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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 2024
FUELCELL ENERGY, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 1-14204 | 06-0853042 | ||
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
||
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3 Great Pasture Road Danbury, Connecticut |
06810 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (203) 825-6000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.0001 par value per share | FCEL | The Nasdaq Stock Market LLC (Nasdaq Global Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01. | Entry into a Material Definitive Agreement. |
Amendment No. 5 to Joint Development Agreement between FuelCell Energy, Inc. and ExxonMobil Technology and Engineering Company
On and effective as of March 31, 2024, FuelCell Energy, Inc. (the “Company”) and ExxonMobil Technology and Engineering Company (f/k/a ExxonMobil Research and Engineering Company) (“EMTEC”) entered into Amendment No. 5 (“Amendment No. 5”) to the Joint Development Agreement between the Company and EMTEC (as amended, the “Joint Development Agreement”).
Under the Joint Development Agreement, the Company has engaged in exclusive research and development efforts with EMTEC to evaluate and develop improved carbonate fuel cells to reduce carbon dioxide emissions from industrial and power sources in exchange for (i) payment by EMTEC of certain fees and costs (including research costs) and (ii) certain licenses.
The term of the Joint Development Agreement, which was initially a two year term, commenced effective as of October 31, 2019. In a series of amendments to the Joint Development Agreement, which were effective as of October 31, 2021, April 30, 2022, December 1, 2022, and August 31, 2023, the Company and EMTEC extended the term of the Joint Development Agreement such that it was to expire by its terms on March 31, 2024 and increased the maximum amount of research costs to be reimbursed by EMTEC from $45.0 million to $67.0 million. The original terms of the Joint Development Agreement and the terms of the amendments thereto are described more fully in the Current Reports on Form 8-K filed by the Company on November 6, 2019, November 2, 2021, May 5, 2022, December 19, 2022, and August 28, 2023.
In Amendment No. 5, the Company and EMTEC further extended the term of the Joint Development Agreement such that it will end on December 31, 2026 (unless terminated earlier), so that the Company and EMTEC may pursue continued work to allow for technical readiness of the Generation 2 Technology fuel cell module as well as additional continuous technology development. In parallel with the Joint Development Agreement, the Company and EMTEC will pursue pioneer commercial deployments of the Generation 2 Technology with third parties, with the Company as the fuel cell module manufacturer for such deployments.
In furtherance of the ultimate goal of commercializing the Generation 2 Technology, Amendment No. 5 provides the Company with the ability to pursue new carbon capture projects with third parties for the remaining duration of the term of the Joint Development Agreement using Generation 1 Technology or Generation 2 Technology (provided that the use of Generation 2 Technology must be limited to the use of Generation 2 physical fuel cell properties and design elements in Generation 1 Technology modules), with any new sales of such activities, authorized work, and carbon capture projects, when summed together, having the capability of capturing no more than 250,000 tons of CO2 on a cumulative annual basis. Under Amendment No. 5, following expiration of the term of the Joint Development Agreement, the Company will also have the opportunity to continue to service continuing obligations for such projects entered into during the term of the Joint Development Agreement (e.g., completion of contracted builds, service and repair/replacement of components, etc.). To allow the Company to pursue such projects, in Amendment No. 5, EMTEC also granted to the Company a worldwide, non-exclusive, royalty-free, irrevocable (during the term of the Joint Development Agreement), non-sub-licensable license to EMTEC’s Generation 1 Technology as well as to EMTEC’s Generation 2 Technology physical fuel cell properties and design elements (including EMTEC’s background information and background patents relating to Generation 2 Technology physical fuel cell properties and design elements).
Amendment No. 5 also removed the cap on the maximum amount of research costs to be reimbursed by EMTEC, and instead includes an expected annual budget for the anticipated work through the remaining term of the Joint Development Agreement of at least $10.0 million per year, subject to approval by EMTEC. Research costs will be set forth in project descriptions that are subject to mutual agreement and pre-approval by the Company and EMTEC in writing. As has been the case for the entire term of the Joint Development Agreement, project descriptions will continue to be described in written, mutually agreed upon documents. In addition, in Amendment No. 5, the hourly rates for the Company’s engineers, scientists, and all other full-time employees were increased by 15% over the rates established in the original Joint Development Agreement, and such rates will increase by 3% annually beginning on March 31, 2025.
For the Company’s use in power applications and hydrogen applications, the Joint Development Agreement includes certain worldwide, non-exclusive, perpetual, irrevocable licenses to practice the Program Results (as defined in the Joint Development Agreement), EMTEC’s background information and background patents for Generation 1 Technology, and EMTEC’s background information and background patents for Generation 2 Technology. Amendment No. 5 makes clear that such licenses will continue on a royalty-free basis going forward.
The foregoing summary of the terms of Amendment No. 5 is qualified in its entirety by reference to the full text of Amendment No. 5, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. In addition, the foregoing summary of the terms of the Joint Development Agreement is qualified in its entirety by reference to the full text of the Joint Development Agreement, a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on November 6, 2019 and is incorporated herein by reference.
Other Material Relationships with EMTEC
Rotterdam Pilot Project
As previously reported in a Current Report on Form 8-K filed by the Company on February 6, 2024, on January 31, 2024, the Company received a binding purchase order from Esso Nederland B.V. (“Esso”), an affiliate of Exxon Mobil Corporation and EMTEC, for fuel cell modules as well as engineering, procurement, fabrication, testing and delivery services required for the construction and implementation of the modular point source carbon capture pilot plant at the Esso Rotterdam Manufacturing Complex. This purchase order provides the funding required by the Company to complete the manufacturing, engineering and other work to support the pilot project through start-up at the project site. This pilot project will be a full-scale commercial prototype of the modules expected to be used in large scale systems for industrial and commercial point source carbon capture applications.
This purchase order is being described only for the purpose of identifying other material relationships between the Company and EMTEC and is not impacted by Amendment No. 5.
License Agreement
In addition to the Joint Development Agreement, in June 2019, the Company and EMTEC entered into a license agreement to facilitate the further development of the Company’s SureSource CaptureTM product. Pursuant to this license agreement, the Company granted EMTEC and its affiliates a non-exclusive, worldwide, fully-paid, perpetual, irrevocable, non-transferable license and right to use the Company’s patents filed on or before April 30, 2021, and any data, know-how, improvements, equipment designs, methods, processes and the like provided directly by the Company or its affiliates to EMTEC or its affiliates under any agreement or otherwise, on or before April 30, 2021, to the extent it is useful to research, develop and commercially exploit carbonate fuel cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources and for any other purpose attendant thereto or associated therewith.
This license agreement is being described only for the purpose of identifying other material relationships between the Company and EMTEC and is not impacted by Amendment No. 5.
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 the Company’s future performance that involve certain contingencies and uncertainties. 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 carbon capture technology, the Company’s expectations regarding the construction of a pilot project and the funding required for such project, the markets in which the Company expects to operate, the expected demand for the Company’s technology and products, and the expected capabilities of and uses for the Company’s technology and products. 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, without limitation, the risks set forth in the Company’s filings with the SEC, including the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2023. 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 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.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit No. | Description | |
| 3.1* | Second Amended and Restated By-Laws of FuelCell Energy, Inc., effective as of February 22, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 22, 2024). | |
| 10.1 | Amendment No. 5 to Joint Development Agreement between FuelCell Energy, Inc. and ExxonMobil Technology and Engineering Company, executed and effective as of March 31, 2024. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| * | The Company previously incorporated this exhibit by reference into its Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2024 filed with the SEC on March 7, 2024 (the “Form 10-Q”). The Company is listing this exhibit in this Current Report on Form 8-K to correct an inaccurate hyperlink in the Form 10-Q. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FUELCELL ENERGY, INC. | ||
| Date: April 4, 2024 | By: | /s/ Michael S. Bishop |
| Michael S. Bishop | ||
| Executive Vice President, Chief Financial Officer and Treasurer | ||
Exhibit 10.1
AMENDMENT NO. 5 TO JOINT DEVELOPMENT AGREEMENT
Between
FUELCELL ENERGY, INC.
and
EXXONMOBIL TECHNOLOGY AND ENGINEERING COMPANY
ExxonMobil Technology and Engineering Company (“ExxonMobil”) and FuelCell Energy, Inc. (“FCE”) are Parties to the Joint Development Agreement with an Effective Date of October 31, 2019 and an ExxonMobil Agreement No. LAW-2019-3608 as amended on October 31, 2021, April 30, 2022, December 1, 2022, and August 31, 2023 (collectively, “Agreement”).
WHEREAS, as a result of continued development, engineering and mechanical de-risking of the Generation 2 Technology fuel cell module (“Gen 2 Technology”), ExxonMobil made a final investment decision to demonstrate the Gen 2 Technology at its Esso Nederland BV Rotterdam Manufacturing Complex (“Demonstration”) and issued a separate purchase order to FCE for such Demonstration;
WHEREAS, further work between the Parties will be required to allow for technical readiness of the Gen 2 Technology and additional continuous technology development and improvement as may be deemed necessary;
WHEREAS, the Parties, in parallel, will pursue pioneer commercial deployments of Gen 2 Technology, with FCE as the ExxonMobil fuel cell module manufacturer for these deployments; and,
WHEREAS, the Parties, in parallel, will continue to progress discussions for a new business framework between the Parties.
The Parties now wish to further amend the Agreement to extend its Term to allow for continued development work for the Gen 2 Technology. The amendments to the Agreement provided herein shall be applicable prospectively from the date of this Amendment forward, and shall not have applicability with respect to periods under the Agreement prior to the date of this Amendment.
To accomplish this, effective March 31, 2024, the Parties hereby agree as follows:
| 1. | Article 12 – TERM AND TERMINATION shall be amended to delete Paragraph 12.01 Term in its entirety and replace it with the following: |
12.01 Term. Unless sooner terminated in accordance with this Article, this Agreement will continue in full force and effect beginning on the Effective Date and ending on December 31, 2026 (“Term”).
| 2. | Article 2 – PROGRAM shall be amended to delete Paragraph 2.03 Work Exclusivity/Independent Work in its entirety and replace it with the following: |
During the Term of this Agreement, FCE will not conduct any Work using Generation 1 Technology in Carbon Capture Applications or any Work using Generation 2 Technology, independently or with third parties outside of this Agreement, without prior written approval from ExxonMobil. Notwithstanding the foregoing, ExxonMobil hereby grants approval for FCE solely to conduct a) Authorized Work using Generation 1 Technology or Modified Generation 2 Technology with Authorized Third Parties for Carbon Capture Applications, provided that for such Carbon Capture Applications, FCE may only use Modified Generation 2 Technology within Generation 1 Technology modules and that ExxonMobil’s approval for new Authorized Work shall terminate at the end of the Term (though FCE may continue to service continuing obligations, e.g., completing contracted builds, service and repair/replacement of components, etc., for Authorized Work entered into during the Term without further modifications or improvements to Modified Generation 2 Technology), and b) any Work using Generation 2 Technology solely for Power Applications and Hydrogen Applications. FCE shall attribute the co-development of the Modified Generation 2 Technology to ExxonMobil when engaging Authorized Third Parties.
| 3. | Article 7 – LICENSE TO PROGRAM RESULTS shall be amended to add the following after 7.01(b)(2): |
7.01(b)(3). Authorized Work with Authorized Third Parties. ExxonMobil grants FCE a worldwide, non-exclusive, royalty-free, irrevocable during the Term, non-sub-licensable (except as set forth herein), non-transferable (except pursuant to Article 14 (Assignment)), right and license to use Generation 1 Technology and Modified Generation 2 Technology for Authorized Work with Authorized Third Parties subject to the use restriction set forth in Paragraph 2.03. For clarity, this right and license shall terminate at the end of the Term. Notwithstanding the foregoing, the rights granted in this Paragraph 7.01(b)(3) shall be grandfathered for servicing continuing obligations resulting from Authorized Work entered into during the Term. Any subsequent arrangement shall be negotiated in good faith under a separate commercial agreement.
| 4. | Article 8 – LICENSE TO BACKGROUND INFORMATION AND PATENTS shall be amended to add the following paragraph after 8.02(b)(2)(ii): |
8.02(b)(2)(iii) Authorized Work with Authorized Third Parties. ExxonMobil grants FCE a worldwide, non-exclusive, royalty-free, irrevocable during the Term, non-sub-licensable (except as set forth herein), non-transferable (except pursuant to Article 14 (Assignment)) right and license to practice ExxonMobil Background Information and ExxonMobil Background Patents for Modified Generation 2 Technology in Carbon Capture Applications, solely to conduct Authorized Work with Authorized Third Parties subject to the use restriction set forth in Paragraph 2.03. For clarity, this right and license shall terminate at the end of the Term. Notwithstanding the foregoing, the rights granted in this Paragraph 8.02(b)(2)(iii) shall be grandfathered for servicing continuing obligations resulting from Authorized Work entered into during the Term. Any subsequent arrangement shall be negotiated in good faith under a separate commercial agreement.
| 5. | Article 10 -PAYMENT shall be deleted in its entirety and replaced with the following: |
10.01 Project Costs
| a) | ExxonMobil will reimburse FCE for Research Costs (i.e., cumulative FTE Costs and Direct Costs) for each Project in the relevant Project Description. Research Costs of FCE paid for by ExxonMobil will be limited to FTE Costs for time actually spent on the Program and Direct Costs actually incurred and approved in advance by the Steering Committee. Research Costs for the Program will be set forth in the relevant Project Description that has been pre-approved by ExxonMobil in writing. ExxonMobil shall have the option of paying for Research Costs as well as any other work in furtherance of the Program using a purchase order. ExxonMobil will reimburse FCE for Costs after receipt of invoices on a monthly basis. Invoices for Direct Costs will be supported by relevant third-party invoices received by FCE documenting such costs. Materials shall be invoiced as incurred and subject to a thirty percent (30%) service fee. All such payments will be made after ExxonMobil’s receipt of invoices in accordance with invoicing procedures specified in Paragraph 10.01(b) and in Paragraph 10.02 (Invoices). |
| b) | Monthly Invoices. Within fifteen (15) days after the end of each calendar month that occurs during the remainder of the Term, FCE will calculate and invoice ExxonMobil for the actual amounts incurred (for charges permitted in accordance with the respective Project Description(s)) during the immediately preceding calendar month. |
| c) | Annual Budget. The expected annual budget for the anticipated work through the Term shall be in an amount of at least ten million United States dollars ($10,000,000.00 USD) per year, subject to ExxonMobil approval. |
| 10.02 | Invoices. FCE will invoice ExxonMobil for any amount due under a Project at the address (including the email address) in Article 16 (Addresses and Notices). Each invoice will identify this Agreement's identification number LAW-2019-3608, the number of the particular Project Description to which it pertains, and details of FTE Costs (including unique employee identifiers of the FTEs) and Direct Costs. FCE will not include charges relating to more than one Project Description in any given invoice. Except as otherwise specifically provided herein, ExxonMobil agrees to pay FCE the amount of each invoice under this Agreement within thirty (30) days following ExxonMobil's receipt. Notwithstanding the foregoing, if ExxonMobil has a good faith dispute regarding any amounts invoiced by FCE, ExxonMobil may withhold payment for the disputed amount, provided that ExxonMobil pays the undisputed amount and notifies FCE in writing of the specific amount and nature of the dispute promptly upon receipt of FCE's invoice in which case the Parties shall attempt to resolve the dispute in good faith. The Parties shall endeavor to resolve such dispute within fifteen (15) days of notice of the dispute, and ExxonMobil shall remit payment to FCE within fifteen (15) days of resolution of such dispute. |
All such payments by ExxonMobil to FCE will be made by wire transfer in United States Dollars. FCE shall provide the Bank Name, Bank Address, Bank Account, and Swift Code in each invoice.
| 6. | “Total Research Cost” in APPENDIX A- DEFINITIONS shall be deleted. |
| 7. | Article 12 – TERM AND TERMINATION shall be amended to delete Paragraph 12.03 in its entirety and replace it with the following: |
Failure to Perform. If ExxonMobil fails to fulfill a material monetary obligation or FCE fails to execute material tasks or obligations in material compliance with all criteria set forth in a respective mutually agreed upon Project Description, in the time and manner required herein, provided that in the case of FCE’s tasks or obligations any non-compliance or delay in meeting said criteria is not due to ExxonMobil or force majeure pursuant to Paragraph 15.01 (Force Majeure), the non-defaulting Party may give written notice of intent to terminate this Agreement, specifying the details of the default. Unless the defaulting Party has remedied such default within the Cure Period, this Agreement may be terminated, without penalty, payment or prejudice to claims then accrued, by written notice to the defaulting Party by the non-defaulting Party specifying the date of termination which will be of immediate effect. In the event of termination under this Paragraph 12.03 where FCE is the defaulting Party, FCE’s royalty-free licenses described in Paragraph 8.02(b)(1)(ii), and 8.02(b)(1)(iii) will immediately convert to royalty-bearing licenses, with the royalty rate to be negotiated by the Parties in good faith.
| 8. | “Authorized Third Parties” and “Authorized Work” in APPENDIX A- DEFINITIONS shall be deleted in their entirety and replaced with the following: |
"Authorized Third Parties" means 1) Drax Group Plc. and Alberta Innovates Corporation, and, subject to FCE obtaining the prior written consent of ExxonMobil, which consent will not be unreasonably withheld, conditioned, or delayed, the respective successors, assigns, joint venturers, partners and contractors of each of them; and, 2) third parties conducting Carbon Capture Applications.
"Authorized Work" means 1) with respect to Drax Group Plc. and Alberta Innovates Corporation, non-commercial activities restricted to research and development, pilot plant, deployment, and demonstration projects, and commercial activities for which FCE has obtained the prior written consent of ExxonMobil; and, 2) third parties conducting Carbon Capture Applications; provided that for 2) above, any new sales of such activities, authorized work, and carbon capture project(s) when summed together, shall not have the capability of capturing more than a total of 250,000 tons of CO2 on a cumulative annual basis.
“FTE Rate" means the hourly amount agreed to by the Parties per FTE. Starting on March 31, 2024, the FTE Rate for scientists and engineers is three hundred seventy-six United States dollars ($376.00 USD) and the FTE Rate for all other FTEs is two hundred twenty-three United States dollars ($223.00 USD). The FCE Rate will increase by 3% each year thereafter on March 31.
| 9. | The following definition shall be added to APPENDIX A- DEFINITIONS: |
“Modified Generation 2 Technology” means the Generation 2 Technology physical fuel cell properties and design elements existing as of March 31, 2024, and as may be modified thereafter during the remainder of the Term. Any modifications or improvements made by FCE to Generation 2 Technology physical fuel cell properties and design elements during the use of the Modified Generation 2 Technology within a Generation 1 Technology module shall be governed by the terms and conditions of the Agreement.
Except as modified herein, all provisions of the Agreement remain unchanged.
This Amendment may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. Where provided for in applicable law, this Amendment may be executed and delivered electronically. If executing this Amendment using a handwritten signature, a Party may deliver a copy of such signature via electronic transmission and may provide the other Party a duplicate original so each Party retains an original for its records.
Each Party has caused this Amendment to be signed by its authorized representative.
| FUELCELL ENERGY, INC. | EXXONMOBIL TECHNOLOGY AND ENGINEERING COMPANY | |||
| By: | /s/ Jason Few | By: | /s/ Prasanna V. Joshi | |
| Name: | Jason Few | Name: | Prasanna V. Joshi | |
| Title: | President and CEO | Title: | Vice President - Low Carbon Solutions | |
| Date: | March 31, 2024 | Date: | March 31, 2024 | |