Exhibit 10o
November 14, 2000
David W. Whitwell
Vice President & CFO
Clean Diesel Technologies, Inc.
Suite 702
300 Atlantic Street
Stamford CT 06901
Re: U.S.$1 Million Term Loan Facility with Warrants
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Dear Mr. Whitwell:
We are pleased to participate as Lenders in the above-captioned loan facility.
The terms and conditions of this facility follow and, if Clean Diesel
Technologies, Inc. (the "Company") is in agreement with such terms and
conditions, kindly sign below where indicated and return one fully executed copy
of this letter to the undersigned.
1. The Loan. The loan shall be up to the amount of $1 million from all Lenders
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(the "Loan"). This facility shall terminate on November 14, 2001.
2. Borrowings. The Company may borrow and the Lenders shall lend up to the full
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amount of the Loan on seven (7) days notice from the Company to the Lenders to
the attention of the Lenders' representative(s) and at the addresses set out
below (a "Borrowing"). There shall be no more than five (5) Borrowings in
amounts each of not less than $200,000. Each Lender shall advance such portion
of a Borrowing as shall be in proportion to such Lender's participation in the
Loan set out below.
3. The Notes. Each Borrowing shall be evidenced by a form of Senior Promissory
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Note or Notes accruing interest at the rate of 10% per annum and with the terms
and conditions more particularly set out in Schedule A attached hereto (the
"Notes"). The sum of the principal amount of all Notes issued in a Borrowing
shall be equal to the amount of the Borrowing as set out in the Company's notice
to the Lenders. The Notes, regardless of issue date, shall be due and payable on
May 14, 2002. It is agreed that, as Senior Debt, the Notes shall rank ahead of
the Company's Subordinated Debt and, as debt, shall rank ahead of the Company's
preferred stock, par U.S.$0.05 per share and common stock, par U.S.$0.05 per
share (the "Common Stock").
4. The Warrants. The Company shall issue to the Lenders warrants with the terms
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and conditions including registration rights more particularly set out in
Schedule B attached hereto (the "Warrants"). The Warrants shall be for the
purchase for ten (10) years of up to 100,0000 shares of the Company's Common
Stock at the exercise price of U.S.$2.00 per share. The Company shall issue
Warrants to the Lenders pro-rata in such proportion as 100,000 bears to the Loan
and as each Lender's participation bears to the Loan, as follows: (i) Warrants
for 50,000 shares pro-rata on the signing of this letter by the Company and all
Lenders and (ii) Warrants up to the amount of 50,000 shares pro-rata on each
Borrowing.
5. Investment; Securities Law. The Lenders represent to the Lenders now and on
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each Borrowing that they are taking the Notes for investment with no intention
of resale or distribution. The Lenders covenant that they shall not sell,
assign, grant a security interest in, pledge, hypothecate or otherwise transfer
the Notes except pursuant to the applicable provisions of the Securities Act of
1933, as amended, of the United States or the securities laws of the several
states of the United Sates or applicable exemptions there from.
6. Law. This facility letter and the rights and obligations of the parties
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hereto shall be governed by the internal substantive laws of the State of
Delaware U.S.A with respect to contracts to be performed in that jurisdiction.
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7. Counterpart Copies. This facility letter has been signed in counterparts and
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each counterpart will be considered for all purposes as an original agreement
but all such counterparts shall in the aggregate constitute a single agreement.
8. Notice. Notice hereunder shall be in writing and, if electronically
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confirmed, may be given by facsimile transmission.
9. Signature and Authority. This facility letter has been signed and delivered
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as of the date first above written by the representatives of the parties who
represent that they are duly authorized to do so.
FUEL TECH, INC.
(Lender) Participation $250,000
By: /s/ S. M. Schecter
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Scott M. Schecter
Vice President, Treasurer
& CFO
Suite 703, 300 Atlantic Street
Stamford CT 06901 U.S.A
S G ASSOCIATES LIMITED
(Agent for several Lenders) Participation $450,000
By: /s/ D. R. Gray
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Derek R. Gray
Managing Director
45 Queen Anne Street
London W1G 9JF U.K.
TREVOR NEWMAN
(Agent for Lender) Participation $300,000
/s/ Trevor Newman
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CLEAN DIESEL TECHNOLOGIES, INC.
(Borrower)
By: /s/ D.W. Whitwell
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David W. Whitwell
Vice President, Treasurer
& CFO
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Senior Promissory Note Schedule A
$ December , 2000
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Clean Diesel Technologies, Inc., a Delaware corporation (the "Company")
hereby promises to pay to the order of___________________________________
(the "Lender") at its home office,________________, the principal sum of
______________ Thousand & no/100 Dollars ($______), in lawful money of the
United States on May 14, 2002 ("Maturity"). This Note shall bear interest on the
unpaid principal amount hereof at the rate of ten percent (10%) per annum on the
basis of a year of 365 days from the date hereof until Maturity or upon any
permitted prepayment.
The loan in part evidenced by this Note (the "Loan") is pursuant to one of
a series of Notes authorized by that certain Letter Agreement as of November
14, 2000 (the "Facility") all of which Notes shall rank parri passu with one
another regardless of date of issue and each such Note shall be Senior Debt of
the Company and the Company covenants that any monies borrowed by the Company
subsequent to the date of the Facility shall be Subordinated Debt and shall be
subordinated to and shall rank behind such Senior Debt. "Monies borrowed" shall
not include amounts owed for goods, services, taxes and other obligations
incurred in the ordinary course of business.
The Loan may be prepaid without penalty or premium in full at any time or
in part in multiples of principal of not less than $200,000 (pro-rata to the
Notes including this Note) from time to time with accrued interest on the
principal so prepaid at the home office of the Lender on seven (7) days notice.
In the event of non-payment of principal or interest hereunder when due,
the Company waives presentment, notice of protest and notice of dishonor, and,
in any enforcement proceeding, trial by jury. The Company further agrees to pay
all expenses (including reasonable legal expenses and attorney's fees) of every
kind of or incidental to the collection or enforcement of this Note.
Notwithstanding the stated maturity of this Note, it shall be immediately
due and payable, if the Company shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, or shall file any answer admitting or not contesting the
material allegations of a petition filed against the Company in any such
proceeding, or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of the Company.
Notice hereunder shall be given by a facsimile message in writing to the
home office of the Lender, electronically confirmed.
This Note and the obligations of the Company hereunder shall be governed by
the internal substantive laws of the State of Delaware.
CLEAN DIESEL TECHNOLOGIES, INC.
By: Attest:
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Name: David W. Whitwell Name: Charles W. Grinnell
Title: Vice President Title: Secretary
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OF THE UNITED
STATES (THE "ACT") OR QUALIFIED UNDER THE SECURITIES LAWS OF THE SEVERAL STATES
OF THE UNITED STATES ("LAWS")AND NO SALE, ASSIGNMENT, GRANT OF SECURITY
INTEREST, PLEDGE, HYPOTHECATION, OR OTHER TRANSFER OF THE NOTES MAY BE EFFECTED
WITHOUT REGISTRATION OR QUALIFICATION UNDER OR EXEMPTIONS FROM SUCH ACT OR LAWS.
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Schedule B
_______, 20__. ___________ Shares, exercisable subject to the
provisions set forth below.
Warrant for Purchase of Common Stock
of
Clean Diesel Technologies, Inc.
(a Delaware Corporation)
This Certifies that _________________________________________ (the "Holder")
of, for value received and subject to the provisions hereinafter set forth is
entitled to purchase from Clean Diesel Technologies, Inc. (the "Company"),
_________ shares of the Common Stock of the Company, par value $.05 per share
(the "Shares"), at a price of $2.00 per share (the "Exercise Price") on or
before November 14, 2010 (the "Expiration Date").
1. Exercise. This Warrant may be exercised from time to time by the Holder as to
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the whole or any lesser number of the Shares upon surrender of this Warrant at
the then executive office of the Company with a written notice signed by the
Holder expressing the Holder's intent to exercise the same together with payment
to the Company of the Exercise Price of the Shares to be purchased. If this
Warrant is exercised in respect of less than all of the Shares, the number of
Shares not purchased shall be endorsed hereon by the Company Secretary and this
Warrant as so endorsed shall be returned by the Company Secretary to the Holder.
Fractional Shares may not be purchased.
2. Series. This Warrant is one of a series of duly authorized Warrants issued
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pursuant to that certain Letter Agreement as of November 14, 2000 between the
Company and certain Lenders (the "Commitment") providing for the issuance to
such Lenders on the terms stated in the Commitment of Warrants evidencing the
right of the Lenders as Holders of Warrants to purchase shares of Common Stock
of the Company.
3. Title. This Warrant is issued subject to the condition that title to this
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Warrant and all rights hereunder shall be non-transferable and non-assignable
and that the Company and all persons dealing with this Warrant may treat the
Holder hereof as the registered and absolute owner hereof for all purposes, any
notice to the contrary notwithstanding; provided, however, that the Holder may,
with the prior written consent of the Company granted in the Company's absolute
discretion, assign this Warrant to any recognized charitable institution under
the laws of any jurisdiction, and, if the Holder is a natural person, to any
immediate family member, or, if the Holder is a corporate entity, to its
affiliates or shareholders ("Permitted Assignees").
4. Covenants. The above provisions are subject to the following:
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(a) This Warrant does not confer upon the Holder or the Holder's
Permitted Assignees any right whatsoever as a stockholder of the Company.
(b) This Warrant and the Shares have not been registered under the
Securities Act of 1933 (the "Act") or qualified under the securities laws of the
several states of the United States ("State Laws"). This Warrant and the Shares
have been purchased for investment and not with a view to distribution or
resale, and may not be assigned, sold or made subject to a security interest,
pledged, hypothecated, or otherwise transferred without an effective
registration statement for such Warrant or Shares under the Act and
qualification under State Laws or an opinion of counsel satisfactory to the
Company that such registration and qualification are not required. Any shares
issued upon the exercise of this Warrant shall bear the following legend:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") or
qualified under the securities laws of the several states of the
United States ("State Laws"). These shares have been acquired for
investment and not with a view to distribution or resale, and may
not be assigned, sold or made subject to a security interest,
pledged, hypothecated, or otherwise transferred without an
effective registration statement for such shares under the Act
and qualification under State Laws or an opinion of Counsel
satisfactory to the Issuer that such registration and
qualification are not required."
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(c) The Holder shall have an unlimited number of incidental
registration rights with respect to the Shares but only until the second
anniversary of the issue date of this Warrant, if such rights shall be required
for a sale by the Holder of the Shares because (i) no exemption is available to
the Holder under the Act with respect to a proposed sale or (ii) a sale under
Rule 144 of the Securities and Exchange Commission shall not enable the Holder
to effect a proposed sale. An incidental registration right shall mean a
registration under the Act of securities of the Company on its own behalf or on
behalf of sellers other than the Holder (other than for employee benefit plans,
employee stock options or the like) in which the Holder shall participate as a
selling stockholder. In any such incidental registration the Holder shall pay or
absorb costs which (i) may be voluntarily assumed, such as legal fees for the
Holder's own counsel or, (ii) are associated with the task of furnishing
information concerning selling stockholders required to be included in the
registration statement or (iii) relate to the fees, commissions or discounts of
underwriters ratably to the Shares. In exercising the incidental registration
rights hereunder the Holder agrees to be guided as to the timing and quantities
of Shares to be offered by the Holder by the independent advice of the managing
underwriter of the proposed offering.
(d) In the event that, at any time prior to the Expiration Date and
prior to the exercise thereof, the Company shall effect a subdivision or
consolidation of shares or other capital readjustments or other increase or
reduction of the number of shares of its common stock outstanding without
receiving compensation therefor in money, services or property, the number of
the Holder's or Permitted Assignees' Shares shall be proportionately adjusted
and the number of Shares with respect to which this Warrant may be exercised
shall (i) in the event of an increase in the number of outstanding shares of
common stock, be proportionately increased and the cash consideration payable
per Share shall be proportionately reduced; and (ii) in the event of a reduction
in the number of outstanding shares of common stock, be proportionately reduced
and the cash consideration payable per Share shall be proportionately increased.
5. Expiration. This Warrant shall be void unless exercised on or before
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the Expiration Date.
WITNESS the seal of the Company and the signature of its duly authorized
officers as of the date first written above.
CLEAN DIESEL TECHNOLOGIES, INC.
By:__________________________ Attest:__________________
Name: David W. Whitwell Name: Charles W. Grinnell
Title: Vice President Title: Secretary
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