Hydrogenics Corporation, a developer and manufacturer of hydrogen generation and fuel cell products, has entered into a strategic alliance with CommScope, Inc., a provider of infrastructure solutions for communications networks, that calls for the development and distribution of specialized fuel cell power systems and includes an equity investment in Hydrogenics.

Under the terms of the agreement, CommScope and Hydrogenics will jointly develop next-generation power modules for telecom-related backup power applications, to be incorporated by CommScope in its products sold to customers worldwide.

CommScope will purchase from Hydrogenics common shares in four tranches, up to a maximum of 2,186,906 shares for a maximum aggregate purchase price of $8,500,000. The first tranche, which is expected to close on August 12, 2010, will consist of 879,393 common shares for an aggregate purchase price of US$3,237,046

(US$3.68 per share). Upon closing of the first tranche, CommScope will own approximately 19.98% of the current issued and outstanding common shares of the company.

The transaction is subject to various conditions, including receipt of regulatory approvals, which includes the approval of the Toronto Stock Exchange and Nasdaq Global Market. The second, third and fourth tranches are subject to shareholder approval at a special meeting of Hydrogenics shareholders, which is anticipated to be held on 28 September 2010. The third and fourth tranches are also subject to the satisfaction by Hydrogenics of certain agreed upon product development milestones with respect to Hydrogenics’ fuel cell business, which are expected to occur in the third quarter of 2011. No assurances can be provided that such product development milestones will be achieved by Hydrogenics.

The agreement provides, among other things, that CommScope will have certain participation rights and, subject to certain ownership requirements, will have the right to appoint one non-voting observer to the board of directors of Hydrogenics.

Hydrogenics and CommScope will also enter into an intellectual property license agreement on the closing of the first tranche, wherein Hydrogenics will grant to CommScope a license to certain intellectual property resulting from the transaction, which will only be exercisable by CommScope upon the occurrence of specified triggering events.