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): January 4, 2017

 

CLEAN ENERGY TECHNOLOGIES, INC.

(Exact name of Company as specified in its charter)

 

 

 

 

Nevada

333-125678

20-2675800

(State or other jurisdiction

(Commission File Number)

(IRS Employer

of Incorporation)

 

Identification Number)

 

 

2990 Redhill Avenue

Costa Mesa, CA 92626

 

 

(Address of principal executive offices)

 

 

 

Phone: (949) 273-4990

 

 

(Company’s Telephone Number)

 

 

 

 

 

 

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-K

 

 

Item 1.01 Entry into a Material Definitive Agreement


 

Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant”) and EMA Financial, LLC, a Delaware limited liability company (“EMAF”) entered into a Partial Debt Settlement Agreement (the “Settlement Agreement”) dated January 9, 2017 pursuant to which the Registrant and EMAF agreed to the terms of the partial repayment of the 12% Convertible Note (the “Note”) with Issue Date of June 6, 2016 in the original principal amount of $87,500 made by Registrant in favor of EMAF.  Pursuant to the Settlement Agreement, of the $80,762.40 in principal and $6,296.86 of accrued interest outstanding (totaling $87,059.26), $60,941.49 was satisfied and canceled in consideration of the payment to EMAF of $97,506.38.  The remaining amount due under the Note of 26,117.77 (consisting of $24.228.72 in principal and $1,899.05 in interest) remained outstanding under the original terms of the Note.  The Registrant caused the debt amount to be paid to Subscriber on January 12, 2017.  

 

Effective January 4, 2017, Auctus Fund, LLC, a Delaware limited liability company (“AF”) elected to convert $15,400 ($11,544.45 in principal and $3.855.55 in accrued interest) under the Convertible Promissory Note (the “AF Note”) dated July 6, 2016 issued to AF pursuant to the Securities Purchase Agreement dated July 6, 2016 between the Registrant and AF into a total of 7,000,000 shares of Common Stock.  Such conversion left $66.205.55 remaining due and payable under the AF Note. Concurrently, the Registrant and AF agreed to the terms of the repayment of the balance of all sums due and payable under the AF Note through payment by the Registrant to AF of a total of $89,401.98.  The Registrant caused the total amount of $89,401.98 to be paid to Subscriber on January 9, 2017, satisfying in full all obligations under the AF Note.

 

Effective February 14, 2017, JSJ Investments, Inc., a Texas company (“JSJ”) the holder of a convertible note in the principal amount of $57,000 dated August 15, 2016 (the “JSJ Note”), agreed (the “Payoff Agreement”) to the terms of the repayment of the balance of all sums due and payable under the JSJ Note, through payment by the Registrant to JSJ of a total of $86,079.37 (the “Payoff Amount”).  The Registrant caused the total amount of $86,079.37 to be paid to JSJ on February 14, 2017, satisfying in full all obligations under the JSJ Note as per the terms of the Payoff Agreement.

 

Concurrently with the partial settlement of the Note payable to EMAF and the satisfaction of all remaining amounts due under the AF Note, the JSJ Note, the Registrant and Megawell USA Technology Investment Fund I LLC, a Wyoming limited liability company in formation (“MW I”) entered into a Credit Agreement and Promissory Note (the “Credit Agreement”), pursuant to which MW I had caused to be deposited funds into escrow to fund the entirety of Registrant’s settlement amount payable to EMAF with respect to the Note and the repayment amount under the AF Note and JSJ Note.  Concurrently, MW I acquired the Convertible Debenture dated March 15, 2016 held by Red Dot Investment, Inc. (the “Master Debenture”).   Pursuant to the terms of the Credit Agreement, the Registrant assigned to MW I all of the Registrant’s rights to repurchase or repay the Note payable to EMAF, the JSJ Note and the AF Note and otherwise agreed that MW I would be subrogated to the rights of either note holder to the extent a note was repaid with funds advanced by MW I.  The Registrant and MW I agreed that all amounts advanced by MW I to or for the benefit of the Registrant would be governed by the terms of the Master Debenture, including the payment of financing fees, interest, minimum interest, and convertibility. The Master Debenture is described in the Registrant’s Current Report dated October 31, 2016, as amended.  Red Dot Investment, Inc. is MW I’s duly appointed agent for purposes of administration of the Credit Agreement and the Master Debenture and advances thereunder.

 

The convertible debt issued to MW I as described above and the underlying securities were offered by the Registrant to MW I pursuant to the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(a)(2) of the Act.

 

The foregoing summary descriptions of the Settlement Agreement, Payoff Agreement and the Credit Agreement are not complete and are qualified in their entirety by reference, to the full text of the Settlement Agreement, a copy of which is included as Exhibit 10.01 to this Current Report, to the full text of the Payoff Agreement, a copy of which is included as Exhibit 10.02 to this Current Report and of the Credit Agreement, a copy of which is included as Exhibit 10.03 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

Partial Debt Settlement Agreement by and between EMA Financial, LLC, a Delaware limited liability company and the Registrant, dated January 9, 2017.

10.02

Payoff Agreement by and between the Registrant and JSJ Investments, Inc., dated February 14, 2017.

10.03

Credit Agreement and Promissory Note by and between Megawell USA Technology Investment Fund I LLC, a Wyoming limited liability company in formation and the Registrant, dated December 31, 2016.

 

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 20, 2017   By: /s/ Kambiz Mahdi  

  Kambiz Mahdi 

  Chief Executive Officer 

 

 

 

 

 

 

 

PARTIAL DEBT SETTLEMENT AGREEMENT

This    PARTIAL    DEBT    SETTLEMENT    AGREEMENT    (this    "Agreement")    is    dated

January   9,   2017   (the   Effective   Date ),   by    and   between   EMA   Financial,   LLC   ( HOLDER ),   a

Delaware   limited   liability company,   and   Clean Energy Technologies,   Inc.,   a Nevada   corporation

( CETY ).

R E C I T A L S:

WHEREAS ,  CETY  issued  a  convertible  promissory   note   in   the  principal   amount  of

$87,500.00 to the HOLDER (the Note ) on or about June 6, 2016; and

WHEREAS ,   as of the   Effective   Date,   the Note is   currently outstanding   in   the amount   of

$87,059.26    (the    Total  Balance ),    consisting    of    $80,762.40    of    principal    and    $6,296.86    of

accrued   interest;

WHEREAS,  HOLDER   and   CETY   desire   to  settle   a   $60,941.49   portion   of   the   Total

Balance (the Settlement   Amount ),   as further provided   herein.

NOW,   THEREFORE ,   in   consideration   of   the   premises   and   of the   terms   and   conditions

herein contained, the parties mutually agree as follows:

1.  Partial Repayment of Note.

1.1

Settlement   Price.    CETY   and   HOLDER   agree   to   settle   the Settlement   Amount,   in

exchange   for   CETY s   payment   of   $97,506.38   (the   Purchase   Price )   to   the   HOLDER   pursuant

to the   wiring   instructions set   forth in Exhibit   A   attached   hereto.    If the Purchase Price does not

clear   into   HOLDER s   bank   account   on   or   before   close   of   business   on   January   12,   2017   (the

Deadline ),   then   this   Agreement   shall   be   null   and   void   at   the   sole   discretion   of   the   HOLDER,

the   Total   Balance   shall   automatically   be   multiplied   by   125%   (for   the   avoidance   of   doubt,   such

penalty   shall   be   added   to   the   Total   Balance   even   if   the   HOLDER   declares   the   Agreement   null

and  void),   and   the   HOLDER   shall   retain   all   rights   under   the   Note   with   respect   to   the   Total

Balance   and   penalty.    Upon   clearing   of the   Purchase   Price   into   HOLDER s   bank   account   by the

Deadline,   the   Settlement   Amount   shall   be   deemed   satisfied   in   full.    The   difference   of   the   Total

Balance   minus   the   Settlement   Amount,   totaling   $26,117.77   (the    Remainder   Amount )

(consisting   of    $24,228.72    of    principal    and    $1,889.05    of    accrued   interest),    shall    remain

outstanding   under   the   Note   pursuant   to   the   terms   therein.    No   provision   of this   Agreement   shall

be  construed  to  reduce  or  hinder  the  HOLDER s   rights   under  the  Note  with   respect  to  the

Remainder   Amount,   including   but   not   limited   to   HOLDER s right   to   effectuate conversion(s)   of

the Remainder Amount.

2.   Representations and Warranties of CETY .

2.1

Authorization.     The    execution,    delivery    and    performance    by    CETY    of    this

Agreement    and    the    performance    of    all    of    CETY s    obligations    hereunder    have    been    duly

authorized   by   all   necessary   corporate   action,   and   this   Agreement   has   been   duly   executed   and

delivered  by   CETY.     This   Agreement  constitutes   the   valid   and  binding   obligation   of  CETY



enforceable   in   accordance   with   its   terms.     The   execution   and   performance   of   the   transactions

contemplated   by   this   Agreement   and   compliance   with   its   provisions   by   CETY   will   not   conflict

with   or   result   in   any   breach   of   any   of   the   terms,   conditions,   or   provisions   of,   or   constitute   a

default   under,   its   Certificate   of   Incorporation   or   Bylaws   or   any   agreement   to   which   CETY   is   a

party or by which it   or any of its properties is bound.

2.3

Binding   Obligation.    Assuming   the due execution   and   delivery of this Agreement,

this   Agreement   constitutes the   valid   and   binding   obligation of   CETY,   enforceable against   CETY

in accordance with its terms.

3.  Representations and Warranties of the   HOLDER .

3.1

Authorization.    The  HOLDER  has  full   power  and  authority   to  enter  into  this

Agreement,    to    perform    its    obligations    hereunder    and    thereunder    and    to    consummate    the

transactions   contemplated   hereby   and   thereby.   This   Agreement   constitutes   a   valid   and   legally

binding obligation of the HOLDER, enforceable in accordance with the   terms.

4.   Miscellaneous .

4.1

No  Third  Party   Beneficiaries.    This   Agreement  shall  not  confer  any   rights  or

remedies   upon   any   person   other   than   the   parties   and   their   respective   successors   and   permitted

assigns.

4.2

Entire   Agreement.    This   Agreement   (including   the   documents   referred   to   herein)

constitutes   the  entire  agreement  among  the  parties   and  supersedes   any   prior  understandings,

agreements,   or   representations   by or   among   the   parties,   written or oral,   to   the   extent   they related

in any way to the subject   matter hereof.

4.3

Counterparts.    This agreement   may be executed   in   one or   more counterparts,   each

of which shall   be   deemed   an original,   but   all of which together   shall constitute one and   the same

instrument.

4.4

Governing    Law.     This    Agreement    shall    be    governed    by    and    construed    in

accordance with the   laws of the State of New York (without regard to conflict of laws).

4.5

No   Amendments.     No   amendment   of   any   provision   of   this   Agreement   shall   be

valid unless the same shall be   in writing and signed   by the HOLDER and CETY.

4.6

Severability.     Any    term    or    provision    of    this    Agreement    that    is    invalid    or

unenforceable   in   any   situation   in   any   jurisdiction   shall   not   affect   the   validity or   enforceability of

the   remaining   terms   and   provisions   hereof or the   validity or   enforceability   of the   offending   term

or provision in any other situation or in any other jurisdiction.

4.7

Costs.   Each   party   will   bear   the   costs   and   expenses   incurred   by   it   in   connection

with this Agreement   and the transaction contemplated thereby.

2

Partial Debt Settlement Agreement   CETY, T1, 2017-01-09



4.8

Survival   of   Terms.     Except   as   provided   in   this   Agreement,   all   representations,

warranties   and   covenants   contained   in   this   Agreement   or   in   any   certificates   or other   instruments

delivered   by   or   on   behalf   of   the   parties   hereto   shall   be   continuous   and   survive   the   execution   of

this Agreement.

4.9

Non-Assignment.     This   Agreement  and   the  obligations  hereunder   shall   not  be

assignable.

4.10

Notices.  Notices hereunder shall be given only by personal delivery, registered or

certified   mail,   return   receipt   requested,   overnight   courier   service,   facsimile,   or   electronic   mail,

and   shall   be   deemed   transmitted   when personally   delivered,   deposited   in   the   mail,   delivered   to   a

courier   service,   transmitted   by   facsimile,   or   transmitted   by   electronic   mail   (as   the   case   may   be),

postage   or   charges   prepaid   (if   applicable),   and   addressed   to   the   particular   party to   whom   the

notice   is to   be sent.

4.11     Headings.     The   headings   used   in   this   Agreement   are   for   convenience   only   and

shall not by themselves determine the   interpretation, construction or meaning of this Agreement.

4.12     Attorneys   Fees   and   Costs.     In   the   event   any   party   to   this   Agreement   shall   be

required   to   initiate   legal   proceedings   to   enforce   performance   of   any   term   or   condition   of   this

Agreement,   including,   but   not   limited   to,   the   interpretation   of   any   term   or   provision   hereof,   the

payment   of   moneys   or   the   enjoining   of   any   action   prohibited   hereunder,   the   prevailing   party

shall  be  entitled  to    recover    such  sums    in  addition  to    any  other  damages  or  compensation

received,   as   will   reimburse   the   prevailing   party   for   reasonable   attorneys   fees   and   court   costs

incurred     on     account     thereof   (including,     without     limitation,     the     costs     of   any     appeal)

notwithstanding the nature of the claim or cause of action asserted by the prevailing party.

IN   WITNESS   WHEREOF ,   the   HOLDER   and   CETY   have   caused   this   Agreement   to   be

executed as of the Effective Date.

HOLDER :

EMA FINANCIAL, LLC

By: _____________________________

Name: Jamie Beitler

Title:   Authorized Signatory

THE ISSUER:

CLEAN ENERGY TECHNOLOGIES, INC.

By: _____________________________

Name:   Kambiz Mahdi

Title: Chief Executive Officer

3

Partial Debt Settlement Agreement   CETY, T1, 2017-01-09



PAYOFF AGREEMENT

This   PAYOFF   AGREEMENT   (the   Agreement ),   dated   as   of   February   13,   2017   (the

Execution   Date ),   by   and   between   Clean   Energy   Technologies   a   Nevada   corporation,   with

headquarters  located  at  2990  Redhill  Avenue,  Costa  Mesa,  CA  (the   Company ),  and  JSJ

INVESTMENTS,    INC. ,    a    Texas    corporation,    with    its    address    at    10830    North    Central

Expressway, Suite 152, Dallas, TX 75231 (the Holder ).

WHEREAS :

A.

The   Company   issued   a   convertible   promissory   note   in   the   principal   amount   of

$57,000 to the Holder on August 15, 2016 (the Note ).

NOW THEREFORE , the Company and the Holder hereby agree as follows:

1.

The Holder   hereby   agrees   that   in   the   event   that Holder   receives   $86,079.37

(the   Payoff   Amount )   from   the   Company   on   or   before   February   14,   2017   (the   Deadline ),   the

Note shall be deemed satisfied in full.

2.

In    the    event    that Holder    does    not    receive    the    Payoff    Amount    on    or

before   the   Deadline,   this   Agreement   shall,   at   the   sole   option   of   the Holder ,   be   deemed   null   and

void and of no further force or effect.

3.

Except   as   specifically   modified   hereby,   all   of   the   provisions   of   the   Note

shall remain in full force and effect.

IN   WITNESS   WHEREOF ,   the   parties   have   caused   this   Agreement   to   be   duly   executed

by their respective authorized representatives as of the Execution Date.

Clean Energy Technologies

By:

Name: ________________________

Title: Chief Executive Officer

JSJ Investments, Inc.

By:

[PAYOFFAGREEMENT_EX10Z2001.JPG]

Name: Sameer Hirji

Title:   President

1



C LEAN E NERGY T ECHNOLOGIES , I NC .

CREDIT AGREEMENT AND PROMISSORY NOTE

This C REDIT A GREEMENT   AND P ROMISSORY N OTE   (this   Agreement )   dated   as   of   December

31,  2016  is  made  by   and  between  Clean  Energy  Technologies,  Inc.,  a  Nevada  corporation  (the

Company )   and   Megawell   USA   Technology   Investment   Fund   I   LLC,   a   Wyoming   limited   liability

company in formation ( Lender ).

R ECITALS

W HEREAS 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 ).

W HEREAS   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 (the Peak One Debenture ).

W HEREAS the Company issued a notice of redemption of the Peak One Debenture and, pursuant

to an Escrow Funding Agreement, the Company assigned its rights under such redemption to Red Dot

Investment, Inc., a California corporation ( Red Dot ), Red Dot acquired the Peak One Debenture, and

the Company and Red Dot or an associate of Red Dot amended the Peak One debenture as held by Red

Dot (or such associate) (the Peak One Debenture, as so amended, the Master Debenture ).

W HEREAS Lender has acquired the Master Debenture from Red Dot.

W HEREAS   on   or   about   June   6,   2016,   July   6,   2016,   and   August   15,   2016,   respectively,   the

Company issued the following securities (collectively the Notes ):   (1) a 12% Convertible Note in the

original principal amount of $87,500.00 to EMA Financial, LLC, a Delaware limited liability company

( EMA ),   (2) a Convertible Promissory Note in the original principal amount of $77,750.00 to Auctus

Fund   LLC,   a   Delaware   limited   liability company   ( Auctus ),   and   (3)   a   12%   Convertible   Promissory

Note   in   the   original   principal   amount   of   $57,000.00   to   JSJ   Investments,   Inc.,   a   Texas   corporation

( JSJ and, together with Auctus and EMA, the Additional Noteholders ) .

W HEREAS the Company intends to redeem all of the Notes or to repay all or substantially all of

the amounts owed to the Additional Noteholders under the Notes, pursuant to which the Company will

pay amounts of $89,401.98, $97,506.38 and $86,079.37, respectively (the Note Payment Amounts ).

W HEREAS the Company does not presently have the funds to pay the Note Payment Amounts.

W HEREAS   the   Company   would   like   to   borrow   additional   amounts   from   the   Lender   for   the

Company s operating capital needs ( Additional Advance Amounts ), which advances would be at the

sole and absolute discretion of Lender.

W HEREAS   Lender   has   deposited   in   escrow   with   Richardson   &   Maloney   LLP   (the   Escrow

Holder )   certain   funds   that   may   be   advanced   to   or   for   the   benefit   of   the   Company   as   Note   Payment

Amounts or as Additional Advance Amounts (the Escrow ).

W HEREAS , as a condition to the advance of any amount from Escrow relating to Note Payment

Amounts, the Company agrees to assign to Lender all of the Company s rights to redeem, repurchase,



reacquire,   repay   or   otherwise   satisfy   any   associated   Note   and   agrees   that   Lender   shall   otherwise   be

subrogated to all of the rights of the lender under any Note repaid with funds advanced by Lender.

W HEREAS ,   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  Note  Payment  Amounts  and  all   costs,  expenses,  fees  or  other   charges  arising   in

connection with or relating to the Notes or payment of the Note Payment Amounts, the assignment of

the    Company s    rights    relating    thereto,    the    amendment    thereof    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 Notes, payment of the Note Payment Amounts, or the

enforcement or collection of any amounts advanced hereunder, 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   Lender,   Red   Dot,   the   Executive   Chairman   of   the   Company,   or   the   Escrow   Holder

(collectively, the Ancillary Note Expenses ).

W HEREAS , pursuant to additional instructions of Lender or Red Dot, as Lender s agent hereby

expressly authorized for such purpose, Lender may further instruct the Escrow Holder to disburse funds

from   the   Escrow   to   fund Additional   Advance   Amounts   and any and   all   costs,   expenses,   fees   or other

charges   arising   in   connection   with   or   relating   to   such   Additional   Advance   Amounts   or   repayment   of

the Additional Advance Amounts, this Agreement, the transactions contemplated herein, including the

Financing   Fee   and   any   costs,   expenses,   or   other   fees   relating   to   the   Additional   Advance   Amounts,

repayment   of   the   Additional   Advance   Amounts,   or   the   enforcement   or   collection   of   any   amounts

advanced   hereunder,   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   Lender   or   Red   Dot,   as

Lender s   agent   hereby   expressly   authorized   for   such   purpose   (collectively,   the   Ancillary   Advance

Expenses and, together with the Ancillary Note Expenses, the Ancillary Expenses ).

W HEREAS Lender and the Company have agreed that Lender will, where possible, acquire the

rights of the Company with respect to any Note and acquire any acquired Note through Escrow or will

otherwise be subrogated to the rights of any Note holder   and that Lender will not purchase such Note

from the Company; provided, however, that where such an assignment of rights and acquisition of an

outstanding Note is not possible, then Lender shall be so subrogated and the amount and rights of such

Note Payment Amounts and Ancillary Note Expenses shall be deemed an additional advance under the

Master Debenture and such Note Payment Amounts shall be added to the outstanding principal of the

Master Debenture.

W HEREAS Lender and the Company have agreed that Lender is acquiring any Note acquired as

a good faith purchaser for value and a holder in due course, but Lender does not acquire any Note with

any representation or warranty from an Additional Noteholder other than as implied by the Additional

Noteholder to the Company, as assignor, with respect to its ownership of the Note.

W HEREAS Lender and the Company have agreed to amend any acquired Note or the subrogated

rights of Lender in respect thereof, once acquired by Lender or once Lender is subrogated thereto, (a)

to have a fixed conversion price of $.005 per share, subject to the provisions for adjustment provided

for   in   the   Master   Debenture,   as   amended,   (b)   to   have   a   fixed   interest   rate   of   ten   percent   (10%)   per

annum with respect to both the Note Payment Amount and any Ancillary Note 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   Note

2



Expenses   to   constitute   additional   principal   under   the   a   Note   so   acquired,   as   amended,   and   (c)   as

otherwise provided herein.

W HEREAS   Lender   and   the   Company   have   agreed   that,   with   respect   to   any   Note   Advance

Amount or Ancillary Note Expense that relates to a Note that is not acquired by Lender, such amounts

shall be added to the principal amount of the Master Debenture.

W HEREAS   Lender   and   the   Company have   agreed   that,   with   any   Additional   Advance   Amount

or Ancillary Advance Expense shall be added to the principal amount of the Master Debenture.

W HEREAS   Lender   and   the   Company   have   further   agreed   that,   in   the   event   Lender   is   not   the

holder   of   the   Master   Debenture,   this   Agreement   shall   constitute   a   Promissory   Note   with   terms   and

conditions   identical to   the Master   Debenture,   mutatis   mutandis .    In   such event,   any references   herein

to the Master Debenture shall be to this Agreement, mutatis mutandis .

A GREEMENT

N OW ,  T HEREFORE ,    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 accodance 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 Master Debenture (including any terms incorproated by reference therein).

2.

Escrow Deposit; Note Assignment; Promise to Pay .

(a)

Lender   has   designated   and   hereby   reaffirms   such   designation,   from   funds   on

deposit in Escrow with the Escrow Holder, sufficient funds to pay the Note Payment Amounts

and   pay   any   Ancillary   Note   Expenses.   The   total   of   such   amounts   (the   Additional   Owed

Principal   Amount )   shall   be   as   set   forth   in   a   schedule   (the   Loan   Schedule )   prepared   and

updated by Lender or Red Dot, as Lender s agent hereby expressly authorized for such purpose,

from time to time and that may be appended or re-appended by Lender or Red Dot, as Lender s

agent hereby expressly authorized for such purpose, to the Master Debenture (or a copy thereof

if   Lender   does   not   receive   the   original   of   the   Master   Debenture).    The   parties   agree   that   the

Loan  Schedule,  as  prepared  by  Lender  or  Red  Dot,  as  Lender s  agent  hereby  expressly

authorized   for   such   purpose,   from   time   to   time   and   whether   or   not   appended   to   the   Master

Debenture   (or   a   copy   thereof),   shall   conclusive   evidence   of   the   Additional   Owed   Principal

Amount.

(b)

The Company represents and warrants to Lender that the Company has or will

reach   consensual   terms   with   the   Additional   Noteholders   for   redemption   or   repayment   of   the

Notes.

(c)

To the maximum extent possible, the Company hereby assign to   Lender all of

the   Company s   rights   to   repurchase   the  Notes   and   otherwise   agrees   that   Lender   shall   be

subrogated to the rights of any Note prepaid with funds advanced by Lender.

3



(d)

To induce Lender to acquire or repay the Notes, the Company agrees to pay to

Lender   a   fee   of   $10,000.00   (the   Financing   Fee )   with   respect   to   the   Note   Payment   Amount

of each Note and each Additional Advance Amount, 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   Master   Debenture, the   Additional

Owed   Principal   Amount,   together   with   interest   accrued   thereon   and   other   amounts   owing   in

connection   therewith, as   any such   amounts   be   due   and   owing and   whether   or   not   reflected   in

the Loan Schedule.

3.

Escrow Deposit; Additional Advance Amounts; Promise to Pay .

(a)

Lender, directly or through its agent hereby expressly authorized therefor, Red

Dot,   may   designate,   from   funds   on   deposit   in   Escrow   with   the   Escrow   Holder,   funds   to   pay

Additional   Payment Amounts and Ancillary Additional Expenses.    The total of such amounts

(the Second Additional Owed Principal Amount ) shall be as set forth in the Loan Schedule

prepared   and   updated   by   Lender   or   Red   Dot   from   time   to   time   and   that   may   be   appended   or

re-appended to the Master Debenture (or a copy thereof, including if Lender does not receive

the   original   of the   Master Debenture).    The   parties   agree   that   the   Loan   Schedule,   as   prepared

by Lender   or   Red   Dot,   as Lender s   agent   hereby expressly authorized   for   such   purpose,   from

time   to   time   and   whether   or   not   appended   to   the   Master   Debenture   (or   a   copy   thereof),   shall

conclusive evidence of the Second Additional Owed Principal Amount.

(b)

In   consideration   of   the   foregoing,   the   Company   hereby   agrees   to   repay   to

Lender,   in   accordance   with   the   terms   and   conditions   of   the   Master   Debenture,   the   Second

Additional Owed Principal Amount, together with interest accrued thereon and other amounts

owing   in   connection   therewith,   as   any   such   amounts   be   due   and   owing   and   whether   or   not

reflected in the Loan Schedule.

4.

Note Escrow Instruction .   Lender and the Company hereby jointly instruct the Escrow

Holder   to   disburse   funds   from   the   Escrow   to   fund   the   entirety   of   the   Note   Payment   Amounts   and   to

pay   from   the   Escrow   Account   any   and   all   Ancillary   Note   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 or Red Dot, as Lender s agent hereby expressly authorized

for   such   purpose,   shall   confirm   in   writing   the   Escrow   Holder s   payment   of   Ancillary   Note   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.

5.

Additional   Advance   Escrow   Instructions .     Lender,   directly   or   through   its   agent

hereby expressly authorized therefor, Red Dot, may in the future instruct the Escrow Holder to disburse

funds   from   the   Escrow   to   fund   Additional   Advance   Amounts   and   to   pay   from   the   Escrow   Account

Ancillary Additional Expenses, inculding the legal expenses and the expenses of the Escrow Holder.

6.

Events of Default .   In addition to the Events of Default listed in the Master Debenture,

the   occurrence   of   any   of   the   following   shall   also   constitute   an   Event   of   Default   under   the   Master

Debenture and this Agreement:

4



(a)

Failure   to   Pay.     The   Company   shall   fail   to   pay   when   due   any   outstanding

amount owed under the Master 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.

7.

Rights   of   Lender   upon   Default .   In   addition   to   any   remedies   listed   in   the   Master

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   Master

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.

8.

No Assignment by the Company .  Neither this Agreement nor the Master 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.

9.

Waiver  and  Amendment.    Any  provision  of  this  Agreement  may  be  amended,

waived, or modified upon the written consent of Company and the Lender, directly or through its agent

hereby expressly authorized therefor, Red Dot.

10.

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.

11.

Payment.  Payment shall be made in lawful tender of the United States.

5



12.

Expenses.    If action is instituted to collect   on the   Master 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.

13.

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.

14.

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 Master 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

MASTER     DEBENTURE,     OR     THE     TRANSACTIONS     CONTEMPLATED     HEREBY     OR

THEREBY.

15.

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 Master Debenture, amounts deemed to constitute interest under applicable law and contracted for,

chargeable,  or  receivable  under  this  Agreement  or  under  the  Master  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   Master   Debenture

then outstanding.

[Remainder of page intentionally left blank]

6



I N W ITNESS W HEREOF , the Company and Lender have each caused this Credit Agreement and

Promissory Note   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

MEGAWELL USA TECHNOLOGY

INVESTMENT FUND I LLC,

a Wyoming limited liability company in formation

By:

Morris Lu

Managing Director

7