RESALE AND RELEASE AGREEMENT
Exhibit 10.03
This Resale and Release Agreement (this “Agreement”) is made and effective as of April 21, 2020 between and among H/Cell Energy Corporation (“HCCC or the Company”) on the one hand, and PVBJ, Inc. (“PVBJ”), a New Jersey corporation, ▇▇▇▇▇ Holdings, LLC, a Pennsylvania Limited Liability Company (“▇▇▇▇▇ LLC”), and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (“▇▇▇▇ ▇▇▇▇▇”) on the other hand. The Company, PVBJ, ▇▇▇▇▇ LLC and ▇▇▇▇ ▇▇▇▇▇ are referred to herein collectively as the “Parties” and sometimes individually as a “Party”. The “Closing Date” shall be April 21, 2020 once all Parties have duly and properly executed this Agreement.
WHEREAS, ▇▇▇▇ ▇▇▇▇▇ is the Managing Member of ▇▇▇▇▇ LLC.
WHEREAS, on February 1, 2018, the Company entered into a Stock Purchase Agreement by and among the Company, PVBJ, and ▇▇▇▇▇ LLC (the “Purchase Agreement”).
WHEREAS, pursuant to the Purchase Agreement, the Company acquired all of the issued and outstanding capital stock of PVBJ (the “PVBJ Stock”) from ▇▇▇▇▇ LLC for the following Cash and Common Stock consideration: (i) $221,800.00 (the “Cash Purchase Price”) and (ii) 444,445 shares of the Company’s common stock (the “Acquisition Shares”).
WHEREAS, pursuant to the Purchase Agreement, the Acquisition Shares were issued at closing of the Purchase Agreement; the Cash Purchase Price was to be paid to ▇▇▇▇▇ LLC from positive earnings before interest and taxes (“EBIT”) of PVBJ with ▇▇▇▇▇ LLC to receive 50% of the positive EBIT achieved of PVBJ until such time as ▇▇▇▇▇ LLC has received the full Cash Purchase Price (the “Positive Earnings Criteria”).
WHEREAS, PVBJ never accomplished the Positive Earnings Criteria.
WHEREAS, upon acquiring PVBJ, PVBJ became the Company’s wholly-owned subsidiary.
WHEREAS, subsequent to the acquisition of PVBJ as the Company’s wholly-owned subsidiary, PVBJ executed a Promissory Note on March 10, 2020 whereby Thermo Communications Funding, LLC (“Thermo”) became a lending facility for PVBJ (the “Note”).
WHEREAS, in connection with the acquisition of PVBJ, the Company entered into an employment agreement with ▇▇▇▇ ▇▇▇▇▇ to serve as the Company’s Executive Vice President for a period of three years at an annual salary of $150,000, which agreement expires on January 31, 2021 (the “Employment Agreement”) .
WHEREAS, the Company wishes to sell 100% of PVBJ Stock back to ▇▇▇▇▇ LLC for the consideration set forth in Items 1 to 6 below.
WHEREAS, ▇▇▇▇▇ LLC wishes to purchase 100% of the PVBJ Stock from the Company for the consideration set forth in Items 1 to 6 below.
WHEREAS, the Closing Date shall represent the date upon which all of the respective obligations of the Parties as set forth herein will be met.
NOW THEREFORE, In consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the WHEREAS clauses above are agreed to as well as the following specific terms:
1. Positive Earnings Criteria
Term 2.1 of the Purchase Agreement provides that the Company shall pay (in addition to the Acquisition Shares) the Cash Purchase Price, for the PVBJ Stock of $221,800. ▇▇▇▇▇ LLC agrees to apply the $221,800 due from the Company to the purchase of PVBJ as consideration thereof.
2. Remaining Salary
▇▇▇▇ ▇▇▇▇▇ agrees to apply the remaining salary due to him pursuant to the Employment Agreement, as prorated from the Closing Date to the expiration date of the Employment Agreement (January 31, 2021), to the purchase of PVBJ by ▇▇▇▇▇ LLC as additional consideration thereof. The Company shall not have any further salary obligation to ▇▇▇▇ ▇▇▇▇▇ beyond the Closing Date. ▇▇▇▇ ▇▇▇▇▇ shall be deemed to have resigned as an executive officer of the Company on the Closing Date.
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3. Assumption of Thermo Lending Facility
As additional consideration for the purchase of PVBJ by ▇▇▇▇▇ LLC, PVBJ shall continue to be responsible for the Note even though the debt was incurred while PVBJ was owned by the Company. In connection with the Note, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ executed a certain Limited Recourse Guaranty dated August 21, 2018 (the “▇▇▇▇▇▇▇ Guaranty”). The Parties shall cause Thermo to do the following (the “Thermo Undertakings”): (a) consent to the sale to ▇▇▇▇▇ LLC of the Company’s interest in PVBJ and (b) cancel the ▇▇▇▇▇▇▇ Guaranty and, if required by Thermo, replace it with a guaranty to be executed by ▇▇▇▇ ▇▇▇▇▇ in form and substance the same as the ▇▇▇▇▇▇▇ Guaranty; provided that if the Thermo Undertakings have not occurred by the Closing Date, the Parties acknowledge and agree that they will use their best efforts to cause the Thermo Undertakings to be fully and finally addressed and completed as soon as practicable after the Closing Date. .
4. Payment of Certain Liabilities
The Company represents and warrants that (a) the April 1, 2020 PVBJ balance sheet (a copy of which is attached as Exhibit “A”) is true, correct and complete in all respects and that there are no undisclosed liabilities; (b) there are no intercompany obligations owing by PVBJ to the Company (the “Intercompany Debts”); and (c) PVBJ does not and will not have to recognize any forgiveness or cancellation of debt income to the extent that any of said Intercompany Debts have been forgiven. Notwithstanding anything to the contrary contained in this Agreement, the Company shall be responsible for payment from Company funds (i.e., not from cash, funds or receipts of PVBJ) of the costs associated with the preparation of the PVBJ 2019 corporate tax returns, along with any tax liabilities owing by PVBJ in relation to the 2019 tax return. All other PVBJ liabilities will transfer to ▇▇▇▇▇ LLC on the Closing Date.
5. Representations and Warranties
Effective as of the Closing Date, each of the Company and ▇▇▇▇▇ LLC represents and warrants to the other as follows:
(a) The execution of this Agreement and the delivery hereof, and the sale contemplated herein, have been or will be prior to the Closing Date, duly authorized by all necessary corporate action. Each Party has the full legal right, power and authority to execute, deliver and carry out the terms and provisions of this Agreement, and this Agreement has been duly and validly executed and delivered and constitutes a valid and binding obligation enforceable in accordance with its terms.
(b) After the Closing Date, PVBJ shall continue to own all of its assets free and clear of all liens, claims or encumbrances (except for the lien held by Thermo) and be responsible for all of its liabilities except as otherwise set forth in this Agreement.
(c) Effective as of the Closing Date, the Company is transferring to ▇▇▇▇▇ LLC its entire ownership interest in PVBJ (the “PVBJ Shares”), which consists of 100% of the issued and outstanding shares of PVBJ, free and clear of all liens, claim or encumbrances of any kind. The Company represents that the PVBJ Shares are not certificated, accordingly, the transfer thereof shall be deemed to have occurred as of the Closing Date.
6. Mutual Release – Release of the Parties
Except as set forth in this Agreement, the Parties mutually agree to release one another and hereby discharge and release the other party and their respective current and former officers, directors, employees, shareholders, note holders, attorneys, assigns, agents, representatives, predecessors and successors in interest, from any and all claims, demands, obligations, or causes of action, known or unknown, heretofore or hereafter arising out of, connected with, or incidental to the Purchase Agreement and any understandings, arrangements or other agreements, verbal or written, related thereto.
7. Status of Purchase Agreement and Closing Documents
The Parties acknowledge and agree that the intent of this Agreement is to place the Parties status quo ante except for any agreements and undertakings set forth in this Agreement to the contrary. As a result, the Parties further acknowledge and agree that they have no rights or responsibilities under the Purchase Agreement and closing documents dated February 1, 2018, as may have been amended, the Employment Agreement and any other documents or agreement entered into in connection therewith.
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8. Further Assurances
The Parties each agree to execute and deliver such other documents or agreements and to take such other action as may be reasonably necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, facilitating the removal of any and all restrictions on the Acquisition Shares.
9. No Admission of Liability
It is understood and agreed that this Agreement was negotiated to resolve all outstanding issues between the Parties. The Parties agree that this Agreement was never intended and shall never constitute nor be construed as an admission of any liability or wrongdoing by any Party.
10. Legal Advice
The parties received independent legal advice from their attorneys with respect to the advisability of making this Agreement.
11. Non-Disparagement
The Parties agree that they shall take no action that is inimical to the best interests of their counter-party respectively, including but not limited to: publishing material that disparages or makes any negative comments whatsoever about the other party, any Releases, to any person, entity, or the media be it orally, in writing, via e-mail or otherwise; participating in interviews or publishing press releases regarding this Agreement except as may be required by law, rule or regulation.
12. Meaning of Terms
When necessary herein, all terms used in the singular shall apply to the plural, and vice versa, and all terms used in the masculine shall apply to the neuter and feminine genders, and vice versa. The headings of paragraphs of this Agreement are inserted solely for convenience of reference and are not a part of and are not intended to govern, limit or aid in the construction of any term or provision hereof.
13. Entire Agreement
This Agreement is intended to be the sole, integrated understanding and agreement of the parties hereto with respect to all matters addressed herein, and may not be modified except by a writing executed by all parties.
14. Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[signature pages appear on next page]
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The Parties have caused this agreement to be executed on the date first set forth above.
| H/CELL ENERGY CORPORATION | ||
| By: | ||
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO | ||
| PVBJ, INC. | ||
| By: | ||
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Director | ||
| ▇▇▇▇▇ HOLDINGS, LLC | ||
| By: | ||
| ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., Managing Member | ||
| ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. | ||
| By: | ||
| ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., Individually | ||
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Exhibit A – PVBJ Balance Sheet as of April 1, 2020
[Exhibit A appears on the next pages]
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