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Item 1.01.
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Entry
into a Material Definitive Agreement.
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On
January 11, 2008, HydroGen Corporation (the “Company”), HydroGen, L.L.C., the
Company’s wholly-owned subsidiary (“HydroGen”), and Samsung Corporation, a
Republic of Korea corporation (“Samsung” and together with the Company and
HydroGen, the “Parties”) entered into a Master Cooperation Agreement (the
“Cooperation Agreement”), a Hydrogen Exclusive Distribution and Marketing
Agreement (the “Hydrogen Distribution Agreement”) and a Letter of Intent
(“LOI”). Set forth below is a brief description of the material terms of each of
the Cooperation Agreement, Distribution Agreement, and LOI.
Cooperation
Agreement
Pursuant
to the Cooperation Agreement, the Company, HydroGen and Samsung have agreed
to
use their best commercial efforts to cooperate with each other with respect
to
the sale and marketing of fuel cell power plants using stacks and modules under
the “HydroGen” brand or related or new brands. The Parties have further agreed
to the following:
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Concurrently
with the execution of the Cooperation Agreement, the Parties agreed
to
enter into the Hydrogen Distribution Agreement and LOI (as each is
more
fully described below).
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HydroGen
shall undertake to complete a design for a fuel cell power plant
fueled by
methane rich gases to meet design specifications as agreed upon by
the
Parties by a target date of July 11, 2008. Upon HydroGen’s producing a
design that meets the design specifications agreed upon by the Parties,
the Parties have agreed to enter into an exclusive distribution and
marketing agreement for fuel cell power plants fueled by methane
rich
gases using stacks and modules manufactured by HydroGen (the “LNG
Distribution Agreement”).
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Upon
entering into the LNG Distribution Agreement and subject to Samsung
obtaining the requisite internal and regulatory approvals, Samsung
has
agreed to purchase shares of the common stock of the Company for
an
aggregate purchase price of not less than $5 million.
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Within
two years after execution of the LNG Distribution Agreement (or,
if the
Parties do not enter into an LNG Distribution Agreement, within two
years
of June 30, 2008), the Parties shall commence a study of the feasibility
and desirability of establishing a joint venture company by 2012
to
produce stacks and modules and / or balance of plant (“BOP”) components
and assemblies worldwide.
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The
Parties have agreed to use their commercially reasonable efforts
to
negotiate and execute a sales agreement for the sale by HydroGen
and
purchase by Samsung of an initial fuel cell power plant fueled by
hydrogen
rich gas of approximately 5 megawatts based upon, and effectuating,
the
terms of the LOI (the “Hydrogen Fuel Cell Power Plant Sales Agreement”) by
March 31, 2008.
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Upon
HydroGen delivering the first fuel cell power plant fueled by hydrogen
rich gas, the Parties have agreed to enter into a BOP Technology
Transfer,
Licensing, and Technical Support Agreement pursuant to which Samsung
shall
obtain in exchange for a royalty fee certain rights to deliver to
Samsung’s customers, fuel cell power plants utilizing HydroGen’s plant
designs and related proprietary rights and confidential
information.
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HydroGen
has the option to license any improvements that Samsung makes to
Samsung’s
balance of plant technology in exchange for a royalty fee.
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The
Cooperation Agreement shall remain effective through December 31, 2015, unless
earlier terminated as provided therein. The Cooperation Agreement shall
automatically terminate upon the termination of the Hydrogen Distribution
Agreement and LNG Distribution Agreement (to the extent that such agreements
were previously executed).
Hydrogen
Distribution Agreement
Pursuant
to the Hydrogen Distribution Agreement, HydroGen appointed Samsung as the
exclusive distributor of HydroGen fuel cell stacks, modules and power plants
in
Asia, the Middle East, Australia, New Zealand and selected countries in Eastern
Europe (the “Territory”). HydroGen has also reserved the right to sell to any
agency, authority or instrumentality of the United States of America including,
without limitation, all branches of its military, in any place in the world.
Samsung
is prohibited from directly or indirectly selling, marketing or distributing
(a)
any fuel cell products with an output capacity of 1.5 megawatts or more in,
or
into, the Territory, other than products from HydroGen and (b) any fuel cell
products with an output capacity of 1.5 megawatts or more outside the Territory.
HydroGen
shall not sell, or cause to be sold, directly or indirectly, any HydroGen
products with an output capacity of 1.5 megawatts or more, in, or into the
Territory. Further, HydroGen shall not appoint other distributors or agents
to
sell HydroGen products of 1.5 megawatts or more in, or into, the Territory.
Each
year
Samsung and HydroGen shall set and / or revise performance targets for the
proceeding three years. Samsung shall set its sales performance targets for
each
of the regions in the Territory and cumulatively. HydroGen shall set price
targets, production targets and system performance targets. If, by December
31,
2009 (and on this date every two years thereafter), HydroGen or Samsung fails
to
attain their respective performance targets for the previous two years, the
other party shall have the right in its sole discretion to terminate the
exclusivity of the Hydrogen Distribution Agreement.
The
Hydrogen Distribution Agreement shall continue in effect through December 31,
2015, unless earlier terminated as provided therein. Samsung has the one-time
right to terminate the exclusivity of the Hydrogen Distribution Agreement on
December 31, 2012; if Samsung does not exercise such termination right on such
date, the Hydrogen Distribution Agreement shall continue in full force and
effect until December 31, 2015.
Letter
of Intent
The
LOI
is a non-binding agreement between Samsung and HydroGen pursuant to which
Samsung and HydroGen have agreed to use their commercially reasonable efforts
to
execute a sales agreement for a fuel cell power plant fueled by hydrogen rich
gas of approximately 5 megawatts on or before March 31, 2008.
