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NOTICE OF FUELCELL ENERGY, INC.’S MOTION TO DISMISS
PLEASE TAKE NOTICE that, upon the filing of the accompanying Memorandum of
Law in Support of FuelCell Energy Inc.’s Motion to Dismiss the Complaint, Defendant FuelCell
Energy, Inc. (“Defendant”), by the undersigned counsel, will move this Court, before the
Honorable Mary Kay Vyskocil, United States District Judge, at the Daniel Patrick Moynihan
United States Courthouse, located at 500 Pearl Street, Room 2230, New York, New York 10007,
for an Order dismissing with prejudice all claims against it under Rule 12(b)(6) of the Federal
Rules of Civil Procedure, and granting such other and further relief as this Court deems proper.
PLEASE TAKE FURTHER NOTICE that Defendant respectfully requests oral
argument on this Motion.
LMAO! The "investors in general" don't hold the majority.
The shares were already set aside for this purpose and they are restricted.
xplanation of Responses:
(1) Deferred common stock units issued to the reporting person pursuant to the FuelCell Energy, Inc. Directors Deferred Compensation Plan. In accordance with elections made by the reporting person under the Directors Deferred Compensation Plan, each common stock unit is the economic equivalent of one share of FuelCell Energy common stock, payable to the reporting person in stock upon separation from service as a director.
No. It's a proceed to submit a motion to dismiss.
21
Filed & Entered: 10/14/2020
Memo Endorsement
Docket Text: MEMO ENDORSEMENT on re: [19] Letter filed by FuelCell Energy, Inc. ENDORSEMENT: Defendant's request for a pre-motion conference is DENIED. The Court hereby GRANTS Defendant leave to file the motion to dismiss. IT IS HEREBY ORDERED that on or before October 19, 2020, the parties shall file via ECF a letter proposing a briefing schedule. (Signed by Judge Mary Kay Vyskocil on 10/14/2020) (mro)
Doc.
No. Dates Description
22
Filed & Entered: 10/15/2020
Letter
Docket Text: LETTER addressed to Judge Mary Kay Vyskocil from Gregory M. Williams dated October 15, 2020 re: Motion to Dismiss Briefing Schedule. Document filed by FuelCell Energy, Inc...(Williams, Gregory)
23
Filed & Entered: 10/15/2020
Memo Endorsement
Docket Text: MEMO ENDORSEMENT on re: [22] Letter filed by FuelCell Energy, Inc. ENDORSEMENT: The Court hereby adopts the parties' proposed briefing schedule for Defendant's Motion to Dismiss. SO ORDERED. (Motions due by 10/21/2020., Responses due by 11/18/2020, Replies due by 12/2/2020.) (Signed by Judge Mary Kay Vyskocil on 10/15/2020) (jca)
October 7, 2020
VIA ECF FILING
Hon. Mary Kay Vyskocil
United States District Court
Southern District of New York
500 Pearl Street, Room 2230
New York, NY 10007
Re: POSCO Energy Co., Ltd. v. FuelCell Energy, Inc., Case No. 1:20-cv-07509
Dear Judge Vyskocil:
Defendant FuelCell Energy, Inc. (“FuelCell”) respectfully requests a pre-motion
conference to seek leave to file a motion to dismiss the Complaint (ECF 1 and, as corrected, ECF
8) filed by POSCO Energy Co., Ltd. f/k/a POSCO Power (“POSCO”) on September 14, 2020.
POSCO’s Complaint advances four duplicative claims that seek the same relief for the
same alleged injury. On June 4, 2018, POSCO asked FuelCell to remove a restrictive legend from
POSCO’s unregistered stock certificates, so that POSCO could sell its FuelCell shares on the
public market. Compl. ¶ 38. The Complaint alleges that FuelCell did not act quickly enough in
fulfilling POSCO’s request, causing POSCO to lose out on the opportunity to sell its shares while
stock prices were relatively higher. Id. ¶¶ 53, 55–57. The Complaint contends that FuelCell’s
“unreasonable delay” in satisfying POSCO’s request constituted (1) a breach of contract under
New York law, (2) a violation of Delaware General Corporation Law (“DGCL”) § 8–401, (3) a
violation of DGCL § 158, and (4) tortious interference with POSCO’s prospective business
advantage. As to each count, the Complaint alleges that POSCO “realized a loss of over
$1,000,000.00 from its inability to sell its shares due to F[uelCell]’s unjustified and unlawful
delays,” for which POSCO seeks monetary damages. See id. ¶¶ 63, 70, 79, 88.
POSCO’s Complaint fails to state a plausible claimfor relief. As the Complaint necessarily
acknowledges, there were two prerequisites (among others) that POSCO was required to satisfy
before FuelCell could remove the restrictive legends from POSCO’s stock certificates. See Compl.
¶¶ 67–68. POSCO did not satisfy either at the time of its delegending request. See id. ¶¶ 38, 45.
First, pursuant to DGCL § 8–401 and the express terms of the parties’ Stock Purchase
Agreements (“SPAs”), POSCO was required to provide FuelCell with the original, legended
certificates before FuelCell could replace them with new, unrestricted shares. See Compl. ¶ 21
(acknowledging that FuelCell’s contractual obligation to delegend POSCO’s shares arose
“following the delivery by the Purchaser to the Company or the Company’s transfer agent of a
legended certificate” (quoting SPAs; emphasis added)); see also 6 Del. C. § 8–401; 7 Frederick
H. Miller, Hawkland Unif. Com. Code Series § 8–401:02 (2013) (“Perhaps the most obvious
Case 1:20-cv-07509-MKV Document 19 Filed 10/07/20 Page 1 of 3
2
requirement that must be satisfied before the issuer’s duty to register a transfer arises, is that the
certificate be presented.”). The SPAs and relevant securities laws impose this requirement
because, “f a new certificate was registered and issued without the old one being surrendered,
the issuer could find itself subject to claims based upon both.” 7 Miller, § 8–401:02.
Second, pursuant to the stock certificates themselves and DGCL §§ 8–401 and 8–204,
POSCO was also required to provide a representation letter from counsel, verifying that POSCO’s
contemplated sale was exempt from the registration requirements of the Securities Act of 1933.
POSCO’s stock certificates stated that POSCO’s shares had not been registered with the SEC and,
consequently, could not be sold “except pursuant to an effective registration statement . . . or
pursuant to an available exemption from . . . the registration requirements of the Securities Act and
in accordance with applicable state securities laws as evidenced by a legal opinion of counsel to
the Transferor to such effect, the substance of which shall be reasonably acceptable to the
Company.” Compl. ¶ 20 (quoting restrictive legends; emphasis added). DGCL § 8–401 requires
a stockholder to comply with all restrictions on the face of its stock certificates before a stock
issuer is required to delegend the stockholder’sshares. See 6 Del. C. §§ 8–204, 8–401(a)(5).
The Complaint acknowledges, as it must, that presenting POSCO’s stock certificates and
providing a representation letter from counsel were “prerequisites” for removal of the restrictive
legends, and that FuelCell’s alleged duty to replace POSCO’s shares did not arise until those
prerequisites were met. See Compl. ¶¶ 67–68 (alleging POSCO “met all of the statutory
prerequisites for removal of the restrictive legend” because it “presented the shares and provided
a Rule 144 opinion letter . . . triggering F[uelCell]’s duty to remove the restrictive legends”);
accord Del. Code Ann. tit. 6, § 8–401 cmt. 1 (West) (“If any of the preconditions do not exist,
there is no duty to register transfer.”).
It is also clear from the face of the Complaint that POSCO did not satisfy either prerequisite
for delegending as of its June 4, 2018 demand. Purposefully vague as to chronology, the
Complaint alleges that POSCO demanded removal of the restrictive legends from its shares on
June 4, 2018 and that, on some unspecified date(s), POSCO then provided the required
representation letter and original share certificates “n the hopes of moving things forward.” Id.
¶¶ 38, 45; see also id. ¶ 51 (conceding POSCO did not provide the representation letter until August
17, 2018). POSCO’s omission regarding when it provided FuelCell with the legended stock
certificates and representation letter is fatal to its claims.
To begin with, the Complaint makes clear that POSCO did not satisfy the contractual or
statutory prerequisites for removal of the restrictive legends from its shares as of June 4, 2018,
which forecloses POSCO’s demands for relief as of that date. Furthermore, because the Complaint
conspicuously omits when POSCO allegedly satisfied those prerequisites, the Complaint cannot
demonstrate that FuelCell “unreasonably delayed” in acting on POSCO’s request. A plaintiff does
not adequately plead a plausible claim for “unreasonable delay” when it purposefully fails to plead
the dates of the critical events to establish liability. See Dejesus v. HF Mgmt. Servs., LLC, 726
F.3d 85, 87 (2d Cir. 2013) (“A complaint must therefore contain more than ‘naked assertion[s]’
devoid of ‘further factual enhancement.’” (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009))).
Finally, there is a reason that POSCO attempts to plead around the critical dates. Documents
integral to the Complaint and referenced therein demonstrate that POSCO, in fact, did not satisfy
Case 1:20-cv-07509-MKV Document 19 Filed 10/07/20 Page 2 of 3
3
either prerequisite until late August 2018 and that FuelCell’s transfer agent immediately removed
the restrictive legends from POSCO’s shares thereafter.
Because the Complaint does not allege sufficient facts to support the conclusion that
FuelCell “unreasonably delayed” in reissuing POSCO’s stock certificates — the basis for all four
counts — and documents integral to the Complaint confirm that FuelCell, in fact, delegended
POSCO’s shares immediately after it satisfied the requisite conditions precedent, Counts One
through Four must be dismissed.
Counts Three and Four suffer from additional, fundamental defects, which independently
require their dismissal. Count Three, which seeks damages under DGCL § 158, is untenable
because Section 158 offers equitable relief alone —specifically, the power to compel a corporation
to issue appropriate stock certificates. See 8 Del. C. § 158; 1 Corp. & Com. Prac. in Del. Ch. §
9.03 (“[A]n action will lie under Section 158 to compel a corporation to issue a certificate where
one has not theretofore been issued.”). POSCO does not seek equitable relief. And it has already
received the delegended certificates that Section 158 could provide. Count Three thus seeks relief
that is not authorized by the statute, and is moot as to the only relief that Section 158 could provide.
Count Fouris duplicative of POSCO’s other claims and patently fails to state a claim under
New York law. See Deutsche Bank Nat’l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 869 (2d
Cir. 2015) (“Under New York law, claims are duplicative [and are properly dismissed as such]
when both ‘arise from the same facts and seek the identical damages for each alleged breach.’”
(citation omitted)). Under New York law, tortious interference with prospective business
advantage requires intentional interference with “a specific business relationship with an identified
third party.” Mehrhof v. Monroe-Woodbury Cent. Sch. Dist., 168 A.D.3d 713, 714 (N.Y. App.
Div. 2019) (emphasis added). Count Four must also be dismissed because the Complaint does not
allege “a specific business relationship with an identified third party,” but rather is based only on
the possibility that POSCO could have sold its shares earlier, but for FuelCell’s alleged delay. See
Compl. ¶¶ 82, 84, 87–88.
FuelCell therefore respectfully requests leave to file a motion to dismiss the Complaint.
Pursuant to Rule 4(A)(i) of the Court’s Individual Rules of Practice in Civil Cases, FuelCell has
conferred with POSCO, which has no objection to FuelCell’s request but will oppose the motion
and respond to this letter accordingly.
Respectfully submitted,
Gregory M. Williams
Let's see how long it takes to get a PR on this.
Solid Oxide Electrolysis Demonstration - Under this proposal, FuelCell Energy Inc. (Danbury, CT) is teaming with Idaho National Laboratory on a solid oxide electrolysis cell (SOEC) system demonstration and validation project to deliver a 250 kW SOEC turn-key sub-scale system with ultra-high efficiency and low cost. The system will be critically verified and validated through collaboration with INL such that it will be ready to integrate into the nuclear environment. These efforts will enable modular 200 to 500 MW SOEC utility scale systems to be available to the market and demonstrate how nuclear-hydrogen production operations can help nuclear plants diversify and increase their profitability by switching between electricity production and hydrogen generation. Total Award Value: $12,500,000
FuelCell Energy Successfully Raises Capital to Advance Business Goals
October 07, 2020 18:58 ET | Source: FuelCell Energy, Inc.
DANBURY, Conn., Oct. 07, 2020 (GLOBE NEWSWIRE) -- FuelCell Energy, Inc. (Nasdaq: FCEL), a global leader in fuel cell technology utilizing its proprietary, state-of-the-art fuel cell platforms to enable a world empowered by clean energy, announced that, between June 2020 and October 2020, it raised approximately US$177.35 million in gross proceeds from multiple offerings of its common stock, including both at the market and underwritten offerings. Gross proceeds are calculated before deducting sales commissions, underwriting discounts and offering expenses.
Jason Few, CEO and President of FuelCell Energy said, “We are very pleased with the success of our capital raising efforts and the strong investor demand for our common stock. With this additional financing, FuelCell Energy is well-positioned to advance our business growth goals, including developing projects and growing our presence in South Korea. We have significantly strengthened the Company’s balance sheet and increased our financial flexibility. Importantly, FuelCell Energy is enhancing our global operations and leadership in clean tech energy while fulfilling our commitments to our customers and remaining focused on delivering value for our shareholders.”
FuelCell Energy is dedicated to growing its platform and sales pipeline of opportunities in South Korea and other Asian markets by providing excellent service and reliable power, thermal energy, hydrogen, and carbon capture directly to utilities and other customers. FuelCell Energy embraces a customer-focused and customer-driven culture.
FuelCell Energy continues to advance innovative technologies that it believes will enable hydrogen-powered cars and trucks to cleanly operate globally. In the U.S., FuelCell Energy is deploying its tri-generation hydrogen technology platform at a new facility at the Port of Long Beach, California to meet the power needs of Toyota at the port, providing hot water for car washing and the hydrogen needed to power the Toyota Mirai fuel cell passenger vehicle, the Toyota FCET/Kenworth T680 and Toyota Uno heavy duty trucks. As FuelCell Energy continues to advance its innovative technologies, the Company intends to deliver electrolysis and hydrogen based long duration energy storage to support intermittent technologies such as wind and solar, and enable hydrogen to repower existing combustion engines, transforming existing assets into zero carbon power and potentially extending the economic life of current power generation assets.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About FuelCell Energy
FuelCell Energy, Inc. (NASDAQ: FCEL) is a global leader in developing environmentally responsible distributed baseload power solutions through our proprietary, molten-carbonate fuel cell technology. We develop turn-key distributed power generation solutions and operate and provide comprehensive service for the life of the power plant. We are working to expand the proprietary technologies that we have developed over the past five decades into new products, applications, markets and geographies. Our mission and purpose remains to utilize our proprietary, state-of-the-art fuel cell platforms to reduce the global environmental footprint of baseload power generation by providing environmentally responsible solutions for reliable electrical power, hot water, steam, chilling, distributed hydrogen, microgrid applications, electrolysis, long-duration hydrogen-based energy storage and carbon capture and, in so doing, drive demand for our products and services, thus realizing positive stockholder returns. Our fuel cell solution is a clean, efficient alternative to traditional combustion-based power generation and is complementary to an energy mix consisting of intermittent sources of energy, such as solar and wind turbines. Our systems answer the needs of diverse customers across several markets, including utility companies, municipalities, universities, hospitals, government entities and a variety of industrial and commercial enterprises. We provide solutions for various applications, including utility-scale distributed generation, on-site power generation and combined heat and power, with the differentiating ability to do so utilizing multiple sources of fuel including natural gas, renewable biogas (i.e., landfill gas, anaerobic digester gas), propane and various blends of such fuels. Our multi-fuel source capability is significantly enhanced by our proprietary gas-clean-up skid.
For more information please visit www.fuelcellenergy.com
SureSource, SureSource 1500, SureSource 3000, SureSource 4000, SureSource Recovery, SureSource Capture, SureSource Hydrogen, SureSource Storage, SureSource Service, SureSource Capital, FuelCell Energy, and FuelCell Energy logo are all trademarks of FuelCell Energy, Inc.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements with respect to the Company’s anticipated financial results and statements regarding the Company’s plans and expectations regarding the continuing development, commercialization and financing of its fuel cell technology and its business plans and strategies. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, changes to projected deliveries and order flow, changes to production rate and product costs, general risks associated with product development, manufacturing, changes in the regulatory environment, customer strategies, ability to access certain markets, unanticipated manufacturing issues that impact power plant performance, changes in critical accounting policies, access to and ability to raise capital and attract financing, potential volatility of energy prices, rapid technological change, competition, the Company’s ability to successfully implement its new business strategies and achieve its goals, the Company’s ability to achieve its sales plans and cost reduction targets, changes by the U.S. Small Business Administration or other governmental authorities to, or with respect to the implementation or interpretation of, the Coronavirus Aid, Relief, and Economic Security Act, the Payroll Protection Program or related administrative matters, and concerns with, threats of, or the consequences of, pandemics, contagious diseases or health epidemics, including the novel coronavirus, and resulting supply chain disruptions, shifts in clean energy demand, impacts to customers’ capital budgets and investment plans, impacts to the Company’s project schedules, impacts to the Company’s ability to service existing projects, and impacts on the demand for the Company’s products, as well as other risks set forth in the Company’s filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based.
Media and Investor Relations Contact:
FuelCell Energy, Inc.
ir@fce.com
+1 203-205-2491
Source: FuelCell Energy
Miscommunications or what? Why is this different?
DANBURY, Conn., Sept. 29, 2020 (GLOBE NEWSWIRE) -- FuelCell Energy, Inc. (Nasdaq: FCEL) (“FuelCell Energy†or the “Companyâ€) today announced the pricing of its underwritten public offering of 43,500,000 shares of its common stock (the “Offeringâ€), at a public offering price of $2.10 per share, for gross proceeds of approximately $91,350,000. The Offering is expected to close on or about October 2, 2020, subject to customary closing conditions. FuelCell Energy has also granted the underwriters a 30-day option to purchase up to 6,525,000 additional shares of its common stock.]]>
The Offering
Issuer
FuelCell Energy, Inc.
Common stock offered by us
31,000,000 shares (or 35,650,000 shares if the underwriters option to purchase additional shares is exercised in full)
Common stock outstanding after
this offering
270,374,041 shares (or 275,024,041 shares if the underwriters option to purchase additional shares is exercised in full)
Use of proceeds
We estimate that the net proceeds from this offering will be approximately $million (or approximately $million if the underwriters option to purchase additional shares is exercised in full), after deducting underwriting discounts and commissions and our expenses.
We intend to use the net proceeds from this offering for project development, project financing, working capital support and general corporate purposes. Additionally, we may also use a portion of the net proceeds of this offering to pay all or a portion of the principal redemption price of the issued and outstanding ClassA Preferred Shares of FCE FuelCell Energy Ltd., together with accrued and unpaid dividends thereon. Finally, we may also use a portion of the net proceeds of this offering to make certain other payments to lenders, including to (i)Orion (as defined below) under the Orion Facility (as defined below), (ii)the Connecticut Green Bank, and/or (iii)Liberty Bank for amounts received under the PPP Note (as defined below) to the extent that the PPP Note is not forgiven. See Use of Proceeds on page S-8 for additional information.
Nasdaq Global Market symbol
FCEL
Looks like POSCO is trying to get about $25M.
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
Case No.:
COMPLAINT FOR DAMAGES
DEMAND FOR JURY TRIAL
Plaintiff POSCO Energy Co., Ltd. (“PE” or “Plaintiff”), by its attorneys, Arnold & Porter Kaye Scholer LLP (“Arnold & Porter”), for its complaint against defendant FuelCell Energy, Inc. (“FCE” or “Defendant”) alleges, on information as to itself and on information and belief as to others, as follows:
NATURE OF THE ACTION
1. PE was at one time one of FCE’s largest outside stockholders. This action arises out of FCE’s unjustified delay in removing restrictive legends on shares owned by PE, thereby preventing PE from selling its FCE shares.
2. Between 2007 and 2012, pursuant to three Securities Purchase Agreements (“SPAs”), PE purchased a total of 30,786,418 restricted shares in FCE in the aggregate amount of $84,121,624.80 (Eighty four million one hundred twenty one thousand six hundred twenty four dollars and eighty cents).
3. The stock certificates bore restrictive legends that restricted PE’s ability to sell its FCE shares.
4. Each of the SPAs contained certain representations, warranties, and covenants obligating FCE to facilitate the removal of the restrictive legend from the stock certificates sold pursuant to the SPAs in the event that PE desires to transfer its shares.
5. In an attempt to deny PE of its rights under the SPAs and statutory and common law, FCE continually and wrongfully delayed its removal of restrictive legends on PE’s stock certificates, including by unreasonably demanding that PE give up certain of its bargained- for rights under the SPAs in exchange for FCE’s agreement to remove the restrictive legends.
6. As a result of FCE’s misconduct and delay, PE was unable to sell its shares as planned, resulting in a loss exceeding $1,000,000.00 (One million dollars).
JURISDICTION AND VENUE
7. This Court has federal diversity jurisdiction under 28 U.S.C. § 1332. FCE is incorporated in Delaware. Its principal place of business is Connecticut. PE is incorporated in Korea. Its principal place of business is Korea. Therefore, complete diversity of citizenship exists. The amount in controversy, exclusive of interest and costs, exceeds the sum or value of
$75,000.
8. Venue is proper in this Court pursuant to 28 U.S.C. § 1391. Acts and transactions complained of below have occurred in this District.
9. This action arises out of the transaction of business, commission of tortious injury, and other activities within the Southern District of New York and elsewhere. PE’s claims in this action arise out of PE’s acquisition and ownership of its shares of FCE.
10. FCE purposefully invoked the protections of New York law in the New York choice of law clause in the SPAs. See SPA § 7.3.
11. Extensive negotiations and drafting of the SPAs took place between FCE and PE through their respective lawyers located in Manhattan. The relevant transactions closed in the offices of FCE’s law firm or PE’s law firm, which were located in Manhattan, and each
2
party was required to deliver to the other certain necessary documents at the closing in Manhattan. Representatives of PE and FCE traveled to Manhattan to attend the closing from Korea and Connecticut, respectively. Furthermore, FCE’s annual stockholders’ meeting takes place in New York, to which PE was invited to attend and did on occasion attend. Also, FCE’s common stock is listed on the NASDAQ, which is located in New York. FCE’s stock transfer agent, American Stock Transfer, was, at all relevant times, located in New York City.
THE PARTIES
12. Plaintiff POSCO Energy Co., Ltd. engages in a wide range of business activities in the energy sector, including the supply of energy, off-gas combined cycle power generation, coal-fired power generation, fuel cell development, renewable energy, and the recycling of resources. POSCO Energy Co., Ltd was previously named POSCO Power until it changed its name in February of 2012. PE is Korea’s largest independent power producer.
13. According to its filings with the U.S. Securities and Exchange Commission, Defendant FuelCell Energy, Inc., together with its subsidiaries, is an integrated fuel cell company with a global presence in delivering environmentally responsible distributed baseload power solutions through its proprietary, molten-carbonate fuel cell technology. FCE develops turn-key distributed power generation solutions and operates and provides comprehensive service for the life of the power plant.
BACKGROUND
A. PE Purchases Shares in FCE
14. Pursuant to three SPAs dated February 7, 2007, June 9, 2009, and April 30, 2012, PE purchased a total of 30,786,418 restricted shares in FCE.
15. Pursuant to the 2007 SPA, in February 2008, PE purchased 3,822,630 shares in FCE at $7.60 per share at a cost of $29,051,900.00.
16. Pursuant to the 2009 SPA, in October 2009, PE purchased 6,963,788 shares in FCE at $3.60 per share at a cost of $25,069,638.80.
17. Pursuant to the 2012 SPA, in April 2012, PE purchased 20,000,000 shares in FCE at $1.50 per share at a cost of $30,000,000.00.
18. All three agreements are “governed by and interpreted in accordance with the laws of the State of New York.” SPA § 7.3.
19. Each of the agreements contained certain representations and warranties relating to the fact that the stock certificates will bear a restrictive legend because the underlying securities were sold in reliance upon an exemption from registration under the Securities Act, or Regulation S thereunder. The SPAs also contained representations, warranties, and covenants requiring FCE to facilitate the removal of such legend in the event that PE desires to transfer its shares. See, e.g., SPA §§ 3.8, 4.8.
20. Each of the three SPAs contained an identical § 3.8(a), which states that the certificates representing the shares will bear restrictive legends in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OF THE UNITED STATES IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR REGULATIONS THEREUNDER, AND ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
21. Each of the three SPAs also contained an identical § 3.8(b), which states that PE may request that FCE remove, and that FCE agrees to remove, the restrictive legends “if such Shares are eligible for sale without restrictions under Rule 144 or under any no-action letter issued by the SEC.” The same provision further states that “[f]ollowing the time a legend is no longer required for any Shares hereunder, the Company will, no later than five (5) Business Days following the delivery by the Purchaser to the Company or the Company’s transfer agent of a legended certificate representing such Shares, accompanied by such additional information as the Company or the Company’s transfer agent may reasonably request, deliver or cause to be delivered to the Purchaser a certificate representing such Shares that is free from all restrictive and other legends.”
22. Each of the three SPAs also contained an identical § 6.6(1), which provides that FCE “shall cooperate” with PE “to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as such Holder may reasonably request and registered in such names as such Holder may request.”
23. Each of the three SPAs also contained an identical § 4.8, pursuant to which FCE covenanted that “[f]rom and after the date hereof, the Company shall use its reasonable best efforts to obtain as promptly as practicable any consent or approval of any Person, including any regulatory authority, required in connection with the transactions contemplated hereby.” Accordingly, SPA § 4.8 requires FCE to “use its reasonable best efforts to obtain as promptly as practicable” any consents or approvals required to remove the restrictive legend from the stock certificates upon PE’s request, as the SPAs expressly contemplated that the stock PE purchased pursuant to the agreements would eventually be resold.
24. In addition to the representations, warranties, and covenants relating to the restrictive legends and FCE’s obligation to facilitate the removal of such legend in the event that PE desires to transfer its shares, the SPAs also provided PE with certain rights relating to PE’s ownership of shares.
25. Section 4.17 of the 2012 SPA entitles PE to appoint an individual to the Board of Directors of FCE, provided that PE owns a certain number of FCE shares, and that PE’s nominee meets the criteria for nomination as a director as set forth in FCE’s Nominating and Corporate Governance Committee Charter.
26. Section 4.15 of the 2012 SPA and 2009 SPA grants PE the right to subscribe to new issuances of FCE’s securities, at the price and on the terms stated in any such New Issue Notice. Section 4.15 further provides notice requirements of the new issuance and sets forth the number of shares of new issuances that PE may purchase.
27. In addition, each of the three SPAs also expressly state that “covenants contained herein shall survive the execution of this Agreement and the Closing of the
transactions contemplated hereby (except to the extent expressly provided in this Agreement).”
See SPA § 7.13.
28. As a result of a 1-for-12 reverse stock split in December 2015, PE’s
ownership interest of 30,786,418 shares was converted into 2,565,534 shares.
29. In May 2019, FCE executed another 1-for-12 reverse stock split, such that
PE currently holds 63,794 shares.
B. Delaware Law Requires Issuers to Remove Restrictive Legends Upon Request of the Stockholder
30. A stockholder that is issued stock certificates displaying restrictive legends must request the issuance of replacement certificates with the legends removed before the stock can be sold.
31. Because FCE is incorporated in Delaware, claims made under the Uniform Commercial Code (“UCC”) proceed under Delaware law.
32. Under Delaware law, the rights of stockholders to obtain certificates without restrictive legends are established in 6 Del. C. § 8-401 and 8 Del. C. § 158.
33. Section 158 provides that “[e]very holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of, the corporation by any 2 authorized officers of the corporation representing the number of shares registered in certificate form.” “By necessary implication this includes the right to a proper certificate without a legend or restriction, where such a legend is no longer appropriate.” Bender v. Memory Metals, Inc., 514 A.2d 1109, 1115 (Del. Ch. 1986).
34. Section 8-401(a) provides for an issuer’s obligation to, upon request of a stockholder, register transfer of a security. Section 8-401 also applies to removal of a restrictive legend because a removal is deemed a registered transfer. Id.
35. Section 8-401(b) provides for damages for “loss resulting from unreasonable delay in registration or failure or refusal to register the transfer.”
C. PE Seeks to Sell Certain of Its Shares and FCE Refuses to Remove the Restrictive Legends
36. In early 2018, PE became interested in selling certain shares that it had acquired, pursuant to an exemption from registration provided under Rule 144 of the Securities Act of 1933.
37. The removal of restrictive legends typically occurs quickly and in a matter of days, but FCE delayed the process for months and would not agree to remove the restrictive legends pursuant to its obligations under 6 Del. C. § 8-401 and 8 Del. C. § 158 and the SPAs, until PE caved to its unreasonable demands, as set forth more fully below.
38. On June 4, 2018, PE requested that FCE remove the restrictive legends on
PE’s shares per SPA § 3.8.
39. On June 5, 2018, FCE informed PE that it had forwarded PE’s request to FCE’s external counsel for review.
40. On June 11, 2018, PE again requested that FCE remove the restrictive legends and requested that FCE provide PE with any necessary procedures to remove the restrictive legends.
41. On June 14, 2018, PE followed up once more by asking FCE to share any documentation required by FCE to remove the restrictive legend.
42. In response, FCE refused to remove the restrictive legends, despite its obligations to do so under UCC § 8-401, as implemented in Delaware at 6 Del. C. § 8-401, and the SPAs. Instead, FCE peppered PE with a variety of unreasonable and irrelevant requests.
43. As conditions for removing the restrictive legends, FCE insisted that PE
provide written representation that it was not an affiliate of FCE and that PE did not possess
material non-public information.
44. Given that any misuse of material non-public information by a stockholder
does not involve the issuer, or create a risk of liability for the issuer, the issuer has no legitimate
basis for requiring a representation that a stockholder does not possess any material non-public
In any event, there is no authority supporting the requirement of such information
as a pre-condition of removal. FCE’s request regarding confirmation that PE did not possess
material non-public information was clearly a fabricated excuse to delay removal of the
restrictive legends.
45. In the hopes of moving things forward, PE provided FCE with all other documentation FCE requested, including a Rule 144 opinion letter from counsel, and the original share certificates. FCE still refused to comply with its obligations to remove the restrictive legends.
1 Indeed, trading on the basis of material non-public information is not illegal unless obtained in a breach of duty owed to the source of the information. Regardless, PE was not attempting to trade
based on material non-public information.
46. Despite PE’s cooperation, FCE continued to take the wrongful and unreasonable position that it could not remove the restrictive legends unless PE verified that it did not possess material non-public information. Such an inquiry and condition are completely irrelevant to an issuer being asked to remove a restrictive legend, as an issuer has no duty to police the trades of its shareholders. FCE used this wrongful and unreasonable condition, and the ensuing dispute over the issue, to continue to delay the removal of the restrictive legends.
47. PE was eager to proceed with the sales of FCE stock that it had planned
to $16.20. Over the next two months, the price continued to fall, plummeting to $12.72 on
September 11, 2018.
48. Repeatedly insisting that PE could be deemed an affiliate because of its right
2009 and 2012 SPAs.
49. Despite PE’s grave reservations about giving up its bargained-for rights without receiving any additional consideration, it believed it had little choice but to agree to FCE’s unreasonable terms in order to salvage what little value remained in its investment.
50. On July 20, 2018, PE agreed to permanently waive its board appointment rights under Section 4.17 of the 2012 SPA. PE also reiterated its position that it is a non-affiliate of FCE and had not been an affiliate in the previous 90 days.
51. FCE continued to drag its feet. Eager to sell its shares, on August 17, 2018, PE sent FCE a draft waiver letter and a representation letter. PE removed a representation relating to FCE’s request for confirmation that PE is not in possession of material non-public information, due to the fact that such a representation was neither a necessary nor an appropriate condition for the removal of restrictive legends. Despite its earlier insistence on this representation, FCE did not object to this omission, thereby admitting that this request was a sham.
52. On August 22, 2018, PE entered into a Waiver Letter (the “Waiver Letter”), pursuant to which it acceded to FCE’s demands in order to effectuate the removal of the restrictive legends as expeditiously as possible.
53. FCE engaged in further dilatory tactics, and failed to remove the restrictive
legend from PE’s stock certificates for yet another two weeks after the Waiver Letter was signed.
FCE’s stock transfer agent finally notified PE on or about September 11, 2018 that the stock
could now be transferred. In the end, FCE took at least three months to fulfill its obligations as
an issuer when honoring PE’s bargained-for and statutory rights should have taken it a matter of
days.
54. FCE’s motive all along was to delay and discourage PE from selling its
shares in FCE.
55. Following the removal of the restrictive legends, PE sold a total of
1,800,000 shares at prices ranging from $6.72 to $8.51, as soon as it was able to, reducing the
number of shares it held to 765,534.
56. From June 4, 2018 to September 11, 2018, FCE’s stock price decreased by
over 45%, from $23.28 to $12.72 (adjusted for splits).
57. As a result, PE realized a loss of over $1,000,000.00 from its inability to
sell its shares due to FCE’s unjustified and unlawful delays.
COUNT I
(Breach of Covenant Under New York Law)
58. PE repeats and realleges the allegations of paragraphs 1-57 of this Complaint as if fully set forth herein.
59. Paragraph 4.8, which is identical in all three SPAs, provides that “[f]rom and after the date hereof, the Company shall use its reasonable best efforts to obtain as promptly as practicable any consent or approval of any Person, including any regulatory authority, required in connection with the transactions contemplated here-by.”
60. One of the transactions contemplated under the SPAs is the potential transfer of the shares it purchased pursuant to the agreement.
61. FCE failed to use its “reasonable best efforts” to obtain the consent or approval of removal of the restrictive legends.
62. Had FCE exercised its “reasonable best efforts” to remove the restrictive legends, PE would have been able to sell the shares earlier.
63. From June 4, 2018 to September 11, 2018, FCE’s stock price decreased by
over 45%, from $23.28 to $12.724 (adjusted for splits). As a result, PE realized a loss of over
$1,000,000.00 from its inability to sell its shares due to FCE’s unjustified and unlawful delays.
64. Accordingly, PE has been substantially damaged as a direct and proximate result of FCE’s aforementioned conduct.
COUNT II
(Violation of 6 Del. C. § 8-401)
65. PE repeats and realleges the allegations of paragraphs 1-64 of this Complaint as if fully set forth herein.
66. FCE was the issuer of the shares of common stock to PE.
67. PE met all of the statutory prerequisites for removal of the restrictive legend, triggering FCE’s duty to remove the restrictive legend.
68. PE presented the shares and provided a Rule 144 opinion letter, incorporating any revisions requested by FCE, and all of the requested documentation in order to have the restrictive legend removed from the shares, triggering FCE’s duty to remove the restrictive legends.
69. After PE followed up and communicated with FCE, it became obvious that there was no justification for FCE’s delay in removing the restrictive legends, and FCE’s delay was unreasonable.
70. From June 4, 2018 to September 11, 2018, FCE’s stock price decreased by over 45%, from $23.28 to $12.72 (adjusted for splits). As a result, PE realized a loss of over
$1,000,000.00 from its inability to sell its shares due to FCE’s unjustified and unlawful delays.
71. As a result of FCE’s unreasonable delay, PE was unable to sell the shares it owned in a timely manner, and was forced to sell its shares later at a substantially reduced price.
72. FCE is liable for any and all loss incurred by PE resulting from preventing the removal of the restrictive legend contained on the share certificate owned by PE.
73. Had FCE removed the restrictive legend, PE would have been able to sell the shares earlier and at a significantly higher price.
74. Accordingly, PE has been substantially damaged as a direct and proximate result of FCE’s aforementioned conduct.
COUNT III
(Violation of 8 Del. C. § 158)
75. PE repeats and realleges the allegations of paragraphs 1-74 of this Complaint as if fully set forth herein.
76. As a holder of FCE shares, PE is entitled to have a certificate signed by, or in the name of, the corporation by any two authorized officers of the corporation representing the number of shares registered in certificate form.
77. By delaying the removal of the restrictive legend, FCE denied PE the certificates to which it was entitled under 8 Del. C. § 158.
78. Had FCE provided PE the certificates to which it was entitled under 8 Del.
C. § 158, PE would have sold its FCE shares earlier, and at a higher price.
79. From June 4, 2018 to September 11, 2018, FCE’s stock price decreased by over 45%, from $23.28 to $12.72 (adjusted for splits). As a result, PE realized a loss of over
$1,000,000.00 from its inability to sell its shares due to FCE’s unjustified and unlawful delays.
80. Accordingly, PE has been substantially damaged as a direct and proximate result of FCE’s aforementioned conduct.
COUNT IV
(Tortious Interference With Prospective Business Advantage)
81. PE repeats and realleges each and every allegation contained in paragraphs 1-80 above as if fully set forth herein.
82. PE had a reasonable expectation of economic advantage from a prospective contractual relationship through the intended sale of its shares of common stock of FCE to third party purchasers in the trading market for FCE’s common stock.
83. FCE knew, or should have known, that PE intended to sell its shares of common stock of FCE in light of PE’s repeated requests for information concerning the process for the removal of the restrictive legends.
84. FCE interfered with this prospective contractual relationship between PE and third party purchasers of PE’s shares of FCE stock by intentionally and deliberately failing to reasonably and timely respond to PE’s request regarding the removal of restrictive legends.
85. FCE’s delay was dishonest, unfair, and/or improper.
86. FCE’s failure to reasonably and timely respond to PE’s requests regarding the removal of restrictive legends or reasonably and timely advise as to the manner in which FCE intended to effectuate the necessary actions to remove the restrictive legends contained on the share certificates owned by PE was intentional and without justification or excuse.
87. As a result of FCE’s failure, PE lost the prospective economic advantage with third party purchasers of the shares on the desired terms when PE first expected to be able to sell its shares.
88. As a result of the loss of this prospective economic advantage with third party purchasers on the desired terms as available in the public trading market, PE suffered damages in excess of over $1,000,000.00, as the per share price of FCE declined from $23.28 per share to $12.72 per share between June 4, 2018 and September 11, 2018.
PRAYER FOR RELIEF
WHEREFORE, plaintiff PE respectfully requests that this Court enter an order:
(a) Awarding all damages and losses suffered by PE as a result of FCE’s conduct in an amount to be determined at trial, which exceed $1,000,000.00, as well as compensatory damages, consequential damages, punitive damages, interest, costs of suit, attorney’s fees and any other relief deemed equitable by this Court as a result of FCE’s tortious conduct; and
(b) Granting such other and further relief as the Court may deem just and proper.
JURY DEMAND
Plaintiff demands a trial by jury.
Dated: September 14, 2020 ARNOLD & PORTER KAYE SCHOLER LLP
By: /s/ James D. Herschlein James D. Herschlein
Jonathan E. Green 250 West 55th Street
New York, New York 10019-9710 Telephone: (212) 836-8000
Facsimile: (212) 836-8689
Email: james.herschlein@arnoldporter.com jonathan.green@arnoldporter.com
James K. Lee
44th Floor, 777 South Figueroa Street Los Angeles, CA 90017-5844 Telephone: (213) 243-4000
Facsimile: (212) 243-4199
Email: james.lee@arnoldporter.com
Pro hac vice forthcoming Attorneys for POSCO Energy Co., Ltd.
That article says it won’t be operational until early next year Of course it’s dated oct 2019
Friday must have been frijoles night at Gay Louy's again. Big run on toilet paper?
No this is good. It's resolution in favor of the company. They identified it months ago and this is the outcome they hoped for.
LMAO. Not surprised at that one. Bruce probably spent weeks researching and submitting that form.....for a 2 second smack down.
So he gets $1400, living with daddy, but he spends $400 on food and $100 on gas. Where's the rest of it? I hear there's space available at the covid hotel.
Doesn't surprise me. I'm waiting for the Hooscal Roundup to begin.
He ought to be happy it wasn't the full original amount.
Good possibility
Good! 60 days they can arrest them all for non compliance.
Any news on POSCO?
Sorry. I didn't realize it was such a difficult question to answer.
They're not to me. That's why I'm asking.
So what are you saying?
LOL! There's a shortage of toilet paper in Gaymanisville, Mex.
Never said it wasn't. Has nothing to do with fuel cell.
This interview was for NRG and was from 2017.
Looks like that final judgement is just for Treaty. Thinking there should be a few more. Whittley not there either.
Guess the shouldn't have pissed the judge off with their stupid antics. Pretty much doubled the amounts with the civil penalty. Bullshine should have paid my money back.
Btw it's $5,080,359.67 for Treaty due in 30 days!
Wonder if the Canoli buys have enough empty korona bottles to cover it.
Doesn't surprise me.
Smells like the dead clownfish are stinkin up the place again.
Wondered how long it would take for treaty’s clownfish to start floating to the surface.
Didn't even bother to write a response. DENIED!
LMAO!!!
Looks like about $6.5 million in interest and disgorgement. Plus penalties!
Blackburn’s penalty can range from $0 up to $1,512,059.96 (the gross amount of his pecuniary gain) per violation. Reid’s penalty can range from $0 up to $525,030.52 (the gross amount of his pecuniary gain) per violation. Mulshine’s penalty can range from $0 to $150,000 (statutory maximum) per violation. Gwyn’s penalty can range from $0 to $772,434.90 (the gross amount of his pecuniary gain) per violation.
Almost missed this. I'm sure Treaty's little helpers will chip in!
The penalty range for Treaty is $0 to $2,270,561.60 (the full gain, netting out what the Officer Defendants received) per violation.
LOL! I bet the Clownfish spawn will be crying in their Coronas tonight! Funnier than the TESDAC scam.
Should see some good stuff by Tuesday.
They'll be able to stay listed on the Nasdaq a won't have to worry about delisting for another year.
Maybe the abettors can start a go fund me account to help pay for disgorgement, fines, and penalties about to be assessed. Oh yeah interest too!