| Item 1.01 | Entry into a Material Definitive Agreement. |
On June 22, 2021, Nikola Corporation (the “Company”) entered into a Membership Interests Purchase Agreement (the “MIPA”) with Wabash Valley Resources LLC (“WVR”) and the sellers party thereto (collectively, the “Sellers”), pursuant to which, subject to the terms and conditions therein, the Company purchased a 20% equity interest in WVR in exchange for $25 million in cash and $25 million of the Company’s common stock, $0.0001 par value per share (the “Shares”). The transactions under the MIPA closed simultaneously with the execution thereof. WVR is developing a clean hydrogen project in West Terre Haute, Indiana, including a hydrogen production facility (the “Plant”). The project plans to use solid waste byproducts such as petroleum coke combined with biomass to produce clean, sustainable hydrogen for transportation fuel and base-load electricity generation while capturing CO2 emissions for permanent underground sequestration. The focus of the project is to produce zero-carbon intensity hydrogen with the potential to develop negative carbon intensity hydrogen in the future. WVR expects to break ground on the Plant in early 2022 and expects completion of the Plant to take approximately two years. The Company will also pay the Sellers an amount equal to the total economic benefit (as defined in the MIPA) received by the Company, minus the economic benefit actually received or realized by the Company that is greater than an agreed-upon threshold in the event any environmental, clean energy, low-carbon, production, or similar tax credits newly created pursuant to any federal or state legislation is adopted between the closing date and the first anniversary of the closing date and arising from the generation or production of hydrogen or hydrogen power in the manner contemplated by WVR for the designing, developing, building and operation of the Plant results in an economic benefit to the Company as a member of WVR.
The MIPA provides that the Shares will be subject to certain blackout windows in which the Sellers will be restricted from transferring the Shares. Under the MIPA, each Seller has a right but not the obligation, in its sole discretion, to cause the Company to purchase a portion of such Seller’s Shares outside the specified blackout windows, at $14.86 per share of common stock, the price the Shares were issued on the closing date. In addition, the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”), to register for resale the Shares. The MIPA contains customary indemnification provisions by the Company and the Sellers, subject to certain limits.
On June 22, 2021, the Company also entered into a Hydrogen Sale and Purchase Agreement (the “Purchase Agreement”) with WVR, pursuant to which WVR agreed to sell to the Company, and the Company agreed to purchase from WVR, hydrogen produced from the Plant. The Purchase Agreement has an initial term ending on the later of (i) twelve years after the construction of the Plant or (ii) ten years after the commercial operation date, which is the date the Plant has completed all construction, testing, permitting and start-up as is required to be available, without restrictions, to produce and deliver hydrogen meeting the specifications provided in the Purchase Agreement on a commercial basis. The Purchase Agreement automatically renews for five year terms ending on December 31 of each year, unless terminated by either party with 180 days’ prior written notice.
In addition, on June 22, 2021, the Company and the Sellers entered into that certain Second Amended and Restated Limited Liability Company Agreement of WVR (the “LLC Agreement”), pursuant to which, among other things, the Company, in its sole discretion, obtained the right (the “Offtake Right”) to own up to 20% of the entity to which WVR will transfer ownership of the hydrogen gas turbine to be part of the business of the project, without further consideration paid therefore, subject to mutual agreement among the Company and the Sellers with respect to the terms of governance and restrictions on transfer of equity.
The foregoing descriptions of the MIPA, the Purchase Agreement and the LLC Agreement are qualified in their entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and each of which is incorporated herein in its entirety by reference. The representations, warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.
