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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 31, 2016
CLEAN ENERGY TECHNOLOGIES, INC.
(Exact name of Company as specified in its charter)
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Nevada | 333-125678 | 20-2675800 |
(State or other jurisdiction | (Commission File Number) | (IRS Employer |
of Incorporation) |
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2990 Redhill Avenue Costa Mesa, CA 92626 |
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Phone: (949) 273-4990 |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:
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))
Clean Energy Technologies, Inc.
Current Report
Form 8-KA
Explanatory Note
This Amendment to Current Report on Form 8-K amends and restates Item 1.01 in its entirety. The other items of the Current Report on Form 8-K are not amended, except that a new Exhibit 10.02 has been included in this Amendment, thereby amending Item 9.01.
Item 1.01 Entry into a Material Definitive Agreement
Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant”) and Cyberfuture One LP, a Delaware limited partnership (“Subscriber”) entered into a Subscription Agreement dated October 31, 2016 pursuant to which the Registrant issued to Subscriber an aggregate of 10,500,000 restricted common shares (“Shares”) at a price of US$0.04 per Share, for total gross proceeds of US$420,000. The restricted shares were offered by the Registrant pursuant to the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(a)(2) of the Act.
Pursuant to the Subscription Agreement, the Registrant granted to the purchaser piggyback registration rights with respect to the Shares on any registration on behalf of the Registrant or shareholder ETI Partners IV LLC and demand registration rights so long as Subscriber holds at least 8% of the Registrant’s outstanding common stock. Pursuant to the Subscription Agreement, the Registrant also granted to Subscriber the right to appoint an observer to the Registrant’s board of directors, with such right continuing until December 31, 2016, subject to possible extension in the event the Registrant or its subsidiary Clean Energy HRS, LLC (“CE HRS”) and CITIC PE or one or more of its affiliates enter into a joint venture for the manufacturing and distribution of CE HRS’s products in China (the “JV”). Pursuant to the Subscription Agreement, the Registrant also granted to Subscriber the right to nominate one person to be elected or appointed to the Registrant’s board of directors, with such right being effective only upon and during such time that the JV has been established, the JV continues distributing CE HRS products, and Subscriber (and its affiliates) continue to hold at least one half of the shares of common stock acquired by Subscriber on the closing date of the Subscription Agreement. CE HRS has not, as of the date of filing this Current Report entered into the JV.
The Subscription Agreement also contains customary terms and conditions for transactions of this type. The foregoing summary description of the Subscription Agreement is not complete and is qualified in its entirety by reference to the full text of the Subscription Agreement, a copy of which is included as Exhibit 10.01 to this Current Report.
On October 28, 2016, the Registrant issued a redemption notice to Peak One Opportunity Fund, L.P., a Delaware limited partnership (“Investor”) under the Convertible Debenture dated March 15, 2016 issued to Investor pursuant to the Securities Purchase Agreement dated March 11, 2016 between the Registrant and Investor. Pursuant to the redemption notice, the Registrant elected to redeem all of the remaining outstanding balance of the Convertible Debenture for an aggregate redemption price of $84,000. Concurrently with such notice, the Registrant and Red Dot Investment, Inc., a California corporation (“Reddot”) entered into an Escrow Funding Agreement, pursuant to which Reddot had caused to be deposited funds into escrow to fund the entirety of Registrant’s redemption price for the Convertible Debenture and the Registrant assigned to Reddot the Registrant’s right to acquire the Convertible Debenture. Reddot agreed with the Registrant that it acquired only the rights of the Registrant with respect to the Convertible Debenture and was acquiring the Convertible Debenture through escrow and was not purchasing the Debenture from the Registrant, but solely had the same rights as the Registrant to acquire the Convertible Debenture without any representation or warranty from Investor other than as implied with respect to its ownership of the Convertible Debenture. Concurrently, the Registrant and Reddot agreed to amend the Convertible Debenture once acquired by Reddot (a) to have a fixed conversion price of $.005 per share, subject to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations, or similar events or events with similar effect (b) to have a fixed interest rate of ten percent (10%) per annum with respect to both the redemption amount and including a financing fee and any costs, expenses, or other fees relating to the Convertible Debenture or its enforcement and collection, and any other expense for or on account of the Registrant (in each case with a minimum 10% yield in the event of payoff or conversion within the first year), such amounts to constitute additional principal under the Convertible Debenture, as amended, and (c) as otherwise provided in the Escrow Funding Agreement . The redemption, transfer, and amendment were effected concurrently on November 2, 2016.
The foregoing summary description of the Escrow Funding Agreement is not complete and is qualified in its entirety by reference to the full text of the Escrow Funding Agreement, a copy of which is included as Exhibit 10.02 to this Current Report.
Item 1.02 Termination of a Material Definitive Agreement
The information set forth in Item 1.01 “Entry into a Material Definitive Agreement” of this Current Report on Form 8-K is incorporated into this Item 1.02 by this reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 “Entry into a Material Definitive Agreement” of this Current Report on Form 8-K is incorporated into this Item 2.03 by this reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 “Entry into a Material Definitive Agreement” of this Current Report on Form 8-K is incorporated into this Item 3.02 by this reference.
Item 3.03 Material Modifications of Rights of Security Holders.
The information set forth in Item 1.01 “Entry into a Material Definitive Agreement” of this Current Report on Form 8-K is incorporated into this Item 3.03 by this reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K.
Exhibit Number | Description of Exhibit |
10.01 | Subscription Agreement by and between the Company and Cyberfuture One LP, dated October 31, 2016. |
10.02 | Escrow Funding Agreement dated November 1, 2016 between Red Dot Investment, Inc., a California corporation and the Registrant. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Probe Manufacturing, Inc.
Date: April 19, 2017 By: /s/ Kambiz Mahdi
Kambiz Mahdi
Chief Executive Officer
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CLEAN ENERGY TECHNOLOGIES, INC.
ESCROW FUNDING AGREEMENT
This ESCROW FUNDING AGREEMENT (this “Agreement”) dated as of November 1, 2016 is made
by and between Clean Energy Technologies, Inc., a Nevada corporation (the “Company”) and Red Dot
Investment, Inc., a California corporation (“Lender”).
RECITALS
WHEREAS on or about March 15, 2016 the Company and Peak One Opportunity Fund, L.P., a
Delaware limited partnership (“Peak One”) entered into a Securities Purchase Agreement dated March
11, 2016 (the “SPA”).
WHEREAS pursuant to the SPA, on March 15, 2016 Peak One subscribed for and purchased
from the Company and the Company issued to Peak One a Convertible Debenture dated March 15,
2016 in the original stated principal amount of $75,000.00 (as originally issued and as amended as
provided herein, the “Convertible Debenture”).
WHEREAS, concurrently herewith, the Company is issuing a redemption notice to Peak One
relating to the Convertible Debenture, pursuant to which the Company elected to redeem all of the
remaining outstanding balance of the Convertible Debenture for an aggregate redemption price of
$84,000.00.
WHEREAS, prior to issuing the redemption notice, the Company did not have the funds to
redeem the Convertible Debenture, but Section 2(b)(iii) of the Convertible Debenture called for there
to be in escrow sufficient funds to effect a redemption of the Convertible Debenture prior to the time
of issuing a redemption notice.
WHEREAS, in compliance with the terms of the Convertible Debenture, Lender is concurrently
herewith depositing in escrow with Richardson & Maloney LLP (the “Escrow Holder”) sufficient
funds to effect the redemption and pay any redemption related costs (the “Escrow”).
WHEREAS, as a condition to such deposit, and in accordance with the terms of the Convertible
Debenture and the SPA, the Company agrees to assign to Lender all of the Company’s rights to
repurchase the Convertible Debenture through redemption, effective upon issuance of the redemption
notice.
WHEREAS, pursuant to the instructions of Lender and the Company contained herein, Lender
and the Company are instructing the Escrow Holder to disburse funds from the Escrow to fund the
entirety of the Company’s redemption of the Convertible Debenture and all costs, expenses, fees or
other charges arising in connection with or relating to the redemption of the Convertible Debenture,
the assignment of the Company’s rights relating thereto, the amendment of the Convertible Debenture
once acquired by Lender, this Agreement, the transactions contemplated herein, including the
Financing Fee (as defined below) and any costs, expenses, or other fees relating to the Convertible
Debenture or its enforcement and collection, and any other expense for or on account of the Company
for which an agent of the Company may request an advance, provided such advance is approved by
the Executive Chairman of the Company or the Escrow Holder (collectively, the “Ancillary
Expenses”).
WHEREAS Lender has agreed that Lender will only acquire the rights of the Company with
respect to the Convertible Debenture and that Lender is acquiring the Convertible Debenture through
Escrow, including through subrogation to the rights of Peak One, and is not purchasing the Convertible
Debenture from the Company, and that, as a result, Lender is acquiring the Convertible Debenture as
a good faith purchaser for value and a holder in due course, but Lender does not acquire the Convertible
Debenture with any representation or warranty from Peak One other than as implied by Peak One to
the Company, as assignor, with respect to its ownership of the Convertible Debenture.
WHEREAS Lender and the Company have agreed that the Convertible Debenture will govern
the rights between Lender and the Company and they have agreed to amend the Convertible Debenture,
once acquired by Lender or once Lender is subrogated to the rights thereunder, (a) to have a fixed
conversion price of $.005 per share, subject to limited potential adjustment, (b) to have a fixed interest
rate of ten percent (10%) per annum with respect to both the Peak One redemption amount and any
Ancillary Expenses (in each case with a minimum 10% yield in the event of payoff or conversion
within the first year), as provided herein, all such expenses to be for the account of and the
responsibility of the Company, notwithstanding that Lender may advance sums to pay for them, the
amount of such Ancillary Expenses to constitute additional principal under the Convertible Debenture,
as amended, and (c) as otherwise provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to agree as
follows:
1.
Recitals; Terms. The foregoign Recitals are incorproated herin by refernce as if set
forth fully herein and, in accodacne with Section 622 of the California Evidence Code, the facts recited
in the Recitals are conclusively presumed to be true as between the parties hereto, or their successors
in interest. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed
thereto in the Convertible Debenture (including any terms incorproated by reference therein).
2.
Escrow Deposit; Debenture Assignment; Promise to Pay.
(a)
Upon and subject to the terms and conditions set forth in this Agreement,
Lender has designated and hereby reaffirms such designation, from funds on deposit in the
Escrow with the Escrow Holder, sufficient funds to effect the redemption and pay any
Ancillary Expenses. The total of such amounts (the “Owed Principal Amount”) shall be as set
forth in a schedule (the “Loan Schedule”) prepared and updated by Lender from time to time
and that may be appended or re-appended by Lender to the Convertible Debenture (or a copy
thereof if Lender does not receive the original of the Convertible Debenture). The parties agree
that the Loan Schedule, as prepared by Lender from time to time and whether or not appended
to the Convertible Debenture (or a copy thereof), shall conclusive evidence of the Owed
Principal Amount.
(b)
The Company represents and warrants to Lender that, currently with the above
the Company has issued the redemption notice for the Convertible Debenture.
(c)
As a condition to such designation, and in accordance with the terms of the
Convertible Debenture and the SPA, immediately after the issuance of the redemption notice
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as provided in Section 2(b) above, the Company hereby assign to Lender all of the Company’s
rights to repurchase the Convertible Debenture.
(d)
To induce Lender to acquire the Convertible Debenture, the Company agrees
to pay to Lender a fee of $10,000.00 (the “Financing Fee”), with the amount of the Financing
Fee to be included as an Ancillary Expenses.
(e)
In consideration of the foregoing, the Company hereby agrees to repay to
Lender, in accordance with the terms and conditions of the Convertible Debenture as amended
hereby, the Owed Principal Amount, together with interest accrued thereon and other amounts
owing in connection therewith (including all Ancillary Expenses), as any such amounts be due
and owing and whether or not reflected in the Loan Schedule.
3.
Escrow Instruction. Lender and the Company hereby jointly instruct the Escrow
Holder to disburse funds from the Escrow to fund the entirety of the Company’s redemption of the
Convertible Debenture and to pay from the Escrow any and all Ancillary Expenses, inculding the legal
expenses incurred in connection with the preparation of this Agreement and the expenses of the Escrow
Holder. At the request of the Escrow Holder, Lender shall conifrm in writing the Escrow Holder’s
payment of Ancillary Expenses and Escrow Holder’s authortiy threfor, though no such confirmation
shall be required, it being agreed between the parties that the Escrow Holder shall have the authority
to pay such expenses as they are invoiced.
4.
Amendments to Convertible Debenture. Lender and the Company agree to amend
the Convertible Debenture, once acquired by Lender or once Lender is subrogated to the rights
thereunder, as follows: (a) the first paragraph of the Convertible Debenture is amended by (i)
substituting Lender and its information for Peak One and its information, (ii) changing the definition
of “Principal Amount” to mean the Owed Principal Amount, (iii) deleting the second sentence, (iv)
deleting all of the third sentence but keeping the definition of “Common Stock,” and (v) in the last
sentence, deleting all words between the word “time” and the period; (b) Section 2(a) is amended to
provide that all amounts due under the Convertible Debenture, including the Principal Amount and
interest acrued thereon, shall be convertible into Common Stock at a fixed conversion price of $.005
per share, subject to equitable adjustments resulting from any stock splits, stock dividends,
recapitalizations, or similar events or events with similar effect; provided that, if any amount of any
Note shall be convertible into Common Stock at a price per share that is less than $0.002 per share,
then, at the election of the Holder, the conversion price shall be adjusted to be equal the lowest price
at which any such amount of a Note shall be converted into Common Stock (subject to the same
equitable adjustments), with any such adjustment to be for the benefit of the Holder and, at the Holder’s
election, one or more other holders of Common Stock as of November 1, 2016; (c) Section 2(b) of the
Convertible Debenture is deleted in its entirety; (d) Section 3 is deleted in its entirety and replaced with
the following “Any amount owed under this Debenture may be converted at the election of the Holder
prior to, at or after the Maturity Date.”; (e) the first four sentences of Section 9 are amended and restated
to provide that the Convertible Debenture shall be governed by the law of the State of Nevada and that
any dispute or other matter between the parties shall be submitted to expedited commerical arbitration
before Pan Pacific Arbitration in accorance with Section 13 below; (f) interest shall acrue from the
date hereof on all Owed Principal Amount at a rate per annum equal to ten percent (10%) per annum,
with a minimum interest accrual of 10% of the Principal Amount in the event the Convertible
Debenture is converted or repaid within one year, and (g) the Convertible Debenture shall entitle the
Holder to voite on all matters on which holders of Common Stock are entitled to vote, including the
election of directors, on an as-converted basis, based on the maximum number of shares of Common
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Stock into with the Convertible Debenture is convertible, applying any then-applicable conversion
limitation.
5.
Events of Default. In addition to the Events of Default listed in the Convertible
Debenture, the occurrence of any of the following shall also constitute an “Event of Default” under the
Convertible Debenture and this Agreement:
(a)
Failure to Pay. The Company shall fail to pay when due any outstanding
amount owed under the Convertible Debenture;
(b)
Cross Default. A default shall occur in any other obligation of the Company
to pay money or to perform an obligation when due;
(c)
Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i)
apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all
or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors,
(iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under
any applicable statute), (vi) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its property by any official in an involuntary case or other proceeding commenced
against it, or (vii) take any action for the purpose of effecting any of the foregoing; or
(d)
Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of the Company or of all or a substantial part
of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within thirty (30) days of commencement.
6.
Rights of Lender upon Default. In addition to any remedies listed in the Convertible
Debenture or available at law or in equity, upon the occurrence and during the continuance of any
Event of Default (and giving effect to any applicable cure periods) and at any time thereafter during
the continuance of such Event of Default, Lender may declare all amounts payable under the
Convertible Debenture to be and become immediately due and payable, whereupon such amounts shall
be immediately due and payable in full. In addition to the foregoing remedies, upon the occurrence or
existence of any Event of Default, Lender may exercise any other right power or remedy otherwise
permitted to it by law, either by suit in equity or by action at law, or both.
7.
No Assignment by the Company. Neither this Agreement nor the Convertible
Debenture nor any of the rights, interests, or obligations of the Company hereunder or thereunder may
be assigned, in whole or in part, by the Company, including by operaiton of law, without the prior
written consent of Lender.
8.
Waiver and Amendment. Any provision of this Agreement may be amended,
waived, or modified upon the written consent of Company and the Lender.
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9.
Notices.
All notices, requests, demands, consents, instructions, or other
communications required or permitted hereunder shall be in writing and faxed, emailed, mailed, or
delivered to each party at the respective addresses of the parties provided for such purpose. All such
notices and communications will be deemed given when sent to an address of the reciptient. Any party
hereto may by notice so given change its address for future notice hereunder.
10.
Payment. Payment shall be made in lawful tender of the United States.
11.
Expenses. If action is instituted to collect on the Convertible Debenture or to enforce
any right under this Agreement, the prevailing party shall pay all costs and expenses, including, without
limitation, attorneys’ fees and costs, incurred in connection with such action.
12.
Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof.
13.
Arbitration; Waiver of Right to Trial by Jury. Any dispute, controversy or claim
arising from or connected with this Agreement, including one regarding the existence, validity or
performance of this Agreement or the Convertible Debenture (a “Dispute”) shall be referred to and
finally resolved by arbitration under the expedited commercial arbitration rules of Pan Pacific
Arbitration. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
CONVERTIBLE DEBENTURE, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
14.
Usury Limitations. It is the intention of the Company and Lender to conform strictly
to applicable usury laws. Accordingly, notwithstanding anything to the contrary in this Agreement or
the Convertible Debenture, amounts deemed to constitute interest under applicable law and contracted
for, chargeable, or receivable under this Agreement or under the Convertible Debenture shall under no
circumstances, together with any other interest, late charges, or other amounts which may be
interpreted to be interest contracted for, chargeable, or receivable hereunder or thereunder, exceed the
maximum amount of interest permitted by law, and in the event any amounts were to exceed the
maximum amount of interest permitted by law, such excess amounts shall be deemed a mistake and
shall either be reduced immediately and automatically to the maximum amount permitted by law or, if
required to comply with applicable law, be canceled automatically and, if theretofore paid, at the option
of Lender, be refunded to the Company or credited on the principal amount of the Convertible
Debenture then outstanding.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company and Lender have each caused this Escrow Funding
Agreement to signed by their duly appointed and authorized officers as the act and deed of such
company as of the date first written above.
CLEAN ENERGY TECHNOGIES, INC.,
a Nevada corporation
By:
Kambiz Mahdi
Chief Executive Officer
RED DOT INVESTMENT, INC.,
a California corporation
By:
Ted Hsu
Chief Executive Officer
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