These Securities Have
Not Been Registered For Offer or Sale Under The Securities Act Of
1933, As Amended, Or Any State securities laws. They May
Not Be Sold Or Offered For Sale Except Pursuant To An Effective
Registration Statement Under Said Act And Any Applicable State
Securities Law Or An Applicable Exemption From Such Registration
Requirements.
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT (this “ Agreement ”) is
dated as of October 2, 2009, by and between Clean Power
Technologies, Inc., a Nevada corporation (the “
Company ”), and The Quercus Trust, a California Trust
(the “ Purchaser ” and together with the
Company, the “Parties”).
W I T N E S S E T
H:
Whereas,
the Company and the Purchaser
entered into that certain Securities Purchase Agreement on July 10,
2008 providing for the purchase and sale of the Company’s 8%
Senior Secured Convertible Promissory Note in the principal fare
amount of $2,000,000 (“Debenture”) Class A Warrants and
Class B Warrants (the “July 2008 Offering”);
Whereas,
subsequent to the July 2008
Offering, the Company and the Purchaser entered into that certain
Stock Purchase Agreement on February 10, 2009 (the “February
2009 Offering”) providing for the purchase and sale of the
Company’s Common Stock and warrants;
Whereas,
the Parties had agreed at the time
of the February 2009 Offering that the sale and purchase of the
Securities shall take place in two tranches as follows: (i) an
initial purchase of such shares of the Company’s Common Stock
in the aggregate amount of $1,000,000 at a price of $0.45 per
share; and (ii) an additional secondary purchase, subject to
certain conditions, of such shares of the Company’s Common
Stock in the aggregate amount of $2,000,000 at a
purchase price of $0.45 per share (the “Secondary
Purchase”);
Whereas
,
the Parties have agreed that the
terms of the Secondary Purchase be modified restated in their
entirety to consist of the following: (i) an initial
purchase and sale of 2,500,000 shares of the Company’s Common
Stock at a purchase price of $0.20 per share, and warrants to
purchase an aggregate of 3,125,000 shares of the Company’s
common stock at exercise prices of (x) $0.27 per share for the
initial 1,875,000 warrants; and (y) $0.38 per share for the
remaining 1,250,000 warrants, to take place upon the execution of
this Agreement (“Initial Closing”); (ii) the purchase
and sale of an additional 1,111,111 shares of the Company’s
Common Stock, at the same terms provided in the February 2009
Offering, to take place on or about October 12, 2009 upon
confirmation of the attainment of the Second Closing Milestone, as
set forth in the February 2009 Offering (“Milestone
Closing”); and thereafter, (iii) the purchase and sale of an
additional 2,469,136 shares of the Company’s Common Stock at
a purchase price of $0.405 per share, plus the issuance of
warrants to purchase an aggregate of 3,086,420 shares of the
Company’s common stock at exercise prices of (x) $0.54 per
share for the initial 1,857,852 warrants; and (y) $0.77 per share
for the remaining 1,234,568 warrants, to take place immediately
upon the appointment of a mutually acceptable 5 th member
of the Company’s Board of Directors (“Final
Closing”); and
Whereas
,
pursuant to the terms hereof, the
Purchaser will have registration rights with respect to the Common
Stock issued herein and such Common Stock issuable upon the
exercise of the Warrants pursuant to the terms of that certain
Registration Rights Agreement to be entered into between the
Company and the Purchaser substantially in the form of Exhibit
A hereto (“ Registration Rights Agreement ”
and, together with the Agreement and the Warrants (the “
Transaction Documents ”)
Now,
Therefore , in consideration of the foregoing premises and
the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Article I.
Purchase and Sale of Shares
and Warrants
Section 1.1 Issuance of
Common Stock . Upon the following terms and
conditions, the Company shall issue and sell to the Purchaser, and
the Purchaser shall purchase from the Company, 2,500,000 shares of
the Company’s Common Stock (the
“Shares”).
Section 1.2 Purchase
Price . The purchase price for the Shares to
be acquired by the Purchaser shall be $500,000 (the “
Purchase Price ”).
Section 1.3 The Closing
. The purchase and sale of the Shares shall take place
on or about the date hereof or such other date as the Purchaser and
the Company may agree upon (the “ Closing Date
”); provided that the Closing Date shall be no later
than October 31, 2009. Within five (5) business days of the Closing
Date, the Company shall deliver to the Purchaser one or more
certificates representing the Shares registered in the name of the
Purchaser or its nominee. On or prior to the Closing
Date, the Purchaser shall deliver the Purchase Price by certified
check or by wire transfer of immediately available
funds:
Bank: CIBC
address: 5609-4th street N.W.,
Calgary, Alberta T2K
1B3
Tel: 403-974-6320
Swift: Code: CIBCCATT
Account #: 02-11516
Transit #: 03029
Account Holder:
Clean Power Technologies Inc
436-35 Avenue N.W.
Calgary, Alberta T2K 0C1
Tel: 403-277-2944
In addition, each party shall deliver all
documents, instruments and writings required to be delivered by
such party pursuant to this Agreement at or prior to the
Closing. The Securities will be fully owned and paid for
by the Purchaser as of the Closing Date. The account
with Gersten Savage LLP shall be referred to herein as the “
Escrow Account ”.
Section 1.4
Warrants . In addition to the Shares, at the
Closing, the Company will execute and deliver to the Purchaser
warrants to purchase shares of the Company’s Common stock,
substantially in the forms attached hereto as Exhibit B (the
“Warrants”). The Warrant shall entitle
the holder thereof to purchase shares of the Company’s Common
Stock equal to one hundred twenty five percent (125%) of the Shares
issued to the Purchaser pursuant hereto at an exercise price of
$0.27 per share for the initial 75% of such Warrants (the
“$0.27 Warrants”) and at an exercise price of $0.38 per
share for the remaining 50% of such Warrants (the “$0.38
Warrants”). On the Closing Date, the
Company shall issue to the Purchaser $0.27
Warrants to purchase 1,875,000 shares of Common Stock and $0.38
Warrants to purchase 1,250,000 shares of common stock. The Warrants
shall have a one (1) year term from the date of
issuance. The shares of Common Stock that are issuable
pursuant to the Warrants are hereafter referred to as the “
Warrant Shares. ” Additionally, the Company shall
issue warrants to the Purchaser as follows: (i) upon the Milestone
Closing, the Company shall issue (y) warrants to purchase 833,333
shares of common stock at $0.60 per share; and (z) warrants to
purchase 555,555 shares of common stock at $0.85 per share; and
(ii) upon the Final Closing, the Company shall issue (y)
warrants to purchase 1,851,852 shares of common stock at $0.54 per
share; and (z) warrants to purchase 1,234,568 shares of common
stock at $0.77 per share.
Article II.
Representations and
Warranties
Section 2.1 Representations
and Warranties of the Company . The Company hereby
makes the following representations and warranties to the Purchaser
as of the date hereof and the Closing Date:
(a) Organization
and Qualification; Material Adverse Effect. The
Company is a corporation duly incorporated and existing in good
standing under the laws of the State of Nevada and has the
requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company does not
have any subsidiaries other than the subsidiaries listed on
Schedule 2.1(a) attached hereto (“ Subsidiaries
”). Except where specifically indicated to the
contrary, all references in this Agreement to subsidiaries shall be
deemed to refer to all direct and indirect subsidiaries of the
Company. Each Subsidiary has been duly incorporated and
is in good standing under the laws of its jurisdiction of
incorporation. The Company and each Subsidiary is duly
qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would
not have a Material Adverse Effect. “ Material
Adverse Effect ” means any adverse effect on the
business, operations, properties, prospects or financial condition
of the Company and its subsidiaries, and which is (either alone or
together with all other adverse effects) material to the Company
and its Subsidiaries, if any, taken as a whole, and any material
adverse effect on the transactions contemplated under the
Transaction Documents.
(b) Authorization;
Enforcement. (i) The Company has all
requisite corporate power and authority to enter into and perform
its obligations under the Transaction Documents and to issue the
Shares and Warrants in accordance with the terms hereof, (ii) the
execution and delivery of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby
and thereby, including the issuance of the Shares and Warrants,
have been duly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of
Directors (or any committee or subcommittee thereof) or
stockholders is required, (iii) the Transaction Documents have been
duly executed and delivered by the Company, (iv) the Transaction
Documents constitute valid and binding obligations of the Company
enforceable against the Company, except (A) as such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of creditors' rights and
remedies or by other equitable principles of general application,
and (B) to the extent the indemnification provisions contained in
this Agreement and the Registration Rights Agreement may be limited
by applicable federal or state securities laws and (v) the Shares,
the Warrants and the Warrant Shares issuable upon the exercise of
the Warrants, have been duly authorized and, upon issuance thereof
and payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable,
free and clear of any and all liens, claims and
encumbrances.
(c)
Capitalization. As of September 28, 2009, the
authorized capital stock of the Company consists of 350,000,000
shares of Common Stock, of which as of August 5, 2009, 72,220,695
shares are issued and outstanding, 200,000,000 shares of preferred
stock consisting of 100,000,000 shares of Class A Preferred Stock
and 100,000,000 shares of Class B Preferred Stock, of which as of
the date hereof, no shares of preferred stock are issued and
outstanding and 2,500,000 shares are issuable and reserved for
issuance pursuant to the Company’s stock option plans and
certain outstanding contracts, or securities exercisable or
exchangeable for, or convertible into, shares of Common
Stock. All of such outstanding shares have been, or upon
issuance will be, validly issued, fully paid and
nonassessable. As of the date hereof, except as
disclosed in Schedule 2.1(c) , (i) no shares of the
Company’s capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or
permitted by the Company, (ii) there are no outstanding debt
securities, and (iii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any
of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries, or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company.
(d) Issuance and
Ownership of Securities . Upon issuance in
accordance with this Agreement, the Shares, the Warrants and the
Warrant Shares will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the
issue thereof. The Company owns all outstanding
shares of the Subsidiaries, free and clear of any liens and other
encumbrances
(e) No
Conflicts . Except as disclosed in Schedule
2.1(e) , the execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby and
issuance of the Shares and Warrant, and Warrant Shares underlying
the Warrant (i) result in a violation of its Certificate of
Incorporation, any certificate of designations, preferences and
rights of any outstanding series of preferred stock of the Company
or its By-laws; (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) to the Company’s knowledge
result in a violation of any law, rule, regulation, order, judgment
or decree (including United States federal and state securities
laws and regulations and the rules and regulations of the OTC
Bulletin Board (“ Principal Market ”) or other
principal securities exchange or trading market on which the Common
Stock is traded or listed) applicable to the Company or any of its
Subsidiaries, or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected, except in the case of
clause (ii), such conflicts that would not have a Material Adverse
Effect.
(f) SEC
Documents . Since the filing of its Annual Report on
Form 10-K for the fiscal year ended August 31, 2008, the Company
has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the “ 1934 Act ”) (all of the foregoing
filed prior to the date hereof and all exhibits included therein
and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as
the “ SEC Documents ”). To the
Company’s knowledge, as of their respective dates, the SEC
Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. Since the
date of the respective filings, the Company has not incurred any
liabilities except in the ordinary course of business or as
reflected in the SEC Documents.
(g) Absence of
Litigation . There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or,
to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company, the Shares or any
officers or directors of the Company or any of its Subsidiaries in
their capacities as such, except as set forth in SEC Documents
which were filed at least 10 days before the date
hereof.
(h) No Integrated
Offering . Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, aside for the July 2008
Offering and the February 2009 Offering, under circumstances that
would cause this offering of the Securities to the Purchaser to be
integrated with prior offerings by the Company for purposes of the
Securities Act of 1933, as amended (“1933 Act” or
“Securities Act”) or any applicable stockholder
approval provisions, including, without limitation, under the rules
and regulations of the Principal Market or other Approved Market,
nor will the Company take any action or steps that would cause the
offering of the Securities to be integrated with other
offerings.
(i) Employee
Relations . Neither the Company nor any of its
Subsidiaries is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, the
effect of which would be reasonably likely to result in a Material
Adverse Effect.
(j) Intellectual
Property Rights . The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights
necessary to conduct their respective businesses as now
conducted. Neither the Company nor any of its
Subsidiaries have any knowledge of any infringement by the Company
or any of its Subsidiaries of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service
names, service marks, service mark registrations, trade secret or
other similar rights of others, or of any such development of
similar or identical trade secrets or technical information by
others and there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being
threatened against, the Company or any of its Subsidiaries
regarding trademarks, trade name rights, patents, patent rights,
inventions, copyrights, licenses, service names, service marks,
service mark registrations, trade secrets or other
infringement. The Company has no knowledge of any
pending or threatened infringement of its intellectual property
rights.
(k)
Compliance with Law . The business of the Company
has been and is presently being conducted so as to comply with all
applicable material federal, state and local governmental laws,
rules, regulations and ordinances.
(l) Environmental
Laws . The Company and its Subsidiaries (i) are, to
the Company’s knowledge, in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“ Environmental Laws ”), (ii)
has received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their
respective businesses and (iii) is in compliance with all
terms and conditions of any such permit, license or approval where
such noncompliance or failure to receive permits, licenses or
approvals referred to in clauses (i), (ii) or (iii) above could
have, individually or in the aggregate, a Material Adverse
Effect.
(m) Disclosure.
No representation or warranty by the Company in this Agreement, nor
in any certificate, schedule, document, exhibit or other instrument
delivered or to be delivered pursuant to this Agreement or
otherwise in connection with the transactions contemplated by the
Transaction Documents, contains or will contain any untrue
statement of material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein not misleading or necessary to in order fully and fairly to
provide the information required to be provided in any such
certificate, schedule, document, exhibit or other
instrument. To the knowledge of the Company at the time
of the execution of this Agreement, there is no information
concerning the Company or any of its Subsidiaries or its respective
businesses which has not heretofore been disclosed to the Purchaser
(or disclosed in the Company's filings made with the SEC under the
1934 Act) that would have a Material Adverse Effect.
(n) Title
. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by it which is
material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects or
such as do not materially and adversely affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company and its
Subsidiaries. Any real property and facilities held
under lease by the Company or any of its Subsidiaries are held by
it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use
made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(o) Insurance
. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company is
engaged.
(p)
Permits. The Company and its Subsidiaries
own, hold, possess, or lawfully use in its business all material
approvals, authorizations, certifications, franchises, licenses,
permits, and similar authorities (“ Permits ”)
that are necessary for the conduct of their business as currently
conducted or the ownership and use of their assets or properties,
in compliance with all Laws. All of such material
Permits are listed on Schedule 2.1(p) , and true, complete
and correct copies of each Permit listed on Schedule 2.1(p) have
been provided to the Purchaser. Neither the Company or
any of its Subsidiaries is in default under, or has received any
notice of any claim of default in respect of, any such
Permits. To the Company’s knowledge, after due
inquiry, all such Permits are renewable by their respective terms
in the ordinary course of business without the need to comply with
any special qualification procedures or to pay any amounts other
than routine filing fees.
(q) Foreign Corrupt
Practices Act . To the Company’s knowledge,
neither the Company, nor any director, officer, agent, employee or
other person acting on behalf of the Company or any Subsidiary has,
in the course of acting for, or on behalf of, the Company, directly
or indirectly used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses
relating to political activity; directly or indirectly made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or
is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or any similar treaties of the
United States; or directly or indirectly made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government or party official or
employee.
(r) Tax Status
. The Company and its Subsidiaries have made or filed
all United States federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to
which it is subject and all such returns, reports and declarations
are true, correct and accurate in all material
respects. The Company has paid all taxes and other
governmental assessments and charges, shown or determined to be due
on such returns, reports and declarations, except those being
contested in good faith, for which adequate reserves have been
established, in accordance with generally accepted accounting
principles (“ GAAP ”).
(s) Issuance of
Shares and/or Warrant Shares. The Warrant Shares
are duly authorized and reserved for issuance and, upon exercise of
the Warrants in accordance with the terms thereof, the Warrant
Shares will be validly issued, fully paid and non-assessable, free
and clear of any and all liens, claims and encumbrances, and
entitled to be traded on the Principal Market or the New York Stock
Exchange, or the American Stock Exchange or the Alternative
Investment Market (AIM) of the London Stock Exchange (collectively
with the Principal Market, the “ Approved
Markets ” ), and the holders of such Warrant
Shares shall be entitled to all rights and preferences accorded to
a holder of Common Stock. As of the date of this
Agreement, the outstanding shares of Common Stock are currently
listed on the Principal Market.
(t) Financial
Statements. Except as set forth in Schedule
2.1(t) , the financial statements of the Company included in
the Forms 10-K and the Forms 10-Q of the Company duly filed with
the Securities and Exchange Commission have been prepared from the
books and records of the Company, in accordance with GAAP, and
fairly present in all material respects the financial condition of
the Company, as at their respective dates, and the results of its
operations and cash flows for the periods covered
thereby.
(u) Internal
Accounting and Disclosure Controls. The Company
maintains a system of internal accounting controls and procedures
that are sufficient to provide reasonable assurance (i)
transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure
controls and procedures (as defined in 1934 Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls
and procedures to ensure that material information relating to the
Company is made known to the certifying officers by others within
those entities, particularly during the period in which the
Company’s Form 10-K or 10-Q, as the case may be, is being
prepared. The Company’s certifying officers have evaluated
the effectiveness of the Company’s controls and procedures in
accordance with the 1934 Act for the Company’s most recently
ended fiscal quarter or fiscal year-end (such date, the “
Evaluation Date ”). The Company presented in its most
recently filed Form 10-K or Form 10-Q the conclusions of the
certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no
significant changes in the Company’s internal controls over
financial reporting (as defined in 34 Act Rules 13a-15(f) and
15(d)-15(f)).
(v)
Off-Balance Sheet Arrangements. There is
no transaction, arrangement, or other relationship between the
Company and an unconsolidated or other off balance sheet entity
that is required to be disclosed by the Company in its 1934 Act
filings and is not so disclosed or that otherwise wou
