Item 1.01.Entry into a
Material Definitive Agreement.
On January 5, 2023, Versa Power Systems Ltd. (“Versa”), a wholly
owned subsidiary of FuelCell Energy, Inc. (“Company”), and
52nd
Street Business Centre LP, by its General Partner, 52nd
Street Business Centre GP Inc. (the “Landlord”) entered into a
Lease Expansion, Extension and Amending Agreement (the “2023 Lease
Amendment”) to the existing lease between the parties, which was
originally entered into on May 20, 2005, by the Landlord’s
predecessor in interest, Westpen Properties Ltd., amended on April
20, 2006, renewed on November 11, 2010, and extended and amended on
October 29, 2013, November 9, 2016, and January 10, 2020 (as
amended by all amendments, renewals, extensions, and expansions,
including the 2023 Lease Amendment, the “Lease”) and which relates
to the premises comprised of approximately 32,000 square feet
located at 4800 – 52nd
Street SE, Calgary, Alberta, Canada (the “Original Premises”) and
currently used as an office, research and development center and
cell stack manufacturing facility for the Company’s solid oxide
platform. Versa and the Landlord entered into the 2023 Lease
Amendment to extend the term of the Lease through September 30,
2028 (as discussed in more detail below) and to expand the space to
be leased by Versa under the Lease to include an additional space
located at the same address and consisting of approximately 48,000
square feet (the “Additional Premises”), for a total of
approximately 80,000 square feet of space under the Lease. The
Additional Premises will be used to accelerate research and
development efforts, create additional manufacturing capacity for
solid oxide fuel cell stacks and establish a center of excellence
for solid oxide cell and stack research and manufacturing
supporting hydrogen generation, hydrogen power generation, long
duration hydrogen storage, and multi-fuel distributed power
generation.
Under the Lease (as amended by the 2023 Lease Amendment), the term
of Lease with respect to the Original Premises has been extended
for a period of 5 years and 8 months, commencing on February 1,
2023 and expiring on September 30, 2028, and the term of the Lease
with respect to the Additional Premises is expected to commence on
October 1, 2023 and will expire on September 30, 2028 (at the same
time as the term of the Lease with respect to the Original
Premises). The Lease does not include an option to further
extend the term, so any further extensions would require the mutual
agreement of the parties and further amendment of the Lease.
Although the parties have mutually agreed to extend the term of the
Lease on several occasions, there can be no assurance that future
extensions will be granted by the Landlord or that the parties will
be able to successfully negotiate further amendments to the
Lease.
As of January 5, 2023, the Additional Premises was occupied by a
third party pursuant to a lease that expires on March 31, 2023.
The Landlord has agreed to use commercially reasonable
efforts to obtain vacant possession of the Additional Premises on
March 31, 2023. However, under the terms of the Lease, the Landlord
will not be responsible for any liabilities, losses, costs, damages
or expenses whatsoever resulting from a delay of the delivery of
vacant possession of the Additional Premises or delay of the
commencement date of the lease of the Additional Premises (which is
initially expected to be October 1, 2023) and any such delay would
not extend the Lease term beyond September 30, 2028.
Under the terms of the Lease (as amended by the 2023 Lease
Amendment), beginning on February 1, 2023, Versa is obligated to
pay annual base rent for the Original Premises of approximately
$260,000 CAD per year and, beginning on October 1, 2023, Versa is
obligated to pay an annual base rent for the Additional Premises of
approximately $386,000 CAD. The base rent for both the Original
Premises and the Additional Premises will increase annually on
October 1st
by approximately three percent of the then-current base rent.
Versa will also be responsible for its proportional share of
operating expenses, real estate taxes and other charges provided
for in the Lease.
The Lease contains customary default provisions allowing the
Landlord to terminate the Lease if Versa fails to remedy a breach
of any of its obligations under the Lease, or upon bankruptcy or
insolvency of Versa.
The foregoing description of the Lease is qualified in its entirety
by reference to the full text of the Lease, a copy of which will be
filed as an exhibit to the Company’s Quarterly Report on Form 10-Q
for the fiscal quarter ending January 31, 2023.
Cautionary Note Regarding
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 regarding future events or
our future performance that involve certain contingencies and
uncertainties, including those discussed in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2022, in the
section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations.” The forward-looking
statements include, without limitation, statements with respect to
the