CETX Cemtrex Inc

Item 1.01 – Entry into a Material Definitive Agreement

On February 26, 2021, we entered into a Settlement and Mutual Release Agreement (the “Agreement”) with Aron Govil, our former officer and director, concerning a dispute that has arisen between the parties related to, among other things, a series of transactions in 2017 and 2018 where funds were transferred from our bank account to the account of an entity that is controlled by Mr. Govil.

The total amount of disputed transfers was approximately $7,100,000 and occurred during 2017 and 2018. The disputed transfers occurred in fiscal year 2017 in the amount of $5,600,000 and in fiscal year 2018 in the amount of $1,500,000. We did not find any other such transfers during this period or after that after looking at all our bank statements. These disputed transfers give rise to claims against Mr. Govil.

In settlement, Mr. Govil is required to pay us consideration with a total value of $7,100,000 (the “Settlement Amount”) within 10 business days of entering the Agreement. Part of the Settlement Amount will be paid in securities: Mr. Govil shall transfer to us the securities that he or his entities own in our company, including 1,000,000 shares of Series A Preferred Stock, 50,000 Shares of Series C Preferred Stock, Series 469,949 shares of Series 1 Preferred Stock, and forfeit all outstanding options to purchase shares of commons stock (collectively, the “Securities”). The Securities being surrendered by Govil to us are collectively valued at the amount of $5,566,720.

The balance of the Settlement Amount will be contained in a secured promissory note (the “Note”) that Mr. Govil is required to issue to our company. The Note bears interest at 9% per annum and is secured by all of Mr. Govil’s assets. Mr. Govil also agreed to sign an affidavit confessing judgment in the event of a default on the Note.

The foregoing description of the Settlement Agreement, and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Settlement Agreement, which is included in this Current Report as Exhibit 10.1, and are incorporated herein by reference.