Exhibit 1.1
EXECUTION VERSION
2,725,000 Shares
CLEAN DIESEL TECHNOLOGIES, INC.
Common Stock
UNDERWRITING AGREEMENT
June 28, 2011
Roth Capital Partners, LLC
As Representative of
the Underwriters named in
Schedule I
c/o Roth Capital Partners, LLC
24 Corporate Plaza
Newport Beach, CA 92660
Ladies and Gentlemen:
Clean Diesel Technologies, Inc. a Delaware corporation (the
Company
), proposes,
subject to the terms and conditions stated herein, to issue and sell to the underwriters listed in
Schedule I
hereto (the
Underwriters
) an aggregate of 2,645,000 authorized but unissued
shares (the
Underwritten Shares
) of common stock, par value $0.01 per share (the
Common Stock
), of the Company, and the stockholders of the Company listed on
Schedule II
hereto (the
Selling Stockholders
and each a
Selling Stockholder
), hereby agree,
severally but not jointly, to sell an aggregate of up to 80,000 shares of Common Stock (the
Secondary Shares
) in the amounts set forth opposite their names on Schedule II. The
Company has granted the Underwriters the option to purchase an aggregate of up to 408,750
additional shares of Common Stock (the
Additional Shares
) as may be necessary to cover
any over-allotments made in connection with the offering. The Underwritten Shares, Secondary
Shares and Additional Shares are collectively referred to as the
Shares
. Roth Capital
Partners, LLC has agreed to act as the representative of the Underwriters (in such capacity, the
Representative
) in connection with the offering and sale of the Shares.
The Company, the Selling Stockholders and the Underwriters hereby confirm their agreement as
follows:
1. Registration Statement and Prospectus
. The Company has prepared and filed with the
Securities and Exchange Commission (the
Commission
) a registration statement on Form S-1
(File No. 333-174680) under the Securities Act of 1933, as amended (the
Securities Act
)
and the rules and regulations (the
Rules and Regulations
) of the Commission thereunder,
and such amendments to such registration statement (including post effective amendments) as
may have been required to the date of this Agreement and a preliminary prospectus or red
herring pursuant to Rule 424(b) under the Securities Act. Such registration statement, as amended
(including any post effective amendments), has been declared effective by the Commission. Such
registration statement, including amendments thereto (including post
effective amendments thereto), the exhibits and any schedules thereto and the documents
and information otherwise deemed to be a
part thereof or included or incorporated by reference therein by the Securities Act or otherwise
pursuant to the Rules and Regulations, is herein called the
Registration Statement
. If
the Company has filed or files an abbreviated registration statement pursuant to Rule 462(b) under
the Securities Act (the
Rule 462 Registration Statement
), then any reference herein to
the term Registration Statement shall include such Rule 462 Registration Statement. Any
preliminary prospectus included in the Registration Statement or filed with the Commission pursuant
to 424(a) under the Securities Act is hereinafter called a
Preliminary Prospectus
. The
Preliminary Prospectus relating to the Shares that was included in the Registration Statement
immediately prior to the pricing of the offering contemplated hereby is hereinafter called the
Pricing Prospectus
.
The Company is filing with the Commission pursuant to Rule 424 under the Securities Act a
final prospectus relating to the Shares and such final prospectus, as filed, is hereinafter called
the
Final Prospectus
. The Final Prospectus, the Pricing Prospectus and any preliminary
prospectus or red herring in the form in which they were included in the Registration Statement
or filed with the Commission pursuant to Rule 424 under the Securities Act is hereinafter called a
Prospectus
.
For purposes of this Agreement, all references to the Registration Statement, the Rule 462
Registration Statement, the Pricing Prospectus, the Final Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis, and Retrieval system
(
EDGAR
). All references in this Agreement to amendments to the Registration Statement,
the Rule 462 Registration Statement, the Pricing Prospectus, the Final Prospectus or the Prospectus
shall be deemed to mean and include any document filed by the Company under the Securities Exchange
Act of 1934, as amended (the
Exchange Act
), that is incorporated by reference therein or
otherwise deemed by the Rules and Regulations to be a part thereof.
2. Representations and Warranties of the Company Regarding the Offering.
(a) The Company represents and warrants to, and agrees with, the Underwriters, as of the date
hereof and as of the Closing Date (as defined in Section 5(c) below), except as otherwise
indicated, as follows:
(i) At each time of effectiveness, at the date hereof and at the Closing Date, the
Registration Statement and any post-effective amendment thereto complied or will comply in
all material respects with the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any 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. The Time of Sale Disclosure Package (as defined in Section
2(a)(iii)(A)(1) below) as of the date hereof and at the Closing Date, any roadshow or
investor presentations delivered by the Company to and approved by
the Representative for use in connection with the marketing of the offering
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of the Shares
(the
Marketing Materials
) when taken together with the Time of Sale Disclosure
Package as of the time of their use and at the Closing Date, and the Final Prospectus, as
amended or supplemented, as of its date, at the time of filing pursuant to Rule 424(b) under
the Securities Act and at the Closing Date, did not and will not contain any 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 light of the circumstances under which
they were made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences shall not apply to statements in or omissions from the
Registration Statement or any Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Representative specifically for use in the
preparation thereof, which written information is described in Section 8(g). The
Registration Statement contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or suspending the
effectiveness or use of the Registration Statement or any Prospectus is in effect and no
proceedings for such purpose have been instituted or are pending, or, to the knowledge of
the Company, are contemplated or threatened by the Commission.
(ii) The Company has not distributed any prospectus or other offering material in
connection with the offering and sale of the Shares other than the Time of Sale Disclosure
Package and the Marketing Materials.
(iii) (A) The Company has provided a copy to the Representative of each Issuer Free
Writing Prospectus (as defined below) used in the sale of Shares. The Company has filed all
Issuer Free Writing Prospectuses required to be so filed with the Commission, and no order
preventing or suspending the effectiveness or use of any Issuer Free Writing Prospectus is
in effect and no proceedings for such purpose have been instituted or are pending, or, to
the knowledge of the Company, are contemplated or threatened by the Commission. When taken
together with the rest of the Time of Sale Disclosure Package or the Final Prospectus, since
its first use and at all relevant times since then, no Issuer Free Writing Prospectus has,
does or will include (1) any untrue statement of a material fact or omission to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (2) information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement or the Final Prospectus. The representations and warranties set forth in the
immediately preceding sentence shall not apply to statements in or omissions from the Time
of Sale Disclosure Package, the Final Prospectus or any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the Company by the
Representative specifically for use in the preparation thereof. As used in this paragraph
and elsewhere in this Agreement:
(1)
Time of Sale Disclosure Package
means the Pricing Prospectus,
each Issuer Free Writing Prospectus, and any description of the transaction provided
by the Representative included on
Schedule III
.
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(2)
Issuer Free Writing Prospectus
means any issuer free
writing prospectus, as defined in Rule 433 under the Securities Act, relating
to the Shares that (A) is required to be filed with the Commission by the Company,
or (B) is exempt from filing pursuant to Rule 433(d)(5)(i) or (d)(8) under the
Securities Act, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the Companys
records pursuant to Rule 433(g) under the Securities Act.
(B) At the time of filing of the Registration Statement and at the date hereof, the
Company was not and is not an ineligible issuer, as defined in Rule 405 under the
Securities Act or an excluded issuer as defined in Rule 164 under the Securities Act.
(C) Each Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period (as defined in Section 6(a)(i)
below), all other conditions as may be applicable to its use as set forth in Rules 164 and
433 under the Securities Act, including any legend, record-keeping or other requirements.
(iv) The consolidated financial statements of the Company, together with the related
notes, included or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus comply in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and fairly present the
financial condition of the Company as of the dates indicated and the results of operations
and changes in cash flows for the periods therein specified in conformity with generally
accepted accounting principles consistently applied throughout the periods involved present
fairly the information required to be stated therein. No other financial statements, pro
forma financial information or schedules are required under the Securities Act to be
included or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package or the Final Prospectus. To the Companys knowledge, KPMG LLP, which has
expressed its opinion with respect to the consolidated financial statements filed as a part
of the Registration Statement and included in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus, is an independent public accounting firm with
respect to the Company within the meaning of the Securities Act and the Rules and
Regulations.
(v) The Company had a reasonable basis for, and made in good faith, each
forward-looking statement (within the meaning of Section 27A of the Act or Section 21E of
the Exchange Act) contained or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package, the Final Prospectus or the Marketing Materials.
(vi) All statistical or market-related data included or incorporated by reference in
the Registration Statement, the Time of Sale Disclosure Package or the Final Prospectus, or
included in the Marketing Materials, are based on or derived from sources that the Company
reasonably believes to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources, to the extent required.
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(vii) The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and
is included or approved for inclusion on The NASDAQ Capital Market. There is no action
pending by the Company or, to the Companys knowledge, The NASDAQ Stock Market LLC, to
delist the Common Stock from The NASDAQ Capital Market, nor has the Company received any
notification that The NASDAQ Stock Market LLC is contemplating terminating such listing.
When issued, the Shares will be listed on The NASDAQ Capital Market.
(viii) The Company has not taken, directly or indirectly, any action that is designed
to or that has constituted or that would reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(ix) The Company is not and, after giving effect to the offering and sale of the Shares
and the application of the net proceeds thereof, will not be an investment company, as
such term is defined in the Investment Company Act of 1940, as amended.
(b) Any certificate signed by any officer of the Company and delivered to the Representative
or to the Representatives counsel in connection with the offering of Shares contemplated hereby
shall be deemed a representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
3. Representations and Warranties Regarding the Company.
(a) The Company represents and warrants to and agrees with, the Underwriters, except as set
forth in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, as
follows:
(i) Each of the Company and its Significant Subsidiaries (which has the meaning set
forth in Rule 1-02 of Regulation S-X) has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation. Each of
the Company and its Significant Subsidiaries has the corporate power and authority to own
its properties and conduct its business as currently being carried on and as described in
the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, and is
duly qualified to do business as a foreign corporation in good standing in each jurisdiction
in which it owns or leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have or is reasonably
likely to result in a material adverse effect upon the business, prospects, properties,
operations, condition (financial or otherwise) or results of operations of the Company and
its subsidiaries, taken as a whole, or in its ability to perform its obligations under this
Agreement (
Material Adverse Effect
).
(ii) The Company has the power and authority to enter into this Agreement and to
authorize, issue and sell the Shares as contemplated by this Agreement. This Agreement has
been duly authorized, executed and delivered by the Company, and constitutes a valid, legal
and binding obligation of the Company, enforceable against the Company in accordance with
its terms, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
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(iii) The execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any law, rule or regulation to
which the Company or any Significant Subsidiary is subject, or by which any property or
asset of the Company or any Significant Subsidiary is bound or affected, (B) conflict with,
result in any violation or breach of, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument (the
Contracts
) or obligation or other understanding to which the
Company or any Significant Subsidiary is a party of by which any property or asset of the
Company or any Significant Subsidiary is bound or affected, except to the extent that such
conflict, default, termination, amendment, acceleration or cancellation right is not
reasonably likely to result in a Material Adverse Effect, or (C) result in a breach or
violation of any of the terms and provisions of, or constitute a default under, the
Companys charter or by-laws.
(iv) Neither the Company nor any of its Significant Subsidiaries is in violation,
breach or default under its certificate of incorporation, by-laws or other equivalent
organizational or governing documents, except where the violation, breach or default in the
case of a Significant Subsidiary of the Company is not reasonably likely to result in a
Material Adverse Effect.
(v) All consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or performance
of this Agreement have been obtained or made, other than such consents, approvals, orders
and authorizations the failure of which to make or obtain is not reasonably likely to result
in a Material Adverse Effect.
(vi) All of the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been issued in
compliance with all applicable securities laws, and conform to the description thereof in
the Registration Statement, the Time of Sale Disclosure Package and the Prospectus. Except
for the issuances of options or restricted stock or restricted stock units in the ordinary
course of business, since the respective dates as of which information is provided in the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus, the Company
has not entered into or granted any convertible or exchangeable securities, options,
warrants, agreements, contracts or other rights in existence to purchase or acquire from the
Company any shares of the capital stock of the Company. The Shares, when issued, will be
duly authorized and validly issued, fully paid and nonassessable, will be issued in
compliance with all applicable securities laws, and will be free of preemptive, registration
or similar rights.
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(vii) Each of the Company and its Significant Subsidiaries has filed all returns (as
hereinafter defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. Each of the Company and its
Significant Subsidiaries has paid all taxes (as hereinafter defined) shown as due on such
returns that were filed and has paid all taxes imposed on or assessed against the Company or
such respective Significant Subsidiary. The provisions for taxes payable, if any, shown on
the consolidated financial statements filed with or as part of the Registration Statement
are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all
periods to and including the dates of such consolidated financial statements. Except as
disclosed in the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, (i) no issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted as due from the Company or
its Significant Subsidiaries, and (ii) no waivers of statutes of limitation with respect to
the returns or collection of taxes have been given by or requested from the Company or its
Significant Subsidiaries. The term
taxes
mean all federal, state, local, foreign,
and other net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties
or other taxes, fees, assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts with respect thereto.
The term
returns
means all returns, declarations, reports, statements, and other
documents required to be filed in respect to taxes.
(viii) Since the respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus, (a) neither the Company
nor any of its Significant Subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions other than in
the ordinary course of business, (b) the Company has not declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; (c) there has not been
any change in the capital stock of the Company or any of its Significant Subsidiaries (other
than a change in the number of outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding convertible notes, options or warrants or the
issuance of restricted stock awards or restricted stock units under the Companys existing
stock awards plan, or any new grants thereof in the ordinary course of business), (d) other
than the possible sale of additional accounts receivable pursuant to its $7.5 million demand
credit facility there has not been any material change in the Companys long-term or
short-term debt, and (e) there has not been the occurrence of any Material Adverse Effect.
(ix) The Company makes and keeps accurate books and records and maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with managements general or specific authorization,
(b) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles, consistently applied and to
maintain accountability for assets, (c) access to assets is permitted only in accordance
with managements general or specific authorization and
(d) the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any differences. Except
as disclosed in the Time of Sale Disclosure Package, there has not been a material weakness
in the Companys internal control over financial reporting (whether or not remediated) and
since January 1, 2011, and there has been no change in the Companys internal control over
financial reporting that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.
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(x) The Company has established and maintains disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), which (a) are designed to ensure
that material information relating to the Company, including its consolidated subsidiaries,
is made known to the Companys principal executive officer and its principal financial
officer by others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared and (b) are effective in
all material respects to perform the functions for which they were established. The Company
is not aware of any fraud, whether or not material, that involves management or other
employees who have a significant role in the Companys internal control over financial
reporting with respect to the Companys internal control over financial reporting.
(xi) There is no pending or, to the knowledge of the Company, any threatened, action,
suit or proceeding to which the Company or any of its Significant Subsidiaries is a party or
of which any property or assets of the Company or its subsidiaries is the subject of before
or by any court or governmental agency, authority or body, or any arbitrator or mediator,
which is reasonably likely to result in a Material Adverse Effect.
(xii) The Company and each of its Significant Subsidiaries holds, and is in compliance
with, all franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders (
Permits
) of any governmental or self-regulatory agency,
authority or body required for the conduct of its business, and all such Permits are in full
force and effect, in each case except where the failure to hold, or comply with, any of them
is not reasonably likely to result in a Material Adverse Effect.
(xiii) The Company and each of its Significant Subsidiaries is in material compliance
with all Environmental Laws. As used herein, Environmental Law(s) means any and all
applicable international, federal, state, or local laws, statutes, ordinances, regulations,
policies, guidance, rules, judgments, orders, court decisions or rule of common law,
permits, restrictions and licenses, that (i) regulate or relate to the protection or clean
up of the environment; the use, treatment, storage, transportation, handling, disposal or
release of Hazardous Substances, the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources; or the health and safety
of persons or property, including without limitation protection of the health and safety of
employees; or (ii) impose liability or responsibility with respect to any of the foregoing,
including without limitation the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. § 9601 et seq.), or any other law of similar effect. As used
herein, Hazardous Substances means any pollutant, chemical,
substance and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or
flammable chemical, or chemical compound, or hazardous substance, material or waste, whether
solid, liquid or gas, that is subject to regulation, control or remediation under any
Environmental Laws, including without limitation, any quantity of asbestos in any form, urea
formaldehyde, PCBs, radon gas, crude oil or any fraction thereof, all forms of natural gas,
petroleum products or by-products or derivatives.
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(xiv) There has not been any Hazardous Substances used, generated, treated, stored,
disposed of, released, handled or otherwise existing on any property that has been owned,
leased or operated by the Company or its Significant Subsidiaries except in compliance with
all Environmental Laws, other than such noncompliance that is not reasonably likely to
result in a Material Adverse Effect.
(xv) Neither the Company nor any of its Significant Subsidiaries has received any
communication, whether from a governmental authority, citizens group, employee or otherwise,
that alleges that the Company or any of its Significant Subsidiaries is not in material
compliance with any Environmental Laws, and, to the Companys knowledge, there are no
circumstances that could reasonably be expected to prevent or interfere with such compliance
in the future. There are no material environmental claims pending or threatened against the
Company or any of its Significant Subsidiaries, nor is the Company aware of any information
which might form the basis of any such claims.
(xvi) The Company has made available all material environmental assessments, reports,
data, results of investigations, audits and other material documents in the possession or
control of the Company or any of its Significant Subsidiaries regarding environmental
matters pertaining to the environmental condition of any real properties owned or operated
by the Company or any of its Significant Subsidiaries, any environmental claims respecting
the Company or any of its Significant Subsidiaries, or any noncompliance by the Company or
any of its Significant Subsidiaries with any Environmental Laws.
(xvii) The Company and its Significant Subsidiaries have good and marketable title to
all property (whether real or personal) described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus as being owned by them that are material to the
business of the Company, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects, except those that are not reasonably likely to
result in a Material Adverse Effect. The property held under lease by the Company and its
Significant Subsidiaries is held by them under valid, subsisting and enforceable leases with
only such exceptions with respect to any particular lease as are not material or do not
interfere in any material respect with the conduct of the business of the Company and its
subsidiaries.
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(xviii) The Company and each of its Significant Subsidiaries owns or possesses or has
valid right to use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses, inventions, trade
secrets and similar rights (
Intellectual Property
) necessary
for the conduct of the business of the Company and its subsidiaries as currently
carried on and as described in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus. To the knowledge of the Company, no action or use by the
Company or any of its Significant Subsidiaries involves or gives rise to any infringement
of, or license or similar fees for, any Intellectual Property of others, except where such
action, use, license or fee is not reasonably likely to result in a Material Adverse Effect.
Neither the Company nor any of its Significant Subsidiaries has received any notice
alleging any such infringement or fee.
(xix) The Company and each of its subsidiaries has complied with, is not in violation
of, and has not received any notice of violation relating to any law, rule or regulation
relating to the conduct of its business, or the ownership or operation of its property and
assets, including, without limitation, (A) the Currency and Foreign Transactions Reporting
Act of 1970, as amended, or any money laundering laws, rules or regulations, (B) the
Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder, (C) the
Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder, and (D) the
Employment Retirement Income Security Act of 1974 and the rules and regulations thereunder,
in each case except where the failure to be in compliance is not reasonably likely to result
in a Material Adverse Effect.
(xx) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, representative, agent or affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (
OFAC
); and the
Company will not directly or indirectly use the proceeds of the offering of the Shares
contemplated hereby, or lend, contribute or otherwise make available such proceeds to any
person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(xxi) The Company and each of its Significant Subsidiaries carries, or is covered by,
insurance in such amounts and covering such risks as the Company reasonably believes is
adequate for the conduct of its business and the value of its properties.
(xxii) No labor dispute with the employees of the Company or any of its Significant
Subsidiaries exists or, to the knowledge of the Company, is imminent that is reasonably
likely to result in a Material Adverse Effect.
(xxiii) No supplier or customer of the Company has notified the Company that it intends
to discontinue or decrease the rate of business done with the Company in such a way that
such discontinuation or decrease is reasonably likely to result in a Material Adverse
Effect. In addition, neither the Company nor its Significant Subsidiaries have experienced
and, to the Companys knowledge, there does not exist, any material quality control or
similar problems with any of the products and/or services currently being supplied to the
Company or any of its Significant Subsidiaries by any of its suppliers such that such
material quality control or similar problem is reasonably likely to result in a Material
Adverse Effect.
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(xxiv) There are no claims, payments, issuances, arrangements or understandings for
services in the nature of a finders, consulting or origination fee with respect to the
introduction of the Company to the Underwriters or the sale of the Shares hereunder or any
other arrangements, agreements, understandings, payments or issuances with respect to the
Company that may affect the Underwriters compensation, as determined by FINRA.
(xxv) Except as disclosed to the Representative in writing, the Company has not made
any direct or indirect payments (in cash, securities or otherwise) to (i) any person, as a
finders fee, investing fee or otherwise, in consideration of such person raising capital
for the Company or introducing to the Company persons who provided capital to the Company,
(ii) any FINRA member, or (iii) any person or entity that has any direct or indirect
affiliation or association with any FINRA member within the 12-month period prior to the
date on which the Registration Statement was filed with the Commission (Filing Date) or
thereafter.
(xxvi) None of the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating FINRA member,
except as specifically authorized herein.
(xxvii) No person has the right to require the Company or any of its subsidiaries to
register any securities for sale under the Securities Act by reason of the filing of the
Registration Statement with the Commission or the issuance and sale of the Shares, except as
otherwise have been waived in connection with the issuance and sale of the Shares
contemplated hereby.
(xxviii) To the Companys knowledge, no (i) officer or director of the Company or its
subsidiaries, (ii) owner of 5% or more of the Companys unregistered securities or that of
its subsidiaries or (iii) owner of any amount of the Companys unregistered securities
acquired within the 180-day period prior to the Filing Date, has any direct or indirect
affiliation or association with any FINRA member. The Company will advise the
Representative and its counsel if it becomes aware that any officer, director or stockholder
of the Company or its subsidiaries is or becomes an affiliate or associated person of a
FINRA member participating in the offering.
(xxix) Other than the Underwriters, no person has the right to act as an underwriter or
as a financial advisor to the Company in connection with the transactions contemplated
hereby.
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4. Representations and Warranties of the Selling Stockholders.
(a) Each Selling Stockholder, severally and not jointly, represents and warrants to, and
agrees with, the Underwriters as follows:
(i) This Agreement has been duly authorized, executed and delivered by such Selling
Stockholder, and constitutes a valid, legal and binding obligation of such Selling
Stockholder, enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of equity.
The execution, delivery and performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, agreement or instrument
to which such Selling Stockholder is a party or by which it is bound or to which any of its
property is subject, or any order, rule, regulation or decree of any court or governmental
agency or body having jurisdiction over such Selling Stockholder or any of its properties,
except for violations and defaults that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and provisions of, or
constitute a default under, such Selling Stockholders charter or by-laws. No consent,
approval, authorization or order of, or filing with, any court or governmental agency or
body is required for the execution, delivery and performance of this Agreement or for the
consummation of the transactions contemplated hereby, including the sale of the Shares by
such Selling Stockholder, except as may be required under the Securities Act or state
securities or blue sky laws; and such Selling Stockholder has the power and authority to
enter into this Agreement and to sell the Shares as contemplated by this Agreement.
(ii) Such Selling Stockholder is, on the date hereof, the record and beneficial owner
of all of the Shares to be sold by the Selling Stockholder hereunder free and clear of all
liens, encumbrances, equities and claims and has duly indorsed such Shares in blank or has
duly signed a stock power assigning all right, title and interest to the Shares to be sold
by such Selling Stockholder, with all signatures appropriately guaranteed by an eligible
guarantor institution with membership in an approved medallion guaranty program pursuant to
Rule 17Ad-15 under the Exchange Act.
(iii) On the applicable Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and transfer by such
Selling Stockholder of the Shares will be fully paid or provided for by such Selling
Stockholder and all laws imposing such taxes will be fully complied with.
(iv) Such Selling Stockholder, directly or indirectly, has not entered into any
commitment, transaction or other arrangement, including any prepaid forward contract, 10b5-1
plan or similar agreement, which transfers or may transfer any of the legal or beneficial
ownership or any of the economic consequences of ownership of the Shares, except as has been
previously disclosed in writing to the Representative.
(v) Such Selling Stockholder represents and warrants that it has not prepared or had
prepared on its behalf or used or referred to any free writing prospectus (as defined in
Rule 405 of the Act) and further represents that it has not distributed and will not
distribute any written materials in connection with the offer or sale of the Shares that
could otherwise constitute a free writing prospectus (as defined in Rule 405 of the Act)
required to be filed with the Commission or retained under Rule 433 of the Act.
12
(vi) All information relating to such Selling Stockholder furnished by or on behalf of
such Selling Stockholder in writing expressly for use in the Registration Statement, the
Time of Sale Disclosure Package or any Prospectus, as the case may be, is as of the
applicable Closing Date, true, correct, and complete in all material respects, and does not,
and will not, contain any untrue statement of a material fact or omit to state any material
fact necessary to make such information not misleading. In addition, such Selling
Stockholder confirms as accurate the number of shares of Common Stock set forth opposite
such Selling Stockholders name in the Time of Sale Disclosure Package and any Prospectus
under the caption Principal and Selling Stockholders (both prior to and after giving
effect to the sale of the Shares).
(vii) Such Selling Stockholder does not have any registration or other similar rights
to have any equity or debt securities registered for sale by the Company under the
Registration Statement or included in an offering contemplated by this Agreement, except for
such rights that have been waived.
(viii) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares in violation of the Act or the Exchange Act.
(ix) Such Selling Stockholder is not prompted to sell shares of Common Stock by any
information concerning the Company that is not set forth in the Registration Statement, the
Time of Sale Disclosure Package or a Prospectus.
(b) Any certificate signed by any officer of a Selling Stockholder and delivered to the
Representative or to the Representatives counsel shall be deemed a representation and warranty by
such Selling Stockholder to the Underwriters as to the matters covered thereby and shall not be
deemed to be a representation and warranty of such person in an individual capacity.
5. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to issue and sell the
Underwritten Shares and the Selling Stockholders agree to sell the Secondary Shares to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase the Underwritten
Shares and Secondary Shares. The purchase price for each Underwritten Share and Secondary Share
shall be $3.5208 per share (the
Per Share Price
).
13
(b) The Company hereby grants to the Underwriters the option to purchase some or all of the
Additional Shares and, upon the basis of the warranties and representations and subject to the
terms and conditions herein set forth, the Underwriters shall have the right to purchase all or any
portion of the Additional Shares at the Per Share Price as may be necessary to cover any
over-allotments made in connection with the transactions contemplated hereby. This option may be
exercised by the Representative at any time (but not more than once) on or before the thirtieth day
following the date hereof, by written notice to the Company (the
Option
Notice
). The Option Notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the Additional Shares are to
be delivered (such date and time being herein referred to as the
Option Closing Date
);
provided
,
however
, that the Option Closing Date shall not be earlier than the Closing Date (as
defined below) nor earlier than the first business day after the date on which the option shall
have been exercised nor later than the fifth business day after the date on which the option shall
have been exercised unless the Company and the Representative otherwise agree.
Payment of the purchase price for and delivery of the Additional Shares shall be made at the
Option Closing Date in the same manner and at the same office as the payment for the Underwritten
Shares as set forth in subparagraph (c) below.
(c) The Underwritten Shares and Secondary Shares will be delivered by the Company and the
Selling Stockholders to the Representative for the account of the Underwriters against payment of
the purchase price therefor by wire transfer of same day funds payable to the order of the Company
or a Selling Stockholder, as appropriate, at the offices of Roth Capital Partners, LLC, 24
Corporate Plaza, Newport Beach, CA 92660, or such other location as may be mutually acceptable, at
6:00 a.m. PST, on the third (or if the Underwritten Shares and Secondary Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern time, the fourth)
full business day following the date hereof, or at such other time and date as the Representative
and the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, or, in the case of the
Additional Shares, at such date and time set forth in the Option Notice. The time and date of
delivery of the Underwritten Shares and the Secondary Shares or the Additional Shares, as
applicable, is referred to herein as the
Closing Date
. If the Representative so elects,
delivery of the Underwritten Shares, Secondary Shares and Additional Shares may be made by credit
through full fast transfer to the account at The Depository Trust Company designated by the
Representative.
6. Covenants.
(a) The Company covenants and agrees with the Underwriters as follows:
(i) During the period beginning on the date hereof and ending on the later of the
Closing Date or such date as determined by the Representative the Prospectus is no longer
required by law to be delivered in connection with sales by an underwriter or dealer (the
Prospectus Delivery Period
), prior to amending or supplementing the Registration
Statement, including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Representative for review and
comment a copy of each such proposed amendment or supplement, and the Company shall not file
any such proposed amendment or supplement to which the Representative reasonably objects.
14
(ii) From the date of this Agreement until the end of the Prospectus Delivery Period,
the Company shall promptly advise the Representative in writing (A) of the receipt of any
comments of, or requests for additional or supplemental information from, the Commission,
(B) of the time and date of any filing of any post-effective amendment to the Registration
Statement or any amendment to the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, (C) of the
time and date that any post-effective amendment to the Registration Statement becomes
effective and (D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or suspending its use
or the use of the Time of Sale Disclosure Package or any Issuer Free Writing Prospectus, or
of any proceedings to remove, suspend or terminate from listing the Common Stock from any
securities exchange upon which it is listed for trading, or of the threatening or initiation
of any proceedings for any of such purposes. If the Commission shall enter any such stop
order at any time during the Prospectus Delivery Period, the Company will use its reasonable
efforts to obtain the lifting of such order as promptly as reasonably possible.
Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b),
430A and 430B, as applicable, under the Securities Act and will use its reasonable efforts
to confirm that any filings made by the Company under Rule 424(b) or Rule 433 were received
in a timely manner by the Commission (without reliance on Rule 424(b)(8) or 164(b) of the
Securities Act).
(iii) (A) During the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the
Rules and Regulations, as from time to time in force, and by the Exchange Act, as now and
hereafter amended, so far as necessary to permit the continuance of sales of or dealings in
the Shares as contemplated by the provisions hereof, the Time of Sale Disclosure Package,
the Registration Statement and the Prospectus. If during such period any event occurs the
result of which the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package ) would include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances then existing, not misleading, or if during such period it is
necessary or appropriate in the opinion of the Company or its counsel or the Representative
or its counsel to amend the Registration Statement or supplement the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure
Package ) to comply with the Securities Act, the Company will promptly notify the
Representative, allow the Representative the opportunity to provide reasonable comments on
such amendment, Prospectus supplement or document, and will amend the Registration Statement
or supplement the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package) so as to correct such statement or omission
or effect such compliance.
(B) If at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development the result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information contained in the Registration
Statement or any Prospectus or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company has promptly notified or promptly will notify the Representative
and has promptly amended or will promptly amend or supplement, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or
omission.
15
(iv) The Company shall take or cause to be taken all necessary action to qualify the
Shares for sale under the securities laws of such jurisdictions as the Representative
reasonably designates and to continue such qualifications in effect so long as required for
the distribution of the Shares, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified, to execute a general consent to service of
process in any state or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise subject.
(v) The Company will furnish to the Representative and counsel for the Representative
copies of the Registration Statement, each Prospectus, any Issuer Free Writing Prospectus,
and all amendments and supplements to such documents, in each case as soon as available and
in such quantities as the Underwriters may from time to time reasonably request.
(vi) The Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the Companys
current fiscal quarter, an earnings statement (which need not be audited) covering a
12-month period that shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Rules and Regulations.
(vii) (A) The Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, will pay or cause to be paid (1) all expenses
(including transfer taxes allocated to the respective transferees) incurred in connection
with the delivery to the Underwriters of the Shares, (2) all expenses and fees (including,
without limitation, fees and expenses of the Companys counsel, but excluding fees and
expenses of the Underwriters counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the financial statements
therein and all amendments, schedules, and exhibits thereto), the Shares, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus and any amendment
thereof or supplement thereto, (3) all reasonable filing fees and reasonable fees and
disbursements of the Underwriters counsel incurred in connection with the qualification of
the Shares for offering and sale by the Underwriters or by dealers under the securities or
blue sky laws of the states and other jurisdictions that the Representative shall designate,
(4) the fees and expenses of any transfer agent or registrar, (5) the reasonable filing fees
and reasonable fees and disbursements of Underwriters counsel incident to any required
review and approval by FINRA, of the terms of the sale of the Shares, (6) listing fees, if
any, and (7) all other costs and expenses incident to the performance of the Companys
obligations hereunder that are not otherwise specifically provided for herein, provided,
however, that the Underwriters shall not incur expenses pursuant to clauses (1) (7) in
excess of $25,000 without the written consent of the Company (all of the foregoing, the
Company Expenses
). The Company will also reimburse the Underwriters for all
out-of-pocket accountable expenses (including, but not limited to, reasonable fees and
disbursements of counsel, travel expenses, postage, facsimile and telephone charges)
incurred by the Underwriters in connection with their investigation, preparing to market and
marketing the Shares or in contemplation of performing their obligations hereunder.
Notwithstanding anything contained herein, the maximum amount payable by the Company
for the Underwriters counsel fees, disbursements and other out of pocket expenses pursuant
to this Section 6(a)(vii)(A), exclusive of the expenses described in Section 6(a)(vii)(B)
below and the Company Expenses, shall be $25,000.
16
(B) Contingent upon the consummation of the offering, on the Closing Date, the Company
will (1) pay the Underwriters an amount equal to 1.5% of the gross proceeds received by the
Company from the sale of the Underwritten Shares, the Secondary Shares and the Additional
Shares, as applicable, as a non-accountable reimbursement of the Underwriters
non-accountable expenses and (2) grant the Underwriters warrants, in the form attached
hereto as
Schedule IV
, to purchase an amount of Common Stock equal to two percent (2.0%) of
the aggregate number of shares sold pursuant to this Agreement.
(viii) The Company intends to apply the net proceeds from the sale of the Shares to be
sold by it hereunder for the purposes set forth in the Time of Sale Disclosure Package and
in the Final Prospectus.
(ix) The Company has not taken and will not take, directly or indirectly, during the
Prospectus Delivery Period, any action designed to or that might reasonably be expected to
cause or result in, or that has constituted, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.
(x) The Company represents and agrees that, unless it obtains the prior written consent
of the Representative, and the Representative represents and agrees that, unless it obtains
the prior written consent of the Company, it has not made and will not make any offer
relating to the Shares that would constitute an Issuer Free Writing Prospectus; provided
that the prior written consent of the parties hereto shall be deemed to have been given in
respect of any free writing prospectus containing only the description of the transaction
included in
Schedule III
. Any such free writing prospectus consented to by the Company and
the Representative is hereinafter referred to as a
Permitted Free Writing
Prospectus
. The Company represents that it has treated or agrees that it will treat
each Permitted Free Writing Prospectus as an issuer free writing prospectus, as defined in
Rule 433, and has complied or will comply with the requirements of Rule 433 applicable to
any Permitted Free Writing Prospectus, including timely Commission filing where required,
legending and record-keeping.
(xi) The Company hereby agrees that, without the prior written consent of the
Representative, it will not, during the period ending 90 days after the date hereof
(
Lock-Up Period
), (i) offer, pledge, issue, sell, contract to sell, purchase,
contract to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or exchangeable for
Common Stock; or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise; or
(iii) file any registration statement with the Commission relating to the offering of any shares of
Common Stock
17
or any securities convertible into or exercisable or exchangeable for Common
Stock. The restrictions contained in the preceding sentence shall not apply to (1) the
Shares to be sold hereunder, (2) the issuance of Common Stock upon the exercise of options
or warrants or other convertible securities disclosed as outstanding in the Registration
Statement (excluding exhibits thereto) or the Prospectus, or (3) the issuance of employee
stock options not exercisable during the Lock-Up Period and the grant of restricted stock
awards or restricted stock units (or the delivery of shares of Common Stock upon settlement
thereof) pursuant to equity incentive plans described in the Registration Statement
(excluding exhibits thereto) and the Prospectus. The restrictions contained in clause (iii)
above shall not apply to any Demand Registration that may be requested on or after
September 1, 2011 by Qualified Investors, as such terms are defined in the Registration
Rights Agreement (
Registration Rights Agreement
) dated as of October 15, 2010, as
amended, among the Company, CSI and the investor parties thereto. Notwithstanding the
foregoing, if (x) the Company issues an earnings release or material news, or a material
event relating to the Company occurs, during the last 17 days of the Lock-Up Period, or (y)
prior to the expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the Lock-Up Period,
the restrictions imposed by this clause shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless the Representative waives such extension in writing.
(b) Each Selling Stockholder, severally and not jointly, covenants and agrees with the
Underwriters as follows:
(i) The Selling Stockholders, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay or cause to be paid (A) all
expenses (including transfer taxes allocated to the respective transferees) incurred in
connection with the delivery to the Underwriters of the Secondary Shares to be sold by the
Selling Stockholders hereunder.
(ii) The Selling Stockholders hereby agree that, without the prior written consent of
the Representative, it will not, during the Lock-Up Period, (i) offer, pledge, issue, sell,
contract to sell, purchase, contract to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock; or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The restrictions contained in the preceding sentence shall not apply to (1) the
Shares to be sold hereunder, (2) the issuance of Common Stock upon the exercise of options
or warrants or other convertible securities disclosed as outstanding in the Registration
Statement (excluding exhibits thereto) or the Prospectus, or (3) the issuance of employee
stock options not exercisable during the Lock-Up Period and the grant of restricted stock
awards or restricted stock units (or the delivery of shares of Common Stock upon settlement
thereof)
18
pursuant to equity incentive plans described in the Registration Statement (excluding exhibits thereto)
and the Prospectus. Notwithstanding the foregoing, if (x) the Company issues an earnings
release or material news, or a material event relating to the Company occurs, during the
last 17 days of the Lock-Up Period, or (y) prior to the expiration of the Lock-Up Period,
the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by this clause
shall continue to apply until the expiration of the 18-day period beginning on the issuance
of the earnings release or the occurrence of the material news or material event, unless the
Representative waives such extension in writing. The restrictions contained in this
subsection shall not apply to any Demand Registration that may be requested on or after
September 1, 2011 by the Selling Stockholders;
provided
however that nothing in this
provision enables the sale of any shares of Common Stock by the Selling Stockholders prior
to the expiration of the Lock-Up Period.
(iii) Such Selling Stockholder will deliver to the Underwriters prior to the applicable
Closing Date a properly completed and executed United States Treasury Department Form W-9.
(iv) During the Prospectus Delivery Period, such Selling Stockholder will advise the
Representative promptly, and if requested by the Representative, will confirm such advice in
writing, of any change in information relating to such Selling Stockholder in the
Registration Statement, the Time of Sale Disclosure Package or any Prospectus.
(v) Such Selling Stockholder agrees that it will not prepare or have prepared on its
behalf or use or refer to any free writing prospectus (as such term is defined in Rule 405
under the Act), and agrees that it will not distribute any written materials in connection
with the offer or sale of the Shares.
7. Conditions of the Underwriters Obligations.
The obligations of the Underwriters hereunder
to purchase the Shares are subject to the accuracy, as of the date hereof and at the Closing Date
(as if made at the Closing Date), of and compliance with all representations, warranties and
agreements of the Company and the Selling Stockholders contained herein, the performance by the
Company and the Selling Stockholders of their respective obligations hereunder and the following
additional conditions:
(a) If filing of the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, is required under the Securities Act or the Rules and Regulations, the Company
shall have filed the Prospectus (or such amendment or supplement) or such Issuer Free Writing
Prospectus with the Commission in the manner and within the time period so required (without
reliance on Rule 424(b)(8) or 164(b) under the Securities Act); the Registration Statement shall
remain effective; no stop order suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462 Registration Statement, or any amendment thereof, nor suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free
Writing Prospectus shall have been issued; no proceedings for the issuance of such an order shall
have been initiated or threatened; any request of the Commission or the Representative for
additional information (to be included in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free
Writing Prospectus or otherwise) shall have been complied with to the Representatives
satisfaction.
19
(b) The Shares shall be qualified for listing on The NASDAQ Capital Market.
(c) FINRA shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(d) The Representative shall not have reasonably determined, and advised the Company, that the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus, or any amendment
thereof or supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue statement
of fact that, in the Representatives reasonable opinion, is material, or omits to state a fact
that, in the Representatives reasonable opinion, is material and is required to be stated therein
or necessary to make the statements therein not misleading.
(e) On the Closing Date, there shall have been furnished to the Representative the opinion and
negative assurance letters of Reed Smith LLP, dated the Closing Date and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representative, to the effect
set forth in
Schedule V
.
(f) On the Closing Date, there shall have been furnished to the Representative the opinion of
legal counsel to each of the Selling Stockholders, dated the Closing Date and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representative, to the effect
set forth in
Schedule VI.
(g) The Representative shall have received a letter of KPMG LLP, on the date hereof and on the
Closing Date addressed to the Underwriters, confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the applicable requirements
relating to the qualifications of accountants under Rule 2-01 of Regulation S-X of the Commission,
and confirming, as of the date of each such letter (or, with respect to matters involving changes
or developments since the respective dates as of which specified financial information is given in
the Time of Sale Disclosure Package, as of a date not prior to the date hereof or more than five
days prior to the date of such letter), the conclusions and findings of said firm with respect to
the financial information and other matters required by the Representative.
(h) On the Closing Date, there shall have been furnished to the Representative a certificate,
dated the Closing Date and addressed to the Underwriters, signed by the chief executive officer and
the chief financial officer of the Company, in their capacity as officers of the Company, to the
effect that:
(i) The representations and warranties of the Company in this Agreement that are
qualified by materiality or by reference to any Material Adverse Effect are true and correct
in all respects, and all other representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at and as of the
Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
20
(ii) No stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the qualification of
the Shares for offering or sale, or (C) suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, has been issued,
and no proceeding for that purpose has been instituted or, to their knowledge, is
contemplated by the Commission or any state or regulatory body; and
(iii) There has been no occurrence of any event resulting or reasonably likely to
result in a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date.
(i) On the Closing Date, there shall been furnished to the Representative a certificate, in
form and substance reasonably satisfactory to the Representative, dated the Closing Date and
addressed to the Underwriters, signed by the chief financial officer of the Company, to the effect
that certain financial information attached to the certificate is accurate in all material respects
as of the date thereof and as of the date of the Time of Sale Disclosure Package.
(j) On the Closing Date, there shall have been furnished to the Representative a certificate,
dated the Closing Date and addressed to the Underwriters, signed by each Selling Stockholder, to
the effect that the representations and warranties of such Selling Stockholder in this Agreement
are true and correct, in all material respects, as if made at and as of the Closing Date, and that
such Selling Stockholder has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date.
(k) On or before the date hereof, the Representative shall have received duly executed
lock-up agreements, in a form acceptable to the Representative, between the Representative and
the persons set forth on
Schedule VII
.
(l) The Company and the Selling Stockholders shall have furnished to the Representative and
its counsel such additional documents, certificates and evidence as the Representative or its
counsel may have reasonably requested.
If any condition specified in this Section 7 shall not have been fulfilled when and as
required to be fulfilled, this Agreement may be terminated by the Representative by notice to the
Company and the Selling Stockholders at any time at or prior to the Closing Date and such
termination shall be without liability of any party to any other party, except that Section
6(a)(vii), Section 8 and Section 9 shall survive any such termination and remain in full force and
effect.
21
8. Indemnification and Contribution
.
(a) The Company agrees to indemnify, defend and hold harmless each Underwriter, its
affiliates, directors, officers and employees, and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any losses, claims, damages or liabilities to which such Underwriter or such
person may become subject, under the Securities Act or otherwise
(including in settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, including the information deemed to be
a part of the Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430B of the Rules and Regulations, or arise out of or are based upon the
omission from the Registration Statement, or alleged omission to state therein, a material fact
required to be stated therein or necessary to make the statements therein not misleading, (ii) an
untrue statement or alleged untrue statement of a material fact contained in the Time of Sale
Disclosure Package, the Prospectus, or any amendment or supplement thereto (including any documents
filed under the Exchange Act and deemed to be incorporated by reference into the Registration
Statement or the Prospectus), any Issuer Free Writing Prospectus, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, or (iii) in whole or in part, any failure of the Company to perform its
obligations hereunder or under law, and will reimburse the Underwriters for any legal or other
expenses reasonably incurred by them in connection with investigating or defending against such
loss, claim, damage, liability or action;
provided, however
, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or action arises out of
or is based upon an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Time of Sale Disclosure Package, the Prospectus, or any
amendment or supplement thereto or any Issuer Free Writing Prospectus, in reliance upon and in
conformity with written information furnished to the Company by the Representative specifically for
use in the preparation thereof, which written information is described in Section 8(g).
(b) Each Selling Stockholder will, severally and not jointly, indemnify, defend and hold
harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus or any Issuer Free Writing Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, but only with reference to the information relating to such Selling Stockholder
furnished by such Selling Stockholder to the Company for use therein which shall consist of the
statements set forth under the caption Principal and Selling Stockholders in the Time of Sale
Disclosure Package and any Prospectus. The liability of each Selling Stockholder under the
indemnity agreement contained in this Section 8(b) shall be limited to an amount equal to the
proceeds (net of underwriting discounts and concessions, but before deducting other expenses)
received by the Selling Stockholder from the sale of the Shares sold by such Selling Stockholder
under this Agreement.
22
(c) Each Underwriter will, severally and not jointly, indemnify, defend and hold harmless the
Company and the Selling Stockholders, their respective affiliates, directors, officers and
employees, and each person, if any, who controls the Company or a Selling Stockholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any
losses, claims, damages or liabilities to which the Company
or a Selling Stockholder may become subject, under the Securities Act or otherwise (including
in settlement of any litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or arise out of or are based upon any
omission from the Registration Statement, or alleged omission to state therein, a material fact
required to be stated therein or necessary in order to make the statements therein not misleading
or (ii) an untrue statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or the Time
of Sale Disclosure Package, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration Statement, the Time of Sale
Disclosure Package, the Prospectus, or any amendment or supplement, or any Issuer Free Writing
Prospectus in reliance upon and in conformity with written information furnished to the Company by
the Representative specifically for use in the preparation thereof, and will reimburse the Company
or a Selling Stockholder for any legal or other expenses reasonably incurred by the Company or a
Selling Stockholder in connection with investigating or defending against any such loss, claim,
damage, liability or action.
(d) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice
of the commencement of any action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the failure to notify the indemnifying party shall not
relieve the indemnifying party from any liability that it may have to any indemnified party except
to the extent such indemnifying party has been materially prejudiced by such failure. In case any
such action shall be brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to participate in, and,
to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the indemnifying partys election so to
assume the defense thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof;
provided
,
however
, that if (i) the indemnified party
has reasonably concluded (based on advice of counsel) that there may be legal defenses available to
it or other indemnified parties that are different from or in addition to those available to the
indemnifying party, (ii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action on behalf of the
indemnified party), or (iii) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, the indemnified party shall have the
right to employ a single counsel to represent it in any claim in respect of which indemnity may be
sought under subsection (a) or (b) of this Section 8, in which event the reasonable fees and
expenses of such
separate counsel shall be borne by the indemnifying party or parties and reimbursed to the
indemnified party as incurred.
23
The indemnifying party under this Section 8 shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is a party or could be named and
indemnity was or would be sought hereunder by such indemnified party, unless such settlement,
compromise or consent (a) includes an unconditional release of such indemnified party from all
liability for claims that are the subject matter of such action, suit or proceeding and (b) does
not include a statement as to or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable or insufficient to
hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the offering and sale of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the Selling Stockholders on the one
hand and the Underwriters on the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the Final Prospectus.
The relative fault shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, the Selling Stockholders or the Underwriters
and the parties relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contributions pursuant to this
subsection (e) were to be determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in the first sentence of
this subsection (e). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending against any action or claim that is the subject of this subsection
(e). Notwithstanding the provisions of this subsection (e), the Underwriters shall not be
required to
24
contribute
any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that the Underwriters have
otherwise been required to pay by reason of such untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters obligations to contribute pursuant to this Section 8 are several and not joint,
in proportion to their respective underwriting commitments as set forth opposite their respective
names on
Schedule I
. For purposes of this Section 8, each officer and employee of an Underwriter
and each person, if any, who controls an Underwriter within the meaning of the Securities Act or
the Exchange Act shall have the same rights to contribution as such Underwriter, and each director
of the Company, each officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company with the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Company.
(f) The obligations of the Company and the Selling Stockholders under this Section 8 shall be
in addition to any liability that the Company and the Selling Stockholders may otherwise have and
the benefits of such obligations shall extend, upon the same terms and conditions, to each person,
if any, who controls the Underwriters within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act; and the obligations of the Underwriters under this Section 8 shall
be in addition to any liability that the Underwriters may otherwise have and the benefits of such
obligations shall extend, upon the same terms and conditions, to the Company, the Selling
Stockholders and their respective officers, directors and each person who controls the Company or a
Selling Stockholder within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act.
(g) For purposes of this Agreement, the Representative confirms, and the Company and the
Selling Stockholders acknowledge, that there is no information concerning the Underwriters
furnished in writing to the Company and the Selling Stockholders by the Representative specifically
for preparation of or inclusion in the Registration Statement, the Time of Sale Disclosure Package
or the Prospectus or any Issuer Free Writing Prospectus, other than the statements set forth in the
last paragraph on the cover page of the Prospectus and the statements set forth in the
Underwriting section of the Prospectus and Time of Sale Disclosure Package, only insofar as such
statements relate to the amount of selling concession and re-allowance or to over-allotment and
related activities that may be undertaken by the Underwriters.
9. Representations and Agreements to Survive Delivery
. All representations, warranties, and
agreements of the Company and the Selling Stockholders herein or in certificates delivered pursuant
hereto, including, but not limited to, the agreements of the Underwriters, the Selling Stockholders
and the Company contained in Section 6(a)(vii) and Section 8 hereof, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of the Underwriters or
any controlling person thereof, or the Company and the Selling Stockholders or any of their
respective officers, directors, or controlling persons, and shall survive delivery of, and payment
for, the Shares to and by the Underwriters hereunder.
25
10. Termination of this Agreement
.
(a) The Representative shall have the right to terminate this Agreement by giving notice to
the Company and the Selling Stockholders as hereinafter specified at any time at or prior to the
Closing Date, if in the discretion of the Representative, (i) there has occurred any event, act or
occurrence that has materially disrupted, or in the opinion of the Representative, will in the
future materially disrupt, the securities markets or there shall be such a material adverse change
in general financial, political or economic conditions or the effect of international conditions on
the financial markets in the United States is such as to make it, in the judgment of the
Representative, inadvisable or impracticable to market the Shares or enforce contracts for the sale
of the Shares (ii) trading in the Companys Common Stock shall have been suspended by the
Commission or The NASDAQ Capital Market or trading in securities generally on the Nasdaq Global
Market, New York Stock Exchange or NYSE Amex shall have been suspended, (iii) minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for securities shall have
been required, on the Nasdaq Global Market, New York Stock Exchange or NYSE Amex, by such exchange
or by order of the Commission or any other governmental authority having jurisdiction, (iv) a
banking moratorium shall have been declared by federal or state authorities, (v) there shall have
occurred any attack on, outbreak or escalation of hostilities or act of terrorism involving the
United States, any declaration by the United States of a national emergency or war, any substantial
change or development involving a prospective substantial change in United States or international
political, financial or economic conditions or any other calamity or crisis, (vi) the Company
suffers any loss by strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, or (vii) in the judgment of the Representative, there has been, since the
time of execution of this Agreement or since the respective dates as of which information is given
in the Prospectus, any material adverse change in the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or business prospects of the Company
and its subsidiaries considered as a whole, whether or not arising in the ordinary course of
business. Any such termination shall be without liability of any party to any other party except
that the provisions of Section 6(a)(vii) and Section 8 hereof shall at all times be effective and
shall survive such termination.
(b) If the Representative elects to terminate this Agreement as provided in this Section, the
Company and the Selling Stockholders shall be notified promptly by the Representative by telephone,
confirmed by letter.
11. Notices
. Except as otherwise provided herein, all communications hereunder shall be in
writing and, if to the Representative, shall be mailed, delivered or telecopied to Roth Capital
Partners, LLC, 24 Corporate Plaza, Newport Beach, CA 92660, telecopy number: (949) 720-7227,
Attention: Managing Director; if to the Company, shall be mailed, delivered or telecopied to it at
Clean Diesel Technologies, Inc., 4567 Telephone Road, Suite 206, Ventura, CA 93033, telecopy
number: (805) 639-9466, Attention: Chief Financial Officer; and if to the Selling Stockholders,
shall be mailed, delivered or telecopied to them at 160 Federal Street, 18
th
Floor,
Boston, MA 02110-1700, telecopy number: (617) 912-1449, Attention: Janet James; or in each case to
such other address as the person to be notified may have requested in writing. Any party to this
Agreement may change such address for notices by sending to the parties to this Agreement written
notice of a new address for such purpose.
26
12. Persons Entitled to Benefit of Agreement
. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 8. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision herein contained.
The term successors and assigns as herein used shall not include any purchaser, as such
purchaser, of any of the Shares from the Underwriters.
13. Absence of Fiduciary Relationship
. The Company and each of the Selling Stockholders
acknowledge and agree that: (a) the Underwriters have been retained solely to act as underwriters
in connection with the sale of the Shares and that no fiduciary, advisory or agency relationship
between the Company and the Selling Stockholders and the Underwriters have been created in respect
of any of the transactions contemplated by this Agreement, irrespective of whether the Underwriters
have advised or are advising the Company or the Selling Stockholders on other matters; (b) the
price and other terms of the Shares set forth in this Agreement were established by the Company and
the Selling Stockholders following discussions and arms-length negotiations with the Underwriters
and the Company and the Selling Stockholders are capable of evaluating and understanding and
understand and accept the terms, risks and conditions of the transactions contemplated by this
Agreement; (c) they have been advised that the Underwriters and their respective affiliates are
engaged in a broad range of transactions that may involve interests that differ from those of the
Company and the Selling Stockholders and that the Underwriters have no obligation to disclose such
interest and transactions to the Company or the Selling Stockholders by virtue of any fiduciary,
advisory or agency relationship; (d) they have been advised that the Underwriters are acting, in
respect of the transactions contemplated by this Agreement, solely for the benefit of the
Underwriters, and not on behalf of the Company or the Selling Stockholders.
14. Amendments and Waivers
. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in
the future. No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any
such waiver be deemed or constitute a continuing waiver unless otherwise expressly provided.
15. Partial Unenforceability
. The invalidity or unenforceability of any section, paragraph,
clause or provision of this Agreement shall not affect the validity or enforceability of any other
section, paragraph, clause or provision.
16. Governing Law
. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
27
17. Submission to Jurisdiction
. The Company and each Selling Stockholder irrevocably (a)
submit to the jurisdiction of any court of the State of New York for the purpose of any suit,
action, or other proceeding arising out of this Agreement, or any of the agreements or transactions
contemplated by this Agreement, the Registration Statement and the Prospectus (each a
Proceeding), (b) agree that all claims in respect of any Proceeding may be heard and
determined in any such court, (c) waive, to the fullest extent permitted by law, any immunity
from jurisdiction of any such court or from any legal process therein, (d) agree not to commence
any Proceeding other than in such courts, and (e) waive, to the fullest extent permitted by law,
any claim that such Proceeding is brought in an inconvenient forum. THE COMPANY (ON BEHALF OF
ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND
CREDITORS) AND THE SELLING STOCKHOLDERS HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT, AND THE PROSPECTUS.
18. Counterparts.
This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original and
all such counterparts shall together constitute one and the same instrument.
28
Please sign and return to the Company the enclosed duplicates of this letter whereupon this
letter will become a binding agreement between the Company, the Selling Stockholders and the
Underwriters in accordance with its terms.
|
|
|
|
|
|
Very truly yours,
COMPANY:
CLEAN DIESEL TECHNOLOGIES, INC.
|
|
|
By:
|
/s/ Nikhil A. Mehta
|
|
|
|
Name:
|
Nikhil A. Mehta
|
|
|
|
Title:
|
Chief Financial Officer
|
|
|
|
SELLING STOCKHOLDERS:
ROCKPORT CAPITAL PARTNERS, L.P.
|
|
|
By:
|
RockPort Capital I, LLC, its General Partner
|
|
|
|
|
|
By:
|
/s/ Janet B. James
|
|
|
|
Name:
|
Janet B. James
|
|
|
|
Title:
|
Managing Member
|
|
|
|
RP CO-INVESTMENT FUND I, L.P.
|
|
|
By:
|
RP Co-Investment Fund I GP, LLC, its General Partner
|
|
|
|
|
|
By:
|
/s/ Janet B. James
|
|
|
|
Name:
|
Janet B. James
|
|
|
|
Title:
|
Managing Member
|
|
|
|
|
|
|
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Confirmed as of the date first
above-mentioned by the Underwriters.
|
|
|
|
|
|
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ROTH CAPITAL PARTNERS, LLC
Acting as Representative of the Underwriters
named in Schedule I
|
|
|
|
|
|
|
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By:
|
|
/s/ Aaron M. Gurewitz
Name: Aaron M. Gurewitz
|
|
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|
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Title: Head of Equity Markets
|
|
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[Signature page to Underwriting Agreement]
SCHEDULE I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Number of
|
|
|
Number of
|
|
|
|
|
|
|
Underwritten
|
|
|
Secondary
|
|
|
Number of
|
|
|
|
Shares to be
|
|
|
Shares to be
|
|
|
Additional Shares
|
|
|
|
Purchased
|
|
|
Purchased
|
|
|
to be Purchased
|
|
Underwriters
|
|
|
|
|
|
|
|
|
|
|
|
|
Roth Capital Partners, LLC
|
|
|
2,512,750
|
|
|
|
76,000
|
|
|
|
388,313
|
|
Maxim Group LLC
|
|
|
132,250
|
|
|
|
4,000
|
|
|
|
20,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,645,000
|
|
|
|
80,000
|
|
|
|
408,750
|
|
|
|
|
|
|
|
|
|
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SCHEDULE II
|
|
|
|
|
|
|
|
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|
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Number of
|
|
|
|
|
|
|
Underwritten and
|
|
|
Number of
|
|
|
|
Secondary Shares
|
|
|
Additional Shares
|
|
|
|
to be Sold
|
|
|
to be Sold
|
|
Company:
|
|
|
|
|
|
|
|
|
Clean Diesel Technologies, Inc.
|
|
|
2,645,000
|
|
|
|
408,750
|
|
|
|
|
|
|
|
|
|
|
Selling Stockholders:
|
|
|
|
|
|
|
|
|
RockPort Capital Partners, L.P.
|
|
|
72,800
|
|
|
|
|
|
RP Co-Investment Fund I, L.P.
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,725,000
|
|
|
|
408,750
|
|
|
|
|
|
|
|
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SCHEDULE III
|
|
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Issuer:
|
|
Clean Diesel Technologies, Inc. (the Company)
|
|
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Symbol:
|
|
CDTI
|
|
|
|
Security:
|
|
Common stock, par value $0.01 per share
|
|
|
|
Company Shares:
|
|
2,645,000 shares of common stock
|
|
|
|
Selling Stockholders Shares:
|
|
80,000 shares of common stock
|
|
|
|
Over-allotment option:
|
|
408,750 additional shares of common stock
|
|
|
|
Public offering price:
|
|
$3.75 per share
|
|
|
|
Underwriting discounts and
commissions:
|
|
$0.2292 per share
|
|
|
|
Net proceeds (excluding the
over-allotment):
|
|
$8.7 million (after deducting the
underwriters discounts and commissions and
estimated offering expenses payable by the
Company)
|
|
|
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Trade date:
|
|
June 29, 2011
|
|
|
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Settlement date:
|
|
July 5, 2011
|
|
|
|
Underwriters:
|
|
Roth Capital Partners, LLC
Maxim Group LLC
|
Entities affiliated with Special Situations Fund have indicated an interest in
purchasing up to 2,200,000 shares in the offering. Assuming completion of the
offering, they will own approximately 33% of the Companys total outstanding
shares (assuming no exercise of the over-allotment option).
SCHEDULE V
Company Opinions
SCHEDULE VI
Selling Stockholders Opinions
Exhibit 10.1
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
CLEAN DIESEL TECHNOLOGIES, INC.
FORM OF WARRANT
|
|
|
|
|
|
Warrant No. [___]
|
|
Original Issue Date:
_____, 2011
|
Clean Diesel Technologies, Inc., a Delaware corporation (the
Company
), hereby certifies
that, as partial compensation for services, [_____] or its registered assigns (the
Holder
), is
entitled to purchase from the Company up to a total of [2% of the offered securities] shares of
Common Stock (each such share, a
Warrant Share
and all such shares, the
Warrant Shares
), at any
time and from time to time from and after the Original Issue Date and through and including
_____, 2016 (the
Expiration Date
) (provided that any Warrant Shares issued prior to the
180
th
day following effectiveness of the Registration Statement on Form S-1 (333-174680)
(the
Registration Statement
) shall remain subject to the lock-up restrictions in FINRA Rule
5110(g)(1)), and subject to the following terms and conditions:
1.
Definitions
. As used in this Warrant, the following terms shall have the
respective definitions set forth in this Section 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 144.
Business Day
means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.
Common Stock
means the common stock of the Company, $0.01 par value per share, and any
securities into which such common stock may hereafter be reclassified or for which it may be
exchanged as a class.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Exercise Price
means $[120% of price to public], subject to adjustment in accordance with
Section 9.
Fundamental Transaction
means any of the following: (1) the Company effects any merger or
consolidation of the Company with or into another Person, (2) the Company effects any sale of all
or substantially all of its assets in one or a series of related transactions, (3) any tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders
of Common Stock are permitted to tender or exchange their shares for other securities, cash or
property, or (4) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property.
New York Courts
means the state and federal courts sitting in the City of New York, Borough
of Manhattan.
Original Issue Date
means the Original Issue Date first set forth on the first page of this
Warrant.
Person
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
Rule 144
means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC on
having substantially the same effect as such Rule.
SEC
means the Securities and Exchange Commission.
Securities Act
means the Securities Act of 1933, as amended.
Subsidiary
means any significant subsidiary as defined in Rule 1-02(w) of Regulation S-X
promulgated by the SEC under the Exchange Act.
Trading Day
means (i) a day on which the Common Stock is traded or quoted on a Trading
Market, or (ii) if the Common Stock is not traded or quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or
any similar organization or agency succeeding to its functions of reporting prices); provided, that
in the event that the Common Stock is not traded or quoted as set forth in (i) or (ii) hereof, then
Trading Day shall mean a Business Day.
-2-
Trading Market
means whichever of the New York Stock Exchange, NYSE Amex Equities, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin
Board on which the Common Stock is listed or quoted for trading on the date in question.
Warrant Shares
means the shares of Common Stock issuable upon exercise of this Warrant.
2.
Registration of Warrant
. The Company shall register this Warrant upon records to
be maintained by the Company for that purpose (the
Warrant Register
), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.
3.
Registration of Transfers
. Subject to the limitation set forth in the last
sentence of Section 4 hereof, the Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Company at its address specified herein. Upon
any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the
form of this Warrant (any such new Warrant, a
New Warrant
), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a Warrant.
4.
Exercise and Duration of Warrants
. This Warrant shall be exercisable by the
registered Holder at any time and from time to time from and after the Original Issue Date
(provided that any Warrant Shares issued prior to the 180
th
day following the
effectiveness of the Registration Statement shall remain subject to the lock-up restrictions in
FINRA Rule 5110(g)(1)) through and including the Expiration Date. At 6:30 p.m., New York City time
on the Expiration Date which in accordance with FINRA Rule 5110(f)(2)(H) shall not be more than
five (5) years from the effectiveness of the Registration Statement, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value. The Company may not call or
redeem any portion of this Warrant without the prior written consent of the affected Holder. This
Warrant shall not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of
any hedging, short sale, derivative, put, or call transaction that would result in the effective
economic disposition of this Warrant by any person for a period of 180 days immediately following
the effective date of the Registration Statement, except as provided in FINRA Rule 5110(g)(2).
-3-
5.
Delivery of Warrant Shares
.
(a) To effect exercises hereunder, the Holder shall not be required to physically surrender
this Warrant unless the aggregate Warrant Shares represented by this Warrant is being exercised.
Upon delivery of the Exercise Notice (in the form attached hereto) to the Company (with the
attached Warrant Shares Exercise Log) at its address for notice set
forth herein and upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder (
provided
, that, in lieu of the payment of
the Exercise Price, the Holder may have notified the Company in its Exercise Notice that such
exercise was made pursuant to a Cashless Exercise (as defined in Section 11 hereof)), the Company
shall promptly (but in no event later than five Trading Days) after the Date of Exercise (as
defined herein)) issue and deliver to the Holder, a certificate for the Warrant Shares issuable
upon such exercise. The Company shall, upon request of the Holder and subsequent to the date on
which a registration statement covering the resale of the Warrant Shares, if any, has been declared
effective by the SEC, use its reasonable best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established clearing corporation
performing similar functions, if available,
provided
, that, the Company may, but will not
be required to change its transfer agent if its current transfer agent cannot deliver Warrant
Shares electronically through the Depository Trust Corporation. A
Date of Exercise
means the
date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the
Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) payment of
the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased.
(b) If by the fifth Trading Day after a Date of Exercise the Company fails to deliver the
required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder
will have the right to rescind such exercise.
(c) The Companys obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of law by the Holder
or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holders right to pursue any other remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Companys failure to timely deliver certificates representing Warrant
Shares upon exercise of the Warrant as required pursuant to the terms hereof.
6.
Charges, Taxes and Expenses
. Issuance and delivery of Warrant Shares upon exercise
of this Warrant shall be made without charge to the Holder for any issue or transfer tax,
withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid by the Company; provided,
however, that the Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a
name other than that of the Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.
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7.
Replacement of Warrant
. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the
Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the
Companys obligation to issue the New Warrant.
8.
Reservation of Warrant Shares
. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable
and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of Persons other than the Holder (taking into account the adjustments
and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.
9.
Certain Adjustments
. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this
Section 9
.
(a)
Stock Dividends and Splits
. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of
Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution, and any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.
-5-
(b)
Fundamental Transactions
. If, at any time while this Warrant is outstanding there
is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the same amount and kind of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the
Alternate Consideration
). For purposes of any such exercise, the determination of the Exercise Price
shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction. At the Holders option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant
substantially in the form of this Warrant and consistent with the foregoing provisions and
evidencing the Holders right to purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.
(c)
Number of Warrant Shares
. Simultaneously with any adjustment to the Exercise
Price pursuant to this Section 9, the number of Warrant Shares that may be purchased upon exercise
of this Warrant shall be increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such adjustment.
(d)
Calculations
. All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100
th
of a share, as applicable. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.
(e)
Notice of Adjustments
. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly compute such adjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing the transactions
giving rise to such adjustments and showing in detail the facts upon which such adjustment is
based. Upon written request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Companys Transfer Agent.
-6-
(f)
Notice of Corporate Events
. If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall deliver to the Holder a notice describing the material terms and conditions
of such transaction (but only to the extent such disclosure would not result in the dissemination
of material, non-public information to the Holder) at least 10 calendar days prior to the
applicable record or effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will take all steps
reasonably necessary in order to give the Holder the practical opportunity to exercise this Warrant
prior to such time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
10.
Payment of Exercise Price
. The Holder shall pay the Exercise Price by delivering
immediately available funds if the Holder did not notify the Company in the Exercise Notice that
the exercise was made pursuant to a Cashless Exercise as further described in Section 11 hereof.
11.
Cashless Exercise
. Notwithstanding anything contained herein to the contrary
(other than Section 12 below), the Holder may, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon exercise, elect instead to receive upon such exercise
the Net Number of shares of Common Stock determined according to the following formula (a
Cashless Exercise
):
Net Number =
(A x B) - (A x C)
B
For purposes of the foregoing formula:
A = the total number of shares with respect to which this Warrant is then being
exercised.
B = as applicable: (i) the closing sale price of the Common Stock on the Trading Day
immediately preceding the date of the applicable Exercise Notice if such Exercise
Notice is (1) both executed and delivered pursuant to Section 5 hereof on a day that
is not a Trading Day or (2) both executed and delivered pursuant to Section 5 hereof
on a Trading Day prior to the opening of regular trading hours (as defined in Rule
600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such
Trading Day, (ii) the bid price of the Common Stock as of the time of the Holders
execution of the applicable Exercise Notice if such Exercise Notice is executed
during regular trading hours on a Trading Day pursuant to Section 5 hereof, (iii)
the closing sale price of the Common Stock on the date of the applicable Exercise
Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice
is both executed and delivered pursuant to Section 5 hereof after the close of
regular trading hours on such Trading Day, or (iv) if the Common Stock is not
traded in such manner that the quotations referred to above are available, the fair
value per share of the Common Stock as determined by the Board of Directors of the
Company in good faith.
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C = the Exercise Price then in effect for the applicable Warrant
Shares at the time
of such exercise.
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-7-
12.
Limitations on Exercise
. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this
Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holders for purposes of Section 13(d) of
the Exchange Act, does not exceed 9.99% of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).
For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or beneficially own in
order to determine the amount of securities or other consideration that such Holder may receive in
the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant. This
restriction may not be waived. Notwithstanding anything to the contrary contained in this Warrant,
(a) no term of this Section may be waived by any party, nor amended such that the threshold
percentage of ownership would be directly or indirectly increased, (b) this restriction runs with
the Warrant and may not be modified or waived by any subsequent holder hereof and (c) any attempted
waiver, modification or amendment of this Section will be
void
ab
initio
.
13.
No Fractional Shares
. No fractional shares of Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares which would,
otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied
by the closing price of one Warrant Share as reported by the applicable Trading Market on the date
of exercise.
14.
Notices
. Any and all notices or other communications or deliveries hereunder
(including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New
York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number specified in this
Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any
Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required
to be given. The addresses for such communications shall be: (i) if to the Company, to 4567
Telephone Road, Suite 206, Ventura, CA 93033, Attn: Chief Financial Officer, or to Facsimile No.:
(805) 639-9466 (or such other address as the Company shall indicate in writing in accordance with
this Section), or (ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may provide to the Company
in accordance with this Section.
15.
Warrant Agent
. The Company shall serve as warrant agent under this Warrant. Upon
10 days notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holders
last address as shown on the Warrant Register.
-8-
16.
Miscellaneous
.
(a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder any legal or
equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in
writing signed by the Company and the Holder and their successors and assigns. The foregoing
sentence shall be subject to the restrictions on waivers and amendments set forth in Section 12 of
this Warrant.
(b) All questions concerning the construction, validity, enforcement and interpretation of
this Warrant 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 this
Warrant and the transactions herein contemplated (
Proceedings
) (whether brought against a party
hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New
York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New
York Courts 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 Proceeding, any claim that it is not personally subject to the jurisdiction of any
New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in
any legal proceeding arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
(c) The headings herein are for convenience only, do not constitute a part of this Warrant and
shall not be deemed to limit or affect any of the provisions hereof.
(d) In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.
(e) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of being a
Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
-9-
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.
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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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[
Signature Page to Warrant
]
EXERCISE NOTICE
CLEAN DIESEL TECHNOLOGIES, INC.
WARRANT DATED ________
The undersigned Holder hereby irrevocably elects to purchase
_____
shares of Common Stock
pursuant to the above referenced Warrant. Capitalized terms used herein and not otherwise defined
have the respective meanings set forth in the Warrant.
(1)
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The undersigned Holder hereby exercises its right to purchase
_____
Warrant
Shares pursuant to the Warrant.
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(2)
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The holder intends that payment of the Exercise Price shall be made as:
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_____
a
Cash Exercise
with respect to
_____
Warrant Shares;
and/or
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_____
a
Cashless Exercise
with respect to
_____
Warrant Shares.
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(3)
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Pursuant to this Exercise Notice, the Company shall deliver to the holder
_____
Warrant Shares in accordance with the terms of the Warrant.
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(4)
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By its delivery of this Exercise Notice, the undersigned represents and warrants to the
Company that in giving effect to the exercise evidenced hereby the Holder will not
beneficially own in excess of the number of shares of Common Stock (determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under Section
12 of this Warrant to which this notice relates.
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Dated:
, ______
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Name of Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
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Warrant Shares Exercise Log
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Number of
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Number of Warrant
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Number of Warrant
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Warrant Shares
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Shares Available to be
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Shares
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Remaining to
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Date
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Exercised
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Exercised
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be Exercised
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CLEAN DIESEL TECHNOLOGIES, INC.
WARRANT DATED ________
WARRANT NO. [___]
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_____
the right represented by the above-captioned Warrant to purchase
_____
shares of Common Stock to which such Warrant relates and appoints
_____
attorney to transfer said right on the books of the Company with full power of substitution in the
premises.
Dated: _______________, ____
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(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
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Address of Transferee
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In the presence of: