Plug Power Inc. has reached an agreement with Amazon to utilize Plug Power fuel cells and hydrogen technology in its fulfillment network. At select fulfillment center locations, Amazon will begin powering its industrial equipment such as forklifts using the GenKey technology which will enable faster charging times, reduced costs, and support energy-efficiency in Amazon's fulfillment operations. Revenues associated with the commercial agreements are expected to be around $70 million in 2017.
"This agreement is a tremendous opportunity for Plug Power to further innovate and grow while helping to support the work Amazon does to pick, pack and ship customer orders," said Andy Marsh, CEO of Plug Power. "Our hydrogen fuel cell technology, comprehensive service network, and commitment to providing cost-savings for customers has enabled Plug Power to become a trusted partner to many in the industry and we are excited to begin working with Amazon."
Additionally, Amazon and Plug Power will begin working together on technology collaboration, exploring the expansion of applications for Plug Power's line of ProGen fuel cell engines.
Plug Power has granted Amazon warrants to acquire up to 55,286,696 of Plug Power's common shares at $1.1893 per share (Exercise Price), which is based on the volume weighted average closing price of Plug Power common shares for the thirty trading days ending April 4, 2017. Vesting of the warrants is tied to payments totaling $600 million in the aggregate made by Amazon, directly or indirectly, in connection with the purchase of goods and services from Plug Power. An adjustment to the Exercise Price will occur after the first 34,917,912 warrants have vested, and will be based on the volume weighted average closing price, at the time that such warrants vest.
The first tranche of 5,819,652 Warrant Shares vested upon the execution of the Warrant and other transaction documents. The second tranche of 29,098,260 Warrant Shares will vest in four installments of 7,274,565 Warrant Shares each time Amazon or its affiliates, directly or indirectly through third parties, make an aggregate of $50 million in payments to the Company, up to payments totaling $200 million in the aggregate. The exercise price for the first and second tranches of Warrant Shares will be $1.1893 per share.
After Amazon has made payments to the Company totaling $200 million, the third tranche of 20,368,784 Warrant Shares will vest in eight installments of 2,546,098 Warrant Shares each time Amazon or its affiliates, directly or indirectly through third parties, make an aggregate of $50 million in payments to the Company, up to payments totaling $400 million in the aggregate. The exercise price of the third tranche of Warrant Shares will be an amount per share equal to ninety percent (90%) of the 30-day volume weighted average share price of the Common Stock as of the first vesting date of the second tranche of Warrant Shares. The Warrant is exercisable through April 4, 2027.
