UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 7, 2016 (April 1, 2016)

 

 

CLEAN DIESEL TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

         
Delaware   001-33710   06-1393453
(State or Other Jurisdiction 
of Incorporation)
 

(Commission

File Number)

  (I.R.S. Employer 
Identification No.)
   

1621 Fiske Place

Oxnard, California, 93033

(Address of Principal Executive Offices) (Zip Code)

 

(805) 639-9458

(Registrants telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On April 1, 2016, Clean Diesel Technologies, Inc. (the “Company” or “CDTI”) executed a Promissory Note (the “Note”) and entered into an amendment to loan agreement (the “Agreement”) with Kanis S.A., one of the Company’s principal lenders and largest stockholders.

 

Pursuant to the terms of the Note, Kanis S.A. agreed to lend the Company $2,000,000 at a rate per annum equal to 8% and a maturity date of September 30, 2017. This Note shall bear no prepayment penalty.

 

Pursuant to the terms of the Agreement, the Company and Kanis S.A. agreed to amend certain prior loans and amendments aggregating a principal balance of $7,500,000 (collectively, the “Loan Agreements”), whereby Kanis S.A. agreed to amend the terms of the outstanding loans made to the Company, such that (i) Kanis S.A. shall have the right to convert the principal balance of the Loan Agreements and any accrued interest thereon at any time before payment by written notice exercising such optional right to convert the $7,500,000 principal balance and any accrued interest into the common stock of the Company at a conversion price equal to the lower of the closing price of CDTI on the date before the date of the Agreement or as of the date when Kanis S.A. sends written notice to the Company exercising its conversion right; and (ii) the Company shall have the right to mandatorily convert the $7,500,000 principal balance and any accrued interest into the common stock of CDTI upon the due date under the Loan Agreements or earlier upon the occurrence of a Liquidity Event at a conversion price equal to the lower of the closing price of CDTI as of the date immediately before the date of the Agreement or at a 25% discount to the Liquidity Event price. A Liquidity Event shall be defined as a strategic investment in CDTI or a public stock offering by CDTI. The Company may prepay the principal and any interest due on the Loan Agreements at any time before due date without penalty.

 

The foregoing description of the Note and the Agreement do not purport to be complete and are qualified in its entirety by reference to the full text of the Note and the Agreement. A copy of the Note and the Agreement are attached as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

 

Item 8.01 Other Events.

 

On April 7, 2016, the Company issued a press release announcing the execution of the Note and entry into the Agreement by the Company with Kanis S.A. The Company’s press release is attached as Exhibit 99.1 hereto and is incorporated by reference herein.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.  

Exhibit Number   Description of Exhibits
10.1   Promissory Note, dated April 1, 2016, by the Company
10.2   Amendment to Loan Agreement, dated April 1, 2016, by and between the Company and Kanis S.A.
99.1   Press Release dated April 7, 2016

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

         
    CLEAN DIESEL TECHNOLOGIES, INC.
     
April 7, 2016   By:  

/s/ David E. Shea

        Name: David E. Shea
        Title: Chief Financial Officer

 

 

 

 

 

 

 

 

Exhibit Index

 

Exhibit No.   Description
10.1   Promissory Note, dated April 1, 2016, by the Company
10.2   Amendment to Loan Agreement, dated April 1, 2016, by and between the Company and Kanis S.A.
99.1   Press Release dated April 7, 2016

 

 

 

 

Exhibit 10.1

Clean Diesel Technologies, Inc.

PROMISSORY NOTE

Principal Amount US$2,000,000.00   Oxnard, California
    April 1, 2016


For value received, the undersigned Clean Diesel Technologies, Inc., a Delaware corporation (“ Maker ”), promises to pay to Kanis, S.A. (“ Payee ”), or order, c/o S G Associates Limited, 82Z Portland Place, London, England, W1B 1NS, the principal sum of Two Million United States Dollars ($2,000,000.00), together with interest at the rate hereinafter provided for on the unpaid principal balance of this promissory note (this “ Note ”) from time to time outstanding until paid in full.

Interest shall accrue on the unpaid and outstanding principal balance of this Note commencing on the date hereof and continuing until repayment of this Note in full at a rate per annum equal to Eight Percent (8.00%). The principal, along with any accrued but unpaid interest shall be due and payable in full on September 30, 2017 (the “ Maturity Date ”). This Note shall bear no prepayment penalty.

Maker shall make all payments hereunder to Payee in lawful money of the United States and in immediately available funds. Payments shall be applied first to accrued and unpaid interest, then to principal.

The maturity of this Note may be accelerated by Payee in the event Maker is in breach or default of any of the terms, conditions or covenants of this Note or any other agreement of Maker with Payee or its affiliates.

Maker waives presentment, demand, notice of demand, protest, notice of protest or notice of nonpayment in connection with the delivery, acceptance, performance, default or enforcement of this Note or of any document or instrument evidencing any security for payment of this Note.

Failure at any time to exercise any of the rights of Payee hereunder shall not constitute a waiver of such rights and shall not be a bar to exercise of any of such rights at a later date.

Maker agrees to pay all reasonable costs of collection and enforcement of this Note, including but not limited to reasonable attorney’s fees and disbursements, whether or not any lawsuit or other legal action is instituted to enforce this Note, including without limitation if Payee seeks the advice or assistance of an attorney as a result of or in connection with any default, or if Maker becomes the debtor or otherwise becomes the subject of any bankruptcy, insolvency or other proceeding for the readjustment of indebtedness.

No addition to or amendment of this Note shall be admissible, enforceable or effective unless it is set forth in a writing duly executed by the party against whom the addition or amendment is sought to be enforced.

 

 

Nothing contained in this Note shall be deemed to require the payment of interest or other charges by Maker or any other person in excess of the amount which the Payee may lawfully charge under the applicable usury laws. In the event that Payee shall collect moneys which are deemed to constitute interest which would increase the effective interest rate to a rate in excess of that permitted to be charged by applicable law, all such sums deemed to constitute interest in excess of the legal rate shall be credited against the principal balance of this Note then outstanding, and any excess shall be returned to Maker.

This Note will be governed by and construed under the laws of the State of California. In any action brought under or arising out of this Note, the Maker hereto hereby consents to the jurisdiction of any competent court within the State of California and consents to service of process by any means authorized by the laws of the State of California.

IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed in California as of the date first written below.

Dated: April 1, 2016   Maker:
     
    CLEAN DIESEL TECHNOLOGIES, INC.
     
    By: /s/ David Shea
      Name: David Shea
      Title: Chief Financial Officer
     
     

Exhibit 10.2

AMENDMENT TO LOAN AGREEMENT

 

This Amendment to Loan Agreement is made between Kanis, S.A (“Lender”) and Clean Diesel Technologies, Inc. (“CDTI”) this 1 st day of April 2016 with reference to the following:

 

Lender and CDTI are parties to certain prior loan agreements and amendments as listed in the attached Exhibit A aggregating a principal balance of $7,500,000 all of which together are herein referred to as the Loan Agreement collectively;

 

The Loan Agreement provided among other things for certain conversion rights of Lender which provided for the conversion of portions of the balance under the Loan Agreement into the common stock of CDTI, as set forth in Exhibit A attached hereto which conversion rights collectively are referred to herein as the “Prior Conversion Rights".

 

NOW THEREFORE , in consideration of this agreement the parties wish to amend the Loan Agreement as follows:

 

1. Amendment to Prior Conversion Rights of the Loan Agreement

 

The parties desire that the following shall supersede and replace the Prior Conversion Rights in the Loan Agreement and in lieu thereof Lender shall have the right to convert the principal balance of the $7,500,000 Loan Agreement and any accrued interest thereon at any time before payment by written notice exercising the Lender’s optional right to convert the $7,500,000 principal balance and any accrued interest into the common stock of CDTI at a conversion price equal to the lower of the closing price of CDTI on the date before the date first set forth above or as of the date when Lender sends written notice to CDTI exercising its conversion right. CDTI shall have the right to mandatorily convert the $7,500,000 Loan Agreement balance plus any accrued interest into the common stock of CDTI upon the due date under the Loan Agreement or earlier upon the occurrence of a Liquidity Event at a conversion price equal to the lower of the closing price of CDTI as of the date immediately before the date first set forth above or at a 25% discount to the Liquidity Event price. A Liquidity Event shall be defined as a strategic investment in CDTI or a public stock offering by CDTI.

 

2. No Prepayment Penalty

 

Notwithstanding anything contained in the Loan Agreement, CDTI may prepay the principal and any interest due on the Loan Agreement at any time before due date without penalty.

 

3. Compliance with NASDAQ

 

Lender agrees to exercise its conversion rights hereunder in compliance with NASDAQ rules governing the issuance of stock at a below market price or in connection with the issuance of stock constituting a change in control. So as to permit CDTI to comply with such NASDAQ rules, Lender will cooperate in the exercise of its conversion rights so as to permit CDTI to comply with said NASDAQ rules.

 

1
 

4. Regulation D

 

Lender hereby confirms that it is an accredited investor as such term is defined under Regulation D of the Securities Act of 1933 and recognizes that the shares of CDTI issued upon conversion will contain the appropriate restrictive legend required under such regulation which in essence provides that the shares may not be resold unless registered or exempt from registration under the Securities Act of 1933 and that a legend to such effect may be placed upon the certificates representing the shares issuable upon conversion.

 

IN WITNESS WHEREOF , the parties have executed this agreement as of the date first set forth above.

 

 

CLEAN DIESEL TECHNOLOGIES, INC.   KANIS, S.A.
     
     
By: /s/ David Shea   By: Christine Maret
     
David Shea   Christine Maret
Its Chief Financial Officer   Its Director

 

 

 

 

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Exhibit A

 

 

Kanis #1 - $1,500,000, originally dated December 30, 2010

10.2 Loan Commitment Letter, dated December 30, 2010, between Kanis S.A. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on January 5, 2011).

10.3 Form of Promissory Note, dated December 30, 2010, issued to Kanis S.A. in an initial aggregate principal amount of $1,500,000 (incorporated by reference to Schedule A to Loan Commitment Letter filed as Exhibit 10.1 to CDTi’s current report on Form 8-K (SEC file number 001-33710) filed on January 5, 2011).

http://www.sec.gov/Archives/edgar/data/949428/000095012311000724/c10593exv10w1.htm

 

10.4 Amendment of Clean Diesel Technologies, Inc.’s Loan Agreement, dated December 30, 2010, between Kanis S.A. and Clean Diesel Technologies, Inc., dated January 30, 2013 (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on February 1, 2013).

http://www.sec.gov/Archives/edgar/data/949428/000151316213000096/exhibit10_1.htm

 

Kanis #2 - $3,000,000 (Subordinated Convertible), originally dated April 11, 2011

10.8 Subordinated Convertible Notes Commitment Letter, dated April 11, 2011, between Kanis S.A. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on April 13, 2011).

10.9 Form of 8% Subordinated Convertible Promissory Note, dated April 11, 2011, issued to Kanis S.A. in the initial aggregate principal amount of $3,000,000 (included as Schedule B to Subordinated Convertible Notes Commitment Letter filed as Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on April 13, 2011).

http://www.sec.gov/Archives/edgar/data/949428/000095012311035074/c15469exv10w1.htm

 

10.10 Amendment of 8% Subordinated Convertible Promissory Note between Clean Diesel Technologies, Inc. and Kanis S.A., dated February 16, 2012 (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on February 17, 2012).

10.6 Form of Warrant issued to Kanis S.A., dated February 16, 2012 (incorporated by reference to Exhibit 10.2 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on February 17, 2012).

http://www.sec.gov/Archives/edgar/data/949428/000119312512067451/d303815dex101.htm

http://www.sec.gov/Archives/edgar/data/949428/000119312512067451/d303815dex102.htm

 

10.12 Letter Agreement, dated January 30, 2013, between Kanis S.A. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit 10.2 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on February 1, 2013).

http://www.sec.gov/Archives/edgar/data/949428/000151316213000096/exhibit10_2.htm

 

10.13 Letter Agreement, dated March 21, 2014, between Kanis S.A. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on March 27, 2014).

http://www.sec.gov/Archives/edgar/data/949428/000151316214000178/exhibit10_1.htm

 

Kanis #3 - $3,000,000, originally dated July 27, 2012

10.11 Second Amendment of 8% Convertible Promissory Note, dated July 27, 2012, between Kanis S.A. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit 10.3 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on August 2, 2012).

10.14 Loan Commitment Letter, dated July 27, 2012, between Kanis S.A. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on August 2, 2012).

10.15 Form of Promissory Note, dated July 27, 2012, issued to Kanis S.A., in the initial aggregate principal amount of $3,000,000 (incorporated by reference to Exhibit 10.2 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on August 2, 2012).

 

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10.16 Form of Warrant issued to Kanis S.A., dated July 27, 2012 (incorporated by reference to Exhibit 10.4 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on August 2, 2012).

http://www.sec.gov/Archives/edgar/data/949428/000151316212000537/exhibit103.htm

http://www.sec.gov/Archives/edgar/data/949428/000151316212000537/exhibit101.htm

 

Amendments affecting terms of Kanis #1, #2 and #3

10.17 Letter Agreement dated November 11, 2014 between Clean Diesel Technologies, Inc. and Kanis S.A. (incorporated by reference to Exhibit 10.17 to CDTi’s Current Report on Form 10-K (SEC file number 001-33710) filed on March 18, 2015).

10.18 Form of Warrant, dated November 11, 2014, issued to Kanis S.A. (incorporated by reference to Exhibit 10.18 to CDTi’s Current Report on Form 10-K (SEC file number 001-33710) filed on March 18, 2015).

http://www.sec.gov/Archives/edgar/data/949428/000151316215000156/exhibit10_17.htm

http://www.sec.gov/Archives/edgar/data/949428/000151316215000156/exhibit10_18.htm

 

10.57 Letter Agreement dated October 7, 2015 between Clean Diesel Technologies, Inc. and Kanis S.A. (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on October 13, 2015).

http://www.sec.gov/Archives/edgar/data/949428/000117184315005460/exh_101.htm

 

Settlement of Premium and Interest with Shares/Units

10.5 Letter Agreement with Kanis S.A. dated June 28, 2013 (incorporated by reference to Exhibit 10.1 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on June 28, 2013).

http://www.sec.gov/Archives/edgar/data/949428/000119312513277478/d560570dex101.htm

 

10.7 Warrant issued to Kanis S.A., dated July 3, 2013 (incorporated by reference to Exhibit 99.2 to CDTi’s Current Report on Form 8-K (SEC file number 001-33710) filed on July 3, 2013).

http://www.sec.gov/Archives/edgar/data/949428/000119312513282537/d563981dex992.htm

 

 

 

 

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EXHIBIT 99.1

CDTi Amends Existing Loan Agreement and Receives Additional $2 Million Loan from Kanis, S.A.

OXNARD, Calif., April 07, 2016 (GLOBE NEWSWIRE) -- Clean Diesel Technologies, Inc. (Nasdaq:CDTI) (“CDTi” or “the Company”), a leader in advanced emission control technology, closed a new $2.0 million loan and amended its existing loan agreement with Kanis, S.A.  The amended agreement provides CDTi mandatory conversion rights of the aggregate principal balance of $7.5 million into common stock of CDTi upon the occurrence of a liquidity event defined as a strategic investment in CDTi or public stock offering by CDTi.

“As a long-time investor in CDTi, Kanis, S.A. has demonstrated continued confidence in our advanced materials business strategy,” stated Matthew Beale, CDTi’s CEO. “We believe these agreements provide us with an opportunity to significantly reduce the debt on our balance sheet and simplify our capital structure to support our path to profitability.”

The new $2.0 million loan bears an annual interest rate of 8% with a maturity date of September 30, 2017. Terms of the loan require CDTi to apply funds received from a liquidity event in excess of $5.0 million toward the repayment of the loan. The amendment to the $7.5 million loan gives CDTi the right to convert the loan balance into common stock at a 25% discount to the price of a strategic investment or public stock offering.

About CDTi
CDTi develops advanced materials technology for the emissions control market. CDTi’s proprietary technologies provide high-value sustainable solutions to reduce hazardous emissions, increase energy efficiency and lower the carbon intensity of on- and off-road combustion engine systems. With a continuing focus on innovation-driven commercialization and global expansion, CDTi’s breakthrough Powder-to-Coat (P2C™) technology exploits the Company’s high-performance, advanced low-platinum group metal (PGM) emission reduction catalysts. Key technology platforms include Mixed Phase Catalyst (MPC®), Base Metal Activated Rhodium Support (BMARS™), Synergized PGM (SPGM™), Zero PGM (ZPGM™) and Spinel™. For more information, please visit www.cdti.com.

Forward-Looking Statements
Certain information contained in this press release constitutes forward-looking statements, including any statements that are not statements of historical fact. You can identify these forward-looking statements by the use of the words “believes”, “expects”, “anticipates”, “plans”, “may”, “will”, “would”, “intends”, “estimates”, and other similar expressions, whether in the negative or affirmative. Forward-looking statements are based on a series of expectations, assumptions, estimates and projections, which involve substantial uncertainty and risk. In this document, the Company includes forward-looking statements regarding the acceleration of the Company’s business transformation into an advanced materials company, the Company’s future financial performance, the timely commercialization of the Company’s technology, the validation of the quality of the Company’s technology and the availability of future financing, are all subject to risks and uncertainties that could cause our actual results and financial position to differ materially.  In general, actual results may differ materially from those indicated by such forward-looking statements as a result of risks and uncertainties, including, but not limited, to (i) that the Company may not be able to (a) successfully implement, or implement at all, its strategic priorities; (b) streamline its operations or align its organization and infrastructure with the anticipated business; (c) meet expectations or projections; (d) decrease costs; (e) increase sales; (f) obtain adequate funding; (g) retain or secure customers; (h) increase its customer base; (i) protect its intellectual property; (j) successfully evolve into an advanced materials supplier or, even if successful, increase profitability; (k) successfully market new products; (l)  obtain product verifications or approvals; (m) attract or retain key personnel; (n) validate, optimize and scale our powder-to-coat capability; or (o) realize benefits from investments; (ii) funding for and enforcement and tightening of emissions controls, standards and regulations; (iii) prices of PGM and rare earth metals;  (iv) royalty and other restrictions on sales in certain Asian countries; (v) supply disruptions or failures; (vi) regulatory, marketing and competitive factors; (vii) environmental harm or damages; and (viii) other risks and uncertainties discussed or referenced in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. In addition, any forward-looking statements represent the Company’s estimates only as of the date of such statements and should not be relied upon as representing the Company’s estimates as of any subsequent date. The Company specifically disclaims any obligation to update forward-looking statements. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.

Contact Information:
Becky Herrick or Cathy Mattison
LHA (IR Agency)
+1 415 433 3777
bherrick@lhai.com / cmattison@lhai.com