WARRANT TO PURCHASE STOCK OF CATALYTIC SOLUTIONS, INC.
Exhibit 10.1
WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH THE SECURITIES COMMISSION OF ANY APPLICABLE
STATE UNDER SUCH STATE’S SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER SUCH SECURITIES ACT AND THE APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
SECURITIES OR BLUE SKY LAWS.
WARRANT TO PURCHASE STOCK
OF
CATALYTIC SOLUTIONS, INC.
OF
CATALYTIC SOLUTIONS, INC.
Warrant No.: 1
|
June 25, 2008 |
This Warrant certifies that, as a material inducement for Cycad Group, LLC, the original
Holder (as defined below) to enter into that certain Loan and Security Agreement (the “Loan
Agreement”), dated June 25, 2008, by and between Holder and Catalytic Solutions, Inc., a
Delaware corporation (the “Company”), the Holder is entitled, subject to the terms and
conditions of this Warrant, to purchase from the Company at any time prior to 5:00 p.m. Pacific
time on or before June 30, 2014 (the “Expiration Date”) 1,250,000 shares of Warrant Stock
(as defined below) at a price per share equal to the Exercise Price (as defined below), upon
surrender of this Warrant at the principal offices of the Company, together with a duly executed
subscription form substantially in the form attached hereto as Exhibit 1 and, if applicable,
payment of the full Exercise Price for the shares of Warrant Stock so purchased in lawful money of
the United States. The Exercise Price and the number and character of shares of Warrant Stock
purchasable under this Warrant are subject to adjustment as provided herein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.
1. Definitions. The following definitions shall apply for purposes of this Warrant:
1.1 “Common Stock Equivalents” means collectively any rights, options or warrants to
subscribe for or to purchase or otherwise acquire common stock or other securities or rights
convertible into or exercisable or exchangeable for shares of the Company’s common stock.
1.2 “Company” means the “Company” as defined above and includes any Person (other than
an individual) which shall succeed to or assume the obligations of the Company under and in
accordance this Warrant.
1.3 “Exercise Price” means the lower of (i) 60 ▇▇▇▇▇ (GBP) per share of Warrant Stock,
(ii) the price per share of any sale of Common Stock by the Company during the Adjustment Period,
and (iii) a price per share equal to the average of the last reported sale price
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of any 20 consecutive days during the Adjustment Period in which a sale was reported by the
London Stock Exchange plc (including the AIM) or other public exchange on which the Company’s
Common Stock is principally traded; provided, however, that in the event that there have not been
20 days in which a sale was reported during the Adjustment Period, then a price per share equal to
the average of the last reported price of such lesser number of days during the Adjustment Period.
For the avoidance of doubt, in the event that there is a trade on June 26, no trades on June 27,
and another trade on June 28, then this would consist of two “consecutive” days in which a sale was
reported for purposes of this provision. By way of example, if there are 5 days in the month of
June on which shares actually traded, 7 days in July on which shares actually traded, and 25 days
in August on which shares actually traded, then the 20 day average could be calculated using the 5
days from July and the first 15 days that trades actually occurred in August, or any combination of
20 “consecutive” days that represent the lowest average (last 2 days in July on which a trade
occurred and the next 18 days in August on which a trade occurred).
1.4 “Fair Market Value” means, on any given date, the Fair Market Value per share
shall be determined as follows: if the principal trading market for the Common Stock is a market
operated by the London Stock Exchange plc, (including the AIM) or other public exchange on which
the Company’s Common Stock is principally traded, the last reported sale price thereof on such date
or (if there were no trades on that date) the latest preceding date upon which a sale was reported.
If the items to be valued are securities not so traded or are other property, assets or evidences
of indebtedness, the “Fair Market Value” means, on any given day, the fair market value of the
securities or other property, assets or evidences of indebtedness as reasonably determined in good
faith by the Board of Directors of the Company; provided, that if the Holder advises the Company’s
Board of Directors in writing that the Holder disagrees with such determination, then the Company
and the Holder shall promptly agree upon a nationally recognized investment banking firm to
undertake such valuation. If the valuation of such investment banking firm is greater than that so
determined by the Company’s Board of Directors, then all fees and expenses of such investment
banking firm shall be paid by the Company. In all other circumstances, such fees and expenses
shall be paid by Holder.
1.5 “Holder” means any Person who shall at the time be the registered holder of this
Warrant.
1.6 “Person” means a natural person, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization or other entity, or a governmental entity or any department, agency or political
subdivision thereof.
1.7 “SEC” means the Securities and Exchange Commission and any successor thereto.
1.8 “Securities Act” means the Securities Exchange Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.9 “Termination Date” has the meaning set forth in Section 4.5.
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1.10 “Warrant” means this Warrant and any warrant(s) delivered in substitution or
exchange therefor, as provided herein.
1.11 “Warrant Stock” means the Company’s common stock, no par value per share. The
number and character of shares of Warrant Stock are subject to adjustment as provided herein and
the term “Warrant Stock” shall include stock and other securities, property and/or assets at any
time receivable or issuable upon exercise of this Warrant in accordance with its terms.
2. Exercise.
2.1 Method of Exercise. Subject to the terms and conditions of this Warrant, the
Holder may exercise this Warrant in whole or in part, at any time or from time to time, on any
business day beginning on the date of this Warrant through and including the Expiration Date by
surrendering this Warrant at the principal offices of the Company, with the subscription form
attached hereto duly executed by the Holder, and payment, as applicable, of an amount equal to the
product obtained by multiplying (i) the number of shares of Warrant Stock to be purchased by the
Holder by (ii) the Exercise Price as determined in accordance with the terms hereof.
2.2 Form of Payment. Payment of the aggregate Exercise Price, as required, may be
made, as determined in the sole discretion of Holder, by (i) a check payable to the Company’s
order, (ii) wire transfer of funds to the Company, (iii) transfer of the Company’s capital stock
held by the Holder to the Company (valued at the then Fair Market Value of such stock), (iv)
cancellation of undisputed indebtedness of the Company to Holder (if any) or (v) any combination of
the foregoing.
2.3 Partial Exercise. Upon a partial exercise of this Warrant, this Warrant shall be
surrendered by the Holder and replaced with a new Warrant of like tenor in which the maximum number
of shares of Warrant Stock purchasable by the Holder shall be the maximum number of shares of
Warrant Stock purchasable under the original Warrant minus the amount of shares of Warrant Stock
purchased in such partial exercise.
2.4 No Fractional Shares. No fractional shares may be issued upon any exercise of
this Warrant, and any fractions shall be rounded down to the nearest whole number of shares to
determine the number of shares to be issued upon such exercise. If upon any exercise of this
Warrant a fraction of a share would otherwise result but for the prior sentence, the Company will
pay the cash value of any such fractional share, calculated on the basis of the Fair Market Value
of a share.
2.5 Net Exercise Election. The Holder may elect to convert all or a portion of this
Warrant, without the payment by the Holder of the Exercise Price or of any other consideration, by
the surrender of this Warrant or such portion to the Company, with the net exercise election
selected in the subscription form attached hereto duly executed by the Holder, into up to the
number of shares of Warrant Stock that is obtained under the following formula:
X = Y (A-B)
A
A
3
where
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X | = | the number of shares of Warrant Stock to be issued to the Holder pursuant to this Section 2.5. | |||
| Y | = | the number of shares of Warrant Stock that could be acquired upon a cash exercise of the portion of this Warrant being surrendered at the time the net exercise election is made pursuant to this Section 2.5. | ||||
| A | = | the Fair Market Value of one share of Warrant Stock at the time the net exercise election is made pursuant to this Section 2.5. | ||||
| B | = | the Exercise Price at the time the net exercise election is made pursuant to this Section 2.5. |
The Company will promptly respond in writing to an inquiry by the Holder as to the then
current Fair Market Value of one share of Warrant Stock.
3. Issuance of Stock. This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as provided above, and the
Person entitled to receive the shares of Warrant Stock issuable upon such exercise shall be treated
for all purposes as the holder of record of such shares as of the close of business on such date.
As soon as practicable on or after such date, but in no event less than three business days
thereafter, the Company shall issue and deliver to the Person or Persons entitled to receive the
same a certificate or certificates for the number of whole shares of Warrant Stock issuable upon
such exercise.
4. Adjustment Provisions. The number and character of the Warrant Stock issuable upon
exercise of this Warrant (or any other securities, property or assets at the time receivable or
issuable upon exercise of this Warrant or the exercise, exchange or conversion of any security
receivable or issuable upon exercise of this Warrant) and the Exercise Price therefor, are subject
to adjustment upon the occurrence of the following events during the period beginning on the date
this Warrant is issued and ending on the date this Warrant is exercised:
4.1 Adjustment for Stock Splits. The Exercise Price, and the number of shares of
Warrant Stock shall each be proportionally adjusted to reflect any stock split, or other
subdivision, reverse stock split, combination of shares, or other similar event affecting the
number of outstanding shares of Warrant Stock (or such other securities) immediately prior to such
event.
4.2 Adjustment for Dividends and Distributions.
(a) If the Company shall make, issue, declare, pay, distribute or set aside, or shall fix a
record date for the determination of eligible holders entitled to receive, a dividend or other
distribution payable with respect to the common stock or any Common Stock Equivalents that is
payable in (i) common stock or Common Stock Equivalents (other than issuances with respect to which
adjustment is made under Section 4.1), (ii) property or assets or (iii) evidences of its
indebtedness, then, and in each such case; (A) the Exercise Price shall be adjusted so that the
same shall equal the price determined by multiplying the Exercise Price in effect immediately prior
to the record date mentioned above by (if there is no such date, then the date immediately
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prior to the date the Company makes, issues, pays, distributes or sets aside such dividend or
distribution) a fraction, the numerator of which shall be equal to the sum of (x) the total number
of shares of common stock then outstanding multiplied by the Fair Market Value per share of the
common stock on the record date mentioned below, minus (y) the Fair Market Value as of such record
date of said shares of common stock or Common Stock Equivalents, properties, assets or evidences of
indebtedness so made, issued, paid, distributed, declared or set aside, plus (z) in the case of the
issuance or distribution of Common Stock Equivalents, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion, exercise or exchange of such
Common Stock Equivalents, and the denominator of which shall be the total number of shares of
common stock then outstanding multiplied by the Fair Market Value per share of common stock on the
record date mentioned above (but in no event shall such fraction be greater than 1.0) and (B) the
number of shares of Warrant Stock shall be adjusted to equal the number obtained by dividing (x)
the Exercise Price in effect immediately prior to such dividend or distribution multiplied by the
number of shares of Warrant Stock immediately prior to such dividend or distribution by (y) the
Exercise Price resulting from the adjustment made pursuant to clause (A) above. Such adjustments
shall be made whenever any such dividend or distribution is (or if there is no such record date,
immediately prior to the date the Company makes, issues, pays, distributes or sets aside such
dividend or distribution) and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution (or if there is no
such record date, immediately prior to the date the Company makes, issues, pays, distributes or
sets aside such dividend or distribution).
(b) In the event of a distribution by the Company of stock or other securities of a subsidiary
or securities convertible or exchangeable into or exercisable for such stock (other than
adjustments made under Section 4.2(a) or Section 4.3), then in lieu of an
adjustment in the Exercise Price, the Holder of this Warrant, upon the exercise thereof at any time
after such distribution, shall be entitled to receive from the Company, such subsidiary or both,
the stock or other securities to which such Holder would have been entitled if such Holder had
exercised such Warrant immediately prior to the record date set for such dividend or distribution,
all subject to further adjustment as provided in this Warrant (or if there is no such record date,
immediately prior to the date the Company makes, issues, pays, distributes or sets aside such
dividend or distribution).
4.3 Adjustment for Reorganization, Consolidation or Merger. In case of any
reorganization, reclassification, recapitalization or similar transaction involving the stock of
the Company (or of any other entity, the stock or other securities of which are at the time
receivable upon the exercise of this Warrant), after the date of this Warrant, or in case, after
such date, the Company (or any such corporation) shall consolidate with or merge into another
corporation, convey all or substantially all of its assets or stock to another entity or undertake
a similar transaction (a “Corporate Transaction”), then, and in each such case, the Holder,
upon the exercise of this Warrant at any time after the record date for the holders of stock
entitled to participate in such Corporate Transaction (or if there is no such record date,
immediately after the consummation of the Corporate Transaction) shall be entitled to receive, in
lieu of the stock or other securities, property, assets, evidences of indebtedness, or other
rights, warrants or options receivable upon the exercise of this Warrant prior to the consummation
of such Corporate Transaction, the stock or other securities, property, assets, evidence of
indebtedness, or other rights, warrants or options to which the Holder would have been entitled
upon the
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consummation of such Corporate Transaction if the Holder had exercised this Warrant
immediately prior thereto and assuming that any adjustment under this Section 4 that would
otherwise be made in connection with the consummation of such Corporate Transaction had been made,
all subject to further adjustment as provided in this Warrant, as applicable, and the successor or
purchasing entity in such Corporate Transaction, (if other than the Company) shall duly execute and
deliver to the Holder a supplement hereto acknowledging such entity’s obligations under this
Warrant; and in each such case, the terms of this Warrant shall be applicable to the shares of
stock or other securities, property, assets, evidences of indebtedness, or other rights, warrants
or options receivable upon the exercise of this Warrant after the consummation of such Corporate
Transaction.
4.4 Intentionally Omitted.
4.5 Intentionally Omitted.
4.6 Notice of Adjustments. The Company shall promptly give written notice of each
adjustment or readjustment of the Exercise Price, the Exercise Quantity or the Warrant Stock or
other securities issuable upon exercise of this Warrant. The notice shall describe the adjustment
or readjustment and show in reasonable detail the facts on which the adjustment or readjustment is
based.
4.7 No Change Necessary. The form of this Warrant need not be changed because of any
adjustment in or change to the Exercise Price, the number of shares of Warrant Stock or in the
Warrant Stock issuable upon its exercise whether pursuant to this Section 4, Section
1.4 or otherwise.
4.8 Reservation of Stock. The Company shall at all times reserve for issuance that
number of shares of Warrant Stock then issuable hereunder. If at any time the number of shares of
Warrant Stock or other securities issuable upon exercise of this Warrant shall not be sufficient to
effect the exercise of this Warrant, the Company will take such corporate action as may be
necessary to reserve such Warrant Stock, including, without limitation, if necessary increasing its
authorized but unissued shares of Warrant Stock or other securities issuable upon exercise of this
Warrant as shall be sufficient for such purpose.
4.9 Statement of Shares. Upon the receipt by the Company of Holder’s request, the
Company shall as promptly as reasonably practicable prepare and deliver to the Holder a statement
setting forth the Company’s calculation of the number of shares of Warrant Stock issuable upon
exercise of this Warrant.
4.10 Reissue of Warrants. Holder may, at its sole option, surrender this Warrant to
the Company and require that the Company execute and deliver new Warrants containing identical
terms and provisions to Holder and to its participants in amounts that reflect their respective
interests hereunder, as provided to the Company by the Holder.
5. Required Notices. The Company will give the Holder notice at least twenty (20)
days prior to the earlier of the effective date of or any applicable record date with respect to
any Corporate Transaction, or other record date for any other transaction or action by the Company
which could trigger any adjustment under Section 4 herein or that could result in the
conversion
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or exchange of all outstanding shares of Warrant Stock into or for cash, any other security or
other property or assets.
6. Registration Rights. The Holder shall have, with respect to the Warrant Stock,
registration rights set forth below and such rights shall be as favorable as those granted to
holders of any class of the Company’s equity securities from time to time. The rights granted to
the Holder hereunder (and for the issuance of security into which the Warrant Stock of other
securities into which the Warrant Stock or other security may be exercisable, exchangeable or
convertible) shall be transferable with this Warrant and/or the Warrant Stock.
6.1 Definitions. For purposes of this Section 6:
(a) Registration. The terms “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term “Registrable Securities” means: (x) the Warrant
Stock and any securities of the Company issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of the Warrant Stock. The term “Registrable Securities” shall
include the securities, if any, that the Holder would be entitled to receive in exchange for
Registrable Securities in any merger, consolidation, reorganization or similar transaction.
(c) Registrable Securities Then Outstanding. The number of shares of “Registrable
Securities then outstanding” shall mean the number of Warrant Stock and other securities that are
Registrable Securities and are then issued and outstanding.
(d) Form S-3. The term “Form S-3” means such form under the Securities Act as is in
effect on the date hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial information by reference
to other documents filed by the Company with the SEC after the effective date of such registration;
6.2 Piggyback Registrations. At any time that the Holder owns Registrable Securities,
the Company shall notify the Holder in writing at least twenty (20) days prior to filing any
registration statement under the Securities Act for purposes of effecting a public offering of
securities of the Company (including registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements on Form S-8 relating to any
employee benefit plan or on Form S-4 relating to any merger or other corporate reorganization) and
will afford the Holder an opportunity to include in such registration statement all or any part of
the Registrable Securities then held by the Holder. If the Holder desires to include in any such
registration statement all or any part of the Registrable Securities the Holder shall, within ten
(10) business days after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the Company of the number of Registrable
Securities the Holder wishes to include in such registration statement. If the Holder decides not
to include all of its Registrable Securities in any registration statement thereafter filed by the
Company, the Holder shall nevertheless continue to have the right to include any
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Registrable Securities in any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms and conditions set
forth herein.
(a) Underwriting. If a registration statement under which the Company gives notice
under this Section 6.2 is for an underwritten offering, then the Company shall so advise
the Holder. In such event, the right of the Registrable Securities to be included in such a
registration shall be conditioned upon such Holder’s participation in such underwriting and the
inclusion of the Holder’s Registrable Securities in the underwriting to the extent provided herein.
The Holder proposes to distribute the Registrable Securities through such underwriting the Holder
shall enter into an underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting; provided, however, that it shall not be considered
customary to require any of the Holder to provide representations and warranties regarding the
Company or indemnification of the underwriters for material misstatements or omissions regarding
the Company in the registration statement, prospectus or prospectus supplement for such offering.
(b) Expenses. All expenses incurred in connection with a registration pursuant to
this Section 6.2 (excluding underwriters’ discounts and commissions relating to shares sold
by the Holder, which shall be borne by the Holder), including, without limitation, all federal,
state and “blue sky” registration, filing and qualification fees, printers’ and accounting fees,
fees and disbursements of one counsel for the Holder, and fees and disbursements of counsel for the
Company, shall be borne by the Company.
6.3 Registration on Form S-3. The Company shall use its commercially reasonable
efforts to qualify for registration on Form S-3 or any comparable or successor form or forms.
After the Company has qualified for the use of Form S-3, in addition to the rights contained in the
foregoing provisions of Section 6.2, the Holders of Registrable Securities shall have the
right to request registrations on Form S-3 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended methods of
disposition of such shares by such Holder or Holders), provided, however, that the Company shall
not be obligated to effect any such registration (i) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) on Form S-3 at an aggregate price to the
public of less than $100,000, or (ii) if, in a given twelve (12) month period, the Company has
effected two (2) such registrations.
6.4 Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably
possible:
(a) Registration Statement. Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and shall cause such registration statement to become
effective.
(b) Amendments and Supplements. Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
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connection with such registration statement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Prospectuses. Furnish to the Holder such number of copies of a prospectus,
including, without limitation, a preliminary prospectus and any applicable prospectus supplement,
in conformity with the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable Securities owned by
the Holder that are included in such registration in accordance with the plan of distribution
described in the related prospectus or prospectus supplement.
(d) Effectiveness; Qualification. The Company shall avoid the issuance of, or if
issued, obtain the prompt withdrawal of, (i) any order suspending the effectiveness or use of any
registration statement covering Registrable Securities or (ii) any suspension of the qualification
or registration for sale (or exemption from qualification or registration for sale) of any of the
Registrable Securities as soon as practicable.
(e) Blue Sky. Register and qualify the securities covered by such registration
statement as required under such other securities or blue sky laws of such jurisdictions as shall
be reasonably requested by the Holder, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
(f) Underwriting. In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, which agreement shall be in usual and
customary form (including, without limitation, customary indemnification of the underwriters by the
Company), with the managing underwriter(s) of such offering. The Holder shall also enter into and
perform its obligations under such an agreement.
(g) Notification. Notify the Holder with respect to the Registrable Securities
covered by such registration statement at any time when a prospectus relating thereto is required
to be delivered under the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances then existing, in
which event the Holder shall not use such prospectus in connection with any offer or sale of the
Registrable Securities until such prospectus has been appropriately amended (which the Company
shall do promptly under the circumstances and deliver new prospectuses to the Holder promptly
thereafter).
(h) Opinion and Comfort Letter. If such securities are being sold through
underwriters, furnish, at the request of the Holder, on the date that the Registrable Securities
are delivered to the underwriters for sale, (1) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering and in the same form and
substance as that provided to the underwriters of such offering, addressed to the underwriters and
to the Holder requesting registration of Registrable Securities and (2) a “comfort” letter dated as
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of such date, from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering and in the same form and substance as that provided to the
underwriters of such offering, addressed to the underwriters and to the Holder requesting
registration of Registrable Securities.
(i) Company’s Right to Delay If the Company provides to the Holder a certified
resolution duly adopted by the Company’s Board of Directors stating that, in it reasonable business
judgment, it would be materially disadvantageous to the Company to disclose certain information
because such disclosure would materially interfere with or otherwise adversely affect in any
material respect any existing or reasonably likely acquisition, financing, corporate reorganization
or other material transaction or development (a “Disadvantageous Condition”), then the
Company may refrain from maintaining the current prospectus contained in the applicable
registration statement (and suspend sales of Registrable Securities) until such Disadvantageous
Condition no longer exists. Any notice of a Disadvantageous Condition shall set forth in general
terms the reason for such determination. The Company shall promptly notify the Holder when such
Disadvantageous Condition no longer exists. The Company may use its delay right under this
Section 6.4(i) only once in any twelve month period for a period of time not to exceed
sixty (60) days. Notwithstanding the foregoing, the Company can only delay maintaining current of
such prospectus (and such suspension of sales of Registrable Securities) only if the Company shall
concurrently prohibit sales by other security holders under all other registration statements then
outstanding and by all of the members of the Company’s Board of Directors, all of the officers of
the Company and all of the stockholders of the Company that own five percent (5%) or more
(including options, warrants and other exchangeable, exercisable or convertible securities
ultimately exchangeable or exercisable for or convertible into common stock of the Company) of the
Company’s common stock.
6.5 Indemnification. In the event any Registrable Securities are included in a
registration statement under Section 6.2 or 6.3:
(a) By the Company. To the extent permitted by law, the Company will indemnify and
hold harmless the Holder, the partners, officers, shareholders, employees, representatives and
directors of the Holder, any underwriter (as determined under the Securities Act) for the Holder
and each person, if any, who controls the Holder or such underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
against any losses, claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state securities or blue sky
laws, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or violations (collectively a
“Violation”):
(x) any untrue statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus contained therein,
or any amendments or supplements thereto;
(y) 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; or
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(z) any violation or alleged violation by the Company of the Securities Act, the Exchange
Act, any federal or state securities or blue sky law or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any federal or state securities or blue sky law in
connection with the offering covered by such registration statement;
and the Company will reimburse the Holder, and each partner, officer, shareholder, employee,
representative, director, underwriter and controlling person of the Holder for any legal or other
expenses reasonably incurred by them, as incurred, in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement
contained in this paragraph shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by the Holder, or any
partner, officer, shareholder, employee, representative, director, underwriter or controlling
person of the Holder.
(b) By the Holder. To the extent permitted by law, the Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company within the meaning of the Securities Act,
and any underwriter and any other person or entity, selling securities under such registration
statement or such person’s or entity’s partners, officers, shareholders, employees, representatives
and directors and any person or entity who controls such person or entity within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such officer or director, controlling person, underwriter or
other such person or entity, partner, officer, shareholder, employee, representative, director or
controlling person of such person or entity may become subject under the Securities Act, the
Exchange Act or other federal or state securities or blue sky law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based upon any
violation, in each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by the Holder expressly for use
in connection with such registration; and the Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such officer or director, controlling person, underwriter
or other person or entity, partner, officer, shareholder, employee, representative, director or
controlling person of such person or entity in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained
in this paragraph shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld or delayed; and provided further, that the total amounts payable
in indemnity by the Holder under this subsection, subsection (d) of this Section 6.5 or
otherwise in respect of any and all Violations shall not exceed in the aggregate the net proceeds
received by the Holder in the registered offering out of which such Violations arise.
(c) Notice. Promptly after receipt by an indemnified party of notice of the
commencement of any action (including any governmental action), such indemnified party will,
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if a claim in respect thereof is to be made against any indemnifying party under this section,
deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying
party, to the extent that representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of interests between
such indemnified party and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of liability except to
the extent the indemnifying party is prejudiced as a result thereof.
(d) Contribution. In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (1) the Holder exercising rights
under this Agreement, or any controlling person of the Holder, makes a claim for indemnification
pursuant to this section, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in full in such case
notwithstanding the fact that this section provides for indemnification in such case, or (2)
contribution under the Securities Act may be required on the part of the Holder or any such
controlling person in circumstances for which indemnification is provided under this section; then,
and in each such case, the Company and the Holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from others) in such
proportion so that the Holder is responsible for the portion represented by the percentage that the
public offering price of the Registrable Securities offered by and sold by the Holder under the
registration statement bears to the public offering price of all securities offered by and sold
under such registration statement, and the Company is responsible for the remaining portion. If,
however, the allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only the relative benefits
received (as described in the previous sentence of this subsection (d)) but also the relative fault
of the Company on the one hand and the Holder on the other in connection with the applicable
Violation or action taken or not taken, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Holder 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 on the one hand and the Holder on the other hand. The relative
fault shall be determined by reference to, among other things, whether the applicable Violation
relates to information supplied by or action taken or not taken by the Company on the one hand or
the Holder on the other and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation or to take or not to take such action. The
Company and the Holder agree that it would not be just and equitable if contribution pursuant to
this subsection (d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in this subsection
(d). In any such case: (x) the Holder will not be required to contribute any amount in excess of
the net proceeds received by the Holder from the public offering price of all the Registrable
Securities offered and sold by the Holder pursuant to such
12
registration statement; and (y) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
6.6 Survival. The obligations of the Company and the Holder under this Section
6.6 shall survive until the expiration of any statutes of limitation including extensions
thereof.
7. Certain Company Representations, Warranties and Covenants.
7.1 The Company represents, warrants and covenants that:
(a) it will at all times reserve and set apart and have, free from preemptive or stock
purchase rights, a sufficient number of shares of authorized but unissued common stock and the
Warrant Stock, if applicable, to provide for the issuance of the Warrant Stock upon the exercise of
this Warrant (and for the issuance of any security into which the Warrant Stock or other securities
into which the Warrant Stock or other security may be exercisable, exchangeable or convertible) and
will take any and all actions, including without limitation, amending its Certificate of
Incorporation, necessary to comply herewith;
(b) before taking any action that would cause an adjustment reducing the Exercise Price below
the then par value of the shares issuable upon exercise of this Warrant, the Company will take any
corporate action that may be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of such Warrant Stock or common stock at such adjusted Exercise
Price;
(c) the issuance of this Warrant shall constitute full authority to the Company’s officers who
are charged with the duty of executing stock certificates to execute and issue the necessary
certificates for the shares of Warrant Stock issuable upon exercise of this Warrant;
(d) the Company has all requisite legal and corporate power to execute and deliver this
Warrant, to sell and issue the Warrant Stock issuable upon exercise of this Warrant and to carry
out and perform its obligations under the terms of this Warrant;
(e) all corporate action on the part of the Company, its directors and stockholders necessary
for the authorization, execution, delivery and performance of this Warrant by the Company, the
authorization, sale, issuance and delivery of the Warrant Stock issuable upon exercise of this
Warrant, and the performance of the Company’s obligations hereunder has been taken; and
(f) the Warrant Stock issuable upon exercise of this Warrant, when issued in compliance with
the provisions of this Warrant, will be legally and validly issued, fully paid and nonassessable,
and free of any preemptive or stock purchase rights, liens, claims or any other encumbrances
whatsoever, and will be issued in compliance with all applicable federal and state securities and
blue sky laws;
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7.2 So long as the Holder holds this Warrant and/or any of the Warrant Stock, the Company
shall deliver to the Holder: (a) promptly after mailing, copies of all notices or other written
communications to the stockholders of the Company, (b) at such time, if any, as the Company is no
longer timely making filings with the SEC that are available on the World Wide Web, within ninety
(90) days after the end of each fiscal year of the Company, full year end financial statement
audited by a certified independent accounting firm reasonably acceptable to Holder, (c) at such
time, if any, as the Company is no longer timely making filings with the SEC that are available on
the World Wide Web, within forty-five (45) days after the end of each fiscal quarter, quarterly,
full quarterly financial statements and (d) within thirty (30) days after the end of each month,
Company-prepared full monthly financial statements.
7.3 No Stockholder Rights. This Warrant, by itself, as distinguished from any Warrant
Stock acquired hereunder, shall not entitle the Holder to any rights of a stockholder of the
Company, including, without limitation, the right to vote or consent as a stockholder of the
Company; provided that nothing herein shall impair any rights granted to the Holder under the Loan
Agreement or in this Agreement (including, without limitation, in Section 7.2 hereof).
8. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or Bylaws, or through reorganization, recapitalization, reclassification,
consolidation, merger, dissolution, issue or sale of securities, conveyance of assets or similar
transaction or any other voluntary action, willfully avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all of the terms hereof and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be necessary or
appropriate in order that the Company may duly and validly issue fully paid and nonassessable
shares of Warrant Stock upon the exercise of this Warrant. Further, the Company will take all
actions to apply the protections provided to Holder under Section 4 to the Warrant Stock
which is not common stock of the Company or Common Stock Equivalents to prevent the dilution of
Holder’s ownership interest or impairment of the Holder’s rights or interest hereunder. The
Company shall not effect any reorganization, recapitalization, reclassification, consolidation,
merger, dissolution, issue or sale of securities, conveyance of assets or similar transactions
unless prior to or simultaneously with the consummation thereof the survivor or successor entity
(if other than the Company) resulting from such transaction or the entity purchasing such assets or
receiving such conveyance or otherwise succeeding to the rights and/or assets of the Company shall
assume by written instrument satisfactory to the Holder executed and sent to such Holder, the
obligation to deliver to such Holder such shares of stock, securities, assets (including cash),
property, evidences of indebtedness or other rights, warrants or options as such Holder may be
entitled to receive hereunder, and containing the express assumption by such successor entity of
the due and punctual performance and observance of every provision of this Warrant to be performed
and observed by the Company and of all liabilities and obligations of the Company hereunder.
9. Attorneys’ Fees. In the event any party engages the services of any attorneys for
the purpose of enforcing this Warrant, or any provision thereof, the prevailing party shall be
entitled to recover its reasonable expenses and costs in enforcing this Warrant, including
reasonable attorneys’ fees and expenses.
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10. Governing Law. This Warrant shall be governed by and construed under the internal
laws of the State of California, without reference to principles of conflict of laws thereof.
11. Headings. The headings and captions used in this Warrant are used for convenience
only and are not to be considered in construing or interpreting this Warrant. All references in
this Warrant to sections and exhibits shall, unless otherwise provided, refer to sections hereof
and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.
12. Notices. Any notice required or permitted under this Warrant shall be given in
accordance with the terms of Section 11.2 of the Loan Agreement and such terms are herein
incorporated by reference.
13. Amendment; Waiver. Any term of this Warrant may be amended, and the observance of
any term of this Warrant may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and the Holder. Any
amendment or waiver effected in accordance with this Section 13 shall be binding upon the
Holder, each future holder of such securities, the Company and the Company’s successor and
permitted assigns.
14. Severability. In case any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be
valid, legal and enforceable but so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this Warrant, and in either case
the validity, legality and enforceability of the remaining provisions of this Warrant and the
future application of such provision shall not in any way be affected or impaired thereby.
15. Successors and Assigns. This Warrant may not be assigned or otherwise transferred
by the Company without the written consent of the Holder. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company and the Holder hereof and their
respective successors and permitted assigns.
15
IN WITNESS WHEREOF, the parties have executed this Warrant as of the date first above written.
| CATALYTIC SOLUTIONS, INC. |
||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. Call | |||
| Name: | ▇▇▇▇▇▇▇ ▇. Call | |||
| Title: | Chief Executive | |||
Facsimile:
Attention:
Attention:
| CYCAD GROUP, LLC |
||||
| By: | /s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Name: | K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | President and Managing Director | |||
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention: K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
[Signature Page to Warrant to Purchase Stock]
16
Exhibit 1
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
(To be signed only upon exercise of Warrant)
To: Catalytic Solutions, Inc.
(1) o The undersigned Holder hereby elects to purchase
shares of Warrant Stock, pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price for such shares in full.
- OR -
o Net Exercise Election. The undersigned Holder elects to convert the Warrant
into ___________ shares of Warrant Stock by net exercise election pursuant to Section 2.5 of the
Warrant.
[CHECK PARAGRAPH ABOVE THAT APPLIES]
(2) Please issue a certificate representing _____________________ shares of Warrant Stock in the
name of specified below:
AMENDMENT NO. 1 TO WARRANT
This Amendment No. 1 (this “Amendment”) is dated and effective as of August 31, 2009 and
amends that certain Warrant to Purchase Stock of Catalytic Solutions, Inc. (the “Warrant”)
originally issued June 25, 2008 by Catalytic Solutions, Inc., a California corporation (the
“Company”) to Cycad Group LLC, a California limited liability company (“Cycad”).
R E C I T A L S
A. In connection with the Company and Cycad entering into a Loan and Security Agreement
dated as of June 25, 2008 (the “Loan Agreement”) and in partial consideration for the advances made
to the Company by Cycad thereunder, the Company issued to Cycad the Warrant exercisable for
1,250,000 shares of Warrant Stock (as defined in the Warrant);
B. In partial consideration for Cycad’s willingness to temporarily forgo exercising its
rights and remedies under the Loan Agreement in connection with the Company’s default thereunder,
and in order to clarify certain terms and conditions governing the Warrant, the Company has agreed
to amend the Warrant in the manner set forth below.
C. This Amendment, duly executed by the Company, shall be incorporated into the Warrant as
of the date first set forth above.
A M E N D M E N T S
The Warrant is hereby amended as follows:
1. The definition of “Expiration Date” set forth in the preamble to the Warrant shall
be amended to mean the date which is the fifth (5th) anniversary of the last day of the
Adjustment Period (as defined in the Loan Agreement).
2. The definition of “Exercise Price” set forth in Section 1.3 of the Warrant is
hereby amended and replaced in its entirety by the following:
“1.3 “Exercise Price” means the lower of (i) 60 ▇▇▇▇▇ (GBP) per share of
Warrant Stock, (ii) the price per share of any sale of Common Stock Equivalents by the
Company during the Adjustment Period, and (iii) a price per share equal to the average of
daily average reported sale prices (taking into account, for purposes of a one-day
average, sales of any line of Company Common Stock) of any five (5) consecutive days
during the Adjustment Period in which a sale was reported by the London Stock Exchange plc
(including the AIM) or other public exchange on which the Company’s Common Stock is
principally traded; provided, however, that in the event that there have not been five (5)
days in which a sale was reported during the Adjustment Period, then a price per share
equal to the average of the daily average reported sale prices of such lesser number of
days during the Adjustment Period. For avoidance of doubt, in the event that there is a
trade on June 26, no trades on June 27, and another trade on June 28, then this would
consist of two “consecutive” days in which a sale was reported for purposes of this
provision. By way of example, if there are five (5) days in the month of June on which
shares actually traded, 7 days in July on which shares actually traded, and 25 days in
August in which shares actually traded, then the five (5) day average could be calculated
using the last 3 days that trades actually occurred in July and the first 2 days that
trades actually occurred in August, or any combination of five (5) “consecutive” days that represent the lowest average (last 2 days in June on which a trade occurred and
the next 3 days in July on which a trade occurred).”
3. Except as herein amended, the Warrant shall in all other respects remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed and delivered by its
duly authorized officer as of the date first set forth above.
| Catalytic Solutions, Inc. |
||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | CFO | |||
Acknowledged and Agreed:
Cycad Group, LLC
By: /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President and Managing Director
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President and Managing Director
2