Exhibit 10.2

 

Lon E. Bell, Ph.D.
[Address]

 

June 30, 2016

 

Clean Diesel Technologies, Inc.
1621 Fiske Place
Oxnard, CA 93033
Attention:  Matthew Beale
                  Chief Executive Officer

 

Re:      Exchange of Note for Common Stock

 

Gentlemen:

 

This letter (this “Agreement”) will confirm the agreement of Clean Diesel
Technologies, Inc., a Delaware corporation (the “Company”) to an exchange with
Lon E. Bell, Ph.D. (“Holder”) of a that certain director’s convertible
promissory note (amended and restated effective May 12, 2016) in the principal
amount of $500,000 (the “Note”) currently held by Holder, and all accrued but
unpaid interest thereon, for shares of the Company’s common stock, par value
$0.01 per share (the “Common Stock”), on the terms set forth herein (the
“Exchange”).

 

1.         Exchange of Note.  Subject to the terms and conditions of this
Agreement, the settlement of the Exchange (“Settlement”) shall take place at the
offices of Stubbs Alderton & Markiles, LLP, at 15260 Ventura Blvd, 20th Floor,
Sherman Oaks, CA 91403, at 10:00 a.m. on the third (3rd) business day after the
receipt of Stockholder Approval (as defined below), or at such other location or
time as the parties may agree.  The date on which the Settlement occurs is
referred to herein as the “Settlement Date.”  On the Settlement Date, Holder
will cause delivery of the Note to the Company, and the Company will cause
delivery to Holder of the number of shares of Common Stock (the “Exchange
Shares”) equal to (a) the principal amount of the Note plus the accrued but
unpaid interest thereon through and including the Settlement Date, divided by
(b) $0.3243 (the “Exchange Price”), in exchange for the Note and all claims
Holder may have arising out of or relating to the Note (including without
limitation any accrued but unpaid interest thereon).

 

2.         Conditions to Obligations of Each Party to Effect the Exchange.  The
respective obligations of each party to this Agreement to effect the Exchange
shall be subject to the satisfaction at or prior to the Settlement Date of the
following conditions:

 

(a)        Company Stockholder Approval.  The issuance of the Exchange Shares to
Holder shall have been duly approved by the Company’s stockholders in accordance
with the continued listing requirements of The Nasdaq Stock Market, LLC, by the
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy at a duly convened Stockholders Meeting (as defined below) and
entitled to vote thereon (“Stockholder Approval”).

 

(b)        No Injunction or Litigation.  As of the Settlement Date, there shall
not be any claim, demand, cause of action, suit, proceeding, arbitration,
hearing or investigation, or any judgment, order, award, writ, injunction or
decree, of any nature or type threatened, pending or

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016
Page 2

 

made by or before any governmental body that questions or challenges the
lawfulness of the transactions contemplated by this Agreement under any law or
regulation or seeks to delay, restrain or prevent such transactions.

 

(c)        Material Adverse Effect.  As of the Settlement Date, there shall not
exist any condition or fact that, individually or in the aggregate, has had or
reasonably may be expected to result in a Material Adverse Effect.  For purposes
hereof, “Material Adverse Effect” means a change, effect, event or circumstance
that is, or would reasonably be expected to be, materially adverse to the
assets, operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, but shall exclude any changes, effects, events
or circumstances related to or resulting from (i) general economic, banking,
currency, capital market, regulatory, political, environmental or other similar
conditions (including acts of war, declared or undeclared, armed hostilities,
terrorism, weather conditions or other force majeure events), (ii) general
business or economic conditions affecting the industries in which the Company
operates, or (iii) the taking of any action expressly contemplated by this
Agreement;  provided that, in each of the cases of clauses (i) and (ii), such
changes do not have a materially disproportionate effect on the Company in the
aggregate relative to other participants in the industries in which the Company
operates.

 

3.         Company Stockholder Meeting.  As promptly as reasonably practicable
after the execution of this Agreement, the Company shall take all action
reasonably necessary in accordance with the Delaware General Corporation Law and
the Company’s certificate of incorporation and bylaws to call, hold and convene
a special meeting of its stockholders for the purpose of considering and taking
action on the Exchange and the issuance to Holder of the Exchange Shares (the
“Stockholders Meeting”), and to prepare and file a proxy statement with the SEC
in connection with the Stockholders Meeting (together with any amendments or
supplements thereto, the “Proxy Statement”).  Holder shall provide promptly to
the Company such information concerning itself (and, to the extent required, its
affiliates) as may be required or appropriate for inclusion in the Proxy
Statement, or in any amendments or supplements thereto.

 

4.         Representations, Warranties and Covenants.

 

(a)        By Holder.  In connection with this transaction, Holder hereby
represents, warrants and acknowledges to and agrees with the Company as follows:

 

(1)        Holder is the sole legal and beneficial owner of the Note and the
Note being transferred hereunder is free and clear of any liens, charges or
encumbrances and upon completion of the Exchange, Holder will convey to the
Company good title to the Note free and clear of all liens, charges and
encumbrances.

 

(2)        Neither Holder nor anyone acting on its behalf has received any
commission or remuneration directly or indirectly in connection with or in order
to solicit or facilitate the Exchange.

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016

Page 3

 

(3)        Holder agrees not to sell shares of Common Stock from the date hereof
through the Settlement Date at price per share below the Exchange Price.

 

(4)        Holder acknowledges that the issuance of the Exchange Shares in the
Exchange is intended to be exempt from registration under the Securities Act of
1933, as amended (the “Securities Act”) by virtue of Section 3(a)(9) of the
Securities Act.  Holder knows of no reason why such exemption is not available.

 

(5)        Holder has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the acquisition
of the Exchange Shares and to make an informed investment decision with respect
to such acquisition and the Exchange.  Holder is an “accredited investors” as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.

 

(6)        Holder understands that the Exchange Shares have not been, and will
not be, registered under the Securities Act, in reliance on an exemption
therefrom and further understands that the Exchange Shares have not been
approved or disapproved by the U.S. Securities and Exchange Commission (the
“SEC”), or any other federal or state agency, nor has any such agency passed on
the accuracy or adequacy of any information or materials provided by the Company
to Holder regarding the Company or its business.

 

(7)        Holder acknowledges that he is an “affiliate” of the Company within
the meaning of Rule 144 promulgated under the Securities Act, and that the
Exchange Shares cannot be sold unless such sale is registered under the
Securities Act or an exemption from such registration is available.

 

(8)        Holder represents that (i) he has all of the power and authority
necessary to enter into this transaction and to consummate the transaction
contemplated hereunder, (ii) this Agreement is an obligation enforceable in
accordance with its terms, and (iii) neither the execution and delivery hereof
or the performance of his obligations hereunder will violate or contravene any
applicable requirements of law or any of his material agreements.

 

(b)        By Company.  In connection with this transaction, the Company hereby
represents, warrants and acknowledges to and agrees with Holder as follows:

 

(1)        The Company acknowledges that the issuance of the Exchange Shares in
the Exchange is intended to be exempt from registration under the Securities Act
by virtue of Section 3(a)(9) of the Securities Act.  The Company knows of no
reason why such exemption is not available.

 

(2)        The Company represents that (i) it is a corporation duly organized
and validly existing under the laws of the State of Delaware, (ii) it has all of
the corporate power and authority necessary to enter into this transaction and
to consummate the transaction contemplated hereunder, (iii) it has taken all
corporate action as may be necessary to authorize the

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016

Page 4

 

execution and delivery of this Agreement and the consummation of the transaction
contemplated by this Agreement and the performance of its obligations hereunder,
other than the receipt of Stockholder Approval, (iv) this Agreement is an
obligation enforceable in accordance with its terms, (v) assuming Stockholder
Approval is obtained, neither the execution and delivery hereof or the
performance of its obligations hereunder will violate or contravene any
applicable requirements of law or any of its charter, by-laws or material
agreements, and (vi) the Exchange Shares have been duly authorized, and upon
issuance of the Exchange Shares in the Exhange and otherwise in in accordance
with the terms hereof, the Exchange Shares will be validly issued, fully paid
and non-assessable.

 

5.         Termination.  This Agreement may be terminated at any time prior to
the Settlement Date, and the Exchange may be abandoned, notwithstanding any
prior receipt of Stockholder Approval:

 

(a)        by mutual agreement of Holder and the Company;

 

(b)        by either the Company or Holder if the Settlement Date shall not have
occurred on or before the close of business on September 15, 2016 (as such date
may be extended by mutual agreement of the parties, the “End Date”) for any
reason; provided, however, that the right to terminate this Agreement under this
Section 5(b) shall not be available to any party whose action or failure to act
has been a principal cause of or resulted in the failure of the Settlement Date
to occur on or before the End Date and such action or failure to act constitutes
a breach of this Agreement;

 

(c)        by either the Company or Holder if a governmental body shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Exchange, which order, decree, ruling or other action is final and
non-appealable;

 

(d)       by either the Company or Holder if Stockholder Approval shall not have
been obtained at the Stockholders Meeting or at any adjournment or postponement
thereof; provided, however, that the right to terminate this Agreement under
this Section 5(d) shall not be available to either party where the failure to
obtain Stockholder Approval shall have been caused by the action or failure to
act of such party and such action or failure to act constitutes a breach by such
party of this Agreement; or

 

(e)        by the Company concurrently with the Company’s repayment in full of
the Note.

 

In the event of the termination of this Agreement as provided in this Section 5,
this Agreement shall be of no further force or effect and there shall be no
liability to any party hereunder in connection with this Agreement or the
Exchange, except that nothing herein shall relieve any party from liability for
fraud or any intentional or willful breach of, or any intentional
misrepresentation made in, this Agreement.

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016

Page 5

 

6.         General.

 

(a)        Omitted.

 

(b)        Note.  Nothing in this Agreement shall amend or modify the Note,
which shall remain in full force and effect in accordance with their terms,
except that Holder shall not convert the Note into shares of Common Stock prior
to the Settlement or termination of this Agreement.

 

(c)        Entire Agreement. This Agreement, together with any exhibits attached
hereto, constitutes the sole and entire agreement of the parties with respect to
the subject matter contained herein, and supersedes all prior and
contemporaneous understandings, agreements, representations and warranties, both
written and oral, with respect to such subject matter.

 

(d)       Notices. All notices, requests, consents, claims, demands, waivers and
other communications under this Agreement (each, a “Notice”) must be in writing
and addressed to the other party at its address set forth below (or to such
other address that the receiving party may designate from time to time in
accordance with this section) and shall be deemed given: (a) on the date of
delivery only if delivered by a commercial overnight courier service, with
confirmation of receipt and costs prepaid; (b) on the date of receipt if sent by
facsimile to the fax number set forth below with a confirmation copy sent by
certified or registered mail, costs prepaid; or (c) on the earlier of the date
of receipt or three (3) days after deposit in the U.S. mail if sent by certified
or registered mail, return receipt requested and postage prepaid.

 

(1)        Notice to Holder:

 

Lon E. Bell
[Address]

 

(2)        Notice to the Company:

 

Clean Diesel Technologies, Inc.
1621 Fiske Place
Oxnard, CA  93033
Attn:  Matthew Beale

 

(e)        Headings. The headings in this Agreement are for reference only and
do not affect the interpretation of this Agreement.

 

(f)        Severability. If any term or provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability does not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction.

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016

Page 6

 

(g)        Amendment and Modification. No amendment to or rescission,
termination or discharge of this Agreement is effective unless it is in writing
and signed by each party.

 

(h)        Waiver.  No waiver under this Agreement is effective unless it is in
writing and signed by the party waiving its right.  Any waiver authorized on one
occasion is effective only in that instance and only for the purpose stated, and
does not operate as a waiver on any future occasion.

 

(i)         Assignment. Neither party may assign any of its rights or delegate
any of its obligations under this Agreement without the prior written consent of
the other party. Any purported assignment or delegation in violation of this
Section is null and void. No assignment or delegation relieves the assigning or
delegating party of any of its obligations under this Agreement.

 

(j)         Successors and Assigns. This Agreement is binding on and inures to
the benefit of the parties and their respective permitted successors and
permitted assigns.

 

(k)        No Third-party Beneficiaries. This Agreement benefits solely the
parties to this Agreement and their respective permitted successors and
permitted assigns and nothing in this Agreement, express or implied, confers on
any other person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

(l)         Governing Law. This Agreement, including all exhibits attached
hereto, and all matters arising out of or relating to this Agreement, are
governed by, and construed in accordance with, the Laws of the State of
California, without regard to the conflict of laws provisions thereof.

 

(m)       Choice of Forum.  Each party irrevocably and unconditionally agrees
that it shall not commence any action, litigation or proceeding of any kind
whatsoever against the other party in any way arising from or relating to this
Agreement, including all exhibits, schedules, attachments and appendices
attached hereto and thereto, and all contemplated transactions, including
contract, equity, tort, fraud and statutory claims, in any forum other than the
state and federal courts in the State of California.  Each party irrevocably and
unconditionally submits to the exclusive jurisdiction of such courts and agrees
to bring any such action, litigation or proceeding only in the state or federal
courts in the State of California. Each party agrees that a final judgment in
any such action, litigation or proceeding is conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
Law.

 

(n)        Counterparts. This Agreement may be executed in counterparts, each of
which is deemed an original, but all of which together are deemed to be one and
the same agreement. A signed copy of this Agreement delivered by facsimile,
e-mail or other means of electronic transmission is deemed to have the same
legal effect as delivery of an original signed copy of this Agreement.

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016

Page 7

 

(o)        Governing Language.  This Agreement has been executed in the English
language which shall be the binding and controlling language for all matters,
notwithstanding the translation of this Agreement into any other language.

 

(p)        No Confidentiality. Holder acknowledges and agrees that the Company
will publicly disclose this Agreement on a Current Report on Form 8-K filed with
the SEC, and that neither the existence of this Agreement or its terms and
conditions will remain confidential.

 

(Signatures on Following Page)

 

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Lon E. Bell, Ph.D.

 

Clean Diesel Technologies, Inc.

June 30, 2016

Page 8

 

If this Agreement meets with your approval, we request that you indicate such
approval by returning the enclosed copy of this Agreement, appropriately signed.

 

 

Sincerely,

 

 

 

/s/ Lon E. Bell, Ph.D.

 

 

 

Lon E. Bell, Ph.D.

 

AGREED TO AND ACCEPTED AS OF
THE DATE FIRST SET FORTH ABOVE:

 

CLEAN DIESEL TECHNOLOGIES, INC.

 

 

 

 

 

By:

/s/ Matthew Beale

 

Name:

Matthew Beale

 

Its:

Chief Executive Officer

 

 

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