the Fuel Cell and hydrogen energy association, and is a member of the hydrogen
and Fuel Cell tactical advisory Committee (“htaC”). htaC has the important responsibility
to provide advice to the department of energy regarding its hydrogen and fuel cell program
goals, strategies, and activities. internationally, Mr. Marsh represents Plug Power in their role as
supporting members of the hydrogen Council, a global initiative of leading energy, transport and
industry companies with a united vision and long-term ambition for hydrogen to foster the
energy transition. Mr. Marsh holds an MSee from duke university and an MBa from SMu.
we believe Mr. Marsh’s qualifications to sit on our Board include his extensive experience with
the alternative energy industry, as well as his experience in management positions.
Gary K. Willis
Age: 75
Director since 2003
Board Committees:
Audit and
Compensation
Class I Director:
Continuing in office
until the 2021 annual
meeting
Gary K. willis has been a director of the Company since 2003. Mr. willis previously served as
the President of the Zygo Corporation (“Zygo”) from February 1992 to 1999 and the Chief
executive officer from 1993 to 1999. Mr. willis served as a director of Zygo from 1992 to
november 2000, including as Chairman of the Board from 1998 to 2000. Zygo, which was
acquired in 2014 by ametek, inc., was a provider of metrology, optics, optical assembly, and
systems solutions to the semiconductor, optical manufacturing, and industrial/automotive
markets. Prior to joining Zygo, Mr. willis served as the President and Chief executive officer
of the Foxboro Company, a manufacturer of process control instruments and systems.
Mr. willis holds a Bachelor of Science degree in Mechanical engineering from worcester
Polytechnic institute.
we believe Mr. willis’ qualifications to sit on our Board include his extensive experience in
management and director positions with similar companies, as well as his educational
background in mechanical engineering.
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Maureen O. Helmer
Age: 64
Director since 2004
Board Committees:
Audit and Corporate
Governance and
Nominating
Class I Director:
Continuing in office
until the 2021 annual
meeting
Prior to joining Barclay damon,
Maureen o. helmer has been a director of the Company since 2004. Ms. helmer is currently a
member of the law firm Barclay damon, llP and is a senior member of the firm’s energy and
telecommunications Regulatory Practice area.
llP,
Ms. helmer was a member of Green & Seifter attorneys, PllC. From 2003 through 2006, she
practiced as a partner in the law firm of Couch white, llP and then as a solo practitioner.
Ms. helmer has advised international energy, telecommunications and industrial companies on
policy and government affairs issues. in addition to serving as Chair of the new York State
Public Service Commission (“PSC”) from 1998 to 2003, Ms. helmer also served as Chair of the
new York State Board on electric Generation Siting and the environment. Prior to her
appointment as Chair, Ms. helmer served as Commissioner of the PSC from 1997 until 1998 and
was General Counsel to PSC from 1995 through 1997. From 1984 through 1995, Ms. helmer
held several positions in the new York legislature, including Counsel to the Senate energy
Committee. She also served as a board member of the new York State energy Research and
development authority, the new York State environmental Board and the new York State
disaster Preparedness Commission during her tenure as Chair of the PSC. in addition, she was
Vice Chair of the electricity Committee of the national association of Regulatory utility
Commissioners and a member of the naRuC Board of directors. She was also appointed to
serve as a member of the new York State Cyber-Security task Force. She formerly served as a
board member of the Center for internet Security, the Center for economic Growth, and new
York women in Communications and energy. Ms. helmer earned her Bachelor of Science from
the State university at albany and her Juris doctorate from the university of Buffalo law
school. She is admitted to practice law in new York.
we believe Ms. helmer’s qualifications to sit on our Board include her long history of
experience with energy regulation, policy and government affairs and advising energy and
industrial companies.
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Class II Directors
George C. McNamee
Chairman
Age: 74
Director since 1997
Board Committee:
Compensation
Class II Director:
Continuing in office
until the 2025 annual
meeting
Johannes M. Roth
Age: 42
Director since 2013
Board Committees:
Compensation and
Corporate
Governance and
Nominating
Class II Director:
Continuing in office
until the 2025 annual
meeting
George C. Mcnamee serves as Chairman of the Company’s Board of directors and has served as
such since 1997. he was previously Chairman of First albany Companies inc. (now GlCh) and
a Managing Partner of Fa tech Ventures, an information and energy technology venture capital
firm. as an executive and director of numerous companies, Mr. Mcnamee has navigated
technological change, rapid- growth, crisis management, team building and strategy. as a public
company director, Mr. Mcnamee has led board special committees, chaired audit committees,
chaired three boards and has been an active lead director. Mr. Mcnamee has previously served
on several public company boards, including the boards of Mechanical technology inc. and the
home Shopping network. he has been an early stage investor, director and mentor for private
companies that subsequently went public including Mapinfo (now Pitney Bowes), Meta Group
(now Gartner Group) and iRobot Corporation, where he served as a director from 1999 to 2016
and as lead director for the last 11 of those years. in 2011, Mr. Mcnamee was the first history
major awarded the Yale Science and engineering association distinguished Service award. he
served as a nYSe director from 1999 to 2004 and chaired its foundation. in the aftermath of the
1987 stock market crash, he chaired the Group of thirty Committee to reform the Clearance and
Settlement System. Mr. Mcnamee has been active as a director or trustee of civic organizations
including the albany academies and albany Medical Center, whose Finance Committee he
chaired for 12 years. he is also a director of several private companies, a Sterling Fellow of Yale
university and a trustee of the american Friends of eton College. he conceived and co-
authored a book on the Chicago Conspiracy trial. he received his Bachelor of arts degree from
Yale university.
we believe Mr. Mcnamee’s qualifications to sit on our Board include his experience serving on
technology company boards, his background in investment banking, which has given him broad
exposure to many financing and merger and acquisition issues, and experience with the financial
sector and its regulatory bodies.
Johannes M. Roth has been a director of the Company since april 2013. Mr. Roth is the founder
of and, since 2006, has been Managing director and Chairman of Fivet Capital holding aG, an
investment holding company based in Switzerland with businesses specializing in asset
management, risk management and alternative investments. Since 2006, Mr. Roth has been a
board member of Fivet Capital aG, Zürich, Switzerland, which advises several long-only funds
and operates an asset management business for high net-worth individuals. Mr. Roth earned a
master’s degree in Management and economics from the university of hohenheim.
we believe Mr. Roth’s qualifications to sit on our Board include his background in financial
investments, financial and risk management and equity capital markets as well as his experience
in management positions.
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Gregory L. Kenausis
Age: 51
Director since 2013
Board Committee:
Audit
Class III Director:
Continuing in office
until the 2025 annual
meeting
Class III Directors
Kyungyeol Song
Age: 48
Director since 2021
Board Committee:
None
Class III Director:
Continuing in office
until the 2023 annual
meeting
Kimberly A. Harriman
Age: 48
Director since 2021
Board Committee:
Audit
Class III Director:
Continuing in office
until the 2023 annual
meeting
Gregory l. Kenausis has been a director of the Company since october 2013. dr. Kenausis is the
founding partner and since 2005 has been the Chief investment officer of Grand haven Capital
aG, an investment firm, where he is the head of research and trading activity and is responsible
for managing the fund’s operations and structure. he also has worked extensively as a business
consultant with a focus on business development and strategy, as well as valuation. dr.
Kenausis earned a bachelor’s degree from Yale university and a doctoral degree from the
university of texas at austin.
we believe dr. Kenausis’ qualifications to sit on our Board include his background and senior
level experience in financial investments, business development and strategy, management and
equity capital markets.
Kyungyeol Song has been a director of the Company since February 2021. Mr. Song is the head
of Quantum Growth tF at SK e&S. Prior to his current position, Mr. Song served as the Senior
Vice President in energy Solution tF at SK e&S from February 2019 until august 2020. Mr.
Song has also served as the director of the McKinsey energy Center from February 2007 until
december 2018. Mr. Song received a Ph.d. in Control and estimation theory, aeronautics and
astronautics from the Massachusetts institute of technology, a Master of Science in aerospace
engineering from Seoul national university, and a Bachelor of Science degree in aerospace
engineering from Seoul national university.
we believe Mr. Song’s qualifications to sit on our Board include his extensive experience with
the renewable energy industry.
Kimberly a. harriman has served as a director of the Company since February 2021. Since 2020,
Ms. harriman is the Vice President of State Government Relations & Public affairs at avangrid,
inc., a nYSe-listed energy provider operating in 24 states. Prior to joining avangrid, from 2016
to december 2020, Ms. harriman served as Senior Vice President, Public and Regulatory
affairs, for new York Power authority, the largest public utility in the united States. Previously
Ms. harriman was General Counsel for the new York State department of Public Service from
2014 to July 2016. Ms. harriman received a J.d. from the albany law School of union
university and a Bachelor of arts degree in Political Science and economics from Siena
College.
we believe Ms. harriman’s qualifications to sit on our Board include her extensive experience in
the energy industry, including her experience with major energy policy initiatives in new York
for the past 20 years.
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Lucas P. Schneider
Age: 52
Director since 2017
Board Committee:
Corporate
Governance and
Nominating
Class III Director:
Continuing in office
until the 2023 annual
meeting
Jonathan Silver
Age: 63
Director since 2018
Board Committee:
Corporate
Governance and
Nominating
Class III Director:
Continuing in office
until the 2023 annual
meeting
lucas P. Schneider has served as a director of the Company since March 2017. Mr. Schneider is
the Chief executive officer of Refraction ai, an autonomous last-mile delivery as a service
company. Prior to his current role, Mr. Schneider was the Chief operating officer of wejo,
ltd., an early-stage connected vehicle data marketplace company from 2019 to 2020.
Mr. Schneider also served as the Chief executive officer of Silvercar, an austin, tX-based
start-up that focuses on the rental car space and other vehicle mobility applications from 2012
until december 2018. in 2017, Silvercar was acquired by audi aG. Prior to Silvercar,
Mr. Schneider was the Chief technology officer of Zipcar. he served at Flexcar as Chief
technology officer and Vice President of Strategy. he has also held various positions with Ford.
Mr. Schneider received a Master of Business administration, specializing in operations and
Strategy from the tepper School of Business at Carnegie Mellon university and a Bachelor of
Science degree in Mechanical engineering from university of texas at austin.
we believe Mr. Schneider’s qualifications to sit on our Board include his extensive experience in
helping guide companies, ranging from start-ups to large enterprises, through major business
milestones including iPos, mergers, acquisitions, and product development.
Jonathan Silver has served as a director of the Company since June 2018. he is a Senior advisor
to Guggenheim Partners, a large asset manager and investment bank, where he works with a
wide array of the firm’s clean energy and sustainability clients. Mr. Silver is considered one of
the nation’s leading clean economy investors and advisors,. From 2009-2011, he led both the
federal government’s $40 billion clean energy investment fund and its $20 billion fund focused
on advanced vehicle technology. From 2011-2018, he was a Senior advisor to iCF, one of the
country’s largest energy and environmental consulting firms, nextera, the nation’s largest
energy provider, and Marathon Capital, a leading power industry-focused investment bank. From
2015-2019, Mr. Silver served as the Managing Partner of tax equity advisors llC, an advisory
firm managing investments in solar power projects on behalf of large corporations. he currently
sits on the boards of national Grid (nGG:nSYe), a global utility, the Peridot Special Purpose
acquisition Corporation and intellihot, a leading player in the tankless water heating sector.
earlier, he served on the board of eemax and Sol Systems. From 1999-2008, Mr. Silver was the
co-founder of Core Capital Partners, a successful venture capital investor in battery technology,
advanced manufacturing, telecommunications and software. From 1990 to 1992, he was a
Managing director, and the Chief operating officer of tiger Management, one of the country's
largest and most successful hedge funds. he has also held senior operating positions, including
chief operating officer and executive vice president, in several companies. Mr. Silver began his
career in 1982 at McKinsey and Company, a global management consulting firm, working on
strategic issues for some of the nation’s largest financial institutions and corporations. Mr. Silver
has served as a senior advisor to three u.S. Cabinet Secretaries: Commerce (1992 to 1993),
interior (1993 to 1995) and treasury (1992 to 1994). he is on the board of Resources for the
Future and has been on the boards of the american Federation of Scientists, the wind energy
Foundation and american Forests.
we believe Mr. Silver’s qualifications to sit on our Board include his extensive experience with
the alternative energy industry.
Investor Agreement
Pursuant to the investor agreement described under Part iii. “item 13. Certain Relationships and Related Party
transactions, and director independence,” Grove energy Capital llC (“Grove energy”), a subsidiary of SK holdings, is entitled
to designate one person (the “SK designee”) to be appointed to the Board of directors of the Company. Grove energy has the
right to require the Board to nominate a SK designee for election to the Board by the stockholders of the
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Company at annual stockholder meetings until the earliest of (i) the date on which Grove energy and affiliates beneficially own
less than 4.0% of our issued and outstanding common stock, (ii) February 24, 2023, in the event that the Company and SK e&S
have not entered into a definitive joint venture agreement with respect to a joint venture in asia (the “asia JV agreement”), and
(iii) any expiration or termination of the asia JV agreement.
Grove energy selected Mr. Song as the SK designee and the Board of directors appointed Mr. Song as a director of the
Company on February 24, 2021.
Executive Officers
the names and ages of all executive officers of the Company and the principal occupation and business experience for
at least the last five years for each are set forth below as of april 28, 2021.
Executive Officers
andrew J. Marsh
Paul B. Middleton
Keith C. Schmid
Gerard l. Conway, Jr.
Sanjay K. Shrestha
Jose luis Crespo
Martin d. hull
Age
Position
65 President, Chief executive officer and director
53 Senior Vice President and Chief Financial officer
58 Senior Vice President and Chief operating officer
56 General Counsel, Corporate Secretary and Senior Vice President
47 Chief Strategy officer
51 Vice President, Global Sales
53 Corporate Controller and Chief accounting officer
Andrew J. Marsh’s biographical information can be found in “directors” above.
Paul B. Middleton joined Plug Power as Senior Vice President and Chief Financial officer in 2014. Prior to Plug Power,
Mr. Middleton worked at Rogers Corp., a global manufacturer and distributor of specialty polymer composite materials and
components, from 2001 to 2014. during his tenure at Rogers Corp., Mr. Middleton served in many senior financial leadership
roles, including Corporate Controller and Principal accounting officer, treasurer and interim Chief Financial officer. Prior to
Rogers Corp., Mr. Middleton managed all financial administration for the tools division of Coopers industries from 1997 to 2001.
Mr. Middleton holds a Master of Science in accounting and a BBa from the university of Central Florida. additionally, he is a
Certified Public accountant.
Keith C. Schmid joined Plug Power as Senior Vice President and Chief operating officer in 2013. Mr. Schmid served as
President of SPS Solutions, a power solutions and energy storage consulting firm, from 2011 to 2013. Previously, Mr. Schmid
served as Chief executive officer of Boston-Power incorporated, a provider of large format lithium ion battery solutions, in
2011, and as President and Chief executive officer of Power distribution incorporated, a power distribution and protection
company, from 2007 to 2010. in addition, Mr. Schmid held the position of General Manager, industrial energy division-
americas for exide technologies, a multinational lead-acid batteries manufacturing company, from 2001 to 2007. Mr. Schmid
holds a Master of Science degree in engineering and a Master in Business administration from the university of wisconsin-
Madison.
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Gerard L. Conway, Jr. has served as General Counsel and Corporate Secretary of Plug Power since September 2004
and, since March 2009, has also served as Senior Vice President of Plug Power. in that capacity, Mr. Conway is responsible for
advising the Company on legal issues such as corporate law, securities, contracts, strategic alliances and intellectual property. he
also serves as the Compliance officer for securities matters affecting the Company. during his tenure at Plug Power,
Mr. Conway served as Vice President of Government Relations from 2005 to June 2008 and in that capacity he advocated on
energy issues, policies, legislation and regulations on the state, federal, national and international levels on behalf of the
Company and the alternative energy sector. Prior to his appointment to his current position, Mr. Conway served as associate
General Counsel and director of Government Relations for the Company beginning in July 2000. Prior to joining Plug Power,
Mr. Conway spent four years as an associate with Featherstonhaugh, Conway, wiley & Clyne, llP, where he concentrated in
government relations, business and corporate law. Mr. Conway has more than 20 years of experience in general business,
corporate real estate and government relations. Mr. Conway holds a Bachelor of arts degree in english and Philosophy from
Colgate university and a Juris doctorate from Boston university School of law.
Sanjay K. Shrestha joined the Company as Chief Strategy officer in 2019. Prior to joining Plug Power, Mr. Shrestha
served as the Chief investment officer of Sky Solar holdings, which owned and operated solar projects in Japan, europe and the
americas, and President of Sky Capital america, which owned and operated solar projects in north and South america, since
2015. under his leadership, Sky Capital america built and acquired over 100Mw of operating solar assets and secured a pipeline
over 100Mw. he also sourced various types of financing solutions to support this growth, including project debt, construction
equity and long-term equity. Before global solar iPP, he led the renewables investment banking effort at FBR Capital Markets
since 2013. during 2014, and under his leadership, the firm was ranked among the top renewable energy underwriters in the
united States. Prior to joining FBR Capital Markets, Mr. Shrestha was the global head of renewables research coverage at lazard
Capital Markets. during his tenure at lazard Capital Markets, he was a member of the institutional investor all america
Research team and was also ranked as one of the top five stock pickers on a global basis. Prior to lazard Capital Markets, Mr.
Shrestha was at First albany Capital, where he built the firm’s renewables and industrial research practice. Mr. Shrestha serves as
an independent director on the board of directors of Fusemachines, an artificial intelligence talent and education solutions
company. Mr. Shrestha received a Bachelor of Science from the College of Saint Rose. he brings to the Company almost two
decades of experience in the broader clean tech sector.
Jose Luis Crespo joined the Company as Vice President of Business and international Sales in 2014. he was promoted
to Vice President of Global Sales in January of 2015 and in 2016 he was also named General Manager for hypulsion, the
Company’s wholly owned european subsidiary. Prior to joining the Company, Mr. Crespo served as Vice President of
international Value Stream at Smiths Power, a supplier of power distribution, conditioning, protection and monitoring solutions
for data centers, wireless communications and other critical or high-value electrical systems, from 2009 to 2013. Mr. Crespo
holds a Master in Business administration from the university of Phoenix and a degree in telecommunications engineering
from the engineering university of Madrid, Spain.
Martin D. Hull joined Plug Power as Corporate Controller and Chief accounting officer in april 2015. Prior to that, he
was a principal and director with the certified public accounting firm of Marvin and Company, P.C. from november 2012 to
March 2015. Prior to that, Mr. hull was with KPMG llP, serving as partner from october 2004 to September 2012, and has a
total of 24 years of public accounting experience. Mr. hull holds a Bachelor of Business administration with a concentration in
accounting from the university of notre dame.
Risk Management
our Board of directors plays a central role in overseeing and evaluating risk. while it is management’s responsibility to
identify and manage our exposure to risk on a day-to-day basis, the Board routinely discusses these risks with management and
actively oversees our risk-management procedures and protocols. the Board regularly receives reports from senior management
on areas of material risk to the Company, including operational, financial, legal, regulatory and strategic risks. in addition, each
of the audit Committee, the Compensation Committee and the Corporate Governance and nominating Committee exercises
oversight and provides guidance relating to the particular risks within the purview of each committee, as well as making periodic
reports to the full Board. the Board and each of these committees regularly discuss with management our major risk exposures,
their potential financial impact on Plug Power and the steps we take to manage them. the audit Committee is responsible for
oversight of Company risks relating to accounting matters, financial reporting and legal and regulatory compliance, while the
Corporate Governance and nominating Committee is responsible for oversight of risks relating to management and Board
succession planning. the Compensation Committee is responsible for the oversight of risks related to compensation matters.
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the Chief Financial officer and the General Counsel report to the Board regarding ongoing risk management activities
at the regularly scheduled, quarterly Board meetings and may report on risk management activities more frequently, as
appropriate. additionally, risk management is a standing agenda item for the regularly scheduled, quarterly audit Committee
meetings.
Board of Directors Leadership Structure
the positions of Chief executive officer and Chairman of the Board are currently separated, with andrew J. Marsh
serving as our Chief executive officer since 2008 and George C. Mcnamee serving as Chairman of the Board since 1997.
Separating these positions allows our Chief executive officer to focus on the Company’s day-to-day business operations, while
allowing the Chairman to lead the Board in its fundamental role of providing advice to and independent oversight of
management. the Board recognizes the time, effort and energy that the Chief executive officer is required to devote to his
position in the current business environment, as well as the commitment required to serve as our Chairman. while our By-laws
and corporate governance guidelines do not require that our Chairman and Chief executive officer positions be separate, the
Board believes that our current leadership structure is appropriate because it provides an effective balance between strategy
development and independent leadership and management oversight. if the position of Chairman is vacant, or if he or she is
absent, the Chief executive officer will preside, when present, at meetings of stockholders and of the Board of directors.
Committees of the Board of Directors
the Board has established three standing committees: the audit Committee, the Compensation Committee, and the
Corporate Governance and nominating Committee.
Audit Committee
our Board has established an audit Committee of the Board of directors. the members of our audit Committee
consist of dr. Kenausis (Chair), Mr. willis, and Ms. helmer. each member of the audit Committee qualifies as an independent
director as defined in the Marketplace Rules of the national association of Securities dealers, inc. (the “naSdaQ Rules”) and
the applicable rules of the SeC. our Board has determined that dr. Kenausis qualifies as an “audit committee financial expert”
as defined in the applicable rules of the SeC. dr. Kenausis’ designation by our Board as an “audit committee financial expert” is
not intended to be a representation that he is an expert for any purpose as a result of such designation, nor is it intended to impose
on him any duties, obligations, or liability greater than the duties, obligations or liability imposed on him as a member of the
audit Committee and the Board in the absence of such designation.
the audit Committee, among other matters, is responsible for (i) appointing the Company’s independent registered
public accounting firm, (ii) evaluating such independent registered public accounting firm’s qualifications, independence and
performance, (iii) determining the compensation for such independent registered public accounting firm, and (iv) pre-approving
all audit and non-audit services. additionally, the audit Committee is responsible for oversight of the Company’s accounting and
financial reporting processes and the integrated audit of the Company’s financial statements and internal control over financial
reporting, including the work of the independent registered public accounting firm. a more complete description of the audit
Committee’s functions is set forth in the audit Committee’s charter which is published on the “investors” section of the
Company’s website at www.plugpower.com. our website is not incorporated into or a part of this annual Report on Form 10-K.
Compensation Committee
the Compensation Committee consists of Messrs. willis (Chair), Roth and Mcnamee, each of whom is an independent
director under the naSdaQ Rules. See “Compensation Committee Report” and “Compensation Committee interlocks and
insider Participation” for a further description of the Compensation Committee and its activities in fiscal year 2020. the
Compensation Committee’s primary responsibilities include (i) reviewing, prescribing and approving compensation policies,
plans and programs that are appropriate for the Company in light of all relevant circumstances, that provide incentives to
achievement of the Company’s goals and objectives, that are consistent with the culture of the Company and that further the
overall goal of building stockholder value; and (ii) reviewing and approving changes to the Company’s executive officers and
management team as the Company’s needs and priorities evolve over time. a more complete description of the Compensation
Committee’s functions is set forth in the
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Compensation Committee’s charter which is published on the “investors” section of the Company’s website at
www.plugpower.com. our website is not incorporated into or a part of this annual Report on Form10-K.
Corporate Governance and Nominating Committee
the Governance Committee consists of Ms. helmer (Chair) and Messrs. Roth, Schneider and Silver, each of whom is an
independent director under the naSdaQ Rules. the Governance Committee’s responsibilities include (i) establishing criteria for
Board and committee membership, (ii) considering director nominations consistent with the requirement that a majority of the
Board be comprised of independent directors as defined in the naSdaQ Rules, (iii) identifying individuals qualified to become
Board members, and (iv) selecting the director nominees for election at each annual meeting of stockholders. the Governance
Committee is also responsible for developing and recommending to the Board a set of corporate governance guidelines applicable
to the Company and periodically reviewing such guidelines and recommending any changes thereto. a more complete
description of the Governance Committee’s functions is set forth in the Governance Committee’s charter, which is published on
the “investors” section of the Company’s website at www.plugpower.com. our website is not incorporated into or a part of this
annual Report on Form 10-K.
Delinquent Section 16(a) Reports
Section 16(a) of the exchange act requires the Company’s officers, as defined by Section 16, directors, and persons or
entities who own more than 10% of a registered class of the Company’s equity securities, to file initial reports of ownership and
reports of changes in ownership with the SeC. Such persons or entities are required by SeC regulations to furnish the Company
with copies of all Section 16(a) forms they file. to our knowledge, based on our review of the copies of such filings and based
on written representations, we believe that all such persons and entities complied on a timely basis with all Section 16(a) filing
requirements during the fiscal year ended december 31, 2020, except that the following persons or entities filed the following
Form 4s late on the following dates:
● Keith C. Schmid filed a Form 4 on February 24, 2020 disclosing the sale of shares pursuant to a pre-established 10b5-1
trading plan and the exercise of options on February 18, 2020;
●
● andrew J. Marsh, Gerard l. Conway, Jr. and Martin d. hull each filed a Form 4 on February 24, 2020 disclosing the
sale of shares pursuant to pre-established 10b5-1 trading plans and the exercise of options on February 18, 2020 and
February 19, 2020;
Johannes M. Roth and Fivet Capital holding aG filed Form 4s on april 28, 2020 disclosing the conversion of Series C
Redeemable Convertible Preferred Stock into shares of common stock on april 16, 2020 and the sale of shares of
common stock on april 22, 2020 and april 23, 2020 by Five More Special Situations Fund ltd., which receives
investment advisory services from a wholly-owned subsidiary of Fivet Capital holding aG, in which entities Mr. Roth
has equity interests and which shares of common stock Mr. Roth has expressly disclaimed beneficial ownership in,
except to the extent of his pecuniary interest therein, if any;
Sanjay K. Shrestha filed a Form 4 on May 14, 2020 disclosing the vesting of restricted stock and tendering of shares to
cover tax withholding obligations in connection with such vesting on May 9, 2020;
●
● andrew J. Marsh, Paul B. Middleton, Keith C. Schmid and Martin d. hull each filed a Form 4 on September 1, 2020
disclosing the vesting of restricted stock and tendering of shares to cover tax withholding obligations in connection with
such vesting on august 19, 2020;
● Gerard l Conway, Jr. filed a Form 4 on September 1, 2020 disclosing the vesting of restricted stock and tendering of
shares to cover tax withholding obligations in connection with such vesting on august 19, 2020 and the sale of shares
pursuant to a pre-established 10b5-1 trading plan on august 27, 2020; and
lucas P. Schneider filed a Form 4 on May 13, 2021 disclosing the sale of shares pursuant to a pre-established 10b5-1
trading plan on July 1, 2020 and october 1, 2020.
●
Code of Conduct
we have adopted a code of conduct applicable to all of our directors, officers and employees, including our principal
executive officer, principal financial officer and principal accounting officer. our code of conduct is a “code of ethics” as
defined in item 406(b) of Regulation S-K and embodies our principles and practices relating to the ethical conduct of our
business and our long-standing commitment to honesty, fair dealing and full compliance with all laws affecting our business. in
the event that we amend or waive certain provisions of our code of conduct in a manner that requires disclosure under applicable
rules, we intend to provide such required disclosure on our website in accordance
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with applicable SeC and naSdaQ Rules. our code of ethics is available on our website at www.plugpower.com under investor
Relations. our website is not incorporated into or a part of this annual Report on Form 10-K.
Corporate Governance Guidelines
we have adopted corporate governance guidelines that serve as a flexible framework within which our Board of directors and its
committees operate. these guidelines cover a number of areas including Board membership criteria and director qualifications,
director responsibilities, Board structure, Board member access to management and independent advisors, director compensation,
director orientation and continuing education, evaluation of senior management and management succession planning. a copy of
our corporate governance guidelines published on the “investors” section of the Company’s website at www.plugpower.com. our
website is not incorporated into or a part of this annual Report on Form 10-K.
Item 11. Executive Compensation
Compensation Discussion and Analysis
this Compensation discussion and analysis (“Cd&a”) discusses our compensation policies and determinations that
apply to our named executive officers. when we refer to our “named executive officers” we are referring to the following
individuals:
● Andrew J. Marsh, our President and Chief executive officer and a director;
Paul B. Middleton, our Chief Financial officer and Senior Vice President;
●
●
Sanjay K. Shrestha, our Chief Strategy officer;
● Keith C. Schmid, our Chief operating officer and Senior Vice President; and
●
Jose Luis Crespo, our Vice President-Global Sales.
while the discussion in the Cd&a is focused on our named executive officers, many of our executive compensation
programs apply broadly across our executive ranks. the following discussion should be read together with the compensation
tables and related disclosures set forth below.
Executive Summary
Our Response to the Covid-19 Pandemic
like all companies, Plug Power was impacted by the Covid-19 pandemic. we rose to the challenge and our response is
reflective of our culture and our commitment to our employees, to our customers and to society. Below are a few highlights:
● we prioritized the health and wellbeing of our employees and their families while continuing to deliver for our
customers.
● as restrictions and shutdowns were announced in countries around the world, we implemented new and imaginative
ways for our employees to work at our facilities and remotely.
● we enabled our employees to remain focused on delivering for our customers by providing personal and
financial “peace of mind” by assuring job security and not implementing salary reductions or furloughs.
● our world-class engineers built ventilator prototypes to address the severe country-wide shortages.
● we deployed members of our engineering, manufacturing and logistics teams to design and 3D print thousands of
face shields that were donated to healthcare facilities and communities.
● our resourceful buyers sourced and coordinated personal protective equipment (PPE) distribution to hospitals.
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● we facilitated the critical delivery operations of our customers providing essential services in the food, retail and
cleaning supplies industries.
● we engaged in corporate philanthropy by making donations to several charitable organizations, including the united
way and the no neighbor hungry Campaign.
the Covid-19 pandemic has highlighted the importance of innovative technology-driven solutions and imaginative human
capital management to address an unprecedented crisis; it has also revealed just how interconnected we are as a society. we are
proud of our Company’s response, and we are grateful for the extraordinary contribution of our employees to the success of Plug
Power.
2020 Business and Strategic Highlights
2020 was an exceptional year for the Company. the Company successfully executed on its strategic growth pillars to reach
significant milestones during 2020. 2020 results include the following achievements that impacted executive compensation:
Strong financial performance with a record year in gross billings.
●
● deployed more than 9,800 fuel cell units powering electric vehicles in 2020 and built over 27 hydrogen stations.
● Raised approximately $1.5 billion in proceeds from equity and debt offerings in 2020, including executing the first
ever convertible green bond offering in the united States as well as the largest follow-on offering in the clean
energy sector.
ended the year with a strong balance sheet with over $1.6 billion in cash to execute on its global growth strategy
and objectives.
●
● Completed the strategic acquisitions of united hydrogen Group, inc. and Giner elX, inc., positioning the
Company as a fully vertically green hydrogen generation company.
● announced strategic partnerships with Brookfield energy, apex Clean energy and aCCiona to source renewable
electricity and build liquid green hydrogen plants.
● Continued to make strides within the Company’s fuel cell system business across its target markets and drove
further adoption in core material handling, on-road and stationary power markets, adding a fourth pedestal
customer, an automotive manufacturer with over 50 plants worldwide, within its core market of material handling
and selecting a site for its gigafactory to drive scale.
● Released multiple new ProGen engine models, including the 125kw (on and off-road applications) and 1kw
(robotics and drone applications) units.
● Continued to make progress with the Company’s partner, lightning Systems, to build “middle-mile” delivery
vehicles, producing the first electric, fuel cell-powered class-6 truck.
●
Signed a memorandum of understanding with linde to deploy pilot class-6 and class-8 vehicles on road in 2021.
● Collaborated with Gaussin to bring a commercial suite of ProGen-powered Gaussin transportation vehicles to
market in 2021 as a solution to decarbonize the logistics ecosystem.
● Released the GenSure hP product designed for large-scale back-up power applications, including data centers,
energy storage systems and microgrids, including manufacturing production of the GenSure hP product line
commencing in december of 2020.
in addition, the Company made significant progress in solidifying its global leadership position in green hydrogen
solutions by executing term sheets for a joint venture in France with Groupe Renault, a top automotive player, and a joint venture
in asia with a subsidiary of SK holdings to bring hydrogen solutions to Korea, China and Vietnam, which joint ventures were
announced in January 2021.
Stockholder Value Creation
Below is a line graph comparing the percentage change in the cumulative total return of the Company’s common stock,
based on the market price of the Company’s common stock, with the total return of companies included within the naSdaQ
Clean edge Green energy index (CelS) and the companies included within the Russell 2000 index (Rut) for the period
commencing december 31, 2015 and ending december 31, 2020. the calculation of the cumulative total return assumes a $100
investment in the Company’s common stock, the naSdaQ Clean edge Green energy index (CelS) and the Russell 2000 index
(Rut) index on december 31, 2015 and the reinvestment of all dividends, if any.
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Index
Plug Power Inc.
naSdaQ Clean edge Green energy index
Russell 2000 index
2015
2016
2017
2018
2019
2020
$ 100.00 $ 56.87
$ 96.38
$ 119.48
$ 100.00
$ 100.00
$ 111.85 $ 58.77
$ 109.45
$ 118.72
$ 126.05
$ 135.18
$ 149.76 $ 1,607.11
$ 152.61
$ 146.15
$ 434.93
$ 173.86
●
the graph above and the accompanying text are not “soliciting material,” are not deemed filed with the SeC and are not
to be incorporated by reference in any filing by us under the Securities act or the exchange act, whether made before
or after the date hereof and irrespective of any general incorporation language in any such filing.
the stock price performance shown on the graph is not necessarily indicative of future price performance.
●
● assuming the investment of $100 on december 31, 2015 and the reinvestment of dividends. the common stock price
performance shown on the graph only reflects the change in our company’s common stock price relative to the noted
indices and is not necessarily indicative of future price performance.
Executive Compensation Program
our goal is to retain and attract experienced and talented executive officers and to motivate them to achieve our short-
term and long-term financial, operational and strategic objectives that produce and promote stockholder value. to achieve this
goal, we strongly emphasize a culture of pay for performance in order to provide incentives and accountability for our executive
officers in working toward the achievement of our objectives. accordingly, we have designed our incentive compensation
programs with the goal of ensuring that actual pay varies above or below targeted compensation
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opportunity based on achievement of challenging performance goals and demonstration of meaningful individual commitment
and contribution.
Base salary reflects received base salary in fiscal 2020.
Key elements of our compensation programs include the following:
Compensation
Element
Base salary
Purpose
Features
to attract and retain experienced and highly skilled
executives.
Fixed component of pay to provide financial stability,
individual
based on responsibilities,
contributions and peer company data.
experience,
Annual cash
incentive
bonuses
to promote and reward the achievement of key short-
term strategic and business goals of the Company as
well as individual performance; to motivate and
attract executives.
Long-term
equity
incentive
compensation
to encourage executives and other employees to
focus on long-term Company performance; to drive
long-term stockholder value; to promote retention; to
reward outstanding Company and individual
performance.
of pay based on annual
Variable component
corporate quantitative and qualitative goals.
although performance goals were
importantly,
established prior to the onset of the Covid-19
pandemic, the Compensation Committee did not
reduce the goals in response to the pandemic.
typically subject to multi-year vesting based on
continued service and are primarily in the form of
stock options, premium priced stock options and
restricted stock, the value of which depends on the
performance of our common stock price, in order to
our
align employee interests
stockholders over the longer-term.
with those of
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Executive Compensation Practices
the Compensation Committee reviews on an ongoing basis the Company’s executive compensation program to evaluate
whether it supports the Company’s executive compensation objectives and is aligned with stockholder interests. our executive
compensation practices include the following, each of which the Compensation Committee believes reinforces our executive
compensation objectives:
What We Do
✓ Pay for performance by structuring a significant
percentage of target annual compensation in the form of
variable, at-risk compensation
What We Don’t Do
× allow hedging of equity without preapproval
× allow for re-pricing of stock options without
stockholder approval
✓Market comparison of executive compensation against a
relevant peer group
× Provide excessive perquisites
✓offer market-competitive benefits for executives that
are consistent with the rest of our employees
× Provide supplemental executive retirement plans
× Provide any excise tax gross-ups
✓Consult with an independent compensation consultant
on compensation levels and practices
× Provide single-trigger severance arrangements
✓Maintain robust stock ownership guidelines
✓have a clawback policy that applies to cash and equity
incentive compensation
✓hold an annual say-on-pay vote
✓have a minimum vesting period of one year for equity
awards, subject to certain limited exceptions
Setting Executive Compensation
the Compensation Committee is responsible for reviewing, and recommending to the Board for approval, the
compensation of our executive officers, including our named executive officers. the Compensation Committee is composed
entirely of non-employee directors who are “independent” as that term is defined in the applicable naSdaQ Rules. in making its
recommendations regarding executive compensation, our Compensation Committee annually reviews the performance of our
executives with our Chief executive officer, and our Chief executive officer makes recommendations to our Compensation
Committee with respect to the appropriate base salary, annual incentive bonuses and performance measures, and grants of long-
term equity incentive awards for each of our executives other than himself. the Chairman of the Compensation Committee
makes recommendations to the Compensation Committee with respect to the Chief executive officer’s compensation. the
Compensation Committee makes its determination regarding executive compensation and then makes a recommendation to the
Board for approval. the Board discusses the Compensation Committee’s recommendations and ultimately approves the
compensation of the executive officers.
in setting executive base salaries and annual cash bonuses and granting equity incentive awards, the Compensation
Committee and the Board consider compensation for comparable positions in the market, the historical compensation levels of
our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to
achieve short and long-term results that are in the best interests of our stockholders, and a long-term commitment to our
Company.
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Independent Compensation Consultant
For purposes of evaluating 2020 compensation for each of our named executive officers and making 2020 compensation
decisions, our Compensation Committee retained Radford as its independent compensation consultant. Radford has not
performed services for the Company other than consulting services related to the compensation and benefits of our executives
and directors. Radford assisted the Compensation Committee in the development of a compensation peer group and provided
their market analysis of the various components of compensation for the named executive officer positions, including base salary,
annual cash bonus and equity compensation.
our Compensation Committee has analyzed whether the work of Radford raised any conflict of interest, taking into account
relevant factors in accordance with SeC guidelines. Based on its analysis, our Compensation Committee determined that the
engagement of Radford does not create any conflict of interest pursuant to the SeC guidelines and naSdaQ Rules.
Peer Group Selection and Market Data
in evaluating the total compensation of our named executive officers, our Compensation Committee, using information
provided by Radford, established a peer group of publicly traded companies. developing a compensation peer group for the
Company for compensation comparison purposes is challenging because there are few pure fuel cell peer companies that are
publicly-traded, stand-alone, u.S.-based and size-appropriate. nonetheless, we strive to establish a peer group that provides
appropriate compensation data for evaluating the competitiveness of our compensation program and we believe that the mix of
companies in the technology and fuel cell industries that comprise our compensation peer group provides appropriate reference
points for compensation and performance comparisons. however, the companies in our peer group have historically differed
from the companies used as peers by some proxy advisory firms. these differences in the composition of compensation peer
groups can result in substantial differences in how such firms view our compensation relative to our peers.
our 2020 peer group was selected based on a balance of the following criteria:
●
●
●
size-appropriate companies that operate in similar industries;
companies against which we believe we compete for executive talent; and
public companies based in the united States whose compensation and financial data are available in proxy
statements or through widely available compensation surveys.
it is important to note that while any one individual peer company will not be fully reflective of Plug Power’s size,
business model and industry, the peer group, as a whole, aims to reasonably represent Plug Power’s competitive market for
executive talent, business characteristics, and business stage.
Based on these criteria, our peer group for 2020, as approved by our Compensation Committee, was comprised of the
following 22 companies:
2020 Peer Group
acacia Communications, inc.
Cree, inc.
Power integrations, inc.
aeroVironment, inc.
FuelCell energy, inc.
ambarella, inc.
inphi Corporation
Rogers Corp.
Semtech Corp.
Ballard Power Systems inc.
lattice Semiconductor Corp.
Silicon laboratories, inc.
Bloom energy Corp.
MaCoM technology Solutions
holdings, inc.
Solaredge technologies, inc.
Brooks automation, inc.
Maxlinear, inc.
Sunrun, inc.
Canadian Solar inc.
Mercury Systems, inc.
Chart industries, inc.
netScout Systems, inc.
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Based on data compiled by Radford at the time of the peer group review, our revenues and market capitalization margin
were at the 12th and 49th percentiles, respectively, in relation to the peer group.
as an additional reference, our Compensation Committee also uses data from the Radford Global technology executive
compensation survey (the “Radford Survey”) to evaluate the competitive market generally when formulating its recommendation
for the total direct compensation packages for our executive officers. the Radford Survey provides compensation market
intelligence and is widely used within the technology industry.
due to the nature of our business, we also compete for executive talent with companies outside our peer group,
including public companies that are larger and more established than we are or that possess greater resources than we do, and
with smaller private companies that may be able to offer greater compensation potential.
in setting compensation, the Compensation Committee considers each executive’s level and job performance, his duties
and responsibilities at the Company compared to the duties and responsibilities of executive officers in similar positions at the
peer group companies and in the survey data, other circumstances unique to the Company, and evaluates whether the
compensation elements and levels provided to our executives are generally appropriate relative to their responsibilities at the
Company and compensation elements and levels provided to their counterparts in the peer group or within survey data. the
Compensation Committee considers both objective and subjective criteria to evaluate Company and individual performance,
which allows it to exercise informed judgment and not rely solely on rigid benchmarks. accordingly, the Compensation
Committee does not formulaically tie compensation decisions to any particular percentile level of total compensation paid to
executives at the peer group companies or survey data.
looking ahead to 2021 − our peer group for 2021, as approved by our Compensation Committee, is comprised of the
following 22 companies:
2021 Peer Group
aeroVironment, inc.
FuelCell energy, inc.
ambarella international, l.P.
Generac holdings inc.
Rogers Corp.
Semtech Corp.
Ballard Power Systems, inc.
inphi Corp.
Silicon laboratories, inc.
Bloom energy Corp.
lattice Semiconductor Corp.
Solaredge technologies, inc.
Brooks automation, inc.
MaCoM technology
holdings, inc.
Solutions
SunPower Corp.
Chart industries, inc.
Maxlinear, inc.
Sunrun inc.
Cree, inc.
Monolithic Power Systems, inc.
enphase energy, inc.
Power integrations, inc.
our revenues and market capitalization margin were at the 23rd and 100 th percentiles, respectively, in relation to the
peer group.
Role of Stockholder Say-on-Pay
we pay careful attention to any feedback we receive from our stockholders about our executive compensation program.
at our 2020 annual Meeting of Stockholders, we conducted our annual non-binding, advisory vote on the compensation of our
named executive officers, commonly referred to as a “say-on-pay” vote, in accordance with the dodd-Frank wall Street Reform
and Consumer Protection act of 2010. approximately 81% of the votes cast by stockholders on this proposal were cast in support
of the compensation paid to our named executive officers. although the results of the say-on-pay vote are advisory and not
binding on the Company, the Board or the Compensation Committee, we value the opinions of our stockholders and take the
results of the say-on-pay vote into account when making decisions regarding the compensation of our named executive officers.
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Our Executive Compensation Program
the primary components of our executive compensation program are base salary, annual cash incentive bonuses and
long-term equity incentive compensation. Consistent with the emphasis we place on pay-for-performance, annual performance-
based bonuses and long-term equity incentive compensation in the form of stock options, premium priced stock options and
restricted stock constitute a significant portion of our total executive compensation.
within the context of the overall objectives of our compensation programs, our Compensation Committee and Board of
directors determined the specific amounts of compensation to be paid to each of our executives in 2020 based on a number of
factors, including:
● our executives’ and Company performance during 2020 in general and as measured against pre-established
performance goals;
●
the nature, scope and level of our executives’ responsibilities;
● our executives’ effectiveness in leading the Company’s initiatives to increase customer and stockholder value,
productivity and revenue growth;
●
the individual experience and skills of, and expected contributions from, our executives;
● our executive’s contribution to the Company’s commitment to corporate responsibility, including our executive’s
success in creating a culture of unyielding integrity and compliance with applicable law and the Company’s ethics
policies;
●
the amounts of compensation being paid to our other executives;
● our executives’ contribution to our business performance and financial results;
● our executives’ historical compensation at our Company; and
● any contractual commitments we have made to our executives regarding compensation.
each of the primary elements of our executive compensation is discussed in detail below and the compensation paid to
our named executive officers in 2020 is discussed under each element. in the descriptions below, we have identified particular
compensation objectives which we have designed our executive compensation programs to serve; however, we have designed our
compensation programs to complement each other and to collectively serve all of our executive compensation objectives
described above. accordingly, whether or not specifically mentioned below, we believe that, as a part of our overall executive
compensation, each element to a greater or lesser extent serves each of our objectives.
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Base Salary
Base salaries are the smallest component of each executive officer’s total direct compensation and represent a fixed
amount paid to each executive for performing his or her normal duties and responsibilities. our executives’ base salaries reflect
the initial base salaries that we negotiated with each of our executives at the time of his initial employment or promotion and our
subsequent adjustments to these amounts to reflect market increases, the growth and stage of development of our Company, our
executives’ performance and increased experience, any changes in our executives’ roles and responsibilities, and other factors.
the following table sets forth the annual base salaries for our named executive officers for each of 2019 and 2020, as well as the
percentage increase year-over-year. Consistent with our pay-for-performance philosophy, the increases are merit based in
recognition of strong performance and contribution:
Name
2019
Base Salary
($)
2020
Base Salary
($)(1)
Increase
(%)
andrew J. Marsh
600,000
676,442
12.7%
Paul B. Middleton
375,000
387,188
3.3%
Sanjay K. Shrestha
306,538
338,222
10.3%
Keith C. Schmid
Jose luis Crespo
391,000
220,000
393,317
227,692
2.5%
3.5%
● Mr. Marsh’s last salary increase was in 2014
● Mr. Middleton’s last salary increase was in
2014
● Mr. Shrestha’s first salary increase since hire in
2019 to reflect additional responsibilities in
connection with leadership of our energy
Solutions Business
● Mr. Schmid’s last salary increase was in 2015
● Mr. Crespo’s last salary increase was in 2014
(1) the reported amounts reflect the effective annual base salaries for 2020 which are a composite of (a) base salaries in
effect from January 1, 2020 to September 28, 2020, which were as follows: andrew J. Marsh – $651,923; Paul B.
Middleton – $386,250; Sanjay K. Shrestha – $325,962; Keith C. Schmid – $391,000; and Jose luis Crespo – $226,922
and (b) base salary increases in effect from September 29, 2020 through december 31, 2020, which were as follows:
andrew J. Marsh – $750,000; Paul B. Middleton – $390,000; Sanjay K. Shrestha – $375,000; Keith C. Schmid –
$400,000; and Jose luis Crespo – $230,000.
Annual Cash Incentive Bonuses
our named executive officers are eligible to receive annual cash incentive bonuses based on our pay-for-performance
incentive compensation program. annual bonuses for 2020 were based upon Company performance as measured against pre-
established performance goals, including financial measures, achievement of strategic objectives, and other factors as described
in more detail below. the primary objective of this program is to motivate and reward our named executive officers for meeting
Company performance goals that drive the long-term success of our business.
at the beginning of the year (and prior to the onset of the pandemic), the Compensation Committee and the Board
established threshold, target and stretch attainment levels for each of our named executive officers based on a percentage of his
base salary. the threshold level for each performance goal is considered reasonably difficult for the executive to attain, and our
expectation for baseline performance before any bonus will be paid. the target attainment level is considered challenging for the
executive to attain, and the executive would need to exceed expectations to achieve this level. the stretch attainment level is
considered exceptionally challenging for the executive to attain, and the executive would need to significantly outperform to
achieve this level. the table below sets forth, for each named executive officer,
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the threshold, target and stretch annual bonus opportunity, both as a percentage of the named executive officer’s year-end base
salary and in dollars.
Name
2020 Threshold
Annual Bonus
(%)
2020 Threshold
Annual Bonus
($)
2020 Target
Annual Bonus
(% )
2020 Target
Annual Bonus
($)
2020 Stretch
Annual Bonus
(% )
2020 Stretch
Annual Bonus
($)
andrew J. Marsh
Paul B. Middleton
65%
65%
Sanjay K. Shrestha
65%
Keith C. Schmid
65%
Jose luis Crespo
100%
487,500
253,500
243,750
260,000
230,000
100%
100%
100%
100%
200%
750,000
390,000
375,000
400,000
460,000
135%
135%
135%
135%
400%
1,012,500
526,500
506,250
540,000
920,000
at the beginning of each year the Compensation Committee and the Board select performance metrics and approve
Company performance goals. The 2020 metrics and goals were established prior to the onset of the Covid-19 pandemic;
however, notwithstanding the potential business disruption that was expected as a result of the pandemic, the goals were
not decreased to address the pandemic. the actual amounts of annual incentive bonuses for 2020 were determined based on
achievement of these pre-established corporate objectives. the 2020 Company goals approved by our Board and Compensation
Committee, the relative weightings assigned to each goal at the beginning of the year, and the performance against these
Company goals for 2020 are set forth below.
Actual
Achievement
for 2020
(as a % of target)
Relative
Weighting
Weighted
Performance
2020 Annual Incentive Goals
Gross Billings
threshold: $230 Million
target: $310 Million
Stretch: $341 Million
Adjusted Operating EBITDA
threshold: $27 Million
target: $36 Million
Stretch: $48.5 Million
Key Strategic Initiatives
threshold: three
target: Four
Stretch: Five
35%
126%
35%
108%
30%
135%
44%
38%
40.5%
122.5%
2020 Company Goal Achievement
100%
● Gross Billings. Gross billings is a measure of topline performance and is based on the invoice value of equipment
deployed and services rendered. invoice value of equipment is measured on a relative basis using cash value within
contracts with customers and it is attributed to the period in which the equipment is deployed. to that amount, the
Company adds the invoice value for services rendered in the period. these services include fuel provided, extended
warranty contracts serviced, and power provided under PPas. the significant estimates and assumptions underlying
gross billings include the allocation of revenue, excluding the provision for warrants, based on relative stand-alone
selling prices used in the Company’s GaaP revenue numbers.
●
Adjusted Operating EBITDA. adjusted operating eBitda is a measure of operating performance based on operating
income (loss), plus stock-based compensation, plus depreciation and amortization, plus right-of-use asset depreciation
and interest associated with PPa financings, plus costs associated with acquisitions, restructuring and other charges.
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●
Rationale for Metric Adjustments. in measuring Gross Billings and adjusted operating eBitda for purposes of our
annual cash incentive plan, the Compensation Committee focuses on the fundamentals of the underlying business
performance and adjusts for items that are not indicative of core performance. the purpose of these adjustments is to
ensure that the measurement of performance reflects factors that management can directly control and that payout levels
are not artificially inflated or impaired by factors unrelated to the core operation of the business. Accordingly, the
calculation of these metrics for compensatory purposes may differ from the calculation for external financial
reporting purposes.
after completion of the fiscal year, initially the Chief executive officer and other members of management, as
appropriate, make a recommendation to the Compensation Committee for each executive’s bonus amount based the level of
attainment of each of the Company goals (with the exception of the Chief executive officer himself whose level of attainment is
evaluated by the Compensation Committee directly).
the Compensation Committee determined the 2020 annual cash incentive awards for the named executive officers using
the following framework:
Base
Salary
Target
Percentage
70% Financial
Performance
Payout: 0 - 135%
30% Key
Strategic
Initiatives
Payout: 0 - 135%
Extraordinary
Personal
Contribution
Overall Payout Cap
of 200%
●
●
●
2020 Financial Performance Achievement. the financial performance was formulaically calculated and earned at 117%
of target.
2020 Key Strategic Initiatives. the Compensation Committee determined that five of the six pre-established strategic
initiatives were achieved, resulting in achievement at 135% of target. the five strategic initiatives achieved in 2020
were:
- new multi-site customer in material handling
- Commencing development of the Rochester innovation Center
-
-
-
launching large scale green hydrogen platform
establishing pilot program with three large fuel cell electric vehicles’ customers
establishing a strategic relationship with a large original equipment manufacturer/fuel provider
2020 Personal Contribution. while the financial and strategic achievements noted above are impressive, it is even more
so given that it was accomplished in the face of the uncertainty and business disruption caused by the Covid-19
pandemic. in addition to driving the business forward with numerous other successful initiatives (see discussion under
Executive Summary - 2020 Business and Strategic Highlights), the management team worked tirelessly to ensure that
the Company addressed the special needs of our employees, our customers and our communities during this period.
after discussion and consideration, the Compensation Committee determined that it would be appropriate to recognize
and reward the named executive officers for their extraordinary contribution during 2020.
the Board, after review and discussion and recommendation from the Compensation Committee, determined the final
level of attainment for each of the performance goals and the amount of each executive’s annual incentive bonus. the actual cash
incentive bonus amounts paid to our named executive officers with respect to performance in 2020 as well as the actual cash
incentive bonus amounts as a percentage of target are set forth in the table below. in addition, as all our
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employees participated in the same annual bonus program as the named executive officers, all employees similarly earned a
200% bonus payout in recognition of their extraordinary contributions during 2020.
2020
Target Bonus
($)
750,000
390,000
375,000
400,000
460,000
2020 Financial/
Strategic
Performance
Achievement
(%)
122.5%
122.5%
122.5%
122.5%
122.5%
2020 Recognition
for Personal
Contribution
(%)
77.5%
77.5%
77.5%
77.5%
77.5%
2020
Actual Bonus
Payment ($)
1,500,000
780,000
750,000
800,000
920,000
2020
Bonus Payment
(% of 2020 Target
Bonus
Opportunity)
200%
200%
200%
200%
200%
Name
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha
Keith C. Schmid
Jose luis Crespo
Long-Term Equity Incentive Compensation
historically, we have granted long-term equity incentive awards in the form of stock options and restricted stock to
executives as part of our total compensation package. in 2020, we chose to use a combination of stock options, premium priced
stock options, and restricted stock. Consistent with our emphasis on pay-for-performance, these awards represent a significant
portion of total executive compensation. Based on the stage of our Company’s development and the incentives we aim to provide
to our executives, we have chosen to use either stock options or a combination of stock options and restricted stock for our long-
term equity incentive awards. our decisions regarding the amount and type of long-term equity incentive compensation and
relative weighting of these awards among total executive compensation are based on our understanding of market practices of
similarly situated companies and our negotiations with our executives in connection with their initial employment or promotion
by our Company.
Stock option awards and premium priced stock option awards provide our executive officers with the right to purchase
shares of Common Stock at a fixed exercise price typically for a period of up to ten years. Stock options generally vest over three
years, beginning with one-third vesting on the first anniversary of the grant date, one-third vesting on the second anniversary of
the grant date and the final one-third vesting on the third anniversary of the grant date, subject to continued service to the
Company and acceleration in certain circumstances. Stock option awards are made pursuant to our third amended and Restated
2011 Stock option and incentive Plan (the “2011 Plan”). except as may otherwise be provided in the applicable stock option
award agreement, stock option awards become fully exercisable upon a “change of control” (as defined in the 2011 Plan). the
exercise price of each stock option is equal to, or, in the case of premium priced stock options, in excess of, the closing price of
Common Stock on the naSdaQ Capital Market as of the option grant date.
Restricted stock awards provide our executive officers with a long-term incentive alternative to the stock option awards.
Restricted stock awards generally vest in equal annual installments over three years from the date of grant, subject to continued
employment with the Company.
we consider a number of factors in determining the number of shares subject to stock options and the number of shares
of restricted stock, if any, to grant to our executives, including:
●
●
●
the number of shares subject to, and exercise price of, outstanding options, both vested and unvested, held by our
named executive officers and the number of shares subject to unvested restricted stock awards held by our named
executive officers;
the vesting schedule of the unvested stock options and restricted stock awards held by our named executive
officers; and
the amount and percentage of our total equity held by our named executive officers.
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the table below sets forth information regarding stock options and premium priced stock options (reflecting a 17.5%
premium above the grant date exercise price) granted to our named executive officers in 2020:
Number of Shares
Subject to
Premium Priced
Stock Options (#)
Exercise Price
Per Share of
17.5%
Premium
Priced Stock
Options ($)
Number of
Shares Subject to
Non-Premium
Priced Stock
Options) (#)
Exercise Price Per
Share of Non-
Premium Priced
Stock Options ($)
275,000
100,000
112,500
100,000
−
15.51
15.51
15.51
15.51
−
275,000
100,000
112,500
100,000
175,000
13.20
13.20
13.20
13.20
13.20
Name
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha
Keith C. Schmid
Jose luis Crespo
the table below sets forth information regarding restricted stock awards granted to our named executive officers in
2020:
Name
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha
Keith C. Schmid
Jose luis Crespo
Number of
Restricted
Shares (#)
550,000
200,000
225,000
200,000
175,000
Broad-Based Benefits
all full-time employees, including our named executive officers, are eligible to participate in our health and welfare
benefit programs, including medical, dental, and vision care coverage, disability insurance and life insurance, and our 401(k) plan
on the same basis as other employees.
Currently, we do not view perquisites or other personal benefits as a significant component of our executive
compensation program. accordingly, we do not provide perquisites to our named executive officers, except in situations where
we believe it is appropriate to assist an individual in the performance of his duties, to make him more efficient and effective, and
for recruitment and retention purposes.
Employment Agreements
the named executive officers are subject to employment agreements that provide for severance benefits upon certain
qualifying terminations of employment with the Company. the Compensation Committee considers these severance benefits to
be an important part of the executive compensation program and consistent with competitive market practice. Consistent with
market practices, the employment agreements do not include change in control-related tax gross-ups. additional information
regarding the employment arrangements with each of our named executive officers, including a quantification of benefits that
would have been received by each named executive officer had his employment terminated on december 31, 2020, is provided
under “employment agreements” and “Potential Payments upon termination or Change in Control.”
Relationship of Executive Compensation to Risk
the Compensation Committee considers whether the design of the Company’s executive compensation program
encourages senior executives to engage in excessive risk-taking. the Compensation Committee reviews the overall program
design, as well as the balance between short-term and long-term compensation, the metrics used to measure
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performance and the award opportunity under the Company’s incentive compensation program, and the implementation of other
administrative features designed to mitigate risk such as vesting requirements, stock ownership guidelines and our clawback
policy, each as described in this Compensation discussion and analysis. Based on its review, the Compensation Committee
believes that the Company’s executive compensation program is aligned to the interests of stockholders, appropriately rewards
pay for performance, and does not promote unnecessary or excessive risk.
Stock Ownership Guidelines
the Board has adopted stock ownership guidelines for executives, including our named executive officers, and these
guidelines are also considered when granting long-term equity incentive awards to executives. the ownership guidelines provide
a target level of Company equity holdings with which named executive officers are expected to comply within five (5) years or
the date the individual is first appointed as an executive. the target stock holdings are determined as a multiple of the named
executive officer’s base salary (5x for the Chief executive officer and 3x for the other named executive officers) and then
converted to a fixed number of shares using a 200-day average stock price. the following shares are included in determining
compliance with the stock ownership guidelines: (i) shares owned outright by the executive or his immediate family members
residing in the same household; (ii) shares held in the Plug Power inc. Savings and Retirement Plan; (iii) restricted stock issued
as part of an executive’s annual or other bonus (whether or not vested); (iv) shares acquired upon the exercise of employee stock
options; (v) shares underlying unexercised employee stock options times a factor of 33%; and (vi) shares held in trust. the named
executive officers who are required to be in compliance with the stock ownership guidelines are in compliance.
Prohibition Against Hedging
the Company maintains an internal “insider trading Policy” that is applicable to our executive officers and directors.
among other things, the policy prohibits any employee of the Company (including directors or executive officers) from (i)
engaging in short sales of the Company’s securities and from trading in puts, calls or options in respect of the Company’s
securities, (ii) buying or selling puts, calls or other derivative securities of the Company or engaging in any other hedging
transactions with respect to the Company’s securities or (iii) purchasing any securities of the Company with money borrowed
from a bank, brokerage firm or other person for the purchase of purchasing securities or using the Company’s securities as
collateral in a margin account.
Clawback Policy
in March 2019, our Compensation Committee and Board of directors adopted a Policy for Recoupment of incentive
Compensation that covers incentive compensation paid to our executive officers who are subject to the reporting requirements of
Section 16 of the exchange act. the policy provides that if we are required to prepare an accounting restatement due to our
material non-compliance with any financial reporting requirement and/or intentional misconduct by a covered executive, our
Compensation Committee may require the covered executive to repay to us any excess compensation received by the covered
executive during the covered period. For purposes of this policy, excess compensation means any annual cash bonus and long-
term equity incentive compensation received by a covered executive during the three-year period preceding the publication of the
restated financial statement that the Compensation Committee determines was in excess of the amount that such covered
executive would have received had such annual cash bonus and long-term equity incentive compensation been calculated based
on the financial results reported in the restated financial statement.
Tax and Accounting Considerations
Deductibility of Executive Compensation
Generally, Section 162(m) of the Code disallows a federal income tax deduction for public corporations of remuneration
in excess of $1 million paid in any fiscal year to certain specified executive officers. For taxable years beginning before January
1, 2018 (i) these executive officers consisted of a public corporation’s principal executive officer and up to three other executive
officers (other than the principal financial officer) whose compensation is required to be disclosed to stockholders under the
exchange act, because they are the corporation’s most highly-compensated executive officers and (ii) qualifying “performance-
based compensation” was not subject to this deduction limit if specified requirements were met.
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Pursuant to the tax Cuts and Jobs act of 2017, for taxable years beginning after december 31, 2017, the remuneration
of a public corporation’s principal financial officer is also subject to the deduction limit. in addition, subject to certain transition
rules (which apply to remuneration provided pursuant to written binding contracts which were in effect on november 2, 2017 and
which are not subsequently materially modified), for taxable years beginning after december 31, 2017, the exemption from the
deduction limit for “performance-based compensation” is no longer available. Consequently, for fiscal years beginning after
december 31, 2017, all remuneration in excess of $1 million paid to a specified executive will not be deductible.
in designing our executive compensation program and determining the compensation of our executive officers,
including our named executive officers, the Compensation Committee considers a variety of factors, including the potential
impact of the Section 162(m) deduction limit. however, the Compensation Committee will not necessarily limit executive
compensation to that which is or may be deductible under Section 162(m) of the Code. the Compensation Committee will
consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent consistent with
its compensation goals. the Compensation Committee believes that our stockholders’ interests are best served if its discretion
and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible
compensation expense.
Taxation of “Parachute” Payments
Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests
and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in
connection with a change in control of the Company that exceed certain prescribed limits, and that the Company (or a successor)
may forfeit a deduction on the amounts subject to this additional tax. we have not agreed to provide any executive officer,
including any named executive officers, or director with a “gross-up” or other reimbursement payment for any tax liability that
the executive officer or director might owe as a result of the application of Sections 280G or 4999 of the Code.
Section 409A of the Internal Revenue Code
Section 409a of the Code imposes additional significant taxes in the event that an executive officer, director or service
provider receives “deferred compensation” that does not satisfy the requirements of Section 409a of the Code. although we do
not maintain a nonqualified deferred compensation plan, Section 409a of the Code may apply to certain severance arrangements,
bonus arrangements and equity awards. we aim to structure all our severance arrangements, bonus arrangements and equity
awards in a manner to either avoid the application of Section 409a or, to the extent doing so is not possible, to comply with the
applicable requirements of Section 409a of the Code.
Accounting for Stock-Based Compensation
we follow FaSB aSC topic 718 for our stock-based compensation awards. FaSB aSC topic 718 requires us to
measure the compensation expense for all share-based payment awards made to our employees and non-employee members of
our Board, including options to purchase shares of our Common Stock and other stock awards, based on the grant date “fair
value” of these awards. this calculation is performed for accounting purposes and reported in the executive compensation tables
required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.
Compensation Committee Report
The following Report of the Compensation Committee of the Board of Directors will not be deemed incorporated by
reference by any general statement incorporating by reference this Form 10-K into any of the Company’s filings under the
Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference,
and will not otherwise be deemed filed under such Acts.
the Compensation Committee reviews and evaluates individual executive officers and recommends or determines the
compensation for each executive officer. the Compensation Committee also oversees management’s decisions concerning the
performance and compensation of other Company officers, administers the Company’s incentive compensation and other stock-
based plans, evaluates the effectiveness of its overall compensation programs, including oversight of the Company’s benefit,
perquisite and employee equity programs, and reviews the Company’s management succession plans. a more complete
description of the Compensation Committee’s functions is set forth in the Compensation Committee’s charter which is published
on the “investors” section of the Company’s website at www.plugpower.com. each member of the Compensation Committee is
an independent director as defined in the naSdaQ Rules.
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in general, the Board and the Compensation Committee design compensation to attract, retain and motivate a superior
executive team, reward individual performance, relate compensation to Company goals and objectives and align the interests of
the executive officers with those of the Company’s stockholders. the Board and the Compensation Committee rely upon their
judgment about each individual—and not on rigid guidelines or formulas, or short-term changes in business performance—in
determining the amount and mix of compensation elements for each senior executive officer. Key factors affecting such
judgments include: the executive’s performance compared to the goals and objectives established for the executive at the
beginning of the year; the nature, scope and level of the executive’s responsibilities; the executive’s contribution to the
Company’s financial results; the executive’s effectiveness in leading the Company’s initiatives to increase customer value,
productivity and revenue growth; and the executive’s contribution to the Company’s commitment to corporate responsibility,
including the executive’s success in creating a culture of unyielding integrity and compliance with applicable law and the
Company’s ethics policies.
the Compensation Committee has reviewed the Compensation discussion and analysis and discussed that analysis
with management. Based on its review and discussions with management, the Compensation Committee recommended to our
Board of directors that the Compensation discussion and analysis be included in the Company’s annual Report on Form 10-K
for the fiscal year ended december 31, 2020 and the Company’s Proxy Statement relating to the Company’s 2021 annual meeting
of stockholders. this report on executive compensation is provided by the undersigned members of the Compensation Committee
of the Board of directors.
Gary K. willis (Chairman)
George C. Mcnamee
Johannes M. Roth
2020 Summary Compensation Table
the following table sets forth the total compensation awarded to, earned by and paid during the fiscal years indicated for
each of our named executive:
Name and Principal Position
andrew J. Marsh
President, Chief Executive Officer
and Director
Paul B. Middleton
Chief Financial Officer and
Senior Vice President
Sanjay K. Shrestha
Chief Strategy Officer
Keith C. Schmid
Chief Operating Officer and
Senior Vice President
Jose luis Crespo
Vice President-Global Sales
Year
Salary
($)
Bonus
($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
All Other
Compensation
($)
Total
($)
2020
2019
2018
2020
2019
2018
676,442 581,250 7,260,000 4,178,075(5)
600,000 -
600,000 -
1,449,500 999,700(8)
980,000
775,000
918,750
631,200
300,000
15,555(6)(7)
15,170
14,920
13,630,072
3,695,570
2,669,920
387,188 302,250 2,640,000 1,519,300(9)
384,500(10)
375,000 -
310,000
375,000 -
557,500
392,000
477,750
394,500
187,500
15,555(6)(7)
15,170
14,920
5,342,043
1,726,670
1,279,420
2020
2019(13) 306,538 -
338,222 290,625 2,970,000 1,709,213(11) 459,375
300,000
249,150
346,500
15,361(6)(12)
9,033
5,782,796
1,211,221
2020
2019
2018
2020
2019
2018
393,317 310,000 2,640,000 1,519,300(9)
384,500(10)
391,000 -
387,500
391,000 -
557,500
490,000
490,000
411,332
195,500
15,555(6)(7)
15,170
14,920
5,368,172
1,759,502
1,478,920
227,692 356,501 2,310,000 1,368,150
307,600(5)
220,000 -
310,000
220,000 -
446,000
392,000
563,500
505,340
220,000
15,026(6)(14)
14,668
14,691
4,840,869
1,493,608
1,156,691
(1)
as discussed in greater detail in the Cd&a, while the Company’s 2020 financial and strategic achievements were
impressive, it was even more so given that it was accomplished in the face of the uncertainty and business disruption
caused by the Covid-19 pandemic. in addition to driving the business forward with numerous other successful initiatives
(see discussion under executive Summary - 2020 Business and Strategic highlights), the management team worked
tirelessly to ensure that the Company addressed the special needs of our employees,
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our customers and our communities during this period. after discussion and consideration, the Compensation
Committee determined that it would be appropriate to recognize and reward all our employees (including the named
executive officers) for their extraordinary commitment and contribution to the Company by paying an additional cash
bonus equal to 77.5% of the relevant target bonus.
this column represents the aggregate grant date fair value of the stock award computed in accordance with FaSB aSC
topic 718. Pursuant to SeC rules, the amounts shown exclude the impact of estimated forfeitures. Fair value is
calculated using the closing price of Plug Power stock on the date of grant. For additional information on stock awards,
refer to note 18 of the Company’s consolidated financial statements in this annual Report on Form 10-K. these
amounts reflect the Company’s accounting expense for these awards, excluding the impact of estimated forfeitures, and
do not correspond to the actual value that will be recognized by our named executive officers.
this column represents the aggregate grant date fair value of the option award computed in accordance with FaSB aSC
topic 718. Pursuant to SeC rules, the amounts shown exclude the impact of estimated forfeitures. For additional
information on the valuation assumptions with respect to option awards, refer to note 18 of the Company’s consolidated
financial statements in this annual Report on Form 10-K. these amounts reflect the Company’s accounting expense,
excluding the impact of estimated forfeitures, for these awards, and do not correspond to the actual value that will be
recognized by our named executive officers.
this column represents the amount of bonuses earned by executives under our annual cash incentive plan. as discussed
in the Cd&a, the metrics and goals for 2020 were established prior to the onset of the Covid-19 pandemic; however,
notwithstanding the potential business disruption that was expected as a result of the pandemic, the goals were not
decreased to address the pandemic.
includes a premium priced stock option with a grant date fair value of $2,028,125.
includes the Company’s share of contributions on behalf of each of Messrs. Marsh, Middleton, Shrestha, Schmid and
Crespo to the Plug Power 401(k) savings plan in the amount of $14,250 in 2020.
includes the Company’s share of contributions on behalf of Messrs. Marsh, Middleton and Schmid in the amount of
$1,305 for life insurance premiums in 2020.
includes a premium priced stock option with a grant date fair value of $490,750.
includes a premium priced stock option with a grant date fair value of $737,500.
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
includes a premium priced stock option with a grant date fair value of $188,750.
(11)
includes a premium priced stock option with a grant date fair value of $829,688.
(12)
includes the Company’s share of contributions on behalf of Mr. Shrestha in the amount of $1,111 for life insurance
premiums in 2020.
(13)
Mr. Shrestha joined the Company as a Chief Strategy officer on april 15, 2019.
(14)
includes the Company’s share of contributions on behalf of Mr. Crespo in the amount of $776 for life insurance
premiums in 2020.
Pay Ratio Disclosure
Pursuant to a mandate of the dodd-Frank wall Street Reform and Consumer Protection act (the “dodd-Frank act”), the
SeC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total
annual compensation of the principal executive officer (“Peo”). the Peo of our Company is Mr. Marsh.
we believe that our compensation philosophy must be consistent and internally equitable to motivate our employees to
create shareholder value. the purpose of the required disclosure is to provide a measure of the equitability
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of pay within the organization. we are committed to internal pay equity, and our Compensation Committee monitors the
relationship between the pay our Peo receives and the pay our non-executive employees receive.
For 2020, the annual total compensation of Mr. Marsh, our Peo, of $13,630,072 as shown in the Summary
Compensation table above, was approximately 203 times the annual total compensation of $67,062 of the median employee
calculated in the same manner. we identified the median employee using the amount reported as compensation on the
employee’s Form w-2 for the year ended december 31, 2020 for all individuals who were employed by us on december 31,
2020, the last day of our payroll year (whether employed on a full-time, part-time, or seasonal basis).
Grants of Plan-Based Awards
the following table sets forth information concerning the grants of plan-based awards to the Company’s named executive
officers during the year ended december 31, 2020.
All Other
Stock
Awards:
Number of
Shares or
Stock Units(#)
(3)
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(4)
Exercise or
Base Price
of Option
Awards ($/Sh)(5)
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(2)
Threshold ($)
Target ($)
487,500
-
-
-
253,500
-
-
-
243,750
-
-
-
260,000
-
-
-
230,000
-
-
-
750,000
-
-
-
390,000
-
-
-
375,000
-
-
-
400,000
-
-
-
460,000
-
-
-
550,000
-
-
200,000
-
-
225,000
-
-
200,000
-
-
175,000
-
-
-
275,000
275,000(7)
-
100,000
100,000(7)
-
112,500
112,500(7)
13.20
15.51
13.20
15.51
13.20
15.51
-
100,000
100,000(7)
-
175,000
13.20
15.51
13.20
781,800
737,500
2,310,000
1,368,150
Grant
Date
Fair
Value
of Stock
and
Option
Awards(6)
($)
7,260,000
2,149,950
2,028,125
2,640,000
781,800
737,500
2,970,000
879,525
829,688
2,640,000
Name
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha
Keith C. Schmid
Jose luis Crespo
Grant
Date (1)
-
09/28/20
09/28/20
09/28/20
09/28/20
09/28/20
09/28/20
-
09/28/20
09/28/20
09/28/20
-
09/28/20
09/28/20
09/28/20
-
09/28/20
09/28/20
09/28/20
(1)
(2)
(3)
(4)
(5)
(6)
each grant was approved by our Compensation Committee on the grant date indicated.
the amounts reported represent the threshold and target amounts of potential cash payouts under our annual incentive
bonus program. the actual amounts paid for fiscal year 2020 are disclosed in the “non-equity incentive Plan
Compensation” column of the 2020 Summary Compensation table above.
this column shows the number of restricted shares granted in 2020 to our named executive officers. the restrictions
lapse ratably in three equal annual installments, beginning one year from the date of grant, subject to the executive’s
continued service to us through the applicable vesting date.
this column shows the number of shares subject to stock options granted in 2020 to our named executive officers.
these options vest and become exercisable ratably in three equal annual installments, beginning one year from the date
of grant, subject to the executive’s continued service to us through the applicable vesting date.
this column shows the per share exercise price for the stock options granted.
this column represents the aggregate grant date fair value of the stock awards and option awards computed in
accordance with FaSB aSC topic 718. Pursuant to SeC rules, the amounts shown exclude the impact of
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estimated forfeitures. For additional information on the valuation assumptions with respect to option awards, refer to
note 18 of the Company’s consolidated financial statements in this annual Report on Form 10-K. these amounts reflect
the Company’s accounting expense for these awards, excluding the impact of estimated forfeitures, and do not
correspond to the actual value that will be recognized by our named executive officers.
(7)
these represent premium priced stock options with exercise prices approximately 17.5% greater than the closing price
of our common stock on the date of grant.
Outstanding Equity Awards at Fiscal Year-End
the following table provides information on the holdings of stock and option awards by our named executive officers as
of december 31, 2020. there were no other stock or option awards held by our named executive officers as of december 31,
2020. For additional information about the awards, see the description of equity incentive compensation in the section titled
“Compensation discussion and analysis.”
Name
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha
Keith C. Schmid
Jose luis Crespo
Option Awards(1)(2)
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Stock Awards(1)(2)
Number of
Shares or
Units of
Stock That
Have Not
Vested(#)
Market Value
of Shares or
Units of Stock
That Have Not
Vested($)(3)
Option
Exercise
Price ($)
Option
Expiration
Date
106,600
466,668
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
100,000
1
—
41,667
—
41,667
—
—
—
1
—
—
—
—
—
—
—
—
166,667
—
216,667
—
216,667
275,000
—
275,000
66,667
—
83,333
—
83,333
100,000
—
100,000
100,000
—
112,500
—
112,500
—
83,333
—
83,333
—
83,333
100,000
—
100,000
66,667
—
66,667
—
66,667
175,000
—
6.10
2.14
1.96
—
2.23
—
2.62
13.20
—
15.51
1.96
—
2.23
—
2.62
13.20
—
15.51
2.31
—
13.20
—
15.51
0.57
1.96
—
2.23
—
2.62
13.20
—
15.51
1.96
—
2.23
—
2.62
13.20
—
4/13/21
8/31/27
8/28/28
—
8/19/29
—
8/19/29
9/28/30
—
9/28/30
8/28/28
—
8/19/29
—
8/19/29
9/28/30
—
9/28/30
5/09/29
—
9/28/30
—
9/28/30
10/23/23
8/28/28
—
8/19/29
—
8/19/29
9/28/30
—
9/28/30
8/28/28
—
8/19/29
—
8/19/29
9/28/30
—
—
—
—
166,667
—
433,333
—
—
550,000
—
—
66,667
—
166,667
—
—
200,000
—
—
100,000
—
225,000
—
—
—
83,333
—
166,667
—
—
200,000
—
—
66,667
—
133,333
—
—
175,000
—
—
—
5,651,678
—
14,694,322
—
—
18,650,500
—
—
2,260,678
—
5,651,678
—
—
6,782,000
—
—
3,391,000
—
7,629,750
—
—
—
2,825,822
—
5,651,678
—
—
6,782,000
—
—
2,260,678
—
4,521,322
—
—
5,934,250
Grant
Date
4/13/11
8/31/17
8/28/18
8/28/18
8/19/19
8/19/19
8/19/19
9/28/20
9/28/20
9/28/20
8/28/18
8/28/18
8/19/19
8/19/19
8/19/19
9/28/20
9/28/20
9/28/20
5/9/19
5/9/19
9/28/20
9/28/20
9/28/20
10/23/13
8/28/18
8/28/18
8/19/19
8/19/19
8/19/19
9/28/20
9/28/20
9/28/20
8/28/18
8/28/18
8/19/19
8/19/19
8/19/19
9/28/20
9/28/20
(1)
all equity awards were granted pursuant to our 2011 Plan.
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(2)
(3)
each equity award vests over a three year period with one-third (1/3) of the shares subject to the award vesting on each
of the first three anniversaries of the grant date, subject to the executive’s continued service to us through each
applicable vesting date.
this column represents the market value of the unvested restricted stock awards calculated based on the closing price of
our common stock ($33.91) on december 31, 2020, the last business date of fiscal year 2020.
Options Exercised and Stock Vested
the following table sets forth information with respect to each of our named executive officers that exercised stock
options or vested in restricted stock during the year ended december 31, 2020.
Option Exercises and Stock Vested - 2020
Name
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha
Keith C. Schmid
Jose luis Crespo
Option Awards
Number of
Shares
Acquired on
Exercise
Value
Realized
on Exercise(1)
($)
Stock Awards
Number of
Shares
Acquired on
Vesting
4,570,831
34,704,898
383,333
1,566,667
26,878,515
149,999
Value
Realized
on Vesting(1)
($)
5,135,829
2,008,820
50,000
467,618
50,000
215,500
2,016,666
36,728,171
166,667
1,224,998
13,861,700
133,333
2,226,671
1,781,329
(1) the value realized on exercise is equal to the difference between the closing price of the stock on the exercise date less the
per share exercise price, multiplied by the number of shares for which the option was being exercised.
(2) amounts disclosed in this column were calculated based on the fair market value of the shares on the date of vesting.
Employment Agreements
the Company and Mr. Marsh are parties to an employment agreement which renews automatically for successive one-
year terms unless Mr. Marsh or the Company gives notice to the contrary. Mr. Marsh receives an annual base salary of $750,000
and is eligible to: (i) receive an annual incentive bonus targeted at an amount equal to one hundred percent (100%) of his annual
base salary; (ii) participate in all savings and retirement plans; and (iii) participate in all benefit plans and executive perquisites.
Mr. Marsh’s employment may be terminated by the Company with or without “Cause,” as defined in the agreement, or by
Mr. Marsh for “Good Reason,” as defined in the agreement, or without Good Reason upon written notice of termination to the
Company. if Mr. Marsh’s employment is terminated by the Company without Cause, the Company is obligated to pay Mr. Marsh
a lump sum equal to the sum of the following amounts:
(a)
(b)
one (1) times annual base salary, and
one (1) times the annual incentive bonus for the immediately preceding fiscal year.
in addition, as of the date of termination, any restricted stock, stock options and other stock awards held by Mr. Marsh
will accelerate vesting as if he had remained an employee for an additional twelve (12) months following the date of termination.
Further, subject to Mr. Marsh’s copayment of premium amounts at the active employees’ rate, Mr. Marsh will be eligible to
continue to participate in the Company’s group health, dental, vision and life insurance programs for twelve (12) months
following his termination.
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the agreement also provides that if, within twelve (12) months after a “Change in Control,” as defined in the agreement,
the Company terminates Mr. Marsh’s employment without Cause or Mr. Marsh terminates his employment for Good Reason,
then he is entitled to:
(i)
receive a lump sum payment equal to three (3) times the sum of (i) his current annual base salary plus
(ii) his average annual incentive bonus over the three (3) fiscal years prior to the Change in Control (or his annual
incentive bonus for the fiscal year immediately preceding to the Change in Control, if higher),
(ii)
accelerated vesting of his stock options and other stock-based awards that would have vested had he
remained an active employee for twelve (12) months following his termination, and
(iii)
subject to Mr. Marsh’s copayment of premium amounts at the active employees’ rate, continued
participation in the Company’s group health, dental, vision and life insurance programs for twelve (12) months
following such termination.
the Company and Messrs. Middleton, Shrestha, Schmid and Crespo are each parties to an employment agreement
pursuant to which, if the executive’s employment is terminated by the Company without “Cause,” as defined in the applicable
agreement, the Company is obligated to pay the executive a lump sum amount equal to one (1) times his annual base salary. in
addition, as of the date of termination, any restricted stock, stock options and other stock awards held by the executive will
accelerate vesting as if he had remained an employee for an additional twelve (12) months following the date of termination.
Further, subject to the executive’s copayment of premium amounts at the active employees’ rate, the Company is required to
continue paying its share of the premiums for the executive’s participation in the Company’s group health plans for twelve
(12) months following his termination.
the employment agreements also provide that if, within twelve (12) months after a “Change in Control,” as defined in
the applicable agreement, the Company terminates such executive’s employment without Cause or the executive terminates his
employment for “Good Reason” as defined in the applicable agreement, then such executive shall be entitled to:
(i)
(ii)
(iii)
receive a lump sum payment equal to the sum of (i) his average annual base salary over the three (3) fiscal
years immediately prior to the Change in Control (or the executive’s annual base salary in effect immediately
prior to the Change in Control, if higher) and (ii) his average annual bonus over the three (3) fiscal years prior
to the Change in Control (or the executive’s annual bonus in effect immediately prior to the Change in Control,
if higher),
accelerated vesting of his stock options and other stock-based awards that would have vested had he remained
an active employee for twelve (12) months following his termination (or, in the case of Mr. Middleton, full
accelerated vesting of all stock options and other stock-based awards held by him), and
subject to the executive’s copayment of premium amounts at the active employees’ rate, continued payment by
the Company of its share of the premiums for the executive’s participation in the Company’s group health
plans for twelve (12) months following the date of termination.
Potential Payments Upon Termination or Change in Control
the Company and Messrs. Marsh, Middleton, Shrestha, Schmid and Crespo are parties to employment agreements,
respectively, that provide for a potential payment upon termination of employment other than for “Cause” as discussed above in
“employment agreements.”
Such payments by the Company to any of the executives are subject to the executive signing a general release of claims
in a form and manner satisfactory to the Company. an executive is not entitled to receive any such payment in the event he
breaches the employee Patent, Confidential information and non-Compete agreement referenced in the executive’s respective
agreement or any non-compete, non-solicit or non-disclosure covenants in any agreement between the Company and such
executive. we agreed to provide severance payments to such executives in these circumstances based on our negotiations with
each of our executives at the time they joined our Company, or as negotiated subsequent to hiring, and in order to provide a total
compensation package that we believed to be competitive. additionally, we believe that providing severance upon a termination
of employment without Cause can help to encourage our executives to take
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the risks that we believe are necessary for our Company to succeed and also recognizes the longer hiring process typically
involved in hiring a senior executive.
if Mr. Marsh had been terminated without Cause on december 31, 2020 and such termination was not within twelve
(12) months following a Change in Control, the approximate value of the severance package, including, as mentioned above in
“employment agreements,” salary, benefits and accelerated vesting of equity awards, under his employment agreement would
have been $36,440,468. if Mr. Middleton, Mr. Shrestha, Mr. Schmid, or Mr. Crespo had been terminated without Cause on
december 31, 2020 and such termination was not within twelve (12) months following a Change in Control, the approximate
value of the severance packages, including, as mentioned above in “employment agreements,” salary, benefits and accelerated
vesting of equity awards, under the employment agreement for such named executive officer would have been as follows:
Mr. Middleton—$14,257,236, Mr. Shrestha—$8,029,183, Mr. Schmid—$15,383,037, and Mr. Crespo—$12,709,207.
the Company and Messrs. Marsh, Middleton, Shrestha, Schmid, and Crespo are parties to employment agreements,
respectively, that provide for a potential payment upon a termination of employment by the Company without Cause or a
resignation by the executive for Good Reason within twelve (12) months following a Change in Control, as discussed above in
“employment agreements.” Such payments by the Company to any of the executives are subject to the executive signing a
general release of claims in a form and manner satisfactory to the Company. an executive is not entitled to receive any such
payment in the event he breaches the employee Patent, Confidential information and non-Compete agreement referenced in the
executive’s respective agreement or any non-compete, non-solicit or non-disclosure covenants in any agreement between the
Company and such executive.
we agreed to provide payments to these executives in these circumstances in order to provide a total compensation
package that we believed to be competitive. additionally, the primary purpose of our equity-based incentive awards is to align
the interests of our executives and our stockholders and provide our executives with strong incentives to increase stockholder
value over time. as change in control transactions typically represent events where our stockholders are realizing the value of
their equity interests in our Company, we believe it is appropriate for our executives to share in this realization of stockholder
value, particularly where their employment is terminated in connection with the change in control transaction. we believe that
this will also help to better align the interests of our executives with our stockholders in pursuing and engaging in these
transactions.
if a Change in Control had occurred on december 31, 2020 and on that date the employment of Mr. Marsh,
Mr. Middleton, Mr. Shrestha, Mr. Schmid, or Mr. Crespo had been terminated by the Company without Cause or the executive
had resigned for Good Reason, the value of the of the severance packages, including, as mentioned above in “employment
agreements,” salary, benefits and accelerated vesting of equity awards, under the employment agreements for each such named
executive officer would have been as follows: Mr. Marsh—$39,102,106, Mr. Middleton—$14,204,736, Mr. Shrestha—
$7,978,702, Mr. Schmid—$15,329,191, and Mr. Crespo—$12,678,245. the employment agreements provide for a modified
cutback such that, any payments or benefits payable under the employment agreements or otherwise would be subject to the
excise tax imposed by Section 4999 of the Code, the executive will receive the greater after-tax amount of either: (i) the full
payment or (ii) a reduced payment that does not give rise to the excise tax imposed by Section 4999 of the Code. the foregoing
numbers do not reflect any cutback. none of the executives are entitled to any tax gross-up payments related to severance
payments or otherwise.
Director Compensation
the Compensation Committee periodically reviews the Company’s non-employee director Compensation Plan (the
“Plan”) to ensure that the compensation aligns the directors’ interests with the long-term interests of the stockholders and that the
structure of the compensation is simple, transparent and easy for stockholders to understand. the Compensation Committee also
considers whether the Plan fairly compensates the Company’s directors when considering the work required in a company of the
size and scope of the Company, and looks at peer group compensation for directors to determine whether our director
compensation is reasonable and competitive in relation to our peers. employee directors do not receive additional compensation
for their services as directors.
during 2020, pursuant to the Plan, upon initial election or appointment to the Board, each non-employee director
received a non-qualified stock option to purchase a number of shares equal to $150,000 divided by the closing price of our
common stock on the grant date, with an exercise price equal to fair market value of the Common Stock on the grant date and that
becomes fully vested and exercisable on the first anniversary of the grant date. in 2020, each director received an
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annual equity grant comprised of (i) a non-qualified stock option for a number of shares equal to $62,500 divided by the closing
price of our common stock on the date of grant and (ii) a number of shares of restricted common stock equal to $62,500 divided
by the closing price of our common stock on the grant date. the stock option portion of the grant has an exercise price equal to
the fair market value of our common stock on the grant date and becomes fully vested and exercisable on the first anniversary of
the grant date. the restricted common stock grant becomes fully vested on the first anniversary of the grant date.
during 2020, under the Plan, each non-employee director was paid an annual retainer of $40,000 ($85,000 for any non-
employee Chairman) for his or her services. Committee members received additional annual retainers for their service on
committees of the Board in accordance with the following table:
Committee
audit Committee
Compensation Committee
Corporate Governance and nominating Committee
Chairman ($)
20,000
15,000
10,000
Member ($)
15,000
5,000
5,000
these additional payments for service on a committee are due to the workload and broad-based responsibilities of the
committees. the total amount of the annual retainer is paid in a combination of 50% cash and 50% common stock, provided that
the director may elect to receive a greater portion (up to 100%) of the total retainer in common stock. all common stock issued
for the annual retainers is fully vested at the time of issuance and is valued at its fair market value on the date of issuance. non-
employee directors are also reimbursed for their direct expenses associated with their attendance at Board meetings.
the Compensation Committee regularly reviews non-employee director compensation in comparison to our industry
peer group, and considers growth in our market capitalization and sales, and other relevant factors including periodic independent
market assessments. the Plan was amended by the Board in September 2020, effective as of January 1, 2021, to provide for (i)
an increase in the annual retainer payable for service on the Board, and (ii) an increase in the value of the stock option and
restricted stock awards granted to non-employee directors upon initial election to the Board and annually. the adjustments to the
annual retainer and equity grants were designed to be competitive with our 2020 peer group.
effective January 1, 2021, pursuant to the Plan, upon initial election or appointment to the Board, each non-employee
director (other than Mr. Song) will receive a non-qualified stock option to purchase a number of shares equal to $225,000 divided
by the closing price of our common stock on the grant date, with an exercise price equal to fair market value of our common
stock on the grant date and that becomes fully vested and exercisable on the first anniversary of the grant date. each year of a
non-employee director’s tenure, the director (other than Mr. Song) will receive an equity grant comprised of (i) a non-qualified
stock option for a number of shares equal to $112,500 divided by the closing price of our common stock on the date of the grant
and (ii) a number of shares of restricted common stock equal to $112,500 divided by the closing price of our common stock on
the grant date. the stock option portion of the grant will have an exercise price equal to the fair market value of our common
stock on the grant date and become fully vested and exercisable on the first anniversary of the grant date. the restricted
common stock grant will become fully vested on the first anniversary of the grant date.
effective January 1, 2021, under the Plan, each non-employee director (other than Mr. Song) will be paid an annual
retainer of $60,000 ($125,000 for any non-employee Chairman) for his or her services. Committee members will receive
additional annual retainers for their service on committees of the Board in accordance with the following table:
Committee
audit Committee
Compensation Committee
Corporate Governance and nominating Committee
Chairman ($)
20,000
15,000
10,000
Member ($)
15,000
5,000
5,000
Mr. Song will not receive any compensation as director (cash or equity) pursuant to the terms of the investor
agreement.
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Non-Employee Director Compensation Table
the following table shows the compensation received or earned by each of our non-employee directors in fiscal year
2020. Mr. Marsh, who is our President and Chief executive officer, did not receive any additional compensation for his service
as a director. the compensation received by Mr. Marsh, as a named executive officer, is presented in “executive Compensation
—2020 Summary Compensation table” above.
Name
Gary K. willis
George C. Mcnamee
Gregory l. Kenausis
Johannes M. Roth
Maureen o. helmer
Jonathan Silver
lucas P. Schneider
Fees Earned
or Paid in
Cash(1) ($)
70,000
90,000
60,000
50,000
65,000
45,000
45,000
Stock
Awards(2)
($)
62,500
62,500
62,500
62,500
62,500
62,500
62,500
Option
Awards(3)
($)
36,145
36,145
36,145
36,145
36,145
36,145
36,145
Total ($)
168,645
188,645
158,645
148,645
163,645
143,645
143,645
(1) each of the following non-employee directors elected to receive all or a portion of their annual retainers in common
stock in lieu of cash in the following amounts: Gary K. willis ($35,000), George C. Mcnamee ($45,000), Gregory l. Kenausis
($30,000), Johannes M. Roth ($50,000), Maureen o. helmer ($32,500), Jonathan Silver ($28,125) and lucas P. Schneider
($22,500).
(2) this column represents the aggregate grant date fair value of the stock award computed in accordance with FaSB
aSC topic 718. Pursuant to SeC rules, the amounts shown exclude the impact of estimated forfeitures. Fair value is calculated
using the closing price of our common stock on the date of grant. Stock awards granted to directors as part of their annual retainer
are fully vested upon grant and annual restricted stock awards made to directors vest in full on the first anniversary of the grant
date. For additional information on stock awards, refer to note 18 of the Company’s consolidated financial statements in this
annual Report on Form 10-K. these amounts reflect the Company’s accounting expense for these awards, and do not necessarily
correspond to the actual value that will be recognized by the non-employee directors. as of december 31, 2020, the following
non-employee directors each held 12,807 shares of restricted stock: Gary K. willis, George C. Mcnamee, Gregory l. Kenausis,
Johannes M. Roth, Maureen o helmer, Jonathan Silver and lucas P. Schneider.
(3) this column represents the aggregate grant date fair value of the option award computed in accordance with FaSB
aSC topic 718. Pursuant to SeC rules, the amounts shown exclude the impact of estimated forfeitures. For additional
information on the valuation assumptions with respect to option awards, refer to note 18 of the Company’s consolidated financial
statements in this annual Report on Form 10-K. these amounts reflect the Company’s accounting expense for these awards, and
do not necessarily correspond to the actual value that will be recognized by the non-employee directors. as of december 31,
2020, the non-employee directors held options to purchase the following numbers of shares of common stock: Jonathan Silver
(12,807), Gary K. willis (170,827), George C. Mcnamee (128,827), Gregory l. Kenausis (233,827), Johannes M. Roth
(243,827), Maureen o. helmer (39,863) and lucas P. Schneider (200,179).
Compensation Committee Interlocks and Insider Participation
during 2020, Messrs. willis (Chairman), Mcnamee, and Roth served as members of the Compensation Committee.
none of the members of our Compensation Committee was an employee or officer of the Company during 2020, a former officer
of the Company, or had any other relationships with us requiring disclosure herein. none of our executive officers currently
serves or has served as a director or member of the compensation committee (or other committee serving an equivalent function)
of any other entity whose executive officers served as one of our directors or a member of the Compensation Committee.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Principal Stockholders
the following table sets forth information regarding the beneficial ownership of our common stock as of april 28,
2021:
●
●
●
●
all persons known by us to have beneficially owned 5% or more of our common stock;
each director of the Company;
the named executive officers; and
all directors and executive officers as a group.
the beneficial ownership of the stockholders listed below is based on publicly available information and from
representations of such stockholders.
Name and Address of Beneficial Owner(1)
Grove energy Capital llC(3)
BlackRock, inc.(4)………………………………………………………………...
the Vanguard Group(5)
andrew J. Marsh
Paul B. Middleton
Sanjay K. Shrestha(6)
Keith C. Schmid(7)
Jose luis Crespo(8)
Kimberly a. harriman
Maureen o. helmer(9)
Gregory l. Kenausis(10)
George C. Mcnamee(11)
Johannes M. Roth(12)
lucas P. Schneider(13)
Jonathan Silver(14)……………………………………………………………..
Kyungyeol Song(15)
Gary K. willis(16)
all executive officers and directors as a group (16 persons)(17)
Shares Beneficially Owned(2)
Number
Percentage
(%)
54,966,188
47,161,335
40,465,986
293,598
38,260
330,909
383,776
101,721
−
153,501
323,217
978,723
471,197
320,574
55,695
−
582,018
4,141,698
9.7%
8.3%
7.1%
*
*
*
*
*
*
*
*
*
*
*
*
*
*
0.7%
*
(1)
(2)
Represents less than 1% of the outstanding shares of our common stock.
unless otherwise indicated, we believe that each stockholder named in the table above has sole voting and investment
power with respect to all shares beneficially owned by them. unless otherwise indicated by footnote, the mailing
address for each stockholder is c/o Plug Power inc. 968 albany Shaker Road, latham, new York 12110.
the number of shares beneficially owned by each stockholder is determined under rules promulgated by the SeC and
includes voting or investment power with respect to securities. under Rule 13d-3 under the exchange act, beneficial
ownership includes any shares to which the individual or entity has sole or shared voting power or investment power
and includes any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days
of april 28, 2021, through the exercise of any warrant, stock option or other right. the inclusion in this table of such
shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of
such shares. the number of shares of our common stock outstanding used in calculating the percentage for each listed
person includes the shares of common stock underlying options,
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warrants or other rights held by such person that are exercisable within 60 days of april 28, 2021 but excludes shares of
common stock underlying options, warrants or other rights held by any other person. Percentage of beneficial ownership
is based on 568,317,504 shares of common stock outstanding as of april 28, 2021. unless otherwise indicated, each of
the stockholders has sole voting and investment power with respect to the shares of common stock beneficially owned
by the stockholder.
information is based on a Schedule 13d filed with the SeC on March 8, 2021. Grove energy Capital llC is owned by
Plutus Capital nY, inc., a delaware corporation (“Plutus”), and PneS investments, llC, a delaware limited liability
company (“PneS”). Plutus is wholly-owned by SK holdings, a company organized under the laws of the Republic of
Korea, and PneS is wholly-owned by SK e&S americas, inc., a delaware corporation (“SK e&S americas”). SK
e&S americas is wholly-owned by SK e&S Co., ltd., a company organized under the laws of the Republic of Korea
(“SK e&S”). 90% of the issued and outstanding common stock of SK e&S is owned by SK holdings. the address of
the principal business office of Grove energy Capital llC is 55 east 59th Street, new York, nY 10022.
information is based on a Schedule 13G/a filed with the SeC on January 27, 2021. BlackRock, inc. reported sole voting
power over 46,314,057 shares of common stock and sole dispositive power over 47,161,335 shares of common stock.
the address of the principal business office of BlackRock, inc. is 55 east 52nd Street, new York, nY 10055.
information is based on a Schedule 13G filed with the SeC on February 10, 2021. the Vanguard Group reported shared
voting power over 905,146 shares of common stock, sole dispositive power over 39,203,572 shares of common stock
and shared dispositive power over 1,262,414 shares of common stock. the address of the principal business office of
the Vanguard Group is 100 Vanguard Blvd, Malvern, Pa 19355.
includes 100,000 shares of common stock issuable upon exercise of outstanding options.
includes 183,335 shares of common stock issuable upon exercise of outstanding options.
includes 1 share of common stock issuable upon exercise of outstanding options.
includes 39,863 shares of common stock issuable upon exercise of outstanding options.
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
includes 233,827 shares of common stock issuable upon exercise of outstanding options.
(11)
includes 88,827 shares of common stock issuable upon exercise of outstanding options, and 300,000 shares of common
stock held by a family trust.
(12)
includes 243,827 shares of common stock issuable upon exercise of outstanding options.
(13)
includes 200,179 shares of common stock issuable upon exercise of outstanding options.
(14)
includes 12,807 shares of common stock issuable upon exercise of outstanding options.
(15)
dr. Kyungyeol Song is an employee of SK e&S and will not receive any equity awards pursuant to the terms of the
investor agreement.
(16)
includes 170,827 shares of common stock issuable upon exercise of outstanding options.
(17)
includes 1,273,493 shares of common stock issuable upon exercise of outstanding options.
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Securities Authorized for Issuance Under Equity Compensation Plans
the following table gives information, as of december 31, 2020, about the shares of our common stock that may be
issued upon the exercise of options and restricted stock under the Company’s 1999 Stock option and incentive Plan, as amended
(the “1999 Stock option Plan”), and the Company’s third amended and Restated 2011 Stock option and incentive Plan (the
“2011 Stock option Plan”):
Number of shares to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b) (1)
Number of shares
remaining for future
issuance under equity
compensation plans
(excluding shares
reflected in column (a))
(c)
15,234,454 (2) $
924,686 (4) $
16,159,140
3.65
4.12
848,909 (3)
—
848,909
Plan Category
equity compensation plans approved
by security holders
equity compensation plans not
approved by security holders
total
(1) the weighted-average exercise price is calculated solely based on outstanding options.
(2) Represents 121,019 outstanding options issued under the 1999 Stock option Plan, 9,238,793 outstanding options issued
under the 2011 Stock option Plan and 5,874,642 shares of restricted stock granted under the 2011 Stock option Plan.
(3)
includes shares available for future issuance under the 2011 Stock option Plan.
included in equity compensation plans not approved by stockholders are shares granted to new employees as an inducement to
join the Company pursuant to Rule 5635(c)(4) of the naSdaQ Rules.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Investor Agreement
Pursuant to the investor agreement described under Part iii. “item 13. Certain Relationships and Related Party
transactions, and director independence,” Grove energy, a subsidiary of SK holdings, is entitled to designate one SK designee
to be appointed to the Board. Grove energy has the right to require the Board to nominate a SK designee for election to the
Board by the stockholders of the Company at annual stockholder meetings until the earliest of (i) the date on which Grove energy
and affiliates beneficially own less than 4.0% of our issued and outstanding common stock, (ii) February 24, 2023, in the event
that the Company and SK e&S have not entered into the asia JV agreement, and (iii) any expiration or termination of the asia
JV agreement.
Related Party Transaction Policy
the Board has adopted a written related party transaction policy that requires the Company’s General Counsel, together
with outside counsel as necessary, to evaluate potential transactions to which the Company is a participant and in which a related
party or an affiliate of a related party has an interest prior to the Company entering into any such transaction to determine
whether such contemplated transaction requires the approval of the Board, the audit Committee, both or neither. the policy
defines a “related party” as: (i) the Company’s directors or executive officers, (ii) the Company’s director nominees, (iii) security
holders known to the Company to beneficially own more than 5% of any class of the Company’s voting securities, or (iv) the
immediate family members of any of the persons listed in items (i) - (iii).
other than as otherwise disclosed herein, since January 1, 2020, there was no transaction or series of similar transactions
to which the Company was or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any
related party had or will have a direct or indirect material interest.
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Director Independence
the Board of directors has determined that Messes. helmer and harriman, dr. Kenausis and Messrs. Mcnamee, willis,
Silver, Roth, Song and Schneider are independent directors as defined in Rule 5605(a)(2) under the naSdaQ Rules.
Item 14. Principal Accounting Fees and Services
the following table presents fees for professional services rendered by KPMG llP for the integrated audit of the
Company’s annual financial statements and internal control over financial reporting and fees billed for other services rendered by
KPMG llP:
audit Fees
audit-Related Fees
tax Fees
all other Fees
total
2020
$3,096,900
$30,000
—
—
$3,126,900
2019
$1,064,325
$30,000
—
—
$1,094,325
in the above table, and in accordance with SeC definitions and rules: (1) “audit fees” are fees for professional services
for the audit of the Company’s consolidated financial statements included in Form 10-K, audit of the Company’s internal controls
over financial reporting, review of unaudited interim consolidated financial statements included in Form 10-Qs, or for services
that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; (2) “audit-
related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of
the Company’s consolidated financial statements; (3) “tax fees” are fees for tax compliance, tax advice, and tax planning; and
(4) “all other fees” are fees for any services not included in the first three categories.
the audit Committee pre-approved all audit and audit-related services provided to the Company by KPMG llP during fiscal
year 2020.
Item 15. Exhibits and Financial Statement Schedules
15(a)(1) Financial Statements
PART IV
the financial statements and notes are listed in the index to Consolidated Financial Statements on page F-1 of this
annual Report on Form 10-K.
15(a)(2) Financial Statement Schedules
the financial statement schedules are listed in the index to Consolidated Financial Statements on page F-1 of this
annual Report on Form 10-K.
all other schedules not filed herein have been omitted as they are not applicable, or the required information or
equivalent information has been included in the Consolidated Financial Statements or the notes thereto.
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15(a)(3) Exhibits
the following exhibits are filed as part of and incorporated by reference into this annual Report on Form 10-K.
Exhibit No.
Description
2.1
2.2
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9*
3.10
agreement and Plan of Merger, dated June 22, 2020, by and among Plug Power inc., Giner elX, inc., Giner elX
Sub, llC, Giner elX Merger Sub, inc. and Giner, inc., as the representative of the stockholders of Giner elX, inc.
(filed as exhibit 2.1 to Plug Power inc.’s Current Report on Form 8-K filed on June 23, 2020 and incorporated by
reference herein)
agreement and Plan of Merger, dated June 18, 2020, by and among Plug Power hydrogen holdings, inc., uhG
Merger Sub, inc., united hydrogen Group inc. and Vladimir Prerad, as the representative of the stockholders of
united hydrogen Group inc. (filed as exhibit 2.2 to Plug Power inc.’s Current Report on Form 8-K filed on June
23, 2020 and incorporated by reference herein)
amended and Restated Certificate of incorporation of Plug Power inc. (filed as exhibit 3.1 to Plug Power inc.’s
annual Report on Form 10-K for the year ended december 31, 2008 and incorporated by reference herein)
Certificate of amendment to amended and Restated Certificate of incorporation of Plug Power inc. (filed as
exhibit 3.3 to Plug Power inc.’s annual Report on Form 10-K for the year ended december 31, 2008 and
incorporated by reference herein)
Second Certificate of amendment of amended and Restated Certificate of incorporation of Plug Power inc. (filed
as exhibit 3.1 to Plug Power inc.’s Current Report on Form 8-K filed on May 19, 2011 and incorporated by
reference herein)
third Certificate of amendment of amended and Restated Certificate of incorporation of Plug Power inc. (filed as
exhibit 3.1 to Plug Power inc.’s Current Report on Form 8-K filed on July 25, 2014 and incorporated by reference
herein)
Certificate of Correction to third Certificate of amendment of amended and Restated Certificate of incorporation
of Plug Power inc. (filed as exhibit 3.9 to Plug Power inc.’s annual Report on Form 10-K for the year ended
december 31, 2016 and incorporated by reference herein)
Fourth Certificate of amendment of amended and Restated Certificate of incorporation of Plug Power inc. (filed as
exhibit 3.1 to Plug Power inc.’s Current Report on Form 8-K filed on June 30, 2017 and incorporated by reference
herein)
Certificate of designations, Preferences and Rights of a Series of Preferred Stock of Plug Power inc. classifying and
designating the Series a Junior Participating Cumulative Preferred Stock. (filed as exhibit 3.1 to Plug Power inc.’s
Registration Statement on Form 8-a filed on June 24, 2009 and incorporated by reference herein)
Certificate of designations, Preferences and Rights of a Series of Preferred Stock of Plug Power inc. classifying and
designating the Series C Redeemable Convertible Preferred Stock. (filed as exhibit 3.1 to Plug Power inc.’s Current
Report on Form 8-K filed on May 20, 2013 and incorporated by reference herein)
Fourth amended and Restated By-laws of Plug Power inc.
Certificate of designations, Preferences and Rights of a Series of Preferred Stock of Plug Power inc. classifying and
designating the Series e Convertible Preferred Stock (filed as exhibit 3.1 to Plug Power inc.’s Current Report on
Form 8-K filed on november 2, 2018 and incorporated by reference herein)
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Exhibit No.
Description
4.1
4.2
4.3
4.4
4.5
Specimen certificate for shares of common stock, $.01 par value, of Plug Power inc. (filed as exhibit 4.1 to Plug
Power inc.’s Registration Statement on Form S-1 (File number 333-86089) and incorporated by reference herein)
indenture, dated as of May 18, 2020, between Plug Power inc. and wilmington trust, national association (filed as
exhibit 4.1 to Plug Power inc.’s Current Report on Form 8-K filed on May 19, 2020 and incorporated by reference
herein)
Form of 3.75% Convertible Senior notes due June 1, 2025 (filed as exhibit 4.2 to Plug Power inc.’s Current Report
on Form 8-K filed on May 19, 2020 and incorporated by reference herein)
warrant to Purchase Common Stock, issued april 4, 2017, between Plug Power inc. and amazon.com nV
investment holdings llC (filed as exhibit 4.1 to Plug Power inc.’s Current Report on Form 8-K filed on april 5,
2017 and incorporated by reference herein)
warrant to Purchase Common Stock, issued July 20, 2017, between Plug Power inc. and wal-Mart Stores, inc.
(filed as exhibit 4.1 to Plug Power inc.’s Current Report on Form 8-K filed on July 21, 2017 and incorporated by
reference herein)
4.6*
description of the Registrant's securities registered under Section 12 of the Securities exchange act of 1934
10.1#
employee Stock Purchase Plan (filed as exhibit 10.34 to Plug Power inc.’s Registration Statement on Form S-1
(File number 333-86089) and incorporated by reference herein)
10.2#*
Form of director indemnification agreement
10.3#*
Form of officer indemnification agreement
10.4#
10.5#
10.6#
10.7#
10.8#
10.9#
employment agreement, dated as of april 7, 2008, between andrew Marsh and Plug Power inc. (filed as exhibit
10.1 to Plug Power inc.’s Current Report on Form 8-K filed on april 7, 2008 and incorporated by reference herein)
executive employment agreement, dated as of May 5, 2008, between Gerard l. Conway, Jr. and Plug Power inc.
(filed as exhibit 10.1 to Plug Power inc.’s Quarterly Report on Form 10-Q filed on august 7, 2008 and incorporated
by reference herein)
executive employment agreement, dated as of october 23, 2013, between Keith C. Schmid and Plug Power inc.
(filed as exhibit 99.2 to Plug Power inc.’s Current Report on Form 8-K filed on october 29, 2013 and incorporated
by reference herein)
executive employment agreement, dated as of november 6, 2014, between Paul B. Middleton and Plug Power inc.
(filed as exhibit 99.2 to Plug Power inc.’s Current Report on Form 8-K filed on november 12, 2014 and
incorporated by reference herein)
Form of incentive Stock option agreement (filed as exhibit 10.2 to Plug Power inc.’s Quarterly Report on Form
10-Q filed on august 11, 2011 and incorporated by reference herein)
Form of non-Qualified Stock option agreement for employees (filed as exhibit 10.3 to Plug Power inc.’s
Quarterly Report on Form 10-Q filed on august 11, 2011 and incorporated by reference herein)
10.10#
Form of non-Qualified Stock option agreement for independent directors (filed as exhibit 10.4 to Plug Power
inc.’s Quarterly Report on Form 10-Q filed on august 11, 2011 and incorporated by reference herein)
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Exhibit No.
10.11#
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
Description
Form of Restricted Stock award agreement (filed as exhibit 10.5 to Plug Power inc.’s Quarterly Report on Form
10-Q filed on august 11, 2011 and incorporated by reference herein)
Purchase and Sale agreement dated as of January 24, 2013, between Plug Power inc. and 968 albany Shaker Road
associates, llC (filed as exhibit 10.1 to Plug Power inc.’s Current Report on Form 8-K filed on april 1, 2013 and
incorporated by reference herein)
amendment to Purchase and Sale agreement dated as of March 13, 2013 between Plug Power inc. and 968 albany
Shaker Road associates, llC (filed as exhibit 10.2 to Plug Power inc.’s Current Report on Form 8-K filed on april
1, 2013 and incorporated by reference herein)
Stock Purchase agreement dated as of January 6, 2021, between Plug Power inc., Grove energy Capital llC,
Plutus Capital nY, inc., and SK e&S americas, inc. (filed as exhibit 10.1 to Plug Power inc.’s Current Report on
Form 8-K filed on January 7, 2021 and incorporated by reference herein)
investor agreement, dated as of February 24, 2021, between Plug Power inc., Grove energy Capital llC, SK
holdings, Co., ltd. and SK e&S Co., ltd. (filed as exhibit 10.1 to Plug Power inc.’s Current Report on Form 8-K
filed on February 25, 2021 and incorporated by reference herein)
transaction agreement, dated as of april 4, 2017, between Plug Power inc. and amazon.com, inc. (filed as exhibit
10.1 to Plug Power inc.’s Current Report on Form 8-K filed on april 5, 2017 and incorporated by reference herein)
transaction agreement, dated as of July 20, 2017, between Plug Power inc. and wal-Mart Stores, inc. (filed as
exhibit 10.1 to Plug Power inc.’s Current Report on Form 8-K filed on July 21, 2017 and incorporated by reference
herein)
Master lease agreement, dated as of June 30, 2017, between Plug Power inc. and wells Fargo equipment Finance,
inc. (filed as exhibit 10.2 to Plug Power inc.’s Current Report on Form 8-K filed on July 21, 2017 and incorporated
by reference herein)
Base Call option Confirmation, dated as of May 13, 2020, between Plug Power inc. and Morgan Stanley & Co.
llC. (filed as exhibit 10.1 to Plug Power inc.’s Current Report on Form 8-K filed on May 19, 2020 and
incorporated by reference herein)
Base Call option Confirmation, dated as of May 13, 2020, between Plug Power inc. and wells Fargo Bank,
national association. (filed as exhibit 10.2 to Plug Power inc.’s Current Report on Form 8-K filed on May 19,
2020 and incorporated by reference herein)
Forward Stock Purchase transaction Confirmation, dated as of March 22, 2018, between Plug Power inc. and
Morgan Stanley & Co, llC (filed as exhibit 10.1 to Plug Power inc.’s Current Report on Form 8-K filed on March
28, 2018 and incorporated by reference herein)
amendment to Forward Stock Purchase transaction, dated as of May 13, 2020, between Plug Power inc. and
Morgan Stanley & Co. llC. (filed as exhibit 10.3 to Plug Power inc.’s Current Report on Form 8-K filed on May
19, 2020 and incorporated by reference herein)
at Market issuance Sales agreement, dated april 13, 2020, by and between Plug Power inc. and B. Riley FBR, inc.
(filed as exhibit 1.1 to Plug Power inc.’s Current Report on Form 8-K filed on april 13, 2020 and incorporated by
reference herein)
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Exhibit No.
10.24
10.25
10.26
10.27#
10.28
10.29
10.30
10.31*
10.32*
23.1*
24.1*
31.1*
31.2*
Description
loan and Security agreement dated March 29, 2019, among Plug Power inc., emerging Power inc., emergent
Power inc., and Generate lending, llC (filed as exhibit 10.1 to Plug Power inc.’s Current Report on Form 8-K
filed on april 3, 2019 and incorporated by reference herein)
First amendment to loan and Security agreement dated March 29, 2019, among Plug Power inc. and emerging
Power inc., emergent Power inc., and Generate lending, llC (filed as exhibit 10.2 to Plug Power inc.’s Current
Report on Form 8-K filed on april 3, 2019 and incorporated by reference herein)
First amended and Restated Master lease agreement, dated as of July 30, 2018, between Plug Power inc. and
wells Fargo equipment Finance, inc. (filed as exhibit 10.4 to Plug Power inc.’s Current Report on Form 10-Q
filed on May 8, 2019 and incorporated by reference herein)
third amended and Restated 2011 Stock option and incentive Plan (filed as exhibit 10.1 to Plug Power inc.’s
Current Report on Form 8-K filed on May 15, 2019 and incorporated by reference herein)
third amendment to loan and Security agreement, dated September 6, 2019, among Plug Power inc. and
emerging Power inc., emergent Power inc., and Generate lending, llC (filed as exhibit 10.3 to Plug Power
inc.’s Current Report on Form 8-K filed on September 9, 2019 and incorporated by reference herein)
Fourth amendment to loan and Security agreement, dated november 27, 2019, among Plug Power inc. and
emerging Power inc., emergent Power inc., and Generate lending, llC (filed as exhibit 10.1 to Plug Power
inc.’s Current Report on Form 8-K filed on december 2, 2019 and incorporated by reference herein)
Sixth amendment to loan and Security agreement, dated as of May 13, 2020, by and among Plug Power inc.,
emerging Power inc., emergent Power inc. and Generate lending, llC (filed as exhibit 10.1 to Plug Power
inc.’s Current Report on Form 8-K filed on May 14, 2020 and incorporated by reference herein)
Master lease agreement, dated as of april 10, 2019, between Plug Power inc. and wells Fargo equipment
Finance, inc.
Master lease agreement, dated as of July 20, 2020, between Plug Power inc. and wells Fargo equipment
Finance, inc.
Consent of KPMG llP
Power of attorney (incorporated by reference to the signature page of this report on Form 10-K)
Rule 13a-14(a)/15d-14(a) Certification of Chief executive officer pursuant to Section 302 of the Sarbanes-oxley
act of 2002
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial officer pursuant to Section 302 of the Sarbanes oxley
act of 2002
32.1**
Section 1350 Certification of Chief executive officer pursuant to Section 906 of the Sarbanes oxley act of 2002
32.2**
Section 1350 Certification of Chief Financial officer pursuant to Section 906 of the Sarbanes oxley act of 2002
101.inS*
XBRl instance document.
101.SCh*
XBRl taxonomy extension Schema document.
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Exhibit No.
Description
101.inS*
inline XBRl instance document (1)
101.SCh*
XBRl taxonomy extension Schema document (1)
101.Cal*
XBRl taxonomy extension Calculation linkbase document (1)
101.deF*
XBRl taxonomy extension definition linkbase document (1)
101.laB*
XBRl taxonomy extension labels linkbase document (1)
101.PRe*
XBRl taxonomy extension Presentation linkbase document (1)
104
Cover Page interactive data File (embedded within the inline XBRl document) (1)
(1)
*
Filed herewith.
Submitted electronically herewith.
Item 16. Form 10-K Summary
not applicable.
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POWER OF ATTORNEY
Know all Men BY theSe PReSentS that each individual whose signature appears below constitutes and
appoints each of andrew Marsh, Paul B. Middleton and Gerard l. Conway, Jr. such person’s true and lawful attorney-in-fact and
agent with full power of substitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign
any and all amendments to this annual Report on Form 10-K, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said
attorney-in-fact and agent, or any substitute or substitutes of any of them, may lawfully do or cause to be done by virtue hereof.
date: May 13, 2021
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.
/s/ andRew MaRSh
andrew Marsh
/s/ Paul B. Middleton
Paul B. Middleton
/s/ MaRtin d. hull
Martin d. hull
/s/ luCaS P. SChneideR
lucas P. Schneider
/s/ MauReen o. helMeR
Maureen o. helmer
/s/ Jonathan SilVeR
Jonathan Silver
/s/ GReGoRY l. KenauSiS
Gregory l. Kenausis
/s/ GeoRGe C. MCnaMee
George C. Mcnamee
/s/ JohanneS Minho Roth
Johannes Minho Roth
/s/ GaRY K. williS
Gary K. willis
President, Chief executive officer and director
(Principal executive officer)
May 13, 2021
Chief Financial officer
(Principal Financial officer)
May 13, 2021
Controller & Chief accounting officer
May 13, 2021
(Principal accounting officer)
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
director
director
director
director
director
director
director
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/s/ KYunGYeol SonG
Kyungyeol Song
director
/s/ KiMBeRlY a. haRRiMan
director
Kimberly a. harrima
May 13, 2021
May 13, 2021
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of independent Registered Public accounting Firm
Consolidated balance sheets as of december 31, 2020 and 2019
Consolidated statements of operations for the years ended december 31, 2020, 2019, and 2018
Consolidated statements of comprehensive loss for the years ended december 31, 2020, 2019, and 2018
Consolidated statements of stockholders’ equity (deficit) for the years ended december 31, 2020, 2019, and 2018
Consolidated statements of cash flows for the years ended december 31, 2020, 2019, and 2018
notes to consolidated financial statements
Page
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F-1
table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Plug Power Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Plug Power Inc. and subsidiaries (the Company)
as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss,
stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2020,
and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and
2019, and the results of its operations and its cash flows for each of the years in the three-year period ended
December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated May 13, 2021 expressed an adverse opinion on the effectiveness
of the Company’s internal control over financial reporting.
Restatement of Previously Issued Financial Statements
As discussed in Note 2 to the consolidated financial statements, the 2019 and 2018 financial statements have been
restated to correct misstatements.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
F-2
table of Contents
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in
any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Stand-alone selling price
As discussed in Notes 4 and 19 to the consolidated financial statements, the Company’s contracts with
customers generally contain multiple performance obligations, and the total transaction price is allocated for
purposes of recognizing revenue based on relative standalone selling prices. The Company estimates
standalone selling prices for fuel cells by considering several inputs, including prices from a limited number of
standalone sales as well as the Company’s negotiations with customers. The Company also considers its
costs to produce fuel cells as well as comparable list prices in estimating standalone selling prices. For
services performed on fuel cells and infrastructure, the Company uses an adjusted market assessment
approach that considers market conditions and constraints, the Company’s market share, pricing strategies
and objectives while maximizing the use of available observable inputs obtained from a limited number of
historical standalone service renewal prices and negotiations with customers. The Company recognized net
revenue from the sales of fuel cells of $(55.1) million and sales of services of $(9.8) million for the year ended
December 31, 2020.
We identified the evaluation of the sufficiency of audit evidence obtained related to the standalone selling
prices for fuel cells and services as a critical audit matter. Significant auditor judgment was required to
evaluate the appropriateness of the estimate of standalone selling prices for fuel cells as well as services
performed on fuel cells and infrastructure, because of the nature of the technology, its emerging market
acceptance and the Company’s limited history of selling these products and services on a standalone basis.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls related to the Company’s process to
estimate standalone selling prices. This included controls related to the assessment of the relevance and
reliability of the inputs mentioned above. We applied auditor judgment to determine the nature and extent of
procedures to be performed over standalone selling prices. We inquired of operational and financial
personnel to understand the Company’s pricing strategies, negotiations with customers, and prices that
customers are willing to pay for fuel cells and services. We evaluated the Company’s estimates of standalone
selling prices by comparing those estimates to supporting documentation, such as a selection of historical
sales transactions, correspondence with customers, and industry research. We evaluated the sufficiency of
audit evidence obtained over standalone selling prices by assessing the results of procedures performed,
including the appropriateness of the nature of such evidence.
Evaluation of a waiver of warrant vesting conditions
As discussed in Note 18 to the consolidated financial statements, in April 2017, the Company issued
warrants to a customer to acquire up to 55,286,696 shares of the Company’s common stock, the vesting of
which was conditioned upon payments made by the customer for the future purchase of goods and services
from the Company. On December 31, 2020, the Company waived the warrants’ remaining vesting conditions
(the Waiver), which resulted in the immediate vesting of all remaining unvested warrants and recognition of a
$399.7 million reduction to revenue. The amount of the revenue reduction was determined by the Company’s
assessment of the number of warrants that were considered probable of vesting under the terms of the
original arrangement, based on projections of probable future cash collections.
F-3
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We identified the evaluation of the accounting for and impact of the Waiver as a critical audit matter. A high
degree of auditor judgment was required to evaluate the appropriate accounting for the Waiver as a different
accounting conclusion could have had a material effect on the consolidated financial statements. Also, the
Company’s assessment of the number of warrants that were considered probable of vesting immediately
prior to the waiver required significant auditor judgment. Specifically, subjective auditor judgment was
required to evaluate the Company’s projections of probable future cash collections from the customer under
the terms of the original arrangement used to determine the probability of vesting.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls over the Company’s accounting for
the Waiver, including controls over the Company’s process for accounting for the Waiver and the estimate of
probable future cash collections from the customer. We evaluated the Company’s assessment of the
accounting for the Waiver, including the determination that the Waiver resulted an immediate reduction to
revenue. We obtained and read the Waiver agreement and inquired of key executives involved in the Waiver
transaction as well as the board of directors. To evaluate management’s assessment of the number of
warrants that were considered probable of vesting under the terms of the original arrangement, we compared
the amount of projected probable future cash collections from the customer to either (1) purchase orders
received from the customer for fuel cells, infrastructure and service, or (2) historical fuel purchases by the
customer.
Maintenance cost projections in the accrual for loss contracts
As discussed in Note 4 to the consolidated financial statements, the Company records an accrual for loss
contracts if the sum of expected costs of providing maintenance services for fuel cell systems and related
infrastructure exceeds related unearned net revenues over the remaining contract term. The Company
recorded an accrual for loss contracts of $24.0 million as of December 31, 2020. Maintenance costs are
estimated in determining the accrual for loss contracts based upon current service cost levels and the
estimated impact of the Company’s expected cost savings initiatives. Estimating the impact of the expected
cost savings initiatives requires significant judgment. The estimated accrual for loss contracts is sensitive to
changes in the assumed cost savings.
We identified the evaluation of maintenance cost projections in the accrual for loss contracts as a critical
audit matter. A high degree of auditor judgment was required to evaluate the expected remaining service
costs required to fulfill the related customer maintenance contracts. Specifically, assessing the likelihood of
achieving as well as the expected impact of the cost savings initiatives required challenging auditor judgment.
Minor changes in the expected costs of providing maintenance services could have had a significant effect on
the amount of the recorded accrual for loss contracts.
The following are the primary procedures we performed to address this critical audit matter. We inquired of
operational and financial personnel to understand the technical elements of planned operational changes and
how and when those initiatives are expected to result in cost savings relative to the Company’s current cost
of providing maintenance services. We obtained underlying documentation supporting expected cost savings
associated with certain initiatives, and actual cost savings realized in 2020 in connection with one customer
site and compared them to the Company’s analysis of expected costs of providing maintenance services
utilized in the accrual for loss contracts. We performed sensitivity analyses to assess the impact of possible
changes to the expected costs of providing maintenance services on the Company’s estimated accrual for
loss contracts.
We have served as the Company’s auditor since 2001.
Albany, NY
May 13, 2021
F-4
table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Plug Power Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Plug Power Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the
material weakness, described below, on the achievement of the objectives of the control criteria, the Company has
not maintained effective internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related
consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for each of
the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated
financial statements), and our report dated May 13, 2021 expressed an unqualified opinion on those consolidated
financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial
statements will not be prevented or detected on a timely basis. The following material weakness has been identified
and included in management’s assessment:
The Company did not maintain a sufficient complement of trained, knowledgeable resources to execute their
responsibilities with respect to internal control over financial reporting for certain financial statement accounts and
disclosures. As a consequence, the Company did not conduct an effective risk assessment process that was
responsive to changes in the Company's operating environment and did not design and implement effective process-
level controls activities in the following areas:
— presentation of operating expenses
— accounting for lease-related transactions
— identification and evaluation of impairment, accrual for loss contracts, certain expense accruals, and deemed
dividends; and
— timely identification of adjustments to physical inventory in interim periods
The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit
of the 2020 consolidated financial statements, and this report does not affect our report on those consolidated
financial statements.
The Company acquired Giner ELX, Inc. and United Hydrogen Group Inc. (the Acquired Companies) during 2020, and
management excluded from its assessment of the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2020, the Acquired Companies’ internal control over financial reporting associated with
total assets of $58.0 million, excluding goodwill and intangible assets of $94.9 million, and total revenues of $7.8
million included in the consolidated financial statements of the Company as of and for the year ended December 31,
2020. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal
control over financial reporting of the Acquired Companies.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility
F-5
table of Contents
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Albany, NY
May 13, 2021
F-6
table of Contents
PLUG POWER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2020 and 2019
(In thousands, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers, net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Redeemable preferred stock:
Series C redeemable convertible preferred stock, $0.01 par value per share (aggregate involuntary
liquidation preference $16,664); 10,431 shares authorized; issued and outstanding: zero at december 31,
2020 and 2,620 at december 31, 2019
Series e convertible preferred stock, $0.01 par value per share; Shares authorized: 35,000 at both
december 31, 2020 and december 31, 2019; issued and outstanding: zero at december 31, 2020 and
500 at december 31, 2019
Stockholders’ equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; issued: 473,977,469 at
december 31, 2020 and 318,637,560 at december 31, 2019
additional paid-in capital
accumulated other comprehensive income
accumulated deficit
less common stock in treasury: 15,926,068 at december 31, 2020 and 15,259,045 at december 31,
2019
total stockholders’ equity
total liabilities, redeemable preferred stock, and stockholders’ equity
See notes to consolidated financial statements.
F-7
2020
2019 (as restated)
$
$
$
$
$
$
1,312,404
64,041
43,041
139,386
44,324
1,603,196
257,839
74,549
5,724
117,016
75,807
72,387
39,251
5,513
2,251,282
50,198
46,083
23,275
14,314
903
32,717
25,389
29,487
222,366
32,944
99,624
4,493
148,836
85,640
150,013
40,447
784,363
—
—
139,496
54,813
25,768
72,391
21,192
313,660
175,191
14,959
1,714
63,266
67,769
8,842
5,539
8,573
659,513
40,376
14,409
11,691
9,428
226
24,667
26,461
6,704
133,962
23,170
50,937
2,011
119,422
110,431
85,708
2,818
528,459
709
441
4,740
3,446,650
2,451
(1,946,488)
(40,434)
1,466,919
2,251,282
$
$
3,186
1,506,953
1,288
(1,350,307)
(31,216)
129,904
659,513
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PLUG POWER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2020, 2019 and 2018
(In thousands, except share and per share amounts)
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision (benefit) for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
Gross (loss) profit
operating expenses:
Research and development
Selling, general and administrative
impairment of long-lived assets
Change in fair value of contingent consideration
total operating expenses
operating loss
interest and other expense, net
Gain (loss) on extinguishment of debt
Change in fair value of common stock warrant liability
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of discount
net loss attributable to common stockholders
net loss per share:
Basic and diluted
2020
2019
(as restated)
2018
(as restated)
(94,295) $
(9,801)
26,620
(16,072)
311
(93,237)
171,404
42,524
35,473
64,640
61,815
323
376,179
$
149,920
25,217
25,553
29,099
186
229,975
97,915
34,582
(394)
41,777
45,247
200
219,327
107,175
22,002
22,569
22,469
—
174,215
85,205
32,271
5,345
41,361
36,037
—
200,219
(469,416)
10,648
(26,004)
27,848
79,348
6,430
1,160
114,786
15,059
43,202
—
—
58,261
12,750
37,685
—
—
50,435
(584,202)
(47,613)
(76,439)
(60,484)
17,686
—
(35,691)
(518)
79
(22,750)
—
4,286
(627,000) $
(83,743)
$
(94,903)
30,845
—
9,295
(596,155) $
(83,743)
$
(85,608)
(26)
(596,181) $
(1,812)
(85,555)
$
(52)
(85,660)
(1.68) $
(0.36)
$
(0.39)
$
$
$
$
$
weighted average number of common stock outstanding
354,790,106
237,152,780
218,882,337
See notes to consolidated financial statements.
F-8
table of Contents
PLUG POWER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the years ended December 31, 2020, 2019 and 2018
(In thousands)
net loss attributable to the Company
other comprehensive gain (loss) - foreign currency translation
adjustment
Comprehensive loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion
of discount
Comprehensive loss attributable to common stockholders
2020
(596,155)
1,163
(594,992)
(26)
(595,018)
$
$
$
$
$
$
2019
(as restated)
2018
(as restated)
(83,743)
$
(85,608)
(296)
(84,039)
(1,812)
(85,851)
$
$
(610)
(86,218)
(52)
(86,270)
See notes to consolidated financial statements.
F-9
table of Contents
PLUG POWER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the years ended December 31, 2020, 2019 and 2018
(In thousands, except share amounts)
December 31, 2017, as restated
Cumulative effect from the adoption of
aSC 842, as restated
net loss attributable to the Company,
as restated
other comprehensive loss
Stock-based compensation
Stock dividend
Public offerings, common stock, net
Stock option exercises
equity component of convertible senior
notes, net of issuance costs and income
tax benefit, as restated
Purchase of capped call
Purchase of common stock forward
exercise of warrants
Provision for common stock warrants
December 31, 2018, as restated
net loss attributable to the Company,
as restated
other comprehensive loss, as restated
Stock-based compensation
Stock dividend
Public offerings, common stock, net, as
restated
Stock option exercises
exercise of warrants
Provision for common stock warrants
accretion of discount, preferred stock
Conversion of preferred stock
December 31, 2019, as restated
net loss attributable to the Company
other comprehensive gain
Stock-based compensation
Stock dividend
Public offerings, common stock, net
Stock option exercises
equity component of 3.75%
Convertible Senior notes issued, net of
issuance costs and income tax expense
Purchase of capped calls
termination of capped calls
exercise of warrants
Provision for common stock warrants
accretion of discount, preferred stock
Conversion of preferred stock
Conversion of 5.5% and 7.5%
Convertible Senior notes
Repurchase of 5.5% Convertible Senior
notes, net of income tax benefit
Shares issued for acquisitions
December 31, 2020
Common Stock
Shares
229,073,517
Amount
$
2,291
$
Additional
Paid-in
Capital
1,250,899
Accumulated
Other
Comprehensive
Income
Treasury Stock
Shares
Amount
$
2,194
587,151
$
(3,102)
Accumulated
Deficit
(1,182,053)
$
Total
Stockholders’
Equity (Deficit)
70,229
$
$
$
—
—
741,216
29,762
3,804,654
511,412
—
—
—
100
—
234,160,661
—
—
1,876,503
19,286
62,333,585
1,151,307
5,250,750
—
—
13,845,468
318,637,560
—
—
439,649
5,156
78,976,250
18,056,200
—
—
—
5,180,457
—
—
2,998,526
30,615,615
9,409,591
9,658,465
473,977,469
$
—
—
8
—
38
5
—
—
—
—
—
2,342
—
—
19
—
622
12
53
—
—
138
3,186
—
—
4
—
790
181
—
—
—
52
—
—
30
306
94
97
4,740
$
$
$
$
—
—
8,763
52
6,978
168
28,586
(16,000)
—
—
10,190
1,289,636
—
—
10,871
52
157,722
1,784
14,099
6,513
(1,978)
28,254
1,506,953
—
17,131
26
1,270,872
41,060
100,761
(16,253)
24,158
(52)
439,915
(29)
1,149
62,247
$
$
—
(610)
—
—
—
—
—
—
—
—
—
1,584
—
(296)
—
—
—
—
—
—
—
—
1,288
—
1,163
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
17,606
—
—
14,397,906
—
—
15,002,663
—
—
—
—
—
256,382
—
—
—
—
15,259,045
—
—
—
—
—
667,023
—
—
—
—
—
—
—
—
1,200
(85,608)
—
—
(52)
—
—
—
—
—
—
—
(1,266,513)
$
(83,743)
—
—
(52)
—
—
—
—
—
—
$
(1,350,307)
(596,155)
$
$
—
—
(26)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(35)
—
—
(27,500)
—
—
(30,637)
—
—
—
—
—
(579)
—
—
—
—
(31,216)
—
—
—
—
—
(9,218)
—
—
—
—
—
—
—
—
1,200
(85,608)
(610)
8,771
—
7,016
138
28,586
(16,000)
(27,500)
—
10,190
(3,588)
(83,743)
(296)
10,890
—
158,344
1,217
14,152
6,513
(1,978)
28,392
129,904
(596,155)
1,163
17,135
—
1,271,662
32,023
100,761
(16,253)
24,158
—
439,915
(29)
1,179
62,553
(50,864)
49,576
3,446,650
$
$
—
—
2,451
—
—
15,926,068
$
—
—
(40,434)
$
—
—
(1,946,488)
$
(50,770)
49,673
1,466,919
See notes to consolidated financial statements.
F-10
table of Contents
PLUG POWER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2020, 2019 and 2018
(In thousands)
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
(Gain) loss on extinguishment of debt
Provision for bad debts and other assets
amortization of debt issuance costs and discount on convertible senior notes
Provision for common stock warrants
loss on disposal of leased assets
Fair value adjustment to contingent consideration
impairment of long-lived assets
Change in fair value of common stock warrant liability
deferred income tax benefit
loss (benefit) on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing activities
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related to fuel delivered to customers
net cash paid for acquisitions
Proceeds from sale of leased assets
Net cash used in investing activities
Financing activities
Proceeds from issuance of preferred stock and warrants, net of transaction costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Payments for redemption of preferred stock
Proceeds from issuance of convertible senior notes, net
Repurchase of convertible senior notes
Purchase of capped calls and common stock forward
Proceeds from borrowing of long-term debt, net of transaction costs
Proceeds from termination of capped calls
Principal payments on long-term debt
Proceeds from finance obligations
Proceeds from long-term debt, net
Repayments of finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
net tangible assets acquired in a business combination
intangible assets acquired in a business combination
Conversion of convertible notes to common stock
net transfers between inventory and long-lived assets
Conversion of preferred stock to common stock
2020
2019
(as restated)
2018
(as restated)
$
(596,155)
$
(83,743)
$
(85,608)
14,434
1,135
17,135
(17,686)
700
17,061
425,047
—
(1,160)
6,430
—
(30,845)
33,125
(15,701)
(63,389)
(18,401)
51,880
20,914
(155,476)
(22,526)
(1,957)
(25,738)
(45,113)
—
(95,334)
—
1,271,714
32,023
—
205,098
(90,238)
(16,253)
—
24,158
(48,020)
65,259
99,000
(27,212)
1,515,529
65
1,264,784
369,500
1,634,284
28,942
55,651
8,751
32,268
62,553
—
1,179
$
$
11,938
698
10,890
518
1,981
9,006
6,513
212
—
—
(79)
—
(1,643)
10,594
(24,633)
(8,110)
17,234
(4,700)
(53,324)
(5,683)
(2,404)
(6,532)
—
375
(14,244)
14,089
158,343
1,217
(4,040)
39,052
—
—
119,186
—
(25,345)
83,668
—
(59,196)
326,974
(59)
259,347
110,153
369,500
19,180
52,924
—
—
—
—
28,392
$
$
$
11,832
693
8,771
—
1,626
6,347
10,190
—
—
—
(4,286)
(9,295)
5,345
(14,666)
19,193
(4,654)
(10,160)
6,322
(58,350)
(5,142)
(929)
(13,501)
—
—
(19,572)
30,934
7,195
138
—
95,856
—
(43,500)
—
—
(16,190)
76,175
—
(30,531)
120,077
(57)
42,098
68,055
110,153
13,057
41,679
—
—
—
18,175
—
$
$
$
See notes to consolidated financial statements.
F-11
table of Contents
1. Nature of Operations
Description of Business
Notes to Consolidated Financial Statements
Plug Power is facilitating the paradigm shift to an increasingly electrified world by innovating cutting-edge hydrogen
and fuel cell solutions. in our core business, we provide and continue to develop commercially-viable hydrogen and fuel cell
product solutions to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some of the world’s
largest retail-distribution and manufacturing businesses. we are focusing our efforts on industrial mobility applications, including
electric forklifts and electric industrial vehicles, at multi-shift high volume manufacturing and high throughput distribution sites
where we believe our products and services provide a unique combination of productivity, flexibility, and environmental benefits.
additionally, we manufacture and sell fuel cell products to replace batteries and diesel generators in stationary backup power
applications. these products have proven valuable with telecommunications, transportation, and utility customers as robust,
reliable, and sustainable power solutions.
our current products and services include:
Gendrive: Gendrive is our hydrogen fueled PeM fuel cell system providing power to material handling electric
vehicles, including class 1, 2, 3 and 6 electric forklifts, automated Guided Vehicles (“aGVs”) and ground support
equipment;
GenFuel: GenFuel is our liquid hydrogen fueling delivery, generation, storage, and dispensing system;
GenCare: GenCare is our ongoing ‘internet of things’-based maintenance and on-site service program for Gendrive fuel
cell systems, GenSure fuel cell systems, GenFuel hydrogen storage and dispensing products and ProGen fuel cell
engines;
GenSure: GenSure is our stationary fuel cell solution providing scalable, modular Proton exchange Membrane (PeM)
fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation,
and utility sectors; GenSure high Power Fuel Cell Platform will support large scale stationary power and data center
markets.
GenKey: GenKey is our vertically integrated “turn-key” solution combining either Gendrive or GenSure fuel cell power
with GenFuel fuel and GenCare aftermarket service, offering complete simplicity to customers transitioning to fuel cell
power;
ProGen: ProGen is our fuel cell stack and engine technology currently used globally in mobility and stationary fuel cell
systems, and as engines in electric delivery vans. this includes the Plug Power Mea (membrane electrode assembly), a
critical component of the fuel cell stack used in zero-emission fuel cell electric vehicle engines; and
GenFuel electrolyzers: GenFuel electrolyzers are modular, scalable hydrogen generators optimized for clean hydrogen
production. electrolyzers generate hydrogen from water using electricity and a special membrane and “green” hydrogen
is generated by using renewable energy inputs, such as solar or wind power.
we provide our products worldwide through our direct product sales force, and by leveraging relationships with original
equipment manufacturers (“oeMs”) and their dealer networks. Plug Power is targeting asia and europe for expansion in
adoption. europe has rolled out ambitious targets for the hydrogen economy and Plug Power is executing on its strategy to
become one of the european leaders. this includes a targeted account strategy for material handling as well as securing strategic
partnerships with european original equipment manufacturers, or oeMs, energy companies, utility leaders and accelerating our
electrolyzer business. we manufacture our commercially viable products in latham, new York, Rochester, new York and
Spokane, washington and support liquid hydrogen generation and logistics in Charleston, tennessee.
F-12
table of Contents
Liquidity
Notes to Consolidated Financial Statements (Continued)
during 2020, the Company issued and sold 79.0 million shares in two separate, registered equity offerings, resulting in
net proceeds of approximately $1.3 billion. See note 16, “Stockholders’ equity, as restated.” in May 2020, the Company issued
$212.5 million in aggregate principal amount of 3.75% Convertible Senior notes due June 1, 2025, in a private placement to
qualified institutional buyers. See note 15, “Convertible Senior notes,” as amended.
as of december 31, 2020, the Company had $1.3 billion of cash and cash equivalents and $321.9 million of restricted
cash. in January and February 2021, the Company issued and sold in another registered equity offering an aggregate of 32.2
million shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $1.8 billion.
Furthermore in February 2021, the Company completed the previously announced sale of its common stock in connection with a
strategic partnership with SK holdings Co., ltd. (“SK holdings”) to accelerate the use of hydrogen as an alternative energy
source in asian markets. the Company sold 54,996,188 shares of its common stock to a subsidiary of SK holdings at a purchase
price of $29.2893 per share, or an aggregate purchase price of approximately $1.6 billion. See note 23, “Subsequent events,” for
more details.
the Company has continued to experience negative cash flows from operations and net losses. the Company incurred
net losses attributable to common stockholders of $596.2 million, $85.6 million and $85.7 million for the years ended december
31, 2020, 2019, and 2018, respectively. the Company’s cash used in operations totaled $155.5 million, $53.3 million, and $58.4
million for the year ended december 31, 2020, 2019 and 2018, and has an accumulated deficit of $1.9 billion at december 31,
2020.
the Company’s significant obligations consisted of the following as of december 31, 2020:
(i)
(ii)
(iii)
(iv)
operating and finance leases totaling $113.9 million and $5.4 million, respectively, of which $14.3 million
and $903 thousand, respectively, are due within the next 12 months. these leases are primarily related to
sale/leaseback agreements entered into with various financial institutions to facilitate the Company’s
commercial transactions with key customers.
Finance obligations totaling $181.6 million of which approximately $32.7 million is due within the next 12
months. Finance obligations consist primarily of debt associated with the sale of future revenues and failed
sale/leaseback transactions.
long-term debt, primarily related to the Company’s loan and security agreement (loan agreement) with
Generate lending, llC (Generate Capital) totaling $175.4 million of which $25.4 million is classified as short
term on the consolidated balance sheets. See note 14, “long-term debt”, for more details.
Convertible senior notes totaling $85.6 million at december 31, 2020. See note 15, “Convertible Senior notes,
as restated” for more details.
the Company believes that its current working capital of $1.4 billion at december 31, 2020, which includes unrestricted
cash and cash equivalents of $1.3 billion, together with proceeds from the January 2021 registered equity offering and SK group
investment, will provide sufficient liquidity to fund operations for a least one year after the date the financial statements are
issued.
the Company plans to invest a portion of its available cash to expand its current production and manufacturing capacity
and to fund strategic acquisitions and partnerships and capital projects. Future use of the Company’s funds is discretionary and
the Company believes that its future working capital and cash position will be sufficient to fund operations even after these
growth investments.
F-13
table of Contents
Notes to Consolidated Financial Statements (Continued)
2. Restatement of Previously Issued Consolidated Financial Statements
Restatement Background
on March 12, 2021, management in concurrence with the Company’s audit Committee of the Board of directors (the
“audit Committee”), concluded that our 2019 and 2018 consolidated financial statements, included in our annual Reports on
Form 10-K as of and for the fiscal years ended december 31, 2019 and 2018, and our unaudited consolidated financial statements
as of and for each of the first three quarterly periods in 2020 and all quarterly periods in 2019, included in our Quarterly Reports
on Form 10-Q for the respective periods, (collectively the “Prior Period Financial Statements”) should no longer be relied upon
due to misstatements that are described below, and that we would restate such financial statements to make the necessary
accounting corrections. in addition, we have restated the statement of operations for the three months ended december 31, 2019,
which was previously disclosed as a note in its form 10-K for the year ended december 31, 2019. details of the restated
consolidated financial statements as of and for the fiscal years ended december 31, 2019 and 2018 are provided below
(“Restatement items”). in addition, details of the restated interim financial information for each of the quarterly periods in fiscal
2019 and for the first three quarters of fiscal 2020, are presented in note 3, “unaudited Quarterly Financial data and Restatement
of Previously issued unaudited interim Condensed Consolidated Financial Statements”. the Company evaluated the materiality
of these errors both qualitatively and quantitatively in accordance with Staff accounting Bulletin (“SaB”) no.
99, Materiality and SaB no. 108, Considering the effects of Prior Year Misstatements in Current Year Financial Statements, and
determined the effect of these corrections were material to the Prior Period Financial Statements. as a result of the material
misstatements, we have restated our Prior Period Financial Statements, in accordance with aSC 250, accounting Changes and
error Corrections (the “Restated Financial Statements”).
the Restatements items reflect adjustments to correct errors on the balance sheets to reduce the carrying amount of certain right
of use assets and lease liabilities associated with leases, increase the loss accrual relating to service contracts, a reclassification of
costs resulting in a decrease in operating expenses - Research and development expense and a corresponding increase in Cost of
revenue, the recording of a deemed dividend, and correction of a cumulative adjustment upon adoption of a new accounting
standard to a correction of an error. the nature and impact of these adjustments are described below and also detailed in the
tables below. also see note 3, “unaudited Quarterly Financial data and Restatement of Previously issued unaudited interim
Condensed Consolidated Financial Statements,” for the impact of these adjustments on each of the quarterly periods.
Restatement Items
Right of use assets relating to operating leases – the Company incorrectly calculated the lease liability and the related
right of use asset associated with sale/leaseback transactions. the Company sells equipment to financial institutions and
leases it back. the Company then uses these assets to fulfill its obligations under Power Purchase agreements (“PPas”).
there are two elements to the transactions with financial institutions – a sale (and leaseback) of equipment and a debt
component. the debt component of the proceeds received from the financial institution relates to the sale of future revenues
to be generated from the related PPa. the lease liability and corresponding right of use asset should be based on the present
value of the portion of the future payments to the third-party financial institution that represent the lease component (i.e.
excluding the portion representing the debt service repayments). historically, the Company incorrectly included the entire
repayment amount when determining the lease liability and corresponding right of use asset. the Company separately
recorded a debt obligation related to the cash received for the sale of future revenues. the result of the correction is that at
inception of the lease, the lease liability and the corresponding right of use asset were reduced to exclude the double-
counting of the debt portion of the obligation. the corrections at december 31, 2019 resulted in the reduction of both the
lease liability and right of use asset of $112.7 million. Similar adjustments were made for the balance sheets for the
quarterly periods of 2019 and 2020. the lease liability for operating leases and related right of use asset are both presented
separately on the consolidated balance sheets. the overall impact on the consolidated statements of operations was not
significant to any of the periods presented and related to depreciation, interest expense, and cost of sales.
Loss accrual provision – the Company did not properly estimate the loss accrual related to its extended maintenance
contracts. as a result of the error in classification of research and development costs discussed below, the Company
F-14
table of Contents
Notes to Consolidated Financial Statements (Continued)
did not consider all relevant historical costs when estimating future service costs when determining whether a loss accrual
for extended maintenance contracts was necessary. additionally, the Company did not consider the service costs related to
hydrogen infrastructure, nor the provision for warrants, when estimating the need for a loss accrual on extended maintenance
contracts. when properly considering these costs, additional loss accruals for extended maintenance contracts were required
to be recorded. the corrections resulted in a ($1.6) million benefit for loss accrual for the year ended december 31, 2019,
inclusive of the partial release of the 2018 loss accrual, and a provision for loss accrual of $5.3 million for the year ended
december 31, 2018.
Research and development expense – the Company did not properly present certain costs related to related to research and
development activities. Some of these costs were presented as research and development costs and should have been
classified as costs of revenue. Correction of this error resulted in an increase in gross loss of $19.5 million and $21.2 million
for the years ended december 31, 2019 and 2018, respectively. the tables below provide a summary of the adjustments
between cost of revenue and research and development.
As of December 31,
2019
Restatement
Adjustments
As of December 31,
2018
Restatement
Adjustments
Cost of revenue:
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Sales of fuel cell systems and related infrastructure
Fuel delivered to customers
Total cost of revenue
$
$
6,986
2,539
1,121
8,846
19,492
7,954
4,264
614
8,325
21,157
Research and development
(19,492)
(21,157)
Series E Redeemable Convertible Preferred Stock Deemed Dividend – during 2019, the Company did not properly
account for certain conversions of its Series e Redeemable Convertible Preferred Stock deemed dividend as a repurchase
settled in common stock. the correction of this error resulted in the Company recording a deemed dividend during 2019 for
approximately $1.8 million. this error correction had no impact on total equity and increased the net loss attributable to
shareholders by $1.8 million.
Adoption of ASC 842 – the Company determined that the $3.4 million amount previously reported as the cumulative effect
of adoption of aSC 842 on January 1, 2018 is actually a correction of errors made in lease accounting through december 31,
2017, under the prior accounting standards. accordingly, the accumulated deficit at december 31, 2017 has been restated to
reflect this accounting.
Other adjustments
in addition to the Restatement items, the Company has corrected other adjustments. while these other adjustments are
quantitatively immaterial, individually and in the aggregate, because we are correcting for the material errors, we have
decided to correct these other adjustments as well.
Reclassifications have been made, whenever necessary, to prior period financial statements to conform to the current
period presentation for the years ended december 31, 2019 and 2018.
F-15
table of Contents
Notes to Consolidated Financial Statements (Continued)
Summary impact of Restatement Items and Other Adjustments to Prior Period Financial Statements
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s consolidated
balance sheets for the periods indicated (in thousands, except per share):
As previously
Reported
As of December 31, 2019
Restatement
Adjustments
As Restated
Restatement
References
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers,
net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Redeemable preferred stock:
Series C redeemable convertible preferred stock, $0.01 par value per share
(aggregate involuntary liquidation preference $16,664); 10,431 shares
authorized; issued and outstanding: 2,620 at december 31, 2019
Series e convertible preferred stock, $0.01 par value per share; Shares
authorized: 35,000 at december 31, 2019; issued and outstanding: 500 at
december 31, 2019
Stockholders’ equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized;
issued: 318,637,560 at december 31, 2019
additional paid-in capital
accumulated other comprehensive income
accumulated deficit
less common stock in treasury: 15,259,045 at december 31, 2019
total stockholders’ equity
total liabilities, redeemable preferred stock, and stockholders’ equity
As of December 31, 2019
$
$
$
$
$
$
$
139,496
54,813
25,448
72,391
21,192
313,340
175,191
14,959
—
—
244,740
8,842
5,539
8,573
771,184
40,376
14,213
11,691
—
—
49,507
26,461
8,543
150,791
23,369
—
—
265,228
110,246
85,708
13
635,355
709
441
3,186
1,507,116
1,400
(1,345,807)
(31,216)
134,679
771,184
$
— $
—
320
—
—
320
—
—
1,714
63,266
(176,971)
—
—
—
$
(111,671)
— $
196
—
9,428
226
(24,840)
—
(1,839)
(16,829)
(199)
50,937
2,011
(145,806)
185
—
2,805
(106,896)
—
—
—
(163)
(112)
(4,500)
—
(4,775)
(111,671)
$
139,496
54,813
25,768
72,391
21,192
313,660
175,191
14,959
1,714
63,266
67,769
8,842
5,539
8,573
659,513
40,376
14,409
11,691
9,428
226
24,667
26,461
6,704
133,962
23,170
50,937
2,011
119,422
110,431
85,708
2,818
528,459
709
441
3,186
1,506,953
1,288
(1,350,307)
(31,216)
129,904
659,513
d
a
a, b
a, b
d
a, b
a
a, b
b, c
d
a, b
a
a, b
d
c
d
d
(a)
(b)
$176.0 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use assets related to operating leases, net;
$1.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use asset related to finance leases, net;
$25.8 million was reclassified from current finance obligations to current operating lease liabilities;
$145.5 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$226 thousand was reclassified from current finance obligations to current finance lease liabilities, respectively; and
$2.0 million was reclassified from non-current finance obligations to non-current finance lease liabilities
the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and long-
term finance obligations have been reclassified to conform to current period presentations, as follows at december 31, 2019:
●
●
●
●
●
●
the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at december 31, 2019:
●
●
●
the right of use assets related to operating leases, net had a decrease of $112.7 million;
equipment related to power purchase agreements and lessor property, net had an increase of $767 thousand;
current operating lease liabilities had a decrease of $16.4 million;
F-16
table of Contents
Notes to Consolidated Financial Statements (Continued)
non-current operating lease liabilities had a decrease of $94.6 million;
the current finance obligations had a $1.2 million increase;
the non-current finance obligation had an increase of $1.7 million; and
other current liabilities decreased $2.7 million.
●
●
●
●
loss accrual provision: the correction of this misstatement resulted in an increase of $897 thousand to other current liabilities and an increase of $2.8 million to other long-term liabilities at
december 31, 2019.
other adjustments: immaterial adjustments at december 31, 2019 resulted in an increase to accounts receivable of $320 thousand. an increase to accrued expenses of $196 thousand. a decrease
to deferred revenue of $199 thousand. an increase in convertible senior notes, net of $185 thousand, and a decrease of $163 thousand to additional paid in capital and a $112 thousand decrease to
accumulated other comprehensive income.
(c)
(d)
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s consolidated
statements of operations for the periods indicated (in thousands, except share and per share amounts):
As Previously
Reported
For the Year Ended December 31, 2019
Restatement
Adjustments
As Restated
Restatement
References
$
149,884
$
36
$
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related
infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related
infrastructure
Benefit for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
Gross profit
operating expenses:
Research and development
Selling, general and administrative
total operating expenses
operating loss
interest and other expense, net
Change in fair value of common stock warrant liability
Gain (loss) on extinguishment of debt
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and
accretion of discount
net loss attributable to common stockholders
net loss per share:
Basic and diluted
weighted average number of common stock outstanding
For the year ended December 31, 2019
$
$
$
$
25,217
25,853
29,099
186
230,239
96,859
28,801
—
40,056
36,357
200
202,273
27,966
33,675
44,333
78,008
(50,042)
(35,502)
79
—
(85,465)
$
—
(85,465)
$
(52)
(85,517)
$
(0.36)
237,152,780
—
(300)
—
—
(264)
1,056
5,781
(394)
1,721
8,890
—
17,054
(17,318)
(18,616)
(1,131)
(19,747)
2,429
(189)
—
(518)
1,722
—
1,722
(1,760)
(38)
$
$
$
$
d
d
a, d
a, c,d
c
a, b,d
a, d
a,d
b,d
b,d
d
e
149,920
25,217
25,553
29,099
186
229,975
97,915
34,582
(394)
41,777
45,247
200
219,327
10,648
15,059
43,202
58,261
(47,613)
(35,691)
79
(518)
(83,743)
—
(83,743)
(1,812)
(85,555)
(0.36)
237,152,780
(a)
(b)
(c)
(d)
(e)
Research and development: the correction of this misstatement resulted in a net decrease of $19.5 million to research and development, and an increase of $1.1 million to the cost of revenue of
fuel cell systems and related infrastructure, an increase of $7 million to the cost of revenue of services performed on fuel cell systems and related infrastructure, an increase of $2.5 million to the
cost of power purchase agreements and an increase in the cost of fuel delivered to customers of $8.9 million at december 31, 2019.
Right of use asset: the correction of this misstatement resulted in a net decrease to cost of revenue for power purchase agreements of $747 thousand. an increase to selling, general, and
administrative expense of $25 thousand, and an increase to interest and other expense, net of $522 thousand.
loss accrual provision: the correction of this misstatement resulted in a net decrease to cost of revenue for services performed on fuel cell systems and related infrastructure of $1.2 million and
a net decrease to the provision for loss contracts related to service of $394 thousand for the period ended december 31, 2019.
other adjustments: immaterial adjustments for the period ended december 31, 2019 resulted in the following: a net increase of $36 thousand to revenue from sales of fuel cell systems and
related infrastructure. a net decrease to revenue from power purchase agreements of $300 thousand. a net decrease of $65 thousand to the cost of revenue for sales of fuel cell systems and
related infrastructure. a net increase to the cost of revenue for services performed on fuel cell systems and related infrastructure of $44 thousand. a net decrease to cost of revenue for power
purchase agreements of $70 thousand. a net increase of $44 thousand to cost of revenue related to fuel delivered to customers. a net increase to research and development expense of $876
thousand. a net decrease to selling general and administrative expense of $1.1 million, a net increase to interest and other expense, net of $185 thousand and an increase of $518 thousand loss on
the extinguisment of debt (which was previously reported as interest and other expense, net of $518 thousand).
Series e redeemable convertible preferred stock deemed dividend: the correction of this misstatement resulted in a net increase of $1.8 million to preferred stock dividends declared, deemed
dividends and accretion of discount.
F-17
table of Contents
Notes to Consolidated Financial Statements (Continued)
For the Year Ended December 31, 2018
As Previously
Reported
Restatement
Adjustments
As Restated
Restatement
References
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
total cost of revenue
Gross (loss) profit
operating expenses:
Research and development
Selling, general and administrative
total operating expenses
operating loss
interest and other expense, net
Change in fair value of common stock warrant liability
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of
discount
net loss attributable to common stockholders
net loss per share:
Basic and diluted
weighted average number of common stock outstanding
For the year ended December 31, 2018
$
$
$
$
$
$
107,292
22,002
22,869
22,469
174,632
84,439
23,698
—
36,161
27,712
172,010
2,622
33,907
38,198
72,105
(69,483)
(22,135)
4,286
(87,332) $
9,217
(78,115) $
(52)
(78,167) $
(0.36)
218,882,337
(117)
—
(300)
—
(417)
766
8,573
5,345
5,200
8,325
28,209
(28,626)
(21,157)
(513)
(21,670)
(6,956)
(615)
—
(7,571)
78
(7,493)
—
(7,493)
$
$
$
$
$
d
d
a,d
a, d
c
a, b
a
a
d
b
d
107,175
22,002
22,569
22,469
174,215
85,205
32,271
5,345
41,361
36,037
200,219
(26,004)
12,750
37,685
50,435
(76,439)
(22,750)
4,286
(94,903)
9,295
(85,608)
(52)
(85,660)
(0.39)
218,882,337
(a)
(b)
(c)
(d)
Research and development: the correction of this misstatement resulted in a net decrease of $21.2 million to research and development, and an increase of $614 thousand to the cost of sales of
fuel cell systems and related infrastructure, an increase of $8.0 million to the cost of services performed on fuel cell systems and related infrastructure, an increase of $4.2 million to the cost of
power purchase agreements and an increase in the cost of fuel delivered to customers of $8.3 million at december 31, 2018.
Right of use asset: the correction of this misstatement resulted in a net increase to cost of revenue for power purchase agreements of $937 thousand, and an increase to interest and other expense,
net of $615 thousand.
loss accrual provision: the correction of this misstatement resulted in a net increase to the provision for loss contracts related to service of $5.3 million for the period ended december 31, 2018.
other adjustments: immaterial adjustments for the period ended december 31, 2018 resulted in the following: a net decrease of $117 thousand to revenue from sales of fuel cell systems and
related infrastructure. a net decrease to revenue from power purchase agreements of $300 thousand. a net increase of $152 thousand to the cost of revenue for sales of fuel cell systems and related
infrastructure. a net increase to the cost of revenue for services performed on fuel cell systems and related infrastructure of $619 thousand. a net decrease to selling general and administrative
expense of $513 thousand and an increase to the income tax benefit of $78 thousand.
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s consolidated
statements of comprehensive loss for the periods indicated (in thousands):
For the year ended December 31, 2019
Cumulative
Adjustments
As Previously
Reported
As Restated
For the year ended December 31, 2018
As Previously Cumulative
Adjustments
Reported
As Restated
Restatement
References
net loss attributable to the Company
other comprehensive loss - foreign currency translation
adjustment
Comprehensive loss attributable to the Company
$
$
(85,465)
$
1,722
(184)
(85,649)
$
(112)
1,610
$
$
(83,743) $
(78,115) $
(7,493) $
(85,608)
(296)
(84,039) $
(610)
(78,725) $
—
(7,493) $
(610)
(86,218)
Preferred stock dividends declared, deemed dividends and
accretion of discount
Comprehensive loss attributable to common stockholders
For the year ened December 31, 2019 and 2018
(52)
(85,701)
(1,760)
(150)
(1,812)
(85,851)
(52)
—
(52)
(78,777)
(7,493)
(86,270)
b
a
(a)
Series e convertible preferred stock deemed dividend: the correction of this misstatement resulted in a net decrease of $1.8 million to preferred stock dividends declared, deemed dividends and
accretion of discount to the period ended december 31, 2019.
F-18
table of Contents
Notes to Consolidated Financial Statements (Continued)
(b)
other adjustments: immaterial adjustment for the period ended december 31, 2019 resulted in a net increase of $112 thousand for the other comprehensive loss related to the foreign currency
translation adjustment.
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s consolidated
statements of stockholders’ equity (deficit) for the periods indicated (in thousands, except share amounts):
Common Stock
Additional
Paid-in
Amount Capital
Shares
Accumulated
Other
Comprehensive
Income
Treasury Stock
Shares
Amount
Accumulated
Deficit
Stockholders’ Restatement
Equity (Deficit) References
Total
BalanCe - december 31,
2017 (as Previously Reported)
Cumulative adjustments
BalanCe - december 31,
2017 (as Restated)
BalanCe - december 31,
2018 (as Previously Reported)
Cumulative adjustments
BalanCe - december 31,
2018 (as Restated)
BalanCe - december 31,
2019 (as Previously Reported)
Cumulative adjustments
BalanCe - december 31,
2019 (as Restated)
As of December 31, 2019 and 2018
229,073,517
—
$ 2,291
—
229,073,517
2,291
234,160,661
—
$ 2,342
—
234,160,661
2,342
318,637,560
—
$ 3,186
—
318,637,560
$ 3,186
$
$
$
$
1,250,899
—
$
2,194
—
587,151
—
$
(3,102)
—
$
(1,178,636)
(3,417)
1,250,899
2,194
587,151
(3,102)
(1,182,053)
1,289,714
(78)
$
1,584
—
15,002,663
—
$
(30,637)
—
$
(1,260,290)
(6,223)
1,289,636
1,584
15,002,663
(30,637)
(1,266,513)
1,507,116
(163)
1,506,953
$
$
1,400
(112)
15,259,045
—
$
(31,216)
—
$
(1,345,807)
(4,500)
1,288
15,259,045
$
(31,216)
$
(1,350,307)
$
$
$
$
73,646
(3,417)
70,229
2,713
(6,301)
(3,588)
134,679
(4,775)
129,904
a,b
a,b
a,b
(a)
(b)
Restatement items: the correction of material misstatements resulted in a net increase in accumulated deficit of $4.5 million, $6.2 million and $3.4 million as of december 31, 2019, 2018 and
2017, respectively.
other adjustments: immaterial adjustments resulted in the following: for the period ended december 31, 2019, there was a net increase of $112 thousand for the other comprehensive loss related to
the foreign currency translation adjustment and a net decrease of $163 thousand in additional paid-in capital; and for the period ended december 31, 2018, there was a net decrease in additional
paid-in capital of $78 thousand.
F-19
table of Contents
Notes to Consolidated Financial Statements (Continued)
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s consolidated
statements of cashflows for the periods indicated (in thousands):
For the Year Ended December 31, 2019
As previously
Reported
Restatement
Adjustments
As Restated
Restatement
References
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating
activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
loss on extinguishment of debt
Provision for bad debts and other assets
amortization of debt issuance costs and discount on
convertible senior notes
Provision for common stock warrants
loss on disposal of leased assets
Change in fair value of common stock warrant liability
Benefit on service contracts
Changes in operating assets and liabilities that provide (use)
cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related
to fuel delivered to customers
Proceeds from sale of leased assets
Net cash used in investing activities
Financing Activities
Proceeds from issuance of preferred stock and warrants, net
of transaction costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Payments for redemption of preferred stock
Proceeds from issuance of convertible senior notes, net
Proceeds from borrowing of long-term debt, net of
transaction costs
Principal payments on long-term debt
Proceeds from finance obligations
Repayments of finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of
period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of preferred stock to common stock
For the year ended December 31, 2019
$
(85,465)
$
1,722
$
(83,743)
11,989
698
10,890
—
1,981
8,821
6,513
212
(79)
—
10,646
(24,481)
(8,110)
19,879
(5,016)
(51,522)
(5,683)
(2,404)
(6,532)
375
(14,244)
14,089
158,428
1,217
(4,040)
39,052
119,186
(24,827)
83,668
(61,713)
325,060
53
259,347
110,153
369,500
19,180
127,370
28,392
$
$
$
(51)
—
—
518
—
185
—
—
—
(1,643)
(52)
(152)
—
(2,645)
316
(1,802)
—
—
—
—
—
—
(85)
—
—
—
—
(518)
—
2,517
1,914
(112)
—
—
— $
—
(74,446)
—
$
$
$
$
11,938
698
10,890
518
1,981
9,006
6,513
212
(79)
(1,643)
10,594
(24,633)
(8,110)
17,234
(4,700)
(53,324)
(5,683)
(2,404)
(6,532)
375
(14,244)
14,089
158,343
1,217
(4,040)
39,052
119,186
(25,345)
83,668
(59,196)
326,974
(59)
259,347
110,153
369,500
19,180
52,924
28,392
a
b, d
d
d
c
d
d
b, d
d
d
d
b
d
b
(a)
(b)
(c)
(d)
Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the year ended december 31, 2019 above.
Right of use asset: the correction of this misstatement resulted in a net decrease to operating cashflows of $2.7 million and a net increase to cash provided by financing activities of $2.5 million
for the period ended december 31, 2019. in addition there was a net decrease of $74.4 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in a net decrease to operating cashflows of $1.6 million for the period ended december 31 2019.
other adjustments: immaterial adjustments resulted in an net increase to operating cashflows of $906 thousand, a decrease to cash provided by financing activites of $603 thousand and a decrease
to effect of exchange rate changes on cash of $112 thousand, for the period ended december 31 2019
F-20
table of Contents
Notes to Consolidated Financial Statements (Continued)
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
Provision for bad debts and other assets
amortization of debt issuance costs and discount on convertible senior
notes
Provision for common stock warrants
Change in fair value of common stock warrant liability
income tax benefit
loss on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
Purchase of intangible assets
Net cash used in investing activities
Financing Activities
Proceeds from issuance of preferred stock and warrants, net of transaction
costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Proceeds from issuance of convertible senior notes, net
Purchase of capped calls and common stock forward
Principal payments on long-term debt
Proceeds from finance obligations
Repayments of finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
net transfers between inventory and long-lived assets
For the year ended December 31, 2018
As previously
Reported
For the Year Ended December 31, 2018
Restatement
Adjustments
As Restated
$
(78,115)
$
(7,493)
$
(85,608)
11,014
693
8,771
1,626
6,347
10,190
(4,286)
(9,217)
—
(14,398)
19,041
(4,654)
(10,266)
5,637
(57,617)
(5,142)
(13,501)
(929)
(19,572)
30,934
7,195
138
95,856
(43,500)
(16,190)
76,175
(31,264)
119,344
(57)
42,098
68,055
110,153
13,057
79,057
18,175
$
$
$
818
—
—
—
—
—
—
(78)
5,345
(268)
152
—
106
685
(733)
—
—
—
—
—
—
—
—
—
—
—
733
733
—
—
—
— $
—
(37,378)
—
$
11,832
693
8,771
1,626
6,347
10,190
(4,286)
(9,295)
5,345
(14,666)
19,193
(4,654)
(10,160)
6,322
(58,350)
(5,142)
(13,501)
(929)
(19,572)
30,934
7,195
138
95,856
(43,500)
(16,190)
76,175
(30,531)
120,077
(57)
42,098
68,055
110,153
13,057
41,679
18,175
$
$
$
Restatement
References
a
b, d
d
c
d
d
d
d
b
b
(a)
(b)
(c)
(d)
Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of operations and Consolidated Balance Sheets sections for the year ended december 31, 2018
above.
Right of use asset: the correction of this misstatement resulted in a net increase to operating cashflows of $818 thousand and a net increase to financing cash flows of $733 thousand for the period
ended december 31, 2018. in addition, there was a net decrease of $37.4 million to the non-cash investing and financing activity related to the recognition of the right of use asset
Provision for loss contracts related to service: the correction of this misstatement resulted in a net increase to operating cashflows of $5.3 million for the period ended december 31 2018.
other adjustments: immaterial adjustments resulted in an net increase to cash used in operating cash flows of $597 thousand for the period ended december 31 2018.
3. Unaudited Quarterly Financial data and Restatement of Previously Issued Unaudited Interim Condensed Consolidated
Financial Statements
the following tables below include corrections to the prior period results, and include the Restatement items and other
adjustments included in note 2, “Restatement of Previously issued Consolidated Financial Statements,” as well as the following:
Bonus Accrual – there was a $5.3 million understatement of bonus expense and related payroll expense for the three months
ended September 30, 2020 due to the Company not properly estimating the bonus expense for the nine month period ended
September 30, 2020.
F-21
table of Contents
Notes to Consolidated Financial Statements (Continued)
Right of Use assets and lease liabilities – there was a $2.4 million understatement of right of use assets and lease liabilities at
September 30, 2020 due to the Company not properly recognizing lease liabilities and right of use assets for certain leases that
renewed during the third quarter of 2020.
Loss accrual provision – there was a $21.0 understatement of the provision for loss contracts as of September 30, 2020 due to
the Company not properly estimating the loss accrual related to extended maintenance contracts.
The summary of the quarterly statement of operations are presented as follows:
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Gross loss
operating expenses
operating loss
net loss attributable to common stockholders
loss per share:
Basic and diluted
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Gross (loss) profit
operating expenses
operating loss
net loss attributable to common stockholders
loss per share:
Basic and diluted
$
$
$
Quarters ended
March 31,
2020
As Restated
June 30,
2020
September 30,
2020
December 31,
2020
$
20,468
6,521
6,421
7,333
76
40,819
(9,703)
15,883
(25,586)
(37,445)
$
47,746
6,236
6,579
7,372
62
67,995
(15)
26,517
(26,532)
(9,414)
$
83,662
6,829
6,629
9,831
97
107,048
(28,584)
25,726
(54,310)
(65,217)
(246,171)
(29,387)
6,991
(40,608)
76
(309,099)
(431,114)
46,660
(477,774)
(484,105)
(0.12)
$
(0.03)
$
(0.18)
$
(1.35)
Quarters ended
As Restated
March 31,
2019
June 30,
2019
September 30,
2019
December 31,
2019
$
2,550
6,343
6,035
6,582
—
21,510
(7,740)
12,227
(19,967)
(30,560)
$
38,702
5,341
6,334
7,089
—
57,466
6,142
17,221
(11,079)
(17,351)
$
38,883
6,205
6,520
7,649
135
59,392
4,500
13,958
(9,458)
(18,366)
69,785
7,328
6,664
7,779
51
91,607
7,746
14,855
(7,109)
(19,277)
$
(0.14)
$
(0.08)
$
(0.08)
$
(0.07)
F-22
table of Contents
Notes to Consolidated Financial Statements (Continued)
Summary impact of Restatement Items to previously reported unaudited interim condensed consolidated financial information
the following tables present the Restatement items, as well as other adjustments, on the Company’s unaudited interim condensed
consolidated balance sheets for the periods indicated (in thousands, except per share):
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers,
net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Stockholders’ equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; issued:
406,123,816 at September 30, 2020
additional paid-in capital
accumulated other comprehensive income
accumulated deficit
less common stock in treasury
total stockholders’ equity
total liabilities, redeemable preferred stock, and stockholders’ equity
As of September 30, 2020
As previously
Reported
As of September 30, 2020
Restatement
Adjustments
As Restated
Restatement
References
$
$
$
$
$
$
$
448,140
55,704
113,133
134,306
26,731
778,014
227,528
64,820
—
—
309,475
71,962
39,169
9,661
1,500,629
58,793
32,031
17,226
—
—
63,692
74,829
17,280
263,851
29,648
—
—
337,150
105,088
120,380
27,068
883,185
4,061
2,083,199
1,958
(1,431,340)
(40,434)
617,444
1,500,629
$
— $
—
372
(103)
—
269
—
—
2,335
90,184
(237,584)
(140)
400
—
$
(144,536)
— $
5,917
—
10,609
374
(32,343)
—
3,803
(11,640)
(137)
74,422
2,384
(196,488)
—
—
18,102
(113,357)
—
(30)
(112)
(31,037)
—
(31,179)
(144,536)
$
448,140
55,704
113,505
134,203
26,731
778,283
227,528
64,820
2,335
90,184
71,891
71,822
39,569
9,661
1,356,093
58,793
37,948
17,226
10,609
374
31,349
74,829
21,083
252,211
29,511
74,422
2,384
140,662
105,088
120,380
45,170
769,828
4,061
2,083,169
1,846
(1,462,377)
(40,434)
586,265
1,356,093
e
e
a
a, b
a, b
e
e
d, e
a, b
a
a, b
b, c
e
a, b
a
a, b
c
e
e
(a) the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and long-
term finance obligations have been reclassified to conform to current period presentations, as follows at September 30, 2020:
●
●
●
●
●
●
$235.8 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to the right of use assets related to operating leases,
net:
$2.3 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to the right of use asset related to finance leases, net;
$32.7 million was reclassified from current finance obligations to current operating lease liabilities;
$195.1 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$374 thousand was reclassified from current finance obligations to current finance lease liabilities; and
$2.4 million was reclassified from non-current finance obligations to non-current finance lease liabilities.
(b) the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at September 30, 2020:
●
●
●
●
●
●
the right of use assets related to operating leases, net had a decrease of $145.6 million;
equipment related to power purchase agreements and fuel delivered to customers, net had an increase of $535 thousand;
current operating lease liabilities had a decrease of $22.1 million;
non-current operating lease liabilities had a decrease of $120.6 million;
the current and non current finance obligations had an increase of $788 thousand and $1.0 million, respectively; and
other current liabilities had a decrease of $2.6 million
F-23
table of Contents
Notes to Consolidated Financial Statements (Continued)
(c) loss accrual provision: the correction of this misstatement resulted in an increase of $6.4 million to other current liabilities and an increase of $18.1 million to other long-term liabilities at
September 30, 2020.
(d) Bonus accrual: adjustments related to the under accrual for bonus expenses resulted in an increase in accrued expenses of $5.3 million at September 30, 2020.
(e) other adjustments: immaterial adjustments at September 30, 2020 resulted in the following: an increase to accounts receivable of $372 thousand and a decrease to inventory of $103 thousand. a
decrease to goodwill of $140 thousand, and an increase to intangible assets of $400 thousand. an increase in accrued expenses of $703 thousand, a net, a decrease to deferred revenue of $137
thousand, a decrease to additional paid in capital of $30 thousand and a decrease to accumulated other comprehensive income of $112 thousand.
As previously
Reported
As of June 30, 2020
Restatement
Adjustments
As Restated
Restatement
References
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers,
net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Stockholders’ equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; issued:
348,201,792 at June 30, 2020
additional paid-in capital
accumulated other comprehensive income
accumulated deficit
less common stock in treasury
total stockholders’ equity
total liabilities, redeemable preferred stock, and stockholders’ equity
$
$
$
$
$
$
$
152,492
50,634
45,522
114,571
31,436
394,655
180,127
60,018
—
—
274,721
70,402
38,574
11,817
1,030,314
39,812
23,320
14,902
—
—
57,695
50,933
21,692
208,354
25,038
—
—
300,653
142,704
101,844
11,756
790,349
3,482
1,658,532
1,271
(1,391,961)
(31,359)
239,965
1,030,314
$
— $
—
260
—
—
260
—
—
2,389
71,789
(206,293)
(140)
400
—
$
(131,595)
— $
597
—
9,453
345
(28,901)
—
(2,274)
(20,780)
(190)
58,410
2,465
(169,000)
185
—
2,720
(126,190)
—
(94)
(112)
(5,199)
—
(5,405)
(131,595)
$
152,492
50,634
45,782
114,571
31,436
394,915
180,127
60,018
2,389
71,789
68,428
70,262
38,974
11,817
898,719
39,812
23,917
14,902
9,453
345
28,794
50,933
19,418
187,574
24,848
58,410
2,465
131,653
142,889
101,844
14,476
664,159
3,482
1,658,438
1,159
(1,397,160)
(31,359)
234,560
898,719
d
a
a, b
a, b
d
d
d
a, b
a
a, b
b, c
d
a, b
a
a, b
d
c
d
d
As of June 30, 2020
(a) the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and long-
term finance obligations have been reclassified to conform to current period presentations, as follows at June 30, 2020:
●
●
●
●
●
●
$204.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use assets related to operating leases, net;
$2.4 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use asset related to finance leases, net;
$29.5 million was reclassified from current finance obligations to current operating lease liabilities;
$169.0 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$345 thousand was reclassified from current finance obligations to current finance lease liabilities; and
$2.4 million was reclassified from non-current finance obligations to non-current finance lease liabilities.
(b) the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at June 30, 2020:
●
●
●
●
●
●
the right of use assets related to operating leases, net had a decrease of $132.9 million;
equipment related to power purchase agreements and fuel delivered to customers, net had an increase of $837 thousand;
current operating lease liabilities had a decrease of $20.1 million;
non-current operating lease liabilities had a decrease of $110.6 million;
the current and non current finance obligations had an increase of $898 thousand and $2.4 million, respectively; and
other current liabilities had a decrease of $3.5 million.
(c) loss accrual provision: the correction of this misstatement resulted in a net increase of $1.3 million to other current liabilities and a net increase of $2.7 million to other long-term liabilities at June 30,
2020.
F-24
table of Contents
Notes to Consolidated Financial Statements (Continued)
(d) other adjustments: immaterial adjustments at June 30, 2020 resulted in the following: an increase to accounts receivable of $260 thousand, a decrease to goodwill of $140 thousand, and an increase to
intangible assets of $400 thousand. an increase in accrued expenses of $597 thousand, a decrease to deferred revenue of $190 thousand, an increase of $185 thousand to convertible senior notes, a
decrease to additional paid in capital of $94 thousand and a decrease to accumulated other comprehensive income of $112 thousand.
As previously
Reported
As of March 31, 2020
Restatement
Adjustments
As Restated
Restatement
References
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers,
net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Redeemable preferred stock:
Redeemable preferred stock: Series C redeemable convertible preferred stock,
$0.01 par value per share (aggregate involuntary liquidation
preference $16,664); 10,431 shares authorized; issued and outstanding: 2,620 at
March 31, 2020
Stockholders’ equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; issued:
322,220,469 at March 31, 2020
additional paid-in capital
accumulated other comprehensive income
accumulated deficit
less common stock in treasury
total stockholders’ equity
total liabilities, redeemable preferred stock, and stockholders’ equity
As of March 31, 2020
$
$
$
$
$
$
$
74,340
56,804
24,437
92,972
28,500
277,053
176,070
16,591
—
—
252,802
8,673
5,296
12,059
748,544
35,503
14,273
11,557
—
—
52,047
27,819
10,423
151,622
22,912
—
—
272,171
112,878
79,119
13
638,715
709
3,222
1,519,257
1,164
(1,383,299)
(31,224)
109,120
748,544
$
— $
—
297
—
—
297
—
—
1,707
64,812
(184,400)
—
400
—
$
(117,184)
— $
597
—
8,959
204
(25,838)
—
(1,977)
(18,055)
(228)
52,165
1,953
(150,849)
185
—
2,373
(112,456)
—
—
(163)
(112)
(4,453)
—
(4,728)
(117,184)
$
74,340
56,804
24,734
92,972
28,500
277,350
176,070
16,591
1,707
64,812
68,402
8,673
5,696
12,059
631,360
35,503
14,870
11,557
8,959
204
26,209
27,819
8,446
133,567
22,684
52,165
1,953
121,322
113,063
79,119
2,386
526,259
709
3,222
1,519,094
1,052
(1,387,752)
(31,224)
104,392
631,360
d
a
a, b
a, b
d
d
a, b
a
a, b
b, c
d
a, b
a
a, b
d
c
d
d
(a) the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and long-term
finance obligations have been reclassified to conform to current period presentations, as follows at March 31, 2020:
●
●
●
●
●
●
$183.4 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use assets related to operating leases, net;
$1.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use asset related to finance leases, net;
$26.6 million was reclassified from current finance obligations to current operating lease liabilities;
$151.0 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$204 thousand was reclassified from current finance obligations to current finance lease liabilities; and
$1.9 million was reclassified from non-current finance obligations to non-current finance lease liabilities.
(b) the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at March 31, 2020:
●
●
●
●
●
●
the right of use assets related to operating leases, net had a decrease of $118.6 million;
equipment related to power purchase agreements and fuel delivered to customers, net had an increase of $725 thousand;
current operating lease liabilities had a decrease of $17.7 million;
non-current operating lease liabilities had a decrease of $99.0 million;
the current finance obligations and non-current finance obligations had an increase of $1.0 million and $2.0 million, respectively; and
other current liabilities had a decrease of $3.2 million.
(c) loss accrual provision: the correction of this misstatement resulted in an increase of $1.2 million to other current liabilities and an increase of $2.4 million to other long-term liabilities at March 31,
2020.
F-25
table of Contents
Notes to Consolidated Financial Statements (Continued)
(d) other adjustments: immaterial adjustments at March 31, 2020 resulted in the following: an increase to accounts receivable of $297 thousand. an increase to intangible assets of $400 thousand. an increase
in accrued expenses of $597 thousand, a decrease to deferred revenue of $228 thousand, an increase of $185 thousand to convertible senior notes, net, a decrease to additional paid in capital of $163
thousand and a decrease to accumulated other comprehensive income of $112 thousand.
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers, net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Deficit
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Common stock warrant liability
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Redeemable preferred stock, $.01 par value
Series C redeemable convertible preferred stock, $0.01 par value per share 10,431 shares
authorized; issued
and outstanding: 2,620 at September 30, 2019
Series e redeemable convertible preferred stock, $0.01 par value per share; Shares
authorized: 35,000 at
September 30, 2019; issued and outstanding: 28,269 at September 30, 2019
Stockholders’ deficit:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; issued:
253,982,578 at September 30, 2019
additional paid-in capital (1)
accumulated other comprehensive income
accumulated deficit (1)
less common stock in treasury
total stockholders’ deficit
total liabilities, redeemable preferred stock, and stockholders’ deficit
As previously
Reported
As of September 30, 2019
Restatement
Adjustments
As Restated
Restatement
References
$
$
$
$
$
$
$
43,275
35,720
24,392
80,601
12,804
196,792
119,322
14,990
—
—
202,034
8,606
5,113
9,152
556,009
36,851
9,457
11,480
—
—
41,112
17,202
10,238
126,340
22,444
—
—
208,465
98
107,760
78,840
13
543,960
709
25,746
$
$
$
—
—
345
—
—
345
—
—
1,720
47,016
(134,786)
—
—
—
(85,705)
—
—
—
8,666
310
(20,643)
—
(1,865)
(13,532)
(231)
36,599
2,068
(108,796)
—
185
—
2,821
(80,886)
—
—
43,275
35,720
24,737
80,601
12,804
197,137
119,322
14,990
1,720
47,016
67,248
8,606
5,113
9,152
470,304
36,851
9,457
11,480
8,666
310
20,469
17,202
8,373
112,808
22,213
36,599
2,068
99,669
98
107,945
78,840
2,834
463,074
709
25,746
2,540
1,340,859
929
(1,327,518)
(31,216)
(14,406)
556,009
$
—
(78)
—
(4,741)
—
(4,819)
(85,705)
$
2,540
1,340,781
929
(1,332,259)
(31,216)
(19,225)
470,304
d
a
a, b
a, b
a, b
a
a, b
b, c
d
a, b
a
a, b
d
c
d
(1) The "as previously reported" balances include a decrease in additional paid-in capital of $6.5 million and an increase of $6.5 million to accumulated deficit due to the impact of the adoption of ASU 2019-08
of January 1, 2019.
As of September 30, 2019
(a) the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and
long-term finance obligations have been reclassified to conform to current period presentations, as follows at September 30, 2019:
●
●
●
●
●
●
$133.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use assets related to operating leases, net;
$1.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use asset related to finance leases, net;
$21.1 million was reclassified from current finance obligations to current operating lease liabilities;
$109.3 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$310 thousand was reclassified from current finance obligations to current finance lease liabilities; and
$2.1 million was reclassified from non-current finance obligations to non-current finance lease liabilities.
(b) the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at September 30, 2019:
●
●
the right of use assets related to operating leases, net had a decrease of $86.7 million;
equipment related to power purchase agreements and fuel delivered to customers, net had an increase of $655 thousand;
F-26
table of Contents
Notes to Consolidated Financial Statements (Continued)
●
●
●
●
current operating lease liabilities had a decrease of $12.4 million;
non-current operating lease liabilities had a decrease of $72.7 million;
the current and non-current finance obligations had a increase of $752 thousand and an increase $2.6 million; and
other current liabilities had a decrease of $3.0 million.
(c) loss accrual provision: the correction of this misstatement resulted in a net increase of $1.2 million to other current liabilities and a net increase of $2.8 million to other long-term liabilities at
September 30, 2019.
(d) other adjustments: immaterial adjustments at September 30, 2019 resulted in the following: adjustments related to increases in accounts receivable of $345 thousand, decrease in deferred
revenue of $231 thousand, increase in convertible senior notes of $185 thousand and decrease in additional paid in capital of $78 thousand.
As previously
Reported
As of June 30, 2019
Restatement
Adjustments
As Restated
Restatement
References
Current assets:
Assets
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered
to customers, net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’
Deficit
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
Common stock warrant liability
operating lease liabilities
Finance lease liabilities
Finance obligations
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Redeemable preferred stock:
Series C redeemable convertible preferred stock, $0.01 par value
per share (aggregate involuntary liquidation
preference $16,664); 10,431 shares authorized; issued and
outstanding: 2,620 at both June 30, 2019
Series e redeemable convertible preferred stock, $0.01 par value
per share (aggregate involuntary liquidation
preference $35,000 at June 30, 2019); Shares authorized: 35,000 at
June 30,
2019; issued and outstanding: 35,000 at June 30, 2019
Stockholders’ deficit:
Common stock, $0.01 par value per share; 750,000,000 shares
authorized; issued: 246,975,173 at June 30, 2019
additional paid-in capital (1)
accumulated other comprehensive income
accumulated deficit (1)
less common stock in treasury
total stockholders’ deficit
total liabilities, redeemable preferred stock, and
stockholders’ deficit
$
$
$
$
$
$
19,845
19,400
26,592
73,190
14,001
153,028
96,082
14,228
—
—
170,455
8,961
5,398
8,842
456,994
36,946
4,522
11,730
—
—
30,663
15,928
3,017
102,806
24,519
525
—
—
157,531
66,844
83,776
13
436,014
709
30,926
2,470
1,325,459
1,460
(1,309,363)
(30,681)
(10,655)
— $
—
252
—
—
252
—
—
1,726
39,679
(101,473)
—
—
—
$
(59,816)
— $
—
—
7,512
266
(18,208)
—
688
(9,742)
(393)
—
30,631
2,123
(80,615)
—
—
3,320
(54,676)
—
—
—
(78)
—
(5,062)
—
(5,140)
$
456,994
$
(59,816)
$
d
a
a, b
a, b
a, b
a
a, b
b, c
d
a, b
a
a, b
c
d
19,845
19,400
26,844
73,190
14,001
153,280
96,082
14,228
1,726
39,679
68,982
8,961
5,398
8,842
397,178
36,946
4,522
11,730
7,512
266
12,455
15,928
3,705
93,064
24,126
525
30,631
2,123
76,916
66,844
83,776
3,333
381,338
709
30,926
2,470
1,325,381
1,460
(1,314,425)
(30,681)
(15,795)
397,178
(1) The "as previously reported" balances include a decrease in additional paid-in capital of $3.5 million and an increase of $3.5 million to accumulated deficit due to the impact of the adoption of ASU 2019-08
of January 1, 2019.
As of June 30, 2019
F-27
table of Contents
Notes to Consolidated Financial Statements (Continued)
(a) the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and long-
term finance obligations have been reclassified to conform to current period presentations, as follows at June 30, 2019:
●
●
●
●
●
●
$100.3 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use assets related to operating leases, net;
$1.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use asset related to finance leases, net;
$16.6 million was reclassified from current finance obligations to current operating lease liabilities;
$80.6 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$266 thousand was reclassified from current finance obligations to current finance lease liabilities; and
$2.1 million was reclassified from non-current finance obligations to non-current finance lease liabilities.
(b) the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at June 30, 2019:
the right of use assets related to operating leases, net had a decrease of $60.6 million;
equipment related to power purchase agreements and fuel delivered to customers, net had an increase of $543 thousand;
current operating lease liabilities had a decrease of $9.1 million;
non-current operating lease liabilities had a decrease of $50.0 million;
the current and non-current finance obligations had a decrease of $1.4 million and an increase of $2.2 million; and
other current liabilities had a decrease of $464 thousand.
●
●
●
●
●
●
(c) loss accrual provision: the correction of this misstatement resulted in a net increase of $1.2 million to other current liabilities and a net increase of $3.3 million to other long-term liabilities at
June 30, 2019.
(d) other adjustments: immaterial adjustments at June 30, 2019 resulted in the following: adjustments related to increases in accounts receivable of $252 thousand, a decrease in deferred revenue of
$393 thousand, and a decrease in additional paid in capital of $78 thousand.
F-28
table of Contents
Notes to Consolidated Financial Statements (Continued)
As previously
Reported
As of March 31, 2019
Restatement
Adjustments
As Restated
Restatement
References
Assets
Current assets:
Cash and cash equivalents
Restricted cash
accounts receivable
inventory
Prepaid expenses and other current assets
total current assets
Restricted cash
Property, plant, and equipment, net
Right of use assets related to finance leases, net
Right of use assets related to operating leases, net
equipment related to power purchase agreements and fuel delivered to customers,
net
Goodwill
intangible assets, net
other assets
total assets
Liabilities, Redeemable Preferred Stock, and Stockholders’ Deficit
Current liabilities:
accounts payable
accrued expenses
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Current portion of long-term debt
other current liabilities
total current liabilities
deferred revenue
operating lease liabilities
Finance lease liabilities
Finance obligations
Common stock warrant liability
Convertible senior notes, net
long-term debt
other liabilities
total liabilities
Redeemable preferred stock:
Series C redeemable convertible preferred stock, $0.01 par value per share
(aggregate involuntary liquidation preference $16,664); 10,431 shares
authorized; issued and outstanding: 2,620 at March 31, 2019
Series e redeemable convertible preferred stock, $0.01 par value per share
(aggregate involuntary liquidation
preference $35,000 at March 31, 2019); Shares authorized: 35,000 at March
31, 2019 ; issued and outstanding: 35,000 at March 31, 2019
Stockholders’ deficit:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; issued:
244,537,235 at March 31, 2019
additional paid-in capital (1)
accumulated other comprehensive income
accumulated deficit (1)
less common stock in treasury
total stockholders’ deficit
total liabilities, redeemable preferred stock, and stockholders’ deficit
$
$
$
$
$
$
$
39,336
19,297
32,062
65,474
10,296
166,465
50,598
13,615
—
—
141,889
8,886
3,677
11,069
396,199
31,688
6,509
11,736
—
—
23,997
12,559
2,271
88,760
25,835
—
—
111,195
2,231
65,025
72,676
17
365,739
709
30,931
— $
—
245
—
—
245
—
—
1,733
33,599
(70,961)
—
—
—
$
(35,384)
— $
—
—
7,042
236
(12,969)
—
1,474
(4,217)
(469)
25,657
2,142
(56,331)
—
—
—
3,729
(29,489)
—
—
39,336
19,297
32,307
65,474
10,296
166,710
50,598
13,615
1,733
33,599
70,928
8,886
3,677
11,069
360,815
31,688
6,509
11,736
7,042
236
11,028
12,559
3,745
84,543
25,366
25,657
2,142
54,864
2,231
65,025
72,676
3,746
336,250
709
30,931
2,445
1,316,893
1,374
(1,291,255)
(30,637)
(1,180)
396,199
$
—
(78)
—
(5,817)
—
(5,895)
(35,384)
$
2,445
1,316,815
1,374
(1,297,072)
(30,637)
(7,075)
360,815
d
a
a, b
a, b
a, b
a
a, b
c
d
a, b
a
a, b
c
d
(1) The "as previously reported" balances include a decrease in additional paid-in capital of $3.0 million and an increase of $3.0 million to accumulated deficit due to the impact of the adoption of ASU 2019-08
of January 1, 2019.
As of March 31, 2019
(a) the "as previously reported" balances for equipment related to power purchase agreements and fuel delivered to customers, net (previously captioned leased assets, net) and the current and long-
term finance obligations have been reclassified to conform to current period presentations, as follows at March 31, 2019:
●
●
●
●
●
$69.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use assets related to operating leases, net;
$1.7 million was reclassified from equipment related to power purchase agreements and fuel delivered to customers, net to right of use asset related to finance leases, net;
$13.1 million was reclassified from current finance obligations to current operating lease liabilities;
$54.2 million was reclassified from non-current finance obligations to non-current operating lease liabilities;
$236 thousand was reclassified from current finance obligations to current finance lease liabilities; and
F-29
table of Contents
Notes to Consolidated Financial Statements (Continued)
●
$2.1 million was reclassified from non-current finance obligations to non-current finance lease liabilities.
(b) the correction of the misstatement associated with the right of use assets relating to operating leases resulted in the following at March 31, 2019:
●
●
●
●
●
the right of use assets related to operating leases, net had a decrease of $36.1 million;
equipment related to power purchase agreements and fuel delivered to customers, net had an increase of $432 thousand;
current operating lease liabilities had a decrease of $6.1 million;
non-current operating lease liabilities had a decrease of $28.6 million; and
the current and non-current finance obligations had an increase of $360 thousand and $19 thousand.
(c) loss accrual provision: the correction of this misstatement resulted in an increase of $1.5 million to other current liabilities and an increase of $3.7 million to other long-term liabilities at March
31, 2019.
(d) other adjustments: immaterial adjustments at March 31, 2019 resulted in the following: adjustments related to increases in accounts receivable of $245 thousand, a decrease in deferred revenue of
$469 thousand, and decrease in additional paid in capital of $78 thousand.
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s unaudited
interim condensed consolidated statements of operations for the periods indicated (in thousands, except per share):
For the three months ended September 30, 2020
For the nine months ended September 30, 2020
As Previously
Reported
Restatement
Adjustments
As
Restated
As Previously
Reported
Restatement
Adjustments
As
Restated
Restatement
References
net revenue:
Sales of fuel cell systems and related
infrastructure
Services performed on fuel cell systems
and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related
infrastructure
Services performed on fuel cell systems
and related infrastructure
Provision for loss contracts related to
service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
$
83,528 $
134
$
83,662
$
151,661 $
215
$
151,876
6,829
6,704
9,831
97
106,989
68,509
7,074
4,306
14,087
14,172
131
108,279
—
(75)
—
—
59
919
2,106
20,841
657
2,830
—
27,353
6,829
6,629
9,831
97
107,048
69,428
9,180
25,147
14,744
17,002
131
135,632
19,586
19,854
24,536
235
215,872
115,929
21,746
4,306
42,034
32,267
275
216,557
—
(225)
—
—
(10)
1,361
5,554
21,642
1,985
7,065
—
37,607
19,586
19,629
24,536
235
215,862
117,290
27,300
25,948
44,019
39,332
275
254,164
Gross loss
(1,290)
(27,294)
(28,584)
(685)
(37,617)
(38,302)
operating expenses:
Research and development
Selling, general and administrative
Change in fair value of contingent
consideration
total operating expenses
11,964
14,277
—
26,241
(4,578)
2,933
1,130
(515)
operating loss
(27,531)
(26,779)
interest and other expense, net
Change in fair value of contingent
consideration
Gain on extinguishment of debt
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed
dividends and accretion of discount
net loss attributable to common
shareholders
net loss per share:
Basic and diluted
weighted average number of common
shares outstanding
For the three months ended September 30, 2020
$
$
$
$
(17,241)
(1,130)
—
(310)
1,130
—
(45,902) $
(25,959)
6,523
121
(39,379) $
(25,838)
—
—
(39,379) $
(25,838)
(0.11)
$
$
$
$
7,386
17,210
1,130
25,726
(54,310)
(17,551)
—
—
32,133
46,948
—
79,081
(15,100)
3,015
1,130
(10,955)
17,033
49,963
1,130
68,126
(79,766)
(26,662)
(106,428)
(42,022)
(1,130)
13,222
(837)
1,130
—
(71,861)
$
(109,696) $
(26,369)
6,644
24,182
(167)
(65,217)
$
(85,514) $
(26,536)
—
(19)
(7)
(65,217)
$
(85,533) $
(26,543)
(0.18)
$
(0.26)
$
$
$
$
(42,859)
—
13,222
(136,065)
24,015
(112,050)
(26)
(112,076)
(0.34)
371,010,544
371,010,544
330,949,265
330,949,265
(a)
(b)
Research and development: the correction of this misstatement resulted in a net decrease of $5.5 million to research and development, and an increase of $232 thousand to the cost of sales of fuel
cell systems and related infrastructure, an increase of $1.5 million to the cost of service performed on fuel cell systems and related infrastructure, an increase of $955 thousand to the cost of Power
Purchase agreements and an increase in the cost of fuel delivered to customers of $2.8 million for the three months ended September 30, 2020.
Provision for loss contracts related to service: the correction of this misstatement resulted in a net increase of $20.8 million to the provision for loss contracts and a $315 thousand decrease in the
cost of services performed on fuel cell systems and related infrastructure for the three months ended September 30, 2020.
F-30
e
e
a,d,e
a,b,d
b
a,c,e
a,d
a,d
c,d
f
c
f
e
e
table of Contents
Notes to Consolidated Financial Statements (Continued)
(c)
(d)
(e)
(f)
Right of use asset: the correction of this misstatement resulted in a net decrease of $280 thousand to the cost of Power Purchase agreements and a net decrease of $56 thousand to selling, general
and administrative expenses, and net increase in interest and other expense of $310 thousand for the three months ended September 30, 2020.
Bonus accrual: adjustments related to the under accrual for bonus expenses resulted in an increase in cost of sales of fuel cell systems and related infrastructure of $584 thousand, increase in cost
of services performed on fuel cell systems and related infrastructure of $930 thousand, increase in cost of fuel delivered to customers of $56 thousand, an increase in research and development
expense of $872 thousand, and an increase in selling and general administration expenses of $2.9 million for the three months ended September 30, 2020.
other adjustments: immaterial adjustments for the three months ended September 30, 2020 resulted in a net increase of $134 thousand to revenue from the sales of fuel cell and systems and
related infrastructure, a net decrease of $75 thousand in revenue from Power Purchase agreements and a net decrease of $18 thousand in cost of revenue related to Power Purchase agreements,
an increase of $103 thousand in the cost of revenue related to the sales of fuel cell systems and related infrastructure and an increase to the income tax benefit of $121 thousand.
Contingent Consideration: the correction of this misstatement resulted in a reclassification of $1.1 million to operating expenses.
For the nine months ended September 30, 2020
(a)
(b)
(c)
(d)
(e)
(f)
Research and development: the correction of this misstatement resulted in a net decrease of $15.9 million to research and development, and an increase of $674 thousand to the cost of sales of fuel
cell systems and related infrastructure, an increase of $5.5 million to the cost of service performed on fuel cell systems and related infrastructure, and increase of $2.8 million to the cost of Power
Purchase agreements and an increase in the cost of fuel delivered to customer of $7 million for the nine months ended September 30 2020.
Provision for loss contracts related to service: the correction of this misstatement resulted in a net increase of $21.6 million to the provision for loss contracts and a $839 thousand decrease in the
cost of services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2020.
Right of use asset: the correction of this misstatement resulted in a net decrease of $788 thousand to the cost of Power Purchase agreements and a net decrease of $138 thousand to selling, general
and administrative expenses, and a net increase of $837 thousand in interest and other expenses for the nine months ended September 30, 2020.
Bonus accrual: adjustments related to the under accrual for bonus expenses resulted in an increase in cost of sales of fuel cell systems and related infrastructure of $584 thousand, increase in cost
of services performed on fuel cell systems and related infrastructure of $931 thousand, increase in cost of fuel delivered to customers of $56 thousand, an increase in research and development
expense of $872 thousand, and an increase in selling and general administration expenses of $2.9 million for the nine months ended September 30, 2020.
other adjustments: immaterial adjustments for the nine months ended September 30, 2020 resulted in a net increase of $215 thousand to revenue from the sales of fuel cell and systems and related
infrastructure a net decrease of $225 thousand in revenue from power purchase agreements and a net decrease of $54 thousand in cost of revenue related to Power Purchase agreements, an increase
of $103 thousand in the cost of revenue related to the sales of fuel cell systems and related infrastructure, a decrease to the income tax benefit of $167 thousand and an increase in preferred stock
dividends declared, deemed dividends and accretion of discount of $7 thousand.
Contingent Consideration: the correction of this misstatement resulted in a reclassification of $1.1 million to operating expenses.
For the three months ended June 30, 2020
As
Restated
Restatement
Adjustments
As Previously
Reported
For the six months ended June 30, 2020
As Previously
Reported
Restatement
Adjustments
As
Restated
Restatement
References
net revenue:
Sales of fuel cell systems and related
infrastructure
Services performed on fuel cell systems
and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related
infrastructure
Services performed on fuel cell systems
and related infrastructure
Provision for loss contracts related to
service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
Gross (loss) profit
operating expenses:
Research and development
Selling, general and administrative
total operating expenses
operating loss
interest and other expense, net
Gain on extinguishment of debt
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed
dividends and accretion of discount
net loss attributable to common stockholders
net loss per share:
Basic and diluted
weighted average number of common shares
outstanding
$
$
$
$
$
47,746 $
—
$
47,746 $
68,133 $
81
$
68,214
6,236
6,654
7,372
62
68,070
33,676
6,491
—
13,704
9,060
63
62,994
—
(75)
—
—
(75)
212
1,282
706
800
2,016
—
5,016
6,236
6,579
7,372
62
67,995
12,757
13,150
14,705
138
108,883
33,888
47,420
7,773
14,672
706
14,504
11,076
63
68,010
—
27,947
18,095
144
108,278
—
(150)
—
—
(69)
442
3,448
801
1,328
4,235
—
10,254
12,757
13,000
14,705
138
108,814
47,862
18,120
801
29,275
22,330
144
118,532
5,076
(5,091)
(15)
605
(10,323)
(9,718)
9,757
21,658
31,415
(26,339)
(13,198)
13,222
(26,315) $
17,659
(8,656) $
(13)
(8,669) $
(0.03)
(4,884)
(14)
(4,898)
4,873
21,644
26,517
20,169
32,671
52,840
(10,522)
82
(10,440)
(193)
(264)
—
(457)
(288)
(745)
—
(745)
$
$
$
$
(26,532)
(52,235)
(13,462)
13,222
(24,781)
13,222
(26,772) $
(63,794) $
17,371
17,659
(9,401) $
(46,135) $
(13)
(19)
(9,414) $
(46,154) $
(0.03) $
(0.15)
117
(527)
—
(410)
(288)
(698)
(7)
(705)
$
$
$
$
9,647
32,753
42,400
(52,118)
(25,308)
13,222
(64,204)
17,371
(46,833)
(26)
(46,859)
(0.15)
316,645,050
316,645,050
310,918,626
310,918,626
F-31
d
d
a
a,b
b
a, c, d
a
a
c
c
d
d
table of Contents
Notes to Consolidated Financial Statements (Continued)
For the three months ended June 30, 2020
(a)
(b)
(c)
(d)
Research and development: the correction of this misstatement resulted in a net decrease of $ 4.9 million to research and development, and an increase of $212 thousand to the cost of sales of fuel
cell systems and related infrastructure, an increase of $1.6 million to the cost of service performed on fuel cell systems and related infrastructure, an increase of $1.1 million to the cost of Power
Purchase agreements and an increase in the cost of fuel delivered to customers of $2.0 million for the three months ended June 30, 2020.
Provision for loss contracts related to service: the correction of this misstatement resulted in a net increase of $706 thousand to the provision for loss contracts and a $315 thousand decrease in the
cost of services performed on fuel cell systems and related infrastructure for the three months ended June 30, 2020.
Right of use asset: the correction of this misstatement resulted in a net decrease of $255 thousand to the cost of Power Purchase agreements and a net decrease of $14 thousand to selling, general
and administrative expenses, and a net increase to interest and other expenses of $264 thousand for the three months ended June 30, 2020.
other adjustments: immaterial adjustments for the three months ended June 30, 2020 resulted in a net decrease of $75 thousand from revenue from Power Purchase agreements, a net decrease of
$18 thousand in the cost of Power Purchase agreements and a net decrease of $288 thousand in income tax benefit.
For the six months ended June 30, 2020
(a)
(b)
(c)
(d)
Research and development: the correction of this misstatement resulted in a net decrease of $10.5 million to research and development, and an increase of $442 thousand to the cost of sales of fuel
cell systems and related infrastructure, an increase of $4.0 million to the cost of service performed on fuel cell systems and related infrastructure, an increase of $1.9 million to the cost of Power
Purchase agreements and an increase in the cost of fuel delivered to customers of $4.2 million for the six months ended June 30, 2020.
Provision for loss contracts related to service: the correction of this misstatement resulted in a net increase of $801 thousand to the provision for loss contracts and a $524 thousand decrease in the
cost of services performed on fuel cell systems and related infrastructure for the six months ended June 30, 2020.
Right of use asset: the correction of this misstatement resulted in a net decrease of $508 thousand to the cost of Power Purchase agreements, a net increase of $82 thousand to selling, general and
administrative expenses and a net increase of $527 thousand to interest and other expenses for the six months ended June 30, 2020.
other adjustments: immaterial adjustments for the six months ended June 30, 2020 resulted in a net increase of $81 thousand to revenue from the sales of fuel cell and systems and related
infrastructure, a net decrease of $150 thousand in revenue from Power Purchase agreements, a net decrease of $36 thousand in cost of revenue related to Power Purchase agreements and a
decrease to the income tax benefit of $288 thousand. a net decrease of $7 thousand related to preferred stock dividends.
As Previously
Reported
For the three months ended March 31, 2020
Restatement
Adjustments
As Restated
Restatement
References
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
Gross loss
operating expenses:
Research and development
Selling, general and administrative
total operating expenses
operating loss
interest and other expense, net
Gain (loss) on extinguishment of debt
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of
discount
net loss attributable to common stockholders
net loss per share:
Basic and diluted
weighted average number of common shares outstanding
For the three months ended March 31, 2020
$
$
$
$
$
20,387
6,521
6,496
7,333
76
40,813
13,744
8,181
—
14,243
9,035
81
45,284
(4,471)
10,412
11,013
21,425
(25,896)
(11,583)
—
(37,479)
$
$
—
(37,479)
$
(13)
(37,492)
$
(0.12)
305,192,201
81
—
(75)
—
—
6
230
2,166
95
528
2,219
—
5,238
(5,232)
(5,638)
96
(5,542)
310
(263)
—
47
—
47
—
47
$
$
$
$
$
d
d
a
a,b
b
a,c,d
a
a
c
c
20,468
6,521
6,421
7,333
76
40,819
13,974
10,347
95
14,771
11,254
81
50,522
(9,703)
4,774
11,109
15,883
(25,586)
(11,846)
—
(37,432)
—
(37,432)
(13)
(37,445)
(0.12)
305,192,201
a)
b)
c)
d)
Research and development: the correction of this misstatement resulted in a net decrease of $5.6 million to research and development, and an increase of $230 thousand to the cost of sales
of fuel cell systems and related infrastructure, an increase of $2.4 million to the cost of service performed on fuel cell systems and related infrastructure, and increase of $799 thousand to the
cost of Power Purchase agreements and an increase in the cost of fuel delivered to customer of $2.2 million for the three months ended March 31, 2020.
Provision for loss contracts related to service: the correction of this misstatement resulted in a net increase of $95 thousand to the provision for loss contracts and a net decrease of $224
thousand in the costs of services performed on fuel cell systems and related infrastructure for the three months ended March 31, 2020.
Right of use asset: the correction of this misstatement resulted in a net decrease of $253 to the cost of power purchase agreements, a net increase of $96 thousand to selling, general and
administrative expenses, and a net increase in interest and other expenses of $262 thousand for the three months ended March 31, 2020.
other adjustments: immaterial adjustments for the three months ended June 30, 2020 resulted in a net decrease of $75 thousand from revenue from Power Purchase agreements and a net
increase of $81 thousand from revenue related to fuel cell systems and related infrastructure.
F-32
table of Contents
Notes to Consolidated Financial Statements (Continued)
For the three months ended December 31, 2019
As Previously
Reported
Restatement
Adjustments
As
Restated
Restatement
References
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
Gross loss
operating expenses:
Research and development
Selling, general and administrative
total operating expenses
operating loss
interest and other expense, net
Change in fair value of common stock warrant liability
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of
discount
net loss attributable to common shareholders
net loss per share:
Basic and diluted
weighted average number of common shares outstanding
For the three months ended December 31, 2019
$
$
$
$
$
$
69,767
7,328
6,739
7,779
51
91,664
46,419
9,999
—
11,992
10,422
50
78,882
12,782
9,341
10,982
20,323
(7,541)
(10,806)
72
(18,275) $
—
(18,275) $
(13)
(18,288) $
(0.07)
260,053,150
18
—
(75)
—
—
(57)
672
1,607
13
309
2,378
—
4,979
(5,036)
(4,459)
(1,009)
(5,468)
432
(193)
—
239
—
239
(1,228)
(989)
$
$
$
$
$
e
e
a, e
a, b, e
b
a, e
a, e
a, e
e
d
69,785
7,328
6,664
7,779
51
91,607
47,091
11,606
13
12,301
12,800
50
83,861
7,746
4,882
9,973
14,855
(7,109)
(10,999)
72
(18,036)
—
(18,036)
(1,241)
f
(19,277)
(0.07)
260,053,150
(a)
(b)
(c)
(d)
(e)
(f)
Research and development: the correction of this misstatement resulted in a net decrease of $5.3 million to research and development, an increase of $585 thousand to the cost of sales of fuel cell
systems and related infrastructure, an increase of $1.9 million to the costs of services performed on fuel cell systems and related infrastructure, an increase in cost of Power Purchase agreements
of $564 thousand and an increase in the cost of fuel delivered to customers of $2.3 million for the three months ended december 31, 2019.
Provision for loss contracts related to service: the correction of this misstatement resulted in an increase of $13 thousand to the provision for loss contracts related to service and a decrease of
$289 thousand to costs of services performed on fuel cell systems and related infrastructure for the three months ended december 31, 2019.
Right of use asset: the correction of the misstatement resulted in net decrease of $237 thousand of costs related to Power Purchase agreements for the three months ended december 31, 2019.
interest expense: the correction of this misstatement resulted in an increase of $193 thousand to interest and other expense, net for the three months ended december 31, 2019.
other adjustments: immaterial adjustments for the three months ended december 31, 2019 resulted in the following: adjustments related to an increase in sales of fuel cells and related
infrastructure of $18 thousand, an increase $87 thousand in cost of revenue for sales of fuel cell systems and related infrastructure, an increase of $44 thousand in cost of services performed on
fuel cells and related infrastructure, a decrease in sales related to Power Purchase agreements of $75 thousand, a decrease in cost of Power Purchase agreements of $18 thousand, an increase of
$44 thousand in cost of fuel delivered to customers, an increase of $876 thousand in research and development expenses and a decrease of $1.0 million in selling general and administrative costs.
Series e redeemable convertible preferred stock deemed dividend: the correction of this misstatement resulted in a net increase of $1.3 million to preferred stock dividends declared, deemed
dividends and accretion of discount.
F-33
table of Contents
net revenue:
Sales of fuel cell systems and
related infrastructure
Services performed on fuel cell
systems and related
infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and
related infrastructure
Services performed on fuel cell
systems and related
infrastructure
Provision (benefit) for loss
contracts related to service
Power Purchase agreements
Fuel delivered to customers
other
total cost of revenue
operating expenses:
Research and development
Selling, general and
administrative
total operating expenses
operating loss
interest and other expense, net
Change in fair value of
common stock warrant liability
loss on extinguishment of debt
loss before income taxes
income tax benefit
net loss attributable to the
Company
Preferred stock dividends
declared, deemed dividends and
accretion of discount
net loss attributable to common
shareholders
net loss per share:
Basic and diluted
weighted average number of
common shares outstanding
$
$
$
$
Restatement
References
e
e
a
Notes to Consolidated Financial Statements (Continued)
For the three months ended September 30, 2019
As
Restated
Restatement
Adjustments
As Previously
Reported
For the nine months ended September 30, 2019
As
Restated
Restatement
Adjustments
As Previously
Reported
$
38,877 $
6
$
38,883
$
80,117 $
18
$
80,135
6,205
6,595
7,649
135
59,461
24,990
6,461
—
10,353
9,160
150
51,114
—
(75)
—
—
(69)
193
1,341
(206)
461
1,989
—
3,778
8,028
10,400
18,428
(10,081)
(7,972)
427
(518)
(4,465)
(5)
(4,470)
623
(301)
—
—
6,205
6,520
7,649
135
59,392
17,889
19,114
21,320
135
138,575
—
(225)
—
—
(207)
17,889
18,889
21,320
135
138,368
25,183
50,440
384
50,824
7,802
(206)
10,814
11,149
150
54,892
4,500
3,563
10,395
13,958
(9,458)
(8,273)
427
(518)
18,802
—
28,064
25,935
150
123,391
4,174
(407)
1,412
6,512
—
12,075
15,184
(12,282)
24,334
33,351
57,685
(42,501)
(24,178)
7
(518)
(14,157)
(122)
(14,279)
1,997
(514)
—
—
22,976
a, b
b
a, c, e
a
a
c
d
(407)
29,476
32,447
150
135,466
2,902
10,177
33,229
43,406
(40,504)
(24,692)
7
(518)
(18,144) $
322
$
(17,822)
$
(67,190) $
1,483
$
(65,707)
—
—
—
—
—
—
(18,144) $
322
$
(17,822)
$
(67,190) $
1,483
$
(65,707)
(531)
(209)
(13)
(18,157) $
(0.08)
(544)
(39)
(531)
(570)
f
$
$
(18,366)
(0.08)
$
$
(67,229) $
952
(0.29)
$
$
(66,277)
(0.29)
236,759,521
236,759,521
229,519,323
229,519,323
Gross profit
8,347
(3,847)
For the three months ended September 30, 2019
(a)
(b)
(c)
(d)
(e)
(f)
Research and development: the correction of this misstatement resulted in a net decrease of $4.5 million to research and development, and an increase of $193 thousand to the cost of sales of fuel
cell systems and related infrastructure, an increase of $1.6 million to the cost of service performed on fuel cell systems and related infrastructure, an increase in cost of Power Purchase
agreements of $654 thousand and an increase in the cost of fuel delivered to customers of $2.0 million for the three months ended September 30, 2019.
Provision for loss contracts related to service: the correction of this misstatement resulted in benefit of $206 thousand to the provision for loss contracts related to service and a decrease of $288
thousand to costs of services performed on fuel cell systems and related infrastructure for the three months ended September 30, 2019.
Right of use asset: the correction of the misstatement resulted in net decrease of $175 thousand of cost related to power purchase agreements and a decrease of $5 thousand in selling general and
administrative expenses for the three months ended September 30, 2019.
interest expense: the correction of this misstatement resulted in an increase of $301 thousand to interest and other expense, net for the three months ended September 30, 2019.
other adjustments: immaterial adjustments for the three months ended September 30, 2019 resulted in the following: adjustments related to an increase in sales of fuel cells and related
infrastructure of $6 thousand, a decrease in sales related to Power Purchase agreements of $75 thousand and a decrease in cost of Power Purchase agreements of $18 thousand.
Series e redeemable convertible preferred stock deemed dividend: the correction of this misstatement resulted in a net increase of $531 thousand to preferred stock dividends declared, deemed
dividends and accretion of discount.
For the nine months ended September 30, 2019
(a)
Research and development: the correction of this misstatement resulted in a net decrease of $14.2 million to research and development, an increase of $384 thousand to the cost of sales of fuel cell
systems and related infrastructure, an increase of $5.1 million to the costs of services performed on fuel cell systems and related infrastructure, increase in cost of Power Purchase agreements of
$2.0 million and an increase in the cost of fuel delivered to customers of $6.5 million for the nine months ended September 30, 2019.
F-34
table of Contents
Notes to Consolidated Financial Statements (Continued)
(b)
(c)
(d)
(e)
(f)
Provision for loss contracts related to service: the correction of this misstatement resulted in benefit of $407 thousand to the provision for loss contracts related to service and a decrease of $960
thousand to costs of service performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2019.
Right of use asset: the correction of the misstatement resulted in a net decrease of $150 thousand of costs related to power purchase agreements and a decrease of $122 thousand in selling general
and administrative expenses for the nine months ended September 30, 2019.
interest expense: the correction of this misstatement resulted in increase of of $514 thousand to interest and other expense, net for the nine months ended September 30, 2019.
other adjustments: immaterial adjustments for the nine months ended September 30, 2019 resulted in the following: adjustments related to an increase in sales of fuel cells and related
infrastructure of $18 thousand, a decrease in sales related to Power Purchase agreements of $225 thousand and a decrease in cost of Power Purchase agreements of $53 thousand.
Series e redeemable convertible preferred stock deemed dividend: the correction of this misstatement resulted in a net increase of $531 thousand to preferred stock dividends declared, deemed
dividends and accretion of discount.
F-35
table of Contents
net revenue:
Sales of fuel cell systems and
related infrastructure
Services performed on fuel
cell systems and related
infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Cost of revenue:
Sales of fuel cell systems and
related infrastructure
Services performed on fuel
cell systems and related
infrastructure
Provision (benefit) for loss
contracts related to service
Power Purchase agreements
Fuel delivered to customers
total cost of revenue
operating expenses:
Research and development
Selling, general and
administrative
total operating expenses
operating loss
interest and other expense, net
Change in fair value of
common stock warrant
liability
loss before income taxes
income tax benefit
net loss attributable to the
Company
Preferred stock dividends
declared, deemed dividends and
accretion of discount
net loss attributable to common
shareholders
net loss per share:
Basic and diluted
weighted average number of
common shares outstanding
$
$
$
$
For the three months ended June 30, 2019
Notes to Consolidated Financial Statements (Continued)
For the three months ended June 30, 2019
For the six months ended June 30, 2019
As Previously
Reported
Restatement
Adjustments
As
Restated
As Previously
Reported
Restatement
Adjustments
As
Restated
Restatement
References
$
38,696 $
6
$
38,702
$
41,240 $
12
$
41,252
5,341
6,409
7,089
—
57,535
—
(75)
—
—
(69)
5,341
6,334
7,089
—
57,466
11,684
12,519
13,671
—
79,114
—
(150)
—
—
(138)
11,684
12,369
13,671
—
78,976
e
e
23,129
200
23,329
25,450
191
25,641
a, e
6,218
—
8,713
8,854
46,914
2,165
(363)
116
2,292
4,410
8,933
13,627
22,560
(11,939)
(7,861)
(5,325)
(14)
(5,339)
860
(104)
8,383
(363)
8,829
11,146
51,324
6,142
3,608
13,613
17,221
(11,079)
(7,965)
12,341
—
17,711
16,775
72,277
2,833
(201)
951
4,523
8,297
6,837
(8,435)
16,306
22,951
39,257
(32,420)
(16,206)
(9,692)
(117)
(9,809)
1,374
(213)
15,174
(201)
18,662
21,298
80,574
(1,598)
6,614
22,834
29,448
(31,046)
(16,419)
a, b
b
a, e
a
a
c
d
1,706
—
1,706
(420)
—
(420)
(18,094) $
756
$
(17,338)
$
(49,046) $
1,161
$
(47,885)
—
—
—
—
—
—
(18,094) $
756
$
(17,338)
$
(49,046) $
1,161
$
(47,885)
—
756
(13)
(18,107) $
(0.08)
(13)
(26)
—
(26)
$
$
(17,351)
(0.08)
$
$
(49,072) $
1,161
(0.22)
$
$
(47,911)
(0.21)
231,114,868
231,114,868
225,899,224
225,899,224
Gross loss
10,621
(4,479)
(a)
(b)
(c)
(d)
(e)
Research and development: the correction of this misstatement resulted in a net decrease of $5.3 million to research and development, an increase of $200 thousand to the cost of sales of fuel cell
systems and related infrastructure, an increase of $2.5 million to the cost of service performed on fuel cell systems and related infrastructure, an increase in cost of Power Purchase agreements of
$299 thousand, and an increase in the cost of fuel delivered to customers of $2.3 million for the three months ended June 30, 2019.
Provision for loss contracts related to service: the correction of this misstatement resulted in benefit of of $363 thousand to the provision for loss contracts related to service and a decrease of
$369 thousand to costs of services performed on fuel cell systems and related infrastructure for the three months ended June 30, 2019.
Right of use asset: the correction of the misstatement resulted in net decrease of $165 thousand of revenue related to cost of power purchase agreements, and a decrease of $14 thousand in selling
general and administrative for the three months ended June 30, 2019.
interest expense: the correction of this misstatement resulted in increase of of $104 thousand to interest and other expense, net for the three months ended June 30, 2019.
other adjustments: immaterial adjustments for the three months ended March 31, 2019 resulted in the following: adjustments related to an increase in sales of fuel cells and related infrastructure
of $6 thousand, a decrease in sales related to Power Purchase agreements of $75 thousand, and a decrease in cost of Power Purchase agreements of $18 thousand.
For the six months ended June 30, 2019
(a)
(b)
(c)
(d)
Research and development: the correction of this misstatement resulted in a net decrease of $9.7 million to research and development, and an increase of $343 thousand to the cost of sales of fuel
cell systems and related infrastructure, an increase of $3.5 million to the cost of service performed on fuel cell systems and related infrastructure, an increase in cost of Power Purchase agreements
of $1.3 million, and an increase in the cost of fuel delivered to customers of $4.5 million for the six months ended June 30, 2019.
Provision for loss contracts related to service: the correction of this misstatement resulted in benefit of of $201 thousand to the provision for loss contracts related to service and a decrease of $672
thousand to cost service performed on fuel cell systems and related infrastructure for the six months ended June 30, 2019.
Right of use asset: the correction of the misstatement resulted in net decrease of $335 thousand of cost related to power purchase agreements and a decrease of $117 thousand in selling general and
administrative for the six months ended June 30, 2019.
interest expense: the correction of this misstatement resulted in increase of $213 thousand to interest and other expense, net for the six months ended June 30, 2019.
F-36
table of Contents
Notes to Consolidated Financial Statements (Continued)
(e)
other adjustments: immaterial adjustments for the six months ended June 30, 2019 resulted in the following: adjustments related to an increase in sales of fuel cells and related infrastructure of
$12 thousand, a decrease in sales related to Power Purchase agreements of $150 thousand, a decrease of $152 thousand in the cost of revenue for sales of fuel cells and related infrastructure and
decrease in cost of Power Purchase agreements of $35 thousand.
For the three months ended March 31, 2019
As Previously
Reported
Restatement
Adjustments
As
Restated
Restatement
References
net revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
net revenue
Cost of revenue:
Sales of fuel cell systems and related infrastructure
Services performed on fuel cell systems and related infrastructure
Provision for loss contracts related to service
Power Purchase agreements
Fuel delivered to customers
total cost of revenue
Gross loss
operating expenses:
Research and development
Selling, general and administrative
total operating expenses
operating loss
interest and other expense, net
Change in fair value of common stock warrant liability
loss before income taxes
income tax benefit
net loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of
discount
net loss attributable to common shareholders
net loss per share:
Basic and diluted
weighted average number of common shares outstanding
For the three months ended March 31, 2019
$
$
$
$
$
$
2,544
6,343
6,110
6,582
21,579
2,321
6,123
—
8,998
7,921
25,363
(3,784)
7,373
9,324
16,697
(20,481)
(8,345)
(2,126)
(30,952) $
—
(30,952) $
(52)
(31,004) $
(0.14)
220,605,068
6
—
(75)
—
(69)
(9)
668
162
835
2,231
3,887
(3,956)
(4,367)
(103)
(4,470)
514
(109)
—
405
—
405
39
444
$
$
$
$
$
e
e
a, e
a, b
b
a, c, e
a
a
c, e
d
2,550
6,343
6,035
6,582
21,510
2,312
6,791
162
9,833
10,152
29,250
(7,740)
3,006
9,221
12,227
(19,967)
(8,454)
(2,126)
(30,547)
—
(30,547)
(13)
f
(30,560)
(0.14)
220,605,068
(a)
(b)
(c)
(d)
(e)
(f)
Research and development: the correction of this misstatement resulted in a net decrease of $4.4 million to research and development, an increase of $143 thousand to the cost of sales
of fuel cell systems and related infrastructure, an increase of $971 thousand to the cost of service performed on fuel cell systems and related infrastructure, an increase in cost of power
purchase agreements of $1.0 million and an increase in the cost of fuel delivered to customers of $2.2 million for the three months ended March 31, 2019.
Provision for loss contracts related to service: the correction of this misstatement resulted in a decrease of $303 thousand in services performed on fuel cell systems and related
infrastructure and a net increase of $162 thousand to the provision for loss contracts related to service for the three months ended March 31, 2019.
Right of use asset: the correction of the misstatement resulted in a net decrease of $167 thousand of cost related to power purchase agreements and increase of $3 thousand to selling
general and administrative expenses, for the three months ended March 31, 2019.
interest expense: the correction of this misstatement resulted in an increase of $109 thousand to interest and other expense, net for the three months ended March 31, 2019.
other adjustments: immaterial adjustments for the three months ended March 31, 2019 resulted in the following: adjustments related to an increase in sales of fuel cells and related
infrastructure of $6 thousand, a decrease in sales related to Power Purchase agreements of $75 thousand, decrease of $106 thousand on selling general and administrative expenses and
a decrease of $152 thousand in cost of sales of fuel cell systems and related infrastructure and a decrease in cost of power purchase agreements of $18 thousand.
Series e redeemable convertible preferred stock deemed dividend: the correction of this misstatement resulted in a net decrease of $39 thousand to preferred stock dividends declared,
deemed dividends and accretion of discount.
F-37
table of Contents
Notes to Consolidated Financial Statements (Continued)
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s unaudited
interim condensed consolidated statements of comprehensive loss indicated (in thousands, except per share):
Three Months
Ended
March 31, 2019
Three Months
Ended
June 30, 2019
Six Months
Ended
June 30, 2019
Three Months
Ended
September 30, 2019
Nine Months
Ended
September 30, 2019
Three Months
Ended
December 30, 2019
As Restated
net loss attributable to the Company
other comprehensive gain (loss) - foreign
currency translation adjustment
Comprehensive loss attributable to the Company
Preferred stock dividends declared, deemed
dividends and accretion of discount
Comprehensive loss attributable to common
stockholders
$
$
(30,547)
(17,338)
(47,885)
(210)
(30,757) $
86
(17,252) $
(124)
(48,009) $
(17,822)
(531)
(18,353) $
(65,707)
(655)
(66,362) $
(13)
(13)
(26)
(544)
(570)
(30,770) $
(17,265) $
(48,035) $
(18,897) $
(66,932) $
(18,036)
296
(17,740)
(1,241)
(18,981)
For the three months ended September 30, 2020
As
Restated
Cumulative
Adjustments
As Previously
Reported
For the nine months ended September 30, 2020
Cumulative
Adjustments
As Previously
Reported
As
Restated
net loss attributable to the Company
other comprehensive gain - foreign currency translation
adjustment
Comprehensive loss attributable to the Company
$
$
Preferred stock dividends declared, deemed dividends and
accretion of discount
Comprehensive loss attributable to common stockholders
(39,379)
687
(38,692)
—
(38,692)
(25,838)
(65,217) $
(85,514)
(26,536)
(112,050)
$
—
(25,838)
$
687
(64,530) $
558
(84,956) $
—
(26,536) $
558
(111,492)
—
—
(19)
(7)
(26)
(25,838)
(64,530)
(84,975)
(26,543)
(111,518)
For the three months ended June 30, 2020
As
Restated
Cumulative
Adjustments
As Previously
Reported
For the six months ended June 30, 2020
As
Restated
Cumulative
Adjustments
As Previously
Reported
net loss attributable to the Company
other comprehensive gain (loss) - foreign currency translation
adjustment
Comprehensive loss attributable to the Company
$
$
Preferred stock dividends declared, deemed dividends and accretion
of discount
Comprehensive loss attributable to common stockholders
$
(8,656)
107
(8,549)
(13)
(8,562)
(745)
—
(745)
—
(745)
(9,401) $
(46,135)
107
(9,294) $
$
(129)
(46,264)
$
(13)
(19)
(9,307)
(46,283)
(698)
—
(698)
(7)
(705)
(46,833)
(129)
(46,962)
$
(26)
(46,988)
As Previously Reported
Cumulative Adjustments
As Restated
For the three months ended March 31, 2020,
net loss attributable to the Company
other comprehensive loss - foreign currency translation adjustment
Comprehensive loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of discount
Comprehensive loss attributable to common stockholders
$
$
$
(37,479)
(236)
(37,715)
(13)
(37,728)
$
$
47
—
47
—
47
$
$
(37,432)
(236)
(37,668)
(13)
(37,681)
F-38
table of Contents
Notes to Consolidated Financial Statements (Continued)
For the three months ended September 30, 2019
As Previously
Reported
Cumulative
Adjustments
As
Restated
For the nine months ended September 30, 2019
Cumulative
As Previously
Adjustments
Reported
As
Restated
net loss attributable to the Company
other comprehensive gain (loss) - foreign currency
translation adjustment
Comprehensive loss attributable to the Company
$
$
Preferred stock dividends declared, deemed dividends and
accretion of discount
Comprehensive loss attributable to common stockholders
(18,144)
(531)
(18,675) $
(13)
(18,688)
322
—
322
(531)
(209)
(17,822) $
(67,190)
(531)
(18,353) $
$
(655)
(67,845) $
1,483
—
1,483
$
(65,707)
(655)
(66,362)
(544)
(18,897)
(39)
(67,884)
(531)
952
(570)
(66,932)
For the three months ended June 30, 2019
As Previously
Reported
Cumulative
Adjustments
As
Restated
For the six months ended June 30, 2019
Cumulative
Adjustments
As Previously
Reported
As
Restated
net loss attributable to the Company
other comprehensive gain (loss) - foreign currency
translation adjustment
Comprehensive loss attributable to the Company
$
$
(18,094)
86
(18,008)
$
Preferred stock dividends declared, deemed
dividends and accretion of discount
Comprehensive loss attributable to common
stockholders
(13)
(18,021)
756
—
756
—
756
(17,338) $
(49,046)
86
(17,252) $
$
(124)
(49,170)
$
(13)
(26)
(17,265)
(49,196)
$
1,161
—
1,161
—
1,161
(47,885)
(124)
(48,009)
(26)
(48,035)
As Previously Reported
Cumulative Adjustments
As Restated
For the three months ended March 31, 2019,
net loss attributable to the Company
other comprehensive gain (loss) - foreign currency translation adjustment
Comprehensive loss attributable to the Company
Preferred stock dividends declared, deemed dividends and accretion of discount
Comprehensive loss attributable to common stockholders
$
$
$
(30,952)
(210)
(31,162)
(52)
(31,214)
$
405
—
405
39
444
$
$
(30,547)
(210)
(30,757)
(13)
(30,770)
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s unaudited
interim condensed consolidated statements of stockholders’ equity (in thousands, except per share):
Common Stock
Additional
Paid-in
Amount Capital
Shares
Accumulated
Other
Comprehensive
Income
Treasury Stock
Shares
Amount
Accumulated
Deficit
Total
Stockholders’
Equity
BalanCe - March 31, 2020 (as
Previously Reported)
Cumulative adjustments
BalanCe - March 31, 2020 (as
Restated)
322,220,469
—
$ 3,222
—
$
1,519,257
(163)
$
1,164
(112)
15,261,007
—
$
(31,224)
—
$
(1,383,299)
(4,453)
322,220,469
3,222
1,519,094
1,052
15,261,007
(31,224)
(1,387,752)
BalanCe - June 30, 2020 (as
Previously Reported)
Cumulative adjustments
BalanCe - June 30, 2020 (as Restated)
348,201,792
—
348,201,792
$ 3,482
—
3,482
BalanCe - September 30, 2020 (as
Previously Reported)
Cumulative adjustments
BalanCe - September 30, 2020 (as
Restated)
406,123,816
—
$ 4,061
—
406,123,816
$ 4,061
$
$
$
1,658,532
(94)
1,658,438
2,083,199
(30)
2,083,169
$
$
$
1,271
(112)
1,159
15,292,591
—
15,292,591
1,958
(112)
15,926,068
—
1,846
15,926,068
$
$
$
(31,359)
—
(31,359)
(40,434)
—
(40,434)
$
$
$
F-39
$
$
$
109,120
(4,728)
104,392
239,965
(5,405)
234,560
617,444
(31,179)
(1,391,961)
(5,199)
(1,397,160)
(1,431,340)
(31,037)
(1,462,377)
$
586,265
table of Contents
Notes to Consolidated Financial Statements (Continued)
Common Stock
Additional
Paid-in
Amount Capital
Shares
Accumulated
Other
Comprehensive
Income
Treasury Stock
Shares
Amount
Accumulated
Deficit
Total
Stockholders’
Equity (Deficit)
BalanCe - March 31, 2019 (as
Previously Reported)
Cumulative adjustments
BalanCe - March 31, 2019 (as
Restated)
BalanCe - June 30, 2019 (as
Previously Reported)
Cumulative adjustments
BalanCe - June 30, 2019 (as
Restated)
244,537,235
—
$ 2,445
—
244,537,235
2,445
246,975,173
—
$ 2,470
—
246,975,173
2,470
BalanCe - September 30, 2019 (as
Previously Reported)
Cumulative adjustments
BalanCe - September 30, 2019 (as
Restated)
253,982,578
—
$ 2,540
—
253,982,578
$ 2,540
$
$
$
$
1,316,893
(78)
$
1,374
—
15,002,663
—
$
(30,637)
—
$
(1,291,255)
(5,817)
1,316,815
1,374
15,002,663
(30,637)
(1,297,072)
1,325,459
(78)
$
1,460
—
15,020,437
—
$
(30,681)
—
$
(1,309,363)
(5,062)
1,325,381
1,460
15,020,437
(30,681)
(1,314,425)
1,340,859
(78)
1,340,781
$
$
929
—
15,259,045
—
929
15,259,045
$
$
(31,216)
—
(31,216)
$
$
(1,327,518)
(4,741)
(1,332,259)
$
$
$
$
(1,180)
(5,895)
(7,075)
(10,655)
(5,140)
(15,795)
(14,406)
(4,819)
(19,225)
F-40
table of Contents
Notes to Consolidated Financial Statements (Continued)
the following tables present the effect of the Restatement items, as well as other adjustments, on the Company’s
unaudited interim condensed consolidated statements of cash flows (in thousands):
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
Gain on extinguishment of debt
amortization of debt issuance costs and discount on convertible senior notes
Provision for common stock warrants
Fair value adjustment to contingent consideration
income tax benefit
loss (benefit) on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related to fuel delivered to
customers
net cash paid for acquisitions
Net cash used in investing activities
Financing Activities
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Proceeds from issuance of convertible senior notes, net
Repurchase of convertible senior notes
Purchase of capped calls and common stock forward
Proceeds from termination of capped calls
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
Proceeds from finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of preferred stock to common stock
three Months ended
March 31, 2020
As Restated
Six Months ended
June 30, 2020
nine Months ended
September 30, 2020
$
(37,432)
$
(46,833)
$
(112,050)
2,991
175
3,045
—
2,716
2,566
—
—
(128)
1,034
(20,581)
(10,794)
(3,374)
(620)
(60,402)
(2,507)
—
(3,848)
—
(6,355)
—
6,104
—
—
—
—
(5,315)
—
(5,343)
9,024
4,470
1
(62,286)
369,500
307,214
5,155
340
441
$
$
$
6,069
398
6,188
(13,222)
6,528
7,983
—
(17,371)
277
(18,333)
(37,983)
(11,887)
3,903
2,392
(111,891)
(5,009)
—
(6,256)
(45,286)
(56,551)
(269)
15,798
205,100
(90,238)
(16,253)
24,158
(21,626)
49,000
(11,129)
27,678
182,219
(24)
13,753
369,500
383,253
9,466
6,836
441
$
$
$
9,860
835
9,258
(13,222)
12,183
25,198
1,130
(24,015)
25,110
(86,056)
(57,615)
(4,956)
41,125
16,709
(156,506)
(11,265)
(1,638)
(13,699)
(45,113)
(71,715)
344,398
23,335
205,098
(90,238)
(16,253)
24,158
(27,845)
99,000
(19,038)
47,568
590,183
(90)
361,872
369,500
731,372
16,975
25,857
43,058
$
$
$
F-41
table of Contents
Notes to Consolidated Financial Statements (Continued)
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
loss on extinguishment of debt
Provision for bad debts and other assets
amortization of debt issuance costs and discount on convertible senior notes
Provision for common stock warrants
loss on disposal of leased assets
Change in fair value of common stock warrant liability
Benefit on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Proceeds from sale of equity interest in joint venture
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related to fuel delivered to
customers
Proceeds from sale of leased assets
Net cash used in investing activities
Financing Activities
Proceeds from issuance of preferred stock, net of transaction costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Payments for redemption of preferred stock
Proceeds from issuance of convertible senior notes, net
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
Proceeds from finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of preferred stock to common stock
three Months ended
March 31, 2019
As Restated
Six Months ended
June 30, 2019
nine Months ended
September 30, 2019
$
(30,547)
$
(47,885)
$
(65,707)
2,748
175
2,497
518
307
2,469
1,193
—
2,126
(142)
5,001
(17,716)
1,018
(2,887)
(2,459)
(35,699)
(1,468)
—
(806)
—
(2,274)
(3)
23,498
81
—
—
(17,671)
84,761
(53,580)
—
37,086
(35)
(922)
110,153
109,231
$
4,858
2,000
—
$
$
5,433
338
5,123
518
907
4,340
2,209
212
420
(873)
9,864
(25,431)
(460)
662
(3,705)
(48,328)
(2,844)
(1,860)
(1,987)
375
(6,316)
(8)
28,265
205
—
—
(18,039)
99,546
(55,712)
25,609
79,866
(48)
25,174
110,153
135,327
8,673
11,689
—
$
$
$
8,858
518
7,927
518
1,253
6,442
3,706
212
(7)
(1,366)
11,625
(32,843)
427
10,164
(5,868)
(54,141)
(4,635)
(1,860)
(2,851)
375
(8,971)
(37)
38,098
(116)
(4,040)
39,052
(21,704)
99,496
(56,603)
57,249
151,395
(119)
88,164
110,153
198,317
8,673
29,903
1,883
$
$
$
F-42
table of Contents
Notes to Consolidated Financial Statements (Continued)
For the Nine Months Ended September 30, 2020
Restatement
Adjustments
As previously
Reported
As
Restated
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
Gain on extinguishment of debt
amortization of debt issuance costs and discount on convertible senior
notes
Provision for common stock warrants
Fair value adjustment to contingent consideration
income tax benefit
loss on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
net cash paid for acquisitions
Net cash used in investing activities
Financing Activities
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Proceeds from issuance of convertible senior notes, net
Repurchase of convertible senior notes
Purchase of capped calls and common stock forward
Proceeds from termination of capped calls
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
Proceeds from finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of convertible notes to common stock
For the nine months ended September 30, 2020
$
(85,514)
$
(26,536)
$
(112,050)
9,381
835
9,258
(13,222)
12,183
25,198
1,130
(24,182)
4,306
(86,004)
(57,718)
(4,956)
35,748
16,647
(156,910)
(11,265)
(1,638)
(13,699)
(45,113)
(71,715)
344,398
23,335
205,098
(90,238)
(16,253)
24,158
(27,845)
99,000
(18,634)
47,568
590,587
(90)
361,872
369,500
731,372
16,975
56,377
42,873
$
$
$
$
$
$
479
—
—
—
—
—
—
167
20,804
(52)
103
—
5,377
62
404
—
—
—
—
—
—
—
—
—
—
—
—
—
(404)
—
(404)
—
—
—
— $
—
(30,520)
185
$
9,860
835
9,258
(13,222)
12,183
25,198
1,130
(24,015)
25,110
(86,056)
(57,615)
(4,956)
41,125
16,709
(156,506)
(11,265)
(1,638)
(13,699)
(45,113)
(71,715)
344,398
23,335
205,098
(90,238)
(16,253)
24,158
(27,845)
99,000
(19,038)
47,568
590,183
(90)
361,872
369,500
731,372
16,975
25,857
43,058
Restatement
References
a
b, e
e
c
e
e
b, d, e
e
b
b
e
(a)
(b)
(c)
(d)
(e)
Refer to description of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the nine months ended September 30, 2020 above.
Right of use asset: the correction of this misstatement resulted in an increase to operating cash flows of $591 thousand and a decrease to financing cash flows of $404 thousand for the nine months
ended September 30,2020. in addition, the adjustments resulted in a decrease of $30.5 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in an increase within operating cash flows of $20.8 million for the nine months ended September 30,
2020.
Bonus accrual: adjustments related to the under accrual for bonus expenses resulted in an increase within operating cash flows of $5.3 million for the nine months ended September 30, 2020.
other adjustments: immaterial adjustments resulted in an increase to operating cash flows of $226 thousand for the nine months ended September 30, 2020. in addition, there was an increase of
$185 thousand in conversion of convertible notes to common stock.
F-43
table of Contents
Notes to Consolidated Financial Statements (Continued)
As previously
Reported
For the Six Months Ended June 30, 2020
Restatement
Adjustments
As
Restated
Restatement
References
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
Gain on extinguishment of debt
amortization of debt issuance costs and discount on convertible senior notes
Provision for common stock warrants
income tax benefit
loss on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
net cash paid for acquisitions
Net cash used in investing activities
Financing Activities
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Proceeds from issuance of convertible senior notes, net
Repurchase of convertible senior notes
Purchase of capped calls and common stock forward
Proceeds from termination of capped calls
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
Proceeds from finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of preferred stock to common stock
As of June 30, 2020
$
(46,135)
$
(698)
$
5,783
398
6,188
(13,222)
6,528
7,983
(17,659)
—
(18,393)
(37,983)
(11,817)
4,699
2,383
(111,247)
(5,009)
(6,256)
(45,286)
(56,551)
(269)
15,798
205,100
(90,238)
(16,253)
24,158
(21,626)
49,000
(11,783)
27,678
181,565
(14)
13,753
369,500
383,253
9,466
26,922
441
$
$
$
$
$
$
286
—
—
—
—
—
288
277
60
—
(70)
(796)
9
(644)
—
—
—
—
—
—
—
—
—
—
—
—
654
—
654
(10)
—
—
— $
—
(20,086)
—
$
(46,833)
6,069
398
6,188
(13,222)
6,528
7,983
(17,371)
277
(18,333)
(37,983)
(11,887)
3,903
2,392
(111,891)
(5,009)
(6,256)
(45,286)
(56,551)
(269)
15,798
205,100
(90,238)
(16,253)
24,158
(21,626)
49,000
(11,129)
27,678
182,219
(24)
13,753
369,500
383,253
9,466
6,836
441
a
b, d
d
c
d
d
b, d
d
b,d
b
(a)
(b)
(c)
(d)
Refer to description of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the six months ended June 30, 2020 above.
Right of use asset: the correction of this misstatement resulted in a decrease to operating cash flows of $553 thousand and a decrease financing cash flows of $222 thousand for the six months
ended June 30, 2020. in addition, the adjustments resulted in a decrease of $20.1 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in an increase to operating cash flows of $277 thousand for the six months ended June 30, 2020.
other adjustments: immaterial adjustments resulted in an increase to operating cash flows of $330 thousand for the six months ended June 30, 2020.
F-44
table of Contents
Notes to Consolidated Financial Statements (Continued)
As previously
Reported
For the Three Months Ended March 31, 2020
Restatement
Adjustments
As
Restated
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
amortization of debt issuance costs and discount on convertible senior
notes
Provision for common stock warrants
Benefit on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
Net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
Net cash used in investing activities
Financing Activities
Proceeds from exercise of stock options
Principal payments on long-term debt
Repayments of finance obligations
Proceeds from finance obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of preferred stock to common stock
As of March 31, 2020
$
(37,479)
$
47
$
(37,432)
2,850
175
3,045
2,716
2,566
—
1,011
(20,581)
(10,794)
(2,933)
(591)
(60,015)
(2,507)
(3,848)
(6,355)
6,104
(5,315)
(5,730)
9,024
4,083
1
(62,286)
369,500
307,214
5,155
6,189
441
$
$
$
$
$
$
141
—
—
—
—
(128)
23
—
—
(441)
(29)
(387)
—
—
—
—
—
387
—
387
—
—
—
— $
—
(5,849)
—
$
2,991
175
3,045
2,716
2,566
(128)
1,034
(20,581)
(10,794)
(3,374)
(620)
(60,402)
(2,507)
(3,848)
(6,355)
6,104
(5,315)
(5,343)
9,024
4,470
1
(62,286)
369,500
307,214
5,155
340
441
Restatement
References
a
b, d
c
d
b
d
b
b
(a)
(b)
(c)
(d)
Refer to description of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the three months ended March 31, 2020 above.
Right of use asset: the correction of this misstatement resulted in a decrease to operating cash flows of $282 thousand and an increase to financing cash flows of $387 thousand for the three
months ended March 31, 2020. in addition, the adjustments resulted in a decrease of $5.8 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in a decrease to operating cash flows of $128 thousand for the three months ended March 31, 2020.
other adjustments: immaterial adjustments resulted in a deccrease to operating cash flows of $24 thousand for the period ended March 31, 2020.
F-45
table of Contents
Notes to Consolidated Financial Statements (Continued)
For the Nine Months Ended September 30, 2019
Restatement
Adjustments
As previously
Reported
As
Restated
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
loss on extinguishment of debt
Provision for bad debts and other assets
amortization of debt issuance costs and discount on convertible senior
notes
Provision for common stock warrants
Change in fair value of common stock warrant liability
loss on disposal of leased assets
Benefit on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
Proceeds from sale of leased assets
net cash used in investing activities
Financing Activities
Proceeds from issuance of preferred stock, net of transaction costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Payments for redemption of preferred stock
Proceeds from issuance of convertible senior notes, net
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
Proceeds from finance obligations
net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
Conversion of preferred stock to common stock
For the nine months ended September 30, 2019
$
(67,190)
$
1,483
$
(65,707)
8,944
518
7,927
—
1,253
6,257
3,706
(7)
212
—
11,702
(32,691)
427
13,293
(6,152)
(51,801)
(4,635)
(1,860)
(2,851)
375
(8,971)
(37)
38,098
(116)
(4,040)
39,052
(21,186)
99,496
(59,461)
57,249
149,055
(119)
88,164
110,153
198,317
8,673
78,626
1,883
$
$
$
(86)
—
—
518
—
185
—
—
—
(1,366)
(77)
(152)
—
(3,129)
284
(2,340)
—
—
—
—
—
—
—
—
—
—
(518)
—
2,858
—
2,340
—
—
—
— $
—
(48,723)
—
$
8,858
518
7,927
518
1,253
6,442
3,706
(7)
212
(1,366)
11,625
(32,843)
427
10,164
(5,868)
(54,141)
(4,635)
(1,860)
(2,851)
375
(8,971)
(37)
38,098
(116)
(4,040)
39,052
(21,704)
99,496
(56,603)
57,249
151,395
(119)
88,164
110,153
198,317
8,673
29,903
1,883
$
$
$
Restatement
References
a
b, d
d
d
c
d
d
b, d
d
d
b
b
(a)
(b)
(c)
(d)
Refer to description of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the nine months ended September 30, 2019 above.
Right of use asset: the correction of this misstatement resulted in a decrease to operating cash flows of $3.1 million and an increase to financing cash flows of $2.9 million for the nine months
ended September 30, 2019. in addition, the adjustments resulted in a decrease of $48.7 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in a decrease to operating cash flows of $1.4 million for the nine months ended September 30, 2019.
other adjustments: immaterial adjustments resulted in an increase to operating cash flows of $600 thousand and a decrease to financing cash flows of $518 thousand for the period ended nine
months ended September 30, 2019.
F-46
table of Contents
Notes to Consolidated Financial Statements (Continued)
As previously
Reported
For the Six Months Ended June 30, 2019
Restatement
Adjustments
As
Restated
Restatement
References
$
(49,046)
$
1,161
$
(47,885)
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
loss on extinguishment of debt
amortization of debt issuance costs and discount on convertible senior
notes
Provision for common stock warrants
Provision for bad debts and other
loss on disposal of assets
Change in fair value of common stock warrant liability
Benefit on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchase of intangible assets
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
Proceeds from sale of leased assets
net cash used in investing activities
Financing Activities
Proceeds from issuance of preferred stock, net of transaction costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
Proceeds from finance obligations
net cash provided by financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
For the six months ended June 30, 2019
5,496
338
5,123
—
4,340
2,209
907
212
420
—
9,848
(25,280)
(460)
1,232
(3,827)
(48,488)
(2,844)
(1,860)
(1,987)
375
(6,316)
(8)
28,265
205
(17,521)
99,546
(56,070)
25,609
80,026
(48)
25,174
110,153
135,327
8,673
34,530
$
$
$
$
$
$
a
b, d
d
c
d
d
b, d
d
d
b
(63)
—
—
518
—
—
—
—
—
(873)
16
(151)
—
(570)
122
160
—
—
—
—
—
—
—
—
(518)
—
358
—
(160)
—
—
—
— $
5,433
338
5,123
518
4,340
2,209
907
212
420
(873)
9,864
(25,431)
(460)
662
(3,705)
(48,328)
(2,844)
(1,860)
(1,987)
375
(6,316)
(8)
28,265
205
(18,039)
99,546
(55,712)
25,609
79,866
(48)
25,174
110,153
135,327
—
8,673
(22,841)
$
11,689
b
(a)
(b)
(c)
(d)
Refer to description of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the six months ended June 30, 2019 above.
Right of use asset: the correction of this misstatement resulted in a decrease to operating cash flows of $492 thousand and an increase to financing cash flows of $358 thousand for the six ended
June 30, 2019. in addition, the adjustments resulted in a decrease of $22.8 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in a decrease to operating cash flows of $873 thousand for the six months ended June 30, 2019.
other adjustments: immaterial adjustments resulted in an increase to operating cash flows of $364 thousand and a decrease in financing cash flows of $518 thousand for the six months ended June
30, 2019.
F-47
table of Contents
Notes to Consolidated Financial Statements (Continued)
Operating Activities
net loss attributable to the Company
adjustments to reconcile net loss to net cash used in operating activities:
depreciation of long-lived assets
amortization of intangible assets
Stock-based compensation
loss on extinguishment of debt
Provision for bad debts and other assets
amortization of debt issuance costs and discount on convertible senior
notes
Provision for common stock warrants
Change in fair value of common stock warrant liability
Benefit on service contracts
Changes in operating assets and liabilities that provide (use) cash:
accounts receivable
inventory
Prepaid expenses, and other assets
accounts payable, accrued expenses, and other liabilities
deferred revenue
net cash used in operating activities
Investing Activities
Purchases of property, plant and equipment
Purchases of equipment related to PPa and equipment related to fuel
delivered to customers
net cash used in investing activities
Financing Activities
Proceeds from issuance of preferred stock, net of transaction costs
Proceeds from public offerings, net of transaction costs
Proceeds from exercise of stock options
Principal payments on long-term debt
Proceeds from long-term debt, net
Repayments of finance obligations
net cash provided by financing activities
Effect of exchange rate changes on cash
Decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Summary of non-cash investing and financing activity
Recognition of right of use assets
For the three months ended March 31, 2019
$
$
$
As previously
Reported
For the Three Months Ended March 31, 2019
Restatement
Adjustments
As
Restated
$
(30,952)
$
405
$
(30,547)
2,776
175
2,497
—
307
2,469
1,193
2,126
—
4,978
(17,564)
1,018
(2,781)
(2,505)
(36,263)
(1,468)
(806)
(2,274)
(3)
23,498
81
(17,153)
84,761
(53,534)
37,650
(35)
(922)
110,153
109,231
4,858
$
$
(28)
—
—
518
—
—
—
—
(142)
23
(152)
—
(106)
46
564
—
—
—
—
—
—
(518)
—
(46)
(564)
—
—
—
— $
2,748
175
2,497
518
307
2,469
1,193
2,126
(142)
5,001
(17,716)
1,018
(2,887)
(2,459)
(35,699)
(1,468)
(806)
(2,274)
(3)
23,498
81
(17,671)
84,761
(53,580)
37,086
(35)
(922)
110,153
109,231
—
4,858
Restatement
References
a
b, d
d
c
d
d
d
d
d
b
— $
2,000
$
2,000
b
(a)
(b)
(c)
(d)
Refer to description of the adjustments and their impact on net loss in the Consolidated Statement of operations sections for the three months ended March 31, 2019 above.
Right of use asset: the correction of this misstatement resulted in a decrease to operating cashflows of $12 thousand and a decrease to financing cashflow of $46 thousand for the three months
ended March 31,2019. in addition, the adjustments resulted in an increase of $2.0 million to the non-cash investing and financing activity related to the recognition of the right of use asset.
Provision for loss contracts related to service: the correction of this misstatement resulted in a decrease to operating cashflows of $142 thousand for the three months ended March 31, 2020.
other adjustments: immaterial adjustments resulted in an increase to operating activities of $312 thousand and a decrease in financing cashflows of $518 thousand for the three months ended
March 30, 2019.
4. Summary of Significant Accounting Policies
Principles of Consolidation
the consolidated financial statements include the financial statements of the Company and its wholly-owned
subsidiaries. all significant intercompany balances and transactions have been eliminated in consolidation.
Leases
the Company is a lessee in noncancelable (1) operating leases, primarily related to sale/leaseback transactions with
financial institutions for deployment of the Company’s products at certain customer sites, and (2) finance leases. the Company
accounts for leases in accordance with accounting Standards Codification (aSC) topic 842, Leases (aSC topic 842), as
amended.
F-48
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Notes to Consolidated Financial Statements (Continued)
the Company determines if an arrangement is or contains a lease at contract inception. the Company recognizes a right
of use asset and a lease liability at the lease commencement date. For operating leases, the lease liability is initially measured at
the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially
measured in the same manner and date as for operating leases and is subsequently measured at amortized cost using the effective
interest method.
Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid
lease payments to present value, (2) the lease term and (3) the lease payments.
● aSC topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if
that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the
interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of
the lessor’s deferred initial direct costs. therefore, the Company generally uses its incremental borrowing rate as the
discount rate for the lease. the Company’s incremental borrowing rate for a lease is the rate of interest it would have to
pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. adjustments that
considered the Company’s actual borrowing rate, inclusive of securitization, as well as borrowing rates for companies of
similar credit quality, were applied in the determination of the incremental borrowing rate.
●
●
the lease term for all of the Company’s leases includes the noncancelable period of the lease, plus any additional
periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably
certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.
lease payments included in the measurement of the lease liability comprise fixed payments, and for certain finance
leases, the exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain at
lease commencement to exercise the option.
the right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for
lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives
received. For operating leases, the right of use asset is subsequently measured throughout the lease term at the carrying amount
of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of
lease incentives received. lease expense for lease payments is recognized on a straight-line basis over the lease term.
For finance leases, the right of use asset is subsequently amortized using the straight-line method from the lease
commencement date to the earlier of the end of the useful life of the underlying asset or the end of the lease term unless the lease
transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to
purchase the underlying asset. in those cases, the right of use asset is amortized over the useful life of the underlying asset.
amortization of the right of use asset is recognized and presented separately from interest expense on the lease liability. the
Company’s leases do not contain variable lease payments.
Right of use assets for operating and finance leases are periodically reviewed for impairment losses. the Company uses
the long-lived assets impairment guidance in aSC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine
whether an right of use asset is impaired, and if so, the amount of the impairment loss to recognize.
the Company monitors for events or changes in circumstances that require a reassessment of its leases. when a
reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the
corresponding right of use asset.
operating and finance lease right of use assets are presented separately on the Company’s consolidated balance sheets.
the current portions of operating and finance lease liabilities are also presented separately within current liabilities and the long-
term portions are presented separately within noncurrent liabilities on the consolidated balance sheets.
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Notes to Consolidated Financial Statements (Continued)
the Company has elected not to recognize right of use assets and lease liabilities for short-term leases that have a lease
term of 12 months or less. the Company recognizes the lease payments associated with its short-term leases as an expense on a
straight-line basis over the lease term.
Revenue Recognition
the Company enters into contracts that may contain one or a combination of fuel cell systems and infrastructure,
installation, maintenance, spare parts, fuel delivery and other support services. Contracts containing fuel cell systems and related
infrastructure may be sold directly to customers or provided to customers under a PPa, discussed further below.
the Company does not include a right of return on its products other than rights related to standard warranty provisions
that permit repair or replacement of defective goods. the Company accrues for anticipated standard warranty costs at the same
time that revenue is recognized for the related product, or when circumstances indicate that warranty costs will be incurred, as
applicable. any prepaid amounts would only be refunded to the extent services have not been provided or the fuel cell systems
or infrastructure have not been delivered.
Revenue is measured based on the transaction price specified in a contract with a customer, subject to the allocation of
the transaction price to distinct performance obligations as discussed below. the Company recognizes revenue when it satisfies a
performance obligation by transferring a product or service to a customer.
Promises to the customer are separated into performance obligations, and are accounted for separately if they are (1)
capable of being distinct and (2) distinct in the context of the contract. the Company considers a performance obligation to be
distinct if the customer can benefit from the good or service either on its own or together with other resources readily available to
the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other
promises in the contract. the Company allocates revenue to each distinct performance obligation based on relative standalone
selling prices.
Payment terms for sales of fuel cells, infrastructure and service to customers are typically 30 to 90 days. Sale/leaseback
transactions with financial institutions are invoiced and collected upon transaction closing. Service is prepaid upfront in a
majority of the arrangements. the Company does not adjust the transaction price for a significant financing component when the
performance obligation is expected to be fulfilled within a year.
in 2017, in separate transactions, the Company issued to each of amazon.com nV investment holdings llC and
walmart warrants to purchase shares of the Company’s common stock. the Company presents the provision for common stock
warrants within each revenue-related line item on the consolidated statements of operations. this presentation reflects a discount
that those common stock warrants represent, and therefore revenue is net of these non-cash charges. the provision of common
stock warrants is allocated to the relevant revenue-related line items based upon the expected mix of the revenue for each
respective contract. See note 18, “warrant transaction agreements,’ for more details.
Nature of goods and services
the following is a description of principal activities from which the Company generates its revenue.
(j) Sales of Fuel Cell Systems and Related infrastructure
Revenue from sales of fuel cell systems and related infrastructure represents sales of our Gendrive units, GenSure
stationary backup power units, as well as hydrogen fueling infrastructure.
the Company uses a variety of information sources in determining standalone selling prices for fuel cells systems and
related infrastructure. For Gendrive fuel cells, given the nascent nature of the Company’s market, the Company considers several
inputs, including prices from a limited number of standalone sales as well as the Company’s negotiations with customers. the
Company also considers its costs to produce fuel cells as well as comparable list prices in estimating standalone selling prices.
the Company uses applicable observable evidence from similar products in the market to determine standalone selling prices for
GenSure stationary backup power units and hydrogen fueling infrastructure. the determination of standalone selling prices of the
Company’s performance obligations requires significant judgment, including periodic assessment of pricing approaches and
available observable evidence in the market. once relative
F-50
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Notes to Consolidated Financial Statements (Continued)
standalone selling prices are determined, the Company proportionately allocates the transaction price to each performance
obligation within the customer arrangement based upon standalone selling price. the allocated transaction price related to fuel
cell systems and spare parts is recognized as revenue at a point in time which usually occurs at shipment (and occasionally upon
delivery). Revenue on hydrogen infrastructure installations is generally recognized at the point at which transfer of control passes
to the customer, which usually occurs upon customer acceptance of the hydrogen infrastructure. in certain instances, control of
hydrogen infrastructure installations transfers to the customer over time, and the related revenue is recognized over time as the
performance obligation is satisfied. the Company uses an input method to determine the amount of revenue to recognize during
each reporting period when such revenue is recognized over time, based on the costs incurred to satisfy the performance
obligation.
(ii)
Services performed on fuel cell systems and related infrastructure
Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our
service and maintenance contracts and sales of spare parts. the Company uses an adjusted market assessment approach to
determine standalone selling prices for services. this approach considers market conditions and constraints, the Company’s
market share, pricing strategies and objectives while maximizing the use of available observable inputs obtained from a limited
number of historical standalone service renewal prices and negotiations with customers. the transaction price allocated to
services as discussed above is generally recognized as revenue over time on a straight-line basis over the expected service period,
as customers simultaneously receive and consume the benefits of routine, recurring maintenance performed throughout the
contract period.
in substantially all of its commercial transactions, the Company sells extended maintenance contracts that generally
provide for a five-to-ten-year service period from the date of product installation in exchange for an up-front payment. Services
include monitoring, technical support, maintenance and services that provide for 97% to 98% uptime of the fleet. these services
are accounted for as a separate performance obligation, and accordingly, revenue generated from these transactions, subject to the
proportional allocation of transaction price, is deferred and recognized as revenue over the term of the contract, generally on a
straight-line basis. additionally, the Company may enter into annual service and extended maintenance contracts that are billed
monthly. Revenue generated from these transactions is recognized as revenue on a straight-line basis over the term of the
contract. Costs are recognized as incurred over the term of the contract. when costs are projected to exceed revenues over the life
of the extended maintenance contract, an accrual for loss contracts is recorded. as of december 31, 2020 and 2019, the
Company recorded a loss accrual of $24.0 million and $3.7 million respectively (2019 restated). Costs are estimated based upon
historical experience and consider the estimated impact of the Company’s cost reduction initiatives. the actual results may differ
from these estimates. See “extended Maintenance Contracts” below.
extended maintenance contracts generally do not contain customer renewal options. upon expiration, customers may
either negotiate a contract extension or switch to purchasing spare parts and maintaining the fuel cell systems on their own.
(iii)
Power Purchase agreements
Revenue from PPas primarily represents payments received from customers who make monthly payments to access for
the Company’s GenKey solution.
Revenue associated with these agreements is recognized on a straight-line basis over the life of the agreements as the
customers receive the benefits from the Company’s performance of the services. the customers receive services ratably over the
contract term.
in conjunction with entering into a PPa with a customer, the Company may enter into transactions with third-party
financial institutions in which it receives proceeds from the sale/leaseback transactions of the equipment and the sale of future
service revenue. the proceeds from the financial institution are allocated between the sale of equipment and the sale of future
service revenue based on the relative standalone selling prices of equipment and service. the proceeds allocated to the sale of
future services are recognized as finance obligations. the proceeds allocated to the sale of the equipment are evaluated to
determine if the transaction meets the criteria for sale/leaseback accounting. to meet the sale/leaseback criteria, control of the
equipment must transfer to the financial institution, which requires among other criteria the leaseback to meet the criteria for an
operating lease and the Company must not have a right to repurchase the
F-51
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Notes to Consolidated Financial Statements (Continued)
equipment (unless specific criteria are met). these transactions typically meet the criteria for sale/leaseback accounting and
accordingly, the Company recognizes revenue on the sale of the equipment, and separately recognizes the leaseback obligations.
the Company recognizes a lease liability for the equipment leaseback obligation based on the present value of the future
payments to the financial institutions that are attributed to the equipment leaseback. the discount rate used to determine the lease
liability is the Company’s incremental borrowing rate, which is based on an analysis of the interest rates on the Company’s
secured borrowings. adjustments that considered the Company’s actual borrowing rate, inclusive of securitization, as well as
borrowing rates for companies of similar credit quality, were applied in the determination of the incremental borrowing rate. the
Company also records a right of use asset which is amortized over the term of the leaseback. Rental expense is recognized on a
straight-line basis over the life of the leaseback and is included as a cost of PPa revenue on the consolidated statements of
operations.
Certain of the Company’s transactions with financial institutions do not meet the criteria for sale/leaseback accounting
and accordingly, no equipment sale is recognized. all proceeds from these transactions are accounted for as finance obligations.
the right of use assets related to these transactions are classified as equipment related to the PPas and fuel delivered to the
customers, net in the consolidated balance sheets. Costs to service the property, depreciation of the assets related to PPas and
fuel delivered to the customers, and other related costs are included in cost of PPa revenue in the consolidated statements of
operations. the Company uses its transaction-date incremental borrowing rate as the interest rate for its finance obligations that
arise from these transactions. no additional adjustments to the incremental borrowing rate have been deemed necessary for the
finance obligations that have resulted from the failed sale/leaseback transactions.
in determining whether the sales of fuel cells and other equipment to financial institutions meet the requirements for
revenue recognition under sale/leaseback accounting, the Company, as lessee, determines the classification of the lease. the
Company estimates certain key inputs to the associated calculations such as: 1) discount rate used to determine the present value
of future lease payments, 2) fair value of the fuel cells and equipment, and 3) useful life of the underlying asset(s):
● aSC topic 842 requires a lessee to discount its future lease payments using the interest rate implicit in the lease or,
if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine
the interest rate implicit in its leases because it does not have access to the lessor’s estimated residual value or the
amount of the lessor’s deferred initial direct costs. therefore, the Company generally uses its incremental
borrowing rate to estimate the discount rate for each lease. adjustments that considered the Company’s actual
borrowing rate, inclusive of securitization, as well as borrowing rates for companies of similar credit quality were
applied in the determination of the incremental borrowing rate.
●
●
in order for the lease to be classified as an operating lease, the present value of the future lease payments cannot
exceed 90% of the fair value of the leased assets. the Company estimates the fair value of the lease assets using the
sales prices.
in order for a lease to be classified as an operating lease, the lease term cannot exceed 75% (major part) of the
estimated useful life of the leased asset. the average estimated useful life of the fuel cells is 10 years, and the
average estimated useful life of the hydrogen infrastructure is 20 years. these estimated useful lives are compared
to the term of each lease to determine the appropriate lease classification.
(iv)
Fuel delivered to Customers
Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been
purchased by the Company from a third party or generated on site. the stand-alone selling price is not estimated because it is sold
separately and therefore directly observable.
the Company purchases hydrogen fuel from suppliers in most cases (and sometimes produces hydrogen onsite) and
sells to its customers. Revenue and cost of revenue related to this fuel is recorded as dispensed and is included in the respective
“Fuel delivered to customers” lines on the consolidated statements of operations.
F-52
table of Contents
Contract costs
Notes to Consolidated Financial Statements (Continued)
the Company expects that incremental commission fees paid to employees as a result of obtaining sales contracts are
recoverable and therefore the Company capitalizes them as contract costs.
Capitalized commission fees are amortized on a straight-line basis over the period of time which the transfer of goods or
services to which the assets relate occur, typically ranging from 5 to 10 years. amortization of the capitalized commission fees is
included in selling, general and administrative expenses.
the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization
period of the assets that the Company otherwise would have recognized is one year or less. these costs are included in selling,
general and administrative expenses.
Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company considers all highly-liquid debt instruments
with original maturities of three months or less to be cash equivalents. at december 31, 2020 and 2019, cash equivalents consist
of money market accounts. the Company’s cash and cash equivalents are deposited with financial institutions located in the u.S.
and may at times exceed insured limits.
Common Stock Warrant Accounting
the Company accounts for common stock warrants as either derivative liabilities or as equity instruments depending on
the specific terms of the respective warrant agreements.
Accounts Receivable
accounts receivable are stated at the amount billed or billable to customers and are ordinarily due between 30 and 60
days after the issuance of the invoice. Receivables are reserved or written off based on individual credit evaluation and specific
circumstances of the customer. the allowance for doubtful accounts and related receivable are reduced when the amount is
deemed uncollectible. as of december 31, 2020, and 2019, the allowance for doubtful accounts was $172 thousand and $249
thousand, respectively.
Inventory
inventories are valued at the lower of cost, determined on a first-in, first-out basis, and net realizable value. all
inventory, including spare parts inventory held at service locations, is not relieved until the customer has received the product, at
which time the customer obtains control of the goods.
Property, Plant and Equipment
Property, plant and equipment are originally recorded at cost or, if acquired as part of business combination, at fair
value. Maintenance and repairs are expensed as costs are incurred. depreciation on plant and equipment, which includes
depreciation on the Company’s primary manufacturing facility, which is accounted for as a financing obligation, is calculated on
the straight-line method over the estimated useful lives of the assets. the Company records depreciation and amortization over
the following estimated useful lives:
leasehold improvements
Software, machinery and equipment
5 ‑ 10 years
1 ‑ 15 years
Gains and losses resulting from the sale of property and equipment are recorded in current operations.
F-53
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Notes to Consolidated Financial Statements (Continued)
Equipment related to PPAs and Fuel Delivered to Customers
equipment related to PPas and fuel delivered to customers primarily consists of the assets deployed related to PPas and
sites where we deliver fuel to customers. equipment is depreciated over its useful life. depreciation expense is recorded on a
straight-line basis and is included in cost of revenue for PPas or cost of fuel delivered to customers, respectively, in the
consolidated statements of operations.
Impairment of Long-Lived Assets and PPA Executory Contract Considerations
we evaluate long-lived assets on a quarterly basis to identify events or changes in circumstances (“triggering events”)
that indicate the carrying value of certain assets may not be recoverable. long-lived assets that we evaluate include right of use
lease assets, equipment deployed to our PPa’s, assets related primarily to our fuel delivery business and other company owned
long-lived assets.
upon the occurrence of a triggering event, long-lived assets are evaluated to determine if the carrying amounts are
recoverable. the determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets
grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups. For
operating assets, the Company has generally determined that the lowest level of identifiable cash flows is based on the customer
sites. the assets related primarily to our fuel delivery business are considered to be their own asset group. the cash flows are
estimated based on the remaining useful life of the primary asset within the asset group.
For assets related to our PPa agreements, we consider all underlying cash inflows related to our contract revenues and
cash outflows relating to the costs incurred to service the PPa’s. our cash flow estimates used in the recoverability test, are
based upon, among other things, historical results adjusted to reflect our best estimate of future cash flows and operating
performance. development of future cash flows also requires us to make assumptions and to apply judgment, including timing of
future expected cash flows, future cost savings initiatives, and determining recovery values. Changes to our key assumptions
related to future performance and other economic and market factors could adversely affect the outcome of our recoverability
tests and cause more asset groups to be tested for impairment.
if the estimated undiscounted future net cash flows for a given asset group are less than the carrying amount of the
related asset group, an impairment loss is determined by comparing the estimated fair value with the carrying amount of the asset
group. the impairment loss is then allocated to the long-lived assets in the asset group based on the asset’s relative carrying
amounts. however, assets are not impaired below their then estimated fair values. Fair value is generally determined through
various valuation techniques, including discounted cash flow models, quoted market values and third-party independent
appraisals, as well as year-over-year trends in pricing of our new equipment and overall evaluation of our industry and market, as
considered necessary. the Company considers these indicators with certain of its own internal indices and metrics in
determining fair value in light of the nascent state of the Company’s market and industry. the estimate of fair value represents
our best estimates of these factors and is subject to variability. Changes to our key assumptions related to future performance and
other economic and market factors could adversely affect our impairment evaluation.
the Company has determined that the assets deployed for certain PPa arrangements are not recoverable based on the
undiscounted estimated future cash flows of the asset group. however, the estimated fair value of the assets in the asset group
equal or exceed the carrying amount of the assets or otherwise limit the amount of impairment that would have been recognized.
the Company has identified the primary source of the losses as the maintenance components of the PPa arrangements and the
impact of customer warrant non-cash provisions. as the PPa arrangements are considered to be executory contracts and there is
no specific accounting guidance that permits loss recognition for these revenue contracts, the Company has not recognized a
provision for the expected future losses under these revenue arrangements. the Company expects that it will recognize future
losses for these arrangements as it continues its efforts to reduce costs of delivering the maintenance component of these
arrangements.
Extended Maintenance Contracts
on a quarterly basis, we evaluate any potential losses related to our extended maintenance contracts for fuel cell systems
and related infrastructure that has been sold. we measure loss accruals at the customer contract level. the expected
F-54
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Notes to Consolidated Financial Statements (Continued)
revenues and expenses for these contracts include all applicable expected costs of providing services over the remaining term of
the contracts and the related unearned net revenue. a loss is recognized if the sum of expected costs of providing services under
the contract exceeds related unearned net revenue and is recorded as a provision for loss contracts related to service in the
consolidated statement of operations. a key component of these estimates is the expected future service costs. in estimating the
expected future service costs, the Company considers its current service cost level and applies significant judgment related to
expected cost saving initiatives. the expected future cost savings will be primarily dependent upon the success of the
Company’s initiatives related to increasing stack life, achieving better economies of scale on service labor, and improvements in
design and operations of infrastructure. if the expected cost saving initiatives are not realized, this will increase the costs of
providing services and could adversely affect our estimated contract loss accrual.
the following table shows the roll forward of balances in the accrual for loss contracts, including changes due to the
provision (benefit) for loss accrual, releases to service cost of sales and releases due to the provision for warrants (in thousands):
Beginning Balance
Provision (benefit) for loss accrual
Released to Service Cost of Sales
Released to Provision for warrants
ending Balance
December 31, 2020
December 31, 2019
(as restated)
December 31, 2018
(as restated)
$
$
3,702
35,473
(2,348)
(12,814)
24,013
$
$
5,345
(394)
(1,249)
—
3,702
$
$
—
5,345
—
—
5,345
Goodwill and indefinite-lived intangible asset
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business
combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually.
the indefinite-lived intangible asset represents in-process research and development for cumulative research and development
efforts associated with dry stack electrolyzer technology acquired in connection with the Giner elX, inc. acquisition.
the Company has the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the
fair value of a reporting unit is less than its carrying amount. if this is the case, the quantitative goodwill impairment test is
required. if it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the quantitative
goodwill impairment test is not required.
the indefinite-lived intangible asset is tested for impairment annually, and more frequently when there is a triggering
event. annually, or when there is a triggering event, the Company first performs a qualitative assessment by evaluating all
relevant events and circumstances to determine if it is more likely than not that the indefinite-lived intangible asset is impaired;
this includes considering any potential effect on significant inputs to determining the fair value of the indefinite-lived intangible
asset. when it is more likely than not that the indefinite-lived intangible asset is impaired, then the Company calculates the fair
value of the intangible asset and performs a quantitative impairment test.
the Company performs an impairment review of goodwill and the indefinite lived intangible asset on an annual basis at
december 1, and when a triggering event is determined to have occurred between annual impairment tests. For the years ended
december 31, 2020, 2019, and 2018, the Company performed a qualitative assessment of goodwill for its single reporting unit
based on multiple factors including market capitalization and determined that it is not more likely than not that the fair value of
its reporting unit is less than the carrying amount. For the year ended december 31, 2020, the Company performed a qualitative
assessment of its indefinite lived intangible asset and determined that it is not more likely than not that its fair value is less than
the carrying amount.
Intangible Assets
intangible assets consist of acquired technology, customer relationships and trademarks, and are amortized using a
straight-line method over their useful lives of 5–10 years. additionally, the intangible assets are reviewed for impairment when
certain triggering events occur.
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Notes to Consolidated Financial Statements (Continued)
Fair Value Measurements
the Company records the fair value of assets and liabilities in accordance with aSC 820, Fair Value Measurement
(“aSC 820”). aSC 820 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date and in the principal or most advantageous market for that asset
or liability. the fair value should be calculated based on assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity.
in addition to defining fair value, aSC 820 expands the disclosure requirements around fair value and establishes a fair value
hierarchy for valuation inputs. the hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in
measuring fair value are observable in the market. each fair value measurement is reported in one of the three levels, which is
determined by the lowest level input that is significant to the fair value measurement in its entirety.
these levels are:
●
●
●
level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities.
level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the
financial instrument.
level 3 — unobservable inputs reflecting management’s own assumptions about the inputs used in
pricing the asset or liability at fair value.
the following table summarizes the carrying amount and estimated fair value of the Company’s financial instruments at
december 31, 2020 and 2019 (in thousands):
As of December 31, 2020
Contingent consideration
Convertible senior notes
long-term debt
Finance obligations
As of December 31, 2019
Convertible senior notes
long-term debt
Finance obligations
$
$
Carrying
Amount
Fair
Value
9,760 $
85,640
175,402
181,553
9,760 $
1,272,766
175,402
181,553
Carrying
Amount
Fair
Value
110,431 $
112,169
144,089
188,775 $
112,169
144,089
Fair Value Measurements
$
$
Level 2
—
1,272,766
—
—
Level 3
9,760
—
175,402
181,553
Fair Value Measurements
$
Level 2
135,320 $
—
—
Level 3
53,455
112,169
144,089
Level 1
—
—
—
—
Level 1
—
—
—
Equity Instruments
Common stock warrants that meet certain applicable requirements of aSC Subtopic 815-40, Derivatives and Hedging –
Contracts in Entity’s Own Equity, and other related guidance, including the ability of the Company to settle the warrants without
the issuance of registered shares or the absence of rights of the grantee to require cash settlement, are accounted for as equity
instruments. the Company classifies these equity instruments within additional paid-in capital on the consolidated balance
sheets.
Common stock warrants accounted for as equity instruments represent the warrants issued to amazon and walmart as
discussed in note 18, “warrant transaction agreements.” the Company adopted FaSB aSu 2019-08, Compensation – Stock
Compensation (topic 718) and Revenue from Contracts with Customers (topic 606), which requires entities to measure and
classify share-based payment awards granted to a customer by applying the guidance under topic 718, as of January 1, 2019.
in order to calculate warrant charges, the Company used the Black-Scholes pricing model, which required key inputs
including volatility and risk-free interest rate and certain unobservable inputs for which there is little or no market data, requiring
the Company to develop its own assumptions. the Company estimated the fair value of unvested warrants, considered to be
probable of vesting, at the time. Based on that estimated fair value, the Company determined warrant charges, which are recorded
as a reduction of revenue in the consolidated statement of operations.
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Notes to Consolidated Financial Statements (Continued)
Redeemable Preferred Stock
we account for redeemable preferred stock as temporary equity in accordance with applicable accounting guidance in
FaSB aSC topic 480, Distinguishing Liabilities from Equity. dividends on the redeemable preferred stock are accounted for as
an increase in the net loss attributable to common stockholders.
Income Taxes
income taxes are accounted for under the asset and liability method. deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis and operating loss and tax credit carryforwards. deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. the effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
period that includes the enactment date. a valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if
it is more likely than not that such assets will not be realized.
the Company accounts for uncertain tax positions in accordance with FaSB aSC no. 740-10-25, Income Taxes-
Overall-Recognition. the Company recognizes in its consolidated financial statements the impact of a tax position only if that
position is more likely than not to be sustained on audit, based on the technical merits of the position. the Company recognizes
interest and penalties on the interest and other expense, net line in the accompanying consolidated statements of operations.
Foreign Currency Translation
Foreign currency translation adjustments arising from conversion of the Company’s foreign subsidiary’s financial
statements to u.S. dollars for reporting purposes are included in accumulated other comprehensive income in stockholders’
equity on the consolidated balance sheets. transaction gains and losses resulting from the effect of exchange rate changes on
transactions denominated in currencies other than the functional currency of the Company’s operations give rise to realized
foreign currency transaction gains and losses, and are included in interest and other income and interest and other expense,
respectively, in the consolidated statements of operations.
Research and Development
Costs related to research and development activities by the Company are expensed as incurred. Certain research and
development expenses have been reclassified for 2018, 2019 and 2020, including interim periods during 2019 and 2020 (see note
2, “Restatement of Previously issued Consolidated Financial Statements,” and note 3 “unaudited Quarterly Financial data and
Restatement of Previously issued unaudited interim Condensed Consolidated Financial Statements).
Stock-Based Compensation
the Company maintains employee stock-based compensation plans, which are described more fully in note 20,
“employee Benefit Plans.”
Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. the
Company measures stock-based compensation cost at grant-date, based on the fair value of the award, and recognizes the cost as
expense on a straight-line basis over the option’s requisite service period.
the Company estimates the fair value of stock-based awards using a Black-Scholes valuation model. Stock-based
compensation expense is recorded in cost of revenue associated with sales of fuel cell systems and related infrastructure, cost of
revenue for services performed on fuel cell systems and related infrastructure, research and development expense and selling,
general and administrative expenses in the consolidated statements of operations based on the employees’ respective function.
the Company records deferred tax assets for awards that result in deductions on the Company’s income tax returns,
based upon the amount of compensation cost recognized and the Company's statutory tax rate. differences between
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Notes to Consolidated Financial Statements (Continued)
the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company's
income tax return are recorded in the income statement. no tax benefit or expense for stock-based compensation has been
recorded during the years ended december 31, 2020, 2019 and 2018 since the Company remains in a full valuation allowance
position.
Convertible Senior Notes
the Company accounts for its convertible senior notes with separate liability and equity components. the carrying
amount of the liability component was initially determined by estimating the fair value of a similar debt instrument that does not
have an associated convertible feature. the carrying amount of the equity component representing the conversion option was
determined by deducting the estimated fair value of the liability component from the par value of the convertible senior notes, as
a whole as of the date of issuance. this difference represents a debt discount that is amortized to interest expense, with a
corresponding increase to the carrying amount of the liability component, over the term of the convertible senior notes using the
effective interest rate method. the equity component is not remeasured as long as it continues to meet the conditions for equity
classification. the Company has allocated issuance costs incurred to the liability and equity components. issuance costs
attributable to the liability component are being amortized to expense over the respective term of the convertible senior notes, and
issuance costs attributable to the equity components were netted with the respective equity component in additional paid-in
capital.
Use of Estimates
the consolidated financial statements of the Company have been prepared in conformity with u.S. 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 consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. actual results could differ from those estimates.
Reclassifications
Reclassifications are made, whenever necessary, to prior period financial statements to conform to the current period
presentation.
Subsequent Events
the Company evaluates subsequent events at the date of the balance sheet as well as conditions that arise after the
balance sheet date but before the consolidated financial statements are issued. the effects of conditions that existed at the balance
sheet date are recognized in the consolidated financial statements. events and conditions arising after the balance sheet date but
before the consolidated financial statements are issued are evaluated to determine if disclosure is required to keep the
consolidated financial statements from being misleading. to the extent such events and conditions exist, if any, disclosures are
made regarding the nature of events and the estimated financial effects for those events and conditions. See note 23, “Subsequent
events.”
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
in June 2016, aSu 2016-13, Financial instruments – Credit losses (topic 326): Measurement of Credit losses on
Financial instruments, was issued. also, in april 2019, accounting Standards update (aSu) 2019-04, Codification
improvements to topic 326, Financial instruments—Credit losses, topic 815, derivatives and hedging, and topic 825,
Financial instruments, was issued to make improvements to updates 2016-01, Financial instruments – overall (Subtopic 825-10),
2016-13, Financial instruments – Credit losses (topic 326) and 2017-12, derivatives and hedging (topic 815). aSu 2016-13
significantly changes how entities account for credit losses for financial assets and certain other instruments, including trade
receivables and contract assets, that are not measured at fair value through net income. the aSu requires a number of changes to
the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a
broader range of information to estimate expected credit losses over the entire lifetime of the asset, including losses where
probability is considered remote. additionally, the standard requires the estimation of lifetime
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Notes to Consolidated Financial Statements (Continued)
expected losses for trade receivables and contract assets that are classified as current. the Company adopted these standards
effective January 1, 2020 and determined the impact of the standards to be immaterial to the consolidated financial statements.
in January 2017, aSu 2017-04, intangibles – Goodwill and other (topic 350), was issued to simplify how an entity is
required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill
impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.
the Company adopted this standard effective January 1, 2020 and determined there to be no impact to the consolidated financial
statements.
Recently Issued and Not Yet Adopted Accounting Pronouncements
in august 2020, the FaSB issued aSu 2020-06, debt - debt with Conversion and other options (Subtopic 470-20) and
derivatives and hedging - Contracts in entity's own equity (Subtopic 815-40): accounting for Convertible instruments and
Contracts in an entity's own equity (“aSu 2020-06”). this aSu simplifies the complexity associated with applying GaaP for
certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the
guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity. under aSu 2020-06,
the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion
features that are not required to be accounted for as derivatives under topic 815, or that do not result in substantial premiums
accounted for as paid-in capital. Consequently, a convertible debt instrument, such as the Company’s 3.75% Convertible Senior
notes, will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation
and recognition as derivatives. the new guidance also requires the if-converted method to be applied for all convertible
instruments and requires additional disclosures. this guidance is required to be adopted by January 1, 2022, and early adoption is
permitted, but no earlier than fiscal years beginning after december 15, 2020. the Company has elected to early adopt this
guidance on January 1, 2021 using the modified retrospective method. under this transition method, the cumulative effect of
accounting change removed the impact of recognizing the equity component of the Company’s convertible notes at issuance and
the subsequent accounting impact of additional interest expense from debt discount amortization. the cumulative effect of the
accounting change upon adoption on January 1, 2021 increased the carrying amount of the convertible notes by $120.7 million,
reduced accumulated deficit by $9.5 million and reduced additional paid-in capital by $130.2 million. Future interest expense of
the convertible notes will be lower as a result of adoption of this guidance and net loss per share will be computed using the if-
converted method for convertible instruments.
in March 2020, aSu 2020-04, Reference Rate Reform (topic 848): Facilitation of the effects of Reference Rate
Reform on Financial Reporting, was issued to provide temporary optional expedients and exceptions to the GaaP guidance on
contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from
the london interbank offered Rate (liBoR) and other interbank offered rates to alternative reference rates. this update was
effective starting March 12, 2020 and the Company may elect to apply the amendments prospectively through december 31,
2022. the adoption of this standard does not have a material impact on the Company’s consolidated financial statements.
in March 2020, aSu 2020-03, Codification improvements to Financial instruments, was issued to make various
codification improvements to financial instruments to make the standards easier to understand and apply by eliminating
inconsistencies and providing clarifications. this update will be effective at various dates beginning with date of issuance of this
aSu. the adoption of this standard does not have a material impact on the Company’s consolidated financial statements.
in december 2019, accounting Standards update (aSu) 2019-12, Simplifying the accounting for income taxes, was
issued to identify, evaluate, and improve areas of GaaP for which cost and complexity can be reduced while maintaining or
improving the usefulness of the information provided to users of financial statements. this update will be effective beginning
after december 15, 2020. the adoption of this standard does not have a material impact on the Company’s consolidated financial
statements.
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Notes to Consolidated Financial Statements (Continued)
5. Acquisitions
Giner ELX Inc. Acquisition
on June 22, 2020, the Company acquired 100% of the outstanding shares of Giner elX, inc. (“Giner elX”). Giner
elX is developer of electrolysis hydrogen generators which can be used for a variety of applications, including on-site refueling
of hydrogen fuel cells.
the fair value of consideration paid by the Company in connection with the Giner elX acquisition was as follows (in
thousands):
Cash
Plug Power Stock
Contingent consideration
total consideration
$ 25,820
19,263
7,790
$ 52,873
the contingent consideration represents the estimated fair value associated with earn-out payments of up to $16.0
million that the sellers are eligible to receive. of the total earnout consideration, $8.0 million is related to the achievement of the
allagash earn-out, $2.0 million is associated with the receipt of certain customer opportunities (purchase orders or other
contracts) by december 31, 2021, and $6.0 million is associated with the achievement of certain revenue targets for years 2021
through 2023. the allagash earn-out is achieved when the Company has produced at least two PeM electrolyzer stacks of one
megawatt each, utilizing the dry build process and meets certain technical specifications as more fully described in the merger
agreement. to be fully paid, the allagash earn-out needs to be satisfied by July 31, 2023 and is reduced by approximately 8.33%
each month beyond this date. in addition to the above, should the earn-out revenue exceed 150% of the 2023 target, the sellers
will receive warrants with a value of $5.0 million and if the earn-out revenue exceeds 200% of the 2023 revenue target, the
sellers will receive warrants with a value of $10.0 million. the warrants are exercisable within two years of issuance.
in connection with the Giner elX acquisition, the Company revised the acquisition-date fair value of contingent
consideration liabilities which were determined to be measurement period adjustments and resulted in an increase in other
liabilities and goodwill of $0.7 million for the year ended december 31, 2020.
the following table summarizes the final allocation of the purchase price to the estimated fair value of the net assets
acquired, excluding goodwill (in thousands):
accounts receivable
inventory
Prepaid expenses and other assets
Property, plant and equipment
identifiable intangibles
accounts payable, accrued expenses and other liabilities
deferred revenue
deferred tax liability, net
total net assets acquired, excluding goodwill
$
$
1,237
4,108
669
596
29,930
(1,621)
(2,350)
(5,889)
26,680
identifiable intangibles consisted of developed technology, non-compete agreements, estimated in-process research and
development (“iPR&d”), and customer relationships.
the fair value of acquired backlog and non-complete agreements was nominal.
the fair value of the acquired iPR&d related to the dry stack technology totaling $29.0 million was calculated using the
multi-period excess earnings method (“MPeeM”) approach which is a variant of the income approach. the basic principle of the
MPeeM approach is that a single asset, in isolation, is not capable of generating cash flow for an enterprise. Several assets are
brought together and exploited to generate cash flow. therefore, to determine cash flow from the
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Notes to Consolidated Financial Statements (Continued)
exploitation of iPR&d, one must deduct the related expenses incurred for the exploitation of other assets used for the generation
of overall cash flow and revenues. the fair value of iPR&d was estimated by discounting the net cash flow derived from the
expected revenues attributable to the acquired iPR&d. the fair value of the acquired customer relationships totaling $0.4 million
was calculated using a distributor method approach, which is a variant of the income approach. the fair value of wet stack
technology totaling $0.4 million was determined using the relief from royalty method.
in addition to identifiable intangible assets, the fair value of acquired work in process and finished goods inventory was
estimated based on the estimated selling price less costs to be incurred and a market participant profit rate. additionally, the fair
value of the deferred revenue was determined using a cost build-up approach. the direct cost of fulfilling the obligation plus a
normal profit margin was used to determine the value of the assumed deferred revenue liability.
included in the purchase consideration are three contingent earn-out payments (as described above): the allagash earn-
out, the customer opportunities, and the revenue targets. due to the nature of the allagash and customer opportunities, as outlined
in the purchase agreement, a scenario based method (“SBM”) was used to value these contingent payments as the payments are
milestone based in nature. these fair value measurements were based on unobservable inputs and are considered to be level 3
financial instruments. the revenue targets are achieved when certain revenue thresholds are met, and the catch-up provision
creates path-dependency. as such, the revenue earn-out was valued using a Monte Carlo Simulation.
in connection with the acquisition, the Company recorded on its consolidated balance sheet a liability of $7.8 million
representing the fair value of contingent consideration payable. the fair value of this contingent consideration was remeasured as
of december 31, 2020, and was estimated to be $9.6 million. this increase in fair value of $1.8 million, which was primarily due
to a change in the discount rate offset by a decrease in the discount period, was recorded as an expense in the consolidated
statement of operations for the year ended december 31, 2020.
included in Giner elX’s net assets acquired are net deferred tax liabilities of $5.9 million. in connection of the
acquisition of these net deferred tax liabilities, the Company reduced its valuation allowance by $5.2 million and recognized a tax
benefit $5.2 million during the year ended december 31, 2020.
Goodwill associated with the Giner elX acquisition was calculated as follows (in thousands):
Consideration paid
less: net assets acquired
total goodwill recognized
$ 52,873
(26,680)
$ 26,193
the goodwill consists of the Company’s increased capabilities in green hydrogen supply through the production of
electrolyzers. the synergies with the Company’s production of hydrogen storage and dispensing equipment are important to the
Company as the demand for green hydrogen is expected to increase.
United Hydrogen Group Inc. Acquisition
on June 18, 2020, the Company acquired 100% of the outstanding shares of united hydrogen Group inc. (“uhG”).
uhG produces and sells liquid hydrogen.
the fair value of consideration paid by the Company in connection with the uhG acquisition was as follows (in
thousands):
Cash
Plug Power Stock
Contingent consideration
total consideration
$ 19,293
30,410
1,110
$ 50,813
included in cash and common stock in the above table is $1.0 million of cash and $6.5 million of common stock that
was paid in april 2020 to purchase a convertible note in uhG. this convertible note included terms that allowed for
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Notes to Consolidated Financial Statements (Continued)
reduction of the purchase price if the Company were to complete the acquisition of uhG. as such, this note was cancelled in
conjunction with the closing of this acquisition.
a portion of the purchase price of uhG was in the form of contingent consideration. the contingent consideration is
contingent on future performance related to two discrete milestones associated with the expansion of the liquefication capacity of
the Charleston, tennessee liquid hydrogen plant (the “Charleston Plant”). the Company’s liability for this contingent
consideration was measured at fair value based on the Company’s expectations of achieving the expansion milestone. the
expected performance was assessed by management which was discounted to present value in order to derive a fair value of the
contingent consideration. this fair value measurement was based on unobservable inputs and is considered a level 3 financial
instrument. due to the milestone nature of the payments, a scenario based method (“SBM”) was used to value these contingent
payments.
the estimated fair value of the contingent consideration as of the acquisition date was $1.1 million. Subsequently, a
payment of $300 thousand was made to the sellers as a result of achieving the first milestone related to the expansion of the
liquefication capacity of the Charleston Plant. a reduction of the contingent consideration liability of $610 thousand was also
recorded subsequent to the acquisition due to a reduction in the probability assessment that the second expansion milestone will
be met. as of december 31, 2020, the remaining contingent consideration liability related to the uhG acquisition was $200
thousand.
the following table summarizes the final allocation of the purchase price to the estimated fair value of the net assets
acquired, excluding goodwill (in thousands):
accounts receivable
inventory
Prepaid expenses and other assets
Property, plant and equipment
leased property
identifiable intangible asset
long-term debt
unfavorable customer contract
accounts payable, accrued expenses, deferred revenue and finance obligations
total net assets acquired, excluding goodwill
$
$
444
89
1,152
41,244
796
2,338
(11,336)
(15,757)
(4,631)
14,339
the identifiable intangible asset consisted of developed technology, as described below in note 10, “intangible assets
and Goodwill.” the fair value of the developed technology totaling $2.3 million was calculated using the relief from royalty
approach which is a variant of the income approach. the application of the relief from royalty approach involves estimating the
value of an intangible asset by quantifying the present value of the stream of market derived royalty payments that the owner of
the intangible asset is exempted or ‘relieved’ from paying.
additionally, the Company estimated the fair value of an unfavorable customer contract. the fair value of the acquired
unfavorable customer contract was calculated using a with and with-out analysis which is a variant of the income approach. Cash
flows were calculated using pricing per terms of the existing contract and then compared to cash flows using expected market
pricing. the difference between the two cash flows was used to determine the fair value of the contract. Further, the Company
assumed interest-bearing debt. the fair value of the assumed debt was calculated using the discounted cash flow method.
in connection with the uhG acquisition, the Company finalized the valuation of an unfavorable customer contract and
long-term debt which resulted in an increase in other liabilities of $1.9 million, a decrease in long-term debt of $1.7 million, and
an increase in goodwill of $0.2 million.
Goodwill associated with the uhG acquisition was calculated as follows (in thousands):
Consideration paid
less: net assets acquired
total goodwill recognized
$ 50,813
(14,339)
$ 36,474
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Notes to Consolidated Financial Statements (Continued)
the Company now has capabilities in liquid hydrogen generation, liquefaction and distribution logistics, which is
important in a growing hydrogen market.
Goodwill recorded in connection with the acquisitions is not deductible for tax purposes.
the results of the Giner elX and uhG are included in the Company’s consolidated financial statements for the year
ended december 31, 2020 from their respective dates of acquisition. Revenues from Giner elX and uhG included in the
Company’s results of operations for the year ended december 31, 2020 totaled $3.6 million and $4.2 million, respectively.
neither the Giner elX acquisition nor the uhG acquisition was material to our consolidated results of operations or
financial position and, therefore, pro forma financial information is not presented.
6. Earnings Per Share, as restated
Basic earnings per common stock are computed by dividing net loss attributable to common stockholders by the
weighted average number of common stock outstanding during the reporting period. diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue common stock (such as stock options, unvested
restricted stock, common stock warrants, and preferred stock) were exercised or converted into common stock or resulted in the
issuance of common stock (net of any assumed repurchases) that then shared in the earnings of the Company, if any. this is
computed by dividing net earnings by the combination of dilutive common stock equivalents, which is comprised of shares
issuable under outstanding warrants, the conversion of preferred stock, and the Company’s share-based compensation plans, and
the weighted average number of common stock outstanding during the reporting period. Since the Company is in a net loss
position, all common stock equivalents would be considered to be anti-dilutive and are, therefore, not included in the
determination of diluted earnings per share. accordingly, basic and diluted loss per share are the same.
the following table provides the components of the calculations of basic and diluted earnings per share (in thousands,
except share amounts):
numerator:
Year ended December 31,
2019
2020
(as restated)
2018
(as restated)
net loss attributable to common stockholders
$
(596,181)
$
(85,555)
$
(85,660)
denominator:
weighted average number of common stock outstanding
354,790,106
237,152,780
218,882,337
the potentially dilutive securities are summarized as follows:
Stock options outstanding (1)
Restricted stock outstanding (2)
Common stock warrants (3)
Preferred stock (4)
Convertible Senior notes (5)
number of dilutive potential shares of common stock
2020
10,284,498
5,874,642
104,753,740
—
42,256,610
163,169,490
At December 31,
2019
23,013,590
4,608,560
110,573,392
2,998,527
59,133,896
200,327,965
2018
21,957,150
2,347,347
115,824,142
17,933,591
43,630,020
201,692,250
(1) during the years ended december 31, 2020, 2019, and 2018, the Company granted 3,509,549, 3,221,892, and 2,679,667
stock options, respectively.
(2) during the years ended december 31, 2020, 2019, and 2018, the Company granted 3,227,149, 3,201,892, and 2,367,347
shares of restricted stock, respectively.
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Notes to Consolidated Financial Statements (Continued)
(3)
in april 2017, the Company issued a warrant to acquire up to 55,286,696 of the Company’s common stock as part of a
transaction agreement with amazon, subject to certain vesting events, as described in note 18, “warrant transaction
agreements.” the warrant had not been exercised as of december 31, 2020.
in July 2017, the Company issued a warrant to acquire up to 55,286,696 of the Company’s common stock as part of a
transaction agreement with walmart, subject to certain vesting events, as described in note 18, “warrant transaction
agreements.” the warrant had been exercised with respect to 5,819,652 shares as of december 31, 2020.
(4) the preferred stock amount represents the dilutive potential on the shares of common stock as a result of the conversion of
the Series C Redeemable Convertible Preferred Stock (Series C Preferred Stock) and Series e Convertible Preferred Stock
(Series e Preferred Stock), based on the conversion price of each preferred stock as of december 31 2019, and 2018,
respectively. of the 10,431 shares of Series C Preferred Stock issued on May 16, 2013, all shares had been converted to
common stock as of december 31, 2020. on november 1, 2018, the Company issued 35,000 shares of Series e Preferred
Stock. as of december 31, 2019, 30,462 shares of the Series e Preferred Stock had been converted to common stock and
4,038 shares were redeemed for cash. all of the remaining Series e Preferred Stock were converted to either common stock
or cash, in January 2020.
(5)
in March 2018, the Company issued the 5.5% Convertible Senior notes. in September 2019, the Company issued the $7.5%
Convertible Senior note, which was fully converted into 16.0 million shares on July 1, 2020. in May 2020, the Company
issued the 3.5% Convertible Senior notes and repurchased $66.3 million of the 5.5% Convertible Senior notes. in the
fourth quarter of 2020, $33.5 million of the remaining 5.5% Convertible Senior notes converted into 14.6 million shares of
common stock. as of december 31, 2020, approximately $160 thousand aggregate principal amount of the 5.5% Convertible
Senior notes remained outstanding, all of which was converted in January 2021.
7. Inventory, as restated
inventory as of december 31, 2020 and 2019 as restated, consists of the following (in thousands):
Raw materials and supplies - production locations
Raw materials and supplies - customer locations
work-in-process
Finished goods
inventory
8. Property, Plant and Equipment
December 31, 2020
December 31, 2019
(as restated)
$
$
92,221
12,405
29,349
5,411
139,386
$
$
48,011
9,241
12,529
2,610
72,391
Property, plant and equipment at december 31, 2020 and 2019 consists of the following (in thousands):
land
leasehold improvements
Software, machinery and equipment
Property, plant, and equipment
less: accumulated depreciation
Property, plant, and equipment, net
December 31, 2020
December 31, 2019
$
$
1,165
1,121
94,449
96,735
(22,186)
74,549
$
$
—
862
31,514
32,376
(17,417)
14,959
depreciation expense related to property, plant and equipment was $4.8 million, $3.6 million, and $2.6 million for the
years ended december 31, 2020, 2019, and 2018, respectively.
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Notes to Consolidated Financial Statements (Continued)
9. Equipment Related to Power Purchase Agreements and Fuel Delivered to Customers, net, as restated
equipment related to power purchase agreements and fuel delivered to customers, net, at december 31, 2020 and 2019
consists of the following (in thousands):
equipment related to power purchase agreements and
fuel delivered to customers
less: accumulated depreciation
equipment related to power purchase agreements and
fuel delivered to customers, net
92,736
(16,929)
$
75,807
$
81,194
(13,425)
67,769
December 31, 2020
December 31, 2019
(as restated)
as of december 31, 2020, the Company had deployed assets at customer sites that had associated PPas. these PPas
expire over the next one to ten years. PPas contain termination clauses with associated penalties, the amount of which cause the
likelihood of cancellation to be remote.
depreciation expense is $7.9 million and $6.3 million for the years ended december 31, 2020 and 2019 respectively.
10. Intangible Assets and Goodwill
the gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of
december 31, 2020 are as follows (in thousands):
acquired technology
Customer relationships, non-compete
agreements, Backlog & trademark
in process research and development
Weighted Average
Amortization Period
Gross Carrying
Amount
Accumulated
Amortization
Total
10 years $
13,697
$
(4,042)
$
9,655
6 years
indefinite
$
890
29,000
43,587
$
(294)
—
(4,336)
$
596
29,000
39,251
the gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of
december 31, 2019 are as follows (in thousands):
acquired technology
trademark
Weighted Average
Amortization Period
Gross Carrying
Amount
Accumulated
Amortization
9 years $
9 years
$
8,244
320
8,564
$
$
(2,815)
(210)
(3,025)
$
$
Total
5,429
110
5,539
the change in the gross carrying amount of the acquired technology from december 31, 2019 to december 31, 2020
was due to changes in acquisitions of uhG and Giner elX, american Fuel Cell (aFC) milestone payments and foreign currency
translation, as discussed below.
the Company’s in-process research and development is related to the development of the dry build process associated
with electrolyzer stacks, as part of acquisition of Giner elX. the related intangible asset is not currently amortized, as research
and development is ongoing. upon completion of the dry build process, amortization will commence based upon the estimated
useful life of the underlying asset. See note 5, “acquisitions” for more details.
also, in 2020, the Company acquired technology as part of the acquisition of uhG. the technology relates to the
chemical process of manufacturing liquid hydrogen from chlor-alkali waste stream. See note 5 “acquisitions”, for more details.
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Notes to Consolidated Financial Statements (Continued)
in 2019, the Company acquired intellectual property from energyor for $1.5 million. in addition, the Company agreed
to pay the sellers a royalty based on future sales of relevant applications, not to exceed $3.0 million, by May 22, 2025. these
royalties are added to the intangible asset balance, as incurred. to date, no royalties have been earned.
as of december 31, 2020, as part of the agreement to acquire the intellectual property from aFC, the Company paid
aFC milestone payments of $2.9 million.
amortization expense for acquired identifiable intangible assets for the years ended december 31, 2020, 2019 and 2018
was $1.1 million, $0.7 million and $0.7 million, respectively.
estimated amortization expense for subsequent years was as follows (in thousands):
2021
2022
2023
2024
2025 and thereafter
total
1,878
1,478
1,478
1,456
3,961
10,251
$
Goodwill was $72.4 million and $8.8 million as of december 31, 2020 and 2019 respectively, which increased $62.6
million as a result of the Giner elX and uhG acquisitions, and increased $900 thousand due to translation gain for hypulsion
goodwill. there were no impairments during the fiscal years ended december 31, 2020 and 2019.
11. Accrued Expenses, as restated
accrued expenses at december 31, 2020 and 2019 consist of (in thousands):
accrued payroll and compensation related costs
accrued accounts payable
accrued sales and other taxes
accrued interest
accrued other
total
2020
29,167
11,750
3,665
649
852
46,083
$
$
$
$
2019
(as restated)
2,932
7,254
905
2,374
944
14,409
12. Operating and Finance Lease Liabilities, as restated
as of december 31, 2020, the Company had operating leases, as lessee, primarily associated with sale/leaseback
transactions that are partially secured by restricted cash, security deposits and pledged escrows (see also note 1, “nature of
operations”) as summarized below. these leases expire over the next one to nine years. Minimum rent payments under
operating leases are recognized on a straight-line basis over the term of the lease.
leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to
be remote. at the end of the lease term, the leased assets may be returned to the lessor by the Company, the Company may
negotiate with the lessor to purchase the assets at fair market value, or the Company may negotiate with the lessor to renew the
lease at market rental rates. no residual value guarantees are contained in the leases. no financial covenants are contained
within the lease, however there are customary operational covenants such as assurance the Company properly maintains the
leased assets and carries appropriate insurance, etc. the leases include credit support in the form of either cash, collateral or
letters of credit. See note 22, “Commitments and contingencies, as restated,” for a description of cash held as security associated
with the leases.
the Company has finance leases associated with its property and equipment in latham, new York and at fueling
customer locations. the fair value of this finance obligation approximated the carrying value as of december 31, 2020.
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Notes to Consolidated Financial Statements (Continued)
Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of
one year) as of december 31, 2020 were as follows (in thousands):
2021
2022
2023
2024
2025 and thereafter
total future minimum payments
less imputed interest
total
Finance
Operating Lease
Lease
Total
Lease
Liability
28,536 $
27,138
26,464
25,947
50,362
158,447
(44,509)
113,938 $
Liability
Liabilities
29,797
1,261 $
28,372
1,234
27,674
1,210
27,240
1,293
52,083
1,721
165,166
6,719
(1,323)
(45,832)
5,396 $ 119,334
$
$
Rental expense for all operating leases was $22.3 million, $14.6 million and $10.2 million for the years ended december
31, 2020, 2019 and 2018, respectively.
the gross profit on sale/leaseback transactions for all operating leases was $61.0 million, $26.2 million and $16.4
million for the years ended december 31, 2020, 2019 and 2018, respectively. Right of use assets obtained in exchange for new
operating lease liabilities was $58.5 million and $37.7 million for the years ended december 31, 2020 and 2019, respectively.
at december 31, 2020 and 2019, the right of use assets associated with operating leases was $117.0 million and $63.3
million, respectively. the accumulated depreciation for these right of use assets was $48.6 million and $23.6 million at december
31, 2020 and 2019, respectively.
at december 31, 2020 and 2019, the right of use assets associated with finance leases was $5.7 million and $1.7
million, respectively. the accumulated depreciation for these right of use assets was $102 thousand and $32 thousand at
december 31, 2020 and 2019, respectively.
at december 31, 2020 and 2019, security deposits associated with sale/leaseback transactions were $5.8 million and
$6.0 million, respectively, and were included in other assets in the consolidated balance sheet.
other information related to the operating leases are presented in the following table:
Cash payments (in thousands)
weighted average remaining lease term (years)
weighted average discount rate
$
Year ended
Year ended
December 31, 2020
December 31, 2019
$
22,626
6.0
11.7%
14,055
5.0
12.1%
Finance lease costs include amortization of the right of use assets (i.e. depreciation expense) and interest on lease
liabilities (i.e. interest and other expense, net in the consolidated statement of operations), and were immaterial for the years
ended december 31, 2019 and 2018.
Right of use assets obtained in exchange for new finance lease liabilities were $4.1 million and $0.1 million for the
years ended december 31, 2020 and 2019, respectively.
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Notes to Consolidated Financial Statements (Continued)
other information related to the finance leases are presented in the following table:
Cash payments (in thousands)
weighted average remaining lease term (years)
weighted average discount rate
13. Finance Obligation, as restated
$
Year ended
Year ended
December 31, 2020
December 31, 2019
$
471
5.6
8.2%
255
7.7
8.8%
the Company has sold future services to be performed associated with certain sale/leaseback transactions and recorded
the balance as a finance obligation. the outstanding balance of this obligation at december 31, 2020 was $157.7 million, $24.7
million and $132.9 million of which was classified as short-term and long-term, respectively, on the accompanying consolidated
balance sheet. the outstanding balance of this obligation at december 31, 2019 was $112.4 million, $16.8 million and $95.6
million of which was classified as short-term and long-term, respectively. the amount is amortized using the effective interest
method. the fair value of this finance obligation approximated the carrying value as of december 31, 2020.
in prior periods, the Company entered into sale/leaseback transactions that were accounted for as financing transactions
and reported as part of finance obligations. the outstanding balance of finance obligations related to sale/leaseback transactions
at december 31, 2020 was $23.9 million, $8.0 million and $15.9 million of which was classified as short-term and long-term,
respectively on the accompanying consolidated balance sheet. the outstanding balance of this obligation at december 31, 2019
was $31.7 million, $7.9 million and $23.8 million of which was classified as short-term and long-term, respectively on the
accompanying consolidated balance sheet. the fair value of this finance obligation approximated the carrying value as of both
december 31, 2020 and december 31, 2019.
Future minimum payments under finance obligations notes above as of december 31, 2020 were as follows (in
thousands):
2021
2022
2023
2024
2025 and thereafter
total future minimum payments
less imputed interest
total
Total
Sale of Future
Sale/leaseback
Finance
revenue - debt
$
$
41,670 $
39,268
39,268
39,268
53,385
212,859
(55,158)
157,701 $
financings Obligations
9,327 $
50,997
4,975
44,243
3,149
42,417
16,154
55,422
—
53,385
33,605
246,464
(64,911)
(9,753)
23,852 $ 181,553
other information related to the above finance obligations are presented in the following table:
Cash payments (in thousands)
weighted average remaining term (years)
weighted average discount rate
$
Year ended
Year ended
December 31, 2020
December 31, 2019
$
44,245
5.0
11.3%
76,244
5.3
11.2%
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14. Long-Term Debt
Notes to Consolidated Financial Statements (Continued)
in March 2019, the Company entered into a loan and security agreement, as amended (the ”loan agreement”), with
Generate lending, llC (“Generate Capital”), providing for a secured term loan facility in the amount of $100 million (the “term
loan Facility”). the Company used the proceeds to pay off in full the Company’s previous loan with nY Green Bank a division
of the new York State energy Research & development (“Green-Bank loan”) and terminate and re-purchase certain equipment
leases with Generate Plug Power SlB ii, llC. in connection with this transaction, the Company recognized a loss on
extinguishment of debt of approximately $0.5 million during the year ended december 31, 2019. this loss was recorded in gain
(loss) on extinguishment of debt, in the Company’s consolidated statement of operations. the Company borrowed an incremental
$20 million in november 2019.
additionally, during the year ended december 31, 2020, the Company, under another series of amendments to the loan
agreement, borrowed an incremental $100 million. as part of the amendment to the loan agreement, the Company’s interest
rate on the secured term loan facility was reduced to 9.50% from 12.00% per annum, and the maturity date was extended to
october 31, 2025 from october 6, 2022. on december 31, 2020, the outstanding balance under the term loan Facility was
$165.8 million.
the loan agreement includes covenants, limitations, and events of default customary for similar facilities. interest and
a portion of the principal amount is payable on a quarterly basis. Principal payments will be funded in part by releases of
restricted cash, as described in note 22, “Commitments and Contingencies, as restated.” Based on the amortization schedule as of
december 31, 2020, the aforementioned loan balance under the term loan Facility will be fully paid by october 31, 2025. the
Company is in compliance with, or has obtained waivers for, all debt covenants.
the term loan Facility is secured by substantially all of the Company’s and the guarantor subsidiaries’ assets,
including, among other assets, all intellectual property, all securities in domestic subsidiaries and 65% of the securities in foreign
subsidiaries, subject to certain exceptions and exclusions.
the loan agreement provides that if there is an event of default due to the Company’s insolvency or if the Company
fails to perform in any material respect the servicing requirements for fuel cell systems under certain customer agreements, which
failure would entitle the customer to terminate such customer agreement, replace the Company or withhold the payment of any
material amount to the Company under such customer agreement, then Generate Capital has the right to cause Proton Services
inc., a wholly owned subsidiary of the Company, to replace the Company in performing the maintenance services under such
customer agreement.
additionally, $1.75 million was paid to an escrow account related to additional fees due in connection with the Green-
Bank loan if the Company does not meet certain new York State employment and fuel cell deployment targets by March 2021.
the amount of escrow expected to be received of $700 thousand was recorded in short-term other assets on the
Company’s consolidated balance sheets as of december 31, 2020. during the year ended december 31, 2020, the Company
received $250 thousand from escrow related to the new York state employment targets. the Company also received $700
thousand related to the new York State employment targets in March 2021. the Company did not meet the deployment targets
and charged-off $800 thousand to interest expense during december, 2020.
as of december 31, 2020 the term loan Facility requires the principal balance as of each of the following dates not to
exceed the following (in thousands):
december 31, 2021
december 31, 2022
december 31, 2023
december 31, 2024
december 31, 2025
127,317
93,321
62,920
33,692
—
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Notes to Consolidated Financial Statements (Continued)
15. Convertible Senior Notes
3.75% Convertible Senior Notes
on May 18, 2020, the Company issued $200.0 million in aggregate principal amount of 3.75% Convertible Senior
notes due June 1, 2025, which is referred to herein as the 3.75% Convertible Senior notes, in a private placement to qualified
institutional buyers pursuant to Rule 144a under the Securities act of 1933, as amended, or the Securities act. on May 29, 2020,
the Company issued an additional $12.5 million in aggregate principal amount of 3.75% Convertible Senior notes.
at issuance in May 2020, the total net proceeds from the 3.75% Convertible Senior notes were as follows:
Principal amount
less initial purchasers' discount
less cost of related capped calls
less other issuance costs
net proceeds
Amount
(in thousands)
212,463
(6,374)
(16,253)
(617)
189,219
$
$
the 3.75% Convertible Senior notes bear interest at a rate of 3.75% per year, payable semi-annually in arrears on June
1 and december 1 of each year, beginning on december 1, 2020. the notes will mature on June 1, 2025, unless earlier
converted, redeemed or repurchased in accordance with their terms.
the 3.75% Convertible Senior notes are senior, unsecured obligations of the Company and rank senior in right of
payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the notes, equal in right of
payment to any of the Company’s existing and future liabilities that are not so subordinated, including the Company’s $100
million in aggregate principal amount of the 5.5% Convertible Senior notes due 2023, which is referred to herein as the 5.5%
Convertible Senior notes, effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of
the value of the collateral securing such indebtedness, and structurally subordinated to all indebtedness and other liabilities,
including trade payables, of its current or future subsidiaries.
holders of the 3.75% Convertible Senior notes may convert their notes at their option at any time prior to the close of
the business day immediately preceding december 1, 2024 in the following circumstances:
1)
2)
3)
4)
during any calendar quarter commencing after december 31, 2020, if the last reported sale price of the Company’s
common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive)
during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately
preceding calendar quarter;
during the five business days after any five consecutive trading day period (such five consecutive trading day period, the
measurement period) in which the trading price per $1,000 principal amount of the 3.75% Convertible Senior notes for
each trading day of the measurement period was less than 98% of the product of the last reported sale price of the
Company’s common stock and the conversion rate on each such trading day;
if the Company calls any or all of the 3.75% Convertible Senior notes for redemption, any such notes that have been
called for redemption may be converted at any time prior to the close of business on the second scheduled trading day
immediately preceding the redemption date; or
upon the occurrence of specified corporate events, as described in the indenture governing the 3.75% Convertible Senior
notes.
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Notes to Consolidated Financial Statements (Continued)
on or after december 1, 2024, the holders of the 3.75% Convertible Senior notes may convert all or any portion of their
notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date
regardless of the foregoing conditions.
the initial conversion rate for the 3.75% Convertible Senior notes is 198.6196 shares of the Company’s common stock
per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $5.03 per share of the
Company’s common stock, subject to adjustment upon the occurrence of specified events. upon conversion, the Company will
pay or deliver, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the
Company’s common stock, at the Company’s election. during January and February of 2021, $15.2 million of the 3.75%
Convertible Senior notes have been converted and the Company has issued 3.0 million shares in conjunction with these
conversions.
in addition, following certain corporate events or following issuance of a notice of redemption, the Company will
increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or convert its
notes called for redemption during the related redemption period in certain circumstances.
the 3.75% Convertible Senior notes will be redeemable, in whole or in part, at the Company’s option at any time, and
from time to time, on or after June 5, 2023 and before the 41st scheduled trading day immediately before the maturity date, at a
cash redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if
any, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price then
in effect for at least 20 trading days (whether or not consecutive), including at least one of the three trading days immediately
preceding the date the Company sends the related redemption notice, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on which the Company sends such redemption notice.
if the Company undergoes a “fundamental change” (as defined in the indenture), holders may require the Company to
repurchase their notes for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the
principal amount of the notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change
repurchase date.
in accounting for the issuance of the 3.75% Convertible Senior notes, the Company separated the notes into liability
and equity components. the initial carrying amount of the liability component of approximately $75.2 million, net of costs
incurred, was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. the
carrying amount of the equity component of approximately $130.3 million, net of costs incurred, representing the conversion
option, was determined by deducting the fair value of the liability component from the par value of the 3.75% Convertible Senior
notes. the difference between the principal amount of the 3.75% Convertible Senior notes and the liability component (the debt
discount) is amortized to interest expense using the effective interest method over the term of the 3.75% Convertible Senior
notes. the effective interest rate is approximately 29.0%. the equity component of the 3.75% Convertible Senior notes is
included in additional paid-in capital in the consolidated balance sheets and is not remeasured as long as it continues to meet the
conditions for equity classification.
we incurred transaction costs related to the issuance of the 3.75% Convertible Senior notes of approximately $7.0
million, consisting of initial purchasers’ discount of approximately $6.4 million and other issuance costs of $0.6 million. in
accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same
proportions as the proceeds from the 3.75% Convertible Senior notes. transaction costs attributable to the liability component
were approximately $2.6 million, were recorded as debt issuance cost (presented as contra debt in the consolidated balance
sheets) and are being amortized to interest expense over the term of the 3.75% Convertible Senior notes. the transaction costs
attributable to the equity component were approximately $4.4 million and were netted with the equity component in
stockholders’ equity.
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Notes to Consolidated Financial Statements (Continued)
the 3.75% Convertible Senior notes consisted of the following (in thousands):
Principal amounts:
Principal
unamortized debt discount (1)
unamortized debt issuance costs (1)
net carrying amount
Carrying amount of the equity component (2)
December 31,
2020
$
$
$
212,463
(124,655)
(2,295)
85,513
130,249
1)
3)
included in the consolidated balance sheets within the 3.75% Convertible Senior notes, net and amortized over the
remaining life of the notes using the effective interest rate method.
included in the consolidated balance sheets within additional paid-in capital, net of the associated income tax benefit
of $29.8 million.
Based on the closing price of the Company’s common stock of $33.91 on december 31, 2020, the if-converted value of
the notes was greater than the principal amount. the estimated fair value of the note at december 31, 2020 was approximately
$1.3 billion. Fair value estimation was primarily based on a stock exchange, active trade on december 29, 2020 of the 3.75%
Senior Convertible note. the Company considers this a level 1 fair value measurement. Refer to note 4, “Summary of
Significant accounting Policies.”
Capped Call
in conjunction with the pricing of the 3.75% Convertible Senior notes, the Company entered into privately negotiated
capped call transactions (the “3.75% notes Capped Call”) with certain counterparties at a price of $16.2 million. the 3.75%
notes Capped Call covers, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock
that underlie the initial 3.75% Convertible Senior notes and is generally expected to reduce potential dilution to the Company’s
common stock upon any conversion of the 3.75% Convertible Senior notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of the converted notes, as the case may be, with such reduction and/or offset
subject to a cap based on the cap price. the cap price of the 3.75% notes Capped Call is initially $6.7560 per share, which
represents a premium of approximately 60% over the last then-reported sale price of the Company’s common stock of $4.11 per
share on the date of the transaction and is subject to certain adjustments under the terms of the 3.75% notes Capped Call. the
3.75% notes Capped Call becomes exercisable if the conversion option is exercised.
the net cost incurred in connection with the 3.75% notes Capped Call has been recorded as a reduction to additional
paid-in capital in the consolidated balance sheet.
7.5% Convertible Senior Note
in September 2019, the Company issued $40.0 million aggregate principal amount of 7.5% Convertible Senior note due
on January 5, 2023, which is referred to herein as the 7.5% Convertible Senior note, in exchange for net proceeds of $39.1
million, in a private placement to an accredited investor pursuant to Rule 144a under the Securities act. there were no required
principal payments prior to the maturity of the 7.5% Convertible Senior note. upon maturity of the 7.5% Convertible Senior
note, the Company was required to repay 120% of $40.0 million, or $48.0 million. the 7.5% Convertible Senior note bore
interest at 7.5% per year, payable quarterly in arrears on January 5, april 5, July 5 and october 5 of each year beginning on
october 5, 2019 and was to mature on January 5, 2023 unless earlier converted or repurchased in accordance with its terms. the
7.5% Convertible Senior note was unsecured and did not contain any financial covenants or any restrictions on the payment of
dividends, or the issuance or repurchase of common stock by the Company.
on July 1, 2020, the 7.5% Convertible Senior note automatically converted into 16.0 million shares of common stock.
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Notes to Consolidated Financial Statements (Continued)
5.5% Convertible Senior Notes
in March 2018, the Company issued $100 million in aggregate principal amount of the 5.5% Convertible Senior notes
due on March 15, 2023, which is referred to herein as the 5.5% Convertible Senior notes, in a private placement to qualified
institutional buyers pursuant to Rule 144a under the Securities act.
in May 2020, the Company used a portion of the net proceeds from the issuance of the 3.75% Convertible Senior notes
to finance the cash portion of the partial repurchase of the 5.5% Convertible Senior notes, which consisted of a repurchase of
approximately $66.3 million in aggregate principal amount of the 5.5% Convertible Senior notes in privately-negotiated
transactions for aggregate consideration of $128.9 million, consisting of approximately $90.2 million in cash and approximately
9.4 million shares of the Company’s common stock. of the $128.9 million in aggregate consideration, $35.5 million and $93.4
million were allocated to the debt and equity components, respectively, utilizing an effective discount rate of 29.8% to determine
the fair value of the liability component. as of the repurchase date, the carrying value of the 5.5% Convertible Senior notes that
were repurchased, net of unamortized debt discount and issuance costs, was $48.7 million. the partial repurchase of the 5.5%
Convertible Senior notes resulted in a $13.2 million gain on early debt extinguishment. in the fourth quarter of 2020, $33.5
million of the remaining 5.5% Convertible Senior notes converted into 14.6 million shares of common stock which resulted in a
gain of approximately $4.5 million which was recorded on the consolidated statement of operations on the gain (loss) on
extinguishment of debt line. as of december 31, 2020, approximately $160 thousand aggregate principal amount of the 5.5%
Convertible Senior notes remained outstanding, all of which were converted into common stock in January 2021.
in accounting for the issuance of the notes, the Company separated the 5.5% Convertible Senior notes into liability and
equity components. the initial carrying amount of the liability component of approximately $58.2 million, net of costs incurred,
was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. the carrying
amount of the equity component of approximately $37.7 million, net of costs incurred, representing the conversion option, was
determined by deducting the fair value of the liability component from the par value of the 5.5% Convertible Senior notes. the
difference between the principal amount of the 5.5% Convertible Senior notes and the liability component (the debt discount) is
amortized to interest expense using the effective interest method over the term of the 5.5% Convertible Senior notes. the
effective interest rate is approximately 16.0%. the equity component of the 5.5% Convertible Senior notes is included in
additional paid-in capital in the consolidated balance sheets and is not remeasured as long as it continues to meet the conditions
for equity classification.
we incurred transaction costs related to the issuance of the 5.5% Convertible Senior notes of approximately $4.1 million,
consisting of initial purchasers’ discount of approximately $3.3 million and other issuance costs of $0.9 million. in accounting for
the transaction costs, we allocated the total amount incurred to the liability and equity components using the same proportions as
the proceeds from the 5.5% Convertible Senior notes. transaction costs attributable to the liability component were
approximately $2.4 million, were recorded as debt issuance cost (presented as contra debt in the consolidated balance sheets) and
are being amortized to interest expense over the term of the 5.5% Convertible Senior notes. the transaction costs attributable to
the equity component were approximately $1.7 million and were netted with the equity component in stockholders’ equity.
the 5.5% Convertible Senior notes consisted of the following (in thousands):
December 31,
2020
December 31,
2019
Principal amounts:
Principal
unamortized debt discount (1)
unamortized debt issuance costs (1)
net carrying amount
Carrying amount of the equity component (2)
$
$
$
$
160
(32)
(1)
127
$
— $
100,000
(27,818)
(1,567)
70,615
37,702
1)
included in the consolidated balance sheets within the 5.5% Convertible Senior notes, net and amortized over the remaining life of the
5.5% Convertible Senior notes using the effective interest rate method.
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Notes to Consolidated Financial Statements (Continued)
2)
included in the consolidated balance sheets within additional paid-in capital, net of $1.7 million in equity issuance costs and associated
income tax benefit of $9.2 million, at december 31, 2019.
Capped Call
in conjunction with the pricing of the 5.5% Convertible Senior notes, the Company entered into privately negotiated
capped call transactions (the “5.5% notes Capped Call”) with certain counterparties at a price of $16.0 million. the 5.5% notes
Capped Call covers, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that
underlie the initial 5.5% Convertible Senior notes and is generally expected to reduce the potential dilution to the Company’s
common stock upon any conversion of the 5.5% Convertible Senior notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of the converted 5.5% Convertible Senior notes, as the case may be, with
such reduction and/or offset subject to a cap based on the cap price. the cap price of the 5.5% notes Capped Call is initially
$3.82 per share, which represents a premium of 100% over the last then-reported sale price of the Company’s common stock of
$1.91 per share on the date of the transaction and is subject to certain adjustments under the terms of the 5.5% notes Capped
Call. the 5.5% notes Capped Call becomes exercisable if the conversion option is exercised.
the net cost incurred in connection with the 5.5% notes Capped Call has been recorded as a reduction to additional paid-
in capital in the consolidated balance sheets.
in conjunction with the partial repurchase of the 5.5% Convertible Senior notes, the Company terminated 100% of the
5.5% notes Capped Call on June 5, 2020. as a result of the termination, the Company received $24.2 million which was
recorded in additional paid-in capital.
Common Stock Forward
in connection with the issuance of the 5.5% Convertible Senior notes, the Company also entered into a forward stock
purchase transaction, or the Common Stock Forward, pursuant to which the Company agreed to purchase 14,397,906 shares of its
common stock for settlement on or about March 15, 2023. in connection with the issuance of the 3.75% Convertible Senior notes
and the partial payoff of the 5.5% Convertible Senior notes, the Company amended and extended the maturity of the Common
Stock Forward to June 1, 2025. the number of shares of common stock that the Company will ultimately repurchase under the
Common Stock Forward is subject to customary anti-dilution adjustments. the Common Stock Forward is subject to early
settlement or settlement with alternative consideration in the event of certain corporate transactions.
the net cost incurred in connection with the Common Stock Forward of $27.5 million has been recorded as an increase in
treasury stock in the consolidated balance sheets. the related shares were accounted for as a repurchase of common stock.
the book value of the Common Stock Forward is not remeasured.
during the fourth quarter of 2020, the Common Stock Forward was partially settled and, as a result, the Company received
4.4 million shares of its common stock.
9.
16. Stockholders’ Equity
Preferred Stock
the Company has authorized 5.0 million shares of preferred stock, par value $0.01 per share. the Company’s certificate
of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. the Company’s
Board of directors is authorized to fix the voting rights, if any, designations, powers, preferences, qualifications, limitations and
restrictions thereof, applicable to the shares of each series.
the Company has authorized Series a Junior Participating Cumulative Preferred Stock, par value $0.01 per share. as of
december 31, 2020 and december 31, 2019, there were no shares of Series a Junior Participating Cumulative
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Notes to Consolidated Financial Statements (Continued)
Preferred Stock issued and outstanding. See note 17, “Redeemable Convertible Preferred Stock,” for a description of the
Company’s Series C Preferred Stock and Series e Preferred Stock.
Common Stock and Warrants
the Company has one class of common stock, par value $.01 per share. each share of the Company’s common stock is
entitled to one vote on all matters submitted to stockholders.
in February 2021, the Company completed the previously announced sale of its common stock in connection with a
strategic partnership with SK holdings to accelerate the use of hydrogen as an alternative energy source in asian markets. the
Company sold 54,966,188 shares of its common stock to a subsidiary of SK holdings at a purchase price of $29.2893 per share,
or an aggregate purchase price of approximately $1.6 billion.
in January and February 2021, the Company issued and sold in a registered equity offering an aggregate of 32.2 million
shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $1.8 billion. See note 23,
“Subsequent events,” for more information.
in november 2020, the Company issued and sold in a registered direct offering an aggregate of 43,700,000 shares of its
common stock at a purchase price of $22.25 per share for net proceeds of approximately $927.3 million.
in august 2020, the Company issued and sold in a registered direct offering an aggregate of 35,276,250 shares of its
common stock at a purchase price of $10.25 per share for net proceeds of approximately $344.4 million.
in december 2019, the Company issued and sold in a registered public offering an aggregate of 46 million shares of its
common stock at a purchase price of $2.75 per share for net proceeds of approximately $120.4 million.
in March 2019, the Company issued and sold in a registered direct offering an aggregate of 10 million shares of its
common stock at a purchase price of $2.35 per share. the net proceeds to the Company were approximately $23.5 million.
there were 458,051,920 and 303,378,515 shares of common stock outstanding as of december 31, 2020 and december
31, 2019, respectively.
during 2017, warrants to purchase up to 110,573,392 shares of common stock were issued in connection with
transaction agreements with amazon and walmart, as discussed in note 18, “warrant transaction agreements.” at december
31, 2020 and december 31, 2019, 68,380,913 and 26,188,434 of the warrant shares had vested, respectively, and are therefore
exercisable. these warrants are measured at fair value at the time of grant or modification and are classified as equity instruments
on the consolidated balance sheets. Refer to note 23, “Subsequent events.”
At Market Issuance Sales Agreement
on april 13, 2020, the Company entered into the at Market issuance Sales agreement with B. Riley Financial (“B.
Riley”) as sales agent, pursuant to which the Company may offer and sell, from time to time through B. Riley, shares of
Company common stock having an aggregate offering price of up to $75.0 million. as of the date of this filing, the Company has
not issued any shares of common stock pursuant to the at Market issuance Sales agreement.
Prior to december 31, 2019, the Company entered into a previous at Market issuance Sales agreement with B. Riley,
which was terminated in the fourth quarter of 2019. under this at Market issuance Sales agreement, for the year ended
december 31, 2019, the Company issued 6.3 million shares of common stock, resulting in net proceeds of $14.5 million and for
the year ended december 31, 2018, the Company issued 3.8 million shares of common stock, resulting in net proceeds of $7.0
million.
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Notes to Consolidated Financial Statements (Continued)
17. Redeemable Convertible Preferred Stock, as restated
Series E Preferred Stock
in november 2018, the Company issued an aggregate of 35,000 shares of the Company’s Series e Preferred Stock in a
private placement to certain accredited investors in reliance on Section 4(a)(2) of the Securities act. the Company received net
proceeds of approximately $30.9 million, after deducting placement agent fees and expenses payable by the Company. the
Company is required to redeem the Series e Preferred Stock in thirteen monthly installments in the amount of $2.7 million each
from May 2019 through May 2020. the Company had 0 and 500 shares of Series e Preferred Stock outstanding at december 31,
2020 and 2019, respectively. the remaining 500 shares were converted to common stock in January 2020.
during 2019, certain conversions of the Series e preferred stock resulted in a deemed dividend of approximately $1.8
million that is reflected on the Company’s consolidated statement of operations as Preferred stock dividends declared, deemed
dividends and accretion of discount.
Series C Preferred Stock
in april 2020, 870 shares of Series C Preferred Stock were converted to 923,819 shares of common stock. in May 2020,
the remaining the 1,750 shares of Series C Preferred Stock were converted into 1,858,256 shares of common stock.
18. Warrant Transaction Agreements
Amazon Transaction Agreement
on april 4, 2017, the Company and amazon entered into a transaction agreement (the “amazon transaction
agreement”), pursuant to which the Company agreed to issue to amazon.com nV investment holdings llC, a wholly owned
subsidiary of amazon, a warrant (the “amazon warrant”) to acquire up to 55,286,696 shares of the Company’s common stock
(the “amazon warrant Shares”), subject to certain vesting events described below. the Company and amazon entered into the
amazon transaction agreement in connection with existing commercial agreements between the Company and amazon with
respect to the deployment of the Company’s GenKey fuel cell technology at amazon distribution centers. the existing
commercial agreements contemplate, but do not guarantee, future purchase orders for the Company’s fuel cell technology. the
vesting of the amazon warrant Shares was conditioned upon payments made by amazon or its affiliates (directly or indirectly
through third parties) pursuant to the existing commercial agreements.
under the terms of the original amazon warrant, the first tranche of the 5,819,652 amazon warrant Shares vested upon
execution of the amazon warrant, and the remaining amazon warrant Shares vest based on amazon’s payment of up to $600.0
million to the Company in connection with amazon’s purchase of goods and services from the Company. the $6.7 million fair
value of the first tranche of the amazon warrant Shares, was recognized as selling, general and administrative expense upon
execution of the amazon warrant.
Provision for the second and third tranches of amazon warrant Shares is recorded as a reduction of revenue, because
they represent consideration payable to a customer.
the fair value of the second tranche of amazon warrant Shares was measured at January 1, 2019, upon adoption of
aSu 2019-08. the second tranche of 29,098,260 amazon warrant Shares vested in four equal installments, as amazon or its
affiliates, directly or indirectly through third parties, made an aggregate of $50.0 million in payments for goods and services to
the Company, up to payments totaling $200.0 million in the aggregate. the last installment of the second tranche vested on
november 2, 2020. Revenue reductions of $9.0 million, $4.1 million and $9.8 million associated with the second tranche of
amazon warrant Shares were recorded in 2020, 2019 and 2018, respectively, under the terms of the original amazon warrant.
F-76
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Notes to Consolidated Financial Statements (Continued)
under the terms of the original amazon warrant, the third tranche of 20,368,784 amazon warrant Shares vests in eight
equal installments, as amazon or its affiliates, directly or indirectly through third parties, made an aggregate of $50.0 million in
payments for goods and services to the Company, up to payments totaling $400.0 million in the aggregate. the measurement date
for the third tranche of amazon warrant Shares was november 2, 2020, when their exercise price was determined, as discussed
further below. the fair value of the third tranche of amazon warrant Shares was determined to be $10.57 each. during 2020,
revenue reductions of $24.1 million associated with the third tranche amazon warrant Shares were recorded under the terms of
the original amazon warrant, prior to the december 31, 2020 waiver described below.
on december 31, 2020, the Company waived the remaining vesting conditions under the amazon warrant, which
resulted in the immediate vesting of all the third tranche of the amazon warrant Shares and recognition of an additional $399.7
million reduction to revenue.
the $399.7 million reduction to revenue resulting from the december 31, 2020 waiver was determined based upon a
probability assessment of whether the underlying shares would have vested under the terms of the original amazon warrant.
Based upon the Company’s projections of probable future cash collections from amazon (i.e., a type i share based payment
modification), a reduction of revenue associated with 5,354,905 amazon warrant Shares was recognized at their previously
measured november 2, 2020 fair value of $10.57 per warrant. a reduction of revenue associated with the remaining 12,730,490
amazon warrant Shares was recognized at their december 31, 2020 fair value of $26.95 each, based upon the Company’s
assessment that associated future cash collections from amazon were not deemed probable (i.e., a type iii share based payment
modification).
the $399.7 million reduction to revenue was recognized during the year ended december 31, 2020 because the
Company concluded such amount was not recoverable from the margins expected from future purchases by amazon under the
amazon warrant, and no exclusivity or other rights were conferred to the Company in connection with the december 31, 2020
waiver. additionally, for the year ended december 31, 2020, the Company recorded a reduction to the provision for warrants of
$12.8 million in connection with the release of the service loss accrual.
at december 31, 2020 and december 31, 2019, 55,286,696 and 20,368,782 of the amazon warrant Shares had vested,
respectively. the total amount of provision for common stock warrants recorded as a reduction of revenue for the amazon
warrant during the years ended december 31, 2020, and 2019 and 2018 was $420.0 million, $4.1 million, and $9.8 million,
respectively.
the exercise price for the first and second tranches of amazon warrant Shares is $1.1893 per share. the exercise price
of the third tranche of amazon warrant Shares is $13.81 per share, which was determined pursuant to the terms of the amazon
warrant as an amount equal to ninety percent (90%) of the 30-day volume weighted average share price of the Company’s
common stock as of november 2, 2020, the final vesting date of the second tranche of amazon warrant Shares. the amazon
warrant is exercisable through april 4, 2027. the amazon warrant provides for net share settlement that, if elected by the
holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. the amazon warrant
provides for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon
exercise due to customary anti-dilution provisions based on future events. the amazon warrant is classified as an equity
instrument.
Fair value of the amazon warrant at december 31, 2020 and november 2, 2020 was based on the Black Scholes option
Pricing Model, which is based, in part, upon level 3 unobservable inputs for which there is little or no market data, requiring the
Company to develop its own assumptions.
the Company used the following assumptions for its amazon warrant:
Risk-free interest rate
Volatility
expected average term
exercise price
Stock price
December 31, 2020
0.58%
75.00%
6.26
$13.81
$33.91
November 2, 2020
0.58%
75.00%
6.42
$13.81
$15.47
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Notes to Consolidated Financial Statements (Continued)
Walmart Transaction Agreement
on July 20, 2017, the Company and walmart entered into a transaction agreement (the “walmart transaction
agreement”), pursuant to which the Company agreed to issue to walmart a warrant (the “walmart warrant”) to acquire up to
55,286,696 shares of the Company’s common stock, subject to certain vesting events (the “walmart warrant Shares”). the
Company and walmart entered into the walmart transaction agreement in connection with existing commercial agreements
between the Company and walmart with respect to the deployment of the Company’s GenKey fuel cell technology across
various walmart distribution centers. the existing commercial agreements contemplate, but do not guarantee, future purchase
orders for the Company’s fuel cell technology. the vesting of the warrant shares conditioned upon payments made by walmart
or its affiliates (directly or indirectly through third parties) pursuant to transactions entered into after January 1, 2017 under
existing commercial agreements.
the majority of the walmart warrant Shares will vest based on walmart’s payment of up to $600.0 million to the
Company in connection with walmart’s purchase of goods and services from the Company. the first tranche of 5,819,652
walmart warrant Shares vested upon the execution of the walmart warrant and was fully exercised as of december 31, 2020.
accordingly, $10.9 million, the fair value of the first tranche of walmart warrant Shares, was recorded as a provision for
common stock warrants and presented as a reduction to revenue on the consolidated statements of operations during 2017. all
future provision for common stock warrants is measured based on their grant-date fair value and recorded as a charge against
revenue. the second tranche of 29,098,260 walmart warrant Shares vests in four installments of 7,274,565 walmart warrant
Shares each time walmart or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in
payments for goods and services to the Company, up to payments totaling $200.0 million in the aggregate. the exercise price for
the first and second tranches of walmart warrant Shares is $2.1231 per share. after walmart has made payments to the
Company totaling $200.0 million, the third tranche of 20,368,784 walmart warrant Shares will vest in eight installments of
2,546,098 walmart warrant Shares each time walmart or its affiliates, directly or indirectly through third parties, make an
aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $400.0 million in the
aggregate. the exercise price of the third tranche of walmart warrant Shares will be an amount per share equal to ninety percent
(90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche
of walmart warrant Shares, provided that, with limited exceptions, the exercise price for the third tranche will be no lower than
$1.1893. the walmart warrant is exercisable through July 20, 2027.
the walmart warrant provides for net share settlement that, if elected by the holder, will reduce the number of shares
issued upon exercise to reflect net settlement of the exercise price. the walmart warrant provides for certain adjustments that
may be made to the exercise price and the number of shares of common stock issuable upon exercise due to customary anti-
dilution provisions based on future events. the walmart warrant is classified as an equity instrument.
at december 31, 2020 and december 31, 2019, 13,094,217 and 5,819,652 of the walmart warrant Shares had vested,
respectively. the total amount of provision for common stock warrants recorded as a reduction of revenue for the walmart
warrant during the years ended december 31, 2020, 2019 and 2018 was $5.0 million, $2.4 million and $0.4 million, respectively.
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Notes to Consolidated Financial Statements (Continued)
19. Revenue, as restated
Disaggregation of revenue
the following table provides information about disaggregation of revenue (in thousands):
Major products/services lines
Sales of fuel cell systems
Sale of hydrogen infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other
net revenue
Contract balances
Year ended December 31,
2019
2018
2020
(as restated)
(as restated)
(55,091) $
(39,204)
(9,801)
26,620
(16,072)
311
(93,237) $
130,757 $
19,163
25,217
25,553
29,099
186
229,975 $
75,029
32,146
22,002
22,569
22,469
—
174,215
$
$
the following table provides information about receivables, contract assets and contract liabilities from contracts with
customers (in thousands):
accounts receivable
Contract assets
Contract liabilities
$
2020
2019
$
43,041
18,189
76,285
25,768
13,251
40,743
Contract assets relate to contracts for which revenue is recognized on a straight-line basis, however billings escalate
over the life of a contract. Contract assets also include amounts recognized as revenue in advance of billings to customers, which
are dependent upon the satisfaction of another performance obligation. these amounts are included in prepaid expenses and other
assets on the consolidated balance sheet.
the contract liabilities relate to the advance consideration received from customers for services that will be recognized
over time (primarily fuel cell and related infrastructure services). Contract liabilities also include advance consideration received
from customers prior to delivery of products. these amounts are included within deferred revenue and other liabilities on the
consolidated balance sheet.
Significant changes in the contract assets and the contract liabilities balances during the period are as follows (in
thousands):
Contract assets
transferred to receivables from contract assets recognized at the beginning of the period
Revenue recognized and not billed as of the end of the period
net change in contract assets
$
$
F-79
Year ended
December 31, 2020
(5,483)
10,421
4,938
table of Contents
Contract liabilities
Notes to Consolidated Financial Statements (Continued)
increases due to cash received, net of amounts recognized as revenue during the period
Contract liabilities assumed as part of acquisitions
Revenue recognized that was included in the contract liability balance as of the beginning
of the period
net change in contract liabilities
$
$
Estimated future revenue
Year ended
December 31, 2020
100,492
2,350
(67,300)
35,542
the following table includes estimated revenue included in the backlog expected to be recognized in the future (sales of
fuel cell systems and hydrogen installations are expected to be recognized as revenue within one year; sales of services and PPas
are expected to be recognized as revenue over five to seven years) related to performance obligations that are unsatisfied (or
partially unsatisfied) at the end of the reporting period, including provision for common stock warrants (in thousands):
Estimated future revenue
Sales of fuel cell systems
Sale of hydrogen installations and other infrastructure
Services performed on fuel cell systems and related infrastructure
Power Purchase agreements
Fuel delivered to customers
other rental income
total estimated future revenue
Contract costs
December 31,
2020
16,209
28,282
75,467
178,450
65,704
3,294
367,406
$
$
Contract costs consists of capitalized commission fees and other expenses related to obtaining or fulfilling a contract.
Capitalized contract costs at december 31, 2020 and 2019 were $1.5 million and $0.5, respectively.
20. Employee Benefit Plans
2011 Stock Option and Incentive Plan
on May 12, 2011, the Company’s stockholders approved the 2011 Stock option and incentive Plan (the “2011 Plan”).
the 2011 Plan provided for the issuance of up to a maximum number of shares of common stock equal to the sum of (i)
1,000,000, plus (ii) the number of shares of common stock underlying any grants pursuant to the 2011 Plan or the Plug Power
inc. 1999 Stock option and incentive Plan that are forfeited, canceled, repurchased or are terminated (other than by exercise).
the shares may be issued pursuant to stock options, stock appreciation rights, restricted stock awards and certain other equity-
based awards granted to employees, directors and consultants of the Company. no grants may be made under the 2011 Plan after
May 12, 2021. through various amendments to the 2011 Plan approved by the Company’s stockholders, the number of shares of
the Company’s common stock authorized for issuance under the 2011 Plan has been increased to 42.4 million. For the years
ended december 31, 2020, 2019, and 2018, the Company recorded expense of approximately $14.4 million, $8.8 million, and
$7.4 million, respectively, in connection with the third amended and Restated 2011 Stock option and incentive Plan.
at december 31, 2020, there were outstanding options to purchase approximately 10.2 million shares of Common Stock
and 0.8 million shares available for future awards under the 2011 Plan, including adjustments for other types of
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Notes to Consolidated Financial Statements (Continued)
share-based awards. options for employees issued under this plan generally vest in equal annual installments over three years and
expire ten years after issuance. options granted to members of the Board generally vest one year after issuance. to date, options
granted under the 2011 Plan have vesting provisions ranging from one to three years in duration and expire ten years after
issuance.
Compensation cost associated with employee stock options represented approximately $6.8 million, $6.0 million, and
$6.4 million of the total share-based payment expense recorded for the years ended december 31, 2020, 2019, and 2018,
respectively. the Company estimates the fair value of stock options using a Black-Scholes valuation model, and the resulting fair
value is recorded as compensation cost on a straight-line basis over the option vesting period. Key inputs and assumptions used to
estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s
stock, an appropriate risk-free rate, and the Company’s dividend yield. estimates of fair value are not intended to predict actual
future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative
of the reasonableness of the original estimates of fair value made by the Company. the assumptions made for purposes of
estimating fair value under the Black-Scholes model for the 3,509,549, 3,221,892 and 2,679,667 options granted during the years
ended december 31, 2020, 2019, and 2018, respectively, were as follows:
expected term of options (years)
Risk free interest rate
Volatility
2020
6
0.37% - 1.37%
64.19% - 68.18%
2019
6
1.52% - 2.53%
69.32% - 87.94%
2018
6
2.81% - 2.88%
98.31% - 98.89%
there was no expected dividend yield for the employee stock options granted.
the Company used the simplified method in determining its expected term of all its stock option grants in all periods
presented. the simplified method was used because the Company does not believe historical exercise data provides a reasonable
basis for the expected term of its grants, due primarily to the limited number of stock option exercises that occurred. the
Company expects to cease using the simplified method to determine its expected term for stock option grants in 2021. the
estimated stock price volatility was derived from the Company’s actual historic stock prices over the past six years, which
represents the Company’s best estimate of expected volatility.
a summary of stock option activity for the year december 31, 2020 is as follows (in thousands except share amounts):
options outstanding at december 31, 2019
Granted
exercised
Forfeited
expired
options outstanding at december 31, 2020
options exercisable at december 31, 2020
options unvested at december 31, 2020
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Terms
Aggregate
Intrinsic
Value
2.48
12.79
2.55
6.32
4.78
5.78
2.31
8.07
6.6
—
—
—
—
7.8
5.8
9.1
$
$
$
22,277
—
—
—
—
289,316
129,068
160,248
Shares
23,013,590
3,509,549
(16,159,742)
(73,249)
(5,650)
10,284,498
4,084,124
6,200,374
$
$
$
the weighted average grant-date fair value of options granted during the years ended december 31, 2020, 2019, and
2018 was $7.22, $1.67, and $1.55, respectively. as of december 31, 2020, there was approximately $8.1 million of unrecognized
compensation cost related to stock option awards to be recognized over the next three years. the total fair value of stock options
that vested during the years ended december 31, 2020 and 2019 was approximately $5.9 million and $6.1 million, respectively.
Restricted stock awards generally vest in equal installments over a period of one to three years. Restricted stock awards
are valued based on the closing price of the Company’s common stock on the date of grant, and compensation cost is recorded on
a straight-line basis over the share vesting period. the Company recorded expense associated with its restricted stock awards of
approximately $7.6 million, $2.8 million, and $966 thousand, for the years ended december 31,
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Notes to Consolidated Financial Statements (Continued)
2020, 2019, and 2018, respectively. additionally, for the years ended december 31, 2020, 2019, and 2018, there was $41.5
million, $8.4 million, and $3.9 million respectively, of unrecognized compensation cost related to restricted stock awards to be
recognized over the next three years.
a summary of restricted stock activity for the year ended december 31, 2020 is as follows (in thousands except share
amounts):
unvested restricted stock at december 31, 2019
Granted
Vested
Forfeited
unvested restricted stock at december 31, 2020
401(k) Savings & Retirement Plan
Shares
4,608,560
3,227,149
(1,896,901)
(64,166)
5,874,642
$
$
Aggregate
Intrinsic
Value
—
—
—
199,209
the Company offers a 401(k) Savings & Retirement Plan to eligible employees meeting certain age and service
requirements. this plan permits participants to contribute 100% 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 or less
actual losses thereon. Participants are vested in the Company’s matching contribution based on years of service completed.
Participants are fully vested upon completion of three years of service. during 2018, the Company began funding its matching
contribution in a combination of cash and common stock. accordingly, the Company has issued 403,474 shares and 841,539
shares of common stock to the Plug Power inc. 401(k) Savings & Retirement Plan during 2020 and 2019, respectively.
the Company’s expense for this plan was approximately $2.6 million, $1.9 million, and $1.8 million for the years ended
december 31, 2020, 2019, and 2018, respectively.
Non-Employee Director Compensation
each non-employee director is paid an annual retainer for their services, in the form of either cash or stock
compensation. the Company granted 36,175, 114,285, and 107,389 shares of stock to non-employee directors as compensation
for the years ended december 31, 2020, 2019, and 2018, respectively. all common stock issued is fully vested at the time of
issuance and is valued at fair value on the date of issuance. the Company’s share-based compensation expense for this plan was
approximately $228 thousand, $243 thousand, and $261 thousand for the years ended december 31, 2020, 2019, and 2018,
respectively.
21. Income Taxes, as restated
the components of loss before income taxes and the income tax benefit for the years ended december 31, 2020, 2019,
and 2018, by jurisdiction, are as follows (in thousands):
loss before income taxes
income tax benefit
net loss attributable to the Company
$
$
2020
Foreign
U.S.
(624,302) $ (2,698) $ (627,000) $ (82,188) $ (1,555) $ (83,743) $ (93,497) $ (1,407) $ (94,903)
9,295
(593,457) $ (2,698) $ (596,155) $ (82,188) $ (1,555) $ (83,743) $ (84,201) $ (1,407) $ (85,608)
U.S.
U.S.
30,845
30,845
Total
9,295
—
—
—
—
—
2019
(as restated)
Foreign Total
2018
(as restated)
Foreign Total
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Notes to Consolidated Financial Statements (Continued)
the significant components of deferred income tax expense (benefit) for the years ended december 31, 2020, 2019, and
2018, by jurisdiction, are as follows (in thousands):
deferred tax (benefit) expense
net operating loss carryforward generated
Valuation allowance increase (decrease)
Benefit for income taxes
U.S.
(31,408)
(51,849)
52,412
(30,845)
$
$
2020
Foreign
Total
U.S.
2019
(as restated)
Foreign Total
U.S.
2018
(as restated)
Foreign Total
$
$
(67)
(438)
505
$ — $
(31,475)
(52,287)
52,917
(30,845)
$
$ (10,621)
(5,099)
15,720
(426)
(270)
696
$ (11,047)
(5,369)
16,416
$
— $
— $
— $
$ (11,745)
(10,321)
12,771
(9,295)
$
933
(665)
(268)
$ — $
$ (10,812)
(10,986)
12,503
(9,295)
the Company’s effective income tax rate differed from the federal statutory rate as follows:
u.S. Federal statutory tax rate
deferred state taxes
Common stock warrant liability
other, net
Change in valuation allowance
2020
(21.0)%
(2.3)%
13.4 %
(3.4)%
8.4 %
(4.9)%
2019
(21.0)%
1.4 %
— %
(0.5)%
20.1 %
0.0 %
2018
(21.0)%
(1.9)%
(1.0)%
0.9 %
13.2 %
(9.8)%
deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of certain assets
and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s
deferred tax assets and liabilities as of december 31, 2020 and 2019 are as follows (in thousands):
intangible assets
deferred revenue
interest expense
other reserves and accruals
tax credit carryforwards
amortization of stock-based compensation
non-compensatory warrants
Capitalized research & development expenditures
Right of use liability (operating leases)
net operating loss carryforwards
total deferred tax asset
Valuation allowance
net deferred tax assets
intangible assets
Convertible debt
Right of use asset (operating leases)
other reserves and accruals
Property, plant and equipment and right of use assets
deferred tax liability
net
U.S.
2019
(as restated)
2020
2020
$
— $
— $
16,082
21,183
5,087
4,360
3,900
5,020
30,870
27,715
110,978
225,195
(154,467)
70,728
(7,360)
(27,420)
(27,684)
—
(9,191)
(71,655)
(927)
$
$
$
$
$
$
7,922
10,216
1,504
2,590
9,081
4,322
22,601
22,647
54,438
135,321
(102,055)
33,266
(15)
(6,592)
(23,040)
—
(3,619)
(33,266)
$
$
— $
Foreign
Total
$
2019
(as restated)
1,197
$
129
—
—
1,253
—
—
4,483
—
9,576
16,638
(16,622)
16
—
—
—
(16)
—
(16)
$
— $
$
$
1,197
192
—
—
1,253
—
—
4,483
—
10,014
17,139
(17,127)
12
—
—
—
(12)
—
(12)
$
— $
2020
1,197
16,274
21,183
5,087
5,613
3,900
5,020
35,353
27,715
120,992
242,334
(171,594)
70,740
(7,360)
(27,420)
(27,684)
(12)
(9,191)
(71,667)
(927)
2019
(as restated)
1,197
8,051
10,216
1,504
3,843
9,081
4,322
27,084
22,647
64,014
151,959
(118,677)
33,282
(15)
(6,592)
(23,040)
(16)
(3,619)
(33,282)
—
$
$
$
$
the Company has recorded a valuation allowance, as a result of uncertainties related to the realization of its net deferred
tax asset, at december 31, 2020 and 2019 of approximately $171.6 million and $118.7 million, respectively. a reconciliation of
the current year change in valuation allowance is as follows (in thousands):
increase in valuation allowance for current year increase in net operating losses
increase (decrease) in valuation allowance for current year net increase (decrease)
in deferred tax assets other than net operating losses
decrease in valuation allowance as a result of foreign currency fluctuation
increase in valuation allowance due to change in tax rates
net increase in valuation allowance
U.S.
51,848
(5,742)
6,306
—
52,412
$
$
$
$
Foreign
Total
51,848
$
133
—
372
505
(5,609)
6,306
372
52,917
$
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Notes to Consolidated Financial Statements (Continued)
the deferred tax assets have been offset by a full valuation allowance because it is more likely than not that the tax
benefits of the net operating loss carryforwards and other deferred tax assets may not be realized due to cumulative losses.
under Section 382 of the internal Revenue Code of 1986, as amended (the “Code”), the use of loss carryforwards may
be limited if a change in ownership of a company occurs. if it is determined that due to transactions involving the Company’s
shares owned by its 5 percent or greater stockholders a change of ownership has occurred under the provisions of Section 382 of
the Code, the Company's federal and state nol carryforwards could be subject to significant Section 382 limitations.
Based on studies of the changes in ownership of the Company, it has been determined that an ownership change under
Section 382 of the Code occurred in 2013 that limited the amount of pre-change nol that can be used in future years to $13.5
million. these nol carryforwards will expire, if unused, at various dates from 2020 through 2033. nols of $450.9 million
incurred after the most recent ownership change are not subject to Section 382 of the Code and are available for use in future
years. accordingly, the Company's deferred tax assets include $464.4 million of u.S. net operating loss carryforwards. the nol
carryforwards available at december 31, 2020, include $205.2 million of nol that was generated in 2020, $25.0 million of net
operating loss that was generated in 2019 and $43.4 million of nol that was generated in 2018 that do not expire (2019 and
2018 as restated). the remainder, if unused, will expire at various dates from 2032 through 2037.
approximately $4.4 million of research credit carryforwards generated after the most recent iRC Section 382 ownership
change are included in the Company's deferred tax assets. due to limitations under iRC Section 382, research credit
carryforwards existing prior to the most recent iRC Section 382 ownership change will not be used and are not reflected in the
Company's gross deferred tax asset at december 31, 2020. the remaining credit carryforwards will expire during the periods
2033 through 2040.
at december 31, 2020, the Company has unused Canadian net operating loss carryforwards of approximately $14.0
million. the net operating loss carryforwards if unused will expire at various dates from 2026 through 2034. at december 31,
2020, the Company has Scientific Research and experimental development (“SR&ed”) expenditures of $17.2 million available
to offset future taxable income. these SR&ed expenditures have no expiry date. at december 31, 2020, the Company has
Canadian itC credit carryforwards of $1.3 million available to offset future income tax. these credit carryforwards if unused
will expire at various dates from 2022 through 2028.
at december 31, 2020, the Company has unused French net operating loss carryforwards of approximately $21.3
million. the net operating loss may carryforward indefinitely or until the Company changes its activity.
as of december 31, 2020, the Company has no un-repatriated foreign earnings or unrecognized tax benefits.
the Company files income tax returns in the u.S. federal jurisdiction and various state and foreign jurisdictions. in the
normal course of business, the Company is subject to examination by taxing authorities. open tax years in the uS range from
2017 and forward. open tax years in the foreign jurisdictions range from 2010 to 2019. however, upon examination in
subsequent years, if net operating losses carryforwards and tax credit carryforwards are utilized, the uS and foreign jurisdictions
can reduce net operating loss carryforwards and tax credit carryforwards utilized in the year being examined if they do not agree
with the carryforward amount. as of december 31, 2020, the Company was not under audit in the u.S. or non-u.S. taxing
jurisdictions.
the Company recognized an income tax benefit for the year ended december 31, 2020 of $30.8 million resulting from a
source of future taxable income attributable to the net credit to additional paid-in capital of $25.6 million related to the issuance
of the 3.75% Convertible Senior notes, offset by the partial extinguishment of the 5.5% Convertible Senior notes and $5.2
million of income tax benefit for the year ended december 31, 2020 related to the recognition of net deferred tax liabilities in
connection with the Giner elX acquisition. this resulted in a corresponding reduction in our deferred tax asset valuation
allowance. the Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net
deferred tax assets, which remain fully reserved.
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Notes to Consolidated Financial Statements (Continued)
22. Commitments and Contingencies, as restated
Restricted Cash
in connection with certain of the above noted sale/leaseback agreements, cash of $169.0 million was required to be
restricted as security as of december 31, 2020, which restricted cash will be released over the lease term. as of december 31,
2020, the Company also had certain letters of credit backed by security deposits totaling $152.4 million that are security for the
above noted sale/leaseback agreements.
the Company also had letters of credit in the aggregate amount of $0.5 million at december 31, 2020 associated with a
finance obligation from the sale/leaseback of its building. we consider cash collateralizing this letter of credit as restricted cash.
Litigation
legal matters are defended and handled in the ordinary course of business. liabilities for loss contingencies arising
from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has
been incurred and the amount can be reasonably estimated. legal costs incurred in connection with loss contingencies are
expensed as incurred. the Company has not recorded any accruals related to any legal matters.
Concentrations of credit risk
Concentrations of credit risk with respect to receivables exist due to the limited number of select customers with whom
the Company has initial commercial sales arrangements. to mitigate credit risk, the Company performs appropriate evaluation of
a prospective customer’s financial condition.
at december 31, 2020, three customers comprised approximately 73.9% of the total accounts receivable balance. at
december 31, 2019, two customers comprised approximately 62.6% of the total accounts receivable balance.
on december 31, 2020, the Company waived the remaining vesting conditions under the amazon warrant, which
resulted in a reduction in revenue of $399.7 million, which resulted in negative consolidated revenue of $93.2 million for the year
ended december 31, 2020. See note 18, “warrant transaction agreements,” to the consolidated financial statements for further
information. total revenue in 2020 for this customer was negative $310.1 million. For the year ended december 31, 2020, this
customer accounted for (332.4)% of our total consolidated revenues which included a provision for warrant charge of $420.0
million, which was recorded as a reduction of revenue. additionally, 156.2% of our total consolidated revenues were associated
primarily with two other customers. For the year ended december 31, 2019 49.7% of total consolidated revenues were associated
primarily with two customers, as restated. For the year ended december 31, 2018 66.8% of total consolidated revenues were
associated primarily with two customers, as restated. For purposes of assigning a customer to a sale/leaseback transaction
completed with a financial institution, the Company considers the end user of the assets to be the ultimate customer. at
december 31, 2020, three customers comprised approximately 73.9% of the total accounts receivable balance. at december 31,
2019, two customers comprised approximately 62.6% of the total accounts receivable balance.
23. Subsequent Events
Capital Raise
in January and February 2021, the Company issued and sold in a registered equity offering an aggregate of 32,200,000
shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $1.8 billion.
3.75% Convertible Senior Notes
during January and February of 2021, $15.2 million of the 3.75% Convertible Senior notes were converted and the
Company has issued 3.0 million shares in conjunction with these conversions.
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Strategic Investment
Notes to Consolidated Financial Statements (Continued)
in February 2021, the Company completed the previously announced sale of its common stock in connection with a
strategic partnership with SK holdings to accelerate the use of hydrogen as an alternative energy source in asian markets. the
Company sold 54,966,188 shares of its common stock to a subsidiary of SK holdings at a purchase price of $29.2893 per share,
or an aggregate purchase price of approximately $1.6 billion.
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table of Contents
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.
SIGNATURES
PluG PoweR inC.
By:
/s/ andRew MaRSh
andrew Marsh
President, Chief Executive Officer and Director
date: May 13, 2021
F-87
FOURTH AMENDED AND RESTATED
Exhibit 3.9
BY-LAWS
OF
PLUG POWER INC.
(the “Corporation”)
Adopted by the Board of Directors on [•] of April, 2021
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 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 other business to be considered by the stockholders may be brought
before an annual Meeting (i) by or at the direction of the Board of directors or (ii) by any
stockholder of the Corporation who was a stockholder of record at the time of giving of notice
provided for in these By-laws, who is entitled to vote at the meeting, who is present (in person or by
proxy) at the meeting and who complies with the notice procedures set forth in these By-laws as to
such nomination or business. For the avoidance of doubt, the foregoing clause (ii) shall be the
exclusive means for a stockholder to bring nominations or business properly before an annual
Meeting (other than matters properly brought under Rule 14a-8 (or any successor rule) under the
Securities exchange act of 1934, as amended (the “exchange act”)), and such stockholder must
comply with the notice and other procedures set forth in article i, Section 2(a)(2) and (3) of these By-
laws to bring such nominations or business properly before an annual Meeting. in addition to the
other requirements set forth in these By-laws, for any proposal of business to be considered at an
annual Meeting, it must be a proper subject for action by stockholders of the Corporation under
delaware law.
(2)
For nominations or other business to be properly brought before an annual
Meeting by a stockholder pursuant to clause (ii) of article i, Section 2(a)(1) of these By-laws, the
stockholder must (i) have given timely notice (as defined below) thereof in writing to the Secretary
of the Corporation, (ii) have provided any updates or supplements to such notice at the times and in
the forms required by these By-laws and (iii) together with the beneficial owner(s), if any, on whose
behalf the nomination or business proposal is made, have acted in accordance with the
representations set forth in the Solicitation Statement (as defined below) required by these By-laws.
to be timely, a stockholder’s written notice shall be received by the Secretary at the principal
executive offices of the Corporation not later than the close of business on the ninetieth (90th) day
nor earlier than the close of business on the one hundred twentieth (120th) day prior to the one-year
anniversary of the preceding year’s annual Meeting; provided, however, that in the event the annual
Meeting is first convened more than thirty (30) days before or more than sixty (60) days after such
anniversary date, or if no annual Meeting were held in the preceding year, notice by the stockholder
to be timely must be received by the Secretary of the Corporation not later than the close of business
on the later of the ninetieth (90th) day prior to the scheduled date of such annual Meeting or the tenth
(10th) day following the day on which public announcement of the date of such meeting is first made
(such notice within such time periods shall be referred to as “timely notice”). Such stockholder’s
timely 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 exchange act (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, and any material interest in such business of each
Proposing Person (as defined below);
(C)
(i) the name and address of the stockholder giving the notice, as they
appear on the Corporation’s books, and the names and addresses of the other Proposing Persons (if
any) and (ii) as to each Proposing Person, the following information: (a) the class or series and
number of all shares of capital stock of the Corporation which are, directly or indirectly, owned
beneficially or of record by such Proposing Person or any of its affiliates or associates (as such terms
are defined in Rule 12b-2 promulgated under the exchange act), including any shares of any class or
series of capital stock of the Corporation as to which such Proposing Person or any of its affiliates or
associates has a right to acquire beneficial ownership at any time in the future, (b) all Synthetic
equity interests (as defined below) in which such Proposing Person or any of its affiliates or
associates, directly or indirectly, holds an interest including a description of the material terms of
each such Synthetic equity interest, including without limitation, identification of the counterparty to
each such Synthetic equity interest and disclosure, for each such Synthetic equity interest, as to (x)
whether or not such Synthetic equity interest conveys any voting rights, directly or indirectly, in such
shares to such Proposing Person, (y) whether or not such Synthetic equity interest is required to be,
or is capable of being,
settled through delivery of such shares and (z) whether or not such Proposing Person and/or, to the
extent known, the counterparty to such Synthetic equity interest has entered into other transactions
that hedge or mitigate the economic effect of such Synthetic equity interest, (c) any proxy (other than
a revocable proxy given in response to a public proxy solicitation made pursuant to, and in
accordance with, the exchange act), agreement, arrangement, understanding or relationship pursuant
to which such Proposing Person has or shares a right to, directly or indirectly, vote any shares of any
class or series of capital stock of the Corporation, (d) any rights to dividends or other distributions on
the shares of any class or series of capital stock of the Corporation, directly or indirectly, owned
beneficially by such Proposing Person that are separated or separable from the underlying shares of
the Corporation, and (e) any performance-related fees (other than an asset based fee) that such
Proposing Person, directly or indirectly, is entitled to based on any increase or decrease in the value
of shares of any class or series of capital stock of the Corporation or any Synthetic equity interests
(the disclosures to be made pursuant to the foregoing clauses (a) through (e) are referred to,
collectively, as “Material ownership interests”) and (iii) a description of the material terms of all
agreements, arrangements or understandings (whether or not in writing) entered into by any
Proposing Person or any of its affiliates or associates with any other person for the purpose of
acquiring, holding, disposing or voting of any shares of any class or series of capital stock of the
Corporation;
(d)
(i) a description of all agreements, arrangements or understandings by
and among any of the Proposing Persons, or by and among any Proposing Persons and any other
person (including with any proposed nominee(s)), pertaining to the nomination(s) or other business
proposed to be brought before the meeting of stockholders (which description shall identify the name
of each other person who is party to such an agreement, arrangement or understanding), and (ii)
identification of the names and addresses of other stockholders (including beneficial owners) known
by any of the Proposing Persons to support such nominations or other business proposal(s), and to the
extent known the class and number of all shares of the Corporation’s capital stock owned beneficially
or of record by such other stockholder(s) or other beneficial owner(s); and
(e)
a statement whether or not the stockholder giving the notice and/or the
other Proposing Person(s), if any, will deliver a proxy statement and form of proxy to holders of, in
the case of a business proposal, at least the percentage of voting power of all of the shares of capital
stock of the Corporation required under applicable law to approve the proposal or, in the case of a
nomination or nominations, at least the percentage of voting power of all of the shares of capital stock
of the Corporation reasonably believed by such Proposing Person to be sufficient to elect the nominee
or nominees proposed to be nominated by such stockholder (such statement, the “Solicitation
Statement”).
For purposes of this article i of these By-laws, the term “Proposing Person” shall mean the
following persons: (i) the stockholder of record providing the notice of nominations or business
proposed to be brought before a stockholders’ meeting, and (ii) the beneficial owner(s), if different,
on whose behalf the nominations or business proposed to be brought before a stockholders’ meeting
is made. For purposes of this Section 2 of article i of these By-laws, the term “Synthetic equity
interest” shall mean any transaction, agreement or arrangement (or series of transactions, agreements
or arrangements), including, without limitation, any derivative, swap, hedge, repurchase or so-called
“stock borrowing” agreement or arrangement, the purpose or
effect of which is to, directly or indirectly: (a) give a person or entity economic benefit and/or risk
similar to ownership of shares of any class or series of capital stock of the Corporation, in whole or in
part, including due to the fact that such transaction, agreement or arrangement provides, directly or
indirectly, the opportunity to profit or avoid a loss from any increase or decrease in the value of any
shares of any class or series of capital stock of the Corporation, (b) mitigate loss to, reduce the
economic risk of or manage the risk of share price changes for, any person or entity with respect to
any shares of any class or series of capital stock of the Corporation, (c) otherwise provide in any
manner the opportunity to profit or avoid a loss from any decrease in the value of any shares of any
class or series of capital stock of the Corporation, or (d) increase or decrease the voting power of any
person or entity with respect to any shares of any class or series of capital stock of the Corporation.
(3)
a stockholder providing timely notice of nominations or business proposed to
be brought before an annual Meeting shall further update and supplement such notice, if necessary,
so that the information (including, without limitation, the Material ownership interests information)
provided or required to be provided in such notice pursuant to these By-laws shall be true and correct
as of the record date for the meeting and as of the date that is ten (10) business days prior to such
annual Meeting, and such update and supplement shall be received by the Secretary at the principal
executive offices of the Corporation not later than the close of business on the fifth (5th) business day
after the record date for the annual Meeting (in the case of the update and supplement required to be
made as of the record date), and not later than the close of business on the eighth (8th) business day
prior to the date of the annual Meeting (in the case of the update and supplement required to be made
as of ten (10) business days prior to the meeting).
(4)
notwithstanding anything in the second sentence of article i, Section 2(a)(2)
of these By-laws 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 ten (10) days before the last day a stockholder may deliver a notice of
nomination in accordance with the second sentence of article i, Section 2(a)(2), a stockholder’s
notice required by these By-laws shall also be considered timely, but only with respect to nominees
for any new positions created by such increase, if it shall be received by the Secretary of the
Corporation not later than the close of business on the tenth (10th) day following the day on which
such public announcement is first made by the Corporation.
(b)
General.
(1)
only such persons who are nominated in accordance with the provisions of
these By-laws shall be eligible for election and to serve as directors and only such business shall be
conducted at an annual Meeting as shall have been brought before the meeting in accordance with
the provisions of these By-laws. the Board of directors or a designated committee thereof shall have
the power to determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the provisions of these By-laws. if neither the Board of
directors nor such designated committee makes a determination as to whether any stockholder
proposal or nomination was made in accordance with the
provisions of these By-laws, the presiding officer of the annual Meeting shall have the power and
duty to determine whether the stockholder proposal or nomination was made in accordance with the
provisions of these By-laws. if the Board of directors or a designated committee thereof or the
presiding officer, as applicable, determines that any stockholder proposal or nomination was not
made in accordance with the provisions of these By-laws, such proposal or nomination shall be
disregarded and shall not be presented for action at the annual Meeting.
(2)
except as otherwise required by law, nothing in this article i, Section 2 shall
obligate the Corporation or the Board of directors to include in any proxy statement or other
stockholder communication distributed on behalf of the Corporation or the Board of directors
information with respect to any nominee for director or any other matter of business submitted by a
stockholder.
(3)
notwithstanding the foregoing provisions of this article i, Section 2, if the
proposing stockholder (or a qualified representative of the stockholder) does not appear at the annual
Meeting to present a nomination or any business, such nomination or business shall be disregarded,
notwithstanding that proxies in respect of such vote may have been received by the Corporation. For
purposes of this article i, Section 2, to be considered a qualified representative of the proposing
stockholder, a person must be authorized by a written instrument executed by such stockholder or an
electronic transmission delivered by such stockholder to act for such stockholder as proxy at the
meeting of stockholders and such person must produce such written instrument or electronic
transmission, or a reliable reproduction of the written instrument or electronic transmission, to the
presiding officer at the meeting of stockholders.
(4)
For purposes of these By-laws, “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 pursuant to Section 13, 14 or 15(d) of the exchange act.
(5)
notwithstanding the foregoing provisions of these By-laws, 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 these By-laws. nothing in these By-laws shall be
deemed to affect any rights of (i) stockholders to have proposals included in the Corporation’s proxy
statement pursuant to Rule 14a-8 (or any successor rule) under the exchange act and, to the extent
required by such rule, have such proposals considered and voted on at an annual Meeting or (ii) the
holders of any series of preferred stock to elect directors under specified circumstances.
SeCtion 3 Special Meetings. except as otherwise required by statute 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 Board of directors acting pursuant to a resolution
approved by the affirmative vote of a majority of the directors then in office. the Board of directors
may postpone or reschedule any previously scheduled special meeting of stockholders. 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. nominations of persons for election to the Board of
directors of the Corporation and stockholder proposals of other business shall not be brought before a
special meeting of stockholders to be considered by the
stockholders unless such special meeting is held in lieu of an annual meeting of stockholders in
accordance with article i, Section 1 of these By-laws, in which case such special meeting in lieu
thereof shall be deemed an annual Meeting for purposes of these By-laws and the provisions of
article i, Section 2 of these By-laws shall govern such special meeting.
SeCtion 4 notice of Meetings; adjournments.
a notice of each annual Meeting stating the hour, date and place, if any, of such annual
Meeting and the means of remote communication, if any, by which stockholders and proxyholders
may be deemed to be present in person and vote at 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 ten (10) days nor more than sixty (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 such stockholder 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. without limiting the manner by which notice may otherwise
be given to stockholders, any notice to stockholders may be given by electronic transmission in the
manner provided in Section 232 of the delaware General Corporation law (“dGCl”).
notice of all special meetings of stockholders shall be given in the same manner as provided
for annual Meetings, except that the 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 waiver of notice is executed, or waiver of notice by electronic transmission is
provided, before or after such meeting by such stockholder or if such stockholder attends such
meeting, unless such attendance is 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 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 2 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
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, if any,
to which the meeting is adjourned and the means of remote communication, if any, by which
stockholders and proxyholders may be deemed to be present in person and vote at such adjourned
meeting; provided, however, that if the adjournment is for more than thirty (30) days from the
meeting date, or if after the adjournment a new record date is fixed for the adjourned meeting, notice
of the adjourned meeting and the means of remote communications, if any, by which stockholders
and proxyholders may be deemed to be present in person and vote at such 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 5 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 4 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 transact business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
SeCtion 6 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 (i) in person, (ii) by written proxy or (iii) by a transmission
permitted by Section 212(c) of the dGCl. any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission permitted by Section 212(c) of the dGCl may be
substituted for or used in lieu of the original writing or transmission for any and all purposes for
which the original writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the entire original
writing or transmission. Proxies shall be filed in accordance with the procedures established for the
meeting of stockholders. except as otherwise limited therein or as otherwise provided by law,
proxies authorizing a person to vote at a specific meeting 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.
SeCtion 7 action at Meeting.
when a quorum is present at any meeting of stockholders, any matter before any meeting of
stockholders (other than an election of a director or directors) shall be decided by a majority
of the votes properly cast for and against such matter, except where a larger vote is required by law,
by the Certificate or by these By-laws. any election of directors by stockholders shall be determined
by a plurality of the votes properly cast on the election of directors. 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 8 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 ten (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 ten (10) days prior to the meeting in the manner provided by law. the
list shall also be open to the examination of any stockholder during the whole time of the meeting as
provided by law.
SeCtion 9 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 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 4 and 5 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 10 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 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.
Subject to the rights, if any, of the holders of any series of preferred stock, 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 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, electronic mail, or other 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 prepaid if mailed, dispatched or transmitted
if sent by facsimile transmission or by electronic mail or other form of electronic communication.
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 or by
electronic transmission and the writing or writings or electronic transmission or transmissions are
filed with the records of the meetings of the Board of directors. Such consent 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.
SeCtion 14 Committees.
the Board of directors, by vote of a majority of the directors then in office, may elect one or
more committees, including, without limitation, a Compensation Committee, a Corporate Governance
and nominating 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. Subject to the rights, if any, of the holders of any series of preferred
stock, 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, or a designated committee thereof, 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.
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.
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 of directors) 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 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. notwithstanding anything to the contrary provided in these Bylaws, the
Board of directors may provide by resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares (except that the foregoing shall not apply to shares
represented by a certificate until such certificate is surrendered to the Corporation), and by the
approval and adoption of these Bylaws the Board of directors has determined that all classes or series
of the
Corporation’s stock may be uncertificated, whether upon original issuance, re-issuance, or subsequent
transfer.
SeCtion 2 transfers.
Subject to any restrictions on transfer and unless otherwise provided by the Board of
directors, shares of stock that are represented by a certificate may be transferred 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. Shares of stock that are not represented by a
certificate may be transferred on the books of the Corporation by submitting to the Corporation or its
transfer agent such evidence of transfer and following such other procedures as the Corporation or its
transfer agent may 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 (10) days before the date of such
meeting and (b) in the case of any other action, shall not be more than sixty (60) 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.
SeCtion 5 Replacement of Certificates.
in case of the alleged loss, destruction or mutilation of a certificate of stock of the
Corporation, 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 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, 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 thirty (30) 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.
(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) sixty (60) days after receipt by the Corporation’s of a written claim for
indemnification, or (b) in the case of a director, ten (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 to advancement of expenses set forth in this article V shall
not be exclusive of any other right 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 the
executive committee of the Board 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 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 exclusive Jurisdiction of delaware Courts or the united States Federal
district.
unless the Corporation consents in writing to the selection of an alternative forum, the Court
of Chancery of the State of delaware shall be the sole and exclusive forum for any state law claims
for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action
asserting a claim of, or a claim based on, a breach of a fiduciary duty owed by any current or former
director, officer or other employee of the Corporation to the Corporation or the Corporation’s
stockholders, (iii) any action asserting a claim arising pursuant to any provision of the delaware
General Corporation law or the Certificate or Bylaws (including the interpretation, validity or
enforceability thereof), or (iv) any action asserting a claim governed by the internal affairs doctrine.
unless the Corporation consents in writing to the selection of an alternative forum, the federal district
courts of the united States of america shall be the sole and exclusive forum for resolving any
complaint asserting a cause of action arising under the Securities act of 1933, as amended. any
person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the
Corporation shall be deemed to have notice of and consented to the provisions of this Section 8.
SeCtion 9 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 in accordance with these
By-laws, by the affirmative vote of at least two-thirds (66 2/3%) of the outstanding shares 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 outstanding shares 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.
SeCtion 10 notices. if mailed, notice to stockholders shall be deemed given when
deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it
appears on the records of the Corporation. without limiting the manner by which notice otherwise
may be given to stockholders, any notice to stockholders may be given by electronic transmission in
the manner provided in Section 232 of the dGCl.
SeCtion 11 waivers. a written waiver of any notice, signed by a stockholder or director,
or waiver by electronic transmission by such person, whether given before or after the
time of the event for which notice is to be given, shall be deemed equivalent to the notice required to
be given to such person. neither the business to be transacted at, nor the purpose of, any meeting
need be specified in such a waiver.
adopted april [•], 2021 and effective as of april [•], 2021.
PLUG POWER INC.
DESCRIPTION OF SECURITIES REGISTERED
UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Exhibit 4.6
Plug Power, inc., a delaware corporation, has one class of securities registered under Section 12 of the Securities exchange act of
1934, as amended, referred to herein as the exchange act: common stock, par value $0.01 per share, referred to herein as the Common Stock.
the following description sets forth certain material terms and provisions of the Common Stock. this description also summarizes relevant
provisions of the delaware General Corporation law, referred to herein as the dGCl. the following summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the applicable provisions of the dGCl and our amended and Restated
Certificate of incorporation, as amended from time to time, referred to herein as the Certificate of incorporation, and our Fourth amended and
Restated Bylaws, as amended from time to time, referred to herein as the Bylaws, copies of which are incorporated by reference as an exhibit to
our annual Report on Form 10‑K of which this exhibit 4.6 is a part. we encourage you to read the Certificate of incorporation, the Bylaws and
the applicable provisions of the dGCl for additional information. References in this exhibit 4.6 to “Plug Power,” the “Company,” “we,” “our”
or “us” refer to Plug Power inc.
General
Authorized Shares
the Certificate of incorporation authorizes us to issue up to 755,000,000 shares, of which (i) 750,000,000 shares are classified as
shares of Common Stock, and (ii) 5,000,000 shares are classified as preferred stock, par value $0.01 per share, consisting of 170,000 shares of
Series a Junior Participating Cumulative Preferred Stock, 10,431 shares of Series C Redeemable Convertible Preferred Stock, 35,000 shares of
Series e Convertible Preferred Stock and 4,784,569 shares of undesignated preferred stock. as of december 31, 2020, there were no shares of
Series a Junior Participating Cumulative Preferred Stock, no shares of Series C Redeemable Convertible Preferred Stock outstanding, and no
shares of Series e Convertible Preferred Stock outstanding.Power to Issue Additional Shares of Common Stock and Preferred Stock, and
Reclassify Shares of Stock
additional shares of authorized Common Stock and preferred stock may be issued, as authorized by our board of directors from time
to time, without stockholder approval, except as may be required by applicable securities exchange requirements. the Certificate of
incorporation authorizes our board of directors to classify any unissued shares of preferred stock and to reclassify any previously classified but
unissued shares of any series into other classes or series of stock. Prior to the issuance of shares of each class or series of preferred stock, the
Company’s board of directors will set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends
or other distributions, qualifications and terms or conditions of redemption for each such class or series.
Voting Rights
the holders of Common Stock possess exclusive voting rights in us, except to the extent our board of directors specifies voting power
with respect to any other class of securities issued in the future. each holder of our Common Stock is entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders, including the election of directors. the holders of a majority of the stock issued and
outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all
meetings of the stockholders.
Stockholders do not have any right to cumulate votes in the election of directors. Consequently,the holders of a majority or, in certain
circumstances, a plurality of the shares of Common Stock entitled to vote in any election of directors may elect all of the directors standing for
election. in an uncontested election, a director nominee will be elected to the board of directors only if the votes cast for such nominee’s
election exceed the votes cast against such nominee’s election. in a contested election, or otherwise where the number of director nominees
exceeds the number of directors to be elected, directors shall be elected by a plurality of the votes cast.
with respect to matters other than the election of directors, at any meeting of the stockholders at which a quorum is present or
represented, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at such meeting and
entitled to vote on the subject matter shall be the act of the stockholders, except as otherwise required by law.
Dividend and Liquidation Rights
Subject to the preferences that may be applicable to any then outstanding preferred stock, each holder of our Common Stock is entitled
to share ratably in distributions to stockholders and to receive ratably such dividends, if any, as may be declared from time to time by our board
of directors out of legally available funds. in the event of our liquidation, dissolution or winding up, holders of our Common Stock will be
entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other
liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred stock.
Terms of Conversion, Sinking Fund Provisions, Redemption
all of the outstanding shares of Commons Stock are, and the shares of Common Stock issued upon the conversion of any securities
convertible into our Common Stock will be, duly authorized, fully paid and nonassessable. holders of our Common Stock have no preemptive,
conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to our Common Stock. the rights,
preferences and privileges of the holders of our Common Stock are subject to, and may be adversely affected by, the rights of any series of our
preferred stock that we may designate and issue in the future.
Delaware Anti-Takeover Law and Provisions of our Certificate of Incorporation and Bylaws
Delaware Anti-Takeover Law
we are subject to Section 203 of the dGCl. Section 203 generally prohibits a public delaware corporation from engaging in a
“business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became
an interested stockholder, unless:
·
·
·
prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested stockholder;
the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are
directors and also officers and (b) shares owned by employee stock plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting
stock which is not owned by the interested stockholder.
Section 203 defines a business combination to include:
·
·
any merger or consolidation involving the corporation and the interested stockholder;
any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
·
·
subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to
the interested stockholder;
and the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
in general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding
voting stock of the corporation or any entity or person affiliated with or controlling or controlled by the entity or person.
Certificate of Incorporation and Bylaws
Provisions of our Certificate of incorporation and Bylaws may delay or discourage transactions involving an actual or potential change
in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares or
transactions that our stockholders might otherwise deem to be in their best interests. therefore, these provisions could adversely affect the price
of our Common Stock. among other things, our Certificate of incorporation and Bylaws:
·
·
·
·
·
·
·
·
permit our board of directors to issue up to 5,000,000 shares of preferred stock, with any rights, preferences and privileges as they
may designate;
provide that the authorized number of directors may be changed only by resolution of the board of directors;
provide that all vacancies, including newly created directorships, may, except as otherwise required by law and subject to the
rights of the holders of any series of preferred stock, be filled by the affirmative vote of a majority of directors then in office, even
if less than a quorum;
divide our board of directors into three classes;
generally require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of
stockholders and not be taken by written consent;
provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as
directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the
form and content of a stockholder’s notice;
do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of Common Stock entitled to
vote in any uncontested election of directors to elect all of the directors standing for election, if they should so choose); and
provide that, except as otherwise required by statute and subject to the rights of the holders of any series of preferred stock, special
meetings of our stockholders may be called only by the board of directors pursuant to a resolution adopted by a majority of the
directors then in office.
the amendment of any of these provisions, with the exception of the ability of our board of directors to issue shares of preferred stock
and designate any rights, preferences and privileges thereto, would require approval by the holders of at least two-thirds of our then outstanding
Common Stock.
Transfer Agent and Registrar
the transfer agent and registrar for our Common Stock is Broadridge Corporate issuer Solutions, inc. the transfer agent and
registrar’s address is 1717 arch Street, Suite 1300, Philadelphia, Pennsylvania, 19103.
Stock Exchange Listing
our Common Stock trades on the naSdaQ Capital Market under the symbol “PluG.”
FoRM oF
indeMniFiCation aGReeMent
Exhibit 10.2
this agreement made and entered into this ____ day of ______, (the “agreement”), by and
between Plug Power inc., a delaware corporation (the “Company,” which term shall include, where
appropriate, any entity (as hereinafter defined) controlled directly or indirectly by the Company) and
____________ (the “indemnitee”):
wheReaS, it is essential to the Company that it be able to retain and attract as directors the
most capable persons available;
wheReaS, increased corporate litigation has subjected directors to litigation risks and
expenses, and the limitations on the availability of directors and officers liability insurance have
made it increasingly difficult for the Company to attract and retain such persons;
wheReaS, the Company’s By-laws (the “By-laws”) require it to indemnify its directors to
the fullest extent permitted by law and permit it to make other indemnification arrangements and
agreements;
wheReaS, the Company desires to provide indemnitee with specific contractual assurance
of indemnitee’s rights to full indemnification against litigation risks and expenses (regardless, among
other things, of any amendment to or revocation of the By-laws or any change in the ownership of the
Company or the composition of its Board of directors);
wheReaS, the Company intends that this agreement provide indemnitee with greater
protection than that which is provided by the By-laws; and
wheReaS, indemnitee is relying upon the rights afforded under this agreement in
becoming a director of the Company.
now, theReFoRe, in consideration of the promises and the covenants contained herein,
the Company and indemnitee do hereby covenant and agree as follows:
definitions.
“Corporate Status” describes the status of a person who is serving or has
(a)
served (i) as a director of the Company, (ii) in any capacity with respect to any
employee benefit plan of the Company, or (iii) as a director, partner, trustee, officer,
employee, or agent of any other entity at the request of the Company. For purposes of
subsection (iii) of this Section 1(a), if indemnitee is serving or has served as a director,
partner, trustee, officer, employee or agent of a Subsidiary, indemnitee shall be
deemed to be serving at the request of the Company.
“entity” shall mean any corporation, partnership, limited liability company,
(b)
joint venture, trust, foundation, association, organization or other legal entity.
“expenses” shall mean all fees, costs and expenses incurred by indemnitee in
(c)
connection with any Proceeding (as defined below), including, without limitation,
attorneys’ fees, disbursements and retainers (including, without limitation, any such
fees, disbursements and retainers incurred by indemnitee pursuant to Sections 10 and
11(c) of this agreement), fees and disbursements of expert witnesses, private
investigators and professional advisors (including, without limitation, accountants and
investment bankers), court costs, transcript costs, fees of experts, travel expenses,
duplicating, printing and binding costs, telephone and fax transmission charges,
postage, delivery services, secretarial services, and other disbursements and expenses.
(d)
“indemnifiable expenses,” “indemnifiable liabilities” and “indemnifiable
amounts” shall have the meanings ascribed to those terms in Section 3(a) below.
“liabilities” shall mean judgments, damages, liabilities, losses, penalties,
(e)
excise taxes, fines and amounts paid in settlement.
“Proceeding” shall mean any threatened, pending or completed claim, action,
(f)
suit, arbitration, alternate dispute resolution process, investigation, administrative
hearing, appeal, or any other proceeding, whether civil, criminal, administrative,
arbitrative or investigative, whether formal or informal, including a proceeding
initiated by indemnitee pursuant to Section 10 of this agreement to enforce
indemnitee’s rights hereunder.
“Subsidiary” shall mean any corporation, partnership, limited liability
(g)
company, joint venture, trust or other entity of which the Company owns (either
directly or through or together with another Subsidiary of the Company) 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.
2.
Services of indemnitee. in consideration of the Company’s covenants and
commitments hereunder, indemnitee agrees to serve or continue to serve as a director of the
Company. however, this agreement shall not impose any obligation on indemnitee or the Company
to continue indemnitee’s service to the Company beyond any period otherwise required by law or by
other agreements or commitments of the parties, if any.
2
3.
agreement to indemnify. the Company agrees to indemnify indemnitee as follows:
Proceedings other than By or in the Right of the Company. Subject to the
(a)
exceptions contained in Section 4(a) below, if indemnitee was or is a party or is
threatened to be made a party to any Proceeding (other than an action by or in the right
of the Company) by reason of indemnitee’s Corporate Status, indemnitee shall be
indemnified by the Company against all expenses and liabilities incurred or paid by
indemnitee in connection with such Proceeding (referred to herein as “indemnifiable
expenses” and “indemnifiable liabilities,” respectively, and collectively as
“indemnifiable amounts”).
Proceedings By or in the Right of the Company. Subject to the exceptions
(b)
contained in Section 4(b) below, if indemnitee was or is a party or is threatened to be
made a party to any Proceeding by or in the right of the Company by reason of
indemnitee’s Corporate Status, indemnitee shall be indemnified by the Company
against all indemnifiable expenses.
expenses as a witness. to the extent that indemnitee is, by reason of his or her
(c)
Corporate Status, a witness in any Proceeding to which indemnitee is not a party and
is not threatened to be made a party, indemnitee shall be indemnified by the Company
against all expenses incurred or paid by indemnitee in connection therewith, which
expenses shall be considered indemnifiable expenses for purposes of this agreement.
Conclusive Presumption Regarding Standard of Care. in making any
(d)
determination required to be made under delaware law with respect to entitlement to
indemnification hereunder, the person, persons or entity making such determination
shall presume that indemnitee is entitled to indemnification under this agreement if
indemnitee submitted a request therefor in accordance with Section 5 of this
agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of any
determination contrary to that presumption.
4.
exceptions to indemnification. indemnitee shall be entitled to indemnification under
Sections 3(a) and 3(b) above in all circumstances other than with respect to any specific claim, issue
or matter involved in the Proceeding out of which indemnitee’s claim for indemnification has arisen,
as follows:
Proceedings other than By or in the Right of the Company. if indemnification
(a)
is requested under Section 3(a) and it has been finally adjudicated by a court of
competent jurisdiction that, in connection with such specific claim, issue or matter,
indemnitee failed to act (i) in good faith and (ii) in a manner indemnitee reasonably
believed to be in or not opposed to the best interests of the Company, or, with respect
to any criminal Proceeding, indemnitee had reasonable cause to believe that
indemnitee’s conduct was unlawful, indemnitee shall not be entitled to payment of
indemnifiable amounts hereunder.
3
Proceedings By or in the Right of the Company. if indemnification is
(b)
requested under Section 3(b) and
(i) it has been finally adjudicated by a court of competent jurisdiction
that, in connection with such specific claim, issue or matter, indemnitee
failed to act (a) in good faith and (B) in a manner indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, indemnitee shall not be entitled to payment of indemnifiable
expenses hereunder; or
(ii) it has been finally adjudicated by a court of competent jurisdiction
that indemnitee is liable to the Company with respect to such specific
claim, indemnitee shall not be entitled to payment of indemnifiable
expenses hereunder with respect to such claim, issue or matter unless
the Court of Chancery or another court in which such Proceeding was
brought shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, indemnitee
is fairly and reasonably entitled to indemnification for such
indemnifiable expenses which such court shall deem proper; or
(iii) it has been finally adjudicated by a court of competent jurisdiction
that indemnitee is liable to the Company for an accounting of profits
made from the purchase or sale by the indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities
exchange act of 1934, the rules and regulations promulgated
thereunder and amendments thereto or similar provisions of any
federal, state or local statutory law, indemnitee shall not be entitled to
payment of indemnifiable expenses hereunder.
(c)
insurance Proceeds. to the extent payment is actually made to the indemnitee
under a valid and collectible insurance policy in respect of indemnifiable amounts in
connection with such specific claim, issue or matter, indemnitee shall not be entitled
to payment of indemnifiable amounts hereunder except in respect of any excess
beyond the amount of payment under such insurance.
5.
Procedure for Payment of indemnifiable amounts. indemnitee shall submit to the
Company a written request specifying the indemnifiable amounts for which indemnitee seeks
payment under Section 3 of this agreement and the basis for the claim. the Company shall pay such
indemnifiable amounts to indemnitee promptly upon receipt of its request. at the request of the
Company, indemnitee shall furnish such documentation and information as are reasonably available
to indemnitee and necessary to establish that indemnitee is entitled to indemnification hereunder.
4
6.
indemnification for expenses of a Party who is wholly or Partly Successful.
notwithstanding any other provision of this agreement, and without limiting any such provision, to
the extent that indemnitee is, by reason of indemnitee’s Corporate Status, a party to and is successful,
on the merits or otherwise, in any Proceeding, indemnitee shall be indemnified against all expenses
reasonably incurred by indemnitee or on indemnitee’s behalf in connection therewith. if indemnitee
is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify
indemnitee against all expenses reasonably incurred by indemnitee or on indemnitee’s behalf in
connection with each successfully resolved claim, issue or matter. For purposes of this agreement,
the termination of any claim, issue or matter in such a Proceeding by withdrawal or dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
7.
effect of Certain Resolutions. neither the settlement or termination of any Proceeding
nor the failure of the Company to award indemnification or to determine that indemnification is
payable shall create a presumption that indemnitee is not entitled to indemnification hereunder. in
addition, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent shall not create a presumption that indemnitee did not act in good
faith and in a manner which indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding, had reasonable cause to believe
that indemnitee’s action was unlawful.
8.
agreement to advance expenses; undertaking. the Company shall advance all
expenses incurred by or on behalf of indemnitee in connection with any Proceeding, including a
Proceeding by or in the right of the Company, in which indemnitee is involved by reason of such
indemnitee’s Corporate Status within ten (10) calendar days after the receipt by the Company of a
written statement from indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding, unless it has been finally determined by a court
of competent jurisdiction that indemnitee is not entitled under this agreement to indemnification with
respect to such expenses. to the extent required by delaware law, indemnitee hereby undertakes to
repay any and all of the amount of indemnifiable expenses paid to indemnitee if it is finally
determined by a court of competent jurisdiction that indemnitee is not entitled under this agreement
to indemnification with respect to such expenses. this undertaking is an unlimited general obligation
of indemnitee.
9.
Procedure for advance Payment of expenses. indemnitee shall submit to the
Company a written request specifying the indemnifiable expenses for which indemnitee seeks an
advancement under Section 8 of this agreement, together with documentation evidencing that
indemnitee has incurred such indemnifiable expenses. Payment of indemnifiable expenses under
Section 8 shall be made no later than ten (10) calendar days after the Company’s receipt of such
request.
10.
Remedies of indemnitee.
Right to Petition Court. in the event that indemnitee makes a request for
(a)
payment of indemnifiable amounts under Sections 3 and 5 above or a request for
5
an advancement of indemnifiable expenses under Sections 8 and 9 above and the
Company fails to make such payment or advancement in a timely manner pursuant to
the terms of this agreement, indemnitee may petition the Court of Chancery to
enforce the Company’s obligations under this agreement.
Burden of Proof. in any judicial proceeding brought under Section 10(a)
(b)
above, the Company shall have the burden of proving that indemnitee is not entitled to
payment of indemnifiable amounts hereunder.
expenses. the Company agrees to reimburse indemnitee in full for any
(c)
expenses incurred by indemnitee in connection with investigating, preparing for,
litigating, defending or settling any action brought by indemnitee under Section 10(a)
above, or in connection with any claim or counterclaim brought by the Company in
connection therewith, whether or not indemnitee is successful in whole or in part in
connection with any such action.
(d)
Failure to act not a defense. the failure of the Company (including its Board
of directors or any committee thereof, independent legal counsel, or stockholders) to
make a determination concerning the permissibility of the payment of indemnifiable
amounts or the advancement of indemnifiable expenses under this agreement shall
not be a defense in any action brought under Section 10(a) above, and shall not create
a presumption that such payment or advancement is not permissible.
11.
defense of the underlying Proceeding.
(a)
notice by indemnitee. indemnitee agrees to notify the Company promptly
upon being served with any summons, citation, subpoena, complaint, indictment,
information, or other document relating to any Proceeding which may result in the
payment of indemnifiable amounts or the advancement of indemnifiable expenses
hereunder; provided, however, that the failure to give any such notice shall not
disqualify indemnitee from the right, or otherwise affect in any manner any right of
indemnitee, to receive payments of indemnifiable amounts or advancements of
indemnifiable expenses unless the Company’s ability to defend in such Proceeding is
materially and adversely prejudiced thereby.
defense by Company. Subject to the provisions of the last sentence of this
(b)
Section 11(b) and of Section 11(c) below, the Company shall have the right to defend
indemnitee in any Proceeding which may give rise to the payment of indemnifiable
amounts hereunder; provided, however that the Company shall notify indemnitee of
any such decision to defend within ten (10) calendar days of receipt of notice of any
such Proceeding under Section 11(a) above. the Company shall not, without the prior
written consent of indemnitee, consent to the entry of any judgment against
indemnitee or enter into any settlement or compromise which (i) includes an
admission of fault of indemnitee or (ii) does not include, as an unconditional term
thereof, the full release of indemnitee from all liability in respect of such Proceeding,
which release shall be in form and
6
substance reasonably satisfactory to indemnitee. this Section 11(b) shall not apply to
a Proceeding brought by indemnitee under Section 10(a) above or pursuant to Section
19 below.
indemnitee’s Right to Counsel. notwithstanding the provisions of Section
(c)
11(b) above, if in a Proceeding to which indemnitee is a party by reason of
indemnitee’s Corporate Status, (i) indemnitee reasonably concludes that he or she may
have separate defenses or counterclaims to assert with respect to any issue which may
not be consistent with the position of other defendants in such Proceeding, (ii) a
conflict of interest or potential conflict of interest exists between indemnitee and the
Company, or (iii) if the Company fails to assume the defense of such proceeding in a
timely manner, indemnitee shall be entitled to be represented by separate legal counsel
of indemnitee’s choice at the expense of the Company. in addition, if the Company
fails to comply with any of its obligations under this agreement or in the event that the
Company or any other person takes any action to declare this agreement void or
unenforceable, or institutes any action, suit or proceeding to deny or to recover from
indemnitee the benefits intended to be provided to indemnitee hereunder, indemnitee
shall have the right to retain counsel of indemnitee’s choice, at the expense of the
Company, to represent indemnitee in connection with any such matter.
12.
Representations and warranties of the Company. the Company hereby represents and
warrants to indemnitee as follows:
authority. the Company has all necessary power and authority to enter into,
(a)
and be bound by the terms of, this agreement, and the execution, delivery and
performance of the undertakings contemplated by this agreement have been duly
authorized by the Company.
(b)
enforceability. this agreement, when executed and delivered by the Company
in accordance with the provisions hereof, shall be a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the enforcement of creditors’
rights generally.
13.
insurance. the Company shall, from time to time, make the good faith determination
whether or not it is practicable for the Company to obtain and maintain a policy or policies of
insurance with a reputable insurance company providing the indemnitee with coverage for losses
from wrongful acts. For so long as indemnitee shall remain a director of the Company and with
respect to any such prior service, in all policies of director and officer liability insurance, indemnitee
shall be named as an insured in such a manner as to provide indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company’s officers and directors.
notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not reasonably available, if
the premium costs for such insurance are disproportionate to the amount of coverage provided, or if
the coverage provided by such
7
insurance is limited by exclusions so as to provide an insufficient benefit. the Company shall
promptly notify indemnitee of any good faith determination not to provide such coverage.
14.
Contract Rights not exclusive. the rights to payment of indemnifiable amounts and
advancement of indemnifiable expenses provided by this agreement shall be in addition to, but not
exclusive of, any other rights which indemnitee may have at any time under applicable law, the
Company’s Certificate of incorporation or By-laws, or any other agreement, vote of stockholders or
directors (or a committee of directors), or otherwise, both as to action in indemnitee’s official
capacity and as to action in any other capacity as a result of indemnitee’s serving as a director of the
Company.
15.
Successors. this agreement shall be (a) binding upon all successors and assigns of the
Company (including any transferee of all or a substantial portion of the business, stock and/or assets
of the Company and any direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal
representatives, executors and administrators of indemnitee. this agreement shall continue for the
benefit of indemnitee and such heirs, personal representatives, executors and administrators after
indemnitee has ceased to have Corporate Status.
16.
Subrogation. in the event of any payment of indemnifiable amounts under this
agreement, the Company shall be subrogated to the extent of such payment to all of the rights of
contribution or recovery of indemnitee against other persons, and indemnitee shall take, at the request
of the Company, all reasonable action necessary to secure such rights, including the execution of such
documents as are necessary to enable the Company to bring suit to enforce such rights.
17.
Change in law. to the extent that a change in delaware law (whether by statute or
judicial decision) shall permit broader indemnification or advancement of expenses than is provided
under the terms of the By-laws and this agreement, indemnitee shall be entitled to such broader
indemnification and advancements, and this agreement shall be deemed to be amended to such
extent.
18.
Severability. whenever possible, each provision of this agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any provision of this
agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be
illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or
modified in its application to the minimum extent necessary to make such provision or clause valid,
legal and enforceable, and the remaining provisions and clauses of this agreement shall remain fully
enforceable and binding on the parties.
19.
indemnitee as Plaintiff. except as provided in Section 10(c) of this agreement and in
the next sentence, indemnitee shall not be entitled to payment of indemnifiable amounts or
advancement of indemnifiable expenses with respect to any Proceeding brought by indemnitee
against the Company, any entity which it controls, any director or officer thereof, or any third party,
unless the Board of directors of the Company has consented to the initiation of such Proceeding. this
Section shall not apply to counterclaims or affirmative defenses asserted by indemnitee in an action
brought against indemnitee.
8
20. Modifications and waiver. except as provided in Section 17 above with respect to
changes in delaware law which broaden the right of indemnitee to be indemnified by the Company,
no supplement, modification or amendment of this agreement shall be binding unless executed in
writing by each of the parties hereto. no waiver of any of the provisions of this agreement shall be
deemed or shall constitute a waiver of any other provisions of this agreement (whether or not
similar), nor shall such waiver constitute a continuing waiver.
21.
Contribution. to the fullest extent permissible under applicable law, if the
indemnification provided for in this agreement is unavailable to indemnitee in whole or in part for
any reason whatsoever (other than because indemnitee is not entitled to such indemnification
pursuant to the terms of this agreement), the Company, in lieu of indemnifying indemnitee, shall
contribute to the amount incurred by indemnitee, whether for judgments, fines, penalties, excise
taxes, amounts paid or to be paid in settlement and/or for expenses, in connection with any claim
relating to an indemnifiable event under this agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company and indemnitee as a result of the event(s) and/or transaction(s)
giving cause to such Proceeding; and (ii) the relative fault of the Company (and its directors, officers,
employees and agents) and indemnitee in connection with such event(s) and/or transaction(s).
additionally, to the fullest extent permitted under applicable law, if the indemnification provided for
in this agreement is unavailable to indemnitee in whole or in part for any reason whatsoever (other
than because indemnitee is not entitled to such indemnification pursuant to the terms of this
agreement) in a Proceeding in which the Company is jointly liable with indemnitee (or would be if
joined in such Proceeding), the Company shall pay, in the first instance, the entire amount of any
judgment or settlement of such Proceeding (except for any such amount that is paid by a third party)
without requiring indemnitee to contribute to such payment, and the Company hereby waives and
relinquishes any right of contribution it may have against indemnitee with respect to such
Proceeding.
22.
General notices. all notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when
transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail
with postage prepaid, on the third business day after the date on which it is so mailed:
9
(i)
if to indemnitee, to:
________________________
________________________
________________________
________________________
(ii)
if to the Company, to:
Plug Power inc.
968 albany-Shaker Road
latham, nY 12110
attn: General Counsel
Facsimile: (518) 782-7884
or to such other address as may have been furnished in the same manner by any party to the others.
23.
Governing law; Consent to Jurisdiction; Service of Process. this agreement shall be
governed by and construed in accordance with the laws of the State of delaware without regard to its
rules of conflict of laws. each of the Company and the indemnitee hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the Court of Chancery of the State
of delaware and the courts of the united States of america located in the State of delaware (the
“delaware Courts”) for any litigation arising out of or relating to this agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto except in such
courts), waives any objection to the laying of venue of any such litigation in the delaware Courts and
agrees not to plead or claim in any delaware Court that such litigation brought therein has been
brought in an inconvenient forum. each of the parties hereto agrees, (a) to the extent such party is not
otherwise subject to service of process in the State of delaware, to appoint and maintain an agent in
the State of delaware as such party’s agent for acceptance of legal process, and (b) that service of
process may also be made on such party by prepaid certified mail with a proof of mailing receipt
validated by the united States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if served upon such party
personally within the State of delaware. For purposes of implementing the parties’ agreement to
appoint and maintain an agent for service of process in the State of delaware, each such party does
hereby appoint the Corporation trust Company, 1209 orange Street, wilmington, new Castle
County, delaware 19801, as such agent and each such party hereby agrees to complete all actions
necessary for such appointment.
[signature page follows]
10
in witneSS wheReoF, the parties hereto have executed this agreement as of the day and
year first above written.
PluG PoweR inC.
By:
name:
title:
Exhibit 10.3
INDEMNIFICATION AGREEMENT
(For Officers of a Delaware Corporation)
this indemnification agreement (“agreement”) is made as this ____ day of ____________
20__ by and between Plug Power inc., a delaware corporation (the “Company”), and ____________
(“indemnitee”).
ReCitalS
wheReaS, the Company desires to attract and retain the services of highly qualified
individuals, such as indemnitee, to serve the Company;
wheReaS, in order to induce indemnitee to [provide]1 [continue to provide]2 services to the
Company, the Company wishes to provide for the indemnification of, and advancement of expenses
to, indemnitee to the maximum extent permitted by law;
wheReaS, the third amended and Restated Bylaws (the “Bylaws”) of the Company
require indemnification of the officers and directors of the Company, and indemnitee may also be
entitled to indemnification pursuant to the General Corporation law of the State of delaware (the
“dGCl”);
wheReaS, the Bylaws and the dGCl expressly provide that the indemnification provisions
set forth therein are not exclusive, and thereby contemplate that contracts may be entered into
between the Company and members of the board of directors, officers and other persons with respect
to indemnification;
wheReaS, the Board of directors of the Company (the “Board”) has determined that the
increased difficulty in attracting and retaining highly qualified persons such as indemnitee is
detrimental to the best interests of the Company’s stockholders;
wheReaS, it is reasonable and prudent for the Company contractually to obligate itself to
indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by
applicable law, regardless of any amendment or revocation of the Charter or the Bylaws, so that they
will [serve]3 [continue to serve] 4 the Company free from undue concern that they will not be so
indemnified; and
1 Plug: include for new executive officers.
2 Plug: include for existing executive officers.
3 Plug: include for new executive officers.
4 Plug: include for new executive officers.
1
wheReaS, this agreement is a supplement to and in furtherance of the indemnification
provided in the Charter, the Bylaws and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of indemnitee thereunder.
now, theReFoRe, in consideration of the premises and the covenants contained herein,
the Company and indemnitee do hereby covenant and agree as follows:
Section 1.
Services to the Company. indemnitee agrees to serve as an officer of the
Company. indemnitee may at any time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by law), in which event the Company shall
have no obligation under this agreement to continue indemnitee in such position. this agreement
shall not be deemed an employment contract between the Company (or any of its subsidiaries or any
enterprise) and indemnitee.
Section 2.
definitions.
as used in this agreement:
(a)
“affiliate” and “associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations under the Securities exchange act of
1934, as amended, as in effect on the date of this agreement; provided, however, that no Person who
is a director or officer of the Company shall be deemed an affiliate or an associate of any other
director or officer of the Company solely as a result of his or her position as director or officer of the
Company.
(b)
a Person shall be deemed the “Beneficial owner” of, and shall be deemed to
“Beneficially own” and have “Beneficial ownership” of, any securities:
(i)
which such Person or any of such Person’s affiliates or associates, directly or
indirectly, Beneficially owns (as determined pursuant to Rule 13d-3 of the Rules under the exchange
act, as in effect on the date of this agreement);
(ii)
which such Person or any of such Person’s affiliates or associates, directly or
indirectly, has: (a) the legal, equitable or contractual right or obligation to acquire (whether directly
or indirectly and whether exercisable immediately or only after the passage of time, compliance with
regulatory requirements, satisfaction of one or more conditions (whether or not within the control of
such Person) or otherwise) upon the exercise of any conversion rights, exchange rights, rights,
warrants or options, or otherwise; (B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); or (C) the right to dispose of pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than customary arrangements with
and between underwriters and selling group members with respect to a bona fide public offering of
securities);
(iii)
which are Beneficially owned, directly or indirectly, by any other Person (or
any affiliate or associate thereof) with which such Person or any of such Person’s affiliates or
associates has any agreement, arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group members
2
with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting
or disposing of any securities of the Company; or
(iv)
that are the subject of a derivative transaction entered into by such Person or
any of such Person’s affiliates or associates, including, for these purposes, any derivative security
acquired by such Person or any of such Person’s affiliates or associates that gives such Person or
any of such Person’s affiliates or associates the economic equivalent of ownership of an amount of
securities due to the fact that the value of the derivative security is explicitly determined by reference
to the price or value of such securities, or that provides such Person or any of such Person’s affiliates
or associates an opportunity, directly or indirectly, to profit or to share in any profit derived from any
change in the value of such securities, in any case without regard to whether (a) such derivative
security conveys any voting rights in such securities to such Person or any of such Person’s affiliates
or associates; (B) the derivative security is required to be, or capable of being, settled through
delivery of such securities; or (C) such Person or any of such Person’s affiliates or associates may
have entered into other transactions that hedge the economic effect of such derivative security.
notwithstanding the foregoing, no Person engaged in business as an underwriter of securities
shall be deemed the Beneficial owner of any securities acquired through such Person’s participation
as an underwriter in good faith in a firm commitment underwriting.
(c)
a “Change in Control” shall be deemed to occur upon the earliest to occur
after the date of this agreement of any of the following events:
(i)
acquisition of Stock by third Party. any Person is or becomes the Beneficial
owner (as defined above), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company’s then outstanding securities
unless the change in relative Beneficial ownership of the Company’s securities by any Person results
solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote
generally in the election of directors, provided that a Change of Control shall be deemed to have
occurred if subsequent to such reduction such Person becomes the Beneficial owner, directly or
indirectly, of any additional securities of the Company conferring upon such Person any additional
voting power;
(ii)
Change in Board of directors. during any period of two (2) consecutive years
(not including any period prior to the execution of this agreement), individuals who at the beginning
of such period constitute the Board, and any new director (other than a director designated by a
Person who has entered into an agreement with the Company to effect a transaction described in
Sections 2(c)(i), 2(c)(iii) or 2(c)(iv)) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least a majority of the
members of the Board;
(iii)
Corporate transactions. the effective date of a merger or consolidation of the
Company with any other entity, other than a merger or consolidation which would result in
3
the voting securities of the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted into voting securities
of the surviving or successor entity) more than 50% of the combined voting power of the voting
securities of the surviving or successor entity outstanding immediately after such merger or
consolidation and with the power to elect at least a majority of the board of directors or other
governing body of such surviving or successor entity;
(iv)
liquidation. the approval by the stockholders of the Company of a complete
liquidation of the Company or an agreement for the sale, lease, exchange or other transfer by the
Company, in one or a series of related transactions, of all or substantially all of the Company’s assets;
and
(v)
other events. there occurs any other event of a nature that would be required
to be reported in response to item 6(e) of Schedule 14a of Regulation 14a (or a response to any
similar item on any similar schedule or form) promulgated under the Securities exchange act of
1934, as amended, whether or not the Company is then subject to such reporting requirement.
(d)
“Corporate Status” describes the status of a person as a current or former
officer of the Company or current or former director, manager, partner, officer, employee, agent or
trustee of any other enterprise which such person is or was serving at the request of the Company.
(e)
“enforcement expenses” shall include all reasonable attorneys’ fees, court
costs, transcript costs, fees of experts, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other out-of-pocket disbursements or
expenses of the types customarily incurred in connection with an action to enforce indemnification or
advancement rights, or an appeal from such action. expenses, however, shall not include fees,
salaries, wages or benefits owed to indemnitee.
(f)
“enterprise” shall
mean any corporation (other than the Company),
partnership, joint venture, trust, employee benefit plan, limited liability company, or other legal entity
of which indemnitee is or was serving at the request of the Company as a director, manager, partner,
officer, employee, agent or trustee.
(g)
“expenses” shall include all reasonable attorneys’ fees, court costs, transcript
costs, fees of experts, travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other out-of-pocket disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in, or otherwise participating in, a
Proceeding or an appeal resulting from a Proceeding. expenses, however, shall not include amounts
paid in settlement by indemnitee, the amount of judgments or fines against indemnitee or fees,
salaries, wages or benefits owed to indemnitee.
(h)
“independent Counsel” means a law firm, or a partner (or, if applicable,
member or shareholder) of such a law firm, that is experienced in matters of delaware corporation
law and neither presently is, nor in the past five (5) years has been, retained to
4
represent: (i) the Company, any subsidiary of the Company, any enterprise or indemnitee in any
matter material to any such party; or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. notwithstanding the foregoing, the term “independent Counsel” shall not
include any Person who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Company or indemnitee in an action to
determine indemnitee’s rights under this agreement. the Company agrees to pay the reasonable fees
and expenses of the independent Counsel referred to above and to fully indemnify such counsel
against any and all expenses, claims, liabilities and damages arising out of or relating to this
agreement or its engagement pursuant hereto.
(i)
“Person” shall mean (i) an individual, a corporation, a partnership, a limited
liability company, an association, a joint stock company, a trust, a business trust, a government or
political subdivision, any unincorporated organization, or any other association or entity including
any successor (by merger or otherwise) thereof or thereto, and (ii) a “group” as that term is used for
purposes of Section 13(d)(3) of the Securities exchange act of 1934, as amended.
(j)
the term “Proceeding” shall include any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought in the right of the
Company or otherwise and whether of a civil, criminal, administrative, regulatory or investigative
nature, and whether formal or informal, in which indemnitee was, is or will be involved as a party or
otherwise by reason of the fact that indemnitee is or was an officer of the Company or is or was
serving at the request of the Company as a director, manager, partner, officer, employee, agent or
trustee of any enterprise or by reason of any action taken by indemnitee or of any action taken on his
or her part while acting as an officer of the Company or while serving at the request of the Company
as a director, manager, partner, officer, employee, agent or trustee of any enterprise, in each case
whether or not serving in such capacity at the time any liability or expense is incurred for which
indemnification, reimbursement or advancement of expenses can be provided under this agreement;
provided, however, that the term “Proceeding” shall not include any action, suit or arbitration, or part
thereof, initiated by indemnitee to enforce indemnitee’s rights under this agreement as provided for
in Section 12(a) of this agreement.
Section 3.
indemnity in third-Party Proceedings. the Company shall indemnify
indemnitee to the extent set forth in this Section 3 if indemnitee is, or is threatened to be made, a
party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company
to procure a judgment in its favor. Pursuant to this Section 3, indemnitee shall be indemnified
against all expenses, judgments, fines, penalties, excise taxes, and amounts paid in settlement
actually and reasonably incurred by indemnitee or on his or her behalf in connection with such
Proceeding or any claim, issue or matter therein, if indemnitee acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the Company and, in the
case of a criminal proceeding, had no reasonable cause to believe that his or her conduct was
unlawful.
5
Section 4.
indemnity in Proceedings by or in the Right of the Company. the Company
shall indemnify indemnitee to the extent set forth in this Section 4 if indemnitee is, or is threatened to
be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, indemnitee shall be indemnified against all
expenses actually and reasonably incurred by indemnitee or on his or her behalf in connection with
such Proceeding or any claim, issue or matter therein, if indemnitee acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best interests of the Company.
no indemnification for expenses shall be made under this Section 4 in respect of any claim, issue or
matter as to which indemnitee shall have been finally adjudged by a court to be liable to the
Company, unless and only to the extent that the delaware Court of Chancery (the “delaware Court”)
shall determine upon application that, despite the adjudication of liability but in view of all the
circumstances of the case, indemnitee is fairly and reasonably entitled to indemnification for such
expenses as the delaware Court shall deem proper.
Section 5.
indemnification for expenses of a Party who is wholly or Partly Successful.
notwithstanding any other provisions of this agreement and except as provided in Section 7, to the
extent that indemnitee is a party to or a participant in any Proceeding and is successful in such
Proceeding or in defense of any claim, issue or matter therein, the Company shall indemnify
indemnitee against all expenses actually and reasonably incurred by him or her in connection
therewith. if indemnitee is not wholly successful in such Proceeding but is successful as to one or
more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify
indemnitee against all expenses actually and reasonably incurred by indemnitee or on his or her
behalf in connection with each successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue
or matter.
Section 6.
Reimbursement for expenses of a witness or in Response to a Subpoena.
notwithstanding any other provision of this agreement, to the extent that indemnitee, by reason of
his or her Corporate Status, (i) is a witness in any Proceeding to which indemnitee is not a party and
is not threatened to be made a party or (ii) receives a subpoena with respect to any Proceeding to
which indemnitee is not a party and is not threatened to be made a party, the Company shall
reimburse indemnitee for all expenses actually and reasonably incurred by him or her or on his or her
behalf in connection therewith.
Section 7.
exclusions. notwithstanding any provision in this agreement to the contrary,
the Company shall not be obligated under this agreement:
(a)
to indemnify for amounts otherwise indemnifiable hereunder (or for which
advancement is provided hereunder) if and to the extent that indemnitee has otherwise actually
received such amounts under any insurance policy, contract, agreement or otherwise; provided that
the foregoing shall not apply to any personal or umbrella liability insurance maintained by
indemnitee;
6
(b)
to indemnify for an accounting of profits made from the purchase and sale (or
sale and purchase) by indemnitee of securities of the Company within the meaning of Section 16(b)
of the Securities exchange act of 1934, as amended, or similar provisions of state statutory law or
common law;
(c)
to indemnify for any reimbursement of, or payment to, the Company by
indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits
realized by indemnitee from the sale of securities of the Company pursuant to Section 304 of SoX or
any formal policy of the Company adopted by the Board (or a committee thereof), or any other
remuneration paid to indemnitee if it shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of law;
(d)
to indemnify with respect to any Proceeding, or part thereof, brought by
indemnitee against the Company, any legal entity which it controls, any director or officer thereof or
any third party, unless (i) the Board has consented to the initiation of such Proceeding or part thereof
and (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers
vested in the Company under applicable law; provided, however, that this Section 7(d) shall not apply
to (a) counterclaims or affirmative defenses asserted by indemnitee in an action brought against
indemnitee or (B) any action brought by indemnitee for indemnification or advancement from the
Company under this agreement or under any directors’ and officers’ liability insurance policies
maintained by the Company in the suit for which indemnification or advancement is being sought as
described in Section 12; or
(e)
to provide any indemnification or advancement of expenses that is prohibited
by applicable law (as such law exists at the time payment would otherwise be required pursuant to
this agreement).
Section 8.
advancement of expenses. Subject to Section 9(b), the Company shall
advance the expenses incurred by indemnitee in connection with any Proceeding, and such
advancement shall be made within thirty (30) days after the receipt by the Company of a statement or
statements requesting such advances (including any invoices received by indemnitee, which such
invoices may be redacted as necessary to avoid the waiver of any privilege accorded by applicable
law) from time to time, whether prior to or after final disposition of any Proceeding. advances shall
be unsecured and interest free. advances shall be made without regard to indemnitee’s (i) ability to
repay the expenses, (ii) ultimate entitlement to indemnification under the other provisions of this
agreement, and (iii) entitlement to and availability of insurance coverage, including advancement,
payment or reimbursement of defense costs, expenses or covered loss under the provisions of any
applicable insurance policy (including, without limitation, whether such advancement, payment or
reimbursement is withheld, conditioned or delayed by the insurer(s)). indemnitee shall qualify for
advances upon the execution and delivery to the Company of this agreement which shall constitute
an undertaking providing that indemnitee undertakes to the fullest extent required by law to repay the
advance if and to the extent that it is ultimately determined by a court of competent jurisdiction in a
final judgment, not subject to appeal, that indemnitee is not entitled to be indemnified by the
Company. no other form of undertaking shall be required. the right to advances under this
paragraph shall in all events continue until final disposition of any
7
Proceeding, including any appeal therein. nothing in this Section 8 shall limit indemnitee’s right to
advancement pursuant to Section 12(e) of this agreement.
Section 9.
Procedure for notification and defense of Claim.
(a)
to obtain indemnification under this agreement, indemnitee shall submit to
the Company a written request therefor specifying the basis for the claim, the amounts for which
indemnitee is seeking payment under this agreement, and all documentation related thereto as
reasonably requested by the Company.
(b)
in the event that the Company shall be obligated hereunder to provide
indemnification for or make any advancement of expenses with respect to any Proceeding, the
Company shall be entitled to assume the defense of such Proceeding, or any claim, issue or matter
therein, with counsel approved by indemnitee (which approval shall not be unreasonably withheld or
delayed) upon the delivery to indemnitee of written notice of the Company’s election to do so. after
delivery of such notice, approval of such counsel by indemnitee and the retention of such counsel by
the Company, the Company will not be liable to indemnitee under this agreement for any fees or
expenses of separate counsel subsequently employed by or on behalf of indemnitee with respect to
the same Proceeding; provided that (i) indemnitee shall have the right to employ separate counsel in
any such Proceeding at indemnitee’s expense and (ii) if (a) the employment of separate counsel by
indemnitee has been previously authorized by the Company, (B) indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and indemnitee in the
conduct of such defense, (C) the Company shall not continue to retain such counsel to defend such
Proceeding, or (d) a Change in Control shall have occurred, then the fees and expenses actually and
reasonably incurred by indemnitee with respect to his or her separate counsel shall be expenses
hereunder.
(c)
in the event that the Company does not assume the defense in a Proceeding
pursuant to paragraph (b) above, then the Company will be entitled to participate in the Proceeding at
its own expense.
(d)
the Company shall not be liable to indemnify indemnitee under this
agreement for any amounts paid in settlement of any Proceeding effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed). without limiting the
generality of the foregoing, the fact that an insurer under an applicable insurance policy delays or is
unwilling to consent to such settlement or is or may be in breach of its obligations under such policy,
or the fact that directors’ and officers’ liability insurance is otherwise unavailable or not maintained
by the Company, may not be taken into account by the Company in determining whether to provide
its consent. the Company shall not, without the prior written consent of indemnitee (which consent
shall not be unreasonably withheld or delayed), enter into any settlement which (i) includes an
admission of fault of indemnitee, any non-monetary remedy imposed on indemnitee or any monetary
damages for which indemnitee is not wholly and actually indemnified hereunder or (ii) with respect
to any Proceeding with respect to which indemnitee may be or is made a party or may be otherwise
entitled to seek indemnification hereunder, does not include the full release of indemnitee from all
liability in respect of such Proceeding.
8
Section 10.
Procedure upon application for indemnification.
(a)
upon written request by indemnitee for indemnification pursuant to Section
9(a), a determination, if such determination is required by applicable law, with respect to
indemnitee’s entitlement to indemnification hereunder shall be made in the specific case by one of
the following methods: (i) by a majority vote of the disinterested directors, even though less than a
quorum; (ii) by a committee of disinterested directors designated by a majority vote of the
disinterested directors, even though less than a quorum; or (iii) if there are no disinterested directors
or if the disinterested directors so direct, by independent Counsel in a written opinion to the Board.
For purposes hereof, disinterested directors are those members of the Board who are not parties to
the action, suit or proceeding in respect of which indemnification is sought. in the case that such
determination is made by independent Counsel, a copy of independent Counsel’s written opinion
shall be delivered to indemnitee and, if it is so determined that indemnitee is entitled to
indemnification, payment to indemnitee shall be made within thirty (30) days after such
determination. indemnitee shall cooperate with the independent Counsel or the Company, as
applicable, in making such determination with respect to indemnitee’s entitlement to indemnification,
including providing to such counsel or the Company, upon reasonable advance request, any
documentation or information which is not privileged or otherwise protected from disclosure and
which is reasonably available to indemnitee and reasonably necessary to such determination. the
Company shall likewise cooperate with indemnitee and independent Counsel, if applicable, in
making such determination with respect to indemnitee’s entitlement to indemnification, including
providing to such counsel and indemnitee, upon reasonable advance request, any documentation or
information which is not privileged or otherwise protected from disclosure and which is reasonably
available to the Company and reasonably necessary to such determination. any out-of-pocket costs
or expenses (including reasonable attorneys’ fees and disbursements) actually and reasonably
incurred by indemnitee in so cooperating with the independent Counsel or the Company shall be
borne by the Company (irrespective of the determination as to indemnitee’s entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold indemnitee harmless
therefrom.
(b)
if the determination of entitlement to indemnification is to be made by
independent Counsel pursuant to Section 10(a), the independent Counsel shall be selected by the
Board. indemnitee may, within ten (10) days after written notice of such selection, deliver to the
Company a written objection to such selection; provided, however, that such objection may be
asserted only on the ground that the independent Counsel so selected does not meet the requirements
of “independent Counsel” as defined in Section 2 of this agreement, and the objection shall set forth
with particularity the factual basis of such assertion. absent a proper and timely objection, the
Person so selected shall act as independent Counsel. if such written objection is so made and
substantiated, the independent Counsel so selected may not serve as independent Counsel unless and
until such objection is withdrawn or the delaware Court has determined that such objection is
without merit. if, within twenty (20) days after the later of (i) submission by indemnitee of a written
request for indemnification pursuant to Section 9(a), and (ii) the final disposition of the Proceeding,
including any appeal therein, no independent Counsel shall have been selected without objection,
either indemnitee or the Company may petition the delaware Court for resolution of any objection
which shall have been made by indemnitee or the Company to the selection of independent Counsel
and/or for the appointment as independent
9
Counsel of a Person selected by the court or by such other Person as the court shall designate. the
Person with respect to whom all objections are so resolved or the Person so appointed shall act as
independent Counsel under Section 10(a) hereof. upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 12(a) of this agreement, independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject to the applicable
standards of professional conduct then prevailing).
(c)
notwithstanding anything to the contrary contained in this agreement, the
determination of entitlement to indemnification under this agreement shall be made without regard to
the indemnitee’s entitlement to and availability of insurance coverage, including advancement,
payment or reimbursement of defense costs, expenses or covered loss under the provisions of any
applicable insurance policy (including, without limitation, whether such advancement, payment or
reimbursement is withheld, conditioned or delayed by the insurer(s)).
Section 11.
Presumptions and effect of Certain Proceedings.
(a)
to the extent permitted by applicable law, in making a determination with
respect to entitlement to indemnification hereunder, it shall be presumed that indemnitee is entitled to
indemnification under this agreement if indemnitee has submitted a request for indemnification in
accordance with Section 9(a) of this agreement, and the Company shall have the burden of proof and
the burden of persuasion by clear and convincing evidence to overcome that presumption in
connection with the making of any determination contrary to that presumption.
(b)
the termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of guilty, nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this agreement) of itself adversely affect the
right of indemnitee to indemnification or create a presumption that indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests
of the Company or, with respect to any criminal Proceeding, that indemnitee had reasonable cause to
believe that his or her conduct was unlawful.
(c)
indemnitee shall be deemed to have acted in good faith if indemnitee’s actions
based on the records or books of account of the Company or any other enterprise, including financial
statements, or on information supplied to indemnitee by the directors, officers, agents or employees
of the Company or any other enterprise in the course of their duties, or on the advice of legal counsel
for the Company or any other enterprise or on information or records given or reports made to the
Company or any other enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or any other enterprise. the provisions of
this Section 11(c) shall not be deemed to be exclusive or to limit in any way the other circumstances
in which indemnitee may be deemed to have met the applicable standard of conduct set forth in this
agreement. in addition, the knowledge and/or actions, or failure to act, of any director, manager,
partner, officer, employee, agent or trustee of the Company, any subsidiary of the Company, or any
enterprise shall not be imputed to indemnitee for purposes of determining the right to
10
indemnification under this agreement. whether or not the foregoing provisions of this Section 11(c)
are satisfied, it shall in any event be presumed that indemnitee has at all times acted in good faith and
in a manner indemnitee reasonably believed to be in or not opposed to the best interests of the
Company. anyone seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence.
Section 12.
Remedies of indemnitee.
(a)
Subject to Section 12(f), in the event that (i) a determination is made pursuant
to Section 10 of this agreement that indemnitee is not entitled to indemnification under this
agreement, (ii) advancement of expenses is not timely made pursuant to Section 8 of this
agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to
Section 10(a) of this agreement within sixty (60) days after receipt by the Company of the request
for indemnification for which a determination is to be made other than by independent Counsel, (iv)
payment of indemnification or reimbursement of expenses is not made pursuant to Section 5 or 6 or
the last sentence of Section 10(a) of this agreement within thirty (30) days after receipt by the
Company of a written request therefor (including any invoices received by indemnitee, which such
invoices may be redacted as necessary to avoid the waiver of any privilege accorded by applicable
law) or (v) payment of indemnification pursuant to Section 3 or 4 of this agreement is not made
within thirty (30) days after a determination has been made that indemnitee is entitled to
indemnification, indemnitee shall be entitled to an adjudication by the delaware Court of his or her
entitlement to such indemnification or advancement. alternatively, indemnitee, at his or her option,
may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial
arbitration Rules of the american arbitration association. indemnitee shall commence such
proceeding seeking an adjudication or an award in arbitration within 180 days following the date on
which indemnitee first has the right to commence such proceeding pursuant to this Section 12(a);
provided, however, that the foregoing time limitation shall not apply in respect of a proceeding
brought by indemnitee to enforce his or her rights under Section 5 of this agreement. the Company
shall not oppose indemnitee’s right to seek any such adjudication or award in arbitration.
(b)
in the event that a determination shall have been made pursuant to Section
10(a) of this agreement that indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and indemnitee shall not be prejudiced by reason of that adverse
determination. in any judicial proceeding or arbitration commenced pursuant to this Section 12, the
Company shall have the burden of proving indemnitee is not entitled to indemnification or
advancement, as the case may be.
(c)
if a determination shall have been made pursuant to Section 10(a) of this
agreement that indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent
(i) a misstatement by indemnitee of a material fact, or an omission of a material fact necessary to
make indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable law.
11
(d)
the Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this
agreement are not valid, binding and enforceable and shall stipulate in any such court or before any
such arbitrator that the Company is bound by all the provisions of this agreement.
(e)
the Company shall indemnify indemnitee to the fullest extent permitted by
law against any and all enforcement expenses and, if requested by indemnitee, shall (within thirty
(30) days after receipt by the Company of a written request therefor) advance, to the extent not
prohibited by law, such enforcement expenses to indemnitee, which are incurred by indemnitee in
connection with any action brought by indemnitee for indemnification or advancement from the
Company under this agreement or under any directors’ and officers’ liability insurance policies
maintained by the Company in the suit for which indemnification or advancement is being sought.
Such written request for advancement shall include invoices received by indemnitee in connection
with such enforcement expenses but, in the case of invoices in connection with legal services, any
references to legal work performed or to expenditures made that would cause indemnitee to waive
any privilege accorded by applicable law need not be included with the invoice.
(f)
notwithstanding anything in this agreement to the contrary, no determination
as to entitlement to indemnification under this agreement shall be required to be made prior to the
final disposition of the Proceeding, including any appeal therein.
Section 13.
non-exclusivity; Survival of Rights; insurance; Subrogation.
(a)
the rights of indemnification and to receive advancement as provided by this
agreement shall not be deemed exclusive of any other rights to which indemnitee may at any time be
entitled under applicable law, the Charter, the Bylaws, any agreement, a vote of stockholders or a
resolution of directors, or otherwise. no amendment, alteration or repeal of this agreement or of any
provision hereof shall limit or restrict any right of indemnitee under this agreement in respect of any
action taken or omitted by such indemnitee in his or her Corporate Status prior to such amendment,
alteration or repeal. to the extent that a change in delaware law, whether by statute or judicial
decision, permits greater indemnification or advancement than would be afforded currently under the
Charter, Bylaws and this agreement, it is the intent of the parties hereto that indemnitee shall enjoy
by this agreement the greater benefits so afforded by such change. no right or remedy herein
conferred is intended to be exclusive of any other right or remedy, and every other right and remedy
shall be cumulative and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. the assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.
(b)
to the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, managers, partners, officers, employees, agents or trustees
of the Company or of any other enterprise, indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage available for any such
director, manager, partner, officer, employee, agent or trustee under such policy or policies. if, at the
time of the receipt of a notice of a claim pursuant to the terms hereof, the
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Company has director and officer liability insurance in effect, the Company shall give prompt notice
of such claim to the insurers in accordance with the procedures set forth in the respective policies.
the Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on
behalf of the indemnitee, all amounts payable as a result of such Proceeding in accordance with the
terms of such policies. upon request of indemnitee, the Company shall also promptly provide to
indemnitee: (i) copies of all of the Company’s potentially applicable directors’ and officers’ liability
insurance policies, (ii) copies of such notices delivered to the applicable insurers, and (iii) copies of
all subsequent communications and correspondence between the Company and such insurers
regarding the Proceeding.
(c)
in the event of any payment under this agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of indemnitee, who shall
execute all papers required and take all action necessary to secure such rights, including execution of
such documents as are necessary to enable the Company to bring suit to enforce such rights.
(d)
the Company’s obligation to provide indemnification or advancement
hereunder to indemnitee who is or was serving at the request of the Company as a director, manager,
partner, officer, employee, agent or trustee of any other enterprise shall be reduced by any amount
indemnitee has actually received as indemnification or advancement from such other enterprise.
Section 14.
duration of agreement. this agreement shall continue until and terminate
upon the later of: (a) ten (10) years after the date that indemnitee shall have ceased to serve as an
officer of the Company or (b) one (1) year after the final termination of any Proceeding, including
any appeal, then pending in respect of which indemnitee is granted rights of indemnification or
advancement hereunder and of any proceeding commenced by indemnitee pursuant to Section 12 of
this agreement relating thereto. this agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of indemnitee and his or her heirs, executors and
administrators. the Company shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the
business and/or assets of the Company, by written agreement in form and substance satisfactory to
indemnitee, expressly to assume and agree to perform this agreement in the same manner and to the
same extent that the Company would be required to perform if no such succession had taken place.
Section 15.
Severability. if any provision or provisions of this agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this agreement (including, without limitation, each
portion of any section of this agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or
impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such
provision or provisions shall be deemed reformed to the extent necessary to conform to applicable
law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent
possible, the provisions of this agreement (including, without limitation, each portion of any section
of this agreement containing any such provision held to be invalid,
13
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
Section 16.
enforcement.
(a)
the Company expressly confirms and agrees that it has entered into this
agreement and assumed the obligations imposed on it hereby in order to induce indemnitee to
[serve]5 [continue to serve] 6 as an officer of the Company, and the Company acknowledges that
indemnitee is relying upon this agreement in serving as an officer of the Company.
(b)
this agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements and understandings,
oral, written and implied, between the parties hereto with respect to the subject matter hereof;
provided, however, that this agreement is a supplement to and in furtherance of the Charter, the
Bylaws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate
any rights of indemnitee thereunder.
Section 17. Modification and waiver. no supplement, modification or amendment, or
waiver of any provision, of this agreement shall be binding unless executed in writing by the parties
thereto. no waiver of any of the provisions of this agreement shall be deemed or shall constitute a
waiver of any other provisions of this agreement nor shall any waiver constitute a continuing waiver.
no supplement, modification or amendment of this agreement or of any provision hereof shall limit
or restrict any right of indemnitee under this agreement in respect of any action taken or omitted by
such indemnitee prior to such supplement, modification or amendment.
Section 18.
notice by indemnitee. indemnitee agrees promptly to notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to indemnification,
reimbursement or advancement as provided hereunder. the failure of indemnitee to so notify the
Company or any delay in notification shall not relieve the Company of any obligation which it may
have to indemnitee under this agreement or otherwise, unless, and then only to the extent that, the
Company did not otherwise learn of the Proceeding and such delay is materially prejudicial to the
Company’s ability to defend such Proceeding or matter; and, provided, further, that notice will be
deemed to have been given without any action on the part of indemnitee in the event the Company is
a party to the same Proceeding.
Section 19.
notices. all notices, requests, demands and other communications under this
agreement shall be in writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall have been directed,
(ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date
on which it is so mailed, (iii) mailed by reputable overnight courier and receipted for by the party to
whom said notice or other communication shall have been
5 Plug: include for new executive officers.
6 Plug: include for existing executive officers.
14
directed or (iv) sent by facsimile transmission, with receipt of oral confirmation that such
transmission has been received:
(a)
(b)
if to indemnitee, at such address as indemnitee shall provide to the Company.
if to the Company to:
Plug Power inc.
968 albany-Shaker Road
latham, nY 12110
Facsimile: (518) 782-7884
attn: General Counsel
or to any other address as may have been furnished to indemnitee by the Company.
Section 20.
Contribution. to the fullest extent permissible under applicable law, if the
indemnification provided for in this agreement is unavailable to indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying indemnitee, shall contribute to the amount
incurred by indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be
paid in settlement and/or for expenses, in connection with any Proceeding in such proportion as is
deemed fair and reasonable in light of all of the circumstances in order to reflect (i) the relative
benefits received by the Company and indemnitee in connection with the event(s) and/or
transaction(s) giving rise to such Proceeding; and/or (ii) the relative fault of the Company (and its
directors, officers, employees and agents) and indemnitee in connection with such event(s) and/or
transactions.
Section 21.
internal Revenue Code Section 409a. the Company intends for this
agreement to comply with the indemnification exception under Section 1.409a-1(b)(10) of the
regulations promulgated under the internal Revenue Code of 1986, as amended (the “Code”), which
provides that indemnification of, or the purchase of an insurance policy providing for payments of, all
or part of the expenses incurred or damages paid or payable by indemnitee with respect to a bona fide
claim against indemnitee or the Company do not provide for a deferral of compensation, subject to
Section 409a of the Code, where such claim is based on actions or failures to act by indemnitee in
his or her capacity as a service provider of the Company. the parties intend that this agreement be
interpreted and construed with such intent.
Section 22.
applicable law and Consent to Jurisdiction. this agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with, the
laws of the State of delaware, without regard to its conflict of laws rules. except with respect to any
arbitration commenced by indemnitee pursuant to Section 12(a) of this agreement, the Company and
indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out
of or in connection with this agreement shall be brought only in the delaware Court, and not in any
other state or federal court in the united States of america or any court in any other country, (ii)
consent to submit to the exclusive jurisdiction of
15
the delaware Court for purposes of any action or proceeding arising out of or in connection with this
agreement, (iii) consent to service of process at the address set forth in Section 19 of this agreement
with the same legal force and validity as if served upon such party personally within the State of
delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the
delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the delaware Court has been brought in an improper or inconvenient forum.
Section 23.
headings. the headings of the paragraphs of this agreement are inserted for
convenience only and shall not be deemed to constitute part of this agreement or to affect the
construction thereof.
Section 24.
identical Counterparts. this agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same agreement. only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the existence of this
agreement.
Section 25. Monetary damages insufficient/Specific enforcement. the Company and
indemnitee agree that a monetary remedy for breach of this agreement may be inadequate,
impracticable and difficult of proof, and further agree that such breach may cause indemnitee
irreparable harm. accordingly, the parties hereto agree that indemnitee may enforce this agreement
by seeking injunctive relief and/or specific performance hereof, without any necessity of showing
actual damage or irreparable harm (having agreed that actual and irreparable harm will result in not
forcing the Company to specifically perform its obligations pursuant to this agreement) and that by
seeking injunctive relief and/or specific performance, indemnitee shall not be precluded from seeking
or obtaining any other relief to which he may be entitled. the Company and indemnitee further agree
that indemnitee shall be entitled to such specific performance and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions, without the
necessity of posting bonds or other undertaking in connection therewith. the Company acknowledges
that in the absence of a waiver, a bond or undertaking may be required of indemnitee by the Court,
and the Company hereby waives any such requirement of a bond or undertaking.
[Remainder of Page intentionally left Blank]
16
in witneSS wheReoF, the parties have caused this agreement to be signed as of the day
and year first above written.
PLUG POWER INC.
By:
name:
title:
name:
Exhibit 10.31
MASTER LEASE AGREEMENT
(DEMO EQUIPMENT)
this Master lease agreement (this "agreement"), dated as of april 10, 2019, is made
between wells Fargo equipment Finance, inc., a Minnesota corporation (together with its successors
and assigns, the "lessor"), and Plug Power inc., a corporation incorporated under the laws of
delaware (the "lessee"). lessor and lessee are referred to in this agreement individually as a
"Party" and, collectively, as the "Parties". Capitalized terms used but not defined herein shall have the
meaning set forth for such terms in the Master Purchase agreement (as defined below).
WHEREAS, lessor is in the business of owning and leasing equipment and has purchased
and plans to continue to purchase, from time to time, certain fuel cell equipment from lessee pursuant
to the Master Purchase and Sale agreement, dated as of the date hereof, between lessor and lessee
(as the same may be amended, supplemented or otherwise modified from time to time, the "Master
Purchase agreement") when and as the conditions to such purchase are met as provided herein;
WHEREAS, lessee desires to lease such fuel cell equipment as further described in this
agreement when and as the conditions to such lease are met as provided herein; and
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties
and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as
follows:
1.
LEASE; DEMO AGREEMENT. (a) lessor agrees to lease to lessee and lessee
agrees to lease from lessor certain fuel cell equipment (the "equipment") as further described in one
or more schedules to this agreement, each in the form attached hereto as exhibit a (each such
schedule being a separate "lease" and collectively, the "leases"). the terms of this agreement shall
control and be effective as to each lease, unless expressly amended or modified in writing. the
equipment shall be installed and placed in service at various locations within the continental united
States as indicated in each lease (each such location, and each location to which any equipment is
relocated pursuant to Section 8(b), a "Site"). the purchase by lessor from lessee of equipment under
the Master Purchase agreement and the entering into by lessor of each lease for equipment shall be
subject to the satisfaction (or waiver by lessor in its sole discretion) of the conditions precedent set
forth in Section 11.
(b)
lessee represents and warrants that, as of the execution and delivery of each lease, the
equipment subject to such lease: (i) is mechanically complete; (ii) has been fully tested at lessee’s
manufacturing facility, shown to operate as intended, and is ready for use; (iii) has no defects of
which lessee is aware that could reasonably be expected to prevent such equipment from being
operated as intended; (iv) is not subject to a power purchase agreement; (v) is not held or accounted
for by lessee as inventory in its sales or manufacturing business (other than its demonstration lease
business); and (vi) is either (x) the subject of a demo
agreement (as defined below) whereby daily and continuous operation of such equipment at the
applicable Site has begun, or (y) lessee is actively seeking to cause such equipment to be the subject
of a demo agreement. a "demo agreement" means an agreement between lessee and a customer or
potential customer of lessee (each, a "demo Customer"), pursuant to which such demo Customer is
granted a right to use equipment leased under a lease at the applicable Site.
(c)
lessee hereby covenants that in no event shall any demo agreement (i) transfer to a
demo Customer any ownership rights in equipment, (ii) have a term (initially or as a result of an
extension) that ends later than the then existing lease term of the related lease or (iii) permit any
demo Customer to sublease equipment or otherwise allow another person or entity to use equipment.
(d)
in addition, lessee covenants that in no event shall (i) any demo Customer be a
disqualified Person (as defined below) for any portion of the term of the demo agreement to which
it is a party or (ii) the entering into of any demo agreement or use of equipment by any demo
Customer cause a loss, disallowance, reduction or recapture of the tax Benefits (as defined in Section
18(a)). a "disqualified Person" means: (i) the united States, any state or political subdivision thereof,
any possession of the united States or any agency or instrumentality of any of the foregoing; (ii) any
organization which is exempt from tax imposed by the internal Revenue Code of 1986, as amended
from time to time, and any successor thereto (the "Code") (including any former tax-exempt
organization within the meaning of Section 168(h)(2)(e) of the Code); (iii) any Person who is not a
"united States person" (within the meaning of Section 7701(a)(30) of the Code); (iv) any indian tribal
government described in Section 7701(a)(40) of the Code; (v) any “tax-exempt controlled entity”
under Section 168(h)(6)(F) of the Code; (vi) any entity referred to in paragraph (4) of Section 54(j) of
the Code; (vii) a mutual savings bank, cooperative bank, or domestic building and loan association to
which Code Section 593 applies; (viii) a regulated investment company or real estate investment trust
subject to taxation under subchapter M, chapter 1 of the Code; (ix) a cooperative organization
described in Code Section 1381(a); and (x) a partnership or other pass-through entity (including a
disregarded entity) a direct owner of which is described in clause (a)–(ix) or this clause (x); provided,
that any such Person shall not be considered a disqualified Person to the extent that (a) the exception
under Section 168(h)(1)(d) of the Code applies with respect to the income from the use of the
equipment by that Person, (B) the Person is described within clause (iii) of this definition and the
exception under Section 168(h)(2)(B)(i) of the Code applies with respect to the income from the use
of the equipment by such Person, or (C) such Person avoids being a "tax-exempt controlled entity"
under Section 168(h)(6)(F) of the Code by making an election under Section 168(h)(6)(F)(ii) of the
Code.
2.
TERM AND RENT. the initial term ("initial term") for each lease shall be for the
initial period specified in such lease, and lessee shall pay lessor the Rent specified in such lease
throughout the initial term for the use of the equipment leased under such lease. the initial term
and Rent with respect to each item of equipment shall commence on, and lessee will be obligated to
pay Rent from, the Rental Commencement date of the lease under which such equipment is leased.
For purposes of this agreement, the term "Rent" shall mean and
2
include all amounts payable by lessee to lessor for the lease of the equipment. as used in this
agreement, the term "lease term" of any lease means the initial term of such lease, plus any
Renewal term (as defined in Section 15) of such lease. all Rent payable under each lease shall be
paid to the account of lessor in u.S. dollar same day funds to the account specified in such lease (or
such other account as lessor shall notify to lessee upon 10 business days prior written notice), and
lessee shall permit lessor to debit the account of lessee at M&t Bank ([***]) to make any payment
of Rent when due under a lease.
3.
LATE CHARGES. if any Rent or other amount due hereunder is not paid within ten
(10) days after the due date thereof, lessor shall have the right to receive and collect, and lessee
agrees to pay, in addition to such unpaid Rent or other amount due hereunder, an amount equal to 1.5%
of such unpaid Rent or other amount due hereunder for each month or part thereof that such Rent or
other amount due hereunder remains unpaid.
4.
DISCLAIMER OF WARRANTIES. lessee acknowledges that lessor is not the
manufacturer of the equipment, nor manufacturer's agent, and lessee agrees that as between lessor
and lessee, the equipment leased hereunder is of a design, size, fitness and capacity selected by
lessee and that lessee is satisfied that the same is suitable and fit for its intended purpose. leSSee
FuRtheR aCKnowledGeS that the eQuiPMent iS leaSed undeR thiS
aGReeMent and eaCh leaSe on an ‘aS-iS,' ‘wheRe iS' BaSiS and that leSSoR
MaKeS no RePReSentation oR waRRantY oF anY Kind, eXPReSS oR iMPlied,
with ReSPeCt to anY oF the eQuiPMent, itS MeRChantaBilitY, oR itS FitneSS
FoR a PaRtiCulaR PuRPoSe. leSSoR Shall not Be liaBle to leSSee oR anY
otheR PeRSon (inCludinG anY deMo CuStoMeR) FoR diReCt, indiReCt, SPeCial,
inCidental oR ConSeQuential daMaGeS aRiSinG FRoM leSSee'S oR anY otheR
PeRSon'S (inCludinG anY deMo CuStoMeR'S) uSe oF the eQuiPMent, anY
deFeCt oR MalFunCtion oF the eQuiPMent, oR FoR daMaGeS BaSed on StRiCt
oR aBSolute toRt liaBilitY oR leSSoR'S neGliGenCe. no defect or unfitness of the
equipment shall relieve lessee of the obligation to timely pay Rent, or to perform any other obligation
under this agreement.
5.
ASSIGNMENT OF WARRANTIES. notwithstanding the foregoing, so long as no
default (as defined in Section 19) has occurred hereunder and is continuing, lessee shall be entitled
to the benefit of any applicable manufacturer's warranties received or held by lessor or from which
lessor otherwise benefits, and to the extent assignable, lessor hereby assigns such warranties to
lessee for the lease term for each lease. in the event that any warranty is not assignable to lessee,
lessor hereby appoints lessee as lessor's agent and attorney-in-fact with respect to such warranty,
which appointment is coupled with an interest, to assert and enforce, from time to time, in the name of
and for the account of the lessor and the lessee, as their interests may appear, but in all cases at the
sole cost and expense of the lessee, any such warranty, and so long as no default shall have occurred
and be continuing, lessee may retain any recovery from such claim.
3
6.
USE, OPERATION AND MAINTENANCE. lessee shall use and shall cause
each demo Customer to use, the equipment in the manner for which it was designed and intended,
solely for lessee's (or a demo Customer's) business purposes, substantially in accordance with all
manufacturer manuals and instructions and in compliance with applicable law. as used herein,
"applicable law" means all applicable laws, statutes, regulations, ordinances, orders and other
requirements of any governmental authority (including such requirements necessary to ensure that the
equipment qualifies for all tax benefits and environmental attributes, in each case, to the extent
available by law to the owner of the equipment as of the date of the applicable lease). lessee, at
lessee's own cost and expense, shall keep the equipment in good repair, condition and working order,
ordinary wear and tear excepted, sufficient to perform according to the requirements of this
agreement and each demo agreement, and shall furnish or otherwise obtain all parts, mechanisms,
devices and servicing required therefor in the ordinary course. lessee shall also make, at lessee's
own cost and expense, all modifications to the equipment as are required from time to time for the
equipment to comply with applicable law and each demo agreement, provided no such
modifications shall diminish the current or estimated residual value, utility, function, operation or
remaining useful life of the equipment (or any portion thereof) or cause the equipment (or any
portion thereof) to constitute "limited use property" within the meaning of Rev. Proc. 2001-28, 2001-
19 i.R.B. 1156 or Rev. Proc. 2001-29, 2001-19 i.R.B. 1160 (or any successors thereto). all
replacement parts and repairs at any time made to or placed upon the equipment shall become the
property of lessor at no cost to lessor and with no adjustment to the schedules of any lease. lessee
may (at no cost to lessor and with no adjustment to the schedules of any lease) make such
alterations, modifications or additions to the equipment as lessee may deem desirable in the conduct
of its business; provided the same shall not diminish the current or estimated residual value, utility,
function, operation or remaining useful life of the equipment (or any portion thereof), cause the loss
of any warranty thereon or any certification necessary for the maintenance thereof, or cause the
equipment (or any portion thereof) to constitute "limited use property" within the meaning of Rev.
Proc. 2001-28, 2001-19 i.R.B. 1156 or Rev. Proc. 2001-29, 2001-19 i.R.B. 1160 (or any successors
thereto). all such alterations, modifications or additions to the equipment shall be readily removable
without causing damage to the equipment (or any portion thereof). upon return to lessor of the
equipment as to which such alterations, modifications or additions have been made, lessee, if
requested to do so by lessor, shall remove the same and restore the equipment to its original
condition, ordinary wear and tear excepted, and, if not so removed, title thereto shall automatically
vest in lessor (at no cost to lessor). lessor acknowledges that any data files or software developed or
installed by lessee which is resident or otherwise installed on the equipment shall be and remain the
property of lessee; provided, however, that the lessor shall have no obligation or responsibility to
remove or return same to lessee.
7.
NET LEASE. this agreement is a "net lease", and lessee's obligation to pay all Rent
and other amounts due and owing hereunder is absolute and unconditional and shall not be
terminated, extinguished, diminished, setoff or otherwise impaired by any circumstance whatsoever,
including by (a) any claim, setoff, counterclaim, defense or other right which lessee may have
against lessor or any affiliate of lessor; (b) any defect in the title, condition, design,
4
operation, merchantability or fitness for use of the equipment, or any eviction of the equipment by
paramount title or otherwise from the Site, or any unavailability of access to the equipment at the
Site; (c) any loss, theft or destruction of, or damage to, the equipment or any portion thereof or
interruption or cessation in the use or possession thereof or any part thereof for any reason whatsoever
and of whatever duration; (d) the condemnation, requisitioning, expropriation, seizure or other taking
of title to or use of the equipment or the Site by any governmental entity or otherwise; (e) any
ineligibility of the equipment or any portion thereof for any particular use, whether or not due to any
failure of lessee to comply with any applicable law; (f) any event of "force majeure" or any
frustration of purpose; (g) any insolvency, bankruptcy, reorganization or similar proceeding by or
against lessee; (h) any default under or termination of, a demo agreement, or the failure of any
demo agreement to be in full force and effect; (i) any defect in the title to, or the existence of any
lien with respect to, the equipment; or (j) the upgrading, conversion or relocation of any equipment,
including any relocation made pursuant to Section 8(b), it being the intention of the Parties hereto that
all Rent and other amounts payable under this agreement shall continue to be payable in the manner
and at times provided for herein. if for any reason whatsoever this agreement is terminated in whole
or in part by operation of law or otherwise, lessee nonetheless agrees, to the extent permitted by
applicable law, to pay to lessor an amount equal to each installment of Rent and all other amounts
due and owing hereunder, at the time such payment would have become due and payable in
accordance with the terms hereof had this agreement not been so terminated.
8.
NO LIENS; REMOVAL; ABANDONMENT; QUIET ENJOYMENT. (a) lessee
shall keep the equipment free and clear from all liens, charges, encumbrances, legal process and
claims other than Permitted liens (as defined in the Master Purchase agreement). lessee shall
promptly notify lessor of the imposition of any lien (other than Permitted liens) of which the lessee
becomes aware and shall promptly use commercially reasonable efforts, at lessee's own cost and
expense, to fully discharge and release any such lien.
(b)
lessee shall not move the equipment from the location specified in the lease therefor
without the prior written consent of lessor; provided, however, that lessee may relocate any item of
equipment (each such item being "Relocated equipment"), so long as the following conditions are
satisfied:
(i)
lessee shall, within the earlier to occur of (x) ten (10) Business days following
such relocation and (y) the date on which the next report is required to be delivered by lessee
pursuant to Section 20(e), provide lessor written notice specifying in reasonable detail: (a)
each item of equipment comprising the Relocated equipment and
(B) the Site from and to which such Relocated equipment is being relocated;
(ii)
the Relocated equipment shall be relocated to a site located in the continental
united States;
(iv)
as a result of such relocation, there is no suspension in use of any equipment,
including the Relocated equipment; and
5
(v)
the Relocated equipment is packed into appropriate shipping containers and the
shipment thereof is insured for the fair market value of such Relocated equipment at such
time.
(c)
lessee agrees not to waive its right to use and possess the equipment in favor of any
party other than lessor and further agrees not to abandon the equipment to any party other than
lessor.
(d)
So long as lessee faithfully performs and meets each and every term and condition to
be performed or met by lessee under this agreement, lessee's quiet and peaceful possession and use
of the equipment will not be disturbed by lessor or anyone claiming by, through or on behalf of
lessor.
9.
TITLE. (a) lessor and lessee agree that the equipment (including any equipment
that is upgraded, converted, or otherwise modified, or relocated pursuant to Section 8(b)) is and at all
times shall remain the sole and exclusive personal property of lessor (subject to Section 25), and
lessee covenants that it will at all times treat the equipment as such and that no part of the
equipment shall be considered or treated as a fixture. no right, title or interest in the equipment shall
pass to lessee other than the right to maintain possession and use of the equipment for the lease
term, conditioned upon lessee's compliance with the terms and conditions of this agreement. if
requested by lessor, lessee shall affix to or place on the equipment, at lessor's expense, plates or
markings indicating lessor's ownership.
(b) the Parties agree that this agreement will be a "true lease," and the lessor will be treated
as owner of the equipment and lessee will be treated as lessee and, accordingly, the Parties agree that
the lessor will be entitled to claim any and all benefits available to an owner of the equipment,
including (i) all tax Benefits (as defined in Section 18), and (ii) all rights and interests in and to any
environmental attributes associated with the energy output from the equipment that, as a matter of
law, belong to the owner rather than the user of the equipment (all such attributes in this clause (ii),
specifically excluding any tax Benefits, the "environmental attributes"). lessor hereby assigns to
lessee, solely for the duration of the lease term, all of its rights and interests in and to any and all
environmental attributes currently available by law to an owner of the equipment as of the date
hereof. For the avoidance of doubt, lessor does not assign to lessee any environmental attributes
that, due to any future change in law, may become available to an owner of the equipment (including,
but not limited to, any carbon credits). in the event that this agreement or any lease is deemed to be
a lease intended for security, lessee hereby grants lessor a purchase money security interest in the
equipment (including any replacements, substitutions, additions, attachments and proceeds).
10.
TAXES. lessee shall promptly reimburse lessor, or shall pay directly if so requested
by lessor, as additional Rent, all taxes, charges and fees (including any interest, additions to tax and
penalties) that may now or hereafter be imposed or levied by any governmental body or agency upon
or in connection with the purchase, ownership, lease, sublease, possession, use or location of the
equipment or otherwise in connection with the transactions contemplated by this agreement or any
lease, including, without limitation, sales,
6
use, property (real or personal and tangible or intangible), value added or other transfer taxes on (i)
the initial sale of equipment to lessor, (ii) the Rents, (iii) the sale of power to, or the use of the
equipment by, the demo Customer under or otherwise with respect to any demo agreement, (iv) any
payment of termination Value (as defined in Section 12) and (v) upon any exercise of the Purchase
option, Renewal option or Return option (in each case, as defined in Section 14), but excluding any
and all taxes, charges and fees (including any interest, additions to tax and penalties) (a) on or
measured by the net income of lessor, but excluding taxes that are in the nature of sales, use,
property (real or personal and tangible or intangible), value added or other transfer taxes, (B) resulting
from lessor's negligence, or (C) resulting from or arising out of any failure on the part of lessor to
file any tax returns or pay any taxes owing on a timely basis or any errors or omissions on lessor's
tax returns unless lessee is responsible under this agreement for filing the returns, lessee has not
provided information requested by lessor that is necessary to file such tax returns or lessor's failure
to file any tax returns or any errors or omissions on such tax returns is attributable to lessee's fraud,
negligence or misrepresentation. lessee shall file, in a timely manner and in the name of lessor as
owner, any personal property tax returns relating to the equipment that are required to be filed
covering periods during the lease term, pay the amounts shown on the returns and provide copies of
such returns and proof of payment to lessor. Failure of lessee to pay promptly amounts due
hereunder shall be treated the same as failure to pay any installment of Rent pursuant to Section 3. if
lessee is requested by lessor to file any other returns or remit payments directly to any governmental
body or agency, lessee shall timely file such returns and remit such payments and shall provide proof
of said timely filing or payment to lessor.
11.
CONDITIONS PRECEDENT TO PURCHASE OF EQUIPMENT AND
ENTERING INTO OF LEASES. lessor and lessee hereby agree that the purchase by lessor of
any equipment from lessee pursuant to the Master Purchase agreement and the entering into by
lessor of any lease hereunder is expressly conditioned on the following:
(a) this agreement shall have been executed and delivered by lessor and lessee and shall be
in full force and effect, and no default (as defined in Section 19) shall have occurred and be
continuing.
(b) the Master Purchase agreement shall have been executed and delivered by lessor and
lessee and shall be in full force and effect.
(c) there shall not have occurred any material adverse condition or material adverse change
in or affecting the business, operations, properties, condition (financial or otherwise) or prospects of
lessee or the l/C issuer (as defined in exhibit B), since april 4, 2019.
(d) there shall not have been any material new litigation initiated against lessee or the l/C
issuer since december 31, 2018.
(e) there shall not have occurred any material adverse change in the business reputation of
lessee or the l/C issuer since april 4, 2019.
7
(f) there shall not have occurred an event since april 4, 2019 that would, in the sole
reasonable opinion of lessor, make it illegal or commercially impractical for lessor to enter into any
of the lease documents (as defined below).
(g) if either (i) the date on which such lease is to be executed and delivered is after december
31, 2019 or (ii) the purchase of such equipment and the entering into of such lease would cause the
aggregate Purchase Price paid by lessor for equipment leased under leases to exceed $25,000,000,
then (x) in the case of clause (i) of this Section 11(g), there shall have been a change in law to cause
the energy percentage under section 48(a)(2) of the Code applicable to the equipment for investment
tax credit purposes to remain thirty percent (30%) and (y) in the case of clauses (i) and (ii) of this
Section 11(g), lessor shall have obtained all required credit approvals to purchase such equipment
and enter into such lease.
(h) the Purchase Price for the purchase of such equipment to be leased under such lease
shall be no less than $1,000,000.
(i) all fees and expenses of the appraiser and of counsel to lessor shall have been paid (or
shall be paid in conjunction with the payment by lessor of the Purchase Price of such equipment to
be leased under such lease).
(j) Such other documents, certificates and items shall have been delivered to lessor (unless
such delivery has been waived by lessor in its sole discretion), in each case, as provided in exhibit B.
the documents set forth in items 1 through 4 of exhibit B, as each may be amended, supplemented or
otherwise modified from time to time, together with this agreement and the Master Purchase
agreement, are referred to herein, collectively, as the "lease documents".
12.
LOSS OF OR DAMAGE TO EQUIPMENT. lessee hereby assumes and shall bear
the risk of loss for destruction of or damage to the equipment from any and every cause whatsoever,
whether or not insured, until the equipment is returned to lessor. no such loss or damage shall
impair any obligation of lessee under this agreement, which shall continue in full force and effect. in
event of damage to or theft, loss or destruction of any equipment (or any item thereof), lessee shall
promptly notify lessor in writing of such fact and of all details with respect thereto, and shall, within
thirty (30) days of such event, at lessee's option, (a) place the same in good repair, condition and
working order, (b) at lessee's expense, dispose of such equipment (or any item thereof) in
accordance with applicable law, substitute such equipment (or any item thereof) with equipment of
equivalent or superior manufacture, make, model and features, unless this option is expressly
prohibited in the lease related to such equipment, in good repair, condition and working order and
transfer clear title to such replacement property to lessor whereupon such property shall be subject to
this agreement and the applicable other lease documents and be deemed equipment for purposes
hereof and thereof, or (c) pay lessor an amount equal to the sum of (i) all Rent under the lease for
such equipment accrued but unpaid to the date of such payment, plus (ii) the then termination Value
(as defined below) of such equipment, whereupon such lease shall terminate, subject to Section 22,
solely with respect to such equipment (or any item thereof) for which such payment is received by
lessor.
8
any insurance proceeds received with respect to such equipment (or any item thereof) shall be
applied, in the event option (c) of this Section 12 is elected, in reduction of the then unpaid
obligations, including the termination Value, of lessee to lessor, if not already paid by lessee, or, if
already paid by lessee, to reimburse lessee for such payment, or, in the event option (a) or (b) of this
Section 12 is elected, to reimburse lessee for the costs of repairing, restoring or replacing such
equipment (or any item thereof) upon receipt by lessor of evidence, satisfactory to lessor, that such
repair, restoration or replacement has been completed, and an invoice has been provided therefor.
"termination Value" means, at any time, with respect to the equipment leased under any lease, the
amount set forth on attachment #3 to such lease at (or on the first scheduled date on attachment #3 to
such lease prior to) such time.
13.
INSURANCE. (a) lessee shall keep the equipment insured against theft and all risks
of loss or damage, subject to policy limitations or exclusions reasonably acceptable to lessor, from
every cause whatsoever for an amount equal to the higher of the replacement value of the equipment
and the termination Value of the equipment and shall carry general liability insurance, both for
personal injury and property damage, and lessee shall be liable for all deductible portions of all
required insurance. all such insurance shall be maintained with insurance companies rated a-X or
better by Best's insurance Guide and Key Ratings (or an equivalent rating by another nationally
recognized insurance rating agency of similar standing if Best's insurance Guide and Key Ratings
shall no longer be published) or with other insurance companies of recognized responsibility
satisfactory to lessor. all insurance for theft, loss or damage shall provide that losses, if any, shall be
payable to lessor, and all such liability insurance shall name lessor (or lessor's assignee as
appropriate) as additional insured and shall be endorsed to state that it shall be primary insurance as to
lessor. lessee shall pay the premiums therefor and deliver to lessor a certificate of insurance or
other evidence satisfactory to lessor that such insurance coverage is in effect; provided, however, that
lessor shall be under no duty either to ascertain the existence of or to examine such insurance
policies or to advise lessee in the event such insurance coverage shall not comply with the
requirements hereof. each insurer shall agree by endorsement upon the policy or policies issued by it
or by independent instrument furnished to lessor, that it will give lessor at least ten (10) days' prior
written notice of cancellation of the policy for nonpayment of premiums and at least thirty (30) days'
prior written notice for alteration or cancellation due to any other reason or for non-renewal of the
policy. the proceeds of such insurance payable as a result of loss of or damage to the equipment shall
be applied as set forth in Section 12.
(b) if lessee fails to obtain insurance or provide evidence thereof to lessor, lessee agrees that
lessor may, but shall not be obligated to, obtain such insurance on lessee's behalf and charge lessee
for all costs and expenses associated therewith. without limiting the forgoing, lessee specifically
agrees that if lessor obtains insurance on lessee's behalf, lessee will be required to pay a monthly
insurance charge. the insurance charge will include reimbursement for premiums advanced to the
insurer, finance charges (which will typically be at a rate higher than the rate used to determine the
Rent), billing and tracking fees, administrative expenses and other related fees. lessor shall receive a
portion of the insurance charges, which
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may include a profit from such finance charges, billing, tracking, administrative and other charges.
except as provided in the immediately preceding paragraph, any other insurance obtained by or
available to lessor shall be secondary insurance, and lessor shall be solely liable for all costs
associated therewith.
14.
END OF LEASE TERM OPTIONS. not later than ninety (90) days prior to the
expiration of the initial term or any Renewal term (as defined below) of a lease, lessee shall notify
lessor in writing whether it intends at the expiration of such term to (i) renew such lease in
accordance with Section 15 (the "Renewal option"), (ii) purchase the equipment leased under such
lease in accordance with Section 16 (the " Purchase option"), or (c) return the equipment leased
under such lease to lessor (the "Return option"); provided that the Renewal option or the Purchase
option may only be exercised so long as (x) no default under this agreement has occurred and is
then continuing and (y) lessor provides its consent to lessee's exercise of the Renewal option or the
Purchase option (as applicable), which consent may be given or withheld by lessor in its sole
discretion. if lessee does not provide this notice at the end of an initial term or any Renewal term,
then such initial term or Renewal term (as applicable) shall be automatically extended on a month-
to-month basis at the monthly rental rate equal to the final Rent payment due immediately prior to the
end of such initial term or Renewal term and such month-to-month renewal term (the "Month-to-
Month Renewal term") shall be terminable by lessee or lessor by giving the other Party not less
than thirty (30) days prior written notice (the "Month-to-Month Renewal term termination notice").
if such Month-to-Month Renewal term termination notice is given by either Party, lessee shall be
deemed to have elected the Return option at the end of such Month-to-Month Renewal term. if the
equipment leased under such lease is not then in good repair, condition and working order, ordinary
wear and tear excepted, or has not been maintained in accordance with Section 6 hereof, lessee shall
promptly reimburse lessor for all reasonable costs incurred to restore such equipment to such
condition. if, at the end of any lease term or any Month-to Month Renewal term for a lease, lessee
has elected or is deemed to have elected the Return option, then lessee shall, within sixty (60) days
of the end of such lease term or Month-to-Month Renewal term (as applicable), at lessee's
expense, (i) reimburse lessor for the costs to restore such equipment as provided above and (ii)
remove all of such equipment from the relevant Site, repair any damage to the relevant location
caused by such removal so the Site is restored to its original condition at the time such equipment
was installed, pack such equipment into appropriate shipping containers, insure the shipment for the
fair market value of such equipment at such time, and cause such equipment to be delivered to such
location within the united States as lessor may specify, free of any hazardous materials or
environmental concerns.
15.
LEASE RENEWAL. (a) if the Renewal option is elected in accordance with Section
14 with respect to a lease, then such lease (with respect to all, but not less than all, of the equipment
leased under such lease) shall be extended for such term as lessor and lessee mutually agree, (each
such term, a "Renewal term"), commencing on the day following the last day of the initial term or
the prior Renewal term of such lease, as applicable. Rent payable
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during any Renewal term shall be the Fair Market Rental Value for the equipment leased under such
lease, as determined below. the commencement of any Renewal term for a lease is conditioned
upon mutually agreeable lease terms between lessor and lessee and any credit enhancements as may
be required by lessor.
(b)
the Fair Market Rental Value (as defined below) of the equipment leased under a
lease, as of the commencement of the Renewal term of such lease, shall be determined by
agreement of lessor and lessee within sixty (60) days after receipt by lessor of the irrevocable
notice from lessee of its election to renew such lease, or, if they shall fail to agree within such sixty
(60) day period, shall be determined by a qualified, independent appraiser that is a member of the
american Society of appraisers and that is selected by lessee and approved by lessor, such approval
not to be unreasonably withheld or delayed (the "appraisal Procedure"), with the fair market value as
determined by such appraiser to be binding and conclusive on the Parties as the "Fair Market Rental
Value" for purposes of such lease and the fees and expenses of the appraiser shall be borne by
lessee. the Rent payable during any Renewal term shall be equal to the average of the Rent payable
during the twelve (12) month period immediately preceding such (as defined below) Renewal term
until the Fair Market Rental Value is determined, at which time the prior Rent payments shall be
adjusted to take into account such determination.
(c)
the amounts that are payable during any Renewal term for a lease as termination
Value shall be determined on the basis of the fair market sales value of the equipment leased under
such lease as of the commencement of such Renewal term and shall be set forth in a schedule to be
mutually agreed by lessor and lessee prior to the commencement of such Renewal term. if lessor
and lessee cannot agree on the fair market sales value, such amount shall be determined by the
appraisal Procedure, and the fees and expenses of the appraiser shall be borne by lessee.
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16.
PURCHASE OPTION. (a) if the Purchase option is elected in accordance with
Section 14 with respect to a lease, lessee shall have the option to purchase all but not less than all of
the equipment leased under such lease from lessor for an amount equal to the then fair market value
of such equipment as agreed by lessee and lessor, or if they fail to so agree, as determined by the
appraisal Procedure (any such amount, the "Purchase option amount"). the Purchase option for a
lease shall be consummated as of the close of business on the closing date set forth in lessee's notice
(which shall be three (3) business days following the end of the lease term for such lease), or on
such other date as the Parties may otherwise agree (any such date being the "Purchase date").
(b)
if lessee elects to exercise the Purchase option with respect to a lease, then on the
Purchase date for such lease, lessee shall pay to lessor (i) the Purchase option amount for such
lease and all sales, use, value added and other taxes required to be paid or otherwise indemnified by
the lessee pursuant to Sections 10 and 18, plus (ii) any unpaid Rent and any other outstanding
amount due under this agreement and such lease on or before such date.
(c)
upon payment of all sums specified in this Section 16, the applicable lease shall
terminate and, at the request of lessee, lessor shall transfer its rights in the equipment leased under
such lease to the lessee on an "as is," "where is" basis without representation or warranty.
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17.
LESSEE INDEMNITY. lessee assumes liability for and shall indemnify, save, and
hold harmless lessor and lessor's officers, directors, employees, agents and assignees from and
against any and all third party claims, actions, suits or proceedings of any kind and nature whatsoever,
including all damages, liabilities, penalties, costs, expenses and reasonable consultant and legal fees
(hereinafter "Claim(s)") based on, arising out of, connected with or resulting from the equipment,
lessee's obligations under this agreement, or lessee's or any demo Customer's possession, use or
operation of the equipment including, without limitation, Claims relating to ownership, use,
possession or disposal of the equipment, Claims arising in contract or tort (including negligence,
strict liability or otherwise), Claims arising out of latent defects of the equipment (regardless of
whether the same are discoverable by lessor or lessee), Claims arising out of or relating to the
violation of applicable law, including environmental law, or the existence or release of hazardous
materials at the site where the equipment is located, or Claims arising out of any trademark, patent or
copyright infringement, but excluding (a) any Claims that accrue in respect of circumstances that
occur after lessor has taken possession of the equipment after termination of this agreement,
provided that such Claims do not relate to lessee's or any demo Customer's use, possession or
operation of the equipment, (b) any Claims that result from the gross negligence or willful
misconduct of lessor, and (c) Claims for taxes (it being agreed that lessee's indemnification
obligations with respect to taxes are set forth in Sections 10 and 18). if any Claim is made against
lessee or lessor, the Party receiving notice of such Claim shall promptly notify the other Party, but
the failure of the Party receiving notice to notify the other Party shall not relieve lessee of any
obligation hereunder.
18.
TAX INDEMNITY.
(a)
lessee acknowledges that the Rent in each lease has been calculated on the
assumption that lessor will be the owner of the equipment for federal, state and local income tax
purposes on the date it acquires the equipment pursuant to the Master Purchase agreement, that it
will remain the sole owner after entering into the applicable lease and that, for federal, state and local
income tax purposes, it will be able to (i) claim an investment tax credit (for federal income tax
purposes) under section 48(a)(3)(iv) of the Code on the Rental Commencement date equal to 30% of
the appraised fair market value of the equipment on the Rental Commencement date (as determined
by the appraiser), (ii) claim cost recovery reductions of one hundred percent (100%) of lessor's
depreciable Cost (as defined below), under section 168(k)(1) of the Code, in the taxable year that
includes the Rental Commencement date with respect thereto and assuming such equipment's
salvage value is zero and (iii) amortize transaction expenses incurred in connection with each lease
ratably over the applicable initial term. the foregoing investment tax credit, depreciation deductions
and amortization deductions are referred to herein as the "tax Benefits." "lessor's depreciable Cost"
means (1) for state and local income tax purposes, the appraised fair market value of the equipment
on the Rental Commencement date (as determined by the appraiser) and (2) for federal income tax
purposes, the appraised fair market value of the equipment on the Rental Commencement date (as
determined by the appraiser), reduced by 50% of the investment tax credit in clause (i) above. the
"appraiser" for purposes of this Section 18 has the meaning given to such term in exhibit B to this
agreement. lessee acknowledges further that the Rent in each lease has been calculated on the
assumption
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that lessor will have to report the Rent as income in the periods and amounts shown on the Rent
schedule to such lease.
(b)
lessee represents, warrants and covenants to lessor the following: (i)(a) for purposes
of the investment tax credit, the equipment will be treated as "placed in service" for federal income
tax purposes and the original use of the equipment will be deemed to commence for federal income
tax purposes on the applicable Rental Commencement date and (B) for purposes of the depreciation
deductions, (1) the equipment will be treated as "placed in service" on the applicable Rental
Commencement date and (2) the acquisition retirements set forth in section 168(k)(2)(e)(ii) of the
Code have been met; (ii) there was no binding contract in place for the equipment as of September
27, 2017; (iii) all of the equipment was originally placed in service by lessee on a date that is no
more than three (3) months before the closing on the purchase of the equipment by lessor and lease
back of such equipment under this agreement to lessee (the "original Placed-in-Service date"); (iv)
during the period beginning on the original Placed-in-Service date and ending on the date of the
purchase of the equipment by lessor and lease back of such equipment under this agreement to
lessee, no person or entity other than lessee has had any ownership interest in the equipment or any
part thereof; (v) all of the equipment was new when it was originally placed in service by lessee; (vi)
all of the equipment will be considered "qualified fuel cell property" within the meaning of Section
48(c)(1) of the Code; (vii) lessor will be able to claim a 30% investment tax credit under section
48(a)(3)(iv) of the Code based on the appraised fair market value of the equipment as of the Rental
Commencement date (as determined by the appraiser); (viii) all of the equipment qualifies as "5-
year property" within the meaning of Section 168(e)(3)(B)(vi)(i) of the Code; (ix) lessor will have a
tax basis for purposes of calculating the investment tax credit equal to the appraised fair market value
of the equipment as of the Rental Commencement date (as determined by the appraiser); (x) lessor
will have a tax basis for (a) state and local income tax depreciation purposes equal to the appraised
fair market value of the equipment on the Rental Commencement date (as determined by the
appraiser) and (B) for federal income tax depreciation purposes equal to 85% of the appraised fair
market value of the equipment as of the Rental Commencement date (as determined by the
appraiser), which takes into account a reduction in basis equal to 50% of the 30% investment tax
credit amount; (xi) the equipment will not be considered "tax-exempt use property" within the
meaning of section 168(h) of the Code during the lease term other than solely due to the fact that
lessor (or any member of lessor) is or becomes a tax-exempt entity within the meaning of section
168(h)(2) of the Code; (xii) the equipment will not be considered used by a disqualified Person as a
result of any lease or demo agreement (in each case, other than as a result of the status of lessor or
any member of lessor); (xiii) as of the applicable Rental Commencement date, no portion of the
equipment is, and at no time during the lease term will any portion of the equipment become, tax-
exempt bond financed property within the meaning of Section 168(g)(5) of the Code or financed with
"subsidized energy financing" within the meaning of Section 48(a)(4) of the Code, other than as a
result of the status of lessor or any member of lessor or actions taken by lessor; (xiv) the equipment
will be used solely in the united States; (xv) the equipment will not be subject to the alternative
depreciation system under section 168(g) of the Code (assuming no election by
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lessor under section 168(g)(1)(e) of the Code); (xvi) lessee has not claimed and will not claim, or
cause to be claimed, an investment tax credit under section 48(a)(3)(iv) of the Code or other federal
tax credit, in each case with respect to the equipment or any portion thereof; (xvii) on the Rental
Commencement date applicable to the equipment, the equipment will not require any improvements,
modifications or additions (other than ancillary items of a kind customarily selected and furnished by
lessees of property of the same kind as the equipment) in order for the equipment to be rendered
complete for its intended use by lessee; (xviii) lessee will not take a position for u.S. federal or state
income tax purposes that it is the owner of any portion of the equipment during the lease term or
that is inconsistent with any of the tax assumptions set forth in this Section 18; (xix) at no time during
the period beginning on the applicable Rental Commencement date and ending on the fifth
anniversary of such date (the "Recapture Period") will the equipment or any portion thereof be
disposed of or otherwise cease to be (in each case within the meaning of section 50 of the Code)
"qualified fuel cell property" within the meaning of Section 48(c)(1) of the Code, other than as a
result of the status of lessor or any member of the lessor or actions taken by lessor; and (xx) all
written information provided by or on behalf of lessee to the appraiser was accurate and complete in
all material respects and remains accurate and complete on the applicable Rental Commencement
date.
(c)
lessee covenants that it has not, and will not at any time from such delivery through
the term of this agreement, take any action or omit to take any action (whether or not the same is
permitted or required hereunder) that is inconsistent with the tax assumptions in Section 18(a), that
could contribute to loss by lessor of all or any part of the tax Benefits or that could require the
lessor to report Rent as income ahead of the periods to which the Rent is allocated in the applicable
Rent schedule, including by entering into a demo agreement with a disqualified Person. lessee
covenants that it will provide lessor promptly upon request any information that lessor requires in
connection with claiming any tax Benefits and responding to questions from the internal Revenue
Service.
(d)
if as a result of any act, omission, breach of warranty or covenant or misrepresentation
by lessee, the tax Benefits are lost, disallowed, eliminated, reduced, delayed, recaptured,
compromised or are otherwise unavailable to lessor (any of the foregoing being a "loss") or lessor
is required to report Rent as income ahead of the periods to which the Rent is allocated in the
applicable Rent schedule (an "inclusion"), then lessee will pay lessor promptly on demand an
amount that will compensate lessor fully for the loss or inclusion (including any interest, penalties
or additions to tax) on an after-tax basis, subject to the last sentence of this Section 18(d). For this
purpose, "after-tax basis" means an amount determined by dividing the amount of the loss or
inclusion by one minus the maximum composite federal, state and local corporate income tax rates in
effect at time of payment. upon payment of the full indemnity amount by lessee, the act, omission,
breach of warranty or covenant or misrepresentation of lessee that caused a loss will not be deemed
a default hereunder. if requested by lessee, lessor agrees to attempt in good faith to challenge any
assertion by the internal Revenue Service that will lead to a loss; provided, however, lessee has first
paid to lessor the amount of such loss and agreed in writing to indemnify lessor for all reasonable
expenses (including attorneys' fees),
15
liabilities or losses that lessor may incur in the contest. lessor will have the sole discretion to
determine whether or not to undertake judicial or administrative proceedings beyond the level of an
internal Revenue Service auditing agent and to select counsel to handle the contest; provided that if
the claim must be paid before the matter can be heard in court, lessee will advance the funds
necessary to do so on an interest-free basis. For purposes of this Section 18, the term "lessor" shall
include the entity or entities, if any, with which lessor files a consolidated income tax return.
19.
DEFAULT AND REMEDIES. (a) lessee shall be in default under this agreement if:
(i) lessee fails to pay Rent or any other payment due and owing hereunder, including an tax
indemnity set forth in Section 18, within five (5) business days of the due date thereof; (ii) (a) any
representation or warranty made by lessee in Section 1(b) shall prove to be false or misleading or (B)
any other respresentation or warranty made by lesseer herein or in any document delivered to lessor
in connection herewith shall prove to be false or misleading and, in the case of this clause (B), the
false or misleading nature of such representation or warranty is not corrected within thirty (30) days
following receipt of written notice thereof from lessor; (iii) a breach of the covenant set forth in
Section 1(c), Section 1(d), Section 18(b), Section 25(c) or Section 26(c) shall have occurred; (iv) a
lease fails to be considered a "true lease" for federal income tax purposes as a result of any act,
omission, breach of warranty or covenant or misrepresentation by lessee; (v) lessee becomes
insolvent, dissolves, or assigns its assets for the benefit of creditors, or enters any bankruptcy or
reorganization proceeding; (vi) lessee fails to observe, keep or perform any other term or condition
of this agreement or any other lease document and such failure continues for thirty (30) days
following receipt of written notice from lessor; (vii) lessee undergoes a Change in Control (as
defined below) without the prior written approval of lessor, where "Change in Control" means any
reorganization, recapitalization, consolidation or merger (or similar transaction or series of related
transactions) of lessee in which the holders of lessee's outstanding shares immediately before
consummation of such transaction or series of related transactions do not, immediately after
consummation of such transaction or series of related transactions, retain shares representing more
than fifty percent (50%) of the voting power of the surviving entity or such transaction or series of
related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by
such parent), in each case without regard to whether lessee is the surviving entity; and/or (viii) any
payment default has occurred and is continuing under any master lease agreement that currently or
may hereinafter exist between lessor and lessee or any affiliate of lessee (after giving effect to any
applicable grace or cure periods therein) (each of (i) through (viii), a "default").
(b)
if a default shall have occurred and be continuing, lessor shall have the right to take
any one or more of the following actions: (i) cancel or terminate this agreement and/or each lease
and repossess the equipment; (ii) proceed by appropriate court action or actions at law or in equity to
enforce performance by lessee of the terms and conditions of this agreement and each lease and/or
recover damages for the breach thereof; (iii) accelerate all of the amounts due hereunder by requiring
lessee to pay lessor an amount equal to the sum of (a) all Rent and any other amounts accrued to the
date of such payment, plus (B) the aggregate termination
16
Value for all equipment; and/or (iv) exercise any other right or remedy available at law or in equity.
(c)
upon payment in full to lessor of the amounts set forth in Section 19(b)(iii), from or
on behalf of lessee, the applicable lease shall terminate (except as set forth in Section 22) solely
with respect to the equipment (or any item thereof) leased under such lease for which such payment
is received by lessor and, at the request of lessee, lessor shall transfer its rights in such equipment
to lessee or lessee's designee on an "as is," "where is" basis without representation or warranty.
20.
REPORTS. (a) within sixty (60) days after the end of each quarterly period during
lease term, lessee shall deliver to lessor unaudited quarterly financial statements for lessee as of
the end of such quarterly period, prepared in accordance with generally accepted accounting
principles in the united States ("GaaP"), it being understood that this Section 20(a) shall be deemed
satisfied if such quarterly financial statements are timely filed by lessee with the Securities and
exchange Commission in compliance with applicable law.
(b) within one hundred twenty (120) days after the end of each calendar year during the
lease term, lessee shall deliver to lessor audited annual financial statements for lessee as of the
end of such calendar year, prepared in accordance with GaaP; provided that if audited annual
financial statements are not prepared for lessee in the ordinary course for any year then unaudited
annual financial statements for lessee for such year may be provided if they are certified by the chief
financial officer of lessee as prepared in accordance with GaaP, it being understood that this
Section 20(b) shall be deemed satisfied if such annual financial statements are timely filed by lessee
with the Securities and exchange Commission in compliance with applicable law.
(c)
Promptly, but in any event within ten (10) business days after receipt thereof, a copy of
each periodic report received by lessee during the lease term from each maintenance provider for
the equipment and, if requested by lessor, each periodic report and other notice sent to or received
by a demo Customer.
(d)
Promptly upon, but no later than ten (10) business days after, lessor's request from
time to time, such data, certificates, reports, statements, documents and further information regarding
the business, assets, liabilities, financial condition, or results of operations of lessee as the lessor
may reasonably request.
(e)
on the last business day of January, april, July and october, a schedule indicating
each item of equipment leased under each of the leases as of such date, listed by Site and identifying
(a) the product/model type and serial number of each such item of equipment and (b) any such item
of equipment (i) that had been relocated from its original Site (noting the Site to and from which such
item of equipment had been relocated) or (ii) whose product/model type had been upgraded,
converted or otherwise modified (noting the original and modified product/model type), in each case,
since the Rental Commencement date of the applicable lease.
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21.
FURTHER ASSURANCES. lessee agrees (a) at the written request of lessor, to
execute and/or deliver to lessor any uniform Commercial Code financing statements, fixture filings
or other instruments lessor reasonably deems necessary for expedient filing, recording or perfecting
the interest and title of lessor in this agreement, any lease and the equipment, (b) that a copy of this
agreement and any lease may be filed in accordance with clause (a), provided the economic terms
not necessary for filing shall have been deleted therefrom, (c) that all reasonable and documented
costs incurred in connection with any actions taken in accordance with clause (a), including, without
limitation, costs for filing fees and taxes, shall be paid by lessee, and (d) to promptly, at lessee's
expense, deliver such other reasonable documents and assurances, and take such further action as
lessor may reasonably request in writing, in order to effectively carry out the intent and purpose of
this agreement and each lease.
22.
SURVIVAL.
lessee's covenants,
warranties and indemnities
contained in Sections 8, 10, 14, 17, 18, 19(b) and 26 hereof are made for the benefit of lessor and
shall survive, remain in full force and effect and be enforceable after the expiration or termination of
this agreement for any reason. each other provision set forth in the lease documents that, by its
terms, survives termination of this agreement shall also survive, remain in full force and effect and be
enforceable after the expiration or termination of this agreement for any reason.
representations,
23.
INSPECTION. during the lease term and subject to any applicable demo
agreement, lessor may, during normal business hours, on reasonable prior written notice to lessee,
inspect the equipment and the records with respect to the operations and maintenance thereof, in
lessee's custody or to which lessee has access. lessee may be present at such inspection. any such
inspection will not unreasonably disturb or interfere with the normal operation or maintenance of the
equipment or the conduct by lessee of its business and will be in accordance with lessee's health,
safety and insurance programs. in no event shall lessor have any duty or obligation to make any such
inspection and lessor shall not incur any liability or obligation by reason of not making any such
inspection.
24.
ACCEPTANCE OF EQUIPMENT; NON CANCELABLE. lessee's acceptance of
the equipment shall be conclusively and irrevocably evidenced by lessee signing the Certificate of
acceptance in the form attached hereto and upon acceptance, each lease shall be noncancelable for
the lease term thereof unless otherwise provided in such lease.
25.
ASSIGNMENT; STATUS OF LESSEE. (a) lessee acknowledges and agrees that
lessor may, at any time, without prior notice to or consent of lessee, assign its rights and obligations
under this agreement in whole or in part and/or mortgage, or pledge or sell the equipment subject to
lessee's rights under this agreement. Such assignee or mortgagee may re- assign this agreement
and/or mortgage without notice to lessee. to the extent so assigned or transferred, any such assignee,
buyer, transferee, grantee or mortgagee shall have and be entitled to exercise any and all rights and
powers of, and shall perform all obligations of, lessor under this agreement. if any such lessor
assignment is a partial assignment of this agreement by wells Fargo equipment Finance, inc. (for
purposes of this Section 25, "wFeF"), (i) so long as
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no default shall have occurred, wFeF shall maintain its administrative role under this agreement
with lessee and shall act as an intermediary between lessee and any wFeF partial assignee, and (ii)
unless lessee receives notice from wFeF or wFeF's assignee to the contrary, lessee's satisfaction of
its obligations under the lease documents to wFeF shall be deemed to satisfy such obligations to all
lessors.
(b) without limiting the foregoing, lessee further acknowledges and agrees that upon
written notice of an assignment from lessor, lessee will pay all Rent and any and all other amounts
payable by lessee under any lease to such assignee or mortgagee or as instructed by lessor in
writing upon at least ten (10) business days' prior notice. lessor agrees to provide prompt notice of
any such assignment or mortgage, and lessee agrees to confirm in writing receipt of any such notice
of assignment as may be reasonably requested by lessor and such assignee or mortgagee; provided
that lessor's failure to provide prompt notice of any such assignment or mortgage shall not affect or
otherwise impact the effectiveness of such assignment or mortgage; provided, however, that lessee
will be deemed to have performed a Rent payment obligation if lessee makes such Rent payment to
the assigning lessor before receiving notice of the related assignment.
(c)
except (i) as otherwise set forth in this agreement and any lease and (ii) for the right
to use the equipment granted under a demo agreement, lessee shall not assign, sublease,
hypothecate, sell or transfer the equipment or any interest in this agreement or any lease, and any
attempt to do so shall be null and void and shall constitute a default hereunder.
(d)
lessee shall not (x) knowingly allow a Blocked Person (as defined below) to have an
ownership interest in lessee or (y) otherwise allow a Blocked Person or Blocked Persons to have a
fifty percent (50%) or greater ownership interest in or control of lessee. "Blocked Person" means any
person or entity that is now or at any time (i) on a list of Specially designated nationals issued by the
office of Foreign assets Control ("oFaC") of the united States department of the treasury or any
sectoral sanctions identification list; or (ii) whose property or interests in property are blocked by
oFaC or who is subject to sanctions imposed by law, including any executive order or any branch or
department of the united States government; or (c) otherwise designated by the united States or any
regulator having jurisdiction or regulatory oversight over lessor, to be a person to whom lessor is
not permitted to extend credit or with regard to whom a debtor relationship may result in penalties
against lessor or limitations on a secured party's ability to enforce a transaction.
26.
REPRESENTATIONS,
WARRANTIES AND COVENANTS.
lessee
represents and warrants to lessor that: (i) the execution and delivery by lessee of each lease
document are duly authorized on the part of lessee and each lease document constitutes valid
obligations binding upon, and enforceable against, lessee; (ii) neither the execution and delivery of
any lease document, nor the due performance thereof by lessee, including the commitment to pay
(and payment of) Rent, will result in any breach of, or constitute a default under, or violation of,
lessee's constitutive documents, or any material agreement to which lessee is a party or by which
lessee is bound that relates to the subject matter hereof, including without
(a)
19
limitation that certain (a) loan and Security agreement dated as of december 23, 2016 by and
among Plug Power inc., nY Green Bank and the other parties thereto and (B) loan and Security
agreement dated as of March 29, 2019 by and among Plug Power inc., Generate lending, llC, and
the other parties thereto, in each case, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time; (iii) lessee is duly incorporated, validly
existing and in good standing in its state of incorporation and in any jurisdiction where the equipment
is located; and (iv) no material approval, consent or withholding of objection is required from any
governmental authority or entity with respect to the entering into, or performance of any lease
document by lessee.
(b)
lessee has provided to lessor true and correct copies of its constitutive documents,
authorizing resolutions for the transactions contemplated hereby, and a certificate of incumbency,
each certified by a duly appointed officer of lessee.
(c)
lessee shall not: (i) amend, modify, supplement, assign or transfer any demo
agreement, in any case, that affects any equipment subject to a lease, or enter into any agreement
with respect to any equipment after the date of the applicable lease (other than a demo agreement),
in each case, in a manner adverse to lessor without the prior written consent of lessor (which
consent shall not be unreasonably withheld), it being understood and agreed, however, that lessee
shall in no event renew (or request renewal of or consent to a renewal of) the term of any demo
agreement that extends beyond the lease term of the related lease; (ii) subject the equipment to any
power purchase agreement; or (iii) hold the equipment, or otherwise account for the equipment, as
inventory. in addition, with respect to equipment leased under a lease, lessee shall at all times
cause such equipment to be subject to a demo agreement or shall actively use its commercially
reasonable efforts to cause such equipment to become subject to a demo agreement.
(d)
lessee will use its commercially reasonable efforts to enforce its rights under each
demo agreement and shall take or omit to take any commercially reasonable action thereunder as
directed by lessor from time to time.
27.
NOTICES. any notice required or given hereunder shall be deemed properly given
when provided in writing (a) three (3) business days after mailed first class, overnight, or certified
mail, return receipt requested, postage prepaid, addressed to the designated recipient at its address set
forth below or such other address as such Party may advise by notice given in accordance with this
provision or (b) upon receipt by the Party to whom addressed in writing by personal delivery,
commercial courier service, fax or other means which provides a permanent record of the delivery of
such notice. notices shall be delivered to the Parties at the following addresses:
if to lessee:
Plug Power inc.
968 albany Shaker Road
latham, nY 12110
20
attn: Paul Middleton
telephone: (518) 738-0281
Facsimile: (518) 782-7884
email: pmiddleton@plugpower.com
if to lessor:
wells Fargo equipment Finance, inc.
600 South Fourth Street
Minneapolis, Mn 55415
attn: account Services
Facsimile: (866) 687-5578
email: wFeFi@wellsfargo.com
28.
DOCUMENTATION. except for the payment of Rent set forth in the applicable
leases, for which invoices are provided as an accommodation to lessee and not as a condition
precedent to payment, lessor shall use its best efforts to provide lessee with reasonable
documentation, including, statements, tax bills and/or invoices, evidencing payment obligations or
reimbursement due to lessor pursuant to the terms of this agreement.
29.
TRADE
INTERNATIONAL
ANTI-MONEY LAUNDERING;
LAW
COMPLIANCE. lessee represents and warrants to lessor, as of the date of this agreement, the
date of each advance of proceeds pursuant to this agreement, the date of any renewal, extension or
modification of this agreement or any lease, and at all times until this agreement and each lease has
been terminated and all amounts thereunder have been indefeasibly paid in full, that: (a) no Covered
entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the
possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any
of its operating income from investments in or transactions with, any Sanctioned Country or
Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance
authority; (b) the proceeds of any lease will not be used to fund any operations in, finance any
investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in
violation of any law, regulation, order or directive enforced by any Compliance authority; (c) the
funds used to repay any lease are not derived from any unlawful activity; and (d) each Covered
entity is in compliance with, and no Covered entity engages in any dealings or transactions
prohibited by, any laws of the united States, including but not limited to any anti-terrorism laws.
lessee covenants and agrees that it shall immediately notify lessor in writing upon the occurrence of
a Reportable Compliance event.
as used herein: "anti-terrorism laws" means any laws relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering, or bribery, all as amended,
supplemented or replaced from time to time; "Compliance authority" means each and all of the (a)
u.S. treasury department/office of Foreign assets Control, (b) u.S. treasury department/Financial
Crimes enforcement network, (c) u.S. State department/directorate of defense trade Controls, (d)
u.S. Commerce department/Bureau of industry and Security, (e) internal Revenue Service, (f) u.S.
Justice department, and (g) u.S. Securities and
21
exchange Commission; "Covered entity" means lessee, its affiliates and subsidiaries, all guarantors,
pledgors of collateral, all owners of the foregoing, and all brokers or other agents of lessee acting in
any capacity in connection with this agreement or any lease; "Reportable Compliance event" means
that any Covered entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or
custodially detained, or receives an inquiry from regulatory or law enforcement officials, in
connection with any anti-terrorism law or any predicate crime to any anti-terrorism law, or self-
discovers facts or circumstances implicating any aspect of its operations with the actual or possible
violation of any anti-terrorism law; "Sanctioned Country" means a country subject to a sanctions
program maintained by any Compliance authority; and "Sanctioned Person" means any individual
person, group, regime, entity or thing listed or otherwise recognized as a specially designated,
prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions
(including but not limited to the blocking of property or rejection of transactions), under any order or
directive of any Compliance authority or otherwise subject to, or specially designated under, any
sanctions program maintained by any Compliance authority.
22
30.
USA PATRIOT ACT NOTICE. to help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial institutions to obtain,
verify and record information that identifies each lessee that opens an account. what this means:
when lessee opens an account, lessor will ask for the business name, business address, taxpayer
identifying number and other information that will allow lessor to identify lessee, such as
organizational documents. For some businesses and organizations, lessor may also need to ask for
identifying information and documentation relating to certain individuals associated with the business
or organization.
31.
GOVERNING LAW. this agreement and each lease are entered into, under and
shall be construed in accordance with, and governed by, the laws of the State of new York, without
giving effect to conflict of laws principles. each Party consents to the exclusive jurisdiction of any
state or federal court in the State of new York over any action or proceeding brought in connection
with this agreement. leSSee and leSSoR eXPReSSlY waiVe anY RiGht to tRial BY
JuRY in anY aCtion oR PRoCeedinG to whiCh leSSoR and/oR leSSee MaY Be
PaRtieS aRiSinG out oF oR in anY waY PeRtaininG to thiS aGReeMent.
32.
FINANCE LEASE STATUS. lessee agrees that if article 2a-leases of the uniform
Commercial Code of the State of new York (the "uniform Commercial Code" or "uCC") applies to
this agreement and any lease, this agreement and each such lease shall be considered a "Finance
lease" as that term is defined in article 2a. to the eXtent PeRMitted BY aPPliCaBle
law, leSSee waiVeS anY and all RiGhtS and ReMedieS ConFeRRed uPon a
leSSee BY SeCtionS 508-522 oF aRtiCle 2a oF the uCC.
33.
BUSINESS DAY. For all purposes hereof, the term "business day" means any day
which is not a Saturday, Sunday or other day on which banks are required to close for business in the
State of new York.
34. MISCELLANEOUS. the captions of this agreement are for convenience only and
shall not be read to define or limit the intent of the provision that follows such captions. this
agreement contains the entire agreement and understanding between lessor and lessee relating to
the subject matter hereof. any variation or modification hereof and any waiver of any of the
provisions or conditions hereof shall not be valid unless in writing signed by an authorized
representative of the Parties hereto. any provision of this agreement that is unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. lessor's failure at any time to require strict performance by lessee or any of the
provisions hereof shall not waive or diminish lessor's right thereafter to demand strict compliance
therewith or with any other provision. this agreement may be executed in separate counterparts, each
of which shall constitute an original, but all of which, when taken together shall constitute a single
contract. delivery of an executed counterpart of a signature page of this
23
agreement or any lease by telecopy, emailed pdf or any other electronic means shall be effective as
delivery of a manually executed counterpart of this agreement or such lease.
24
in witneSS wheReoF, the Parties hereto have duly executed this agreement as of the
date first above written.
LESSOR:
WELLS FARGO EQUIPMENT FINANCE, INC.
By: /s/ angela d. Baumann
name: angela d. Baumann
title: authorized Signer
LESSEE:
PLUG POWER INC.
By:
Paul Middleton
Chief Financial officer
(Wells Fargo/Plug Power- Master Lease Agreement (Demo Equipment))
(original)
in witneSS wheReoF, the Parties hereto have duly executed this agreement as of the
date first above written.
LESSOR:
WELLS FARGO EQUIPMENT FINANCE, INC.
By:
name:
title:
LESSEE:
PLUG POWER INC.
By: /s/ Paul Middleton
Paul Middleton
Chief Financial officer
(Wells Fargo/Plug Power - Master Lease Agreement (Demo Equipment))
(original)
EXHIBIT A
RENTAL SCHEDULE NO. [
]
this Rental Schedule dated and effective as of [
], 20[ ] (this "lease") incorporates by
reference the terms and provisions of the Master lease agreement dated as of april 10, 2019 (as the
same may be amended, amended and restated, supplemented or otherwise modified from time to time,
the "Master lease agreement") by and between wells Fargo equipment Finance, inc. (together with
its successors and assigns, "lessor") and Plug Power inc. ("lessee"). this lease shall be accompanied
by a Certificate of acceptance in the form attached as attachment #1.
all terms used within this document that are defined in the Master lease agreement shall have
the same meaning herein.
1. description of equipment:
[ ] Gendrive Fuel Cells, as more fully described on Schedule a hereto, and located at the
following Site: [inSeRt addReSS oF Site].
Lease Terms:
]1
Initial Term: [
Rental Commencement Date: [ ], 20[ ]
Rent: as set forth on attachment #2 attached hereto and incorporated herein
Lessor Account Information: all payments of Rent shall be made to the following
account of lessor
]2
[
the initial term of this lease shall commence upon the acceptance date as indicated on the
Certificate of acceptance ("lease Commencement date") and, unless earlier terminated
pursuant to the terms of the Master lease agreement, shall continue until expiration of the
number of months of the initial term specified above after the Rental Commencement date.
lessee shall pay Rent throughout the initial term in advance on each Rent payment date listed
on attachment #2 in the amount specified under the column heading "Rent Payment" for such
Rent payment date. the Rent payable on each Rent payment date shall be applied to satisfy
the lessee's obligation with respect to the Rent owed on each "Rental date" for the applicable
rental period, as further set forth on attachment #2 hereto.
2. the termination Values are as set out on attachment #3 attached hereto and incorporated
herein.
3. all purchase and end of term options awarded to lessee in respect of this lease shall apply to
all, but not less than all, equipment leased under this lease.
1 Initial term to be 78 months from the Lease Commencement Date.
2 Account information to be inserted
1
[Signature page follows.]
in witneSS wheReoF, the Parties hereto have caused this lease to be duly executed on
the date set forth below by their authorized representatives.
thiS leaSe Cannot Be CanCelled
LESSOR:
WELLS FARGO EQUIPMENT FINANCE, INC.
By:
name:
title:
LESSEE:
PLUG POWER INC.
By:
Paul Middleton
Chief Financial officer
Schedule A
TO EXHIBIT A
DESCRIPTION OF EQUIPMENT
Product / Model Number
Serial Number
Attachment #1
TO EXHIBIT A
CERTIFICATE OF ACCEPTANCE
to
Rental Schedule no.
dated [
], 20[ ]
in compliance with the terms, conditions and provisions of the Master lease agreement dated
as of april 10, 2019 (as the same may be amended, supplemented or otherwise modified from time to
time, the "lease") between the undersigned ("lessee") and wells Fargo equipment Finance, inc.
(together with its successors and assigns, "lessor"), lessee hereby:
(a)
(b)
(c)
certifies and warrants that all equipment described in the above-referenced Rental
Schedule (the "equipment") is delivered, inspected and fully installed, and operational
as of the acceptance date as indicated below;
accepts all the equipment for all purposes under the lease and all attendant documents
as of the date above (the "acceptance date"); and
restates and reaffirms, as of the acceptance date, each of the representations,
warranties and covenants heretofore given to lessor in the lease.
lessor is hereby authorized to insert serial numbers on the above-referenced Rental Schedule.
leSSee:
PLUG POWER INC.
By:
name:
title:
Attachment #2
TO EXHIBIT A
Rents
for Rental Schedule No. [
]
Rent shall be due and payable in accordance with the following schedule.3 Rent is stated
exclusive of all applicable sales and/or use taxes. lessee is responsible for all sales and/or use taxes on
the Rent.
3 Rent payments will be due monthly in advance.
6
Attachment #3
TO EXHIBIT A
Termination Value Schedule Rental
Schedule No. [
]
EXHIBIT B
ADDITIONAL CONDITIONS PRECEDENT TO PURCHASE OF EQUIPMENT AND
ENTERING INTO OF LEASES
1. a lease for the applicable equipment, substantially in the form of exhibit a to this agreement,
duly executed by lessee.
2. a Certificate of acceptance for the applicable equipment, substantially in the form of attachment
#1 to exhibit a to this agreement, duly executed by lessee.
3. a Bill of Sale for the applicable equipment duly executed by lessee.
4. the demo agreement for the applicable equipment duly executed by lessee and the demo
Customer.
5. the warranties with respect to the applicable equipment.
6.
(a) in the case of the first lease entered into on or after the date of this agreement, a certificate of
the Secretary or assistant Secretary of lessee, attaching (i) true and complete copies of the
constitutive documents of lessee as in effect on the date of this agreement, (ii) a true and
complete copy of resolutions duly adopted by the authorized governing body of lessee,
authorizing the execution, delivery and performance by lessee of each of the lease documents to
which it is or will be a party, (iii) an incumbency certificate with respect to the officers of lessee
authorized to execute and deliver the lease documents to which lessee is or will be a party and
(iv) a certificate of good standing, issued by the Secretary of State of the State of delaware, dated
no more than ten (10) business days prior to the date of such lease; and (b) in the case of each
other lease, a bringdown of the certificate referenced in clause (a) of this item 6 in form and
substance satisfactory to lessor.
7. Precautionary uCC-1 financing statements, naming lessee as debtor and lessor or its successors
and assigns as secured party, properly filed, registered or recorded in each jurisdiction in which
lessor shall reasonably request.
8. uCC search reports, satisfactory to lessor, dated not more than ten (10) business days before the
date of the applicable lease, made in respect of lessee in each jurisdiction in which lessee is
located.
9. uCC-3 financing statements, terminating the interests of any secured party that is not lessor,
properly filed, registered or recorded in each jurisdiction in which lessor shall reasonably request.
10. Copies of certificates of insurance naming lessor as loss payee and/or additional insured that
conform to all requirements set forth in Section 13.
11. an itemized invoice for each item of equipment (including itemization of any sales/use tax being
paid or sales tax exemption certificate), together with evidence of payment thereof.
8
12. a pay proceeds letter addressed to lessor, duly executed by lessee, and in form and substance
satisfactory to lessor (each, a "Pay Proceeds letter").
13. an appraisal report prepared solely for lessor and its counsel by an appraiser chosen by lessor
(the "appraiser") that is satisfactory in form and substance to lessor, which confirms, among
other things, that all of the applicable equipment is "qualified fuel cell property" within the
meaning of section 48(c)(1) of the Code, lessor will be eligible to claim a 30% investment tax
credit under section 48(a)(3)(iv) of the Code based on the appraised fair market value of the
equipment as of the Rental Commencement date, and confirms a residual value and remaining
useful life for the applicable equipment at the end of the initial term therefor that is acceptable to
lessor and lessor’s counsel.
14. a certificate from the chief financial officer of lessee that is satisfactory in form and substance to
lessor confirming that the applicable equipment is in service for u.S. federal income tax
purposes as of the date of the applicable lease.
15. an opinion issued by norton Rose Fulbright uS llP to lessor, satisfactory in form and
substance to lessor.
16. an irrevocable standby letter of credit (each, a "letter of Credit"), issued by Suntrust Bank or
such other united States bank acceptable to lessor in its sole discretion (the "l/C issuer"):
(a) naming lessor as beneficiary; (b) in a face amount at least equal to the lease Proceeds
amount (as defined in the Pay Proceeds letter relating to such lease); and (c) otherwise in form
and substance satisfactory to lessor.
17. Such other documentation as lessor shall reasonably require.
MASTER LEASE AGREEMENT
(Home Depot)
Exhibit 10.32
this Master lease agreement (this “agreement”), dated as of august 20, 2020, is made between Wells
Fargo Equipment Finance, Inc., a Minnesota corporation (together with its successors and assigns, the
“lessor”), and Plug Power Inc., a corporation incorporated under the laws of delaware (the “lessee”). lessor
and lessee are referred to in this agreement individually as a “Party” and, collectively, as the “Parties”.
Capitalized terms used but not defined herein shall have the meaning set forth for such terms in the Master
Purchase agreement (as defined below).
WHEREAS, lessor is in the business of owning and leasing equipment and has purchased and plans to
continue to purchase, from time to time, certain fuel cell equipment from lessee pursuant to the Master
Purchase and Sale agreement, dated as of the date hereof, between lessor and lessee (as the same may be
amended, supplemented or otherwise modified from time to time, the “Master Purchase agreement”); and
WHEREAS, with respect to fuel cell equipment purchased by lessor under the Master Purchase
agreement on and after the date hereof, lessee desires to lease such fuel cell equipment from lessor, and
lessor desires to lease such fuel cell equipment to lessee, under the terms and conditions of this agreement
and the leases (as defined below), when and as the conditions to each of such leases are met as provided
herein.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and
agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:
1.
LEASE. lessor agrees to lease to lessee and lessee agrees to lease from lessor certain fuel
cell equipment (the “equipment”) as further described in one or more schedules to this agreement, each in the
form attached hereto as exhibit a (each such schedule referenced in this Section 1 being a separate “lease”
and collectively, the “leases”). the terms of this agreement shall control and be effective as to each lease,
unless expressly amended or modified in writing. equipment shall be installed and placed in service at various
locations as indicated in each lease (each such location, and each location to which any equipment is
relocated pursuant Section 8(b), a “Site”). the entering into by lessor of any lease shall be subject to the
satisfaction (or waiver by lessor in its sole discretion) of the conditions precedent set forth in Section 11.
2.
TERM AND RENT. the initial term (“initial term”) for each lease shall be for the initial
period specified in such lease, and lessee shall pay lessor the Rent specified in such lease throughout the
initial term for the use of the equipment leased under such lease. the initial term and Rent with respect to
each item of equipment shall commence on, and lessee will be obligated to pay Rent from, the Rental
Commencement date of the lease under which such equipment is leased. For purposes of this agreement, the
term “Rent” shall mean and include all amounts payable by lessee to lessor for the lease of the equipment. as
used in this agreement, the term “lease term” of any lease means the initial term of such lease, plus any
Renewal terms (as defined in Section 15). all Rent payable under each lease shall be paid to the account of
lessor in u.S. dollar same day funds to the account specified in such lease (or such other account as lessor
shall notify to lessee upon 10 business days prior written notice), and lessee shall permit lessor to debit the
account of lessee at M&t Bank ([***]) to make any payment of Rent when due under a lease.
3.
LATE CHARGES. if any Rent or other amount due hereunder is not paid within ten (10) days
after the due date thereof, lessor shall have the right to receive and collect, and lessee agrees to pay, in
addition to such unpaid Rent or other amount due hereunder, an amount equal to 1.5% of such unpaid Rent or
other amount due hereunder for each month or part thereof that such Rent or other amount due hereunder
remains unpaid.
4.
lessor is not
DISCLAIMER OF WARRANTIES. lessee acknowledges that
the
manufacturer of the equipment, nor manufacturer’s agent, and lessee agrees that as between lessor and
lessee, the equipment leased hereunder is of a design, size, fitness and capacity selected by lessee and that
lessee is satisfied that the same is suitable and fit for its intended purpose. leSSee FuRtheR
aCKnowledGeS that the eQuiPMent iS leaSed undeR thiS aGReeMent and eaCh leaSe
on an ‘aS-iS,’ ‘wheRe iS’ BaSiS and that leSSoR MaKeS no RePReSentation oR waRRantY
oF anY Kind,
itS
MeRChantaBilitY, oR itS FitneSS FoR a PaRtiCulaR PuRPoSe. leSSoR Shall not Be liaBle
to leSSee oR anY otheR PeRSon FoR diReCt,
inCidental oR
ConSeQuential daMaGeS aRiSinG FRoM leSSee’S uSe oF the eQuiPMent, anY deFeCt oR
MalFunCtion oF the eQuiPMent, oR FoR daMaGeS BaSed on StRiCt oR aBSolute toRt
liaBilitY oR leSSoR’S neGliGenCe. no defect or unfitness of the equipment shall relieve lessee of the
obligation to timely pay Rent, or to perform any other obligation under this agreement.
with ReSPeCt to anY oF the eQuiPMent,
eXPReSS oR iMPlied,
indiReCt,
SPeCial,
5.
ASSIGNMENT OF WARRANTIES. notwithstanding the foregoing, so long as no default
(as defined in Section 19) has occurred hereunder and is continuing, lessee shall be entitled to the benefit of
any applicable manufacturer’s warranties received or held by lessor or from which lessor otherwise benefits,
and to the extent assignable, lessor hereby assigns such warranties to lessee for the lease term for each
lease. in the event that any warranty is not assignable to lessee, lessor hereby appoints lessee as lessor’s
agent and attorney-in-fact with respect to such warranty, which appointment is coupled with an interest, to
assert and enforce, from time to time, in the name of and for the account of the lessor and the lessee, as their
interests may appear, but in all cases at the sole cost and expense of the lessee, any such warranty, and so long
as no default shall have occurred and be continuing, lessee may retain any recovery from such claim.
6.
USE, OPERATION AND MAINTENANCE. lessee shall use the equipment in the manner
for which it was designed and intended, solely for lessee’s business purposes, substantially in accordance with
all manufacturer manuals and instructions and in compliance with applicable law. as used herein,
“applicable law” means all applicable laws, statutes, regulations, ordinances, orders and other requirements
of any governmental authority (including such requirements necessary to ensure that the equipment
qualifies for all tax benefits and
2
environmental attributes, in each case, to the extent available by law to the owner of the equipment as of the
date of the applicable lease). lessee, at lessee’s own cost and expense, shall keep the equipment in good
repair, condition and working order, ordinary wear and tear excepted, sufficient to perform according to the
requirements of this agreement or the Master Sublease (as defined below), any Sublease (as defined below) or
the GenKey agreement (as defined below) (collectively, the “Related agreements”), and shall furnish or
otherwise obtain all parts, mechanisms, devices and servicing required therefor in the ordinary course. lessee
shall also make, at lessee’s own cost and expense, all modifications to the equipment as are required from
time to time for the equipment to comply with applicable law and each Related agreement, provided no such
modifications shall diminish the current or estimated residual value, utility, function, operation or remaining
useful life of the equipment (or any portion thereof) or cause the equipment (or any portion thereof) to
constitute “limited use property” within the meaning of Rev. Proc. 2001-28, 2001-19 i.R.B. 1156 or Rev. Proc.
2001-29, 2001-19 i.R.B. 1160 (or any successors thereto). all replacement parts and repairs at any time made to
or placed upon the equipment shall become the property of lessor at no cost to lessor and with no adjustment
to the schedules of any lease. lessee may, with lessor’s prior written consent (at no cost to lessor and with
no adjustment to the schedules of any lease), which shall not be unreasonably withheld, make such alterations,
modifications or additions to the equipment as lessee may deem desirable in the conduct of its business;
provided the same shall not diminish the current or estimated residual value, utility, function, operation or
remaining useful life of the equipment (or any portion thereof), cause the loss of any warranty thereon or any
certification necessary for the maintenance thereof, or cause the equipment (or any portion thereof) to
constitute “limited use property” within the meaning of Rev. Proc. 2001-28, 2001-19 i.R.B. 1156 or Rev. Proc.
2001-29, 2001-19 i.R.B. 1160 (or any successors thereto). all such alterations, modifications or additions to
the equipment shall be readily removable without causing damage to the equipment (or any portion thereof).
upon return to lessor of the equipment as to which such alterations, modifications or additions have been
made, lessee, if requested to do so by lessor, shall remove the same and restore the equipment to its original
condition, ordinary wear and tear excepted, and, if not so removed, title thereto shall automatically vest in
lessor (at no cost to lessor). lessor acknowledges that any data files or software developed or installed by
lessee which is resident or otherwise installed on the equipment shall be and remain the property of lessee;
provided, however, that the lessor shall have no obligation or responsibility to remove or return same to
lessee.
7.
NET LEASE. this agreement is a “net lease”, and lessee’s obligation to pay all Rent and
other amounts due and owing hereunder is absolute and unconditional and shall not be terminated,
extinguished, diminished, setoff or otherwise impaired by any circumstance whatsoever, including by (a) any
claim, setoff, counterclaim, defense or other right which lessee may have against lessor or any affiliate of
lessor; (b) any defect in the title, condition, design, operation, merchantability or fitness for use of the
equipment, or any eviction of the equipment by paramount title or otherwise from the Site, or any
unavailability of access to the equipment at the Site; (c) any loss, theft or destruction of, or damage to, the
equipment or any portion thereof or interruption or cessation in the use or possession thereof or any part
thereof for any reason whatsoever and of whatever duration; (d) the condemnation, requisitioning,
expropriation, seizure or other taking of title to or use of the equipment or the Site by any governmental
entity or
3
otherwise; (e) any ineligibility of the equipment or any portion thereof for any particular use, whether or not
due to any failure of lessee to comply with any applicable law; (f) any event of “force majeure” (including
any pandemic) or any frustration of purpose; (g) any insolvency, bankruptcy, reorganization or similar
proceeding by or against lessee; (h) any default under or termination of, any Related agreement or the hd
Parent Guaranty (as defined below), or the failure of any Related agreement or the hd Parent Guaranty to be
in full force and effect; (i) any defect in the title to, or the existence of any lien with respect to, the equipment; or
(j) the upgrading, conversion or relocation of any equipment, including any relocation made pursuant to
Section 8(b), it being the intention of the Parties hereto that all Rent and other amounts payable under this
agreement shall continue to be payable in the manner and at times provided for herein. if for any reason
whatsoever this agreement is terminated in whole or in part by operation of law or otherwise, lessee
nonetheless agrees, to the extent permitted by applicable law, to pay to lessor an amount equal to each
installment of Rent and all other amounts due and owing hereunder, at the time such payment would have
become due and payable in accordance with the terms hereof had this agreement not been so terminated.
8.
NO LIENS; REMOVAL; ABANDONMENT; QUIET ENJOYMENT. (a) lessee shall keep
the equipment free and clear from all liens, charges, encumbrances, legal process and claims other than
Permitted liens (as defined in the Master Purchase agreement). lessee shall promptly notify lessor of the
imposition of any lien (other than Permitted liens) of which the lessee becomes aware and shall promptly use
commercially reasonable efforts, at lessee’s own cost and expense, to fully discharge and release any such
lien.
(b)
lessee shall not move the equipment from the location specified in the lease therefor without
the prior written consent of lessor; provided, however, that lessee may relocate any item of equipment (each
such item being “Relocated equipment”), so long as the following conditions are satisfied:
(i)
at least five (5) business days prior to effectuating such relocation, lessee shall have
provided lessor written notice specifying in reasonable detail: (a) each item of equipment comprising
the Relocated equipment, (B) the Site from and to which such Relocated equipment is being relocated
and (c) each item of fuel cell equipment being substituted for such Relocated equipment (the
“Replacement equipment”) and the owner thereof;
(ii)
the Relocated equipment shall consist of all of the components comprised within the
equipment (the associated hydrogen infrastructure must be relocated with any individual fuel cells);
(iii)
the Relocated equipment shall be relocated to a site operated by home depot u.S.a.
inc. (“hd uSa”) or any other subsidiary of the home depot, inc. (the “hd Parent”) and located in the
continental united States;
(iv)
as a result of such relocation, there is no suspension in use of any equipment, including
the Relocated equipment and any fueling equipment;
4
(v)
as a result of such relocation, the current or estimated residual value, utility, function,
operation and remaining useful life of the Relocated equipment (or any portion thereof) are not
diminished and the equipment (or any portion thereof) does not constitute “limited use property” within
the meaning of Rev. Proc. 2001-28, 2001-19 i.R.B. 1156 or Rev. Proc. 2001-29, 2001-19 i.R.B. 1160
(or any successors thereto);
(vi)
the Relocated equipment is packed into appropriate shipping containers and the
shipment thereof is insured for the fair market value of such Relocated equipment at such time; and
(vii)
the Replacement equipment is integrated with the hydrogen infrastructure comprised
within the Relocated equipment at the applicable Site or, if the Relocated equipment does not include
such infrastructure, the fueling equipment at the applicable Site.
(c)
lessee agrees not to waive its right to use and possess the equipment in favor of any party other
than lessor and further agrees not to abandon the equipment to any party other than lessor.
(d)
So long as lessee faithfully performs and meets each and every term and condition to be
performed or met by lessee under this agreement, lessee’s quiet and peaceful possession and use of the
equipment will not be disturbed by lessor or anyone claiming by, through or on behalf of lessor.
9.
TITLE. (a) lessor and lessee agree that the equipment (including any equipment that is
upgraded, converted, or otherwise modified, or relocated pursuant to Section 8(b)) is and at all times shall
remain the sole and exclusive personal property of lessor (subject to Section 25), and lessee covenants that it
will at all times treat the equipment as such and that no part of the equipment shall be considered or treated as
a fixture. no right, title or interest in the equipment shall pass to lessee other than the right to maintain
possession and use of the equipment for the lease term, conditioned upon lessee’s compliance with the
terms and conditions of this agreement. if requested by lessor, lessee shall affix to or place on the
equipment, at lessor’s expense, plates or markings indicating lessor’s ownership.
(b)
the Parties agree that this agreement will be a “true lease,” and the lessor will be treated as
owner of the equipment and lessee will be treated as lessee and, accordingly, the Parties agree that the lessor
will be entitled to claim any and all benefits available to an owner of the equipment, including (i) all tax
Benefits (as defined in Section 18), and (ii) all rights and interests in and to any environmental attributes
associated with the energy output from the equipment that, as a matter of law, belong to the owner rather than
the user of the equipment (all such attributes in this clause (ii), specifically excluding any tax Benefits, the
“environmental attributes”). lessor hereby assigns to lessee, solely for the duration of the lease term, all of
its rights and interests in and to any and all environmental attributes currently available by law to an owner of
the equipment as of the date hereof. For the avoidance of doubt, lessor does not assign to lessee any
environmental attributes that, due to any future change in law, may become available to an owner
5
of the equipment (including, but not limited to, any carbon credits). in the event that any lease is deemed to
be a lease intended for security, lessee grants lessor a security interest in the equipment subject to such lease
to secure its obligations under this agreement, such lease, all other leases and all other indebtedness (except
QFC obligations as defined below) at any time owing by lessee to lessor. in no event shall lessee’s
obligations under this agreement or any lease be secured by any real property unless the document granting
an interest in real property specifically references this agreement or any lease by date and/or number. “QFC
obligations” means obligations arising under a securities contract, commodities contract, forward contract,
repurchase agreement, swap agreement or any similar agreement (as defined purposes of treasury Part 148
under 12 u.S.C. 5390(c)(8)(h) or FdiC Part 371 under 12 u.S.C. 1821(e)(8)(d)) that the FdiC determines by
regulation, resolution, or order to be a qualified financial contract.
10.
TAXES. lessee shall promptly reimburse lessor, or shall pay directly if so requested by
lessor, as additional Rent, all taxes, charges and fees (including any interest, additions to tax and penalties)
that may now or hereafter be imposed or levied by any governmental body or agency upon or in connection
with the purchase, ownership, lease, sublease, possession, use or location of the equipment or otherwise in
connection with the transactions contemplated by this agreement or any lease, including, without limitation,
sales, use, property (real or personal and tangible or intangible), value added or other transfer taxes on (i) the
initial sale of equipment to lessor or the lease of the equipment to lessee, (ii) the Rents, (iii) the sublease of
the equipment to hd uSa pursuant to the Master Sublease and each Sublease, (iv) the sale of power to, or the
sublease or use of the equipment by, hd uSa under the GenKey agreement by and between lessee and hd
uSa entered into and effective as of February 24, 2015 (as amended, supplemented or otherwise modified from
time to time, the “GenKey agreement”) or any other Related agreement, (v) any payment of termination
Value (as defined in Section 12) and (vi) upon any exercise of the Purchase option (as defined in Section 14),
but excluding any and all taxes, charges and fees (including any interest, additions to tax and penalties) (a) on
or measured by the net income of lessor, but excluding taxes that are in the nature of sales, use, property (real
or personal and tangible or intangible), value added or other transfer taxes, (B) resulting from lessor’s
negligence, or (C) resulting from or arising out of any failure on the part of lessor to file any tax returns or pay
any taxes owing on a timely basis or any errors or omissions on lessor’s tax returns unless the lessee is
responsible under this agreement for filing the returns, lessee has not provided information requested by
lessor that is necessary to file such tax returns or lessor’s failure to file any tax returns or any errors or
omissions on such tax returns is attributable to lessee’s fraud, negligence or misrepresentation. lessee shall
file, in a timely manner and in the name of the lessor as owner, any personal property tax returns relating to
the equipment that are required to be filed covering periods during the lease term, pay the amounts shown on
the returns and provide copies of such returns and proof of payment to the lessor. Failure of lessee to pay
promptly amounts due hereunder shall be treated the same as failure to pay any installment of Rent pursuant to
Section 3. if lessee is requested by lessor to file any other returns or remit payments directly to any
governmental body or agency, lessee shall timely file such returns and remit such payments and shall provide
proof of said timely filing or payment to lessor.
11.
CONDITIONS PRECEDENT TO LEASES. lessor and lessee hereby agree that the
entering into by lessor of any lease is expressly conditioned on the following:
6
(a)
in the case of the first such lease to be entered into on or after the date of this agreement, the
following shall have been executed and delivered by the parties thereto, each in form and substance reasonably
satisfactory to lessor: (i) this agreement; and (ii) the Master Purchase agreement;
(b)
there not having occurred any material adverse condition or material adverse change in or
affecting the business, operations, properties, condition (financial or otherwise) or prospects of lessee, the hd
Parent or the issuing Bank (as defined in exhibit B attached hereto), in each case, since december 31, 2019;
(c)
no material new litigation having been initiated against lessee, the hd Parent or the issuing
Bank, in each case, since december 31, 2019;
(d)
there not having occurred any material adverse change in the business reputation of lessee, the
hd Parent or the issuing Bank, in each case, since december 31, 2019;
(e)
there not having occurred an event that would, in the reasonable opinion of lessor, make it
illegal or commercially impractical for lessor to enter into any of the lease documents (as defined below) to
which it is a party;
(f)
all fees and expenses of the appraiser and of counsel to lessor shall have been paid (or shall be
paid in conjunction with the payment by lessor of the Purchase Price of the equipment to be leased under such
lease); and
(g)
the execution and delivery of such other documents, certificates and items and the satisfaction of
such other conditions, in each case, as are set forth in exhibit B attached hereto, as each may be amended,
amended and restated, modified or supplemented from time to time, and including any replacement or
supplementary agreements thereof or thereto (together with this agreement, the Master Purchase agreement,
the Master Sublease, each Sublease, the hd Parent Guaranty, the assignment agreement and the Consent,
collectively, the “lease documents”), in each case, in accordance with the terms of exhibit B attached hereto.
12.
LOSS OF OR DAMAGE TO EQUIPMENT. lessee hereby assumes and shall bear the risk
of loss for destruction of or damage to the equipment from any and every cause whatsoever, whether or not
insured, until the equipment is returned to lessor. no such loss or damage shall impair any obligation of
lessee under this agreement, which shall continue in full force and effect. in event of damage to or theft, loss
or destruction of the equipment (or any item thereof), lessee shall promptly notify lessor in writing of such
fact and of all details with respect thereto, and shall, within thirty (30) days of such event, at lessee’s option,
(a) place the same in good repair, condition and working order, (b) at lessee’s expense, dispose of any
equipment in accordance with applicable law, substitute such equipment (or any item thereof) with
equipment of equivalent or superior manufacture, make, model and features, unless this option is expressly
prohibited in the lease related to such equipment, in good repair, condition and working order and transfer
clear title to such replacement property to lessor whereupon such property shall be subject to this agreement
and the applicable other lease documents and be deemed equipment
7
for purposes hereof and thereof, or (c) pay lessor an amount equal to the sum of (i) all Rent accrued but unpaid
to the date of such payment, plus (ii) the then “termination Value” of the equipment as set forth in attachment
#3 to such lease (the “termination Value”), whereupon such lease shall terminate, subject to Section 22,
solely with respect to the equipment (or any item thereof) for which such payment is received by lessor. any
insurance proceeds received with respect to the equipment (or any item thereof) shall be applied, in the event
option (c) is elected, in reduction of the then unpaid obligations, including the termination Value, of lessee to
lessor, if not already paid by lessee, or, if already paid by lessee, to reimburse lessee for such payment, or,
in the event option (a) or (b) is elected, to reimburse lessee for the costs of repairing, restoring or replacing the
equipment (or any item thereof) upon receipt by lessor of evidence, satisfactory to lessor, that such repair,
restoration or replacement has been completed, and an invoice has been provided therefor.
13.
INSURANCE. (a) lessee shall keep the equipment insured against theft and all risks of loss or
damage, subject to policy limitations or exclusions reasonably acceptable to lessor, from every cause
whatsoever for an amount equal to the higher of the replacement value of the equipment and the termination
Value of the equipment and shall carry general liability insurance, both for personal injury and property
damage, and lessee shall be liable for all deductible portions of all required insurance. all such insurance shall
be maintained with insurance companies rated a-X or better by Best’s insurance Guide and Key Ratings (or an
equivalent rating by another nationally recognized insurance rating agency of similar standing if Best’s
insurance Guide and Key Ratings shall no longer be published) or with other insurance companies of
recognized responsibility satisfactory to lessor. all insurance for theft, loss or damage shall provide that
losses, if any, shall be payable to lessor, and all such liability insurance shall name lessor (or lessor’s
assignee as appropriate) as additional insured and shall be endorsed to state that it shall be primary insurance
as to lessor. lessee shall pay the premiums therefor and deliver to lessor a certificate of insurance or other
evidence satisfactory to lessor that such insurance coverage is in effect; provided, however, that lessor shall
be under no duty either to ascertain the existence of or to examine such insurance policies or to advise lessee
in the event such insurance coverage shall not comply with the requirements hereof. each insurer shall agree
by endorsement upon the policy or policies issued by it or by independent instrument furnished to lessor, that
it will give lessor at least ten (10) days’ prior written notice of cancellation of the policy for nonpayment of
premiums and at least thirty (30) days’ prior written notice for alteration or cancellation due to any other reason
or for non-renewal of the policy. the proceeds of such insurance payable as a result of loss of or damage to the
equipment shall be applied as set forth in Section 12.
(b)
if lessee fails to obtain insurance or provide evidence thereof to lessor, lessee agrees that
lessor may, but shall not be obligated to, obtain such insurance on lessee’s behalf and charge lessee for all
costs and expenses associated therewith. without limiting the forgoing, lessee specifically agrees that if
lessor obtains insurance on lessee’s behalf, lessee will be required to pay a monthly insurance charge. the
insurance charge will include reimbursement for premiums advanced to the insurer, finance charges (which
will typically be at a rate higher than the rate used to determine the Rent), billing and tracking fees,
administrative expenses and other
8
related fees. lessor shall receive a portion of the insurance charges, which may include a profit from such
finance charges, billing, tracking, administrative and other charges.
except as provided in the immediately preceding paragraph, any other insurance obtained by or available to
lessor shall be secondary insurance, and lessor shall be solely liable for all costs associated therewith.
14.
END OF LEASE TERM OPTIONS. not later than ninety (90) days prior to the expiration of
the initial term or any Renewal term (as defined below) of a lease, lessee shall notify the lessor in writing
whether it intends at the expiration of such term to (i) renew such lease in accordance with Section 15 of this
agreement (the “Renewal option”), (ii) purchase the equipment leased under such lease in accordance with
Section 16 of this agreement (the “Purchase option”), or (iii) return the equipment leased under such lease to
lessor (the “Return option”); provided that the Renewal option or the Purchase option may only be exercised
so long as (x) no default under this agreement has occurred and is then continuing and (y) lessor provides its
consent to lessee’s exercise of the Renewal option or the Purchase option (as applicable), which consent may
be given or withheld by lessor in its sole discretion. if lessee does not provide this notice at the end of an
initial term or any Renewal term, then such initial term or Renewal term (as applicable) shall be
automatically extended on a month-to-month basis at the monthly rental rate equal to the final Rent payment
due immediately prior to the end of such initial term or Renewal term and such month-to-month renewal
term (the “Month-to-Month Renewal term”) shall be terminable by lessee or lessor by giving the other Party
not less than ninety (90) days prior written notice (the “Month-to-Month Renewal term termination notice”).
if such Month- to-Month Renewal term termination notice is given by either Party, the lessee shall be
deemed to have elected the Return option at the end of such Month-to-Month Renewal term. if the equipment
leased under such lease is not then in good repair, condition and working order, ordinary wear and tear
excepted, or has not been maintained in accordance with Section 6 hereof, lessee shall promptly reimburse
lessor for all reasonable costs incurred to restore such equipment to such condition. if, at the end of any lease
term or any Month-to Month Renewal term for a lease, lessee has elected or is deemed to have elected the
Return option, then lessee shall, within sixty (60) days of the end of such lease term or Month-to-Month
Renewal term (as applicable), at lessee’s expense, (i) reimburse lessor for the costs to restore such
equipment as provided above and (ii) remove all of such equipment from the relevant Site(s), repair any
damage to the relevant location caused by such removal so each such Site is restored to its original condition at
the time such equipment was installed, pack such equipment into appropriate shipping containers, insure the
shipment for the fair market value of such equipment at such time, and cause such equipment to be delivered
to such location within the united States as lessor may specify, free of any hazardous materials or
environmental concerns.
15.
LEASE RENEWAL. (a) if the Renewal option is elected in accordance with Section 14 of this
agreement with respect to a lease, then such lease (with respect to all, but not less than all, of the equipment
leased under such lease) shall be extended for such term as lessor and lessee mutually agree, but not less than
the greater of (x) twelve (12) months and (y) the remaining term of the related Sublease (each such term, a
“Renewal term”), commencing on the
9
day following the last day of the initial term or the prior Renewal term of such lease, as applicable. Rent
payable during any Renewal term shall be the Fair Market Rental Value for the equipment leased under such
lease, as determined below. the commencement of any Renewal term for a lease is conditioned upon (i) hd
uSa renewing (or having renewed in accordance with the Master Sublease agreement and this agreement)
the terms of the related Sublease with respect to the equipment leased under such lease (which terms shall be
in form and substance acceptable to lessor in its sole discretion), (ii) the hd Parent Guaranty remaining in full
force and effect, (iii) otherwise upon mutually agreeable lease terms between lessor and lessee and/or (iv) any
other credit enhancements as may be required by lessor.
(b)
the Fair Market Rental Value (as defined below) of the equipment leased under a lease, as of
the commencement of the Renewal term of such lease, shall be determined by agreement of lessor and
lessee within sixty (60) days after receipt by lessor of the irrevocable notice from the lessee of its election to
renew such lease, or, if they shall fail to agree within such sixty (60) day period, shall be determined by a
qualified, independent appraiser that is a member of the american Society of appraisers and that is selected by
lessee and approved by lessor, such approval not to be unreasonably withheld or delayed (the “appraisal
Procedure”), with the fair market rental value as determined by such appraiser to be binding and conslusive on
the Parties as the “Fair Market Rental Value” for purposes of such lease, and the fees and expenses of the
appraiser shall be borne by lessee. the Rent payable during any Renewal term shall be equal to the average of
the Rent payable during the twelve (12) month period immediately preceding such Renewal term until the Fair
Market Rental Value is determined, at which time the prior Rent payments shall be adjusted to take into
account such determination.
(c)
the amounts that are payable during any Renewal term for a lease as termination Value shall
be determined on the basis of the fair market sales value of the equipment leased under such lease as of the
commencement of such Renewal term and shall be set forth in a schedule to be mutually agreed by lessor and
lessee prior to the commencement of such Renewal term. if lessor and lessee cannot agree on the fair
market sales value, such amount shall be determined by the appraisal Procedure, and the fees and expenses of
the appraiser shall be borne by lessee.
16.
PURCHASE OPTION. (a) if the Purchase option is elected in accordance with Section 14 of
this agreement with respect to a lease, lessee shall have the option to purchase all but not less than all of the
equipment leased under such lease from lessor for an amount equal to the then fair market value of such
equipment as agreed by lessee and lessor, or if they fail to so agree, as determined by the appraisal
Procedure (any such amount, the “Purchase option amount”). the Purchase option for a lease shall be
consummated as of the close of business on the closing date set forth in lessee’s notice (which shall be no
earlier than, and no later than three (3) business days following, the end of the lease term for such lease), or
on such other date the Parties may otherwise agree (any such date being the “Purchase date”).
(b)
if lessee elects to exercise the Purchase option with respect to a lease, then on the Purchase
date for such lease, lessee shall pay to lessor (i) the Purchase option amount for such lease and all sales,
use, value added and other taxes required to be indemnified by the lessee
10
pursuant to Sections 10 and 18, plus (ii) any unpaid Rent and any other outstanding amount due under this
agreement and such lease on or before such date.
(c)
upon payment of all sums specified in this Section 16, the applicable lease shall, subject to
Section 22, terminate and, at the request of lessee, lessor shall transfer its rights in the equipment leased
under such lease to the lessee on an “as is,” “where is” basis without representation or warranty.
17.
LESSEE INDEMNITY. lessee assumes liability for and shall indemnify, save, and hold
harmless lessor and lessor’s officers, directors, employees, agents and assignees from and against any and all
third party claims, actions, suits or proceedings of any kind and nature whatsoever, including all damages,
liabilities, penalties, costs, expenses and reasonable consultant and legal fees (hereinafter “Claim(s)”) based on,
arising out of, connected with or resulting from the equipment, lessee’s obligations under this agreement, or
lessee’s possession, use or operation of the equipment including, without limitation, Claims relating to
ownership, use, possession or disposal of the equipment, Claims arising in contract or tort (including
negligence, strict liability or otherwise), Claims arising out of latent defects of the equipment (regardless of
whether the same are discoverable by lessor or lessee), Claims arising out of or relating to the violation of
applicable law, including environmental law, or the existence or release of hazardous materials at the site where
the equipment is located, or Claims arising out of any trademark, patent or copyright infringement, but
excluding (a) any Claims that accrue in respect of circumstances that occur after lessor has taken possession of
the equipment after termination of this agreement, provided that such Claims do not relate to lessee’s use,
possession or operation of the equipment, (b) any Claims that result from the gross negligence or willful
misconduct of lessor, and (c) Claims for taxes (it being agreed that lessee’s indemnification obligations with
respect to taxes are set forth in Sections 10 and 18). if any Claim is made against lessee or lessor, the Party
receiving notice of such Claim shall promptly notify the other, but the failure of such person receiving notice to
notify the other shall not relieve lessee of any obligation hereunder.
18.
TAX INDEMNITY.
(a)
lessee acknowledges that the Rent in each lease has been calculated on the assumption that the
lessor will be the owner of the equipment for federal, state and local income tax purposes on the date it
acquires the equipment pursuant to the Master Purchase agreement, that it will remain the sole owner of the
equipment after entering into the applicable lease and that, for federal, state and local income tax purposes, it
will be able to (i) claim an investment tax credit (for federal income tax purposes) under Section 48(a) of the
Code on the basis that the equipment qualifies under Section 48(a)(3)(a)(iv) of the Code on the Rental
Commencement date equal to 26% of the Purchase Price of the equipment (which shall be equal to the
equipment’s appraised fair market value on the Rental Commencement date, as determined by the appraiser),
(ii) claim cost recovery reductions of one hundred percent (100%) of lessor’s depreciable Cost, under section
168(k)(1) of the Code, in the taxable year that includes the Rental Commencement date with respect thereto
and assuming such equipment’s salvage value is zero, and (iii) amortize transaction expenses incurred in
connection with each lease ratably over the applicable initial
11
term. the foregoing investment tax credit, depreciation deductions and amortization deductions are referred to
herein as the “tax Benefits.” “lessor’s depreciable Cost” means (1) for state and local income tax purposes,
the Purchase Price of the equipment and (2) for federal income tax purposes, the Purchase Price of the
equipment, reduced by 50% of the investment tax credit in clause (i) above. the “appraiser” for purposes of
this Section 18 has the meaning given to such term in exhibit B to this agreement. lessee acknowledges
further that the Rent in each lease has been calculated on the assumption that lessor will have to report the
Rent as income in the periods and amounts shown on the Rent schedule to such lease.
(b)
lessee represents, warrants and covenants to lessor the following: (i)(a) for purposes of the
investment tax credit, the equipment will be treated as “placed in service” for federal income tax purposes and
the original use of the equipment will be deemed to commence for federal income tax purposes on the
applicable Rental Commencement date and (B) for purposes of the depreciation deductions, (1) the equipment
will be treated as “placed in service” on the applicable Rental Commencement date and (2) the acquisition
retirements set forth in section 168(k)(2)(e)(ii) of the Code have been met; (ii) neither the equipment nor any
portion thereof was placed in service by lessee or any other person or entity before lessor purchased the
equipment from lessee and leased it back to lessee pursuant to the applicable lease; (iii) all of the equipment
was new when it was originally placed in service by the lessor; (iv) all of the equipment will be considered
“qualified fuel cell property” within the meaning of Section 48(c)(1) of the Code; (v) the lessor will be able to
claim an investment tax credit under Section 48(a) of the Code on the basis that the equipment qualified under
Section 48(a)(3)(a)(iv) of the Code equal to 26% of the Purchase Price of the equipment (which shall be equal
to the equipment’s appraised fair market value as of the Rental Commencement date, as determined by the
appraiser); (vi) all of the equipment qualifies as “5-year property” within the meaning of Section 168(e)(3)(B)
(vi)(i) of the Code; (vii) the lessor will have a tax basis for purposes of calculating the investment tax credit
equal to the Purchase Price of the equipment (which shall be equal to the equipment’s appraised fair market
value as of the Rental Commencement date, as determined by the appraiser); (viii) the lessor will have a tax
basis for (a) state and local income tax depreciation purposes equal to the Purchase Price of the equipment
(which shall be equal to the equipment’s appraised fair market value as of the Rental Commencement date, as
determined by the appraiser) and (B) for federal income tax depreciation purposes equal to 87% of the
Purchase Price of the equipment, which takes into account a reduction in basis equal to 50% of the 26%
investment tax credit amount; (ix) the lessor will be able to amortize transaction expenses incurred in
connection with each lease, ratably over the applicable initial term; (x) the equipment will not be considered
“tax-exempt use property” within the meaning of section 168(h) of the Code during the lease term other than
solely due to the fact that the lessor (or any member of the lessor) is or becomes a tax- exempt entity within
the meaning of section 168(h)(2) of the Code; (xi) the equipment will not be considered used by a tax-exempt
entity within the meaning of section 50(b)(3) of the Code or governmental unit or foreign person or entity
within the meaning of section 50(b)(4) of the Code during the lease term (in each case, other than as a result
of the status of the lessor or any member of the lessor); (xii) as of the applicable Rental Commencement date,
no portion of the equipment is, and at no time during the lease term will any portion of the equipment
become, tax-exempt
12
bond financed property within the meaning of Section 168(g)(5) of the Code, other than as a result of the status
of the lessor or any member of the lessor or actions taken by the lessor; (xiii) the equipment will be used
solely in the united States; (xiv) the equipment will not be subject to the alternative depreciation system under
section 168(g) of the Code (assuming no election by lessor under section 168(g)(1)(e) of the Code); (xv) the
GenKey agreement will be treated as a service contract under Section 7701(e) of the Code and not as a lease
for income tax purposes; (xvi) the lessee has not claimed and will not claim, or cause to be claimed, an
investment tax credit under section 48(a) of the Code or other federal tax credit with respect to the equipment
or any portion thereof; (xvii) on the Rental Commencement date applicable to the equipment, the equipment
will not require any improvements, modifications or additions (other than ancillary items of a kind customarily
selected and furnished by lessees of property of the same kind as the equipment) in order for the equipment to
be rendered complete for its intended use by the lessee; (xviii) the lessee will not take a position for u.S.
federal or state income tax purposes that it is the owner of any portion of the equipment during the lease term
or that is inconsistent with any of the tax assumptions set forth in this Section 18; (xix) at no time during the
period beginning on the applicable Rental Commencement date and ending on the fifth anniversary of such
date (the “Recapture Period”) will the equipment or any portion thereof be disposed of or otherwise cease to
be (in each case within the meaning of section 50 of the Code) “qualified fuel cell property” within the
meaning of Section 48(c)(1) of the Code, other than as a result of the status of the lessor or any member of the
lessor or actions taken by the lessor; and (xx) all written information provided by or on behalf of the lessee
to the appraiser was accurate and complete in all material respects and remains accurate and complete on the
applicable Rental Commencement date.
(c)
lessee covenants that it has not, and will not at any time from such delivery through the term of
this agreement, take any action or omit to take any action (whether or not the same is permitted or required
hereunder) that is inconsistent with the tax assumptions in Section 18(a), that could contribute to loss by lessor
of all or any part of the tax Benefits or that could require the lessor to report Rent as income ahead of the
periods to which the Rent is allocated in the applicable Rent schedule. lessee covenants that it will provide
lessor promptly upon request any information that lessor requires in connection with claiming any tax
Benefits and responding to questions from the internal Revenue Service or any state taxing authority.
(d)
if as a result of any act, omission, breach of warranty or covenant or misrepresentation by
lessee, the tax Benefits are lost, disallowed, eliminated, reduced, delayed, recaptured, compromised or are
otherwise unavailable to lessor (any of the foregoing being a “loss”) or the lessor is required to report Rent
as income ahead of the periods to which the Rent is allocated in the applicable Rent schedule (an “inclusion”),
then lessee will pay the lessor promptly on demand an amount that will compensate the lessor fully for the
loss or inclusion (including any interest, penalties or additions to tax) on an after-tax basis, subject to the last
sentence of this Section 18(d). For this purpose, “after-tax basis” means an amount determined by dividing the
amount of the loss or inclusion by one minus the maximum composite federal, state and local corporate
income tax rates in effect at time of payment. upon payment of the full indemnity amount by lessee, the act,
omission, breach of warranty or covenant or
13
misrepresentation of lessee that caused a loss will not be deemed a default hereunder. if requested by lessee,
lessor agrees to attempt in good faith to challenge any assertion by the internal Revenue Service that will lead
to a loss; provided, however, lessee has first paid to lessor the amount of such loss and agreed in writing to
indemnify lessor for all reasonable expenses (including attorneys’ fees), liabilities or losses that lessor may
incur in the contest. lessor will have the sole discretion to determine whether or not to undertake judicial or
administrative proceedings beyond the level of an internal Revenue Service auditing agent and to select
counsel to handle the contest; provided that if the claim must be paid before the matter can be heard in court,
lessee will advance the funds necessary to do so on an interest-free basis. For purposes of this Section 18, the
term “lessor” shall include the entity or entities, if any, with which lessor files a consolidated income tax
return.
19.
DEFAULT AND REMEDIES. (a) lessee shall be in default under this agreement if: (i)
lessee fails to pay Rent or any other payment due and owing hereunder, including an tax indemnity set forth in
Section 18, within five (5) business days of the due date thereof; (ii) any representation or warranty made by
lessee herein or in any document delivered to lessor in connection herewith shall prove to be false or
misleading and the false or misleading nature of such representation or warranty is not corrected within thirty
(30) days following receipt of written notice thereof from lessor; (iii) a breach of the covenant set forth in
Section 18(b), Section 26(c) or Section 26(d) hereof shall have occurred; (iv) a lease fails to be considered a
“true lease” for federal income tax purposes as a result of any act, omission, breach of warranty or covenant or
misrepresentation by lessee; (v) lessee becomes insolvent, dissolves, or assigns its assets for the benefit of
creditors, or enters any bankruptcy or reorganization proceeding; (vi) (a) the Master Sublease or any Sublease
has been terminated without the prior written consent of lessor other than pursuant to an early termination
contemplated by Section 2 of the Sublease; or (B) any default has occurred and is continuing under any
provision of the Master Sublease or any Sublease and any cure period provided thereunder has terminated
without such default having been cured; (vii) lessee fails to observe, keep or perform any other term or
condition of this agreement or any other lease document and such failure continues for thirty (30) days
following receipt of written notice from lessor; (viii) lessee undergoes a Change in Control (as defined below)
without the prior written approval of lessor, where “Change in Control” means any (x) reorganization,
recapitalization, consolidation or merger (or similar transaction or series of related transactions) of lessee in
which the holders of lessee’s outstanding shares immediately before consummation of such transaction or
series of related transactions do not, immediately after consummation of such transaction or series of related
transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving
entity of such transaction or series of related transactions (or the parent of such surviving entity if such
surviving entity is wholly owned by such parent), in each case without regard to whether lessee is the
surviving entity or (y) the sale, transfer, lease or other disposal of all or substantially all of lessee’s assets to
another person or entity; (ix) (a) the hd Parent Guaranty is no longer in full force and effect, (B) the hd
Parent contests the validity or enforceability of any provision of the hd Parent Guaranty, or (C) the hd Parent
purports to revoke, terminate or rescind the hd Parent Guaranty or any provision thereof; (x) the chief
executive officer, chief financial officer or chief operating officer of lessee is convicted of a felony; (xi)
within thirty (30) days following the date on which the initial lease is
14
entered into by lessor and lessee, any of the following shall have occurred: (a) the Master Sublease shall not
have been executed and delivered by lessee and hd uSa; (B) the Payment Guaranty shall not have been
executed and delivered by the hd Parent; (C) the assignment agreement shall have been be executed and
delivered by lessee; or (d) the Consent shall not have been executed and delivered by hd uSa; (xii) within
thirty (30) days following the date any lease is entered into by lessor and lessee, the Sublease for the related
equipment shall not have been executed and delivered by lessee and hd uSa; and/or (xiii) any payment
default has occurred and is continuing under any master lease agreement that currently or may hereinafter exist
between lessor and lessee or any affiliate of lessee (after giving effect to any applicable grace or cure periods
therein) (each of (i) through (xiii), a “default”).
(b)
if a default shall have occurred and be continuing, lessor shall have the right to take any one or
more of the following actions: (i) cancel or terminate this agreement and/or each lease and repossess the
equipment; (ii) proceed by appropriate court action or actions at law or in equity to enforce performance by
lessee of the terms and conditions of this agreement and each lease and/or recover damages for the breach
thereof; (iii) accelerate all of the amounts due hereunder by requiring lessee to pay lessor an amount equal to
the sum of (a) all Rent and any other amounts accrued to the date of such payment, plus (B) the aggregate
termination Value for all equipment; (iv) take any other action as provided for in the assignment agreement
and/or the Consent and/or the letter(s) of Credit; and/or (v) exercise any other right or remedy available at law
or in equity; provided, however, that with respect to a default under Section 19(a)(xii), lessor’s sole remedies
shall be to demand lessee pay the termination Value for the related equipment or to draw on the related
initial letter of Credit, and upon receipt by lessor of the proceeds of such demand or such draw, and
notwithstanding anything to the contrary contained herein or in any other lease document, (1) the lease for
the related equipment will, subject to Section 22, be deemed terminated, cancelled and of no further force and
effect and (2) the related equipment will be transferred to lessee or lessee’s designee on an “as is,” “where is”
basis without representation or warranty. lessor shall have no obligation to exercise remedies against any
equipment or other collateral to mitigate damages and may elect to demand and receive the termination Value
without proceeding against any collateral.
(c)
upon payment in full to lessor of the amounts set forth in Section 19(b)(iii), from or on behalf
of the lessee, the applicable lease shall terminate (except as set forth in Section 22) solely with respect to the
equipment (or any item thereof) leased under such lease for which such payment is received by lessor and, at
the request of lessee, lessor shall transfer its rights in such equipment to lessee or lessee’s designee on an
“as is,” “where is” basis without representation or warranty.
20.
REPORTS. (a) within sixty (60) days after the end of each quarterly period during the lease
term, lessee shall deliver to lessor unaudited quarterly financial statements for the lessee as of the end of
such quarterly period, prepared in accordance with generally accepted accounting principles in the united
States (“GaaP”), it being understood that this Section 20(a) shall be deemed satisfied if such quarterly
financial statements are timely filed by lessee with the Securities and exchange Commission in compliance
with applicable law.
15
(b) within one hundred twenty (120) days after the end of each calendar year during the lease
term, lessee shall deliver to lessor audited annual financial statements for the lessee as of the end of such
calendar year, prepared in accordance with GaaP and certified by an independent accounting firm acceptable
to lessor; it being understood that this Section 20(b) shall be deemed satisfied if such annual financial
statements are timely filed by lessee with the Securities and exchange Commission in compliance with
applicable law.
(c)
Promptly, but in any event within ten (10) business days after receipt thereof, a copy of each
periodic report received by the lessee during the lease term from each maintenance provider for the
equipment and, if requested by lessor, each periodic report and other notice sent to or received by hd uSa
under any Related agreement.
(d)
Promptly upon, but no later than ten (10) business days after, lessor’s request from time to time,
such data, certificates, reports, statements, documents and further information regarding the business, assets,
liabilities, financial condition, or results of operations of the lessee as the lessor may reasonably request.
(e)
on January 31 and July 31 of each calendar year, a schedule reflecting all leases then in effect
and each item of equipment then being leased thereunder listed by Site and identifying (i) the product/model
type and serial number of each such item of equipment and (ii) any such item of equipment (a) that had been
relocated from its original Site (noting the Site to an from which such item of equipment had been relocated)
or (B) whose product/model type had been upgraded, converted or otherwise modified (noting the original and
modified product/model type), in each case, since the Rental Commencement date of the applicable lease.
21.
FURTHER ASSURANCES. lessee agrees (a) at the written request of lessor, to execute and
deliver to lessor any uniform Commercial Code financing statements, fixture filings or other instruments
lessor reasonably deems necessary for expedient filing, recording or perfecting the interest and title of lessor
in this agreement, any lease and the equipment, (b) that a copy of this agreement and any lease may be filed
in accordance with clause (a), provided the economic terms not necessary for filing shall have been deleted
therefrom, (c) that all reasonable and documented costs incurred in connection with any actions taken in
accordance with clause (a), including, without limitation, costs for filing fees and taxes, shall be paid by
lessee, and (d) to promptly, at lessee’s expense, execute and deliver to lesssor such further documents, take
such further action and provide such information as lessor may request in order to carry out more effectively
the intent and purpose of this agreement and the other lease documents and/or comply with the laws or
regulations applicable to lessor, lessee and/or the transactions contemplated by this agreement and the other
lease documents.
22.
SURVIVAL. lessee’s covenants, representations, warranties and indemnities contained in
Sections 7, 10, 14, 17, 18, 19(b) and 26 hereof are made for the benefit of lessor and shall survive, remain in
full force and effect and be enforceable after the expiration or termination of this agreement for any reason.
each other provision set forth in the lease documents that, by its terms, survives termination of this
agreement shall also survive, remain in full force and effect and be enforceable after the expiration or
termination of this agreement for any reason.
16
23.
INSPECTION. during the lease term and subject to the Master Sublease, lessor may, during
normal business hours, on reasonable prior written notice to lessee, inspect the equipment and the records
with respect to the operations and maintenance thereof, in lessee’s custody or to which lessee has access.
lessee may be present at such inspection. any such inspection will not unreasonably disturb or interfere with
the normal operation or maintenance of the equipment or the conduct by lessee of its business and will be in
accordance with lessee’s health, safety and insurance programs. in no event shall lessor have any duty or
obligation to make any such inspection and lessor shall not incur any liability or obligation by reason of not
making any such inspection.
24.
ACCEPTANCE OF EQUIPMENT; NON CANCELABLE. lessee’s acceptance of the
equipment shall be conclusively and irrevocably evidenced by lessee signing the Certificate of acceptance in
the form attached hereto and upon acceptance, each lease shall be noncancelable by lessee for the lease
term thereof unless otherwise provided in such lease.
25.
ASSIGNMENT; STATUS OF LESSEE. (a) lessee acknowledges and agrees that lessor
may, at any time, without prior notice to or consent of lessee, assign its rights and obligations under this
agreement in whole or in part and/or mortgage, or pledge or sell the equipment subject to lessee’s rights
under this agreement. Such assignee or mortgagee may re- assign this agreement and/or mortgage without
notice to lessee. to the extent so assigned or transferred, any such assignee, buyer, transferee, grantee or
mortgagee shall have and be entitled to exercise any and all rights and powers of, and shall perform all
obligations of, lessor under this agreement. if any such lessor assignment is a partial assignment of this
agreement by wells Fargo equipment Finance, inc. (for purposes of this Section 25, “wFeF”), (i) so long as
no default shall have occurred, wFeF shall maintain its administrative role under this agreement with lessee
and shall act as an intermediary between lessee and any wFeF partial assignee, and (ii) unless lessee
receives notice from wFeF or wFeF’s assignee to the contrary, lessee’s satisfaction of its obligations under
the lease documents to wFeF shall be deemed to satisfy such obligations to all lessors.
(b) without limiting the foregoing, lessee further acknowledges and agrees that upon written notice
of an assignment from lessor, lessee will pay all Rent and any and all other amounts payable by lessee under
any lease to such assignee or mortgagee or as instructed by lessor in writing upon at least ten (10) business
days’ prior notice. lessor agrees to provide prompt notice of any such assignment or mortgage, and lessee
agrees to confirm in writing receipt of any such notice of assignment as may be reasonably requested by
lessor and such assignee or mortgagee; provided that lessor’s failure to provide prompt notice of any such
assignment or mortgage shall not affect or otherwise impact the effectiveness of such assignment or
mortgage; provided, however, that lessee will be deemed to have performed a Rent payment obligation if
lessee makes such Rent payment to the assigning lessor before receiving notice of the related assignment.
(c)
except (i) as otherwise set forth in this agreement and any lease and (ii) for the sublease of the
equipment granted under the Master Sublease and each Sublease, lessee shall not
17
assign, sublease, hypothecate, sell or transfer the equipment or any interest in this agreement or any lease,
and any attempt to do so shall be null and void and shall constitute a default hereunder.
(d)
lessee will not: (x) knowingly allow a Blocked Person (as defined below) to have an ownership
interest in lessee; or (y) otherwise allow a Blocked Person or Blocked Persons to have a fifty percent (50%) or
greater ownership interest in or control of lessee. “Blocked Person” means any person or entity that is now or
at any time (a) on a list of Specially designated nationals issued by the office of Foreign assets Control
(“oFaC”) of the united States department of the treasury or any sectoral sanctions identification list, or (B)
whose property or interests in property are blocked by oFaC or who is subject to sanctions imposed by law,
including any executive order of any branch or department of the united States government or (C) otherwise
designated by the united States or any regulator having jurisdiction or regulatory oversight over the lessor, to
be a person to whom the lessor is not permitted to extend credit or with regard to whom a lessee relationship
may result in penalties against the lessor or limitations on the lessor’s ability to enforce a transaction.
26.
REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) lessee represents and
warrants to lessor that: (i) the execution and delivery by lessee of this agreement, any lease and any
Certificate of acceptance are duly authorized on the part of lessee and constitute valid obligations binding
upon, and enforceable against, lessee; (ii) neither the execution and delivery of this agreement, any lease or
any Certificate of acceptance, nor the due performance thereof by lessee, including the commitment to pay
(and payment of) Rent, will result in any breach of, or constitute a default under, or violation of, lessee’s
constitutive documents, or any material agreement to which lessee is a party or by which lessee is bound that
relates to the subject matter hereof, including without limitation that certain loan and Security agreement
dated as of March 29, 2019 by and among Plug Power inc., Generate lending, llC, as lender, and certain
other parties thereto, as the same may be amended, amended and restated, supplemented or otherwise modified
from time to time; (iii) lessee is duly incorporated, validly existing and in good standing in its state of
incorporation and in any jurisdiction where the equipment is located; and (iv) no material approval, consent or
withholding of objection is required from any governmental authority or entity with respect to the entering
into, or performance of this agreement, any lease or any Certificate of acceptance by lessee.
(b)
lessee has provided to lessor true and correct copies of its constitutive documents, authorizing
resolutions for the transactions contemplated hereby, and a certificate of incumbency, each certified by a duly
appointed officer of lessee.
(c)
lessee shall not, without the prior written consent of lessor: (i) amend, modify, supplement,
assign, transfer or terminate the Master Sublease or any Sublease; (ii) renew or extend (or request renewal or
extension of or consent to a renewal or extension of) the term of the Master Sublease or any Sublease; or (iii)
release the hd Parent from any of its obligations under, or amend or otherwise modify the terms of, the hd
Parent Guaranty
(d)
lessee shall: (i) use its commercially reasonable efforts to enforce its rights under the Master
Sublease, each Sublease and the hd Parent Guaranty and take or omit to take any action
18
thereunder as directed by lessor from time to time; and (ii) if the Master Sublease or any Sublease is
terminated by hd uSa pursuant to Section 2 of the Master Sublease, cause the proceeds of the payment made
by hd uSa in connection with any such termination to be deposited in an account of wells Fargo Bank, n.a.
and over which the lessor will have control and the exclusive right to disburse the funds therein.
27.
NOTICES. any notice required or given hereunder shall be deemed properly given when
provided in writing (a) three (3) business days after mailed first class, overnight, or certified mail, return
receipt requested, postage prepaid, addressed to the designated recipient at its address set forth below or such
other address as such Party may advise by notice given in accordance with this provision or (b) upon receipt by
the Party to whom addressed in writing by personal delivery, commercial courier service, fax or other means
which provides a permanent record of the delivery of such notice. notices shall be delivered to the Parties at
the following addresses:
if to lessee:
Plug Power inc.
968 albany Shaker Road
latham, nY 12110
attn: Paul Middleton
telephone: (518) 738-0281
Facsimile: (518) 782-7884
email: pmiddleton@plugpower.com
if to lessor:
wells Fargo equipment Finance, inc.
600 South Fourth Street
Minneapolis, Mn 55415
attn: account Services
Facsimile: (866) 687-5578
email: wFeFi@wellsfargo.com
28.
DOCUMENTATION. except for the payment of Rent set forth in the applicable leases, for
which invoices are provided as an accommodation to lessee and not as a condition precedent to payment,
lessor shall use its best efforts to provide lessee with reasonable documentation, including, statements, tax
bills and/or invoices, evidencing payment obligations or reimbursement due to lessor pursuant to the terms of
this agreement.
29.
ANTI-MONEY LAUNDERING; INTERNATIONAL TRADE LAW COMPLIANCE.
lessee represents and warrants to lessor, as of the date of this agreement, the date of each advance of
proceeds pursuant to this agreement, the date of any renewal, extension or modification of this agreement or
any lease, and at all times until this agreement and each lease has been terminated and all amounts
thereunder have been indefeasibly paid in full, that: (a)
19
no Covered entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the
possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its
operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in
violation of any law, regulation, order or directive enforced by any Compliance authority; (b) the proceeds of
any lease will not be used to fund any operations in, finance any investments or activities in, or, make any
payments to, a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive
enforced by any Compliance authority; (c) the funds used to repay any lease are not derived from any
unlawful activity; and (d) each Covered entity is in compliance with, and no Covered entity engages in any
dealings or transactions prohibited by, any laws of the united States, including but not limited to any anti-
terrorism laws. lessee covenants and agrees that it shall immediately notify lessor in writing upon the
occurrence of a Reportable Compliance event.
(c) u.S.
as used herein: “anti-terrorism laws” means any laws relating to terrorism, trade sanctions programs
and embargoes, import/export licensing, money laundering, or bribery, all as amended, supplemented or
replaced from time to time; “Compliance authority” means each and all of the (a) u.S. treasury
department/office of Foreign assets Control, (b) u.S. treasury department/Financial Crimes enforcement
network,
State department/directorate of defense trade Controls, (d) u.S. Commerce
department/Bureau of industry and Security, (e) u.S. internal Revenue Service, (f) u.S. Justice department,
and (g) u.S. Securities and exchange Commission; “Covered entity” means lessee, its affiliates and
subsidiaries, all guarantors, pledgors of collateral, all owners of the foregoing, and all brokers or other agents of
lessee acting in any capacity in connection with this agreement or any lease; “Reportable Compliance event”
means that any Covered entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or
custodially detained, or receives an inquiry from regulatory or law enforcement officials, in connection with
any anti-terrorism law or any predicate crime to any anti-terrorism law, or self-discovers facts or
circumstances implicating any aspect of its operations with the actual or possible violation of any anti-
terrorism law; “Sanctioned Country” means a country subject to a sanctions program maintained by any
Compliance authority; and “Sanctioned Person” means any individual person, group, regime, entity or thing
listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or
subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of
transactions), under any order or directive of any Compliance authority or otherwise subject to, or specially
designated under, any sanctions program maintained by any Compliance authority.
30.
USA PATRIOT ACT NOTICE. to help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to obtain, verify and record
information that identifies each lessee that opens an account. what this means: when lessee opens an account,
lessor will ask for the business name, business address, taxpayer identifying number and other information that
will allow lessor to identify lessee, such as organizational documents. For some businesses and organizations,
lessor may also need to ask for identifying information and documentation relating to certain individuals
associated with the business or organization.
20
31.
GOVERNING LAW. this agreement and each lease are entered into, under and shall be
construed in accordance with, and governed by, the laws of the State of new York, without giving effect to
conflict of laws principles. each Party consents to the exclusive jurisdiction of any state or federal court in the
State of new York over any action or proceeding brought in connection with this agreement. leSSee and
leSSoR eXPReSSlY waiVe anY RiGht to tRial BY JuRY in anY aCtion oR PRoCeedinG
to whiCh leSSoR and/oR leSSee MaY Be PaRtieS aRiSinG out oF oR in anY waY
PeRtaininG to thiS aGReeMent.
32.
FINANCE LEASE STATUS. lessee agrees that if article 2a-leases of the uniform
Commercial Code of the State of new York (the “uniform Commercial Code” or “uCC”) applies to this
agreement and any lease, this agreement and each such lease shall be considered a “Finance lease” as that
term is defined in article 2a. to the eXtent PeRMitted BY aPPliCaBle law, leSSee waiVeS
anY and all RiGhtS and ReMedieS ConFeRRed uPon a leSSee BY SeCtionS 508-522 oF
aRtiCle 2a oF the uCC.
33.
BUSINESS DAY. For all purposes hereof, the term “business day” means any day which is not
a Saturday, Sunday or other day on which banks are required to close for business in the State of new York.
34. MISCELLANEOUS. the captions of this agreement are for convenience only and shall not
be read to define or limit the intent of the provision that follows such captions. this agreement contains the
entire agreement and understanding between lessor and lessee relating to the subject matter hereof. no delay,
omission or prior act or waiver of the lessor shall constitute a waiver by the lessor. any variation or
modification hereof and any waiver of any of the provisions or conditions hereof shall not be valid unless in
writing signed by an authorized representative of the Parties hereto. any provision of this agreement that is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction. lessor’s failure at any time to require strict performance by lessee or any of the provisions hereof
shall not waive or diminish lessor’s right thereafter to demand strict compliance therewith or with any other
provision. lessor may in its sole discretion, accept a photocopy, electronically transmitted facsimile, pdf or
other reproduction of this agreement, a lease, any other lease document and/or any document related hereto
or thereto (a “Counterpart”) as the binding and effective record of this agreement, such lease, such other
lease document and/or such other document whether or not an ink signed copy hereof or thereof is also
received by lessor from lessee; provided, however, that if lessor accepts a Counterpart as the binding and
effective this agreement or any other document, the Counterpart acknowledged by lessor (either in ink or
electronically) shall constitute the record hereof or thereof. lessee represents to lessor that the signature that
appears on the Counterpart that is transmitted by lessee to lessor in any manner described above is intended
by lessee to authenticate the Counterpart nothwithstanding that such signature is electronic, facsimile or a
reproduction and lessee further agrees that a Counterpart of this agreement or such other document received
by lessor, shall, when
21
acknowledged by lessor (either in ink or electronically), constitute an original document for the purposes of
establishing the provisions hereof and thereof and shall be legally admissible under the best evidence rule and
binding on and enforceable against lessee. if lessor accepts a Counterpart of a lease as the binding and
effective record thereof, only such Counterpart acknowledged by lessor’s ink or electronic signature may be
marked “original” and to the extent that a lease or other document constitutes chattel paper, perfection of a
security interest by possession or control may only be accomplished by possession or control of the
Counterpart that bears lessor’s acknowledgement.
22
in witneSS wheReoF, the Parties hereto have duly executed this agreement as of the date first
above written.
LESSOR:
WELLS FARGO EQUIPMENT FINANCE, INC.
By: /s/ Kathleen hatella
name: Kathleen hatella
title: authorized Signer
LESSEE:
PLUG POWER INC.
By:
name:
title:
Wells Fargo/Plug Power-Master Lease Agreement (Home Depot)
(original)
in witneSS wheReoF, the Parties hereto have duly executed this agreement as of the date first
above written.
LESSOR:
WELLS FARGO EQUIPMENT FINANCE, INC.
By:
name:
title:
LESSEE:
PLUG POWER INC.
By: /s/ Paul Middleton
name: Paul Middleton
title: CFo
Wells Fargo/Plug Power-Master Lease Agreement (Home Depot)
(original)
EXHIBIT A
RENTAL SCHEDULE NO. [ ]
this Rental Schedule dated and effective as of [ ], 202[ ] (this “lease”) incorporates by
reference the terms and provisions of the Master lease agreement dated as of august [12], 2020 (as the same
may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Master
lease agreement”) by and between wells Fargo equipment Finance, inc. (together with its successors and
assigns, “lessor”) and Plug Power inc. (“lessee”). this lease shall be accompanied by a Certificate of
acceptance in the form attached as attachment #1.
all terms used within this document that are defined in the Master lease agreement shall have the
same meaning herein.
1.
description of equipment:
[ ] Gendrive Fuel Cells, as more fully described on Schedule a hereto, and located at [ ].
[ ] GenKey hydrogen Fueling System, as more fully described on Schedule a hereto, and located at
[ ].
Lease Terms:
Initial Term: [ ]1
Rental Commencement Date: [ ], 202[ ]
Rent: as set forth on attachment #2 attached hereto and incorporated herein
Lessor Account Information: all payments of Rent shall be made to the following account of lessor
[ ]2
the initial term of this lease shall commence upon the acceptance date as indicated on the
Certificate of acceptance (“lease Commencement date”) and, unless earlier terminated pursuant to the
terms of the Master lease agreement, shall continue until expiration of the number of months of the
initial term specified above after the Rental Commencement date.
lessee shall pay Rent throughout the initial term in advance on each Rent payment date listed on
attachment #2 in the amount specified under the column heading “Rent Payment” for such Rent
payment date. the Rent payable on each Rent payment date shall be applied to satisfy the lessee’s
obligation with respect to the Rent owed on each “Rental date” for the applicable rental period, as
further set forth on attachment #2 hereto.
2.
the termination Values are as set out on attachment #3 attached hereto and incorporated
herein.
1 initial term to be 78 months from the lease Commencement date.
2 account information to be inserted
1
3.
all purchase and end of term options awarded to lessee in respect of this lease shall apply to
all, but not less than all, equipment leased under this lease.
[Signature page follows.]
2
in witneSS wheReoF, the Parties hereto have caused this lease to be duly executed on the date set
forth below by their authorized representatives.
thiS leaSe Cannot Be CanCelled
LESSOR:
WELLS FARGO EQUIPMENT FINANCE, INC.
By:
name:
title:
LESSEE:
PLUG POWER INC.
By:
Paul Middleton
Chief Financial officer
3
Schedule A
TO EXHIBIT A
DESCRIPTION OF EQUIPMENT
Product / Model Number
Serial Number
4
Attachment #1
TO EXHIBIT A
CERTIFICATE OF ACCEPTANCE
to
Rental Schedule no.
dated [ ], 202[ ]
in compliance with the terms, conditions and provisions of the Master lease agreement dated as of
august [ ], 2020 (as the same may be amended, supplemented or otherwise modified from time to time, the
“lease”) between the undersigned (“lessee”) and wells Fargo equipment Finance, inc. (together with its
successors and assigns, “lessor”), lessee hereby:
(a)
(b)
(c)
certifies and warrants that all equipment described in the above-referenced Rental Schedule
(the “equipment”) is delivered, inspected and fully installed, and operational as of the
acceptance date as indicated below;
accepts all the equipment for all purposes under the lease and all attendant documents as of the
date above (the “acceptance date”); and
restates and reaffirms, as of the acceptance date, each of the representations, warranties
and covenants heretofore given to lessor in the lease.
lessor is hereby authorized to insert serial numbers on the above-referenced Rental Schedule.
leSSee:
PLUG POWER INC.
By:
name:
title:
5
Attachment #2
TO EXHIBIT A
Rents
for Rental Schedule No. [ ]
Rent shall be due and payable in accordance with the following schedule.33 Rent is stated exclusive of
all applicable sales and/or use taxes. lessee is responsible for all sales and/or use taxes on the Rent.
3 Rent payments will be due monthly in advance.
6
Attachment #3
TO EXHIBIT A
Termination Value Schedule
Rental Schedule No. [ ]
7
EXHIBIT B
ADDITIONAL CONDITIONS PRECEDENT TO LEASES
1. a lease for the applicable equipment, substantially in the form of exhibit a to this agreement executed by
lessor and lessee .
2. a Certificate of acceptance for the applicable equipment, substantially in the form of attachment #1 to
exhibit a to this agreement, executed by lessee.
3. a Bill of Sale for the applicable equipment, substantially in the form of exhibit #1 to the Master Purchase
agreement, executed by lessor and lessee.
4. the warranties with respect to the applicable equipment.
5.
in the case of the first lease entered into on or after the date of this agreement, a Secretary’s Certificate of
lessee, dated the date of such lease and attaching (i) true and complete copies of its constitutive
documents in effect as of the date thereof, (ii) a true and complete copy of resolutions duly adopted by the
authorized governing body of lessee, authorizing the execution, delivery and performance by lessee of
each of the lease documents to which it is a party, (iii) an incumbency certificate with respect to the
officers of lessee authorized to execute the lease documents to which lessee is a party, and (iv) a
certificate of good standing, issued by the Secretary of State of delaware, dated not more than ten (10)
business days before the date of such lease; and (b) in the case of each other lease, a bringdown of the
certificate referenced in clause (a) of this paragraph 6 in form and substance satisfactory to lessor.
6. Precautionary uCC-1 financing statements, naming lessee as debtor and lessor or its successors and
assigns as secured party, properly filed, registered or recorded in each jurisdiction in which lessor shall
reasonably request.
7. uCC lien search reports, satisfactory to lessor, dated not more than ten (10) business days before the date
of the applicable lease, made in respect of lessee in each jurisdiction in which lessee is located.
8. uCC-3 financing statements, terminating the interests of any secured party that is not lessor, properly
filed, registered or recorded in each jurisdiction in which lessor shall reasonably request.
9. Copies of certificates of insurance naming lessor as loss payee and/or additional insured that conform to all
requirements set forth in Section 13 of this agreement.
10. an itemized invoice for each item of equipment (including itemization of any sales/use tax being paid or
sales tax exemption certificate), together with evidence of payment thereof.
11. a pay proceeds letter addressed to lessor, executed by lessee, and in form and substance satisfactory to
lessor.
8
12. an appraisal report prepared solely for lessor and its counsel by an appraiser chosen by lessor (the
“appraiser”) that is satisfactory in form and substance to lessor, which confirms, among other things, that
all of the applicable equipment is “qualified fuel cell property” within the meaning of section 48(c)(1) of
the Code, the lessor will be eligible to claim an investment tax credit under section 48(a) of the Code on
the basis that the equipment qualifies under section 48(a)(3)(a)(iv) of the Code equal to 26% of the
Purchase Price of the equipment (which shall be equal to the equipment’s appraised fair market value on
the Rental Commencement date, as determined by the appraiser), and confirms a residual value and
remaining useful life for the applicable equipment at the end of the initial term therefor that is acceptable
to lessor and lessor’s counsel.
13. a certificate from the chief financial officer of lessee that is satisfactory in form and substance to lessor,
dated the date of the applicable lease, confirming that the applicable equipment has not been placed in
service for u.S. federal income tax purposes as of the date of the applicable lease.
14. an irrevocable standby letter of credit (each, an “initial letter of Credit”), issued by Key Bank or such
other united States bank acceptable to lessor in its sole discretion (the “issuing Bank”): (a) naming lessor
as beneficiary; (b) in a face amount at least equal to 105% of the initial termination Value of the
applicable equipment; and (c) otherwise in form and substance satisfactory to lessor.
15. not later than thirty (30) days following the execution and delivery of the first lease to be entered into
hereunder, the following documents in form and substance satisfactory to lessor:
(i)
(ii)
the Master Sublease agreement between lessee, as sublessor, and hd uSa, as sublessee (as the same
may be amended, supplemented or otherwise modified from time to time, the “Master Sublease”);
the Payment Guaranty executed by the hd Parent in favor of lessee and its successors and assigns
(as the same may be amended, supplemented or otherwise modified from time to time, the “hd
Parent Guaranty”), pursuant to which the hd Parent guarantees the obligations of hd uSa under the
Master Sublease and each sublease entered into pursuant to the terms of the Master Sublease (each
such sublease, a “Sublease”);
(iii) the assignment agreement executed by lessee in favor of lessor (as the same may be amended,
supplemented or otherwise modified from time to time, the “assignment agreement”), pursuant to
which, among other things, lessee collaterally assigns its rights under the Master Sublease and each
Sublease to lessor;
(iv) in connection with the assignment agreement, a uCC-1 financing statement, naming lessee as
debtor and lessor or its successors and assigns as secured party, properly filed, registered or recorded
with the Secretary of State of delaware;
(v)
the Consent and agreement executed by hd uSa for the benefit of lessor with respect to the
assignment agreement (the “Consent”);
(vi) a certificate of an officer of the hd Parent certifying to the incumbency of the signature of the hd
Parent representative who executed the hd Parent Guaranty; and
9
(vii) a certificate of an officer of hd uSa certifying to the incumbency of the signature of the hd uSa
representative who executed the Master Sublease.
16. not later than thirty (30) days following the execution and delivery of each lease, the following documents
in form and substance satisfactory to lessor:
(i) a Sublease for the related equipment, substantially in the form of Schedule a to the Master Sublease,
executed by lessee and hd uSa;
(ii) an irrevocable standby letter of credit, issued by the issuing Bank in replacement of the initial letter of
Credit issued on the date of, and in connection with, the corresponding lease (each such replacement
letter of credit, together with each initial letter of Credit being collectively, “letters of Credit”): (a)
naming lessor as beneficiary; and (b) in an initial face amount at least equal to the difference between
(1) 105% of the termination Value of the applicable equipment and (2) the stipulated loss value of the
applicable equipment as set forth in such Sublease;
(iii)a certificate of an officer of hd uSa certifying to the incumbency of the signature of the hd uSa
representative who executed such Sublease, but only if lessor did not have an incumbency certificate
on file for such hd uSa representative;
(iv)a certificate from the chief financial officer of lessee, dated the date of such Sublease, confirming that
the applicable equipment has been placed in service and commenced operation at the applicable Site;
and
(v) an opinion issued by norton Rose Fulbright uS llP to lessor.
17. if either (a) the date of any lease to be entered into is to occur after august 31, 2020 or (b) the entering into
of any lease would cause the aggregate Purchase Price paid by lessor for equipment leased under leases
to exceed $25,000,000, then (in either case) lessor shall have obtained all required credit approvals to enter
into such lease.
18. Such other documentation as lessor shall reasonably require.
10
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
the Board of directors
Plug Power inc.:
We consent to the incorporation by reference in the Registration Statements (Nos. 333-235328 and 333-189056) on
Form S-3 and (Nos. 333-234784, 333-222260, 333-200912, 333-175907, 333-90277, 333-90275, and 333-72734) on
Form S-8 of Plug Power Inc. (the “Company”), of our reports dated May 13, 2021 with respect to the consolidated
financial statements of the Company, which comprise the consolidated balance sheets as of December 31, 2020 and
December 31, 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity
(deficit) and cash flows for each of the years in the three-year period ended December 31, 2020, and the related
notes (collectively, the “consolidated financial statements”) and the effectiveness of internal control over financial
reporting included herein.
Our report dated May 13, 2021, on the effectiveness of internal control over financial reporting as of December 31,
2020, expresses our opinion that the Company did not maintain effective internal control over financial reporting as of
December 31, 2020 because of the effect of the material weakness on the achievement of the objectives of the
control criteria and contains an explanatory paragraph that states the following material weakness has been identified
and included in management’s assessment:
The Company did not maintain a sufficient complement of trained, knowledgeable resources to execute their
responsibilities with respect to internal control over financial reporting for certain financial statement accounts and
disclosures. As a consequence, the Company did not conduct an effective risk assessment process that was
responsive to changes in the Company's operating environment and did not design and implement effective
process-level controls activities in the following areas:
●
●
●
●
presentation of operating expenses
accounting for lease-related transactions
identification and evaluation of impairment, loss-contract reserve, certain expense accruals, and deemed
dividends; and
timely identification of adjustments to physical inventory in interim periods.
The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit
of the 2020 consolidated financial statements, and this report does not affect our report on those consolidated
financial statements.
Our report dated May 13 2021, on the effectiveness of internal control over financial reporting as of December 31,
2020, contains an explanatory paragraph that states that the Company acquired Giner ELX, Inc. and United Hydrogen
Group Inc. (the Acquired Companies) during 2020, and management excluded from its assessment of the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, the Acquired
Companies’ internal control over financial reporting associated with total assets of $58.0 million, excluding goodwill
and intangible assets of $94.9 million, and total revenues of $7.8 million included in the consolidated financial
statements of the Company as of and for the year ended December 31, 2020. Our audit of internal control over
financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the
Acquired Companies.
/s/ KPMG llP
albany, new York
May 13, 2021
Exhibit 31.1
i, andrew Marsh, certify that:
1.
2.
3.
4.
i have reviewed this annual report on Form 10-K of Plug Power inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
the registrant’s other certifying officer and i are responsible for establishing and maintaining disclosure controls and
procedures (as defined in exchange act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in exchange act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
the registrant’s other certifying officer and i have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
date: May 13, 2021
by:
/s/ andRew MaRSh
andrew Marsh
Chief Executive Officer
Exhibit 31.2
i, Paul B. Middleton certify that:
1.
2.
3.
4.
i have reviewed this annual report on Form 10-K of Plug Power inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
the registrant’s other certifying officer and i are responsible for establishing and maintaining disclosure controls and
procedures (as defined in exchange act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in exchange act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
the registrant’s other certifying officer and i have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
date: May 13, 2021
by:
/s/ Paul B. Middleton
Paul B. Middleton
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
in connection with the annual Report of Plug Power inc. (the “Company”) on Form 10-K for the period ended
december 31, 2020 as filed with the Securities and exchange Commission (the “SeC”) on the date hereof (the “Report”), i,
andrew Marsh, Chief executive officer of the Company, certify, solely pursuant to 18 u.S.C. § 1350, as adopted pursuant to
§ 906 of the Sarbanes-oxley act of 2002 (“§ 906”), that to my knowledge:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
exchange act of 1934, as amended; and
the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
this certification is being furnished and not filed, and shall not be incorporated into any documents for any other
purpose, under the Securities exchange act of 1934, as amended, or the Securities act of 1933, as amended. a signed original of
this written statement required by § 906 has been provided to the Company and will be retained by the Company and furnished to
the SeC or its staff upon request.
/s/ andRew MaRSh
andrew Marsh
Chief Executive Officer
May 13, 2021
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
in connection with the annual Report of Plug Power inc. (the “Company”) on Form 10-K for the period ended
december 31, 2020 as filed with the Securities and exchange Commission (the “SeC”) on the date hereof (the “Report”), i, Paul
B. Middleton, Chief Financial officer of the Company, certify, solely pursuant to 18 u.S.C. § 1350, as adopted pursuant to § 906
of the Sarbanes-oxley act of 2002 (“§ 906”), that to my knowledge:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
exchange act of 1934, as amended; and
the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
this certification is being furnished and not filed, and shall not be incorporated into any documents for any other
purpose, under the Securities exchange act of 1934, as amended, or the Securities act of 1933, as amended. a signed original of
this written statement required by § 906 has been provided to the Company and will be retained by the Company and furnished to
the SeC or its staff upon request.
/s/ Paul B. Middleton
Paul B. Middleton
Chief Financial Officer
May 13, 2021