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

 











 

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.

 











 

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

 











 

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.

 











 

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.

 











 

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.

 











 

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)

 











 

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