As reported by the Company’s FORM 10-Q For The Quarterly Period Ended March 31, 2005, on December 29, 2004, the plaintiffs and the defendants entered into a Stipulation and Agreement of Settlement to settle all remaining claims in the litigation, subject to final approval by the Court. The $5 million cash settlement requires no payment by the Company or the individual defendants and will be fully funded by directors and officers insurance. On April 29, 2005, the Court entered an Order and Final Judgment approving the settlement and dismissing the complaint with prejudice.
According to a press release dated May 19, 2004, Plug Power Inc. announced an agreement has been reached in the shareholders' class action lawsuit commenced against Plug Power and certain of its officers and directors in August 2000. The settlement is subject to negotiation of a final agreement by the parties and approval of the settlement by the court. Under the terms to which both parties have agreed, the settlement will be covered by the Company's primary insurance policy.
In a press release dated January 30, 2003, a federal court dismissed some of the claims made in a shareholder lawsuit against Plug Power Inc. (PLUG) related to its initial public offering, the company disclosed in a regulatory filing Thursday. Plug Power said it believes the remaining allegations are without merit and that it will vigorously defend itself against those claims. In the class-action lawsuit, filed more than two years ago in the federal district court for the Eastern District of New York, plaintiffs alleged the company failed to disclose information about its products and prospects in documents for its IPO and subsequent press releases. Plug Power filed a motion to dismiss the lawsuit in May 2001. On Jan. 21, the court dismissed all claims relating to pre-IPO press releases, the IPO prospectus and all but three post-IPO press releases, according to a filing with the Securities and Exchange Commission. The court ruled that the three remaining press releases raised questions of fact that couldn't be resolved on a motion to dismiss. The court also denied the motion to dismiss the claims against officers and board members also named as defendants.
The original complaint charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder by issuing a series of material misrepresentations to the market
between February 14, 2000 and August 2, 2000, thereby inflating the price of
PLUG stock. PLUG is a developmental stage company in the business of
designing and developing fuel cells for commercial and residential use. In
February 1999, PLUG partnered with General Electric and formed GE Fuel Cell Systems LLC, which was dedicated to providing marketing, distribution, service and installation and maintenance of residential fuel cells through GE's global network. The complaint alleges that PLUG's contract with GE was a material, if not the most important, asset of the Company. The complaint further alleges that PLUG failed to disclose that PLUG was unable to produce fuel cells in conformance with the contractual specifications in the GE contract and that, as a result, the Company's relationship with GE was subject to increased risk and uncertainty and GE would be able to terminate its agreement with PLUG without having to purchase PLUG fuel cells. The complaint further alleges that the Company failed to disclose that (i) PLUG's fuel cell technology was not commercially viable and the Company's plans to refine its technology were not meeting with success and (ii) PLUG would experience greater operating losses than anticipated by the market and therefore would not be profitable in the near future. As alleged in the complaint, on August 2, 2000, PLUG issued a press release disclosing (i) that it would cut its fuel cell systems manufacturing schedule to 125 systems for the year; (ii) that it would have operating losses which would continue through the year 2003; and (iii) that PLUG's fuel cells would not become commercially available until 2002 at the earliest. Prior to the disclosure of the true facts about the Company, certain PLUG insiders sold personally-held PLUG common stock to the public, generating proceeds of $9 million.