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
Company's plans and expectations regarding the continuing development and
commercialization of its current and future fuel cell technologies, the
Company's business plans and strategies, including with respect to the
acceleration of its research and development efforts and the establishment of a
center of excellence, and the expected timing of commencement of the term of the
Lease with respect to the Additional Premises. These forward-looking statements
are not guarantees of future performance, and 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 the risks set forth in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 2022. The forward-looking statements contained
herein speak only as of the date of this Current Report on Form 8-K. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any such statement contained or incorporated by
reference herein to reflect any change in the Company's expectations or any
change in events, conditions or circumstances on which any such statement is
based, except as may be required under applicable securities laws.
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