Exhibit 10.46
GE POWER SYSTEMS
1 RIVER ROAD
SCHENECTADY, NEW YORK 12345
August 21, 2001
Plug Power Inc.
968 Albany-Shaker Road
Latham, New York 12110
Attn.: Mr. Roger Saillant
Re: GE Fuel Cell Systems, L.L.C. (the "Company")
Dear Mr. Saillant:
General Electric Company, a New York corporation ("GE"), acting through
its GE Power Systems business ("GEPS"), owns all of the outstanding capital
stock of GE Microgen, Inc. (f/k/a GE On-Site Power, Inc.), a Delaware
corporation ("GEMG"). GEMG and Plug Power Inc. (f/k/a Plug Power, L.L.C.), a
Delaware corporation ("PP"), are the members of GE Fuel Cell Systems, L.L.C., a
Delaware limited liability company (the "Company"), with GEMG and PP holding
75% and 25%, respectively of the Company's Membership Interest. GEMG has
agreed to shift to PP an additional 15% of the Membership Interest of the
Company to PP, thereby reducing its Membership Interest to 60% and increasing
PP's Membership Interest of the Company to 40%. Such transfer is to be effected
pursuant to the terms and conditions set forth in that certain Amended and
Restated Limited Liability Company Agreement (the "LLC Agreement") of even date
herewith, between GEMG and PP. Unless otherwise specified, capitalized terms
in this letter shall have the meanings ascribed to them in the LLC Agreement.
In addition, in connection with and in consideration of the shift in Membership
Interests described above, PP has agreed to issue to GE Power Systems Equities,
Inc. ("GEPS Equities"), an affiliate of GEMG, an Option to Purchase Common
Stock of PP, whereby GEPS Equities has the right to purchase from PP, at any
time and from time to time during the next five years, up to 725,000 shares of
PP common stock for a purchase price of $15.00 per share.
Section 5.5(a) of the LLC Agreement obligates GEMG to arrange for loans to
the Company, which are to be provided by GE. In consideration of the benefits
to be derived by GEMG and, indirectly, by GE, from PP's participation in the
Company and PP's entering into the LLC Agreement and the Ancillary Agreements,
GE agrees to provide to the Company the loans contemplated by Section 5.5(a) of
the LLC Agreement, subject to the terms and conditions set forth therein. Such
loans shall be provided to the Company in accordance with the terms of the
Promissory Note and Security Agreement executed February 3, 1999.
GE recognizes that the transactions contemplated by the LLC Agreement and
the Ancillary Agreements will establish the Company as PP's exclusive
distributor of Products in the Territory. GE, therefore, agrees that, while
the LLC Agreement is in effect and so long as the Company has not been
dissolved, GEPS will be bound by the following restrictions:
Plug Power Inc.
August __, 2001
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(a) GEPS will not Sell (as that term is defined in the
Distributor Agreement of even date herewith (the"Distributor Agreement"))
PEM Fuel Cell-Powered Generator Sets, replacement parts, upgrades,
accessories, and improvements, (in each case, except as designed for use
in propulsion applications) in the Territory, directly or through any
entity other than the Company, provided that the Products are competitive,
as determined pursuant to Section 4.2(b) of the Distributor Agreement,
with non-PP manufactured PEM Fuel Cell-Powered Generator Sets.
However, paragraph (a) shall not
(b) apply, with respect to GE, to any division or entity other
than GEPS, and, within GEPS, such restrictions shall not apply to the fuel
processing activities of GE Energy and Environmental Research Corp., a
GEPS subsidiary; however, in the event that GE sells a non-PP manufactured
PEM Fuel Cell-Powered Generator Set, except as designed for use in
propulsion applications, PP may elect to name additional distributors in
the Territory or terminate the LLC Agreement;
(c) prohibit the acquisition (by merger or otherwise) of the
securities or assets of a business where the gross revenues of such
business attributable to activities that violate the non-compete
provisions of paragraph (a) constitute less than 15% of the total gross
revenues of such business and where the entry into activities that violate
the non-compete provisions of paragraph (a) is not the principal purpose
of such acquisition, if the competing portion of such business is first
offered for sale to the Company for the cost to the acquiror and the
Member proposing to acquire such business cooperates to enable the Company
to acquire it (including, if it remains a Member and is requested by the
other Member, the provision of necessary fundsin proportion to the then
outstanding Membership Interests);
(d) without limiting paragraph (b) above, restrict in any way
General Electric Capital Services, Inc., and its subsidiaries, General
Electric Investment Corporation, General Electric Investment Management
Incorporated, or any other Affiliate of GE engaged primarily in the
financial services business (including any account managed by any of them)
from engaging in any activities, including, without limitation, holding an
interest in any entity which, now or in the future, owns, operates or
engages in a business that violates the non-compete provisions of
paragraph (a), or foreclosing against or assuming operational control of
such an entity or taking other enforcement actions; or
(e) prevent compliance by GEPS with license agreements or other
commitments entered into prior to the date hereof, or prevent GEPS from
entering into future license agreements or other commitments not related
to Products, Services or technology derived from PP or the Company.
The laws of the State of New York shall govern the validity,
interpretation, construction, performance, and enforcement of this letter
agreement, provided that any provision of such laws (e.g., choice of law
provisions) invalidating any provision hereof or modifying the intent of the
Plug Power Inc.
August __, 2001
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parties as expressed herein shall not apply. This letter agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof, supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter hereof, and may not be assigned or modified without the written
consent of both parties. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by any party hereto. No party will be liable to the other for
special, incidental, or consequential damages, including, but not limited to,
personal injury, property damage, loss of profit or revenues, or business
interruption.
Please indicate your acceptance of the terms of this letter agreement by
executing it in the space provided below, returning the executed original to
the address above, and retaining the executed copy for your records. Thank you.
Very truly yours,
GENERAL ELECTRIC COMPANY
By:_________________________________
Name:_______________________________
Title:______________________________
Agreed and accepted this ____ day
of August, 2001.
PLUG POWER INC.
By:_______________________________
Roger Saillant
President and CEO