Equity Compensation Plan Information
The following table sets forth information as of December 31, 2015 regarding the Company's equity compensation plan.
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Plan Category
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Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights(1)
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Weighted Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights(2)
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Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in the first
column)(3)
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Equity compensation plans approved by security holders:
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Amended and Restated Stock Incentive Plan
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296,902
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$
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20.00
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40,641
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Equity compensation plans not approved by security holders:
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N/A
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-
(1)
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Includes
outstanding restricted share units of 39,929.
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(2)
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Excludes
the restricted share units described in footnote 1 above because they do not have an exercise price.
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(3)
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480,000
shares are reserved for issuance under the Amended and Restated Stock Incentive Plan.
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DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
We are delivering this Information Statement to all stockholders of record as of the Record Date. Stockholders residing in the same household
who hold their shares in the name of a bank, broker or other holder of record may receive only one Information Statement if previously notified by their bank, broker or other holder. This process, by
which only one Information Statement is delivered to multiple security holders sharing an address, unless contrary instructions are received from one or more of the security holders, is called
"householding." Householding may provide convenience for stockholders and cost savings for companies. Once begun, householding may continue unless instructions to the contrary are received from one or
more of the stockholders within the household.
Copies
of this Information Statement are available promptly by calling (805) 639-9458, or by writing to Clean Diesel Technologies, Inc., Attn: Investor Relations, 1621
Fiske Place, Oxnard, CA 93033. If you are receiving multiple copies of this Information Statement, you also may request orally or in writing to receive a single copy of this Information
Statement by calling (805) 639-9458, or by writing to Clean Diesel Technologies, Inc., Attn: Investor Relations, 1621 Fiske Place, Oxnard, CA 93033.
By
order of the Board of Directors,
Matthew Beale
Chief Executive Officer
Oxnard, California
November 21, 2016
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ANNEX A
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
CLEAN DIESEL TECHNOLOGIES, INC.
Clean Diesel Technologies, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby does certify:
FIRST:
The name of the corporation is Clean Diesel Technologies, Inc. The original Certificate of Incorporation of the Corporation
was filed
with the Secretary of State of Delaware on January 19, 1994. A Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on March 21, 2007 (the "Restated
Certificate"). A Certificate of Amendment to the Restated Certificate was filed with the Secretary of State of Delaware on June 15, 2007. A second Certificate of Amendment to the Restated
Certificate was filed with the Secretary of State of Delaware on October 14, 2010. A third Certificate of Amendment to the Restated Certificate of Incorporation was filed with the Secretary of
State of Delaware on May 23, 2012. A fourth Certificate of Amendment to the Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on February 12, 2016.
A fifth Certificate of Amendment to the Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on July 21, 2016.
SECOND:
That the Board of Directors of the Corporation on October 11, 2016 duly adopted resolutions setting forth a proposed
amendment of the
Restated Certificate, as heretofore amended, declaring said amendment to be advisable and in the best interests of the Corporation, and authorizing the distribution of the resolutions to the
stockholders of the Corporation for consideration thereof.
THIRD:
That stockholders of the Corporation holding a majority of the outstanding stock entitled to vote thereon, acting by written
consent of
stockholders in lieu of a meeting, on October 24, 2016 voted to authorize said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of
Delaware.
FOURTH:
That the said amendment was duly adopted in accordance with the applicable provisions of Sections 228 and 242 of the
General
Corporation Law of the State of Delaware. The Restated Certificate is hereby amended as follows:
The
introductory paragraph of Article 4 is hereby deleted in its entirety and replaced with the following:
"4.
The Corporation shall have authority to issue the total number of Twenty Million (50,100,000) Shares of the par value of $0.01 per share, amounting in the aggregate to Five Hundred
One Thousand Dollars ($501,000), and of such shares, Fifty Million (50,000,000) shall be designated as Common Stock and One Hundred Thousand (100,000) shall be designated as preferred stock."
FIFTH:
The Restated Certificate is hereby ratified and confirmed in all other respects.
IN
WITNESS WHEREOF, this Corporation has caused this Certificate to be duly executed this day of .
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CLEAN DIESEL TECHNOLOGIES, INC.
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By:
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Name:
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Title:
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A-1
ANNEX B
CLEAN DIESEL TECHNOLOGIES, INC.
2016 OMNIBUS INCENTIVE PLAN
Clean Diesel Technologies, Inc. (the "
Company
"), a Delaware corporation, hereby
establishes and adopts the following 2016 Omnibus Incentive Plan (the "
Plan
").
1. PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company and its Subsidiaries in attracting and retaining selected individuals to serve as employees, directors,
consultants and/or advisors who are expected to
contribute to the Company's success and to achieve long-term objectives that will benefit stockholders of the Company through the additional incentives inherent in the Awards hereunder.
2. DEFINITIONS
2.1 "
Award
" shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock
Unit Award, Other Share-Based Award, Performance Award or any other right, interest or option relating to Shares or other property (including cash) granted pursuant to the provisions of the Plan.
2.2 "
Award Agreement
" shall mean any agreement, contract or other instrument or document evidencing
any Award hereunder, whether in writing or through an electronic medium.
2.3 "
Board
" shall mean the board of directors of the Company.
2.4 "
Business Combination
" shall have the meaning set forth in Section 11.3(c).
2.5 "
Change in Control
" shall have the meaning set forth in Section 11.3.
2.6 "
Code
" shall mean the Internal Revenue Code of 1986, as amended.
2.7 "
Committee
" shall mean the Compensation and Nominating Committee of the Board or a subcommittee
thereof formed by the Compensation and Nominating Committee to act as the Committee hereunder. The Committee shall consist of no fewer than two Directors, each of whom is (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act, (ii) an "outside director" within the meaning of Section 162(m) of the Code, and (iii) an "independent
director" for purpose of the rules of the principal U.S. national securities exchange on which the Shares are traded, to the extent required by such rules.
2.8 "
Company Voting Securities
" shall have the meaning set forth in Section 11.3(b).
2.9 "
Consultant
" shall mean any consultant or advisor who is a natural person and who provides
services to the Company or any Subsidiary, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company's securities in a
capital-raising transaction, (ii) does not directly or indirectly promote or maintain a market for the Company's securities and (iii) otherwise qualifies as a consultant under the
applicable rules of the SEC for registration of shares of stock on a Form S-8 registration statement.
2.10 "
Covered Employee
" shall mean an employee of the Company or its Subsidiaries who is a "covered
employee" within the meaning of Section 162(m) of the Code.
2.11 "
Data
" shall have the meaning set forth in Section 13.17.
2.12 "
Director
" shall mean a member of the Board who is not an employee.
2.13 "
Dividend Equivalents
" shall have the meaning set forth in Section 12.5.
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2.14 "
Effective Date
" shall have the meaning set forth in Section 13.13.
2.15 "
Employee
" shall mean any employee of the Company or any Subsidiary and any prospective employee
conditioned upon, and effective not earlier than, such person becoming an employee of the Company or any Subsidiary.
2.16 "
Exchange Act
" shall mean the Securities Exchange Act of 1934, as amended.
2.17 "
Fair Market Value
" shall mean, with respect to Shares as of any date, (i) the closing
price of the Shares as reported on the principal U.S. national securities exchange on which the Shares are listed and traded on such date, or, if there is no closing price on that date, then on the
last preceding date on which such a closing price was reported; (ii) if the Shares are not listed on any U.S. national securities exchange but are quoted in an inter-dealer quotation system on
a last sale basis, the final ask price of the Shares reported on the inter-dealer quotation system for such date, or, if there is no such sale on such date, then on the last preceding date on which a
sale was reported; or (iii) if the Shares are neither listed on a U.S. national securities exchange nor quoted on an inter-dealer quotation system on a last sale basis, the amount determined by
the Committee to be the fair market value of the Shares as determined by the Committee in its sole discretion. The Fair Market Value of any property other than Shares shall mean the market value of
such property determined by such methods or procedures as shall be established from time to time by the Committee.
2.18 "
Incentive Stock Option
" shall mean an Option which when granted is intended to qualify as an
incentive stock option for purposes of Section 422 of the Code.
2.19 "
Incumbent Directors
" shall have the meaning set forth in Section 11.3(a).
2.20 "
Maximum Plan Shares
" shall have the meaning set forth in Section 3.1(a).
2.21 "
Non-Qualifying Transaction
" shall have the meaning set forth in Section 11.3(c).
2.22 "
Option
" shall mean any right granted to a Participant under the Plan allowing such Participant
to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.
2.23 "
Other Share-Based Award
" shall have the meaning set forth in Section 8.1.
2.24 "
Parent Corporation
" shall have the meaning set forth in Section 11.3(c).
2.25 "
Participant
" shall mean an Employee, Director or Consultant who is selected by the Committee to
receive an Award under the Plan.
2.26 "
Performance Award
" shall mean any Award of Performance Cash, Performance Shares or Performance
Units granted pursuant to Article 9.
2.27 "
Performance Cash
" shall mean any cash incentives granted pursuant to Article 9 payable
to the Participant upon the achievement of such performance goals as the Committee shall establish.
2.28 "
Performance Period
" shall mean the period established by the Committee during which any
performance goals specified by the Committee with respect to a Performance Award are to be measured.
2.29 "
Performance Share
" shall mean any grant pursuant to Article 9 of a unit valued by
reference to a designated number of Shares, which value may be paid to the Participant upon achievement of such performance goals as the Committee shall establish.
2.30 "
Performance Unit
" shall mean any grant pursuant to Article 9 of a unit valued by
reference to a designated amount of cash or property other than Shares, which value may be paid to the Participant upon achievement of such performance goals during the Performance Period as the
Committee shall establish.
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2.31 "
Permitted Assignee
" shall have the meaning set forth in Section 12.3.
2.32 "
Prior Plan
" means the Clean Diesel Technologies, Inc. Amended and Restated Stock
Incentive Plan (formerly known as the 1994 Incentive Plan).
2.33 "
Restricted Stock
" shall mean any Share issued with the restriction that the holder may not
sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose, which restrictions may lapse separately or in combination at such
time or times, in installments or otherwise, as the Committee may deem appropriate.
2.34 "
Restricted Stock Award
" shall have the meaning set forth in Section 7.1.
2.35 "
Restricted Stock Unit
" means an Award that is valued by reference to a Share, which value may
be paid to the Participant in Shares or cash as determined by the Committee in its sole discretion upon the satisfaction of vesting restrictions as the Committee may establish, which restrictions may
lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
2.36 "
Restricted Stock Unit Award
" shall have the meaning set forth in Section 7.1.
2.37 "
SEC
" means the Securities and Exchange Commission.
2.38 "
Shares
" shall mean the shares of common stock of the Company, par value $0.01 per share.
2.39 "
Stock Appreciation Right
" shall mean the right granted to a Participant pursuant to
Article 6.
2.40 "
Subsidiary
" shall mean any entity (other than the Company) in an unbroken chain of entities
beginning with the Company if, at the relevant time each of the entities other than the last entity in the unbroken chain owns equity and/or interests possessing 50% or more of the total combined
voting power of all equity in one of the other corporations in the chain.
2.41 "
Substitute Awards
" shall mean Awards granted or Shares issued by the Company in assumption of,
or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the
Company or any Subsidiary combines.
2.42 "
Surviving Corporation
" shall have the meaning set forth in Section 11.3(c).
2.43 "
Vesting Period
" shall mean the period of time specified by the Committee during which vesting
restrictions for an Award are applicable.
3. SHARES SUBJECT TO THE PLAN
3.1
Number of Shares.
(a) Subject to adjustment as provided in
Section 12.2, a total of 2,250,000 Shares shall be authorized for grant under the Plan (the "
Maximum Plan Shares
"). Any Shares that are subject
to Awards shall be counted against this limit as one (1) Share for every one (1) Share granted.
(b) If
any Shares subject to an Award are forfeited, an Award expires or an Award is settled for cash (in whole or in part), then in each such case the Shares subject to
such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for Awards under the Plan on a one-for-one basis. In the event that any Award granted hereunder is
exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall again be
available for Awards under the Plan on a one-for-one basis. In addition, in the event that withholding tax liabilities arising from any Award are satisfied by the tendering of Shares (either actually
or by attestation) or by the withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall again be available for Awards under the Plan on a one-for-one basis.
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(c) Substitute
Awards shall not reduce the Shares authorized for grant under the Plan or the applicable limitations applicable to a Participant under Section 10.5,
nor shall Shares subject to a Substitute Award again be available for Awards under the Plan as provided in paragraph (b) above. Additionally, in the event that a company acquired by the Company
or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards
under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been
made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or
combination.
3.2
Character of Shares.
Any Shares issued hereunder may consist, in whole or in part,
of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.
3.3
Prior Plan.
No further grants may be made under the Prior Plan after the Effective
Date.
4. ELIGIBILITY AND ADMINISTRATION
4.1
Eligibility.
Any Employee, Director or Consultant shall be eligible to be selected
as a Participant.
4.2
Administration.
(a) The Plan shall be administered by the Committee. The
Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time
be adopted by the Board, to: (i) select the Employees, Directors and Consultants to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards to
be granted to each Participant hereunder; (iii) determine the number of Shares (or dollar value) to be covered by each Award granted hereunder; (iv) determine the terms and conditions,
not inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or
other property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be
deferred either automatically or at the election of the Participant; (vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended;
(viii) interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement; (ix) correct any defect, supply
any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (x) establish such rules
and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) determine whether any Award, other than an Option or Stock Appreciation
Right, will have Dividend Equivalents; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(b) Decisions
of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, and any Subsidiary. A majority of
the members of the Committee may determine its actions, including fixing the time and place of its meetings.
(c) To
the extent not inconsistent with applicable law, including Section 162(m) of the Code with respect to Awards intended to comply with the performance-based
compensation exception under Section 162(m), or the rules and regulations of the principal U.S. national securities
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exchange
on which the Shares are traded, the Committee may (i) delegate to a committee of one or more directors of the Company any of the authority of the Committee under the Plan, including
the right to grant, cancel or suspend Awards and (ii) to the extent permitted by law, authorize one or more executive officers to do one or more of the following with respect to Employees who
are not directors or executive officers of the Company: (A) designate Employees (including officers) to be recipients of Awards, (B) determine the number of Shares subject to such Awards
to be received by such Employees and (C) cancel or suspend Awards to such Employees; provided that (x) any resolution of the Committee authorizing such officer(s) must specify the total
number of Shares subject to Awards that such officer(s) may so award and (y) the Committee may not authorize any officer to designate himself or herself as the recipient of an Award.
5. OPTIONS
5.1
Grant of Options.
Options may be granted hereunder to Participants either alone or
in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and conditions of this Article and to such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable.
5.2
Award Agreements.
All Options shall be evidenced by an Award Agreement in such form
and containing such terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan. The terms and conditions of Options need not be the same with
respect to each Participant. Granting an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any Participant who is granted an Option pursuant to this
Article may hold more than one Option granted pursuant to the Plan at the same time.
5.3
Option Price.
Other than in connection with Substitute Awards, the option price per
Share purchasable under any Option granted pursuant to this Article shall not be less than 100% of the Fair Market Value of one Share on the date of grant of such Option; provided, however, that in
the case of an Incentive Stock Option granted to a Participant who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any
Subsidiary, the option price per share shall be no less than 110% of the Fair Market Value of one Share on the date of grant. Other than pursuant to Section 12.2, the Committee shall not
without the approval of the Company's stockholders (a) lower the option price per Share of an Option after it is
granted, (b) cancel an Option in exchange for cash or another Award (other than in connection with a Change in Control as defined in Section 11.3), or (c) take any other action
with respect to an Option that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are traded.
5.4
Option Term.
The term of each Option shall be fixed by the Committee in its sole
discretion; provided that no Option shall be exercisable after the expiration of ten (10) years from the date the Option is granted, except in the event of death or disability; provided,
however, that the term of the Option shall not exceed five (5) years from the date the Option is granted in the case of an Incentive Stock Option granted to a Participant who, at the time of
the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Subsidiary. Notwithstanding the foregoing, in the event that on the last business day
of the term of an Option (i) the exercise of the Option, other than an Incentive Stock Option, is prohibited by applicable law or (ii) Shares may not be purchased or sold by certain
employees or directors of the Company due to the "black-out period" of a Company policy or a "lock-up" agreement undertaken in connection with an issuance of securities by the Company, the term shall
be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement.
5.5
Exercise of Options.
(a) Vested Options granted under the Plan shall be
exercised by the Participant (or by a Permitted Assignee thereof or the Participant's executors, administrators, guardian
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or
legal representative, as may be provided in an Award Agreement) as to all or part of the Shares covered thereby, by giving notice of exercise to the Company or its designated agent, specifying the
number of Shares to be purchased. The notice of exercise shall be in such form, made in such manner, and shall comply with such other requirements consistent with the provisions of the Plan as the
Committee may prescribe from time to time.
(b) Unless
otherwise provided in an Award Agreement, full payment of such purchase price shall be made at the time of exercise and shall be made (i) in cash or cash
equivalents (including certified check or bank check or wire transfer of immediately available funds), (ii) by tendering previously acquired Shares (either actually or by attestation) valued at
their then Fair Market Value, (iii) with the consent of the Committee, by delivery of other consideration having a Fair Market Value on the exercise date equal to the total purchase price,
(iv) with the consent of the Committee, by withholding Shares otherwise issuable in connection with the exercise of the Option, (v) through any other method specified in an Award
Agreement (including same-day sales through a broker), or (vi) any combination of any of the foregoing. The notice of exercise, accompanied by such payment, shall be delivered to the Company at
its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the
Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share.
(c) Notwithstanding
the foregoing, an Award Agreement may provide that if on the last day of the term of an Option the Fair Market Value of one Share exceeds the option
price per Share, the Participant has not exercised the Option (or a tandem Stock Appreciation Right, if applicable) and the Option has not expired, the Option shall be deemed to have been exercised by
the Participant on such day with payment made by withholding Shares otherwise issuable in connection with the exercise of the Option. In such event, the Company shall deliver to the Participant the
number of Shares for which the Option was deemed exercised, less the number of Shares required to be withheld for the payment of the total purchase price and required withholding taxes; provided,
however, any fractional Share shall be settled in cash.
5.6
Form of Settlement.
In its sole discretion, the Committee may provide that the
Shares to be issued upon an Option's exercise shall be in the form of Restricted Stock or other similar securities.
5.7
Incentive Stock Options.
The Committee may grant Incentive Stock Options to any
Employee subject to the requirements of Section 422 of the Code. Solely for purposes of determining whether Shares are available for the grant of Incentive Stock Options under the Plan, the
maximum aggregate number of Shares that may be issued pursuant to Incentive Stock Options granted under the Plan shall be the Maximum Plan Shares, subject to adjustment as provided in
Section 12.2.
6. STOCK APPRECIATION RIGHTS
6.1
Grant and Exercise.
The Committee may grant Stock Appreciation Rights (a) in
tandem with all or part of any Option granted under the Plan or at any subsequent time during the term of such Option, (b) in tandem with all or part of any Award (other than an Option) granted
under the Plan or at any subsequent time during the term of such Award, or (c) without regard to any Option or other Award in each case upon such terms and conditions as the Committee may
establish in its sole discretion.
6.2
Terms and Conditions.
Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:
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(a) Upon
the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market Value of one Share on the date of
exercise (or such amount less than such Fair Market Value as the Committee shall so determine at any time during a specified period before the date of exercise) over (ii) the grant price of the
Stock Appreciation Right.
(b) The
Committee shall determine in its sole discretion whether payment on exercise of a Stock Appreciation Right shall be made in cash, in whole Shares or other property,
or any combination thereof.
(c) The
terms and conditions of Stock Appreciation Rights need not be the same with respect to each recipient.
(d) The
Committee may impose such other terms and conditions on the exercise of any Stock Appreciation Right as it shall deem appropriate. A Stock Appreciation Right shall
(i) have a grant price per Share of not less than the Fair Market Value of one Share on the date of grant or, if applicable, on the date of grant of an Option with respect to a Stock
Appreciation Right granted in exchange for or in tandem with, but subsequent to, the Option (subject to the requirements of Section 409A of the Code) except in the case of Substitute Awards or
in connection with an adjustment provided in Section 12.2, and (ii) have a term not greater than ten (10) years, except in the event of death or disability. Notwithstanding
clause (ii) of the preceding sentence, in the event that on the last business day of the term of a Stock Appreciation Right (x) the exercise of the Stock Appreciation Right is prohibited
by applicable law or (y) Shares may not be purchased or sold by certain employees or directors of the Company due to the "black-out period" of a Company policy or a "lock-up" agreement
undertaken in connection with an issuance of securities by the Company, the term shall be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period
or lock-up agreement.
(e) An
Award Agreement may provide that if on the last day of the term of a Stock Appreciation Right the Fair Market Value of one Share exceeds the grant price per Share of
the Stock Appreciation Right, the Participant has not exercised the Stock Appreciation Right or the tandem Option (if applicable), and the Stock Appreciation Right has not expired, the Stock
Appreciation Right shall be deemed to have been exercised by the Participant on such day. In such event, the Company shall make payment to the Participant in accordance with this Section, reduced by
the number of Shares (or cash) required for withholding taxes; provided, however, any fractional Share shall be settled in cash.
(f) Without
the approval of the Company's stockholders, other than pursuant to Section 12.2, the Committee shall not (i) reduce the grant price of any Stock
Appreciation Right after the date of grant, (ii) cancel any Stock Appreciation Right in exchange for cash or another Award (other than in connection with a Change in Control as defined in
Section 11.3), or (iii) take any other action with respect to a Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S.
national securities exchange on which the Shares are traded.
7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1
Grants.
Awards of Restricted Stock and of Restricted Stock Units may be granted
hereunder to Participants either alone or in addition to other Awards granted under the Plan (a "
Restricted Stock Award
" or
"
Restricted Stock Unit Award
" respectively), and such Restricted Stock Awards and Restricted Stock Unit Awards shall also be available as a form of
payment of Performance Awards and other earned cash-based incentive compensation. The Committee has absolute discretion to determine whether any consideration (other than services) is to be received
by the Company or any Subsidiary as
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a
condition precedent to the grant of Restricted Stock or Restricted Stock Units, subject to such minimum consideration as may be required by applicable law.
7.2
Award Agreements.
The terms of any Restricted Stock Award or Restricted Stock Unit
Award granted under the Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms of Restricted Stock
Awards and Restricted Stock Unit Awards need not be the same with respect to each Participant.
7.3
Rights of Holders of Restricted Stock and Restricted Stock Units.
Unless otherwise
provided in the Award Agreement, beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become a stockholder of the Company
with respect to all Shares subject to the Award Agreement and shall have all of the rights of a stockholder, including the right to vote such Shares and the right to receive distributions made with
respect to such Shares. A Participant who holds a Restricted Stock Unit Award shall only have those rights specifically provided for in the Award Agreement; provided, however, in no event shall the
Participant have voting rights with respect to such Award. Except as otherwise provided in an Award Agreement, any Shares or any other property distributed as a dividend or otherwise with respect to
any Restricted Stock Award or Restricted Stock Unit Award as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted Stock Award or Restricted Stock
Unit Award. Notwithstanding the provisions of this Section, cash dividends, stock and any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Stock
Award or Restricted Stock Unit Award that vests based on achievement of performance goals shall either (i) not be paid or credited or (ii) be accumulated, shall be subject to
restrictions and risk of forfeiture to the same extent as the Restricted Stock or Restricted Stock Units with respect to which such cash, stock or other property has been distributed and shall be paid
at the time such restrictions and risk of forfeiture lapse.
7.4
Issuance of Shares.
Any Restricted Stock granted under the Plan may be evidenced in
such manner as the Board may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company.
Such book entry registration, certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such
Restricted Stock.
8. OTHER SHARE-BASED AWARDS
8.1
Grants.
Other Awards of Shares and other Awards that are valued in whole or in part
by reference to, or are otherwise based on, Shares or other property ("
Other Share-Based Awards
"), including deferred stock units, may be granted
hereunder to Participants either alone or in addition to other Awards granted under the Plan. Other Share-Based Awards shall also be available as a form of payment of other Awards granted under the
Plan and other earned cash-based compensation.
8.2
Award Agreements.
The terms of Other Share-Based Awards granted under the Plan shall
be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms of such Awards need not be the same with respect to each
Participant. Notwithstanding the provisions of this Section, Dividend Equivalents with respect to the Shares covered by an Other Share-Based Award that vests based on achievement of performance goals
shall be subject to restrictions and risk of forfeiture to the same extent as the Shares covered by an Other Share-Based Award with respect to which such cash, stock or other property has been
distributed.
8.3
Payment.
Except as may be provided in an Award Agreement, Other Share-Based Awards
may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee. Other Share-Based Awards may be paid in a lump sum or in installments or, in
accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.
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8.4
Deferral of Director Fees.
Directors shall, if determined by the Board, receive
Other Share-Based Awards in the form of deferred stock units in lieu of all or a portion of their annual retainer. In addition Directors may elect to receive Other Share-Based Awards in the form of
deferred stock units
in lieu of all or a portion of their annual and committee retainers and annual meeting fees, provided that such election is made in accordance with the requirements of Section 409A of the Code.
The Committee shall, in its absolute discretion, establish such rules and procedures as it deems appropriate for such elections and for payment in deferred stock units.
9. PERFORMANCE AWARDS
9.1
Grants.
Performance Awards in the form of Performance Cash, Performance Shares or
Performance Units, as determined by the Committee in its sole discretion, may be granted hereunder to Participants, for no consideration or for such minimum consideration as may be required by
applicable law, either alone or in addition to other Awards granted under the Plan. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee
and may be based upon the criteria set forth in Section 10.2 or such other criteria as determined by the Committee in its discretion.
9.2
Award Agreements.
The terms of any Performance Award granted under the Plan shall be
set forth in an Award Agreement (or, if applicable, in a resolution duly adopted by the Committee) which shall contain provisions determined by the Committee and not inconsistent with the Plan,
including whether such Awards shall have Dividend Equivalents. The terms of Performance Awards need not be the same with respect to each Participant.
9.3
Terms and Conditions.
The performance criteria to be achieved during any Performance
Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award. The amount of the Award to be distributed shall be conclusively
determined by the Committee.
9.4
Payment.
Except as provided in Article 11, as provided by the Committee or as
may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property, or
any combination thereof, in the sole discretion of the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with
procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.
10. CODE SECTION 162(m) PROVISIONS
10.1
Covered Employees.
Notwithstanding any other provision of the Plan, if the
Committee determines at the time a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Award or an Other Share-Based Award is granted to a Participant who is, or is likely to be, as
of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Article 10 is applicable
to such Award.
10.2
Performance Criteria.
If the Committee determines that a Restricted Stock Award, a
Restricted Stock Unit, a Performance Award or an Other Share-Based Award is intended to be subject to this Article 10, the lapsing of restrictions thereon and the distribution of cash, Shares
or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment
of specified levels of one or any combination of the following: net sales; revenue; revenue growth or product revenue growth; operating income (before or after taxes); pre- or after-tax income or loss
(before or after allocation of corporate overhead and bonus); earnings or loss per share; net income or loss (before or after taxes); return on equity; total stockholder return; return on assets or
net assets;
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appreciation
in and/or maintenance of the price of the Shares or any other publicly-traded securities of the Company; market share; gross profits; earnings or losses (including earnings or losses
before taxes, before interest and taxes, or before interest, taxes, depreciation and amortization); economic value-added models or equivalent metrics; comparisons with various stock market indices;
reductions in costs; cash flow or cash flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital); cash flow return on investment;
improvement in or attainment of expense levels or working capital levels, including cash, inventory and accounts receivable; operating margin; gross margin; year-end cash; cash margin; debt reduction;
stockholders equity; operating efficiencies; market share; customer satisfaction; customer growth; employee satisfaction; regulatory achievements (including submitting or filing applications or other
documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections (whether of the Company or the Company's third-party
manufacturer) and validation of manufacturing processes (whether the Company's or the Company's third-party manufacturer's)); strategic partnerships or transactions (including in-licensing and
out-licensing of intellectual property; establishing relationships with commercial entities with respect to the marketing, distribution and sale of the Company's products (including with group
purchasing organizations, distributors and other vendors); supply chain achievements (including establishing relationships with manufacturers or suppliers of component materials and manufacturers of
the Company's products); co-development, co-marketing, profit sharing, joint venture or other similar arrangements; financial ratios, including those measuring liquidity, activity, profitability or
leverage; cost of capital or assets under management; financing and other capital raising transactions (including sales of the Company's equity or debt securities, factoring transactions, sales or
licenses of the Company's assets, including its intellectual property, whether in a particular jurisdiction or territory or globally, or through partnering transactions); implementation, completion or
attainment of measurable objectives with respect to
research, development, manufacturing, commercialization, products or projects, production volume levels, acquisitions and divestitures; and recruiting and maintaining personnel. Such performance goals
also may be based solely by reference to the Company's performance or the performance of a Subsidiary, division, business segment or business unit of the Company, or based upon the relative
performance of other companies or upon comparisons of any of the indicators of performance relative to other companies. The Committee may also exclude charges related to an event or occurrence which
the Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) an
event either not directly related to the operations of the Company or not within the reasonable control of the Company's management, or (c) the cumulative effects of tax or accounting changes
in accordance with U.S. generally accepted accounting principles. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m) of the Code, and the regulations thereunder.
10.3
Adjustments.
Notwithstanding any provision of the Plan (other than
Article 11), with respect to any Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other Share-Based Award that is subject to this Section 10, the Committee may
adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or
disability of the Participant or as otherwise determined by the Committee in special circumstances.
10.4
Restrictions.
The Committee shall have the power to impose such other restrictions
on Awards subject to this Article as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for "performance-based compensation" within the meaning of
Section 162(m) of the Code.
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10.5
Limitations on Grants to Individual Participants.
Subject to adjustment as provided
in Section 12.2, no Participant may (i) be granted Options or Stock Appreciation Rights during any 12-month period with respect to more than 35% of the Maximum Plan Shares and
(ii) earn more than 35% of the Maximum Plan Shares for each twelve (12) months in the vesting period or Performance Period with respect to Restricted Stock Awards, Restricted Stock Unit
Awards, Performance Awards and/or Other Share-Based Awards that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in Shares (provided
that any Shares that would have been earned after such twelve (12) month period that are earned due to an acceleration as a result of a Change in Control of the Company shall not count against
such limitation). In addition to the foregoing, the maximum dollar value that may be earned by any Participant for each twelve (12) months in a Performance Period with respect to Performance
Awards that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in cash is $2,000,000 (provided that any amount that would have been earned
after such twelve (12) month period that is earned due to an acceleration as a result of a Change in Control of the Company shall not count against such limitation). If an Award is cancelled,
the cancelled Award shall continue to be counted toward the applicable limitation in this Section.
11. CHANGE IN CONTROL PROVISIONS
11.1
Impact on Certain Awards.
Award Agreements may provide that in the event of a
Change in Control of the Company (as defined in Section 11.3): (i) Options and Stock Appreciation Rights outstanding as of the date of the Change in Control shall be cancelled and
terminated without payment if the Fair Market Value of one Share as of the date of the Change in Control is less than the per Share Option
exercise price or Stock Appreciation Right grant price, and (ii) all Performance Awards shall be (x) considered to be earned and payable based on achievement of performance goals or
based on target performance (either in full or pro rata based on the portion of Performance Period completed as of the date of the Change in Control), and any limitations or other restrictions shall
lapse and such Performance Awards shall be immediately settled or distributed or (y) converted into Restricted Stock Awards or Restricted Stock Unit Awards based on achievement of performance
goals or based on target performance (either in full or pro rata based on the portion of Performance Period completed as of the date of the Change in Control) that are subject to Section 11.2.
11.2
Assumption or Substitution of Certain Awards.
(a) (a) Unless otherwise
provided in an Award Agreement, in the event of a Change in Control of the Company in which the successor company assumes or substitutes for an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Share-Based Award (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant's employment with such successor
company (or the Company) or a subsidiary thereof terminates within 12 months following such Change in Control (or such other period set forth in the Award Agreement, including prior thereto if
applicable) and under the circumstances specified in the Award Agreement: (i) Options and Stock Appreciation Rights outstanding as of the date of such termination of employment will immediately
vest, become fully exercisable, and may thereafter be exercised for 12 months (or the period of time set forth in the Award Agreement), (ii) the restrictions, limitations and other
conditions applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall lapse and the Restricted Stock and Restricted Stock Units shall
become free of all restrictions, limitations and conditions and become fully vested, and (iii) the restrictions, limitations and other conditions applicable to any Other Share-Based Awards or
any other Awards shall lapse, and such Other Share-Based Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the
full extent of the original grant. For the purposes of this Section 11.2, an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award
shall be considered assumed or substituted for if following the Change in Control the Award confers the right to purchase or receive, for each Share
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subject
to the Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award immediately prior to the Change in Control, the consideration (whether
stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if
holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
transaction constituting a Change in Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be
received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award, for each Share subject thereto, will be
solely common stock of the successor company substantially equal in fair market value to the per Share consideration received by holders of Shares in the transaction constituting a Change in Control.
The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.
(b) Unless
otherwise provided in an Award Agreement, in the event of a Change in Control of the Company to the extent the successor company does not assume or substitute for
an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award (or in which the Company is the ultimate parent corporation and does not continue
the Award), then immediately prior to the Change in Control: (i) those Options and Stock Appreciation Rights outstanding as of the date of the Change in Control that are not assumed or
substituted for (or continued) shall immediately vest and become fully exercisable, (ii) restrictions, limitations and other conditions applicable to Restricted Stock and Restricted Stock Units
that are not assumed or substituted for (or continued) shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions and become
fully vested, and (iii) the restrictions, other limitations and other conditions applicable to any Other Share-Based Awards or any other Awards that are not assumed or substituted for (or
continued) shall lapse, and such Other Share-Based Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full
extent of the original grant.
(c) The
Committee, in its discretion, may determine that, upon the occurrence of a Change in Control of the Company, each Option and Stock Appreciation Right outstanding
shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation
Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of such Change in Control over the exercise price per Share of such Option and/or Stock
Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as
the Committee, in its discretion, shall determine.
11.3
Change in Control.
For purposes of the Plan, unless otherwise provided in an Award
Agreement, Change in Control means the occurrence of any one of the following events:
(a) During
any 12-month period, individuals who, as of the beginning of such period, constitute the Board (the "
Incumbent
Directors
") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period whose
election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director;
provided
,
however
, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with
respect to directors or as a result of any other actual or
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threatened
solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b) Any
"person" (as such term is defined in the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "
Company Voting Securities
");
provided
,
however
, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following
acquisitions: (i) by the Company or any Subsidiary, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (iii) by any
underwriter temporarily holding securities pursuant to an offering of such securities, (iv) pursuant to a Non-Qualifying Transaction, as defined in paragraph (c), or (v) by any
person of Voting Securities from the Company, if a majority of the Incumbent Board approves in advance the acquisition of beneficial ownership of 50% or more of Company Voting Securities by such
person;
(c) The
consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that
requires the approval of the Company's stockholders, whether for such transaction or the issuance of securities in the transaction (a "
Business
Combination
"), unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A) the corporation resulting from such
Business Combination (the "
Surviving Corporation
"), or (B) if applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "
Parent Corporation
"), is
represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities
were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (iii) at least a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of
the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (i), (ii) and (iii) above shall
be deemed to be a "
Non-Qualifying Transaction
"); or
(d) The
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of a sale of all or substantially all of the
Company's assets.
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 50% of the Company Voting Securities as a result of
the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding;
provided
,
that
if after such
acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
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12. GENERALLY APPLICABLE PROVISIONS
12.1
Amendment and Termination of the Plan.
The Board may, from time to time, alter,
amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for stockholder approval imposed by applicable law, including the rules and regulations of the principal
U.S. national securities exchange on which the Shares are traded; provided that the Board may not amend the Plan in any manner that would result in noncompliance with Rule 16b-3 under the
Exchange Act; and further provided that the Board may not, without the approval of the Company's stockholders, amend the Plan to (a) increase the number of Shares that may be the subject of
Awards under the Plan (except for adjustments pursuant to Section 12.2), (b) expand the types of awards available under the Plan, (c) materially expand the class of persons
eligible to participate in the Plan, (d) amend Section 5.3 or Section 6.2(f) to eliminate the requirements relating to minimum exercise price, minimum grant price and stockholder
approval, (e) increase the maximum permissible term of any Option specified by Section 5.4 or the maximum permissible term of a Stock Appreciation Right specified by
Section 6.2(d), or (f) increase any of the limitations in Section 10.5. The Board may not (except pursuant to Section 12.2 or in connection with a Change in Control),
without the approval of the Company's stockholders, cancel an Option or Stock Appreciation Right in exchange for cash or take any action with respect to an Option or Stock Appreciation Right that
would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are traded, including a reduction of the exercise price of an
Option or the grant price of a Stock Appreciation Right or the exchange of an Option or Stock Appreciation Right for another Award. In addition, no amendments to, or termination of, the Plan shall
impair the rights of a Participant in any material respect under any Award previously granted without such Participant's consent.
12.2
Adjustments.
In the event of any merger, reorganization, consolidation,
recapitalization, dividend or distribution (whether in cash, shares or other property, other than a regular cash dividend), stock split, reverse stock split, spin-off or similar transaction or other
change in corporate structure affecting the Shares or the value thereof, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee deems equitable or
appropriate taking into consideration the accounting and tax consequences, including such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan, the
limitations in Section 10.5 (other than to Awards denominated in cash), the maximum number of Shares that may be issued pursuant to Incentive Stock Options and, in the aggregate or to any
Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the substitution
of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate; provided, however, that the number of
Shares subject to any Award shall always be a whole number.
12.3
Transferability of Awards.
Except as provided below, no Award and no Shares that
have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will
or the laws of descent and distribution, and such Award may be exercised during the life of the Participant only by the Participant or the Participant's guardian or legal representative. To the extent
and under such terms and conditions as determined by the Committee, a Participant may assign or transfer an Award without consideration (each transferee thereof, a "
Permitted
Assignee
") (i) to the Participant's spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings,
(ii) to a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) to a partnership, limited liability company or corporation in
which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders or (iv) for charitable donations; provided that such Permitted Assignee
shall be bound by and subject to all of the terms and
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conditions
of the Plan and the Award Agreement relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such
Participant shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any Permitted Assignee and the Company's transfer agent in effectuating any transfer permitted
under this Section.
12.4
Termination of Employment or Services.
The Committee shall determine and set forth
in each Award Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, continue to vest or be earned and the terms of such exercise, vesting or earning, on and
after the date that a Participant ceases to be employed by or to provide services to the Company or any Subsidiary (including as a Director), whether by reason of death, disability, voluntary or
involuntary termination of employment or services, or otherwise. The date of termination of a Participant's employment or services will be determined by the Committee, which determination will be
final.
12.5
Deferral
;
Dividend Equivalents
. The
Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an
Award other than an Option or Stock Appreciation Right may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, amounts equivalent to cash, stock or other
property dividends on Shares ("
Dividend Equivalents
") with respect to the number of Shares covered by the Award, as determined by the Committee, in its
sole discretion. The Committee may provide that the Dividend Equivalents (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested and may provide that the Dividend
Equivalents are subject to the same vesting or performance conditions as the underlying Award. Notwithstanding the foregoing, Dividend Equivalents credited in connection with an Award that vests based
on the achievement of performance goals shall be subject to restrictions and risk of forfeiture to the same extent as the Award with respect to which such Dividend Equivalents have been credited.
13. MISCELLANEOUS
13.1
Award Agreements.
Each Award Agreement shall either be (a) in writing in a
form approved by the Committee and executed by the Company by an officer duly authorized to act on its behalf, or (b) an electronic notice in a form approved by the Committee and recorded by
the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking one or more types of Awards as the Committee may provide; in each case and if required by the
Committee, the Award Agreement shall be executed or otherwise electronically accepted by the recipient of the Award in such form and manner as the Committee may require. The Committee may authorize
any officer of the Company to execute any or all Award Agreements on behalf of the Company. The Award Agreement shall set forth the material terms and conditions of the Award as established by the
Committee consistent with the provisions of the Plan.
13.2
Tax Withholding.
The Company shall have the right to make all payments or
distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) net of any applicable federal, state and local taxes required to be paid or withheld as a result of (a) the
grant of any Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award
or (e) any other event occurring pursuant to the Plan. The Company or any Subsidiary shall have the right to withhold from wages or other amounts otherwise payable to a Participant (or
Permitted Assignee) such withholding taxes as may be required by law, or to otherwise require the Participant (or Permitted Assignee) to pay such withholding taxes. If the Participant (or Permitted
Assignee) shall fail to make such tax payments as are required, the Company or its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any
kind otherwise due to such Participant (or Permitted Assignee) or to take such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to establish
procedures for election by Participants (or Permitted Assignee) to satisfy
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such
obligation for the payment of such taxes by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value), or by directing the Company to retain
Shares (up to the minimum required tax withholding rate for the Participant (or Permitted Assignee) or such other rate, including a higher rate specified by the Participant, that will not cause an
adverse accounting consequence or cost) otherwise deliverable in connection with the Award.
13.3
Right of Discharge Reserved; Claims to Awards.
Nothing in the Plan nor the grant of
an Award hereunder shall confer upon any Employee, Director or Consultant the right to continue in the employment or service of the Company or any Subsidiary or affect any right that the Company or
any Subsidiary may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee, Director or Consultant at any time for any reason.
The Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship. No Employee, Director or
Consultant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees, Directors or Consultants under the Plan.
13.4
Substitute Awards.
Notwithstanding any other provision of the Plan, the terms of
Substitute Awards may vary from the terms set forth in the Plan to the extent the Committee deems appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which
they are granted.
13.5
Cancellation of Award; Forfeiture of Gain.
Notwithstanding anything to the contrary
contained herein, an Award Agreement may provide that:
(a) In
the event of a restatement of the Company's financial statements, the Committee shall have the right to review any Award, the amount, payment or vesting of which was
based on an entry in the financial statements that are the subject of the restatement. If the Committee determines, based on the results of the restatement, that a lesser amount or portion of an Award
should have been paid or vested, it may (i) cancel all or any portion of any outstanding Awards and (ii) require the Participant or other person to whom any payment has been made or
shares or other property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the
exercise of any Option or Stock Appreciation Right and the value realized (whether or not taxable) on the vesting or payment of any other Award during the period beginning twelve months preceding the
date of the restatement and ending with the date of cancellation of any outstanding Awards.
(b) If
the Participant, without the consent of the Company, while employed by or providing services to the Company or any Subsidiary or after termination of such employment
or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise engages in activity that is in conflict with or adverse to the interest of the Company or
any Subsidiary, as
determined by the Committee in its sole discretion, then (i) any outstanding, vested or unvested, earned or unearned portion of the Award may, at the Committee's discretion, be canceled and
(ii) the Committee, in its discretion, may require the Participant or other person to whom any payment has been made or Shares or other property have been transferred in connection with the
Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value
realized (whether or not taxable) on the vesting or payment of any other Award during the time period specified in the Award Agreement.
13.6
Stop Transfer Orders.
All certificates for Shares delivered under the Plan pursuant
to any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, any U.S. national
securities exchange upon which the Shares are then listed, and any applicable federal or state securities law, and
B-16
the
Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
13.7
Nature of Payments.
All Awards made pursuant to the Plan are in consideration of
services performed or to be performed for the Company or any Subsidiary, division or business unit of the Company. Any income or gain realized pursuant to Awards under the Plan constitutes a special
incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the
Company or any Subsidiary except as may be determined by the Committee or by the Board or board of directors of the applicable Subsidiary.
13.8
Other Plans.
Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific
cases.
13.9
Severability.
The provisions of the Plan shall be deemed severable. If any
provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction or by reason of change in a law or regulation, such
provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect,
and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other
payment or benefit from being made or provided under the Plan, and if the
making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or
unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or
benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the Plan.
13.10
Construction.
As used in the Plan, the words
"
include
" and "
including
," and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "
without limitation
."
13.11
Unfunded Status of the Plan.
The Plan is intended to constitute an "unfunded" plan
for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those
of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the
Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.
13.12
Governing Law.
The Plan and all determinations made and actions taken thereunder,
to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware, without reference to principles of conflict of laws, and
construed accordingly.
13.13
Effective Date of Plan; Termination of Plan.
The Plan shall be effective on the
date of the approval of the Plan by the holders of the shares entitled to vote thereon (the "
Effective Date
"). The Plan shall be null and void and of no
effect if the foregoing condition is not fulfilled and in such event each Award shall, notwithstanding any of the preceding provisions of the Plan, be null and void and of no effect. Awards may be
granted under the Plan at any time and from time to time on or prior to the tenth anniversary of the Effective Date of the Plan, on which date the Plan will expire except as to Awards then outstanding
under the Plan; provided, however, in no event may Incentive Stock Options
B-17
be
granted more than ten (10) years after the earlier of (i) the date of the adoption of the Plan by the Board or (ii) the Effective Date of the Plan as provided in the first
sentence of this Section. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired.
13.14
Foreign Employees and Consultants.
Awards may be granted to Participants who are
foreign nationals or employed or providing services outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees or Consultants providing
services in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions
on the exercise or vesting of Awards in order to minimize the Company's obligation with respect to tax equalization for Employees or Consultants on assignments outside their home country.
13.15
Compliance with Section 409A of the Code.
This Plan is intended to comply
and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent that an Award
or the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall be granted, paid, settled or deferred in a manner that will comply with
Section 409A of the Code, including regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. Any provision of this Plan that would cause the
grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis,
which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.
13.16
No Registration Rights; No Right to Settle in Cash.
The Company has no obligation
to register with any governmental body or organization (including, without limitation, the SEC) any of (a) the offer or issuance of any Award, (b) any Shares issuable upon the exercise
of any Award, or (c) the sale of any Shares issued upon exercise of any Award, regardless of whether the Company in fact undertakes to register any of the foregoing. In particular, in the event
that any of (x) any offer or issuance of any Award, (y) any Shares issuable upon exercise of any Award, or (z) the sale of any Shares issued upon exercise of any Award are not
registered with any governmental body or organization (including, without limitation, the SEC), the Company will not under any circumstance be required to settle its obligations, if any, under this
Plan in cash.
13.17
Data Privacy.
As a condition of acceptance of an Award, the Participant explicitly
and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section by and among, as applicable, the Company and its Subsidiaries
for the exclusive purpose of implementing, administering and managing the Participant's participation in the Plan. The Participant understands that the Company and its Subsidiaries hold certain
personal information about the Participant, including the Participant's name, home address and telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company or any Subsidiary, details of all Awards or any other entitlement to Shares awarded, canceled, exercised, vested,
unvested or outstanding in the Participant's favor, for the purpose of implementing, managing and administering the Plan (the "
Data
"). The Participant
further understands that the Company and its Subsidiaries may transfer the Data amongst themselves as necessary for the purpose of implementation, management and administration of the Participant's
participation in the Plan, and that the Company and its Subsidiaries may each further transfer the Data to any third parties assisting the Company in the implementation, management and administration
of the Plan. The Participant understands that these recipients may be located in the Participant's country, or elsewhere, and that the recipient's country may have different data privacy laws and
protections than the Participant's country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her
local human resources representative. The Participant, through participation in the
B-18
Plan
and acceptance of an Award under the Plan, authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing,
administering and managing the Participant's participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant may
elect to deposit any Shares. The Participant understands that the Data will be held only as long as is necessary to implement, manage, and administer the Participant's participation in the Plan. The
Participant understands that he or she may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data, or
refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Participant understands that refusal or withdrawal of
consent may affect the Optionee's ability to participate in the Plan. For more information on the consequences of refusal to consent or withdrawal of consent, the Optionee understands that he or she
may contact his or her local human resources representative.
13.18
Indemnity.
To the extent allowable pursuant to applicable law, each member of the
Committee or of the Board and any person to whom the Committee has delegated any of its authority under the Plan shall be indemnified and held harmless by the Company from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he
or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or
proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her
own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
13.19
Captions.
The captions in the Plan are for convenience of reference only, and are
not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein.
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ANNEX C
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "
Agreement
") is dated as of the 3rd day of
November, 2016, by and between Clean Diesel Technologies, Inc., a Delaware corporation (the "
Company
"), and each individual or entity named on
the Schedule of Buyers attached hereto (each such individual or entity, individually, a "
Buyer
" and all of such individuals or entities, collectively,
the "
Buyers
").
RECITALS
A. Subject
to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
"
Securities Act
"), and Rule 506(b) promulgated thereunder, the Company desires to issue and sell to each Buyer, and each Buyer, severally and not
jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
B. In
connection with the offering, the Company, MDB Capital Group LLC (the "
Placement Agent
") and Delaware Trust
Company (the "
Escrow Agent
") have entered into an escrow agreement, in the form attached hereto as
Exhibit B
(the "
Escrow
Agreement
"), to hold the Purchase Price (as hereinafter defined), to be
released at each Closing to the Company, upon the written consent of the Company and the Placement Agent.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES
The
foregoing recitals are true and correct and, together with the Schedules and Exhibits referred to hereafter, are hereby incorporated into this Agreement by this
reference.
ARTICLE II
DEFINITIONS
For
purposes of this Agreement, except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, or unless the context otherwise requires, the
capitalized terms in this Agreement shall have the meanings assigned to them in this Article as follows:
2.1 "
Affiliate
" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled
by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
2.2 "
Assets
" means all of the properties and assets of the Company or of its subsidiaries, whether real, personal or mixed,
tangible or intangible, wherever located, whether now owned or hereafter acquired.
2.3 "
Buyer's Purchase Price
" shall mean, with respect to any Buyer, the "Purchase Price" opposite such Buyer's name on the
Schedule of Buyers.
2.4 "
Claims
" means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements, assessments,
charges, costs and expenses of any nature or kind.
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2.5 "
Common Stock
" means the Company's common stock, $0.01 par value per share.
2.6 "
Consent
" means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any
application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified
action or actions, in a specified manner and/or to achieve a specific result.
2.7 "
Contract
" means any written or oral contract, agreement, order or commitment of any nature whatsoever, including, any
sales order, purchase order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement, guarantee, management contract, employment agreement, consulting
agreement, partnership agreement, shareholders agreement, buy-sell agreement, option, warrant, debenture, subscription, call or put.
2.8 "
Encumbrance
" means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, tax, covenant,
restriction, reservation, conditional sale, prior assignment, or any other encumbrance, claim, burden or charge of any nature whatsoever.
2.9 "
Environmental Requirements
" means all Laws and requirements relating to human, health, safety or protection of the
environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials in the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Materials.
2.10 "
Exchange Act
" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
2.11 "
GAAP
" means generally accepted accounting principles, methods and practices set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, and statements and pronouncements of the Financial Accounting Standards Board, the SEC or
of such other Person as may be approved by a significant segment of the U.S. accounting profession, in each case as of the date or period at issue, and as applied in the U.S. to U.S. companies.
2.12 "
Governmental Authority
" means any foreign, federal, state or local government, or any political subdivision thereof, or
any court, agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial, regulatory or administrative function of government.
2.13 "
Hazardous Materials
" means: (i) any petroleum or petroleum products, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls (PCB's);
(ii) any chemicals, materials, substances or wastes which are now or hereafter become defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants" or words of similar import, under any Law; and (iii) any other chemical,
material, substance, or waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.
2.14 "
Judgment
" means any order, writ, injunction, fine, citation, award, decree, or any other judgment of any nature
whatsoever of any Governmental Authority.
2.15 "
Law
" means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation of any
Governmental Authority.
2.16 "
Leases
" means all leases for real or personal property.
C-2
2.17 "
Material Adverse Effect
" means with respect to the event, item or question at issue, that such event, item or question
would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any of the Transaction Documents;
(ii) a material adverse effect on the results of operations, Assets, business or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole; (iii) a
material adverse effect on the Company's or its subsidiaries' ability to perform, on a timely basis, its or their respective Obligations under this Agreement or any Transaction Documents; or
(iv) a material adverse effect on the Buyer's ability to sell or dispose of any of the Shares, whether on the Principal Trading Market, or otherwise, in accordance with applicable securities
Laws.
2.18 "
Material Contract
" means any Contract to which the Company is a party or by which it is bound which has been filed or
is required to have been filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K promulgated by the SEC.
2.19 "
Obligation
" means any debt, liability or obligation of any nature whatsoever, whether secured, unsecured, recourse,
nonrecourse, liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown or obligations under executory Contracts.
2.20 "
Operating Sub
" shall have the meaning given in
Section 2.2
.
2.21 "
Ordinary Course of Business
" means the ordinary course of business consistent with past custom and practice (including
with respect to quantity, quality and frequency).
2.22 "
Outside Closing Date
" shall have the meaning given in
Section 12.1
.
2.23 "
Permit
" means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever,
granted, issued, approved or allowed by any Governmental Authority.
2.24 "
Person
" means any individual, sole proprietorship, joint venture, partnership, company, corporation, association,
cooperation, trust, estate, Governmental Authority, or any other entity of any nature whatsoever.
2.25 "
Principal Trading Market
" shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the OTC Markets, including the Bulletin Board and Pink Sheets, the NYSE Euronext or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the
Common Stock.
2.26 "
Proceeding
" means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative
hearing, or any other proceeding of any nature whatsoever.
2.27 "
Real Property
" means any real estate, land, building, structure, improvement, fixture or other real property of any
nature whatsoever, including, but not limited to, fee and leasehold interests.
2.28 "
Registration Rights Agreement
" means the Registration Rights Agreement, dated the date hereof, among the Company and
the Buyers, in the form of
Exhibit A
attached hereto.
2.29 "
SEC
" means the United States Securities and Exchange Commission.
2.30 "
SEC Documents
" shall have the meaning given in
Section 6.7
.
2.31 "
Securities Act
" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
2.32 "
Shares
" means up to Six Million (6,000,000) shares of Common Stock issued or issuable to the Buyers pursuant to this
Agreement.
2.33 "
Tax
" means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use,
occupancy, general property, real property, personal property, intangible property, transfer, fuel, excise, accumulated earnings, personal holding company, unemployment compensation, social
C-3
security,
withholding taxes, payroll taxes, or any other tax of any nature whatsoever, (ii) any foreign, federal, state or local organization fee, qualification fee, annual report fee, filing
fee, occupation fee, assessment, rent, or any other fee or charge of any nature whatsoever, or (iii) any deficiency, interest or penalty imposed with respect to any of the foregoing.
2.34 "
Tax Return
" means any tax return, filing, declaration, information statement or other form or document required to be
filed in connection with or with respect to any Tax.
2.35 "
Transaction Documents
" means this Agreement and the Registration Rights Agreement.
ARTICLE III
INTERPRETATION
In
this Agreement, unless the express context otherwise requires: (i) the words "herein," "hereof" and "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement; (ii) references to the words "Article" or "Section" refer to the respective Articles and Sections of this Agreement,
and references to "Exhibit" or "Schedule" refer to the respective Exhibits and Schedules annexed hereto; (iii) references to a "party" mean a party to this Agreement and include references to
such party's permitted successors and permitted assigns; (iv) references to a "third party" mean a Person not a party to this Agreement; (v) the terms "dollars" and "$" means U.S.
dollars; (vi) wherever the word "include," "includes" or "including" is used in this Agreement, it will be deemed to be followed by the words "without limitation."
ARTICLE IV
PURCHASE AND SALE
4.1
Sale and Issuance of Shares.
Subject to the terms and conditions of this Agreement, each Buyer agrees,
severally and not jointly, to purchase, and the Company agrees to sell and issue to each Buyer, the number of Shares set forth in the column designated "Total InvestmentNumber of Shares"
opposite such Buyer's name on the Schedule of Buyers, which in the aggregate shall equal up to Twelve Million Dollars ($12,000,000.00) of Shares, at a cash purchase price of $2.00 per Share (the
"
Purchase Price
"). The Company's agreement with each Buyer is a separate agreement, and the sale and issuance of the Shares to each Buyer is a separate
sale and issuance.
4.2
Closings.
The purchase, sale and issuance of the Shares shall take place at two closings (each of which is
referred to in this Agreement as a "
Closing
" and the date of each is referred to in this Agreement as a "
Closing
Date
").
(a) The
initial Closing (the "
Initial Closing
") shall be for a total of 949,960 Shares and a total Purchase Price of One
Million Eight Hundred Ninety Nine Thousand Nine Hundred Twenty Dollars ($1,899,920.00) (the "
Initial Closing Purchase Proceeds
"), with each Buyer
purchasing from the Company the number of Shares set forth in the column designated "Initial ClosingNumber of Shares" opposite such Buyer's name on the Schedule of Buyers. The Initial
Closing shall take place at the offices of Stubbs Alderton & Markiles, LLP, 15260 Ventura Boulevard, 20
th
Floor, Sherman Oaks, California 91403, or such other
location as the parties shall mutually agree, no later than the second business day following the satisfaction or waiver of the conditions provided in Articles VIII and IX of this Agreement
(other than conditions that, by their terms, are intended to be satisfied at the Initial Closing, but subject to the satisfaction or waiver of those conditions) ("
Initial
Closing Date
"), but in no event later than the Outside Closing Date.
(b) The
second Closing (the "
Second Closing
") shall be for a total of 4,222,290 Shares and a total Purchase Price of Eight
Million Four Hundred Forty Four Thousand Five Hundred Eighty Dollars ($8,444,580.00) (the "
Second Closing Purchase Proceeds
"), with each Buyer
purchasing from the Company the number of Shares set forth in the column designated "Second Closing
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Number
of Shares" opposite such Buyer's name on the Schedule of Buyers. The Second Closing shall take place at the offices of Stubbs Alderton & Markiles, LLP, 15260 Ventura Boulevard,
20
th
Floor, Sherman Oaks, California 91403, or such other location as the parties shall mutually agree, no later than the second business day following the satisfaction or waiver
of the conditions provided in Articles VIII and IX of this Agreement (other than conditions that, by their terms, are intended to be satisfied at the Second Closing, but subject to the
satisfaction or waiver of those conditions) ("
Second Closing Date
"), but in no event later than the Outside Closing Date.
(c) If
less than all of the Shares are sold and issued at the Initial Closing and Second Closing, then, subject to the terms and conditions of this Agreement, the Company
may sell and issue at one or more subsequent closings (each, a "
Subsequent Closing
"), to one or more Buyers or new purchasers (each, an
"
Additional Buyer
") approved by the Company's Board of Directors, the number of Shares agreed to by the Company and such Buyer or Additional Buyer;
provided
, that (a) such subsequent sale is consummated prior to the Outside Closing Date, (b) each Additional Buyer shall become a party
to this Agreement and the other Transaction Documents by executing and delivering a counterpart signature
page to each of the Transaction Documents and (c) the aggregate number of Shares sold pursuant to this Agreement does not exceed 6,000,000. Any such sale and issuance in a Subsequent Closing
shall be on the same terms and conditions as those contained herein. Each Subsequent Closing shall take place at such date, time and place as shall be approved by the Company and the Placement Agent
each in their sole discretion. The Schedule of Buyers attached to this Agreement shall be updated to reflect the number of Shares purchased at each such Subsequent Closing and the Buyer or Additional
Buyer purchasing such Shares.
4.3
Form of Payment; Delivery.
At each Closing, Buyer shall deliver to the Company the Buyer's Purchase Price by
the release of the Buyer's Purchase Price from escrow in accordance with the Escrow Agreement, by cancellation or conversion of indebtedness of the Company to such Buyer (including interest), or by
any combination of such methods.
4.4
Payment to Placement Agent.
At each Closing, the Company will issue to the Placement Agent or its designees
that number of shares of Common Stock equal to 10% of the gross proceeds from the sale of the Shares being sold at such Closing divided by the Purchase Price and a warrant to purchase shares of Common
Stock equal to 10% of the number of Shares sold, with an exercise price equal to 110% of the Purchase Price; provided that no shares of Common Stock or warrants will be issued to the Placement Agent
in respect of any Shares sold to Kanis S.A., Haldor Topose A/S, any officer or director of the Company, or any of their respective affiliates. The Placement Agent is intended to be a third
party beneficiary of this provision and the conditions precedent to any Closing that the foregoing fees are paid.
ARTICLE V
BUYERS' REPRESENTATIONS AND WARRANTIES
Each
Buyer, severally, and not jointly, represents and warrants to the Company, that:
5.1
Investment Purpose.
Each Buyer is acquiring the Shares for its own account for investment only and not with
a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act;
provided
,
however
, that by making the representations herein, each Buyer reserves the right to dispose
of the Shares at any time in accordance with or pursuant to an effective registration statement covering such Shares or an available exemption under the Securities Act. The Buyer acknowledges that a
legend will be placed on the certificates representing the Shares or other evidence of direct registration of the Shares in book-entry form, as follows:
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THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 UNDER THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER OR PURSUANT TO AN OPINION OF COUNSEL, WHICH IS TO BE ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL TO
THE ISSUER, THAT REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES.
5.2
Accredited Investor Status.
Each Buyer is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D, as promulgated under the Securities Act.
5.3
Reliance on Exemptions.
Each Buyer understands that the Shares are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States federal and state securities Laws and that the Company is relying in part upon the truth and accuracy of, and each Buyer's
compliance with, the representations, warranties, agreements, acknowledgments and understandings of each Buyer set forth herein in order to determine the availability of such exemptions and the
eligibility of each Buyer to acquire the Shares.
5.4
Information.
Each Buyer and its advisors, if any, have been furnished with all materials relating to the
business, finances and operations of the Company and other information each Buyer deemed material to making an informed investment decision regarding its purchase of the Shares, which have been
requested by such Buyer. Each Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries, nor any other due diligence
investigations conducted by any Buyer or its advisors, if any, or its representatives, shall modify, amend or affect each Buyer's right to rely on the Company's representations and warranties
contained in Article VI below. Each Buyer understands that its investment in the Shares involves a high degree of risk. Each Buyer is in a position regarding the Company that enabled and
enables Buyer to obtain information from the Company in order to evaluate the merits and risks of this investment. Each Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its acquisition of the Shares.
5.5
No Governmental Review.
Each Buyer understands that no United States federal or state Governmental Authority
has passed on or made any recommendation or endorsement of the Shares, or
the fairness or suitability of the investment in the Shares, nor have such Governmental Authorities passed upon or endorsed the merits of the offering of the Shares.
5.6
Authorization, Enforcement.
This Agreement has been duly and validly authorized, executed and delivered on
behalf of each Buyer and is a valid and binding agreement of each Buyer, enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
5.7
General Solicitation.
The Buyer is not purchasing the Shares as a result of any advertisement, article,
notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as set forth and disclosed in the Company's disclosure schedules ("
Disclosure Schedules
") attached to this
Agreement and made a part hereof, the Company hereby makes the following representations and warranties to each Buyer. The Disclosure Schedules shall be arranged in sections corresponding to the
numbered and lettered sections and subsections contained in this
Article VI
and certain other sections of this Agreement, and the disclosures in
any section or subsection of the Disclosure Schedules shall qualify other sections and subsections in this
Article VI
only to the extent it is
readily apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.
6.1
Subsidiaries.
Except as disclosed in the SEC Documents, the Company has no subsidiaries and the Company does
not own, directly or indirectly, any outstanding voting securities of or other interests in, or have any control over, any other Person. With respect to each of the Company's subsidiaries, all
representations and warranties in this Article VI and elsewhere in this Agreement shall be deemed repeated and re-made from and by each such subsidiary, as if such representations and
warranties were independently made by each such subsidiary, in this Agreement (but modified as necessary in order to give effect to the intent of the parties that such representation and warranty is
being made by the subsidiary, rather than the Company, as applicable). In addition, each representation and warranty contained in this Article VI or otherwise set forth in this Agreement shall
be deemed to mean and be
construed to include the Company and each of its subsidiaries, as applicable, regardless of whether each of such representations and warranties in Article VI specifically refers to the
Company's subsidiaries or not.
6.2
Organization.
The Company and its subsidiaries are corporations, duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which they are incorporated. The Company has the full corporate power and authority and all necessary certificates, licenses, approvals and Permits
to: (i) enter into and execute this Agreement and the Transaction Documents and to perform all of its obligations hereunder and thereunder; and (ii) own and operate its Assets and
properties and to conduct and carry on its business as and to the extent now conducted. The Company is duly qualified to transact business and is in good standing as a foreign corporation in each
jurisdiction where the character of its business or the ownership or use and operation of its Assets or properties requires such qualification, except to the extent that failure to so qualify will not
result in a Material Adverse Effect.
6.3
Authority and Approval of Agreement; Binding Effect.
The execution and delivery by the Company of this
Agreement and the Transaction Documents, and the performance by the Company of all of its Obligations hereunder and thereunder, including the issuance of the Shares, have been duly and validly
authorized and approved by the Company and its board of directors pursuant to all applicable Laws and, except for the Stockholder Approval and Stockholder Notification contemplated in
Section 7.7
of this Agreement, no other corporate action or Consent on the part of the Company, its board of directors, stockholders or any other
Person is necessary or required by the Company to execute this Agreement and the Transaction Documents, consummate the transactions contemplated herein and therein, perform all of Company's
Obligations hereunder and thereunder, or to issue the Shares. This Agreement and each of the Transaction Documents have been duly and validly executed by the Company (and the officer executing this
Agreement and all such other Transaction Documents is duly authorized to act and execute same on behalf of the Company) and constitute the valid and legally binding agreements of the Company,
enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
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6.4
Capitalization.
Immediately prior to the Initial Closing, the authorized capital stock of the Company will
consist of 20,000,000 shares, with a par value of $0.01 per share, of which 19,900,000 shares are designated Common Stock and 100,000 shares are designated preferred stock, of which 9,487,362 shares
of Common Stock and no shares of preferred stock are issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. The Common Stock is currently
quoted on the Nasdaq Capital Market under the trading symbol "CDTI." The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for
quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation. Except as set forth in
Section 6.4
of the Disclosure
Schedules, no shares of Common Stock are subject to preemptive rights or any other similar rights or
any Encumbrances suffered or permitted by the Company. Except as set forth on
Section 6.4
of the Disclosure Schedules, as of the date hereof:
(i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares
of capital stock of the Company or any of its subsidiaries, or Contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may become bound to issue
additional Shares of capital stock of the Company or any of its subsidiaries, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries; (collectively, "
Derivative Securities
");
(ii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other Contracts or instruments evidencing indebtedness of the Company or any of its subsidiaries,
or by which the Company or any of its subsidiaries is or may become bound; (iii) there are no outstanding registration statements with respect to the Company or any of its securities (other
than registration statements on Form S-8); (iv) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except pursuant to this Agreement); (v) there are no financing statements securing obligations filed in connection with the Company or any of its
Assets; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the
transactions described herein or therein; and (vii) there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no
Contracts by which the Company is or may become bound to redeem a security of the Company. Except as set forth on
Section 6.4
of the Disclosure
Schedules, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company's capital stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company's stockholders.
Section 6.4
of the Disclosure Schedules sets forth a detailed calculation of the
total number of shares of Common Stock outstanding immediately prior to the issuance of the Shares at the Initial Closing and assuming (i) the exercise in full of all outstanding Derivative
Securities taking into account all applicable anti-dilution or similar adjustments or rights, including without limitation those resulting from the issuance of Shares pursuant to this Agreement, and
(ii) the exercise of all Derivative Securities authorized for issuance, but not yet issued, under any plan of the Company.
6.5
No Conflicts; Consents and Approvals.
The execution, delivery and performance of this Agreement and the
Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Shares, will not: (i) constitute a violation of or conflict
with any provision of the Company's or any of the Company's subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents; (ii) constitute a
violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflict with, or give to any other Person any rights of termination, amendment,
acceleration or cancellation of, any provision of any Material Contract; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or
both), or conflict with, any Judgment; (iv) assuming the accuracy of the representations and warranties of the Buyers set forth in Article V above, constitute
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a
violation of, or conflict with, any Law (including United States federal and state securities Laws and the rules and regulations of any market or exchange on which the Common Stock is quoted); or
(v) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the
use of, Company or any of Company's Assets. The Company is not in violation of its articles of incorporation, bylaws or other organizational or governing documents and the Company is not in default or
breach (and no event has occurred which with notice or lapse of time or both could put the Company in default or breach) under, and the Company has not taken any action or failed to take any action
that would give to any other Person any rights of termination, amendment, acceleration or cancellation of, any Material Contract. Except as specifically contemplated by this Agreement, including with
respect to the Stockholder Approval and Stockholder Notification contemplated in
Section 7.7
of this Agreement, the Company is not required to
obtain any Consent of, from, or with any Governmental Authority, or any other Person, in order for it to execute, deliver or perform any of its Obligations under this Agreement or the Transaction
Documents in accordance with the terms hereof or thereof, or to issue and sell the Shares in accordance with the terms hereof. Except for the Stockholder Approval and Stockholder Notification
contemplated in
Section 7.7
of this Agreement, all Consents which the Company is required to obtain pursuant to the immediately preceding
sentence have been obtained or effected on or prior to the date hereof.
6.6
Issuance of Shares.
Each of (i) the Shares, (ii) the shares of Common Stock to be issued to
the Placement Agent pursuant to Section 4.4, and (iii) the shares of Common Stock underlying the warrant to be issued to the Placement Agent pursuant to Section 4.4 are duly
authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all Encumbrances with respect to the issue thereof, and, in
respect of the Shares, assuming the accuracy of the representations and warranties of the Buyers set forth in Article V above, will be issued in compliance with all applicable United States
federal and state securities Laws. Assuming the accuracy of the representations and warranties of the Buyers set forth in Article V above, the offer and sale by the Company of the Shares is
exempt from: (i) the registration and prospectus delivery requirements of the Securities Act; and (ii) the registration and/or qualification provisions of all applicable state and
provincial securities and "blue sky" laws.
6.7
SEC Documents; Financial Statements.
The Common Stock is registered pursuant to Section 12 of the
Exchange Act and the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC under the Exchange Act (all of the foregoing filed
within the two (2) years preceding the date hereof or amended after the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated
by reference therein, being hereinafter referred to as the "
SEC Documents
"). The Company is current with its filing obligations under the Exchange Act
and all SEC Documents have been filed on a timely basis or the Company has received a valid extension of such time of filing and has filed any such SEC Document prior to the expiration of any such
extension. The Company represents and warrants that true and complete copies of the SEC Documents are available on the SEC's website (www.sec.gov) at no charge to Buyers, and Buyers acknowledge that
each of them may retrieve all SEC Documents from such website and each Buyer's access to such SEC Documents through such website shall constitute delivery of the SEC Documents to Buyers;
provided
,
however
, that if any Buyer is unable to obtain any of such SEC Documents from such website at
no charge, as result of such website not being available or any other reason beyond any Buyer's control, then upon request from such Buyer, the Company shall deliver to such Buyer true and complete
copies of such SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC
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Documents
is, or has been, required to be amended or updated under applicable Law (except as such statements have been amended or updated in subsequent filings prior to the date hereof, which
amendments or updates are also part of the SEC Documents). As of their respective dates, the financial statements of the Company included in the SEC Documents ("
Financial
Statements
") complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto (except as such
Financial Statements have been amended or updated in subsequent filings prior to the date hereof, which amendments or updates are also part of the SEC Documents). All of the Financial Statements have
been prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or
(ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and fairly present in all material respects the
consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). To the knowledge of the Company and its officers, no other information provided by or on behalf of the Company to the Buyers which is not included in
the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which
they are or were made, not misleading.
6.8
Absence of Certain Changes.
Since the date the last of the SEC Documents was filed with the SEC, none of the
following have occurred:
(a) There
has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; or
(b) Except
for this Agreement and the other Transaction Documents, there has been no transaction, event, action, development, payment, or other matter of any nature
whatsoever entered into by the Company that requires disclosure in an SEC Document which has not been so disclosed.
6.9
Absence of Litigation or Adverse Matters.
Except as disclosed in the SEC Documents: (i) there is no
Proceeding before or by any Governmental Authority or any other Person, pending, or the best of Company's knowledge, threatened or contemplated by, against or affecting the Company, its business or
Assets; (ii) there is no outstanding Judgments against or affecting the Company, its business or Assets; and (iii) the Company is not in breach or violation of any Material Contract.
6.10
Liabilities of the Company.
The Company does not have any Obligations of a nature required by GAAP to be
disclosed on a consolidated balance sheet of the Company, except: (i) as disclosed in the Financial Statements; or (ii) incurred in the Ordinary Course of Business since the date of the
last Financial Statements filed by the Company with the SEC that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
6.11
Title to Assets.
The Company has good and marketable title to, or a valid license or leasehold interest in,
all of its Assets which are material to the business and operations of the Company as presently conducted, free and clear of all Encumbrances or restrictions on the transfer or use of same, other than
restrictions on transfer or use arising under a license or Lease with respect to such Assets that, individually or in the aggregate, would not have, or be reasonably expected to, materially interfere
with the purposes for which they are currently used and for the purposes for which they are proposed to be used. Except as would not have a Material Adverse Effect, the Company's Assets are in good
operating condition and repair, ordinary wear and tear excepted, and are free of any latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they are
currently used and for the purposes for which they are proposed to be used.
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6.12
Real Estate
.
(a)
Real Property Ownership.
The Company does not own any Real Property.
(b)
Real Property Leases.
Except pursuant to the Leases described in the SEC Documents or in
Section 6.12
of the
Disclosure Schedules (the "
Company Leases
"), the Company does not lease any
Real Property. With respect to each of the Company Leases: (i) the Company has been in peaceful possession of the property leased thereunder and neither the Company nor, to the Company's
knowledge, the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the Obligations thereunder has been granted by the Company or landlord thereunder; and
(iii) there exists no event, occurrence, condition or act known to the Company which, upon notice or lapse of time or both, would be or could become a default thereunder or which could result
in the termination of the Company Leases, or any of them, or have a Material Adverse Effect on the business of the Company, its Assets or its operations or financial results. The Company has not
violated nor breached any provision of any such Company Leases, and all Obligations required to be performed by the Company under any of such Company Leases have been fully, timely and properly
performed. If requested by any of the Buyers, the Company has delivered to such Buyers true, correct and complete copies of all Company Leases, including all modifications and amendments thereto,
whether in writing or otherwise. The Company has not received any written or oral notice to the effect that any of the Company Leases will not be renewed at the termination of the term of such Company
Leases, or that any of such Company Leases will be renewed only at higher rents.
6.13
Material Contracts.
A list of the Material Contracts is set forth in
Section 6.13
of the Disclosure Schedules. An
accurate, current and complete copy of each of the Material Contracts has been furnished to Buyers
and/or is readily available as part of the SEC Documents, and each of the Material
Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof. Each of the Material Contracts is in full force and effect and is a valid and
binding Obligation of the parties thereto in accordance with the terms and conditions thereof. To the knowledge of the Company and its officers, all Obligations required to be performed under the
terms of each of the Material Contracts by any party thereto have been fully performed by all parties thereto, and no party to any Material Contracts is in default with respect to any term or
condition thereof, nor has any event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification
of any Obligation of any party thereto or the creation of any Encumbrance upon any of the Assets of the Company. Further, the Company has received no notice, nor does the Company have any knowledge,
of any pending or contemplated termination of any of the Material Contracts and, no such termination is proposed or has been threatened, whether in writing or orally.
6.14
Compliance with Laws.
Except as would not have a Material Adverse Effect, the Company is and at all times
has been in material compliance with all Laws. The Company has not received any notice that it is in violation of, has violated, or is under investigation with respect to, or has been threatened to be
charged with, any violation of any Law.
6.15
Intellectual Property.
The Company owns or possesses adequate and legally enforceable rights or licenses to
use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and all other intellectual property rights necessary to conduct its business as now conducted. The Company does not have any knowledge of any infringement by the Company of trademark, trade
name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other intellectual property rights of others, and, to
the knowledge of the Company, there is no Claim being made or brought against, or to the Company's knowledge, being threatened against, the Company regarding trademark, trade name,
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patents,
patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other intellectual property infringement; and the Company is unaware of
any facts or circumstances which might give rise to any of the foregoing.
6.16
Labor and Employment Matters.
The Company is not involved in any labor dispute or, to the knowledge of the
Company, is any such dispute threatened. To the knowledge of the Company and its officers, none of the Company's employees is a member of a union and the Company believes that its relations with its
employees are good. To the knowledge of the Company and its officers, the Company has complied in all material respects with all Laws relating to employment matters, civil rights and equal employment
opportunities.
6.17
Employee Benefit Plans.
The Company is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder
("
ERISA
"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the
"
Code
"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. To the Company's knowledge, the Company has
promptly paid and discharged all Obligations arising under ERISA of a character which if unpaid or unperformed might result in the imposition of an Encumbrance against any of its Assets or otherwise
have a Material Adverse Effect.
6.18
Tax Matters.
The Company has made and timely filed all Tax Returns required by any jurisdiction to which it
is subject, and each such Tax Return has been prepared in compliance with all applicable Laws, and all such Tax Returns are true and accurate in all respects. Except and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported Taxes, the Company has timely paid all Taxes shown or determined to be due on such Tax
Returns, except those being contested in good faith, and the Company has set aside on its books provision reasonably adequate for the payment of all Taxes for periods subsequent to the periods to
which such Tax Returns apply. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim. The Company has withheld and paid all Taxes to the appropriate Governmental Authority required to have been withheld and paid in connection with amounts paid or owing to any Person. There
is no Proceeding or Claim for refund now in progress, pending or, to the Company's knowledge, threatened against or with respect to the Company regarding Taxes.
6.19
Insurance.
The Company is covered by valid, outstanding and enforceable policies of insurance which were
issued to it by reputable insurers of recognized financial responsibility, covering its properties, Assets and businesses against losses and risks normally insured against by other corporations or
entities in the same or similar lines of businesses as the Company is engaged and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities (the
"
Insurance Policies
"). Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid. None of the Insurance Policies
will lapse or terminate as a result of the transactions contemplated by this Agreement. The Company has complied with the provisions of such Insurance Policies. The Company has not been refused any
insurance coverage sought or applied for and the Company does not have any reason to believe that it will not be able to renew its existing Insurance Policies as and when such Insurance Policies
expire or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not
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materially
and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company.
6.20
Permits.
The Company possesses all Permits necessary to conduct its business, and the Company has not
received any notice of, or is otherwise involved in any Proceedings relating to, the revocation or modification of any such Permits. All such Permits are valid and in full force and effect and the
Company is in material compliance with the respective requirements of all such Permits.
6.21
Business Location.
The Company has no office or place of business other than as identified in the SEC
Documents and the Company's principal executive offices are located in Oxnard, California. All books and records of the Company and other material Assets of the Company are held or located at the
offices and places of business identified in the SEC Documents.
6.22
Environmental Laws.
The Company is and has at all times been in compliance in all material respects with
any and all applicable Environmental Requirements, and there are no pending Claims against the Company relating to any Environmental Requirements, nor to the best knowledge of the Company, is there
any basis for any such Claims.
6.23
Illegal Payments.
Neither the Company, nor any director, officer, agent, employee or other Person acting on
behalf of the Company has, in the course of his actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
6.24
Related Party Transactions.
Except as disclosed in the SEC Documents, and except for arm's length
transactions pursuant to which the Company makes payments in the Ordinary Course of Business upon terms no less favorable than the Company could obtain from third parties, none of the officers,
directors or employees of the Company, nor any stockholders who own, legally or beneficially, five percent (5%) or more of the issued and outstanding shares of any class of the Company's capital stock
(each a "
Material Shareholder
"), is presently a party to any transaction with the Company (other than for services as employees, officers and
directors), including any Contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any
officer, director or such employee or Material Shareholder or, to the best knowledge of the Company, any other Person in which any officer, director, or any such employee or Material Shareholder has a
substantial or material interest in or of which any officer, director or employee of the Company or Material Shareholder is an officer, director, trustee or partner. There are
no Claims or disputes of any nature or kind between the Company and any officer, director or employee of the Company or any Material Shareholder, or, to the Company's knowledge, between any of them,
relating to the Company and its business.
6.25
Internal Accounting Controls.
Except as set forth in the SEC Documents, the Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to
Assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for Assets is compared with the existing Assets at reasonable
intervals and appropriate action is taken with respect to any differences.
6.26
Acknowledgment Regarding Buyers' Purchase of the Shares.
The Company acknowledges and agrees that each
Buyer is acting solely in the capacity of an arm's length purchaser with respect to this
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Agreement
and the transactions contemplated hereby. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any advice given by any Buyer or any of its representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to such Buyer's purchase of the Shares. The Company further represents to each Buyer that the Company's decision to enter into this Agreement has been based
solely on the independent evaluation by the Company and its representatives.
6.27
Listing and Maintenance Requirements.
The Company's Common Stock is registered pursuant to
Section 12 of the Exchange Act, and the Company has taken no action designed to, or which to the best of its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act, nor has the Company received any notification that the SEC is contemplating terminating such registration.
6.28
Bad Actor.
No "bad actor" disqualifying event described in Rule 506(d)(1)(i)-(viii) of the
Securities Act (a "
Disqualification Event
") is applicable to the Company or, to the Company's knowledge, any Company Covered Person, except for a
Disqualification Event as to which Rule 506(d)(2)(ii - iv) or (d)(3), is applicable. As used in this
Section 6.28
, the term
"
Company Covered Person
" means, with respect to the Company as an "issuer" for purposes of Rule 506 promulgated under the Securities Act, any
Person listed in the first paragraph of Rule 506(d)(1).
6.29
Brokerage Fees.
Except for the Placement Agent, there is no Person acting on behalf of the Company who is
entitled to or has any claim for any financial advisory, brokerage or finder's fee or commission in connection with the execution of this Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE VII
COVENANTS
7.1
Best Efforts.
Each party shall use its best efforts to timely satisfy each of the conditions to be satisfied
by it as provided in Articles VIII and IX of this Agreement.
7.2
Form D.
If required by applicable Law, the Company agrees to file a Form D with respect
to the Shares as required under Regulation D of the Securities Act and to provide a copy thereof to the Placement Agent. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary to qualify the Shares, or obtain an exemption for the Shares for sale to each of the Buyers at Closing pursuant to this Agreement under applicable
securities or "Blue Sky" Laws of the states of the United States, and shall provide evidence of any such action so taken to the Placement Agent on or prior to the Closing Date.
7.3
Affirmative Covenants
.
(a)
Reporting Status; Listing.
So long as any Buyer owns, legally or beneficially any of the Shares, the Company
shall: (i) file in a timely manner all reports required to be filed under the Securities Act, the Exchange Act or any securities Laws and regulations thereof applicable to the Company of any
state of the United States, or by the rules and regulations of the Principal Trading Market, and, if not otherwise publicly available, to provide a copy thereof to a Buyer upon request;
(ii) not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such
termination; (iii) if required by the rules and regulations of the Principal Trading Market, promptly secure the listing of the Shares upon the Principal Trading Market (subject to official
notice of issuance) and, take all reasonable action under its control to maintain the continued listing, quotation and trading of its Common Stock on the Principal Trading Market, and the Company
shall comply in all respects with the Company's reporting, filing and other Obligations under the bylaws or rules of
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the
Principal Trading Market, the Financial Industry Regulatory Authority, Inc. and such other Governmental Authorities, as applicable.
(b)
Rule 144.
With a view to making available to each Buyer the benefits of Rule 144 under the
Securities Act ("
Rule 144
"), or any similar rule or regulation of the SEC that may at any time permit Buyers to sell any of the Shares to the
public without registration, the Company represents and warrants that: (i) the Company is, and has been for a period of at least ninety (90) days immediately preceding the date hereof,
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (ii) the Company has filed all required reports under Section 13 or 15(d) of the Exchange Act, as
applicable, during the twelve (12) months preceding the Closing Date (or for such shorter period that the Company was required to file such reports); (iii) the Company is not an issuer
defined as a "Shell Company" (as hereinafter defined); and (iv) if the Company has, at any time, been an issuer defined as a Shell Company, the Company has: (A) not been an issuer
defined as a Shell Company for at least six (6) months prior to the Closing Date; and (B) has satisfied the requirements of Rule 144(i) (including, without limitation, the proper
filing of "Form 10 information" at least six (6) months prior to the Closing Date). For the purposes hereof, the term "
Shell Company
"
shall mean an issuer that meets the description set forth under Rule 144(i)(1)(i). In addition, so long as any Buyer owns, legally or beneficially, any of the Shares, the Company shall, at its
sole expense:
(i) Make,
keep and ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144, is publicly available;
(ii) furnish
to each Buyer, promptly upon reasonable request: (A) a written statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act; and (b) such other information as may be reasonably requested by each Buyer to permit each Buyer to sell the Shares pursuant to
Rule 144 without limitation or restriction; and
(iii) promptly
at the request of each Buyer, give the Company's transfer agent instructions to the effect that, upon the transfer agent's receipt from any Buyer of a
certificate (a "
Rule 144 Certificate
") certifying that such Buyer's holding period (as determined in accordance with the provisions of
Rule 144) for any portion of the Shares which such Buyer proposes to sell (the "
Securities Being Sold
") is not less than six (6) months,
and receipt by the transfer agent of the "Rule 144 Opinion" (as hereinafter defined) from the Company or its counsel (or from such Buyer and its counsel as permitted below), the transfer agent
is to effect the transfer of the Securities Being Sold and issue to such Buyer or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold or other
evidence of issuance by direct registration without any restrictive legend and without recording any restrictions on the transferability of such Securities Being Sold on the transfer agent's
books and records. In this regard, upon each Buyer's request, the Company shall have an affirmative obligation to cause its counsel to promptly issue to the transfer agent a legal opinion providing
that, based on the Rule 144 Certificate, the Securities Being Sold were or may be sold, as applicable, pursuant to the provisions of Rule 144, even in the absence of an effective
registration statement (the "
Rule 144 Opinion
"). If the transfer agent requires any additional documentation in connection with any proposed
transfer by any Buyer of any Securities Being Sold, the Company shall promptly deliver or cause to be delivered to the transfer agent or to any other Person, all such additional documentation as may
be necessary to effectuate the transfer of the Securities Being Sold and the issuance of an unlegended certificate or other evidence of issuance by direct registration to any transferee thereof, all
at the Company's expense.
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(c)
Matters With Respect to Securities and Transfer Agent
.
(i)
Removal of Restrictive Legends.
In the event that any Buyer has any shares of the Company's Common Stock
bearing any restrictive legends, and such Buyer, through its counsel or other representatives, submits to the Company's transfer agent ("
Transfer
Agent
") any such shares for the removal of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to
any
exemption to the registration
requirements under the Securities Act, or otherwise, and the Company and or its counsel refuses or fails for any
reason (except to the extent that such refusal or failure is based solely on applicable Law that would prevent the removal of such restrictive legends) to render an opinion of counsel or any other
documents or certificates required for the removal of the restrictive legends, then the Company hereby agrees and acknowledges that such Buyer is hereby irrevocably and expressly authorized to have
counsel to such Buyer render any and all opinions and other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Company hereby irrevocably
authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Company, issue any such shares without restrictive legends as instructed by such Buyer, and
surrender to a common carrier for overnight delivery to the address as specified by such Buyer, certificates or other evidence of issuance by direct registration, registered in the name of such Buyer
or its designees, representing the shares of Common Stock to which such Buyer is entitled, without any restrictive legends and otherwise freely transferable on the books and records of the Company.
(ii)
Authorized Agent of the Company.
The Company hereby irrevocably appoints each Buyer and each Buyer's
counsel and its representatives, each as the Company's duly authorized agent and attorney-in-fact for the Company for the purposes of authorizing and instructing the Transfer Agent to process
issuances, transfers and legend removals upon instructions from each Buyer, or any counsel or representatives of each Buyer, consistent with this
Section 7.3(c)
. The authorization and power of
attorney granted hereby is coupled with an interest and is irrevocable so long as any Buyer owns
or has the right to receive, any shares of the Company's Common Stock hereunder. In this regard, the Company hereby confirms to the Transfer Agent and each Buyer that it can
NOT
and will
NOT
give instructions, including stop orders or otherwise, inconsistent with the terms of
this
Section 7.3(c)
with
regard to the matters contemplated herein, and that each Buyer shall have the absolute right to provide a copy of this Agreement to the Transfer Agent as evidence of the Company's irrevocable
authority for each Buyer and Transfer Agent to process issuances, transfers and legend removals upon instructions from each Buyer, or any counsel or representatives of each Buyer, in each case as
specifically contemplated in this
Section 7.3(c)
, without any further instructions, orders or confirmations from the Company.
(iii)
Injunction and Specific Performance
. The Company specifically acknowledges and agrees that in the event of
a breach or threatened breach by the Company of any provision of this
Section 7.3(c)
, each Buyer will be irreparably damaged and that damages at
law would be an inadequate remedy if this Agreement were not specifically enforced. Therefore, in the event of a breach or threatened breach of any provision of this
Section 7.3(c)
by the Company,
each Buyer shall be entitled to obtain, in addition to all other rights or remedies such Buyer may have, at law or in equity, an
injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of
this
Section 7.3(c)
.
7.4
Use of Proceeds.
The Company shall use the net proceeds from the sale of the Shares for general corporate
purposes, including general and administrative expenses, and for the repayment of any outstanding Indebtedness of the Company or any of its subsidiaries.
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7.5
Fees and Expenses.
The Company agrees to pay to each Buyer (or any designee or agent of the Buyers), upon
demand, or to otherwise be responsible for the payment of, any and all costs, fees, charges and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for any Buyer, and
of any experts and agents, which any Buyer may incur or which may otherwise be due and payable in connection with: (i) any documentary stamp taxes, intangibles taxes, recording fees, filing
fees, or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any other Transaction Documents; (ii) the exercise or
enforcement of any of the rights of any Buyer under this Agreement or the Transaction Documents; or (iii) the failure by the Company to perform or observe any of the provisions of this
Agreement or any of the Transaction Documents. The provisions of this Subsection shall survive the termination of this Agreement.
7.6
Public Disclosure of Buyers.
The Company shall not publicly disclose the name of any Buyer, or include the
name of any Buyer in any filing with the SEC or any regulatory agency or Principal Trading Market, without the prior written consent of such Buyer except: (a) as required by federal securities
law in connection with any registration statement contemplated by the Registration Rights Agreement or (b) to the extent such disclosure is required by Law or Principal Trading Market
regulations, in which case the Company shall provide Buyers with prior written notice of such disclosure permitted under this clause (b).
7.7
Stockholder Approval and Notification.
Prior to or concurrently with the Company's execution and delivery of
this Agreement, Kanis S.A., the holder of a majority of the issued and outstanding Common Stock ("
Kanis
"), has provided its irrevocable written
consent to the issuance of the Shares and the consummation of the transactions contemplated by this Agreement (such approval, the "
Stockholder
Approval
"). As promptly as practicable after the Initial Closing, the Company shall use its best efforts to prepare and file with the SEC and transmit to holders of the
Company's Common Stock a written information statement (the "
Information Statement
") with respect to such Stockholder Approval containing the
information specified in Schedule 14C of the Exchange Act (Rule 14c-101), and use its best efforts to take all other actions required by Rule 14c-2 of the Exchange Act in
connection with such Stockholder Approval to allow the Company to consummate the Second Closing (the "
Stockholder Notification
").
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS TO SELL
The
obligation of the Company hereunder to issue and sell the Shares to a Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion:
8.1 The
Buyer shall have executed the Transaction Documents that require the Buyer's execution, and delivered them to the Company.
8.2 The
Buyer shall have paid the Buyer's Purchase Price to the Escrow Agent, which payment will be released from escrow to the Company, upon the joint written instructions
of the Company and the Placement Agent in accordance with the Escrow Agreement, by cancellation or conversion of indebtedness of the Company to such Buyer (including interest), or by any combination
of such methods.
8.3 The
Buyer's representations and warranties shall be true and correct in all material respects as of the date when made and as of the applicable Closing Date as though
made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required
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by
this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the applicable Closing Date.
8.4 No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
8.5 Since
the date of execution of this Agreement, no event or series of events shall have occurred that resulted, or could reasonably be expected to result, in a Material
Adverse Effect.
8.6 Trading
in the Common Stock shall not have been suspended by the SEC or any Principal Trading Market (except for any suspensions of trading of not more than one trading
day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement.
8.7 Other
than with respect to the Initial Closing (with respect to which this
Section 8.7
shall not apply), at least
twenty (20) days shall have elapsed from the date the Company first transmits the Information Statement to holders of Common Stock.
ARTICLE IX
CONDITIONS PRECEDENT TO A BUYER'S OBLIGATIONS TO PURCHASE
The
obligation of a Buyer hereunder to purchase the Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following
conditions (in addition to any other conditions precedent elsewhere in this Agreement), provided that these conditions are for the Buyer's sole benefit and may be waived by the Buyer at any time in
its sole discretion:
9.1 The
Company shall have executed and delivered the Transaction Documents and delivered the same to the Placement Agent.
9.2 The
Company shall have delivered to the transfer agent for the Company's Common Stock, instructions and all such other documents required by the transfer agent to issue
by direct registration in book-entry form in such Buyer's name the number of Shares that such Buyer is purchasing.
9.3 The
representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and
warranties are already qualified as to materiality in Article VI above, in which case, such representations and warranties shall be true and correct in all respects without further
qualification) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Placement Agent shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, to
the foregoing effect.
9.4 The
Company shall have delivered to the Placement Agent a certificate evidencing the formation and good standing of the Company in its jurisdiction of formation issued
by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within twenty (20) days of the Closing Date.
9.5 The
Company shall have delivered to the Placement Agent a certificate or other reasonably acceptable evidence of the Company's qualification as a foreign corporation and
good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within twenty
(20) days of the Closing Date.
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9.6 The
Company shall have delivered to the Placement Agent a certified copy of the Certificate of Incorporation as certified by the Secretary of State of the Company's
jurisdiction of incorporation within twenty (20) days of the Closing Date.
9.7 The
Company shall have delivered to the Placement Agent a certificate, in the form acceptable to the Placement Agent, executed by the Secretary of the Company dated as
of the Closing Date, as to (i) the resolutions consistent with
Section 6.3
as adopted by the Company's board of directors, (ii) the
Certificate of Incorporation of the Company and (iii) the Bylaws of the Company as in effect at the Closing.
9.8 The
Company shall have delivered to the Placement Agent an opinion of counsel to the Company, as of the Closing Date, in a form satisfactory to the Placement Agent and
its counsel.
9.9 The
Company shall have obtained all governmental, regulatory or third party consents and approvals necessary for the sale of the Shares.
9.10 No
event or series of events shall have occurred that resulted, or could reasonably be expected to result, in a Material Adverse Effect.
9.11 The
Company will have delivered to the Placement Agent or its designees the shares of Common Stock and the warrant to purchase shares of Common Stock, together
representing the compensation due to the Placement Agent in connection with sale of the Shares as provided in Section 4.4 hereof.
9.12 Kanis
and the Placement Agent shall have entered into a Lock-Up Agreement, in form and substance reasonably satisfactory to Kanis and the Placement Agent, for a period
of one year from the date of this Agreement.
9.13 Other
than with respect to the Initial Closing (with respect to which this
Section 9.13
shall not apply), at
least twenty (20) days shall have elapsed from the date the Company first transmits the Information Statement to holders of Common Stock.
ARTICLE X
INDEMNIFICATION
10.1
Company's Obligation to Indemnify.
In consideration of the Buyers' execution and delivery of this Agreement
and acquiring the Shares hereunder, and in addition to all of the Company's other obligations under this Agreement, the Company hereby agrees to defend and indemnify each Buyer and each Buyer's
Affiliates and subsidiaries, and their respective directors, officers, employees, agents and representatives, and the successors and assigns of each of them (collectively, the
"
Buyer Indemnified Parties
") and the Company does hereby agree to hold the Buyer Indemnified Parties harmless, from and against any and all Claims made,
brought or asserted against the Buyer Indemnified Parties, or any one of them, and the Company hereby agrees to pay or reimburse the Buyer Indemnified Parties for any and all Claims payable by any of
the Buyer Indemnified Parties to any Person, including reasonable attorneys' and paralegals' fees and expenses, court costs, settlement
amounts, costs of investigation and interest thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable Law, through all negotiations, mediations,
arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any misrepresentation or breach of any representation or warranty made by the Company in this
Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement or Obligation of the Company
contained in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (iii) any Claims brought or made against the Buyer
Indemnified Parties, or any one of them, by any Person and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement, the Transaction Documents or any
other instrument,
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document
or agreement executed pursuant hereto or thereto, any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Shares, or
the status of the Buyers of any of the Shares, as a buyer and holder of such Shares in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which is permissible under applicable Law. The Company will not be liable to any Buyer
under this indemnity: (i) for any settlement by a Buyer in connection with any Claim effected without the Company's prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed; or (ii) to the extent, but only to the extent, that a Claim is attributable to any Buyer's breach of any of the representations, warranties, covenants or agreements made
by such Buyer in this Agreement or in the other Transaction Documents.
ARTICLE XI
MATTERS RELATING TO THE BUYERS
11.1
Independent Nature of Buyers' Obligations and Rights.
The obligations of each Buyer under this Agreement
and the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer
under any one or more of the Transaction Documents. The decision of each Buyer to purchase the Shares pursuant to the Transaction Documents has been made by each such Buyer independently of any other
Buyer and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of its subsidiaries, if any, which may have been made or given by any other Buyer or any of their respective officers, directors, principals, employees,
agents, counsel or representatives (collectively, including the Buyer in question, the "
Buyer Representatives
"). No Buyer Representative shall have any
liability to any other Buyer or the Company
relating to or arising from any such information, materials, statements or opinions, if any. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with making its
investment hereunder and that no Buyer will be acting as agent of such other Buyer in connection with monitoring its investment in the Shares or enforcing its rights under the Transaction Documents.
Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Buyer to be joined as an additional party in any Proceeding for such purpose. The Company and each of the Buyers acknowledge that, for reasons of administrative
convenience the Company has elected to provide each of the Buyers with the same Transaction Documents for the purpose of closing a transaction with multiple Buyers and not because it was required or
requested to do so by any Buyer. In furtherance of the foregoing, and not in limitation thereof, the Company and the Buyers acknowledge that nothing contained in this Agreement or in any Transaction
Document, and no action taken by any Buyer pursuant thereto, shall be deemed to constitute any two or more Buyers as a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
11.2
Equal Treatment of Buyers.
No consideration shall be offered or paid to any Buyer to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents, unless the same consideration is also offered to all of the other Buyers parties to the Transaction Documents.
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ARTICLE XII
TERMINATION
12.1
Termination.
This Agreement may be terminated prior to the Initial Closing (i) by mutual written
agreement of the Required Buyers and the Company and notice to the Escrow Agent, or (ii) by either the Company or a Buyer (as to itself but for no other Buyer) upon written notice to the other
and the Escrow Agent, if the Initial Closing shall not have taken place by 3:30 p.m. Eastern Time on November 11, 2016, or such later date as approved by the Company's board of directors
and the Placement Agent, but in no event later than December 2, 2016 ("
Outside Closing Date
"); provided, that the right to terminate this
Agreement under this Section 12.1 shall not be available to any party whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such time. After the Initial Closing Date, this Agreement may not be terminated by the Company. After the Initial Closing Date, this Agreement will terminated
automatically, by no action of the Company or any of the Buyers, if the Second Closing is not held by the 120th calendar day after the Initial Closing Date ("
Automatic
Termination Date
"); provided that commencing on the 45th calendar day after the Initial Closing Date and prior to the Automatic Termination Date, any Buyer (as to itself
but for no other Buyer) may terminate this Agreement upon written notice to the Company and the Escrow Agent.
12.2
Consequences of Termination.
Upon the termination of this Agreement, if any the funds deposited by a Buyer
are still in escrow with the Escrow Agent, the Company and the Placement Agent, time being of the essence, shall jointly instruct the Escrow Agent to return those funds to such Buyer in
accordance with the Escrow Agreement. No termination of this Agreement shall release any party from any liability for breach by such party of the terms and provisions of this Agreement or the other
Transaction Documents.
ARTICLE XIII
MISCELLANEOUS
13.1
Notices.
All notices of request, demand and other communications hereunder shall be addressed to the
parties as follows:
|
|
|
If to the Company:
|
|
Clean Diesel Technologies, Inc.
1621 Fiske Place
Oxnard, CA 93033
Attention: Matthew Beale
Email: mbeale@cdti.com
Facsimile: (805) 205-1333
|
With a copy to:
|
|
Stubbs Alderton & Markiles, LLP
15260 Ventura Boulevard, 20
th
Floor
Sherman Oaks, California 91403
Attention: John McIlvery
Email: jmcilvery@stubbsalderton.com
Facsimile: (818) 444-6302
|
If to the Buyers:
|
|
To each Buyer based on the information set forth in the Schedule of Buyers attached hereto
|
unless
the address is changed by the party by like notice given to the other parties. Notice shall be in writing and shall be deemed delivered: (i) if mailed by certified mail, return receipt
requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if
mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business
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day
after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to
5:00 p.m., New York time, on a business day. Any notice hand delivered after 5:00 p.m., New York time, shall be deemed delivered on the following business day. Notwithstanding the
foregoing, notice, consents, waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered
only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.
13.2
Entire Agreement.
This Agreement, including the Exhibits and Schedules attached hereto and the documents
delivered pursuant hereto, including the Transaction Documents, set forth all the promises, covenants, agreements, conditions and understandings between the parties hereto with respect to the subject
matter hereof and thereof, and supersede all prior and contemporaneous agreements, understandings, inducements or conditions, expressed or implied, oral or written, except as contained herein and in
the Transaction Documents;
provided
,
however
, except as explicitly stated herein, nothing contained in
this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have
any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company prior to the date hereof with respect to any prior investment made by such
Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company, or any rights of or benefits to any Buyer or any other Person, in any agreement entered
into prior to the date hereof between or among the Company and any Buyer, or any instruments any Buyer received from the Company prior to the date hereof, and all such agreements and instruments shall
continue in full force and effect.
13.3
Successors and Assigns.
This Agreement, and any and all rights, duties and obligations hereunder, shall not
be assigned, transferred, delegated or sublicensed by the Company without the prior written consent of each Buyer. Subject to the foregoing and except as otherwise provided herein, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
13.4
Binding Effect.
This Agreement shall be binding upon the parties hereto, their respective successors and
permitted assigns.
13.5
Amendment.
Except as specifically set forth herein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other
than by an instrument in writing signed by the Company and the Required Buyers. Any amendment to any provision of this Agreement made in conformity with the provisions of this
Section 13.5
shall be
binding on all Buyers and holders of Shares, as applicable, provided that no such amendment shall be effective to the
extent that it (1) applies to less than all of the holders of the Shares then outstanding or (2) imposes any obligation or liability on any Buyer without such Buyer's prior written
consent (which may be granted or withheld in such Buyer's sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party,
provided that the Required Buyers may waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this
Section 13.5
shall be
binding on all Buyers and holders of Shares, as applicable, provided that no such waiver shall be effective to the extent
that it (1) applies to less than all of the holders of the Shares then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any
Buyer without such Buyer's prior written consent (which may be granted or withheld in such Buyer's sole discretion). No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents who are holders of Shares.
The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions
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of
the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this
Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise. As a material inducement for each Buyer to enter into this
Agreement, the Company expressly acknowledges and agrees that no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect
such Buyer's right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company's representations and warranties contained in this Agreement or any other Transaction
Document. "
Required Buyers
" means Buyers holding and/or subscribing hereunder for a majority of the Shares, as group, sold or to be sold pursuant to
this Agreement.
13.6
Gender and Use of Singular and Plural.
All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.
13.7
Execution.
This Agreement may be executed in one or more counterparts, all of which taken together shall be
deemed and considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other
party. A digital reproduction, portable document format (".pdf") or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by electronic
signature (including signature via
DocuSign
or similar services), electronic mail or any similar electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes.
13.8
Headings.
The article and section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of the Agreement.
13.9
Governing Law.
All questions concerning the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereby irrevocably waives any right it may have, 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. If either party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys'
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
13.10
Further Assurances.
The parties hereto will execute and deliver such further instruments and do such
further acts and things as may be reasonably required to carry out the intent and purposes of this Agreement.
C-23
13.11
Survival.
The representations and warranties contained herein shall survive the Closing and the delivery
of the Shares. Each Buyer shall be responsible only for its own representations, warranties and covenants hereunder.
13.12
Time is of the Essence.
The parties hereby agree that time is of the essence with respect to performance
of each of the parties' Obligations under this Agreement. The parties agree that in the event that any date on which performance is to occur falls on a Saturday, Sunday or state or national holiday,
then the time for such performance shall be extended until the next business day thereafter occurring.
13.13
Joint Preparation.
The preparation of this Agreement has been a joint effort of the parties and the
resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.
13.14
Severability.
If any one of the provisions contained in this Agreement, for any reason, shall be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall remain in full force
and effect and be construed as if the invalid, illegal or unenforceable provision had never been contained herein.
13.15
No Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except for Section 4.4 of this Agreement of which the
Placement Agent is an intended third-party beneficiary.
13.16
WAIVER OF JURY TRIAL.
THE BUYERS AND THE COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BUYERS AND THE
COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BUYERS TO PURCHASE THE NEW NOTES.
13.17
Compliance with Federal Law.
The Company shall: (i) ensure that no Person who owns a controlling
interest in or otherwise controls the Company is or shall at any time be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign
Assets Control ("
OFAC
"), the Department of the Treasury, included in any Executive Orders or in any other similar lists of any Governmental Authority;
(ii) not use or permit the use of the proceeds of the purchase of the Shares to violate any of the foreign asset control regulations of OFAC or any enabling statute, Executive Order relating
thereto or any other requirements or restrictions imposed by any Governmental Authority; and (iii) comply with all applicable Lender Secrecy Act laws and regulations, as amended.
[SIGNATURES
ON THE FOLLOWING PAGE]
C-24
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.
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"COMPANY"
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CLEAN DIESEL TECHNOLOGIES, INC.,
a Delaware corporation
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By:
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/s/ MATTHEW BEALE
Matthew Beale
Chief Executive Officer
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BUYERS:
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See Signature pages for each Buyer attached
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Company
Signature Page to Securities Purchase Agreement
C-25
BUYER SIGNATURE PAGE FOR SECURITIES PURCHASE AGREEMENT
WITH CLEAN DIESEL TECHNOLOGIES, INC.
By its execution below, the undersigned Buyer hereby acknowledges and agrees to the terms set forth in the Securities Purchase Agreement to
which this signature page is attached.
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FOR ENTITY INVESTORS
:
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FOR INDIVIDUAL INVESTORS
:
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[Name of Entity]
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Signature:
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WORK ADDRESS:
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HOME ADDRESS:
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Number
of Shares to be Purchased or Dollar Amount Invested:
Exhibit
B
C-26
ANNEX D
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "
Agreement
") is made and entered into as of this
4th day of November, 2016 by and among Clean Diesel Technologies, Inc., a Delaware corporation (the "
Company
"), and the investors
identified on the signature pages hereto (each, including its successors and assigns, an "
Investor
," and collectively, the
"
Investors
").
R E C I T A L S
WHEREAS,
the Company will sell up to $12,000,000 of shares of the Company's Common Stock to the Investors pursuant to that certain Securities Purchase Agreement (the
"
Purchase Agreement
") dated as of even date herewith by and among the Company and the Investors.
A G R E E M E N T
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Investors agree as follows:
The
parties hereby agree as follows:
1.
Certain Definitions.
As used in this Agreement, the following terms shall have the following meanings:
"
Business Day
" means any day other than a Saturday, Sunday or a day which is a Federal legal holiday in the U.S.
"
Common Stock
" means the Company's common stock, par value $0.01 per share, and any securities into which such shares may hereinafter be
reclassified.
"
Prospectus
" means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any "free writing prospectus" as defined in Rule 405 under the 1933 Act.
"
Register
," "
registered
" and
"
registration
" refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.
"
Registrable Securities
" means (i) the Shares and (ii) any other securities issued or issuable with respect to or in
exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided, that an Investor's security shall cease to be a Registrable Security upon the earliest to occur of the
following: (A) sale of such security pursuant to a Registration Statement; or (B) such security becoming eligible for sale by the Investor pursuant to Rule 144 under the 1933 Act
without regard to the holding period or volume limitations thereunder.
"
Registration Statement
" means any registration statement of the Company filed under the 1933 Act (including a post-effective amendment to
a previously filed registration statement) that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.
"
Required Investors
" means the Investors holding a majority of the Registrable Securities.
D-1
"
SEC
" means the U.S. Securities and Exchange Commission.
"
Selling Stockholder Questionnaire
" means a questionnaire in the form attached as
Exhibit B
hereto, or such other form of questionnaire as may reasonably be adopted
by the Company from time to time.
"
Shares
" means the shares of Common Stock issued pursuant to the Purchase Agreement.
"
1933 Act
" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"
1934 Act
" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
2.
Registration
.
(a)
Registration Statement.
Promptly following the final closing date of the transactions contemplated by the
Purchase Agreement (the "
Closing Date
") but no later than forty-five (45) days after the Second Closing Date (as that term is defined in the
Purchase Agreement) (the "
Filing Deadline
"), the Company shall prepare and file with the SEC a Registration Statement on Form S-3 (or, if
Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities) covering the resale
of the Registrable Securities. Subject to any SEC comments, such Registration Statement shall include the plan of distribution
attached hereto as
Exhibit A
; provided, however, that no Investor shall be named as an "underwriter" in the Registration Statement without the
Investor's prior written consent. Such Registration Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and their counsel prior
to its filing or other submission. If a Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Filing Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof
following the Filing Deadline for which no Registration Statement is filed with respect to the Registrable Securities. Such payments shall constitute the Investors' exclusive monetary remedy for such
events, but shall not affect the right of the Investors to seek injunctive relief. Such payments shall be made to each Investor in cash no later than three (3) Business Days after the end of
each 30-day period or any portion thereof.
(b)
Expenses.
The Company will pay all expenses associated with each registration, including filing and printing
fees, the Company's counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, reasonable fees
and expenses of one counsel to the Investors and the Investors' reasonable expenses in connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.
(c)
Effectiveness
.
(i) The
Company shall use commercially reasonable efforts to have the Registration Statement declared effective as promptly as possible. The Company shall promptly notify
the Investors by facsimile or e-mail as promptly as possible after, and in any event, no later than 5:00 p.m. New York time on the next Business Day following the date, any Registration
D-2
Statement
is declared effective and shall simultaneously provide the Investors by facsimile or e-mail with copies of any related Prospectus to be used in connection with the sale or other disposition
of the securities covered thereby. If (A) a Registration Statement covering the Registrable Securities is not declared effective by the SEC prior to the earlier of (i) five (5)
Business Days after the SEC shall have
informed the Company that no review of the Registration Statement will be made or that the SEC has no further comments on the Registration Statement or (ii) one hundred twenty (120) days
after the Second Closing Date (as that term is defined in the Purchase Agreement) or (B) a Registration Statement has been declared effective by the SEC but sales cannot be made pursuant to
such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company's failure to update the Registration Statement), but excluding any Allowed Delay (as
defined below) or the inability of any Investor to sell the Registrable Securities covered thereby due to market conditions, then the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the date by
which such Registration Statement should have been effective (the "
Blackout Period
"). Such payments shall constitute the Investors' exclusive monetary
remedy for such events, but shall not affect the right of the Investors to seek injunctive relief. The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within
three (3) Business Days of the last day of each 30-day period following the commencement of the Blackout Period until the termination of the Blackout Period. Such payments shall be made to each
Investor in cash.
(ii) Notwithstanding
anything herein to the contrary, the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section
in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of
which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus
so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an "
Allowed Delay
");
provided, that the Company shall promptly (a) notify each Investor in writing of the commencement of and the reasons for an Allowed Delay, but shall not (without the prior written consent of an
Investor) disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement
until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.
(iii) Notwithstanding
anything herein to the contrary, in no event shall the liquidated damages paid or to be paid by the Company to an Investor pursuant to
Sections 2(a) and 2(c) of this Agreement exceed, in the aggregate, an amount equal to 10.0% of the aggregate amount invested by such Investor.
(d)
Rule 415; Cutback
If at any time the SEC takes the position that the offering of some or all of the
Registrable Securities in a Registration Statement (alone or together with previously or subsequently registered shares of Common Stock) is not eligible to be made on a delayed or continuous basis
under the provisions of Rule 415 under the 1933 Act or requires any Investor to be named as an "underwriter", the Company shall use its best efforts to persuade the SEC that the offering
contemplated by the Registration Statement is a valid secondary offering and not an offering "by or on behalf of the issuer" as defined in Rule 415 and that none of the Investors is an
D-3
"underwriter".
The Investors shall have the right to participate or have their counsel participate in any meetings or discussions with the SEC regarding the SEC's position (unless in the reasonable
opinion of the Company or its counsel, such participation will be to the detriment to the Company in that it may cause undue delays in the registration process or for other reasons) and to comment or
have their counsel comment on any written submission made to the SEC with respect thereto. No such written submission shall be made to the SEC to which the Investors' counsel reasonably objects. In
the event that, despite the Company's best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company shall (i) first remove any
securities registered for the account of any selling shareholders other than the holders of Registrable Securities, (ii) second remove any securities being registered for sale by the Company,
and (iii) third remove from the Registration Statement such portion of the Registrable Securities (the "
Cut Back Shares
") and/or agree to such
restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company's compliance with the requirements of Rule 415
(collectively, the "
SEC Restrictions
"); provided, however, that the Company shall not agree to name any Investor as an "underwriter" in such
Registration Statement without the prior written consent of such Investor. Any cut-back imposed on the Investors pursuant to this Section 2(d) shall be allocated among the Investors (and the
holders of any previously or subsequently registered shares of Common Stock whose shares are subject to the Rule 415 position taken by the SEC) on a pro rata basis, unless the SEC Restrictions
otherwise require or provide or the Investors otherwise agree. No liquidated damages shall accrue as to any Cut Back Shares until such date as the Company is able to commence the registration of such
Cut Back Shares in accordance with any SEC Restrictions (such date, the "
Restriction Termination Date
" of such Cut Back Shares). From and after the
Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the liquidated damages provisions) shall again be applicable to such Cut Back
Shares; provided, however, that (i) the Filing Deadline for the Registration Statement including such Cut Back Shares shall be ten (10) Business Days after such Restriction Termination
Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut Back Shares under Section 2(c) shall be the 90
th
day
immediately after the Restriction Termination Date.
3.
Company Obligations.
The Company will use commercially reasonable efforts to effect the registration of the
Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:
(a) use
commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon
the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and (ii) the date on which all
Registrable Securities covered by such Registration Statement may be sold without any restriction pursuant to Rule 144 (the "
Effectiveness
Period
") and (i) advise the Investors in writing when the Effectiveness Period has expired and (ii) provide the Investors with a copy of the opinion of counsel to
the Company to the Transfer Agent and instructions from the Company to
the Transfer Agent to remove the re-sale restrictions imposed by the 1933 Act from the Registrable Securities, both of which will be irrevocable;
(b) prepare
and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration
Statement effective for the Effectiveness Period and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered
thereby;
(c) provide
copies to counsel designated by the Investors and permit such counsel to review each Registration Statement and all amendments and supplements thereto no fewer
than three (3) Business Days, in the case of the initial Registration Statement, and two (2) Business Days, in the
D-4
case
of any amendment or supplement, prior to their filing with the SEC and not file any document to which such counsel reasonably objects;
(d) furnish
to the Investors and to counsel designated by the Investors (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and
any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC,
and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which
the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other
documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement;
(e) use
commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest possible moment;
(f) prior
to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investors and their counsel in
connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any
and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement;
provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or
(iii) file a general consent to service of process in any such jurisdiction;
(g) use
commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the Company are then listed;
(h) immediately
notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which,
the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall
not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the
circumstances then existing; and
(i) comply
in all material respects with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172
under the 1933 Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if,
at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver a Prospectus in
connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate
D-5
the
registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an
earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the 1933
Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(i), "
Availability Date
" means the 45th day
following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter).
(j) With
a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time
permit the Investors to sell shares of Common Stock to the public without registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) twelve months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof
pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner
all reports and other documents required of the Company under the 1934 Act; (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a
written statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of the Company's most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any
such Registrable Securities without registration; and (iv) use commercially reasonable efforts to assist each Investor with the removal of any legends required under Rule 144 under the
1933 Act, including with respect to any opinions required thereby, provided that the Company's obligations hereunder are subject to the reasonable determination of the Company and the Company's
counsel that any such legend removal complies with the 1933 Act.
4.
Due Diligence Review; Information.
Upon written request, the Company shall make available, during normal
business hours, for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to
the Company), all financial and other records, all SEC Filings and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such
representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by
any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investors and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement. As a condition to
such inspection and review, the Company may require the Investors to enter into confidentiality agreements.
The
Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the
Company identifies such information as being material nonpublic information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.
D-6
5.
Obligations of the Investors
.
(a) Each
Investor shall furnish to the Company a completed and executed Selling Stockholder Questionnaire. The Company shall not be required to include the Registrable
Securities of an Investor in a Registration Statement who fails to furnish to the Company a fully completed and executed Selling Stockholder Questionnaire at least two (2) Business Days prior
to the first anticipated filing date of such Registration Statement. It is agreed and understood that if an Investor returns a Selling Stockholder Questionnaire after the deadline specified in the
previous sentence, the Company shall use its commercially reasonable efforts to take such actions as are required to name such Investor as a selling security holder in the Registration Statement or
any pre-effective or post-effective amendment thereto and to include (to the extent not theretofore included) in the Registration Statement the Registrable Securities identified in such late Selling
Stockholder Questionnaire; provided that the Company shall not be obligated to file any additional Registration Statements solely for such shares or to take any action that the Company reasonably
concludes would cause the Company to miss the Filing Deadline or the deadline by which the Registration Statement must be declared effective by the SEC, or otherwise cause other Registrable Securities
to be ineligible for sale.
(b) Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such
Registration Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or
(ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made.
6.
Indemnification
.
(a)
Indemnification by the Company.
The Company will indemnify and hold harmless each Investor and its officers,
directors, members, managers, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon: (i) any untrue statement or alleged untrue statement or omission or alleged
omission of any material fact contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any blue sky application or
other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all
of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a "
Blue Sky Application
");
(iii) the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the
Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with
such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an Investor's behalf and will reimburse such Investor, and each such officer,
director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or
action;
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provided
,
however
, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any
such controlling person in writing specifically for use in such Registration Statement or Prospectus. For an abundance of clarity, the liquidated damage provisions in Section 2 shall not limit
the recovery to which an Investor is entitled under this Section 6.
(b)
Indemnification by the Investors.
Each Investor agrees, severally but not jointly, to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the 1933 Act) against
any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to
the extent that such untrue statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by such Investor in
connection with any claim relating to this Section 6 and the amount of any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission) received by
such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
(c)
Conduct of Indemnification Proceedings.
Any person entitled to indemnification hereunder shall
(i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party;
provided
that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has
agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or
(c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists or may exist between such person and the indemnifying party with
respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and
provided
,
further
, that the failure of any
indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation, and such settlement shall not
include any admission as to fault on the part of such indemnified party.
(d)
Contribution.
If for any reason the indemnification provided for in the preceding paragraphs (a) and
(b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the
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amount
paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than
the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution
obligation.
7.
Miscellaneous
.
(a)
Amendments and Waivers.
This Agreement may be amended only by a writing signed by the Company and the
Required Investors. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Required Investors.
(b)
Notices.
All notices and other communications provided for or permitted hereunder shall be made as set forth
in the Purchase Agreement.
(c)
Assignments and Transfers by Investors.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the Investors and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such Investor to such person, provided that such Investor complies with all laws applicable thereto and provides written notice of assignment
to the Company promptly after such assignment is effected and agrees in writing to be bound by the terms hereof.
(d)
Assignments and Transfers by the Company.
This Agreement may not be assigned by the Company (whether by
operation of law or otherwise) without the prior written consent of the Required Investors, provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange
or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person
shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term "Company" shall be deemed to refer to such Person and the term "Registrable
Securities" shall be deemed to include the securities received by the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors after giving
effect to such transaction.
(e)
Benefits of the Agreement.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(f)
Counterparts; Delivery.
This Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. A digital reproduction, portable document format (".pdf") or other reproduction of this Agreement may be
executed by one or more parties hereto and delivered by such party by electronic signature (including signature via
DocuSign
or similar services),
electronic mail or any similar electronic transmission device pursuant to which the signature of or on behalf of such party
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can
be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes.
(g)
Titles and Subtitles.
The titles and subtitles used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement.
(h)
Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.
(i)
Further Assurances.
The parties shall execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.
(j)
Entire Agreement.
This Agreement is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject matter.
(k)
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court
in any
such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in
such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
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IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.
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CLEAN DIESEL TECHNOLOGIES, INC.
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By:
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/s/ MATTHEW BEALE
Matthew Beale,
Chief Executive Officer
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IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
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INVESTOR
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Name of Investor
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Signature of Investor or by Authorized Person
executing for Investor
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Its:
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(Printed Name of Authorized Person and Title
for Person executing for Investor)
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QuickLinks
QUESTIONS AND ANSWERS ABOUT THIS INFORMATION STATEMENT
ITEM NO. ONE INCREASE IN AUTHORIZED COMMON STOCK
ITEM NO. TWO 2016 OMNIBUS INCENTIVE PLAN
ITEM NO. THREE ISSUANCE OF SHARES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
ANNEX A CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF CLEAN DIESEL TECHNOLOGIES, INC.
ANNEX B
CLEAN DIESEL TECHNOLOGIES, INC. 2016 OMNIBUS INCENTIVE PLAN
ANNEX C SECURITIES PURCHASE AGREEMENT
RECITALS
AGREEMENT
ARTICLE I RECITALS, EXHIBITS, SCHEDULES
ARTICLE II DEFINITIONS
ARTICLE III INTERPRETATION
ARTICLE IV PURCHASE AND SALE
ARTICLE V BUYERS' REPRESENTATIONS AND WARRANTIES
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY
ARTICLE VII COVENANTS
ARTICLE VIII CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS TO SELL
ARTICLE IX CONDITIONS PRECEDENT TO A BUYER'S OBLIGATIONS TO PURCHASE
ARTICLE X INDEMNIFICATION
ARTICLE XI MATTERS RELATING TO THE BUYERS
ARTICLE XII TERMINATION
ARTICLE XIII MISCELLANEOUS
BUYER SIGNATURE PAGE FOR SECURITIES PURCHASE AGREEMENT WITH CLEAN DIESEL TECHNOLOGIES, INC.
ANNEX D REGISTRATION RIGHTS AGREEMENT
R E C I T A L S
A G R E E M E N T