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): February 1, 2018

 

 

 

H/CELL ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada   000-55802   47-4823945

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

3010 LBJ Freeway, Suite 1200, Dallas, Texas 75234

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (972) 888-6009

 

Copy of correspondence to:

 

Frederick M. Lehrer, P. A.

(561) 706-7646

flehrer@securitiesattorney1.com

 

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 (see General Instruction A.2. below):

 

[  ] 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))

 

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 [X]

 

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. [  ]

 

Securities registered pursuant to Section 12(b) of the Act: None

 

 

 

 
 

 

H/Cell Energy Corporation is referred to herein as “we”, “our, or “us”.

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Item 1.02 Termination of a Material Definitive Agreement

 

Background

 

On February 1, 2018, we entered into a stock purchase agreement (the “Purchase Agreement”) by and among us, PVBJ, Inc., a New Jersey corporation (“PVBJ”), and Benis Holdings LLC, PVBJ’s sole shareholder (“Benis Holdings”). Pursuant to the Purchase Agreement, we acquired all of PVBJ’s issued and outstanding capital stock from Benis Holdings for a Cash Purchase Price of $221,800 (the “Cash Purchase Price”) and 444,445 shares of our common stock per share having an aggregate value of $1,000,000.00 (the “Acquisition Shares”). The Acquisition Shares were issued at the closing and the Cash Purchase Price was to be paid to Benis Holdings from positive earnings before taxes of PVBJ, with Benis Holdings to receive 50% of annual earnings before taxes of PVBJ until such time as Benis Holdings has received the full Cash Purchase Price (“Positive Earnings Criteria”), which Positive Earnings Criteria PVBJ never accomplished. Further, in connection with our acquisition of PVBJ, we entered into an employment agreement with Paul V. Benis, Jr. (the “Employment Agreement”) to serve as our Executive Vice President for a period of three years at an annual salary of $150,000 in return for Paul V. Benis’ oversight of PVBJ’s business operations. Upon acquiring PVBJ, PVBJ became our wholly-owned subsidiary. After we acquired PVBJ, PVBJ executed a March 10, 2020 Promissory Note whereby Thermo Communications Funding, LLC (“Thermo”) became PVBJ’s lending facility (the “Note”).

 

April 21, 2020 Resale and Release Agreement

 

On April 21, 2020, our Board of Directors authorized our resale of PVBJ back to PVBJ pursuant to the terms contained in the Resale and Release agreement attached hereto as Exhibit 10.03 (“Resale Agreement”), as follows: (a) Benis Holdings LLC will apply the $221,800 Cash Purchase Price as consideration towards the purchase of PVBJ; (b) Paul Benis agrees to apply the remaining salary due to him, as prorated from the Closing Date to the expiration date of the Employment Agreement (January 31, 2021), to the purchase of PVBJ by Benis Holdings LLC as additional consideration thereof, at which time we will have no further salary obligation to Paul Benis, who will then be deemed to have resigned as our executive officer; and (c) as additional consideration for the purchase of PVBJ by Benis Holdings LLC, PVBJ shall continue to be responsible for the Note.

 

The Resale Agreement provides that the Parties mutually release one another and 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.

 

The foregoing description of the terms of the Purchase Agreement, Employment Agreement, and Resale Agreement does not purport to be complete and is subject to, and are qualified in their entirety by reference to those agreements filed as exhibits as denoted below. The foregoing agreements are incorporated herein by reference.

 

 
 

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

The discussion set forth in Items 1.01 and 1.02 is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The discussion set forth in Items 1.01 and 1.02 is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

10.03 Resale Agreement dated April 21, 2020*

 

10.01 Form of Stock Purchase Agreement, by and among H/Cell Energy Corporation, PVBJ Inc. and Benis Holdings LLC, dated February 1, 2018**
   
10.02 Form of Employment Agreement, by and between H/Cell Energy Corporation and Paul V. Benis, Jr., dated February 1, 2018**

 

* Furnished herewith.

** Previously filed in Form 8-K on February 5, 2018.

 

 
 

 

SIGNATURE

 

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  H/CELL ENERGY CORPORATION
     
Date: April 21, 2020 By: /s/ MATTHEW HIDALGO
    Matthew Hidalgo
    Chief Financial Officer

 

 

 

 

Exhibit 10.03

 

RESALE AND RELEASE AGREEMENT

 

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, Benis Holdings, LLC, a Pennsylvania Limited Liability Company (“Benis LLC”), and Paul V. Benis, Jr. (“Paul Benis”) on the other hand. The Company, PVBJ, Benis LLC and Paul Benis 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, Paul Benis is the Managing Member of Benis LLC.

 

WHEREAS, on February 1, 2018, the Company entered into a Stock Purchase Agreement by and among the Company, PVBJ, and Benis 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 Benis 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 Benis LLC from positive earnings before interest and taxes (“EBIT”) of PVBJ with Benis LLC to receive 50% of the positive EBIT achieved of PVBJ until such time as Benis 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 Paul Benis 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 Benis LLC for the consideration set forth in Items 1 to 6 below.

 

WHEREAS, Benis 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. Benis LLC agrees to apply the $221,800 due from the Company to the purchase of PVBJ as consideration thereof.

 

2. Remaining Salary

 

Paul Benis 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 Benis LLC as additional consideration thereof. The Company shall not have any further salary obligation to Paul Benis beyond the Closing Date. Paul Benis 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 Benis 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, Andrew Hidalgo executed a certain Limited Recourse Guaranty dated August 21, 2018 (the “Hidalgo Guaranty”). The Parties shall cause Thermo to do the following (the “Thermo Undertakings”): (a) consent to the sale to Benis LLC of the Company’s interest in PVBJ and (b) cancel the Hidalgo Guaranty and, if required by Thermo, replace it with a guaranty to be executed by Paul Benis in form and substance the same as the Hidalgo 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 Benis LLC on the Closing Date.

 

5. Representations and Warranties

 

Effective as of the Closing Date, each of the Company and Benis 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 Benis 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:    
  Andrew Hidalgo, CEO  
     
PVBJ, INC.  
     
By:    
  Andrew Hidalgo, Director  
     
BENIS HOLDINGS, LLC  
     
By:    
  Paul V. Benis Jr., Managing Member  
     
PAUL V. BENIS Jr.  
     
By:    
  Paul V. Benis Jr., 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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