CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
EXHIBIT 10.5
DISTRIBUTOR AGREEMENT
THIS DISTRIBUTOR AGREEMENT is made and entered into as of this 2nd day of
February, 1999 (herein referred to as the "Effective Date"), between GE FUEL
CELL SYSTEMS, L.L.C., a Delaware limited liability company located at 1 River
Road, Schenectady, New York 12345 (hereinafter referred to as "DISTRIBUTOR"),
and PLUG POWER, L.L.C., a Delaware limited liability company located at 968
Albany-Shaker Road, Latham, New York 12110 (hereinafter referred to as
"SUPPLIER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, DISTRIBUTOR and SUPPLIER intend to enter into this Agreement in
order to set forth, in writing, DISTRIBUTOR's obligation to market and sell
Products (defined below) and Pre-Commercial Units (defined below) and provide
Services (defined below) in the Territory (defined below); and
WHEREAS, the mission of DISTRIBUTOR and SUPPLIER through the term of this
Agreement is to bring to customers the highest quality line of Products and Pre-
Commercial Units and provide world-class Services for the purpose of increasing
SUPPLIER's Product and Pre-Commercial Unit sales;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the mutual benefits to be derived
herefrom, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
1.1 Affiliate. The term "Affiliate" when used herein shall mean, with
---------
respect to any Person, any Person directly or indirectly controlling, controlled
by, or under common control with such other Person, except that an Affiliate of
SUPPLIER shall only include any Person directly or indirectly controlled by
SUPPLIER. As used herein, control shall mean the ownership, either directly or
by attribution, of more than 50% of the combined voting rights attributable to
the equity interests of a Person or the ability, either direct or indirect, to
control the composition of the majority of the Board of Directors or comparable
management body of a Person.
1.2 Agreement. The term "Agreement" when used herein shall mean this
---------
document and any annex, exhibit, attachment, schedule, addendum, or modification
hereto, unless the context otherwise indicates.
1.3 Commencement Date. The term "Commencement Date" when used herein shall
-----------------
have the meaning ascribed in Section 4.1 hereof.
1.4 Customer. The term "Customer(s)" when used herein shall mean any
--------
purchaser or potential purchaser of the Products, Pre-Commercial Units, Test &
Evaluation Units, or Services from DISTRIBUTOR, directly or indirectly through
third parties.
1.5 GEPS. The term "GEPS" when used herein shall mean the GE Power Systems
----
business of General Electric Company.
1.6 GEPS Competitor. The term "GEPS Competitor" when used herein shall
---------------
mean any of the following Persons, provided that DISTRIBUTOR may revise this
list upon written notice to SUPPLIER to include additional Persons involved
directly, or indirectly through an affiliate, in the manufacture, assembly, or
provision of O&M services for, gas or steam turbines, regardless of origin or
design: AAR Engine Group - USA; ABB - Switzerland; Advanced Materials
Technologies, Inc. -USA; Aero & Industrial Technology - UK; Aetc Ltd./ - UK;
Alfa Laval - UK; AlliedSignal - US; Bailey Automation PLC - UK; Baird
Analtical -USA; Baker/MO Services Inc. - USA; Bales Scientific Inc. - USA;
Bently Nevada -USA; Bosman Powersource B.V. - Netherlands; Boyce Engineering
Int'l. Ltd. - UK; Boyce Engineering International - USA; Brush Electrical
Machines Ltd. - UK; Chromalloy Gas Turbine - USA; Concepts ETI, Inc. - USA;
Conmec, Inc. - USA; Cooper Energy Services - USA; Cooper Rolls - USA; Demag
Delaval Turbomachinery Corp. - USA; Dresser Rand Turbo Products Division - USA;
Ebara Corporation -Japan; Elbar BV- Netherlands; European Gas Turbines Ltd. -
UK; Fern Engineering, Inc. - USA; Fiat Avio S.P.A. - Italy; Gas-Path Technology,
Inc. - USA; Hickham Industries, Inc. - USA; Hitachi - Japan; Honeywell Solid
State Electric Center -USA; HSDE -UK; IHI-Japan; John Brown / Kvearner
Engineering - UK; Kawasaki -Japan; Liburdi Engineering Ltd. - Canada; Man
Gutehoffnungshutte AG - Germany; Mannesmann Demag Veidichter - Germany; McGuffy
Systems, Inc. - USA; Mitsubishi Heavy Industries -Japan; Moog Controls - USA;
Natole Turbine Enterprises, Inc. -USA; Ormat Industries Ltd. - Israel;
Petrotech, Inc. - USA; Polytec P.I. Inc. -USA; Powmat Ltd - USA; Pratt &
Whitney -USA; Precision Castparts Corp. - USA; Preco Turbine Services Inc. -
USA; Rolls-Royce Industrial & Marine - UK; Senior Thermal Engineering - UK;
Sermatech International Inc. - USA; Siemens-Westinghouse Power Corp. - USA;
Solar Turbines Incorporated - USA; SPE Mashproekt - Ukraine; Stork RMO BV -
Netherlands; Sulzer Turbo - Germany; Thomassen International B.V. -Netherlands;
Toshiba - Japan; Triconex Systems, Inc. - USA; Turbine Controls Ltd. - UK;
Turbine Technology Services Corp. - USA; Wilson & Daleo Inc. -Canada; Wood Group
Gas Turbines Ltd.- UK.
1.7 PEM Fuel Cell-Powered Generator Set. The term "PEM Fuel Cell-Powered
-----------------------------------
Generator Set" when used herein shall mean a proton exchange membrane fuel cell
stack packaged with a fuel processor (to convert fuel at standard available
pressure and quality to fuel usable by the fuel cell stack), with a maximum
continuous output no greater than 35 kW, and all of the ancillary components,
systems, electronics, batteries, controls, protective relaying (e.g., over/under
current, transfer switch), and enclosure(s) required to be ready for indoor or
outdoor installation and operation for stand-alone or grid-interconnected
stationary power applications.
1.8 Person. The term "Person" when used herein shall mean an individual, a
------
corporation, a partnership, a limited liability company, an association, a trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
1.9 Pre-Commercial Unit. The term "Pre-Commercial Unit" when used herein
-------------------
shall mean a 7kW output PEM Fuel Cell-Powered Generator Set manufactured by
SUPPLIER and meeting the specifications outlined in Schedule B attached hereto.
----------
-2-
1.10 Product Quality and Safety Assurance Program. The term "Product
--------------------------------------------
Quality and Safety Assurance Program" when used herein shall have the meaning
ascribed in Section 6.8 of this Agreement.
1.11 Products. The term "Products" when used herein shall mean the PEM Fuel
--------
Cell-Powered Generator Sets and other items manufactured by or on behalf of
SUPPLIER described on Schedule A-1, attached hereto, and such other items which
------------
may, from time to time, be included on Schedule A-1 pursuant to the terms of
------------
this Agreement or by the mutual written consent of SUPPLIER and DISTRIBUTOR.
1.12 Proprietary Information. The term "Proprietary Information" when used
-----------------------
herein shall have the meaning ascribed in Section 7.1 hereof.
1.13 Services. The term "Services" when used herein shall mean those
--------
services listed on Schedule A-2 of this Agreement, attached hereto.
------------
1.14 Term. The term "Term" when used herein shall mean the term of this
----
Agreement as defined pursuant to Section 4.1, including all extensions and
renewals thereof.
1.15 Territory. The term "Territory" when used herein shall mean every
---------
country, province, territory or other principality in the world, except the
States of Michigan, Indiana, Ohio, and Illinois while Edison Development
Corporation has exclusive rights to market and sell products similar to Products
and provide services similar to Services therein. In the event that Edison
Development Corporation ("EDC") shall lose all of its rights to market and sell
similar products and provide similar services in the States of Michigan,
Indiana, Ohio and Illinois in the United States of America (the "EDC
Territory"), this definition of "Territory" shall be expanded to include the EDC
Territory. In the event that EDC shall lose its exclusive rights to market and
sell similar products and provide similar services in the EDC Territory,
DISTRIBUTOR will have the rights to market and sell Products and provide
Services in the EDC Territory on a non-exclusive basis.
1.16 Test & Evaluation Unit. The term "Test & Evaluation Unit" when used
----------------------
herein shall mean a pre-commercial version of the Product with performance
(e.g., efficiency, emissions, size, noise, reliability) below that of a Pre-
Commercial Unit, which is intended to demonstrate proof of concept and provide
the manufacturer with field test data.
ARTICLE II - APPOINTMENT AND SCOPE
2.1 Appointment. Subject to the terms and conditions and for the Term of
-----------
this Agreement (as defined in Article IV hereof) SUPPLIER hereby appoints
DISTRIBUTOR, and DISTRIBUTOR accepts such appointment, as SUPPLIER's distributor
in the Territory to exclusively purchase, except as set forth in Section 2.2(a),
Products, Pre-Commercial Units, and Test & Evaluation Units, and market and sell
Products, Pre-Commercial Units, and Test & Evaluation Units to Customers for
their own use or resale, and to provide Services to Customers.
2.2 Non-Compete. During the term of this Agreement and except as
-----------
otherwise provided herein,
-3-
(a) SUPPLIER and its Affiliates shall not, directly or indirectly,
market or sell PEM Fuel Cell-Powered Generator Sets, components, replacement
parts, upgrades, accessories, or improvements that compete with Products, Pre-
Commercial Units, or Test & Evaluation Units, market and sell the output of PEM
Fuel Cell-Powered Generator Sets that compete with the Products, Pre-Commercial
Units, or Test & Evaluation Units, or provide Services to Customers in the
Territory, so long as, and to the extent that, DISTRIBUTOR is SUPPLIER's
exclusive distributor in the Territory pursuant to this Agreement (except for
sales of Test & Evaluation Units and Pre-Commercial Units to federal, state,
municipal and other governmental entities, the Gas Research Institute, Electric
Power Research Institute, and such other industry groups mutually agreed to by
SUPPLIER and DISTRIBUTOR, to the extent such entities and groups are purchasing
the units for their research and development, as opposed to purchasing the units
for resale);
(b) DISTRIBUTOR will utilize SUPPLIER as its sole supplier of PEM
Fuel Cell-Powered Generator Sets, components, replacement parts, upgrades,
accessories, and improvements therefor.
2.3 Third Parties. DISTRIBUTOR may appoint or contract with third parties
-------------
(e.g., agents, distributors, sub-distributors) in connection with the marketing
and sale of the Products, Pre-Commercial Units, and Test & Evaluation Units and
the provision of Services, so long as any compensation to such third parties
shall be the sole responsibility of DISTRIBUTOR. DISTRIBUTOR will use reasonable
efforts to consult with SUPPLIER regarding any such appointments or contracts
prior to entering into such appointments or contracts.
2.4 Independent Contractor Status. DISTRIBUTOR is an independent purchaser
-----------------------------
and seller of the Products, Pre-Commercial Units, and Test & Evaluation Units.
Nothing contained in this Agreement shall be construed to constitute DISTRIBUTOR
as a partner, employee, agent or joint venturer of SUPPLIER, nor shall
DISTRIBUTOR and SUPPLIER have any authority to bind the other in any respect, it
being intended that each shall remain an independent contractor responsible for
its own actions. Each party shall be responsible for all of its own expenses and
employees, except as provided otherwise in this Agreement.
2.5 Provision of Services. To the extent SUPPLIER is engaged in providing
---------------------
any Services, SUPPLIER hereby agrees to make available such Services requested
by DISTRIBUTOR, in accordance with the provisions set forth in this Agreement,
including Section 3.3 hereof. SUPPLIER hereby agrees that DISTRIBUTOR shall be
the sole provider of Services to DISTRIBUTOR's Customers with respect to the
Products and that DISTRIBUTOR may utilize any service provider to provide such
Services.
2.6 Resale of Products by DISTRIBUTOR or Customer. Other than as expressly
---------------------------------------------
set forth in this Agreement, the DISTRIBUTOR and its Customers shall not have
any restrictions, in any manner, with respect to the resale of any Product, Pre-
Commercial Unit, or Test & Evaluation Unit acquired pursuant to this Agreement,
including restrictions as to the price at which they elect to resell any such
Products, Pre-Commercial Units, or Test & Evaluation Units.
-4-
ARTICLE III - TERMS AND CONDITIONS OF SALE OF THE PRODUCTS
3.1 Product Purchase Orders; Terms and Conditions. The terms and
---------------------------------------------
conditions for all orders for the Products and Pre-Commercial Units shall be
subject to all of the provisions set forth in this Article III and in Schedules
---------
B, C, and D, attached hereto.
- ------------
3.2 Service Orders; Terms and Conditions. The terms and conditions for all
------------------------------------
orders for the provision of Services shall be subject to all the provisions set
forth in this Article III, in Schedule B, and as otherwise negotiated between
----------
the parties.
3.3 Prices; Products and Services.
-----------------------------
(a) The prices charged to DISTRIBUTOR for all Products purchased
hereunder shall be the lower of (i) those prices set forth on Schedule C,
----------
attached hereto, or (ii) the lowest prices charged by SUPPLIER to any other
purchaser for the same such Product in similar quantities during the four months
preceding an order. To the extent that SUPPLIER's direct cost per unit for the
Products exceeds that set forth on Schedule C, SUPPLIER and DISTRIBUTOR shall
----------
agree to an increase in the price to DISTRIBUTOR and a decrease to DISTRIBUTOR's
Sales Commitments. If SUPPLIER and DISTRIBUTOR cannot reach such agreements,
then this Agreement shall terminate. The prices charged to DISTRIBUTOR for all
Pre-Commercial Units purchased hereunder shall be those prices set forth on
Schedule C, and such prices are not subject to adjustment even if SUPPLIER sells
- ----------
Pre-Commercial Units to another purchaser at a lower price.
(b) The prices charged to DISTRIBUTOR for all Services ordered
hereunder shall be the lowest prices charged by SUPPLIER to any other person or
entity, other than Edison Development Corporation or an affiliate thereof, for
the same such Services in similar quantities during the four months preceding an
order, provided, however, in the event that any Services are included in
-------- -------
the price of a Product or Pre-Commercial Unit or are not charged for, a
reasonable price allocation shall be made with respect to such Services for
purposes of this pricing formula.
(c) All prices for the Products, Pre-Commercial Units, Test &
Evaluation Units, and Services shall be expressed in United States Dollars. All
payments for Products, Pre-Commercial Units, Test & Evaluation Units, and
Services shall be made in United States Dollars.
(d) To the extent DISTRIBUTOR assists SUPPLIER in sourcing components
for the manufacturing of Products or Pre-Commercial Units, DISTRIBUTOR will
receive 50% of any savings realized by SUPPLIER, for components of like quality
and quantity, where savings is defined as the difference between the best quote
obtained by SUPPLIER and the quote obtained by DISTRIBUTOR. DISTRIBUTOR's share
of any savings will be applied as a credit against DISTRIBUTOR's purchases of
Products or Pre-Commercial Units from SUPPLIER.
ARTICLE IV - TERM AND TERMINATION
4.1 Term. Except as otherwise provided in this Agreement, the term of this
----
Agreement shall begin thirty (30) days after the execution of this Agreement
(the "Commencement Date") and shall continue
-5-
for a five (5) year term ending on the fifth anniversary of the Commencement
Date. The parties intend to negotiate an amendment to this Agreement which shall
set forth purchase prices for Products and DISTRIBUTOR's purchase commitments
for the period beyond the initial term. SUPPLIER and DISTRIBUTOR will initiate
negotiations on the amendment no later than January 1, 2002.
4.2 Termination for Cause. This Agreement shall terminate immediately in
---------------------
the event that DISTRIBUTOR is dissolved or the Limited Liability Company
Agreement under which DISTRIBUTOR is governed terminates, whichever occurs
first. This Agreement may be terminated by a party hereto prior to expiration of
the initial five (5) year term or any renewal term hereof by furnishing prior
written notice to the other party, as follows:
(a) Termination by a party, in the event the other party should fail
to perform any of its obligations hereunder and such failure results in a
material adverse effect to the terminating party, provided such other party
shall fail to remedy any such nonperformance within 120 days after receiving
written demand therefor, except as otherwise specified in Schedule D;
----------
(b) Termination by a party, if the other party should become a
subject of any voluntary or involuntary bankruptcy, settlement, receivership,
reorganization or other insolvency proceedings, unless such proceedings are
terminated within one month from their formal opening; or
(c) Termination by a party, if the other party should attempt to
sell, assign (in violation of this Agreement), delegate or transfer any of its
rights and obligations under this Agreement without having obtained the other
party's prior written consent thereto.
4.3 Rights of Parties on Termination or Expiration. The following
----------------------------------------------
provisions shall apply on the termination or expiration of this Agreement (the
date of termination or expiration being the "Termination Date"):
(a) DISTRIBUTOR shall cease all purchases from SUPPLIER and shall
return to SUPPLIER and immediately cease all use of Confidential Information
previously furnished by SUPPLIER and then in DISTRIBUTOR's possession; provided,
--------
however, notwithstanding the forgoing, (i) SUPPLIER shall fulfill any and all
- -------
orders for Products, Pre-Commercial Units or Services firmly committed to by
DISTRIBUTOR, in accordance with Schedule D, and (ii) DISTRIBUTOR shall have the
----------
right to continue to use such Confidential Information in connection with such
orders. SUPPLIER shall return to DISTRIBUTOR and immediately cease all use of
any Confidential Information previously furnished by DISTRIBUTOR, except as
needed to fulfill orders for Products, Pre-Commercial Units or Services firmly
committed to by DISTRIBUTOR, in accordance with Schedule D.
----------
(b) Except as otherwise provided herein, all rights granted to
DISTRIBUTOR under or pursuant to this Agreement shall cease, and where
appropriate, revert to SUPPLIER; similarly, all rights granted to SUPPLIER under
or pursuant to this Agreement shall cease, and where appropriate, revert to
DISTRIBUTOR.
(c) The provisions of this Agreement that are expressed to survive
this Agreement or to apply notwithstanding termination or expiration hereof
shall be followed by the parties hereto.
-6-
(d) Termination or expiration of this Agreement shall not prejudice
or otherwise affect the rights or liabilities of the parties with respect to the
Products, Pre-Commercial Units or Services theretofore sold or rendered
hereunder, or any indebtedness then owing by either party to the other; nor
shall termination or expiration relieve the parties of any obligations imposed
by the provisions of this Agreement which are expressed to survive the
termination or expiration of this Agreement or any liability for damages
resulting from breach of such provisions.
ARTICLE V - OBLIGATIONS OF DISTRIBUTOR
5.1 Sales and Promotion; Services; Facilities, Personnel and Advertising.
--------------------------------------------------------------------
DISTRIBUTOR shall (a) use best efforts to market and sell Products and Pre-
Commercial Units and provide Services within the Territory; and (b) maintain, at
its own expense, such office space and facilities, and hire and train such
personnel as DISTRIBUTOR may deem necessary to carry out its obligations under
this Agreement. DISTRIBUTOR will use its best efforts to market and sell
Products and Pre-Commercial Units in the manner that its Affiliates market and
sell similar products, and to provide Services to ensure a level of customer
service consistent with that provided for other GE-branded products, taking into
consideration the lower sales volumes of Products and Pre-Commercial Units.
Within 60 days after the effective date of this Agreement, SUPPLIER and
DISTRIBUTOR will mutually agree to a marketing and Services development schedule
for the period ending December 31, 2000, which will include milestones and
objective measures of progress towards the January 1, 2001, Product release.
SUPPLIER and DISTRIBUTOR will meet not less than quarterly for the purpose of
evaluating DISTRIBUTOR's progress against the development schedule.
5.2 Purchase Volume Goal. During the Term of this Agreement, DISTRIBUTOR
--------------------
shall use its best efforts to achieve minimum Global Sales Commitments and Major
Market Sales Commitments as defined and specified in Schedule D. DISTRIBUTOR
----------
shall provide SUPPLIER with a 12-month rolling forecast of monthly purchases in
accordance with Schedule D. In the event that DISTRIBUTOR fails to achieve the
----------
minimum purchase volume goals set forth in Schedule D, SUPPLIER may appoint
-----------
additional distributors and/or terminate this Agreement under the provisions
specified in Schedule D. In the event that SUPPLIER appoints any additional
----------
distributors pursuant to the preceding sentence, DISTRIBUTOR may terminate this
Agreement upon 120 days written notice.
5.3 Expenses. Except as otherwise provided in this Agreement, DISTRIBUTOR
--------
shall bear all expenses associated with DISTRIBUTOR's marketing and sale of
Products and Pre-Commercial Units and provision of Services under this
Agreement.
5.4 DISTRIBUTOR Intelligence. DISTRIBUTOR shall make intelligence (e.g.,
------------------------
Product applications, customer demand) related to the sale and use of Products
and Pre-Commercial Units to Customers available to SUPPLIER (collectively,
"DISTRIBUTOR Intelligence").
5.5 Pre-Commercial Units. DISTRIBUTOR shall purchase, on a take or pay
--------------------
basis, 485 Pre-Commercial Units, as specified in Schedule B, for delivery by
----------
December 31, 2000, at a purchase price of $21,134 per unit, with no more than
250 units to be delivered in any one quarter. One-fourth of the purchase price
shall be paid to SUPPLIER as a deposit six months prior to delivery but no
earlier than January 1, 2000, and the balance of the purchase price shall be
paid on delivery. To the extent
DISTRIBUTOR elects to purchase units available prior to the Pre-Commercial
Units, DISTRIBUTOR's purchases will be credited against its take-or-pay
commitment on a dollar-for-dollar basis (e.g., if DISTRIBUTOR purchases
$1,000,000 of Test & Evaluation Units available in 1999, DISTRIBUTOR'S take-or-
pay commitment on the Pre-Commercial Units will be reduced by $1,000,000).
DISTRIBUTOR will make reasonable efforts to have its Customers for Pre-
Commercial Units perform certain testing as prescribed by SUPPLIER, provide
SUPPLIER with all data generated by such testing, and provide SUPPLIER with
reasonable on-site access to the Pre-Commercial Units.
5.6 Assistance. DISTRIBUTOR shall, if required by SUPPLIER, provide
----------
SUPPLIER with reasonable access to and assistance of its sales and marketing
personnel. Such assistance shall be without charge to SUPPLIER except as may be
otherwise mutually agreed.
5.7 Regulatory Approvals. In conjunction with SUPPLIER's obligations in
--------------------
Section 6.6, DISTRIBUTOR shall be responsible for the administration and field
work necessary to obtain any regulatory approvals for DISTRIBUTOR to conduct its
operations in the Territory. DISTRIBUTOR shall provide assistance to SUPPLIER in
order to assist SUPPLIER in complying with registration requirements in the
Territory, obtain such other approvals from governmental authorities of the
Territory as may be necessary to comply with any and all governmental laws,
regulations, and orders that may be applicable to DISTRIBUTOR by reason of the
execution of this Agreement, and assist SUPPLIER in taking those actions
necessary for DISTRIBUTOR to be registered as SUPPLIER's independent distributor
with any governmental authority. Without limiting the foregoing, DISTRIBUTOR
shall furnish SUPPLIER with such documentation as SUPPLIER may request to
confirm DISTRIBUTOR's compliance with this Section, and DISTRIBUTOR agrees that
it shall not engage in any course of conduct that would cause SUPPLIER to be in
violation of the laws of any jurisdiction within the Territory. DISTRIBUTOR
shall comply fully with, and shall be solely responsible for, all safety
standards, health code requirements and regulations, specifications, and other
requirements imposed by law, regulation, or order in the Territory and
applicable to the marketing and sale of the Products and Pre-Commercial Units,
and to the provision of Services provided by DISTRIBUTOR.
ARTICLE VI - OBLIGATIONS OF SUPPLIER
6.1 Sales Support. SUPPLIER shall, at its expense, provide DISTRIBUTOR
-------------
with reasonable amounts of technical materials (e.g., drawings, schematics,
installation manuals, operating procedures, available marketing materials, field
test results, training materials) and available information regarding product
applications and customer demand pertaining to the Products and Pre-Commercial
Units as are requested by DISTRIBUTOR from time to time. All such information
and materials will be furnished in the English language.
6.2 Notification of Changes. SUPPLIER shall notify DISTRIBUTOR of any
-----------------------
material changes in or affecting the Products, Pre-Commercial Units, projected
delivery dates and schedule changes that may reasonably be expected to affect
the business of DISTRIBUTOR; provided, that no such notification shall relieve
--------
SUPPLIER of any of its obligations hereunder.
6.3 Assistance. SUPPLIER shall, if required by DISTRIBUTOR, provide
----------
DISTRIBUTOR with reasonable access to and assistance of its technical support
personnel. Such assistance shall be without charge to DISTRIBUTOR except as may
be otherwise mutually agreed.
-8-
6.4 Insurance. SUPPLIER shall maintain in effect at all times product
---------
liability insurance with policy limits as described in Schedule E attached
----------
hereto, as such exhibit may be revised from time to time upon the mutual
agreement of SUPPLIER and DISTRIBUTOR, and DISTRIBUTOR shall be named as an
additional insured to each such policy. In the event that SUPPLIER cannot
obtain such insurance on commercially reasonable terms, SUPPLIER shall notify
DISTRIBUTOR, and DISTRIBUTOR may terminate this Agreement.
6.5 Third Party Inquiries. If SUPPLIER is contacted, or has been
---------------------
contacted, by third parties concerning purchase of the Products by Customers in
the Territory, SUPPLIER will use its best efforts to refer such persons to
DISTRIBUTOR, provided that SUPPLIER has not named any additional distributors to
the relevant market area in accordance with this Agreement.
6.6 Governmental Approvals; Compliance. SUPPLIER shall comply with all
----------------------------------
registration requirements in the Territory that are applicable to SUPPLIER,
obtain such other approvals from governmental authorities of the Territory as
may be necessary to comply with any and all governmental laws, regulations, and
orders that may be applicable to SUPPLIER by reason of the execution of this
Agreement, and take those actions necessary for DISTRIBUTOR to be registered as
SUPPLIER's independent distributor with any governmental authority. At
DISTRIBUTOR's request, SUPPLIER shall perform all tests for all certifications
(regulatory or otherwise) required to certify use of the Products and Pre-
Commercial Units sold by DISTRIBUTOR for stand-alone and/or grid-interconnected
stationary power applications. Without limiting the foregoing, SUPPLIER shall
furnish DISTRIBUTOR with such documentation as DISTRIBUTOR may request to
confirm SUPPLIER's compliance with this Section, and SUPPLIER agrees that it
shall not engage in any course of conduct that would cause DISTRIBUTOR to be in
violation of the laws of any jurisdiction within the Territory. If the cost of
compliance with regulatory requirements outside of the U.S. causes SUPPLIER's
direct cost per unit to exceed SUPPLIER's direct cost as shown on Schedule C,
----------
then SUPPLIER and DISTRIBUTOR will mutually agree to adjust the prices as shown
on Schedule C, and the Sales Commitments as shown on Schedule D, for any units
---------- ----------
purchased by DISTRIBUTOR for sale outside of the U.S. that require such
compliance.
6.7 Production Capability; Minimum Volume.
-------------------------------------
(a) SUPPLIER will use best efforts to maintain a minimum annual
Product supply of [***] units per year in "2001," as defined in Schedule D, plus
----------
any additional capacity required to fill any of DISTRIBUTOR'S firm purchase
orders; provided that DISTRIBUTOR stays on schedule, as determined in good faith
by SUPPLIER, in developing the infrastructure necessary to market, sell, and
provide Services to such volume of Products; and provided further that SUPPLIER
will not be obligated to increase Product supply by more than 100% between any
two quarters, and, in any event, SUPPLIER will not be obligated to increase
Product supply beyond the Global Sales Commitments.
(b) SUPPLIER will use best efforts to produce 485 Pre-Commercial
Units during the year 2000, and use best efforts to front load production in the
first half of the year.
(c) Supplier shall supply Products to DISTRIBUTOR at the lower of
(i) the pricess set forth on Schedule C, or (ii) [***]. Supplier shall supply
Pre-
Commerical Units to DISTRIBUTOR at the prices set forth on Schedule C. To the
extent that [***], Supplier and Distributor shall agree to [***]. If SUPPLIER
and DISTRIBUTOR cannot reach such agreements, then this Agreement shall
terminate.
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
-9-
6.8 Legal Standards. SUPPLIER shall comply fully with, and shall be solely
---------------
responsible for, all safety standards, health code requirements and regulations,
specifications, and other requirements imposed by law, regulation, or order in
the Territory, that are applicable to the design, manufacturing, and testing of
the Products and Pre-Commercial Units and the provision of Services by SUPPLIER.
SUPPLIER shall establish and maintain a program, to the mutual satisfaction of
SUPPLIER and DISTRIBUTOR, in order to create ongoing product design,
manufacturing, testing, inspection, and other safety and quality-related
processes that are adequate to assure the safety and reliability of SUPPLIER's
Products and Pre-Commercial Units (the "Product Quality and Safety Assurance
Program").
6.9 Replacement Parts. SUPPLIER shall sell replacement parts to
-----------------
DISTRIBUTOR for the lower of (a) those prices set forth on Schedule C, attached
hereto, or (b) [***]. SUPPLIER shall maintain a reasonable supply of replacement
parts for the Products and Pre-Commercial Units throughout the design life of
the Products and Pre-Commercial Units, as set forth in SUPPLIER'S Product and
Pre-Commercial Unit Specifications.
6.10 Funding of GE Corporate Research and Development Support. SUPPLIER
--------------------------------------------------------
will enter into a separate service agreement with General Electric Company,
under which SUPPLIER will pay or obtain outside funding to pay General Company
$500,000 per year during the pre-commercial period (i.e., the period up to the
commercial release of Products) in exchange for support by the Corporate
Research and Development Department of General Electric Company of the
development and testing of Products, Pre-Commercial Units, and Test & Evaluation
Units, with specific projects to be specified by SUPPLIER in such separate
agreement. The failure of SUPPLIER to enter into such agreement shall constitute
cause for termination of this Agreement pursuant to Section 4.2(a), without
regard to materiality considerations. SUPPLIER will use reasonable efforts to
enter into such agreement within 90 days following the execution date of this
Agreement.
ARTICLE VII - CONFIDENTIAL INFORMATION AND PROPRIETARY RIGHTS
7.1 Confidentiality. SUPPLIER and DISTRIBUTOR agree to follow the
---------------
following requirements regarding confidentiality:
(a) Each party hereto expects to furnish to the other party certain
confidential information which will constitute trade secrets or other
proprietary business or technical information belonging to the disclosing party
(including, but not limited to, components, processes, financial information,
drawings, specifications and other data, whether in written, printed, oral or
other form) and will be marked "Confidential" or "Proprietary" (such information
is hereinafter referred to as "Confidential Information") at the time it is
disclosed. Oral information which is confidential or proprietary shall be
reduced to writing by the disclosing party within ten (10) working days after
disclosure, which writing shall
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
-10-
specifically reference the date of disclosure and otherwise conform to the
requirements of this paragraph. Any information which is disclosed in any other
manner shall be deemed to be non-confidential. The receiving party shall not
disclose Confidential Information to anyone except its employees who have a need
to know such Confidential Information in order to perform their work and shall
inform such individuals of the confidential nature of the Confidential
Information. Subject to the provisions of subsection (b), below, the receiving
party shall use the Confidential Information only for the purpose of such work
and shall use efforts to protect the confidentiality of such Confidential
Information commensurate with those which it employs for the protection of its
own confidential information, but it shall not be liable for unauthorized
revelations of such Confidential Information which occur in spite of such
efforts.
(b) Notwithstanding the provisions of subsection (a) above, (i) the
receiving party shall not be subject to any restriction hereunder with respect
to any part of such Confidential Information which appears in issued patents or
publications, which is known or becomes generally known to the relevant public
through no fault of the receiving party, which is independently generated by the
receiving party without use of the Confidential Information, which is furnished
to others by the disclosing party without restriction on disclosure, which was
or becomes known to the receiving party through other sources free of any
confidentiality restriction, which must be disclosed by requirements of law or
valid legal or regulatory process, in which case the party intending to make
such disclosure shall notify the party which designated the material as
confidential in advance of any such disclosure and reasonably cooperate with any
attempt to maintain the confidentiality of such materials; and (ii) any and all
restrictions with respect to Confidential Information provided hereunder will
expire three (3) years after the date that such Confidential Information is
disclosed to the receiving party.
(c) When one party no longer desires to use the Confidential
Information of another party, it shall return to the other party any such
Confidential Information and shall destroy all copies of such Confidential
Information with the exception of one copy which may be retained exclusively for
the purpose of documenting the disclosures made hereunder.
(d) The receiving party will restrict access to any Confidential
Information made available or disclosed by the disclosing party to the receiving
party hereunder only to those employees of the receiving party with a need to
know such information in performance of their jobs with the receiving party.
7.2 SUPPLIER's Trademark. All of the Products and Pre-Commercial Units
--------------------
sold by DISTRIBUTOR shall bear one or more of SUPPLIER's trademarks, copies of
which are set forth on Schedule F, attached hereto. Such trademarks shall be
----------
affixed to the Products and Pre-Commercial Units by SUPPLIER, in a manner to be
mutually determined, with the understanding that SUPPLIER's trademarks will be
readily visible, but less prominent than DISTRIBUTOR's trademarks. All resulting
use of SUPPLIER's trademarks shall inure solely to the benefit of SUPPLIER.
DISTRIBUTOR shall not directly or indirectly use SUPPLIER's trademarks (or part
thereof), or any mark or name confusingly similar thereto, as part of its
corporate or business name, except that (a) DISTRIBUTOR shall co-brand (i.e.,
affixing DISTRIBUTOR's Trademark (defined below), a copy of which is also set
forth on Schedule F, to a Product or Pre-Commercial Unit that also bears the
----------
trademark of SUPPLIER) each of the Products and Pre-Commercial Units with its
own trademark or otherwise identify itself as an "authorized distributor" of
SUPPLIER and (b) DISTRIBUTOR shall use SUPPLIER's trademarks relating to the
Products and Pre-Commercial Units, for display, promotional, or advertising
purposes in connection with solicitation of orders for Products and Pre-
Commercial Units from
-11-
Customers in the Territory and in any other manner approved by SUPPLIER in
writing. In addition, DISTRIBUTOR shall not register or attempt to register any
of SUPPLIER's trademarks or any mark or name closely resembling them, unless
requested to do so by SUPPLIER in writing.
SUPPLIER represents and warrants to DISTRIBUTOR that (a) SUPPLIER's
trademarks pertaining to the Products and Pre-Commercial Units are subject to
and protected by United States trademark law, applications for registration of
trademarks pertaining to the Products and Pre-Commercial Units have been filed
in the United States, and similar applications will be filed by SUPPLIER in
other countries of the Territory designated by DISTRIBUTOR; provided that in the
event that SUPPLIER does not agree to file any such application in any country
or other jurisdiction in the Territory, DISTRIBUTOR shall, in SUPPLIER's sole
discretion, (i) sell the Products or Pre-Commercial Units in such country or
other jurisdiction without SUPPLIER's trademark affixed, (ii) sell the Products
or Pre-Commercial Units in such country or other jurisdiction with a different
SUPPLIER trademark affixed (in which event, all of SUPPLIER's representations,
warranties, covenants, and indemnities herein shall apply to such substitute
trademark and the use thereof), or (iii) continue to sell the Products and Pre-
Commercial Units in such country or other jurisdiction with SUPPLIER's trademark
affixed (in which event, SUPPLIER shall indemnify DISTRIBUTOR against any and
all damages resulting from such sale in accordance with Sections 7.4 and 8.1(f);
(b) to SUPPLIER's knowledge, the trademarks set forth on Schedule F are owned by
----------
SUPPLIER; (c) to SUPPLIER's knowledge, SUPPLIER owns free and clear of any
mortgage, security interest, financing statement, royalty obligation, lien,
encumbrance, charge, option, equity or restriction, all right, title and
interest in and to the trademarks set forth on Schedule F and all patents that
----------
it owns or uses in connection with the Products and Pre-Commercial Units as of
the date hereof (except for a patent royalty obligation to the Los Alamos
National Laboratory); and (d) to SUPPLIER's knowledge, none of such trademarks
or patents infringes any existing intellectual property right of any third party
and there are no trademarks or trademark applications included in such
intellectual property rights which are invalid or unenforceable.
7.3 Intellectual Property. Each party's patents, trademarks, trade names,
---------------------
inventions, copyrights, know-how, trade secrets, licensed rights or other
intellectual property rights ("Intellectual Property") now in existence or
-
hereafter lawfully acquired or developed by such party shall not be deemed to be
transferred to any other party by virtue of this Agreement. DISTRIBUTOR shall
not have the right pursuant to this Agreement to manufacture, duplicate, or
otherwise copy or reproduce any of the Products, Pre-Commercial Units, or any
parts thereof. The use by either party of any Intellectual Property of the
other party is authorized only for the purposes herein set forth; and upon
termination of this Agreement for any reason, such authorization shall cease.
Notwithstanding the foregoing provisions of this Section 7.3, DISTRIBUTOR hereby
grants to SUPPLIER a perpetual non-exclusive, non-transferable, irrevocable,
royalty-free, fully paid up license to use Product information regarding market
size, demographics, demand, segmentation, design parameters sought by the
market, and contact information (names, addresses, telephone numbers) for
customers, resellers, service providers, code bodies, and similar information
acquired or developed by DISTRIBUTOR under this Agreement.
7.4 DISTRIBUTOR's Trademark. At the election of DISTRIBUTOR, SUPPLIER
-----------------------
shall (a) identify DISTRIBUTOR as an "authorized distributor" of SUPPLIER, (b)
affix to the Products and Pre-Commercial Units the General Electric Company
trademark licensed to DISTRIBUTOR ("DISTRIBUTOR's Trademark") as directed by
DISTRIBUTOR for the purpose of co-branding Products and Pre-Commercial Units
sold by DISTRIBUTOR (i.e., affixing DISTRIBUTOR's Trademark to a Product or Pre-
Commercial Unit that also bears the trademark of SUPPLIER), and (c) permit
DISTRIBUTOR's marketing and selling of co-branded Products
-12-
and Pre-Commercial Units. In the event that DISTRIBUTOR elects not to have
SUPPLIER affix DISTRIBUTOR's Trademark to the Products and Pre-Commercial Units,
DISTRIBUTOR will affix DISTRIBUTOR's Trademark to the Products and Pre-
Commercial Units. DISTRIBUTOR shall use DISTRIBUTOR's Trademarks for display,
promotional, or advertising purposes in connection with solicitation of orders
for Products and Pre-Commercial Units from Customers in the Territory. The only
Products and Pre-Commercial Units that may bear DISTRIBUTOR's Trademark are
those that are sold by DISTRIBUTOR. SUPPLIER acknowledges that it is not
authorized to use DISTRIBUTOR's Trademark for any purpose unless expressly
permitted in writing to do so by DISTRIBUTOR. All resulting use of DISTRIBUTOR's
Trademark shall inure solely to the benefit of General Electric Company.
DISTRIBUTOR represents and warrants to SUPPLIER that (a) DISTRIBUTOR's
Trademark is subject to and protected by United States trademark law; (b) to
DISTRIBUTOR's knowledge, DISTRIBUTOR's Trademark is owned by General Electric
Company, and DISTRIBUTOR has a valid license to use DISTRIBUTOR's Trademark; (c)
to DISTRIBUTOR's knowledge, General Electric Company owns free and clear of any
mortgage, security interest, financing statement, royalty obligation, lien,
encumbrance, charge, option, equity or restriction, all right, title and
interest in and to DISTRIBUTOR's Trademark set forth on Schedule F; and (d) to
----------
DISTRIBUTOR's knowledge, DISTRIBUTOR's Trademark does not infringe on any
existing intellectual property right of any third party and is not invalid or
unenforceable.
7.5 Protection of Intellectual Property. In addition to any obligation
-----------------------------------
SUPPLIER may have under Article VIII hereof, SUPPLIER shall take all actions
reasonably necessary to enforce and protect its trademarks, patents, and
Intellectual Property Rights relating to the Products and Pre-Commercial Units.
Without limiting the generality of the foregoing, SUPPLIER shall defend and
indemnify DISTRIBUTOR against any suit, claim, or proceeding brought against
DISTRIBUTOR that is based on a claim that any trademark owned or used by
SUPPLIER directly in connection with any Product, Pre-Commercial Unit, or any
part thereof (except for DISTRIBUTOR's Trademark), as such trademark was affixed
to such Product, Pre-Commercial Unit, or part thereof in accordance with Section
7.2, infringes any intellectual property right of any third party in any country
or other jurisdiction in the Territory, if notified promptly in writing and
given authority, information, and assistance (at SUPPLIER's expense) for the
defense of same, and provided that such infringement did not arise as a result
of DISTRIBUTOR's unauthorized use of such trademark. SUPPLIER shall pay all
damages and costs awarded with respect to any suit, claim, or proceeding for
which SUPPLIER is required to provide indemnification pursuant to this Section
7.5. Without limiting the generality of the foregoing, SUPPLIER shall defend
and indemnify DISTRIBUTOR against any suit, claim or proceeding brought against
DISTRIBUTOR that is based on a claim that any Product or Pre-Commercial Unit, or
any part thereof, furnished under this Agreement, as well as any device or
process necessarily resulting from the use thereof, constitutes an infringement
of any patent of the United States (or any other country or other jurisdiction
in the Territory), if notified promptly in writing and given authority,
information, and assistance (at SUPPLIER's expense) for the defense of same, and
provided that such infringement did not arise as a result of (a) DISTRIBUTOR's
developments, misuse, or modifications that were not approved by SUPPLIER, or
(b) DISTRIBUTOR's combination, operation, or use with devices, data, equipment,
systems, programs, or products not furnished by SUPPLIER, contemplated by the
specifications in Schedule B, or approved by SUPPLIER, SUPPLIER shall pay all
----------
damages and costs awarded with respect to any suit, claim, or proceeding for
which SUPPLIER is required to provide indemnification pursuant to this Section
7.5. In the event a claim is made or appears likely to be made that any Product
or Pre-Commercial Unit, or any part thereof, furnished under this Agreement, as
well as any device or process necessarily resulting from the use thereof,
infringes upon a third party's patent, SUPPLIER shall, at its own expense and at
its option, and in
-13-
addition to all other rights or remedies which the DISTRIBUTOR may have pursuant
to this Agreement, (a) procure for DISTRIBUTOR the right to continue using said
Product, Pre-Commercial Unit, part, device, or process; (b) replace same with a
non-infringing equivalent; or (c) remove said Product, Pre-Commercial Unit,
part, device, or process and refund the purchase price and the transportation
and installation costs thereof.
ARTICLE VIII - INDEMNIFICATION
8.1 SUPPLIER's Indemnification of DISTRIBUTOR. SUPPLIER agrees to
-----------------------------------------
indemnify, defend and hold the DISTRIBUTOR, its officers, directors, employees,
successors, and permitted assigns harmless against all third party claims,
losses, costs, liabilities, judgments, damages, or expenses of whatever form or
nature, including attorneys' fees and other costs of legal defense, whether
direct or indirect, that they, or any of them, may sustain or incur as a result
of any acts or omissions (except for acts or omissions caused by the acts or
omissions of DISTRIBUTOR) of SUPPLIER or any of its directors, officers,
employees, Affiliates, or agents, including, but not limited to, (a) material
breach of any of the provisions of this Agreement; (b) negligence or other
tortious conduct; (c) representations or warranties made by SUPPLIER herein; (d)
violation by SUPPLIER or any of its directors, officers, employees, agents,
dealers, or subdistributors of any applicable law, regulation, or order of the
United States of America or of other countries in the Territory or other
applicable law; (e) competition by SUPPLIER or any of its Affiliates in the
Territory; (f) trademark infringement claims brought against DISTRIBUTOR
pertaining to DISTRIBUTOR's use of SUPPLIER's trademarks in accordance with
Section 7.5 hereof; or (g) patent infringement claims brought against
DISTRIBUTOR in accordance with Section 7.5 hereof.
8.2 DISTRIBUTOR's Indemnification of SUPPLIER. DISTRIBUTOR agrees to
-----------------------------------------
indemnify, defend and hold the SUPPLIER, its officers, directors, employees,
successors, and permitted assigns harmless against all third party claims,
losses, costs, liabilities, judgments, damages, or expenses of whatever form or
nature, including attorneys' fees and other costs of legal defense, whether
direct or indirect, that they, or any of them, may sustain or incur as a result
of any acts or omissions (except for acts or omissions caused by the acts or
omissions of SUPPLIER) of the DISTRIBUTOR or any of its directors, officers,
employees, Affiliates, or agents, including, but not limited to, (a) material
breach of any of the provisions of this Agreement; (b) negligence or other
tortious conduct; (c) representations or warranties made by DISTRIBUTOR herein;
(d) violation by DISTRIBUTOR or any of its directors, officers, employees or
agents, agents, dealers, or sub-distributors of any applicable law, regulation,
or order of the United States of America or of other countries in the Territory
or other applicable law; (e) competition by DISTRIBUTOR in the Territory; or (f)
trademark infringement claims brought against SUPPLIER pertaining to
DISTRIBUTOR's Trademark.
8.3 Scope of Indemnity. The parties' foregoing obligations to indemnify
------------------
each other shall include, but not be limited to, indemnification against all
expenses, including reasonable attorneys' and paralegals' fees at trial, on
appeal or otherwise, incurred in investigating and/or defending against any
claims, actions or liabilities for which indemnification is provided herein.
Each party hereto agrees to defend the other party hereto against any and all
claims, actions, and liabilities for which indemnification is provided herein,
whether such claims or actions are rightfully or wrongfully brought or filed.
Each party hereto further agrees to pay the amount of any compromise or
settlement. No indemnifying party shall be required to pay the indemnified
party any amount under this Article VIII unless and until the aggregate of such
amounts payable to such indemnified party shall reach $25,000, at which time the
indemnifying party shall become responsible for all such amounts (including the
initial $25,000); and the indemnification obligations of each party hereunder
shall
-14-
be limited to $1,000,000; provided, that this sentence shall not apply to the
indemnification obligations set forth in Section 8.1 (f) and (g) and Section 8.2
(f). The foregoing indemnification shall not in any manner limit a party's legal
remedies under applicable law against the other party for breaches of this
Agreement.
ARTICLE IX - GENERAL PROVISIONS
9.1 Disclosure. This Agreement may be discussed with, shown to, and filed
----------
with any government agency or official as determined to be appropriate by either
party, so long as the party making such disclosure, filing or discussion of this
Agreement provides the other party with ten (10) days prior written notice of
such proposed action.
9.2 Waiver. Each party agrees that the failure of the other party at any
------
time to require performance of any of the provisions herein shall not operate as
a waiver of the right of the other party to request strict performance of the
same or like provisions, or any other provisions hereof, at a later time.
9.3 Expenses. Except as otherwise provided herein, each party hereto shall
--------
bear its own costs and expenses associated with the negotiation, preparation,
delivery and performance of this Agreement.
9.4 Notices and Consents. All notices or consents hereunder shall be in
--------------------
the English language and shall be in writing and shall be deemed given (a) when
delivered personally, (b) five (5) days after deposit, postage prepaid, if
mailed by registered or certified mail, return receipt requested, or (c) upon
transmission if transmitted by telex or facsimile (with an electronic
confirmation thereof to the transmitter), to the parties at their respective
addresses set forth in the preamble of this Agreement (or at such other address
for a party as shall be specified by notice given hereunder):
If to SUPPLIER: PLUG POWER, L.L.C.
968 Albany-Shaker Road
Latham, New York 12110
Attn: Mr. Gary Mittleman
If to DISTRIBUTOR: GE FUEL CELL SYSTEMS, L.L.C.
1 River Road
Schenectady, New York 12345
Attn: Mr. Barry Glickman
9.5 Severability of Provisions. Wherever possible, each provision of this
--------------------------
Agreement shall be interpreted in such manner as to be effective and valid, but
if any provision of this Agreement shall be prohibited by applicable law,
unenforceable in any jurisdiction or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition,
unenforceability, or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, or affecting the
validity or enforceability of such provision in any other jurisdiction.
9.6 Survival. Sections 4.3, 6.6 and 6.8 and Articles VII, VIII and IX of
--------
this Agreement shall continue and survive the termination hereof.
-15-
9.7 Language. The English language text, and American usage thereof, shall
--------
govern and control the interpretation of this Agreement and all writings between
the parties.
9.8 Entire Agreement; Amendment. This Agreement (including the exhibits
---------------------------
hereto and all documents and papers delivered pursuant hereto and any written
amendments hereof executed by the parties to this Agreement, as specified
herein) constitutes the entire agreement and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof, it being understood and agreed that any business plan
that may hereafter be compiled or delivered shall be for informational purposes
only and shall not constitute any representation, warranty or covenant of
DISTRIBUTOR or SUPPLIER and shall not be deemed to be a part of this Agreement.
No course of prior dealings between the parties and no usage of trade shall be
relevant or admissible to supplement, explain or vary any of the terms of this
Agreement. This Agreement may be amended only by written agreement executed by
all of the parties hereto. Time is of the essence of this Agreement and each of
its provisions, and no extension of any time period shall be binding upon any of
the parties hereto unless expressly provided herein or in writing and signed by
all of the parties hereto.
9.9 Governing Law. The validity, construction, interpretation and
-------------
performance of this Agreement and all transactions under it shall be governed by
the laws of the State of New York exclusively (except that if any choice of law
provision under New York law would result in the application of the law of a
state or jurisdiction other than New York, such provision shall not apply). The
parties hereto expressly agree and acknowledge that the United Nations
Convention for the International Sale of Goods shall not apply to this
Agreement.
9.10 Miscellaneous. This Agreement may be executed in any number of
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties hereto shall
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements or other instruments as the other
party or its counsel may reasonably request from time to time for purposes of
carrying out the transactions contemplated by this Agreement. The article and
section headings contained herein are for reference only and shall not be
considered as substantive parts of this Agreement. The use of the singular or
plural form shall include the other form and the use of the masculine, feminine
or neutered gender shall include the other gender. The words "hereof,"
"herein," and "hereunder" and words of similar import when used in this
Agreement, shall refer to this Agreement as a whole, including all exhibits
hereto, and not to any particular provision of this Agreement unless otherwise
specified; all references herein to paragraphs, sections, schedules or exhibits
shall refer to paragraphs or sections of this Agreement, or schedules or
exhibits to this Agreement. The parties hereto acknowledge and agree that the
recitals immediately following the preamble of this Agreement are true and
correct and are incorporated herein as a part of this Agreement. This Agreement
shall be binding upon the parties hereto and their successors and permitted
assigns and shall inure to the benefit of their successors and permitted
assigns.
9.12 Force Majeure. If the performance by either party of any non-monetary
-------------
obligation under this Agreement is delayed or prevented in whole or in part by
any cause not reasonably within its control (including, without limitation, acts
of God, war, civil disturbances, accidents, damage to its facilities, labor
disputes, acts of any governmental body not attributable to such party's failure
to comply with this Agreement, or failure or delay of third parties), it shall
be excused, discharged, and released of performance to the extent
-16-
such performance is so limited or prevented, without liability of any kind. Each
party shall use its reasonable efforts to minimize the duration and consequences
of any failure of or delay in performance resulting from a "Force Majeure"
event.
9.13 Limitation of Liability. In no case will SUPPLIER or DISTRIBUTOR 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 arising out of the manufacture, marketing,
distribution, sale, or supplying of the Products, Pre-Commercial Units, or
Services.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SUPPLIER:
PLUG POWER, L.L.C.
By:/s/ Gary Mittleman
------------------------------------------
Gary Mittleman, President & CEO
DISTRIBUTOR:
GE FUEL CELL SYSTEMS, L.L.C.
By: /s/ Barry Glickman
------------------------------------------
Barry Glickman, President
-17-
TABLE OF SCHEDULES
------------------
Schedule A-1 - Products
- ------------
Schedule A-2 - Services
- ------------
Schedule B - Terms and Conditions of Purchase/Sale; Specifications
- ----------
Schedule C - Product and Pre-Commercial Unit Prices
- ----------
Schedule D - DISTRIBUTOR's Sales Commitments
- ----------
Schedule E - SUPPLIER's Insurance
- ----------
Schedule F - Trademark Registrations
- ----------
-1-
SCHEDULE A-1
------------
DEFINITION OF PRODUCTS
The term "Products" shall include the following items manufactured by or on
behalf of SUPPLIER: Proton Exchange Membrane ("PEM") Fuel-Cell Powered Generator
Sets, without changes or additions (other than standard installation materials -
e.g., ducting, pipe, wire), and components (e.g., fuel processor, fuel cell
stack, power electronics), replacement parts, upgrades, accessories (e.g.,
combined power and hot water packages), and improvements, of various sizes no
larger than 35kW of maximum continuous output that (a) meet the Commercial Unit
Specifications set forth in Schedule B, and (b) are designed for use in
residential, commercial, and industrial stationary power applications (e.g.,
base load power, peaking power, emergency back-up power, enhanced power quality,
cogeneration, trailer-mounted units for temporary stationary power and/or rental
power use).
The term "Products" excludes the following, regardless of their
manufacturer:
1. PEM Fuel Cell-Powered Generator Sets and/or components designed for use in
transportation or vehicle applications;
2. PEM Fuel Cell-Powered Generator Sets and/or components designed for use in
extended run, uninterruptible power supply ("UPS") systems for data centers
applications, where the PEM Fuel Cell-Powered Generator Set (a) produces DC
or AC premium (i.e., superior power quality to the grid) power for data
center supporting information technology ("IT") equipment, (b) does not
provide power to the entire facility, (c) is installed at a sub-panel
downstream from the customer's main distribution panel, (d) is designed to
enable remote IT equipment shutdown and power cycling for IT equipment that
is no longer responding to commands, and (e) is designed to promote
reliability over efficiency;
3. PEM Fuel Cell-Powered Generator Sets and/or components for rack-mounted
equipment in telecommunications, cellular, or cable television applications;
and
4. PEM Fuel Cell-Powered Generator Sets and/or components that are integrated
with another device that utilizes all of the electrical output of the Fuel
Cell-Powered Generator Set for that specific device only (e.g., an air
conditioner powered by a Fuel Cell-Powered Generator Set, but not a combined
Fuel Cell-Powered Generator Set-chiller cogen unit).
-2-
SCHEDULE A-2
------------
SERVICES
--------
The term "Services" shall include the following activities associated with
the Products and Pre-Commercial Units:
Installation
Permitting
Application Engineering
Operation
Routine Maintenance
Unscheduled Maintenance
Repair
Overhaul (e.g., stack replacement)
Upgrade
Remote monitoring, diagnostics, and/or control (i.e., dispatch)
Operator and Customer Training
Customer Service
Customer Support
-3-
SCHEDULE B
----------
TERMS AND CONDITIONS OF PURCHASE/SALE
1. ACCEPTANCE OF TERMS AND CONDITIONS. (a) DISTRIBUTOR and SUPPLIER agree to
be bound by and to comply with all the terms and conditions in and referred to
in this Schedule B, as well as those appearing elsewhere in the Agreement (to
----------
which the section references contained herein apply), in any supplements hereto
and in all specifications and other documents referred to herein. (b) An order
by DISTRIBUTOR or the acceptance of an order by SUPPLIER does not constitute an
acceptance by the DISTRIBUTOR or SUPPLIER of any offer to sell, any quotation,
or any proposal, other than under the terms and conditions contained in this
Agreement. ANY PURCHASE ORDER, ATTEMPTED ACKNOWLEDGMENT OF AN ORDER, OR ANY
DOCUMENT CONNECTED THEREWITH, CONTAINING TERMS AND CONDITIONS INCONSISTENT WITH
OR IN ADDITION TO THE TERMS AND CONDITIONS IN THIS SCHEDULE B IS NOT BINDING
----------
UPON DISTRIBUTOR OR SUPPLIER UNLESS SPECIFICALLY ACCEPTED BY DISTRIBUTOR AND
SUPPLIER IN WRITING.
2. PRICES AND PAYMENTS. SUPPLIER's prices are firm, are as specified in
Schedule C and shall not be subject to change, except as provided in this
- ----------
Agreement and Schedule C. SUPPLIER's total price is FOB SUPPLIER's designated,
----------
continental U.S. manufacturing facility, unless otherwise agreed in writing by
SUPPLIER and DISTRIBUTOR. All prices are exclusive of any applicable federal,
state, or local sales, use, excise, or other similar taxes, provided, however,
that any such taxes to which SUPPLIER becomes subject as a result of
manufacturing, having manufactured, or procuring Products or Pre-Commercial
Units, shall be borne by SUPPLIER. No extra charges of any kind will be allowed
unless specifically agreed to in writing by DISTRIBUTOR. Unless otherwise agreed
between SUPPLIER and DISTRIBUTOR, payments shall become due 45 days from receipt
of invoice. In the event of delay in payment, DISTRIBUTOR will pay SUPPLIER a
late fee equal to the lesser of 1.5%, or the maximum rate allowable by law, of
any unpaid balance per month of delay or the maximum rate allowable by law.
DISTRIBUTOR must make payment when due, without offset, deduction, or
counterclaim, regardless of any claim by DISTRIBUTOR.
3. DELIVERY AND PASSAGE OF TITLE. Time is of the essence of all purchase
orders, except that delivery dates will be framed in terms of calendar months
and orders will not be deemed late until after the end of such calendar month.
If SUPPLIER fails to deliver the Products or Pre-Commercial Units or to complete
any Services furnished hereunder, then DISTRIBUTOR shall be entitled, in
addition to the remedies available elsewhere under the Agreement, to assess an
amount, as liquidated damages for delay, equal to 1% of the total dollar value
of DISTRIBUTOR's order for the first month of delay and 2% of the total dollar
value of DISTRIBUTOR's order per subsequent month of delay; provided, (a) that
such remedy will be capped at 6%, (b) if the order is more than three months
late, then DISTRIBUTOR may cancel the order, and (c) such liquidated damages
will only be available to DISTRIBUTOR for those orders to the extent that
DISTRIBUTOR has provided such remedy to its Customer. SUPPLIER agrees that such
amounts are a reasonable pre-estimate of the damages which DISTRIBUTOR may
suffer as a result of such delay, and are to be assessed as liquidated damages
and not as a penalty. Where such liquidated damages are available to
DISTRIBUTOR, they shall be DISTRIBUTOR's only remedy for SUPPLIER's failure to
make timely delivery, other than the remedies for non-performance expressly set
forth in this Agreement.
Products or Pre-Commercial Units which will be shipped from within the United
States for delivery within the United States shall be delivered FOB SUPPLIER's
designated, continental U.S. manufacturing facility, unless otherwise agreed in
writing by SUPPLIER and DISTRIBUTOR. Products or Pre-Commercial Units delivered
to DISTRIBUTOR in advance of schedule may be returned to SUPPLIER at SUPPLIER's
expense. Title shall pass to DISTRIBUTOR upon delivery to DISTRIBUTOR FOB
SUPPLIER's designated, continental U.S. manufacturing facility.
4. CHANGES. The DISTRIBUTOR may at any time, in writing, request changes
within the general scope of a purchase order in (a) specifications, where the
Products or Pre-Commercial Units to be furnished are to be specifically
manufactured in accordance therewith, (b) method of shipment or packing, or (c)
place and time of delivery. Any such change shall be authorized only by an
amendment executed by SUPPLIER and DISTRIBUTOR, with such amendment to specify
any additional expense, to be borne by DISTRIBUTOR.
5. INSPECTION. (a) All Products and Pre-Commercial Units shall be subject to
inspection and test by DISTRIBUTOR at reasonable times and places upon
reasonable notice, including the place of manufacture (which SUPPLIER shall use
reasonable efforts to arrange, including providing for such access in SUPPLIER's
purchase orders to the manufacturer); (b) If any inspection or test is made on
the premises of SUPPLIER, then SUPPLIER, without additional charge, shall
provide reasonable facilities and assistance for the safety and convenience of
the inspectors in the performance of their duties, provided that the inspectors
must execute SUPPLIER's standard confidentiality agreement, must abide by such
facility's rules and regulations, and must be covered by insurance for
occurrences other than due to SUPPLIER's negligence or willful misconduct; and
(c) SUPPLIER shall provide and maintain a program, to the mutual satisfaction of
SUPPLIER and DISTRIBUTOR, in order to create ongoing product design,
manufacturing, testing, inspection, and other safety and quality-related
processes that are adequate to assure the safety and reliability of SUPPLIER's
Products and Pre-Commercial Units (the "Product Quality and Safety Assurance
Program"). Records of all inspection work by SUPPLIER shall be kept complete and
available to DISTRIBUTOR during the performance of a purchase order and for
three (3) years from the date of such inspection. SUPPLIER will allow
representatives of DISTRIBUTOR access to the facilities involved in performing
an order for purposes of reviewing the status and progress of production.
6. REJECTION. If any of the Products, Pre-Commercial Units or Services (to the
extent that SUPPLIER is providing Services) ordered are found by DISTRIBUTOR
within 30 days of delivery to be defective, or otherwise not in conformity with
the requirements of the order, including any applicable specifications,
SUPPLIER, at its option and sole discretion may: (a) instruct DISTRIBUTOR to
return such goods at SUPPLIER's expense; (b) request that DISTRIBUTOR, with
DISTRIBUTOR's written approval, take such actions as may be required to cure all
defects and/or bring the Products or Pre-Commercial Units into conformity with
all requirements, in which event any reasonable costs and expenses thereby
incurred by DISTRIBUTOR, including material and handling charges, will be at
SUPPLIER's expense; and (c) re-perform, at SUPPLIER's own expense, any defective
portion of the Services performed, to the extent that SUPPLIER is performing
Services. DISTRIBUTOR must notify SUPPLIER in writing of such defect or
non-conformity within 30 days after delivery of the Products or Pre-Commercial
Units or performance of Services, if applicable, or DISTRIBUTOR's rights under
this Section 6 shall be waived. The remedies in this Section 6 shall be
DISTRIBUTOR's exclusive remedies under this Section 6.
7. WARRANTIES. (a) SUPPLIER will convey clear title to all Products and
Pre-Commercial Units to DISTRIBUTOR as provided hereunder; (b) SUPPLIER warrants
and represents that all Products, Pre-Commercial Units and Services (to the
extent that SUPPLIER provides Services) sold hereunder or pursuant hereto will
be free from all material defects in workmanship and material, and that the
Products, Pre-Commercial Units and Services (to the extent that SUPPLIER
provides Services) are provided in strict accordance with the specifications set
forth in Schedule B, and (c) Except as provided by this Agreement, any attempt
----------
by SUPPLIER to limit, disclaim, or restrict any such warranties or any remedies
of DISTRIBUTOR, except as limited by this Agreement, by acknowledgment or
otherwise, in accepting or performing an order, shall be null, void and
ineffective without DISTRIBUTOR's written consent. For Products purchased under
this Agreement, the foregoing warranties shall apply for a period of the lesser
of twelve (12) months from the date of installation or eighteen (18) months from
delivery to DISTRIBUTOR. For Pre-Commercial Units purchased under this
Agreement, the foregoing warranties shall apply for a period of the lesser of
one (1) month from the date of installation or two (2) months from delivery to
DISTRIBUTOR. For any product or component purchased by SUPPLIER with a warranty
coverage available to DISTRIBUTOR for the relevant components. The foregoing
warranties are conditioned upon (a) proper storage, handling, transportation,
installation, use, repair, and maintenance, and conformance with any reasonable
recommendations of SUPPLIER, and (b) DISTRIBUTOR's promptly notifying SUPPLIER
of any defects and, if required, promptly making the Product or Pre-Commercial
Unit available for correction. The foregoing warranties are provided at no cost
to DISTRIBUTOR or Customers.
If any Product or Pre-Commercial Unit fails to meet the foregoing warranties
during the warranty periods set forth above, SUPPLIER shall thereupon correct
any such failure by either (with such choice to be solely SUPPLIER's) (a)
repairing the defective Product or Pre-Commercial Unit, or (b) replacing the
defective Product or Pre-Commercial Unit. All costs associated with such repair
or replacement, including any transportation costs, shall be the sole
responsibility of SUPPLIER, subject to the limitations set forth in the Service
Agreement described in the next paragraph.
DISTRIBUTOR will provide the labor, transportation, and other Services necessary
for such repairs and replacements pursuant to a Service Agreement that will be
mutually agreed between SUPPLIER and DISTRIBUTOR. If such Service Agreement is
not agreed to by June 1, 2000, then this Distributor Agreement will terminate.
The Service Agreement will set forth limits on SUPPLIER's reimbursement to
DISTRIBUTOR for labor, transportation, and other Services. The Service Agreement
will also set forth a warranty approval process that will include pre-approval
of major warranty claims prior to commencement of work, submission of all
warranty claims for review and approval by SUPPLIER, and return of all parts
subject to warranty claims to SUPPLIER.
For Products, SUPPLIER will provide DISTRIBUTOR with the option of purchasing an
extension to the initial warranty period. Such additional warranty period will
be for three years beyond the termination of the initial warranty period, and
will cover the fuel cell stack, control system, power conditioning system
(excluding batteries and recharger), and fuel processor (i.e., the extended
warranty covers all components except for the air humidifier assembly,
humidifier pump, system frame assembly, package skin assembly, manifold
assemblies, electrical harness assemblies, coolant pump and fan, cooling system
heat exchanger, fuel cell air blower, particulate air filter, air regulator,
water deionizing and purification system, batteries, recharger, and fuel
processing auxiliaries). The price for such warranty extension, if purchased,
will not exceed $750, to be paid as a lump sum at the time of Product purchase,
for Products purchased in "2001", as defined in Schedule D, and $500 for
----------
Products purchased thereafter. The extended warranty price for "2001" is
not firm and will become firm no later than April 1, 2000. In the event that the
extended warranty price for "2001" exceeds $750, then SUPPLIER and DISTRIBUTOR
shall agree to a decrease to DISTRIBUTOR's Sales Commitments. If SUPPLIER and
DISTRIBUTOR cannot reach such agreement, then this Agreement shall terminate.
For Pre-Commercial Units, SUPPLIER will provide DISTRIBUTOR with the option of
purchasing an extension to the initial warranty period. Such additional warranty
period will be for one year beyond the termination of the initial warranty
period, and SUPPLIER will provide a firm price no later than October 1, 1999.
THE WARRANTIES SET FORTH IN THIS SECTION 7 ARE IN LIEU OF ALL OTHER WARRANTIES,
WHETHER ORAL, WRITTEN, EXPRESS, OR IMPLIED, INCLUDING WITHOUT LIMITATION IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. SUPPLIER'S
WARRANTY OBLIGATIONS AND DISTRIBUTOR'S REMEDIES UNDER THIS SECTION 7 (EXCEPT AS
TO TITLE) ARE SOLELY AND EXCLUSIVELY AS STATED HEREIN.
8. PROPER BUSINESS PRACTICES. SUPPLIER and DISTRIBUTOR shall comply with all
laws dealing with improper or illegal payments, gifts or gratuities, and
SUPPLIER and DISTRIBUTOR agree not to pay, promise to pay or authorize the
payment of any money or anything of value, directly or indirectly to any person
for the purpose of illegally or improperly inducing a decision or obtaining or
retaining business in connection with a purchase order.
9. COMPLIANCE WITH LAWS. SUPPLIER and DISTRIBUTOR agree to comply with the
applicable provisions of any federal, state, provincial or local law or
ordinance and all lawful orders, rules, and regulations issued thereunder. No
forced or prison labor may be used in manufacturing the products to be supplied
under this Agreement. If forced or prison labor is determined to have been used
in the manufacture of the Products or Pre-Commercial Units supplied hereunder,
the DISTRIBUTOR shall have the right to immediately terminate the purchase order
and this Agreement without further compensation to the SUPPLIER; and, in such
case, DISTRIBUTOR shall return to SUPPLIER any Products or Pre-Commercial Units
for which it has not yet made payment.
Provisions applicable to orders for work to be performed, goods to be produced,
or services to be rendered within the United States. (a) SUPPLIER shall comply
with any provisions, representations or agreements or contractual clauses
required thereby to be included or incorporated by reference or operation of law
in the contract resulting from acceptance of this order and dealing with: (i)
Equal Opportunity (Executive Order 11246 as amended by Executive Orders 113575
and 10286 and applicable regulations promulgated pursuant thereto); (ii)
Employment of Veterans (Executive Order 11701 and applicable regulations
promulgated pursuant thereto); (iii) Employment of the Handicapped (Executive
Order 11758 as amended by Executive Order 11867 and applicable regulations
promulgated pursuant thereto); (iv) Employment Discrimination Because of Age
(Executive Order 11141 and applicable regulations promulgated pursuant thereto);
and (v) Utilization of Disadvantaged and Business Enterprises (Executive Order
11625, Public Law 95-507 and applicable regulations promulgated pursuant
thereto). (b) SUPPLIER certifies that with respect to orders which exceed
$10,000 it is in compliance with the requirements for non-segregated facilities
set forth in 41 CFR Chapter 60-1.8. (c) SUPPLIER warrants that each chemical
substance constituting or contained in goods sold or otherwise transferred to
DISTRIBUTOR hereunder is on the list of chemical substances compiled and
published by the Administrator of the Environmental Protection Administration
pursuant to the Toxic Substances Control Act (P.L. 92-573 as amended, and the
Federal Hazardous Substances Act (P.L. 92-516) as amended and lawful standards
and regulations thereunder. (d) In accepting an order SUPPLIER represents that
the goods to be furnished thereunder were or will be produced in compliance with
the requirements of the Fair Labor Standards Act of 1938, as amended, including
Section 12(a) and SUPPLIER shall insert a certificate to that effect on all
invoices submitted in connection with such order.
10. PACKING, PRESERVATION AND MARKING. Packing, preservation and marking
requirements will be in accordance with the specification drawing or as
otherwise agreed by SUPPLIER and DISTRIBUTOR. If none are specified, SUPPLIER
shall use the commercially accepted practice.
11. YEAR 2000 COMPLIANCE WITH DATE PROCESSING REQUIREMENTS. In addition to any
other warranties and representations provided by SUPPLIER to DISTRIBUTOR,
whether pursuant to this Schedule B, by law, equity, or otherwise, SUPPLIER
----------
represents, warrants and covenants that (a) any Product(s), Pre-Commercial
Unit(s) and/or Service(s) provided by SUPPLIER hereunder, including, without
limitation, each item of hardware, software, or firmware; any system, equipment,
or products consisting of or containing one or more thereof; and any and all
enhancements, upgrades, customizations, modifications, maintenance and the like,
performed approved, or contained in official documentation provided by SUPPLIER
("Products/Services") shall be Year 2000 Compliant at the time of delivery and
at all times thereafter and in all subsequent updates or revisions of any kind,
and (b) SUPPLIER's supply of the Products/Services to DISTRIBUTOR shall not be
interrupted, delayed, decreased, or otherwise materially affected by dates prior
to, on, after or spanning January 1, 2000. For purposes of this purchase order,
the term "Year 2000 Compliant" means that (1) the Products/Services accurately
process, provide and/or receive date data, within, from, into, and between
centuries (including without limitation, the twentieth and twenty-first
centuries, the last year of a century (e.g., 1999) and the first year of the
next century (e.g., 2000)), and leap year calculations, and (2) neither the
performance nor the functionality nor SUPPLIER's supply to DISTRIBUTOR of the
Products/Services will be materially affected by dates prior to, on, after, or
spanning January 1, 2000. Moreover, SUPPLIER covenants and agrees that the
design of said Products/Services to ensure compliance with the foregoing
warranties, representations and covenants shall include, without limitation,
date data century recognition, and date data interface values that reflect the
century. In particular, but without limitation, (i) no value for current date
will cause any error, interruption, or decreased performance in the operation of
such Products/Services, (ii) all manipulations of date-related data (including,
but not limited to, calculating, comparing, sequencing, processing, and
outputting) will produce correct results for all valid dates, (iii) date
elements in interfaces and data storage will specify the correct century to
eliminate date ambiguity without human intervention, including leap year
calculations, (iv) where any date element is represented without a century, the
correct century will be unambiguous for all manipulations involving that
element, (v) authorization codes, passwords, and zaps (purge functions) should
function normally and in the same manner prior to, on, after and spanning
January 1, 2000, including, without limitation, the manner in which they
function with respect to expiration dates and CPU serial numbers. No obligation
of SUPPLIER under a purchase order pursuant to this Agreement shall be excused
by reason of the failure of SUPPLIER's or any other person's products or
services to be Year 2000 Compliant, nor shall such occurrence(s) be deemed a
force majeure event. As used herein or in a purchase order, the words "date" and
"dates" shall be deemed to include "time".
In the event of breach of this warranty, in addition to any other remedies
DISTRIBUTOR may have, whether pursuant to this Schedule B, by law, equity or
----------
otherwise, DISTRIBUTOR shall, at SUPPLIER's option, be entitled to repair or
replacement of any non-compliant Products/Services, at SUPPLIER's cost, within
thirty (30) days after notice of breach from DISTRIBUTOR to SUPPLIER. In
addition to SUPPLIER'S obligations as set forth above, SUPPLIER shall indemnify
and hold DISTRIBUTOR harmless from and against any claims, costs, losses,
damages, or expenses (including reasonable attorneys' fees) incurred by
DISTRIBUTOR as a result of any failure of any Products/Services to be Year 2000
Compliant. Notwithstanding anything herein to the contrary, the liability of
SUPPLIER for a breach of SUPPLIER's Year 2000 Compliant representation, warranty
and agreement set forth herein shall not be subject to any limitations or
exclusions of remedies or warranties, if any, contained in a purchase order or
any other agreement between the parties.
Notwithstanding anything in a purchase order or in this Agreement to the
contrary, the period of the representations, warranties and covenants set forth
in this section shall extend at least until January 31, 2001. Any statute of
limitations that might be applicable to SUPPLIER's Year 2000 Compliant warranty
and representation shall not accrue or begin to run until the later of January
31, 2001, or the time when such statute of limitations would otherwise accrue or
begin to run, and, with respect to any claim based on any failure of the
Products/Services to be Year 2000 Compliant, SUPPLIER shall not assert any
defense based on or alleging the passage of time from the effective date of a
purchase order to January 31, 2001.
12. LIMITATION OF LIABILITY. In no case will SUPPLIER or DISTRIBUTOR be liable
for the other's special, incidental, or consequential damages, including, but
not limited to, personal injury, property damage, loss of profit or revenues, or
business interruption arising out of the manufacture, marketing, distribution,
sale, or supplying of the Products, Pre-Commercial Units, or Services.
The remedies available to DISTRIBUTOR hereunder may be asserted only by
DISTRIBUTOR and by no other party. DISTRIBUTOR may not expand warranty coverage
to Customers beyond the coverage specifically described herein, except as agreed
in writing by SUPPLIER.
SCHEDULE B (continued)
----------------------
Pre-Commercial Unit
Performance Specifications
Note: SUPPLIER and DISTRIBUTOR recognize that these specifications may change
- -------------------------------------------------------------------------------
based on further analysis of residential load profiles and field testing. If
- -----------------------------------------------------------------------------
SUPPLIER and DISTRIBUTOR mutually agree to change the specifications set forth
- ------------------------------------------------------------------------------
below, SUPPLIER and DISTRIBUTOR agree to adjust the prices and purchase volumes
- -------------------------------------------------------------------------------
set forth in Schedule C.
- ------------------------
Testing protocol and acceptance criteria:
- -----------------------------------------
On or before October 1, 1999, DISTRIBUTOR and SUPPLIER will agree on the
specific testing protocol and acceptance criteria for all Pre-Commercial Units
("PCUs") purchased by DISTRIBUTOR. The protocol and acceptance criteria will (a)
incorporate the field test results from the "Test and Evaluation Units" ("TEUs")
that SUPPLIER expects to have available beginning the second quarter of 1999;
and (b) address all aspects of PCU system and component performance that are
expected to impact regulatory approvals and end-user economics, including, but
not limited to, useful life, output, reliability, efficiency, operating
environment requirements, power quality, load following capability, and
emissions. In the event that DISTRIBUTOR and SUPPLIER are unable to agree on the
testing protocol and/or acceptance criteria this Agreement will terminate.
Packaging:
- ----------
PCU product design will be complete to the point where interfaces between
major components (e.g., stack, reformer, inverter, etc.) will be similar to that
of the final Product. The overall PCU package size and weight must be suitable
for installation outside of a typical single family residence (and, where
practicable, inside a typical single family residence).
Certifications:
- ---------------
Certifications (e.g., UL, NFPA, AGA, FCC Class B) are not required for the
PCUs. However, PCUs must meet any customary local codes and regulations required
for field testing by DISTRIBUTOR's Customers. To the extent the test site
requires preparation to meet local codes, any site improvements will be at the
Customer's expense.
Technology:
- -----------
Basic technology of all major PCU components must be the same as that of
the Product; however, suppliers and manufacturers of the major components need
not be the same as those for the Product.
Interconnection:
- ----------------
PCUs will be capable of interconnection to the electrical system of a
typical single family residence; provided however that the PCU will operate
isolated from the grid with the use of a transfer switch ("stand-alone
operation"). The transfer switch will, in the event that the PCU fails or is
interrupted, transfer the household load from the PCU back to the utility grid
within no more than one-tenth of a second.
Installation:
- -------------
PCUs must be in compliance with any applicable NEC installation
requirements.
Documentation:
- --------------
PCUs must be shipped with sufficient documentation (e.g., installation
drawings, operating manuals, repair guides) to allow for start-up and Service by
individuals with a skill level comparable to a typical HVAC technician, after
such individual has completed the SUPPLIER training program or a training
program approved by SUPPLIER.
PCUs must be provided in strict accordance with samples, drawings, and/or
designs provided by SUPPLIER and approved in writing by SUPPLIER and
DISTRIBUTOR.
Technical Support:
- ------------------
SUPPLIER will make available by telephone to DISTRIBUTOR and its Customers
PCU technical support during SUPPLIER's normal business hours. SUPPLIER will
also establish a 24-hour telephone number to accommodate emergency calls from
DISTRIBUTOR and its Customers.
Shipping:
- ---------
SUPPLIER will prepare all PCUs to allow for standard commercial shipment
(e.g., truck, rail, cargo ship) to Customer locations.
Monitoring & Diagnostics:
- -------------------------
PCUs will be designed to accommodate remote monitoring and diagnostics
("RM&D") equipment (e.g., modems, data collection/storage). RM&D equipment will
be provided, installed, and operated at DISTRIBUTOR's or its Customers' expense.
At a minimum, the PCU control system will allow the RM&D equipment to monitor
the following parameters:
Current System Status
Output Power
Voltage
Current
Others - TBD*
Assumptions:
- -------------
Plug Power assumed the following in developing the specifications set forth
below:
(a) Natural gas line pressure at [***] or greater; and
(b) Average system usage of [***].
- ----------------------------------------------------------------------------------------------
Specification PCU
- ----------------------------------------------------------------------------------------------
kW output rating 7kW continuous, [***] operating design point, [***]
for [***]
- ----------------------------------------------------------------------------------------------
Voltage/frequency [***]
- ----------------------------------------------------------------------------------------------
Operating design point efficiency (i.e., [***]
efficiency at 2kw output)
- ----------------------------------------------------------------------------------------------
Continuous capacity output efficiency [***]
(i.e., efficiency at 7kW output)
- ----------------------------------------------------------------------------------------------
Phase [***]
- ----------------------------------------------------------------------------------------------
Fuel capability ([***] by [***]
SUPPLIER will be fueled by [***]
will be fueled by [***] unless notified by
DISTRIBUTOR in writing 12 months prior
to PCU delivery)
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Specification PCU
- ----------------------------------------------------------------------------------------------
Allowable fuel contaminants Must be able to operate on [***].
For NG:
Sulfur ___ TBD*
Alkalis ___ TBD*
Water ___ TBD*
Nitrogen ___ TBD*
Non-Methane Hydrocarbons ____ TBD*
Methane ___ TBD*
For LPG: _______ TBD*
For Methanol: _______ TBD*
- ----------------------------------------------------------------------------------------------
System make up water requirements Must be able to operate on [***].
Iron (PPM maximum) ___ TBD*
Calcium (PPM maximum) ___ TBD*
Chlorine (PPM maximum) ____ TBD*
Particulate (PPM maximum) ___ TBD*
Other ______ (PPM maximum) ____ TBD*
- ----------------------------------------------------------------------------------------------
Noise ____ dBa (TBD*) [***]
____ dBa (TBD*) [***]
- ----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Specification PCU
- -----------------------------------------------------------------------------------------------
Operating environment requirements Must be able to operate [***].
Humidity
maximum ____% TBD*
minimum ____% TBD*
Salt in Air
maximum ____% TBD*
minimum ____% TBD*
Particulate [***]
maximum ____% TBD*
minimum ____% TBD*
Other Cathode contaminant(s) [***]
maximum ____% TBD*
minimum ____% TBD*
- -----------------------------------------------------------------------------------------------
Emissions - TBD*
_ NOx (NG) ____/____ (maximum/target)
_ CO (NG) ____/____ (maximum/target)
_ NOx (LPG) ____/____ (maximum/target)
_ CO (LPG) ____/____ (maximum/target)
_ NOx (Methanol) ____/____ (maximum/target)
_ CO (Methanol) ____/____ (maximum/target)
- -----------------------------------------------------------------------------------------------
Ambient temperature range [***]
- -----------------------------------------------------------------------------------------------
Altitude [***]
- -----------------------------------------------------------------------------------------------
Power conditioning system [***]
- ----------------------------------------------------------------------------------------------
Overload [***] [***]
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Specification PCU
- ----------------------------------------------------------------------------------------------
Harmonics Harmonics at 7 kW continuous operation to
satisfy [***], for harmonic voltages.
Harmonics at [***] will be subject to [***].
- ----------------------------------------------------------------------------------------------
Power quality (isolated)
- ----------------------------------------------------------------------------------------------
Voltage, steady state (up to [***] kW Reference [***]
continuous)
- ----------------------------------------------------------------------------------------------
Voltage, transient (up to overload [***]
rating)
- ----------------------------------------------------------------------------------------------
Control Suitable for isolated operation
- ----------------------------------------------------------------------------------------------
Communications [***] similar as needed to establish
communications links
- ----------------------------------------------------------------------------------------------
Grid connection [***]
- ----------------------------------------------------------------------------------------------
MTB stack replacement TBD*
[***]
- ----------------------------------------------------------------------------------------------
MTB system (i.e., PEM Fuel Cell-Powered TBD*
Generator Set) failure
- ----------------------------------------------------------------------------------------------
Performance degradation (e.g., TBD*
efficiency, output) (e.g., degradation of system efficiency and
output will not exceed [***] of rated values
at the end of [***] hours of operation)
- ----------------------------------------------------------------------------------------------
Non-fuel O&M ($/year up to first stack TBD*
replacement) at [***] kWh/year
- ----------------------------------------------------------------------------------------------
Product life with prescribed routine TBD*
maintenance (including stack (e.g., less than [***])
replacement) at more than [***] kWh/year
- ----------------------------------------------------------------------------------------------
* SUPPLIER and DISTRIBUTOR will mutually agree to the specific values for
these areas no later than October 1, 1999 (e.g., based on TEU lab and field
testing).
Product ("Commercial Unit")
Performance Specifications
Note: SUPPLIER and DISTRIBUTOR recognize that these specifications may change
- -------------------------------------------------------------------------------
based on further analysis of residential load profiles and field testing. If
- -----------------------------------------------------------------------------
SUPPLIER and DISTRIBUTOR mutually agree to change the specifications set forth
- ------------------------------------------------------------------------------
below, SUPPLIER and DISTRIBUTOR agree to adjust the prices set forth in Schedule
- --------------------------------------------------------------------------------
C and the purchase volumes set forth in Schedule D.
- ---------------------------------------------------
Testing protocol and acceptance criteria:
- -----------------------------------------
On or before June 1, 2000, DISTRIBUTOR and SUPPLIER will agree on the
specific testing protocol and acceptance criteria for all Products purchased by
DISTRIBUTOR. The protocol and acceptance criteria will (a) incorporate the field
test results from the PCUs; and (b) address all aspects of Product system and
component performance that are expected to impact regulatory approvals and end-
user economics, including, but not limited to, useful life, output, reliability,
efficiency, operating environment requirements, power quality, load following
capability, and emissions. In the event that DISTRIBUTOR and SUPPLIER are unable
to agree on the testing protocol and/or acceptance criteria this Agreement will
terminate.
Packaging:
- ----------
Product package size and weight must be suitable for installation indoor or
outside of a typical single family residence within the Major Markets.
Certifications:
- ---------------
Commercial units, including packaging, must be compliant with all requisite
standards (e.g., UL, NFPA, AGA, FCC Class B, CE) within the Major Markets. To
the extent the installation site requires preparation to meet local codes, any
site improvements will be at the Customer's expense.
Interconnection:
- ----------------
Products will be capable of interconnection to the electrical system of a
typical single family residence; provided however that the Product will operate
isolated from the grid with the use of a transfer switch ("stand-alone
operation"). The transfer switch will, in the event that the Product fails or is
interrupted, transfer the household load from the Product back to the utility
grid within no more than one-tenth of a second.
Should it be determined that DISTRIBUTOR's Customers require an
interconnection scheme other than stand-alone operation (e.g., grid parallel),
DISTRIBUTOR and SUPPLIER will jointly set the requirements of the new
interconnection scheme. To the extent the new interconnection scheme results in
an increase in SUPPLIER's Product cost, SUPPLIER will adjust DISTRIBUTOR's
transfer price proportionately.
In the event that SUPPLIER offers Products with a heat recovery option and
such units require an interconnection scheme other than stand-alone operation,
DISTRIBUTOR and SUPPLIER will jointly set the requirements of the new
interconnection scheme. To the extent the new interconnection scheme results in
an increase in SUPPLIER's Product cost, SUPPLIER will adjust DISTRIBUTOR's
transfer price proportionately.
Installation:
- -------------
Products must be in compliance with any applicable installation
requirements within the Major Markets.
Documentation:
- --------------
Products must be shipped with sufficient documentation (e.g., installation
drawings, operating manuals, repair guides) to allow for start-up and Service by
individuals with a skill level comparable to a typical HVAC technician, after
such individual has completed the SUPPLIER training program or a training
program approved by SUPPLIER.
Products must be shipped with documentation sufficient for an average
homeowner to perform routine maintenance.
Products must be provided in strict accordance with samples, drawings,
and/or designs provided by SUPPLIER and approved in writing by SUPPLIER and
DISTRIBUTOR.
Technical Support:
- ------------------
SUPPLIER will make available by telephone to DISTRIBUTOR and its Customers
Product technical support during SUPPLIER's normal business hours. SUPPLIER
will also establish a 24-hour telephone number to accommodate emergency calls
from DISTRIBUTOR and its Customers.
Shipping:
- ---------
SUPPLIER will prepare all Products to allow for standard commercial
shipment (e.g., truck, rail, cargo ship) to Customer locations.
Monitoring & Diagnostics:
- -------------------------
Products will be designed to accommodate remote monitoring and diagnostics
(RM&D) equipment (e.g., modems, data collection/storage). RM&D equipment will
be provided, installed, and operated at DISTRIBUTOR's or its Customers' expense.
At a minimum, the Product control system will allow the RM&D equipment to
monitor the following parameters:
Current System Status
Output Power
Voltage
Current
Others - TBD*
Assumptions:
- ------------
Plug Power assumed the following in developing the specifications set forth
below:
(a) Natural gas line pressure at [***] of water or greater; and
(b) Average system usage of [***].
- -------------------------------------------------------------------------------------------------
Specification Product
- -------------------------------------------------------------------------------------------------
kW output rating 7kW continuous, [***] operating design point, [***]
- -------------------------------------------------------------------------------------------------
Voltage/frequency [***]
- -------------------------------------------------------------------------------------------------
Operating design point efficiency (i.e., [***]
efficiency at 2kW output)
- -------------------------------------------------------------------------------------------------
Continuous capacity output efficiency [***]
(i.e., efficiency at 7kW output)
- -------------------------------------------------------------------------------------------------
Phase [***]
- -------------------------------------------------------------------------------------------------
Fuel capability [***]
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Specification Product
- -------------------------------------------------------------------------------------------------
Allowable fuel contaminants Must be able to operate on [***]
For NG:
Sulfur ___ TBD*
Alkalis ___ TBD*
Water ___ TBD*
Nitrogen ___ TBD*
Non-Methane Hydrocarbons ____ TBD*
Methane ___ TBD*
For LPG: _______ TBD*
For Methanol: _______ TBD*
- -------------------------------------------------------------------------------------------------
System make up water requirements Must be able to operate on [***]
Iron (PPM maximum) ___ TBD*
Calcium (PPM maximum) ___ TBD*
Chlorine (PPM maximum) ____ TBD*
Particulate (PPM maximum) ___ TBD*
Other(s) ______ (PPM maximum) ____ TBD*
- -------------------------------------------------------------------------------------------------
Noise ____ dBa (TBD*) [***] meter for outdoor installations,
not to exceed [***]
____ dBa (TBD*) [***] meter for indoor installations,
not to exceed [***]
- ----------------------------------------------------------------------------------------------
Operating environment requirements Must be able to operate [***]
Humidity
maximum ____% TBD*
minimum ____% TBD*
Salt in Air
maximum ____% TBD*
minimum ____% TBD*
Particulate [***]
maximum ____% TBD*
minimum ____% TBD*
Other Cathode contaminant(s) [***]
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
vapor)
maximum ____% TBD*
minimum ____% TBD*
- ----------------------------------------------------------------------------------------------
Emissions - TBD*
__ NOx (NG) ____/____ (maximum/target)
__ CO (NG) ____/____ (maximum/target)
__ NOx (LPG) ____/____ (maximum/target)
__ CO (LPG) ____/____ (maximum/target)
__ NOx (Methanol) ____/____ (maximum/target)
__ CO (Methanol) ____/____ (maximum/target)
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Specification Product
- ----------------------------------------------------------------------------------------------
Ambient temperature range [***]
- ----------------------------------------------------------------------------------------------
Altitude [***]
- ----------------------------------------------------------------------------------------------
Power conditioning system [***]
- ----------------------------------------------------------------------------------------------
Overload [***] [***]
- ----------------------------------------------------------------------------------------------
Harmonics Harmonics at [***] continuous operation to
satisfy [***] for harmonic voltages. Harmonics
at [***], including [***]
- ----------------------------------------------------------------------------------------------
Power quality (isolated)
- ----------------------------------------------------------------------------------------------
Voltage, steady state (up to 7.0 kW [***]
continuous load)
- ----------------------------------------------------------------------------------------------
Voltage, transient (up to overload [***]
rating)
- ----------------------------------------------------------------------------------------------
Control [***]
- ----------------------------------------------------------------------------------------------
Communications [***] or similar as needed to establish
communications links
- ----------------------------------------------------------------------------------------------
Grid Connection Suitable for isolated operation [***]
- ----------------------------------------------------------------------------------------------
MTB stack replacement [***]
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Specification Product
- ----------------------------------------------------------------------------------------------
MTB system (i.e., PEM Fuel Cell-Powered TBD*
Generator Set) failure [***]
- ----------------------------------------------------------------------------------------------
Performance degradation (e.g., TBD*
efficiency, output ) [***]
- ----------------------------------------------------------------------------------------------
Non-fuel O&M ($/year up to first stack TBD*
replacement) at [***] (e.g., [***]/year
Assumptions
-----------
Labor Hours: [***]
Labor Rate: [***]
Total Labor: [***]
Materials: [***]
- ----------------------------------------------------------------------------------------------
Product life with prescribed routine TBD*
maintenance (including stack [***]
replacement) at more than [***]
- ----------------------------------------------------------------------------------------------
* SUPPLIER and DISTRIBUTOR will mutually agree to the specific values for
these areas no later than June 1, 2000 (e.g., based on PCU lab and field
testing).
SCHEDULE C
----------
PCU AND PRODUCT PRICES
Pre-Commercial Units
------------------------------------------------------------------------------------------
SUPPLIER's
estimated Cumulative #
direct cost Price to DISTRIBUTOR of units
# of units per unit per unit (US$) purchased by
Lot # in Lot (US$) DISTRIBUTOR
------------------------------------------------------------------------------------------
1 485* [***] [***] 485
2 All units ** [***] greater than 485
purchased
after the
first 485
* [***]
** The price per unit to DISTRIBUTOR for Lot #2 will be equal to
[***] and SUPPLIER will provide DISTRIBUTOR with a firm cost/price
quote no later than January 1, 2000.
Products (Commercial Units)
--------------------------------------------------------------------------------------
SUPPLIER's
estimated Cumulative #
direct cost Price to of units
# of units per unit DISTRIBUTOR per purchased by
Lot # in Lot (US$) unit (US$) DISTRIBUTOR
--------------------------------------------------------------------------------------
1 [***-- Note: all numbers have been omitted and filed separately
with the Securities and Exchange Commission pursuant to Rule 406
under the Securities Act.]
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Prices shown are for the Products as specified in Schedule B. Any modification
----------
to the Schedule B specifications requested by DISTRIBUTOR that result in a
----------
change to SUPPLIER'S direct cost will cause the price to DISTRIBUTOR to be
changed by an equal amount.
Prices for the Pre-Commercial Units as shown are firm (i.e., not subject to
change).
Product prices as shown are not firm. On April 1 of each year, beginning April
1, 2000, SUPPLIER will provide DISTRIBUTOR with a 3-year forecast of Product
prices for the period nine months hence (e.g., on April 1, 2000, SUPPLIER will
provide DISTRIBUTOR with Product prices for the 3-year period beginning January
1, 2001). The first year of each of SUPPLIER's forecast will be a firm price
commitment (i.e., in the forecast provided to DISTRIBUTOR on April 1, 2000,
SUPPLIER's Product prices for 2001 will be firm).
Prices are based upon cumulative quantity purchased (e.g., if DISTRIBUTOR
purchases [***] Product units in year 1, the price for the first [***] units is
[***] per unit, the price for the second [***] units is [***] per unit, and
the price for the first [***] units purchased in year 2 is [***] per unit).
On or before July 1, 2000, DISTRIBUTOR will provide SUPPLIER with a forecast of
DISTRIBUTOR's monthly purchases for the 12 months beginning January 1, 2001.
Each of the first 3 months of DISTRIBUTOR's forecast (i.e., January 1, 2001 to
March 31, 2001) will be a firm order (i.e., subject to change at SUPPLIER's sole
discretion). DISTRIBUTOR's forecast for the final 9 months of the forecast
period (i.e., April 1, 2001 to December 31, 2001) is for SUPPLIER's planning
purposes only. DISTRIBUTOR, at its sole discretion, may change the monthly
purchase forecast in any month in the final 9-month forecast period by any
amount.
On the first business day of each month beginning October 1, 2000, DISTRIBUTOR
will provide SUPPLIER with a 12-month rolling forecast of monthly purchases for
the period beginning 3 months hence. Each of the first 3 months of DISTRIBUTOR's
forecast will be a firm order. DISTRIBUTOR's forecast for the final 9 months of
each forecast period is for SUPPLIER'S planning purposes only. DISTRIBUTOR, at
its sole discretion, may change the monthly purchase forecast in any month in
the final 9-month forecast period by any amount.
Any Products that DISTRIBUTOR is obligated to purchase, but otherwise unable to
sell, may be held in SUPPLIER's inventory at the request of DISTRIBUTOR.
Electing to have SUPPLIER hold DISTRIBUTOR's inventory does not relieve
DISTRIBUTOR of its obligation to purchase any of DISTRIBUTOR's units held in
inventory. DISTRIBUTOR will reimburse SUPPLIER for its fully loaded inventory
carrying cost, including warehouse expenses, interest, and any inventory
carrying cost charged to SUPPLIER by SUPPLIER's vendors as a direct result of
DISTRIBUTOR's request for SUPPLIER to hold inventory.
On or before April 1, 2000, SUPPLIER will provide DISTRIBUTOR with a firm price
for the monthly inventory carrying charge for 2001. On or before August 1 of
each subsequent year, SUPPLIER will provide DISTRIBUTOR with a firm price for
the monthly inventory carrying charge for the upcoming year.
Prices to DISTRIBUTOR for Product and Pre-Commercial Unit replacement parts will
not exceed SUPPLIER's fully loaded actual cost plus [***]. DISTRIBUTOR will have
the right to audit SUPPLIER's financial records to the extent necessary to
verify compliance with this provision.
SCHEDULE D
----------
SALES COMMITMENTS
DISTRIBUTOR'S Global Sales Commitments are as follows:
Calendar Total number of
year units
--------------- -----------------
2001 [***]
2002 [***]
2003 [***]
DISTRIBUTOR'S Major Market Sales Commitments are as follows:
Total number of Total number of
Calendar units sold in units sold in
year U.S. and Canada Western Europe
----------- ------------------- --------------------
2001 [***] [***]
2002 [***] [***]
2003 [***] [***]
Global Sales Commitments and Major Market Sales Commitments (collectively
"Commitments") as shown are expressed in 7kW equivalent units based on maximum
continuous output. If DISTRIBUTOR sells any units larger or smaller than 7kW,
the sales targets will be adjusted accordingly (e.g., DISTRIBUTOR can satisfy
its 2001 Global Sales Commitment with [***] units).
The Commitment for any 1-month period will be equal to [***] of the annual
Commitment.
DISTRIBUTOR's Global Sales Commitments and Major Market Sales Commitments
commence January 1, 2001, provided that SUPPLIER has designed and manufactured a
"lock in" system that meets the Product specifications in Schedule B by January
----------
1, 2000. To the extent SUPPLER has not designed and manufactured such lock-in
system by January 1, 2000, DISTRIBUTOR's Global Sales Commitments and Major
Market Sales Commitments will be deferred on a month-for-month basis (e.g., if
SUPPLIER completes design and manufacturing of the lock-in system on April 1,
2000, then DISTRIBUTOR'S "calendar year" 2001 Global Sales Commitments and Major
Market Sales Commitments will run from April 1, 2001 to March 31, 2002).
Global Sales Commitments
DISTRIBUTOR shall be deemed to have achieved the Global Sales Commitments if
DISTRIBUTOR achieves global minimum sales of at least [***] of the Global Sales
Commitment in each relevant 12-month period.
In the event DISTRIBUTOR's total sales in the Territory in "2001" (defined
herein as the 12-month period commencing 12 months after SUPPLIER completes
design and manufacturing of the lock-in system, but no earlier than January 1,
2001) are less than [***], but more than [***], of the "2001" Global Sales
Commitment, DISTRIBUTOR must achieve sales in "2002" (defined herein as the
12-month period after the completion of "2001") of not less than [***] of the
"2002" Global Sales Commitment, or SUPPLIER shall have the right to name
additional distributors in the Territory for "2003" (defined herein as the
12-month period after the completion of "2002").
In the event DISTRIBUTOR's total sales in "2001" are less than [***], but more
than [***], of the "2001" Global Sales Commitment, DISTRIBUTOR must achieve
sales in the first 6 months of "2002" of not less than [***] of the Global Sales
Commitment for the first 6 months of "2002", or SUPPLIER shall have the right to
name additional distributors in the Territory beginning in month 7 of "2002".
In the event that DISTRIBUTOR's total sales in "2001" are less than [***], but
more than [***], of the "2001" Global Sales Commitment, and DISTRIBUTOR achieves
sales in the first 6 months of "2002" of not less than [***] of the Global Sales
Commitment for the first 6 months of "2002", DISTRIBUTOR must also achieve sales
for the 12-month period from month 7, "2002" through month 6, "2003" of not less
than [***] of the Global Sales Commitment for such 12-month period, or SUPPLIER
shall have the right to name additional distributors in the Territory for the
last 6 months of "2003".
In the event that, during any 12-month period, DISTRIBUTOR's total sales are
less than [***] of the Global Sales Commitment for such period, SUPPLIER shall
have the right to terminate this Agreement.
Major Market Sales Commitments
DISTRIBUTOR shall be deemed to have achieved the Major Market Sales Commitments
if DISTRIBUTOR achieves sales of at least [***] of each Major Market Sales
Commitment in each relevant 12-month period.
In the event DISTRIBUTOR's sales in a "Major Market" (defined herein as
U.S./Canada, and Western Europe) in "2001" are less than [***], but more than
[***], of the "2001" Major Market Sales Commitment for such Major Market,
DISTRIBUTOR must achieve sales in "2002" in such Major Market of not less than
[***] of the Major Market Sales Commitment for such Major Market in "2002", or
SUPPLIER shall have the right to name additional distributors in that Major
Market for "2003".
In the event that DISTRIBUTOR's sales in either Major Market in any 12-month
period are less than [***] of the Major Market Sales Commitment for such Major
Market for such period, SUPPLIER shall have the right to name additional
distributors in that Major Market.
However, in the event that DISTRIBUTOR's total sales exceed [***] of the Global
Sales Commitment for "2001" or "2002", SUPPLIER shall not be allowed to name
additional distributors in either Major Market for the following year (the
"Extension") (e.g., if DISTRIBUTOR achieves greater than [***] of the Global
Sales Commitment for "2001", then SUPPLIER may not name additional distributors
to either Major Market in "2002", regardless of DISTRIBUTOR's sales in the Major
Markets in "2001"). This Extension shall apply only one time, such that if this
clause applies in the "2001", it shall not apply in "2002".
SCHEDULE E
----------
SUPPLIER'S INSURANCE
SUPPLIER shall maintain in effect at all times during the Term of this
Agreement products liability insurance as set forth on the following
certificate, with DISTRIBUTOR named as additional insured:
Marshall & Sterling THIS CERTIFICATE
Upstate Inc ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
113 Saratoga Road HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND
Glenville, NY 12302 OR ALTER THE COVERAGE AFFORDED BY POLICIES BELOW
David P. Charnock COMPANIES AFFORDING COVERAGE
518-384-1100 518-384-0193
Company A Great Northern Insurance Company
Company B Pacific Indemnity
Plug Power LLC
968 Albany Shaker Road Company C First Rehabilitation Insurance
Latham NY 12110
Company D American Int'l Specialty Lines
COVERAGES
THIS IS TO CERTIFY THAT THE POLICIES LISTED BELOW HAVE BEEN ISSUED TO THE
INSURED NAMED ABOVE FOR THE POLICY PERIOD INDCATED, NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR AMY PERTAIN, THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HVAE BEEN REDUCED BY PAID
CLAIMS.
Co TYPE OF INSURANCE POLICY NUMBER POLICY POLICY LIMITS
Ltr EFFECTIVE EXPIRATION
DATE DATE
A GENERAL LIABILITY 35365127CCG 06/27/98 06/27/99 GENERAL AGGREGATE $ 2,000,000
[_] COMMERCIAL GENERAL LIABILITY
[_][_] CLAIMS MADE [X] OCCUR PRODUCTS-COMMON COMP/AGG $ 2,000,000
[_] OWNERS AND CONTRACTORS
[_] PERSONAL AND ADV INJURY $ 1,000,000
[_]___________________________
[_] EACH OCCURRENCE $ 1,000,000
Fire DAMAGE $ INCLUDED
Med Exp $ 10,000
A AUTOMOBILE 35365127CCG 06/27/98 06/27/99 $ 1,000,000
LIABILITY SINGLE UNIT
[_] ANY AUTO
[_] ALL OWNED AUTOS BODILY INJURY $
[_]SCHEDULED AUTOS per person
[X] AUTOS
[X] NON-OWNED AUTOS BODILY INJURY $
[_]___________________________ per accident
[_]
PROPERTY DAMAGE $
GARAGE LIABILITY AUTO ONLY-EA ACCIDENT $
[_] ANY AUTO
[_]____________________________ OTHER THAN AUTO ONLY $
[_]
EACH ACCIDENT $
AGGREGATE $
D EXCESS LIABILITY 8189611 (BTE 08/01/98 08/01/98 EACH OCCURRENCE $ 25,000,000
[X] .UMBRELLA FORM ENERGY CO)
[_] OTHER THAN UMBRELLA FORM AGGREGATE $ 25,000,000
B WORLDWIDE COMPENSATION AND statutory limits
EMPLOYEE LIABILITY
71644855 06/27/98 06/27/99 EACH ACCIDENT $ 100,000
DISEASE POLICY LIMIT $ 500,000
THE PROTECTIONS AFFECTING [_]incl
EXECUTIVE OFFICERS ARE [_]exel disease-each employee $ 100,000
OTHER
A PROPERTY 35365127CCG 06/27/98 06/27/99 Limit $ 1,200,000
A TRANSPORTATION 35365127CCG 06/27/98 06/27/99 LIABILITY $ 500,000
-22-
SCHEDULE F
----------
COPIES OF TRADEMARK REGISTRATIONS
DISTRIBUTOR'S TRADEMARK [GENERAL ELECTRIC LOGO
APPEARS HERE]
SUPPLIER'S TRADEMARK [PLUG POWER LOGO
APPEARS HERE]
-23-