EXHIBIT 10.1
STANDSTILL
AGREEMENT
This
Standstill Agreement (this “Agreement”) is entered into as of April 30, 2024 (the “Effective Date”)
by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and Cemtrex, Inc., a Delaware
corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given
to them in the Notes (defined below).
A.
Borrower previously sold and issued to Lender that certain Promissory Note, as amended, dated September 30, 2021 in the original principal
amount of $5,755,000.00 (the “September Note”) pursuant to that certain Note Purchase Agreement dated September 30,
2021 by and between Lender and Borrower (the “September Purchase Agreement,” and together with the September Note
and all other documents entered into in conjunction therewith, the “September Transaction Documents”).
B.
Borrower also previously sold and issued to Lender that certain Promissory Note, as amended, dated February 22, 2022 in the original
principal amount of $9,205,000.00 (the “February Note,” and together with the September Note, the “Notes”)
pursuant to that certain Note Purchase Agreement dated February 22, 2022 by and between Lender and Borrower (the “February Purchase
Agreement,” and together with all other documents entered into in conjunction therewith, the “February Transaction
Documents,” and together with the September Transaction Documents, the “Transaction Documents”).
C.
Borrower has requested and Lender has agreed, subject to the terms, conditions and understandings expressed in this Agreement, to refrain
and forbear temporarily from making redemptions under the Notes.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.
Recitals and Definitions. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement
are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.
2.
Equity Raise.
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(a) |
Borrower
is in the process of completing an equity financing of at least $9,000,000.00 (the “Financing”). Borrower shall
pay to Lender the greater of $4,000,000.00 and fifty-percent (50%) of the net proceeds received from the Financing within
three (3) business days (the “Payment Date”, and such payment, the “Financing Payment”).
Any payments made pursuant to this Section 2 will be deemed payments under the Notes (allocated between the Notes at Lender’s
discretion). In the event the Financing has not closed by May 10, 2024, then this Agreement will automatically terminate and be
deemed void ab initio. |
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(b) |
Lender
hereby acknowledges, agrees and consents to the Financing as a “Variable Security Issuance” pursuant to (i) Section 4
of the September Purchase Agreement and (ii) Section 4 of the February Purchase Agreement. |
3.
Standstill. For the period beginning on the date of the closing of the Financing and continuing for one (1) year thereafter (the
“Standstill Period”), Lender will not seek to make any redemptions under Section 5 of either of the Notes (the
“Standstill”).
4.
Maturity Date Extension. In the event Lender receives the Financing Payment on or before May 10, 2024, then the Maturity
Date of the September Note will automatically be extended until June 30, 2025 and the Maturity Date of the February Note will automatically
be extended until February 22, 2026.
5.
Future Equity Financings. Borrower shall pay to Lender fifty percent (50%) of the net proceeds Borrower receives from the sale
of any of its Common Stock or preferred stock during the Standstill Period. Any payments made pursuant to this Section 5 will be deemed
payments under the Notes (allocated between the Notes at Lender’s discretion).
6.
Ratification of the Notes. Except as set forth herein, the Notes shall be and remain in full force and effect in accordance with
their terms, and are hereby ratified and confirmed in all respects. Borrower acknowledges that it is unconditionally obligated to pay
the remaining balance of the Notes and represents that such obligation is not subject to any defenses, rights of offset or counterclaims.
No forbearance or waiver other than as expressly set forth herein may be implied by this Agreement. Except as expressly set forth herein,
the execution, delivery, and performance of this Agreement shall not operate as a waiver of, or as an amendment to, any right, power
or remedy of Lender under the Notes or the Transaction Documents, as in effect prior to the date hereof.
7.
Failure to Comply. Borrower understands that the Standstill shall terminate immediately upon the occurrence of any breach of this
Agreement and that in any such case, Lender may seek all recourse available to it under the terms this Agreement or applicable law. Upon
the termination of this Agreement or the expiration of the Standstill Period, among other rights, Lender shall have the right to redeem
all or any portion of the Outstanding Balance in accordance with the terms of the Notes. For the avoidance of doubt, the termination
of the Standstill pursuant to this Section 7 shall not terminate, limit or modify any other provision of this Agreement.
8.
Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and
for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows:
(a)
Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein,
all of which have been duly authorized by all proper and necessary action. No consent, approval, filing or registration with or notice
to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations
of Borrower hereunder.
(b)
Any Event of Default which may have occurred under the Notes has not been, is not hereby, and shall not be deemed to be waived by Lender,
expressly, impliedly, through course of conduct or otherwise except upon full satisfaction of Borrower’s obligations under this
Agreement. The agreement of Lender to refrain and forbear from exercising any rights and remedies by reason of any existing default or
any future default shall not constitute a waiver of, consent to, or condoning of, any other existing or future default.
(c)
All understandings, representations, warranties and recitals contained or expressed in this Agreement are true, accurate, complete, and
correct in all respects; and no such understanding, representation, warranty, or recital fails or omits to state or otherwise disclose
any material fact or information necessary to prevent such understanding, representation, warranty, or recital from being misleading.
Borrower acknowledges and agrees that Lender has been induced in part to enter into this Agreement based upon Lender’s justifiable
reliance on the truth, accuracy, and completeness of all understandings, representations, warranties, and recitals contained in this
Agreement. There is no fact known to Borrower or which should be known to Borrower which Borrower has not disclosed to Lender on or prior
to the date hereof which would or could materially and adversely affect the understandings of Lender expressed in this Agreement or any
representation, warranty, or recital contained in this Agreement.
(d)
Except as expressly set forth in this Agreement, Borrower acknowledges and agrees that neither the execution and delivery of this Agreement
nor any of the terms, provisions, covenants, or agreements contained in this Agreement shall in any manner release, impair, lessen, modify,
waive, or otherwise affect the liability and obligations of Borrower under the terms of the Notes or any of the other Transaction Documents.
(e)
Borrower has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes
of action of any kind or nature whatsoever against Lender, directly or indirectly, arising out of, based upon, or in any manner connected
with, the transactions contemplated hereby, whether known or unknown, which occurred, existed, was taken, permitted, or begun prior to
the execution of this Agreement and occurred, existed, was taken, permitted or begun in accordance with, pursuant to, or by virtue of
any of the terms or conditions of the Transaction Documents. To the extent any such defenses, affirmative or otherwise, rights of setoff,
rights of recoupment, claims, counterclaims, actions or causes of action exist or existed, such defenses, rights, claims, counterclaims,
actions and causes of action are hereby waived, discharged and released. Borrower hereby acknowledges and agrees that the execution of
this Agreement by Lender shall not constitute an acknowledgment of or admission by Lender of the existence of any claims or of liability
for any matter or precedent upon which any claim or liability may be asserted.
(f)
Borrower hereby acknowledges that it has freely and voluntarily entered into this Agreement after
an adequate opportunity and sufficient period of time to review, analyze, and discuss (i) all terms and conditions of this Agreement,
(ii) any and all other documents executed and delivered in connection with the transactions contemplated by this Agreement, and (iii)
all factual and legal matters relevant to this Agreement and/or any and all such other documents, with counsel freely and independently
selected by Borrower (or had the opportunity to be represented by counsel). Borrower further acknowledges and agrees that it has actively
and with full understanding participated in the negotiation of this Agreement and all other documents executed and delivered in connection
with this Agreement after consultation and review with its counsel (or had the opportunity to be represented by counsel), that all of
the terms and conditions of this Agreement and the other documents executed and delivered in connection with this Agreement have been
negotiated at arm’s-length, and that this Agreement and all such other documents have been negotiated, prepared, and executed without
fraud, duress, undue influence, or coercion of any kind or nature whatsoever having been exerted by or imposed upon any party by any
other party. No provision of this Agreement or such other documents shall be construed against or interpreted to the disadvantage of
any party by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured,
dictated, or drafted such provision.
(g)
There are no proceedings or investigations pending or threatened before any court or arbitrator or before or by, any governmental, administrative,
or judicial authority or agency, or arbitrator, against Borrower.
(h)
There is no statute, regulation, rule, order or judgment and no provision of any mortgage, indenture, contract or other agreement binding
on Borrower, which would prohibit or cause a default under or in any way prevent the execution, delivery, performance, compliance or
observance of any of the terms and conditions of this Agreement and/or any of the other documents executed and delivered in connection
with this Agreement.
(i)
Borrower is solvent as of the date of this Agreement, and none of the terms or provisions of this Agreement shall have the effect of
rendering Borrower insolvent. The terms and provisions of this Agreement and all other instruments and agreements entered into in connection
herewith are being given for full and fair consideration and exchange of value.
(j)
To the best of its belief, after diligent inquiry, Borrower represents and warrants that, as of the date hereof, no Event of Default
under the Notes (nor any breach by Borrower under any of the other Transaction Documents) exists.
8.
Certain Acknowledgments. Each of the parties acknowledges and agrees that no property or cash consideration of any kind whatsoever
has been or shall be given by Lender to Borrower in connection with the Standstill or any other amendment to the Notes granted herein.
9.
Arbitration. Each party agrees that any dispute arising out of or relating to this Agreement shall be subject to the Arbitration
Provisions (as defined in the Transaction Documents).
10.
Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah without
regard to the principles of conflict of laws. Each party agrees that the proper venue for any dispute arising out of or relating to this
Agreement shall be determined in accordance with the provisions of the Transaction Documents. BORROWER HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
11.
Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had
signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of
this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Electronic
signatures shall be deemed to be original signatures for all purposes.
12.
Attorneys’ Fees. In the event of any arbitration or action at law or in equity to enforce or interpret the terms of this
Agreement, the parties agree that the prevailing party shall be entitled to an additional award of the full amount of the attorneys’
fees and expenses paid by such prevailing party in connection with the arbitration, litigation and/or dispute without reduction or apportionment
based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator’s
or a court’s power to award fees and expenses for frivolous or bad faith pleading.
13.
Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve
the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.
14.
Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes
all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to
the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower
makes any representation, warranty, covenant or undertaking with respect to such matters.
15.
No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, representatives
or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, stockholders,
or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into
the transactions contemplated by this Agreement and the Transaction Documents, Borrower is not relying on any representation, warranty,
covenant or promise of Lender or its officers, directors, members, managers, agents or representatives other than as set forth in this
Agreement and in the Transaction Documents.
16.
Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of
this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.
17.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder
may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement
or any of its obligations herein without the prior written consent of Lender.
18.
Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Notes and each of the
other Transaction Documents shall remain in full force and effect, enforceable in accordance with all of their original terms and provisions.
This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there
is any conflict between the terms of this Agreement, on the one hand, and the Notes or any other Transaction Document, on the other hand,
the terms of this Agreement shall prevail.
19.
Time is of Essence. Time is of the essence with respect to each and every provision of this Agreement.
20.
Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this
Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Transaction Documents.
21.
Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.
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BORROWER: |
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CEMTREX,
INC. |
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By:
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/s/
Saagar Govil |
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Saagar
Govil, CEO |
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LENDER: |
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STREETERVILLE
CAPITAL, LLC |
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By: |
/s/John
M. Fife |
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John
M. Fife, President |
