-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VO5PQH3biAH5ZZHpIU4uHFb5m+47HJtEM5iY/A3pmnKPajZRdglaYwNsaYKr5Okd 6OIY0QJ+31bV9IljMGr9eg== 0000950116-96-001380.txt : 19961202 0000950116-96-001380.hdr.sgml : 19961202 ACCESSION NUMBER: 0000950116-96-001380 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961127 EFFECTIVENESS DATE: 19961127 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAN DIESEL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000949428 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160] IRS NUMBER: 061393453 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-16939 FILM NUMBER: 96673368 BUSINESS ADDRESS: STREET 1: 300 ATLANTIC ST CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2034259830 S-8 1 Registration No. 33- ----------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------------------------- CLEAN DIESEL TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) DELAWARE (Jurisdiction of Incorporation or Organization) 06-1393453 06901 (I.R.S. Employer Identification No) (Zip Code) 300 Atlantic Street Suite 702 Stamford Connecticut (Address of Principal Executive Offices) THE 1994 INCENTIVE PLAN OF CLEAN DIESEL TECHNOLOGIES, INC. (Full title of plan) ----------------------------------------- Charles W. Grinnell, Esq. 1055 Washington Blvd. - 5th Floor Stamford, CT 06901 (Name and address of agent for service) (203) 363-7105 (Telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------- Title of Shares Amount to Proposed Maximum Proposed Maximum Amount of to be Registered be Registered Offering Price Per Aggregate Registration Fee Share Offering Price - --------------------------------------------------------------------------------------------------------------------- Common Stock 312,500 $3.18(1) $992,269.50(1) $300.69 par value, $0.05 per share - ---------------------------------------------------------------------------------------------------------------------
(1) Based upon the following shares and exercise prices, 62,500 shares at $0.20, 62,500 shares at $2.00, 37,500 shares at $2.50, 5,000 shares at $6.50, 54,450 shares at $6.82, 5,000 shares at $5.63, 60,000 shares at $4.50, and, estimated solely for the purpose of computing the registration fee, 25,550 shares at $2.31 being the average of the high and low prices as reported on the NASDAQ (small capitalization) system on November 25, 1996. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The following documents are incorporated by reference in the registration statement: (a) The registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, filed pursuant to Section 13(a) of the Securities Exchange Act of 1934; (b) All other reports filed by the registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act subsequent to December 31, 1995; (c) The description of the common stock contained in the registrant's registration statement on Form S-1 under the Securities Act of 1933 (File No. 33-95840) including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the registrant pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Securities and Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in the registration statement and to be a part thereof from the date of filing such documents. Item 5. Interests of Named Experts and Counsel Charles W. Grinnell, counsel to the registrant who has issued an opinion as to the validity of the common shares covered by this registration statement, is a director and officer of the registrant, owns 7,842 of registrant's common shares and holds options to purchase 12,000 common shares covered by this registration statement. Item 6. Indemnification of Directors and Officers. Pursuant to Article 9 of the Articles of Incorporation of the registrant, directors of the registrant are, to the fullest extent permitted by the laws of Delaware, not personally liable to the registrant or its shareholders for monetary damages for breach of fiduciary duty as directors. Also, pursuant to Article 10 of the registrant's Articles of Incorporation, the registrant shall indemnify directors and employees of the registrant to the fullest extent permitted by the laws of Delaware against liability imposed or incurred by such person in any pending or threatened -1- action, suit or proceeding and is authorized to purchase and maintain insurance to protect such persons from expense or liability incurred by them in such capacity or arising out of their status. Item 8. Exhibits. 4.1 Certificate of Incorporation of registrant is incorporated by reference to Exhibit No. 3 (i) to the registrant's Registration Statement on Form S-1 (File No. 33-95840). 4.2 The 1994 Incentive Plan of Clean Diesel Technologies, Inc. as amended through August 8, 1996. 4.3 Form of Option Agreement under the 1994 Incentive Plan of Clean Diesel Technologies, Inc. 5.0 Opinion of Charles W. Grinnell, Esq. 23.1 Consent of Ernst & Young LLP 23.2 Consent of Charles W. Grinnell, Esq. (included in opinion filed as Exhibit 5.0). 24.0 Powers of Attorney in favor of Ralph E. Bailey, Kent D.S. Durr, John A. de Havilland, Jeremy D. Peter- Hoblyn, Charles W. Grinnell, Scott M. Schecter and James M. Valentine (included on signature pages). Item 9. Undertakings. The registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "Act"); (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually, or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; -2- provided, however, that paragraphs (i) and (ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That for the purposes of determining any liability under the Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6 or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is assserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -3- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, therunto duly authorized, in the City of Stamford, Connecticut, on November 27, 1996. CLEAN DIESEL TECHNOLOGIES, INC By /s/ Jeremy D. Peter-Hoblyn ---------------------------------- Jeremy D. Peter-Hoblyn President and Chief Executive Officer Each person whose signature appears below constitutes and appoints Jeremy D. Peter-Hoblyn and Charles W. Grinnell, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in fact and agent full power and authority to do and perform each act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons on November 27, 1996 in the capacities indicated. Signature Title /s/ J.D. Peter-Hoblyn President, Chief Executive Officer - ---------------------------- and Director (Principal Executive Jeremy D. Peter-Hoblyn Offcer) /s/ Scott M. Schecter Vice President, Treasurer and Chief - ---------------------------- Financial Officer (Principal Scott M. Schecter Financial and Accounting Officer) /s/ Ralph E. Bailey Chairman of the Board and Director - ---------------------------- Ralph E. Bailey -4- /s/ John A. de Havilland Director - ---------------------------- John A. de Havilland /s/ Kent D.S. Durr Director - ---------------------------- Kent D. S. Durr /s/ James M. Valentine Executive Vice President, Chief - ----------------------------- Operating Officer and Director James M. Valentine /s/ Charles W. Grinnell Vice President, General Counsel, - ----------------------------- Corporate Secretary and Director Charles W. Grinnell -5- EXHIBIT INDEX 4.1 Certificate of Incorporation of registrant is incorporated by reference to Exhibit No. 3 (i) to the registrant's Registration Statement on Form S-1 (File No. 33-95840). 4.2 The 1994 Incentive Plan of Clean Diesel Technologies, Inc. as amended through August 8, 1996. 4.3 Form of Option Agreement under the 1994 Incentive Plan of Clean Diesel Technologies, Inc. 5.0 Opinion of Charles W. Grinnell, Esq. 23.1 Consent of Ernst & Young LLP 23.2 Consent of Charles W. Grinnell, Esq. (included in opinion filed as Exhibit 5.0). 24.0 Powers of Attorney in favor of Ralph E. Bailey, Kent D.S. Durr, John A. de Havilland, Jeremy D. Peter- Hoblyn, Charles W. Grinnell, Scott M. Schecter and James M. Valentine (included on signature pages). EX-4.2 2 1994 INCENTIVE PLAN Exhibit 4.2 CLEAN DIESEL TECHNOLOGIES, INC. 1994 INCENTIVE PLAN As amended through August 8, 1996 The 1994 Incentive Plan of Clean Diesel Technologies, Inc. As amended through August 8, 1996 Index Page 1. Purpose and Effective Date 1 2. Definitions 1 3. Administration 3 3.1 Committee 3 3.2 Effect of Determinations 4 4. Eligibility 4 5. Shares Subject to This Plan 4 5.1 Maximum Number of Shares 4 5.2 Share Accounting 4 6. Awards 5 6.1 Options 5 6.2 Stock Appreciation Rights 7 6.3 Restricted Shares 8 6.4 Performance Awards 9 6.5 Bonuses 10 6.6 Other Awards 12 7. Adjustments Upon Changes in Capitalization 12 8. Change in Control 13 8.1 Definition of Change in Control 13 8.2 Effect of Change in Control 15 9. Relationship of the Plan to Benefit Plans 15 10. Effect of the Plan on Right to Continued Employment and Interest in Particular Property 15 11. Withholding Taxes and Deferrals 16 11.1 Cash Withholding 16 11.2 Share Withholding 16 11.3 Deferrals 16 12. Compliance With Applicable Legal Requirements 17 13. Amendments 17 13.1 Plan Amendments 17 13.2 Award Amendments 17 13.3 Rights of Participants 17 13.4 Rule 16b-3 18 14. Miscellaneous Provisions 18 14.1 Awards in Various Countries 18 14.2 Transferability 18 14.3 Cancellation of Awards 18 14.4 Arbitration; Governing Law 19 (i) CLEAN DIESEL TECHNOLOGIES, INC. 1994 INCENTIVE PLAN As amended through August 8, 1996 1. Purpose and Effective Date The purpose of this 1994 Incentive Plan of Clean Diesel Technologies, Inc., a Delaware corporation ("the Corporation") is to further the interests of the Corporation and its shareholders by providing incentives in the form of awards to such directors, officers, employees, consultants or advisors to the Corporation as the directors shall determine are key to the continued success and profitability of the Corporation. The Plan is intended to retain Participants with significant training, experience and ability; to attract new Participants whose services are considered valuable; and to encourage such Participants to acquire a proprietary interest in the Corporation. So that the maximum incentive can be provided each Participant in the Plan by granting to such participant an Award best suited to the circumstances, the Plan provides for granting, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Shares, Performance Awards, Bonuses, Other Awards, or any combination of the foregoing. This Plan shall become effective upon its adoption by the Board, subject to approval within one (1) year of such adoption by the Corporation's shareholders, and shall remain effective until terminated by resolution of the Board. 2. Definitions As used in this Plan: (1) "Award" means the grant hereunder, and by consent of the Participant, awards or options granted previously by the Corporation of any form of Option, Stock Appreciation Right, Restricted Share, Performance Award, Other Award, Bonus, or any other form of Share based or non-Share based Award. (2) "Award Agreement" means a written agreement between the Corporation and a Participant that sets forth the terms, conditions and limitations applicable to an Award. (3) "Beneficiary" means, where a Participant is with respect to any Award not forfeitable by its terms on the death of the Participant entitled to any unpaid portion thereof, such person or persons entitled thereto under the Participant's will or under the laws of descent and distribution. (4) "Board" means the Board of Directors of the Corporation. -1- (5) "Bonus" means any payment under ss. 6.5. (6) "Change in Control" has the meaning set forth in ss. 8. (7) "Code" means the United States Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor statute. (8) "Committee" means the Committee of the Board or any successor committee as described in Section 3.1, or, if there shall be no such Committee, the Board. (9) "Corporation" means Clean Diesel Technologies, Inc., a Delaware corporation, or any successor corporation, and its subsidiaries and affiliates, incorporated or otherwise, in which the Corporation shall own directly or indirectly at least fifty percent (50%) of the interests. (10) "Employee" means any individual who is a salaried employee on the payroll of the Corporation. (11) "Exchange Act" means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute. (12) "Fair Market Value Per Share" in reference to the common stock of the Corporation means such value as shall be determined by the Board or a Committee thereof, as the case may be, responsible from time to time for the administration of the Plan. (13) "Non-Qualified Stock Option" shall mean a stock option which is not an Incentive Stock Option within the meaning of ss. 422 of the Code. (14) "Option" means an Award to purchase Shares granted pursuant to ss. 6.1. (15) "Participant" means any director, officer, employee, consultant or advisor who is granted an Award under this Plan. Except that consultants and advisors shall not include those rendering services in connection with the offer or sale of the Corporation's securities in a capital raising transaction. (16) "Performance Award" has the meaning described in ss.6.4. (17) "Plan" means this 1994 Incentive Plan of Clean Diesel technologies, Inc., as amended from time to time. (18) "Restricted Shares" means Shares which have certain restrictions attached to the ownership thereof, which may be issued under ss. 6.3. - 2 - (19) "Retirement" means termination of a Participant's employment with the Corporation by retirement under the normal, mandatory, early and applicable age plus service or other provision of the applicable retirement plan of the Corporation or a subsidiary or affiliate of the Corporation, or, if there shall be no such plan or plans, then under such procedures as the Company or its subsidiaries and affiliates may from time to time establish. (20) "Rule 16b-3" means such rule as promulgated by the Securities and Exchange Commission under the Exchange Act as now in force or as such regulation or successor regulation shall be hereafter amended. (21) "Shares" mean shares of common stock of the Corporation. (22) "Share Unit" means the right to receive a payment equivalent in value to one Share on the date of payment. (23) "Stock Appreciation Right" means a right which may be issued under ss. 6.2, the value of which is determined relative to the appreciation in value of Shares. (24) "Totally Disabled" means a condition of a Participant found by a qualified physician selected by the Corporation to be that as described in ss. 22(e)(3) of the Code or as such Section or successor section shall be hereafter amended. (25) "Non-Employee Director" means a director as defined in Rule 16b-3 (b) (3) (i) of the Securities and Exchange Commission. 3. Administration 3.1 Committee (a) This Plan shall be administered by the Board. The Board may, however, appoint a Committee to administer the Plan which shall consist of not less than a sufficient number of Non-Employee Directors so as to qualify the Committee to administer this Plan as contemplated by Rule 16b-3. The Board may limit the participation of Committee members in the Plan to formula based or other awards. The Board may remove members from or add members to the Committee. Vacancies on the Committee shall be filled by the Board. (b) To the extent permitted by ss. 13.3, the Board or Committee is authorized to (i) determine the persons who shall be Participants in the Plan and which Awards shall be granted to Participants, (ii) establish, amend and rescind rules, regulations and guidelines relating to the Plan as it deems appropriate, (iii) interpret and administer the Plan, Awards and Award Agreements, (iv) establish, modify and terminate terms and conditions of Award Agreements, (v) grant waivers - 3 - and accelerations of Plan, Award and Award Agreement restrictions and (vi) take any other action necessary for the proper administration and operation of the Plan. (c) The Board or Committee may designate persons and entities other than its members, including but not limited to, any successor committee, the Chief Executive officer, and the Corporate Secretary, to carry out any of its responsibilities under and described in this Plan, under such conditions or limitations as the Board or Committee may establish, other than its authority with regard to participants, if any, who are subject to ss. 16 of the Exchange Act. 3.2 Effect of Determinations Determinations of the Board or Committee and its designees shall be final, binding and conclusive on the Corporation, its stockholders, Employees and Participants. No member of the Board or Committee or any of its designees shall be personally liable for any action or determination made in good faith with respect to this Plan, any award, or any Award Agreement. 4. Eligibility Persons eligible for Awards under this Plan shall consist of key managerial and other directors, officers, employees, consultants or agents who possess valuable experience and skills and have contributed, or can be expected to contribute, materially to the success and profitability of the Corporation. The Board or Committee shall determine which persons shall be Participants, the types of Awards to be made to Participants and the terms, conditions and limitations applicable to the Awards. 5. Shares Subject to This Plan 5.1 Maximum Number of Shares The maximum number of Shares available for Awards under this Plan in each calendar year during any part of which this Plan shall be in effect shall be such fixed amount of shares as the Board shall from time to time determine but not more than twelve and one-half percent (12 1/2%) of the issued and outstanding shares of the Corporation. Treasury stock shall not be deemed to be issued and outstanding. Any and all such Shares may be issued in respect of any of the types of Awards. 5.2 Share Accounting Shares related to Awards that are forfeited, terminate, expire unexercised, exchanged, settled in cash in lieu of Shares or settled in such other manner so that a portion or all of the Shares included in an Award are not issued to a Participant shall be - 4 - available for other Awards. Any Shares not so used shall be available for further Awards; provided, however, that in any calendar year no more than the amount determined under ss. 5.1 above, shall be available for Awards. Shares issued under this Plan shall be authorized and unissued Shares or Shares reacquired by the Corporation, as determined by the Committee. No fractional Shares shall be issued under this Plan. 6. Awards (a) Awards may include, but are not limited to, those described in this ss. 6. Awards may be granted singly, in combination, or in tandem with other Awards. Subject to the other provisions of this Plan, Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan and any other plan of the Corporation, including any plan of any acquired entity and for the benefit of any present or former director, officer, consultant or agent of such acquired entity. Subject to the terms of the Awards described in this ss. 6 and the related Award Agreement, the form of payment for Awards may be in cash, in Shares, in Share Units, or such other form as determined by the Board or the Committee, and may be made partly in one form and partly in one or more other forms, all as determined by the Committee. Except as otherwise provided in this Plan, Awards shall be evidenced by Award Agreements, the terms of which may be amended or accelerated by the Board or Committee following the grant of any Award and need not be uniform among Participants. Except as otherwise provided in this Plan, Awards shall be granted for such minimum consideration as is required by applicable law, rules and regulations, including without limitation, the then applicable Rule 16b-3, and such additional consideration, if any, as may be determined by the Committee. (b) Notwithstanding anything contained in this Plan, if required by the then applicable Rule 16b-3 or any successor provision, any "equity security" awarded pursuant to this Plan to any participant who is subject to Section 16 of the Exchange Act must be held by the Participant for at least six (6) months after the award thereof. In addition, if required by the then applicable Rule 16b-3 or any successor provision, with respect to any Participant who is subject to Section 16 of the Exchange Act, at least six (6) months must elapse from the date of acquisition of a "derivative security" hereunder to the date of disposition of such security. The terms "equity security" and "derivative security" shall have the meanings described in the then applicable Rule 16b-3. 6.1 Options Options may be granted under this Plan from time to time. If Options are granted they shall be upon the following terms and conditions with such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Board or Committee - 5 - in its discretion shall deem desirable: (a) Options shall be Non-Qualified Stock Options. (b) The option price per Share for all Options shall be not less than one hundred per cent (100%) of the Fair Market Value Per Share on the date the Option is granted. (c) Award Agreements for Options shall conform to the requirements of this Plan, and may contain such other provisions as the Committee shall deem advisable. (d) Award Agreements for Options shall specify when an Option may be exercisable. An option may be exercised, in whole or in part, by giving written notice of exercise to the Corporation specifying the number of Shares to be purchased. Shares purchased upon exercise of an Option shall be paid for in full at the time the Option is exercised in cash or, with the consent of the Board or Committee, in Shares. Payment may also be made in any other manner or form approved by the Board or Committee, consistent with applicable law, regulations and rules. (e) A holder of an Option shall have no rights as a stockholder with respect to any Shares covered by such Option unless and until the date of the issuance of the stock certificate for such Shares. (f) (i) If, after completion of any required period of continuous employment or affiliation in order to exercise an Option as provided in an Award Agreement, a Participant dies while employed by the Corporation, such Option shall be exercisable by the Beneficiary thereof, but after the date of death of the Participant only within the period specified in the Award Agreement which shall not be later than the expiration date of the Option. (ii) Following the death of a Participant, the Board or Committee may at its discretion, upon the request of such Participant's Beneficiary who holds an exercisable Option and in consideration of the surrender of such Option, pay the amount by which the Fair Market Value per Share on the date of such request shall exceed the Option price per Share multiplied by the number of Shares as to which the request was made. (g) If, after completion of any required period of continuous employment in order to exercise an Option as provided in an Award Agreement, a Participant is Totally Disabled or retires, such Option shall be exercisable by the Participant, but only within the period specified in the Award Agreement. - 6 - 6.2 Stock Appreciation Rights Stock Appreciation Rights may be granted under this Plan from time to time. If Stock Appreciation Rights are granted they shall be upon the following terms and conditions, and such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Board or Committee in its discretion shall deem desirable: (a) A Stock Appreciation Right may be granted in tandem with part or all of, in addition to, or completely independent of, an Option or any other Award under this Plan. A Stock Appreciation Right issued in tandem with an Option may be granted at the time of grant of the related Option or at any time thereafter during the term of the Option. (b) Award Agreements for Stock Appreciation Rights shall conform to the requirements of this Plan and may contain such other provisions (including but not limited to, the permitted form of payment for the exercise of the Stock Appreciation Right, the requirement of employment for designated periods of time prior to exercise and the ability of the Board or Committee to revoke Stock Appreciation Rights which are issued in tandem with options without compensation to the Participant) as the Board or Committee shall deem advisable. (c) Stock Appreciation Rights issued in tandem with Options shall be subject to the following: (i) Stock Appreciation Rights shall be exercisable at such time or times and to the extent, but only to the extent, that the Option to which they relate shall be exercisable. (ii) Upon exercise of Stock Appreciation Rights the holder thereof shall be entitled to receive a number of Shares equal in aggregate value to the amount by which the Fair Market Value Per Share on the date of such exercise shall exceed the option price per Share of the related Option, multiplied by the number of Shares in respect of which the Stock Appreciation Rights shall have been exercised. (iii) All or any part of the obligation arising out of an exercise of Stock Appreciation Rights may, at the discretion of the Board or Committee, be settled by the payment of cash equal to the aggregate value of the Shares (or a fraction of a Share) that would otherwise be delivered under ss. 6.2(c)(ii). (iv) Upon exercise of Stock Appreciation Rights the unexercised tandem options of the Participant shall automatically terminate upon the exercise of such Stock - 7 - Appreciation Rights. (v) Stock Appreciation Rights issued in tandem with Options shall automatically terminate upon the exercise of such Options. 6.3 Restricted Shares Awards of Restricted Shares may be granted under this Plan from time to time. If Awards of Restricted Shares are granted they shall be upon the following terms and conditions and such additional terms and conditions, not inconsistent with the express provisions of this Plan, as the Committee in its discretion shall deem desirable: (a) Restricted Shares are Shares which are subject to such terms, conditions and restrictions as the Board or Committee deems appropriate, which may include restrictions upon the sale, assignment, transfer or other disposition of the Restricted Shares and the requirement of forfeiture of the Restricted Shares upon termination of employment under certain specified conditions. The Board or Committee may condition the lapsing of restrictions on part or all of an Award of Restricted Shares upon the attainment of specific performance goals or such other factors as the Board or Committee may determine. Awards of Restricted Shares may be granted for no cash consideration or for such minimum consideration as may be required by applicable law. (b) Award Agreements for Restricted Shares shall conform to the requirements of this Plan, and may contain such other terms and conditions (including but not limited to, a description of a period during which the Participant may not transfer the Restricted Shares and limits on encumbering the Restricted Shares during such period) as the Board or Committee shall deem desirable. To the extent permitted by ss. 13.3 hereof, the Board or Committee may provide for the lapse of any such term or condition in installments and may accelerate or waive any such term or condition in whole or in part, based on service, performance and/or such other factors or criteria as the Board or Committee may determine. (c) Award Agreements for Restricted Shares shall provide that the stock certificates representing Restricted Shares shall be legended, that such certificates be held by a custodian or the Corporation, or that there be other mechanisms for maintaining control by the Corporation of the Restricted Shares until the restrictions thereon are no longer in effect. After the lapse, waiver or release of the restrictions imposed pursuant to the Award Agreement on any Restricted Shares, the Corporation shall cause to be issued in - 8 - the Participant's name a stock certificate evidencing the Restricted Shares with respect to which the restrictions have lapsed or been waived or released, free of any legend, and shall cause such stock certificate to be delivered to the Participant. (d) Except as otherwise provided in this Plan or in the Award Agreement, the participant shall have, with respect to Awards of Restricted Shares, all of the rights of a shareholder of the Corporation, including the right to vote the Restricted Shares and the right to receive any cash or stock dividends on such Restricted Shares. The Board or Committee may provide that the payment of cash dividends shall or may be deferred. Any reinvestment of deferred cash dividends shall be as determined by the Board or Committee. Stock dividends issued with respect to restricted Shares shall be Restricted Shares and shall be subject to the same terms, conditions and restrictions that apply to the Restricted Shares with respect to which such dividends are issued. Any additional Shares issued with respect to cash or stock dividends shall not be counted against the maximum number of Shares for which Awards may be granted under this Plan as set forth in Section 5. (e) If the employment of a Participant is terminated prior to the lapse of restrictions on Restricted Shares because the Participant dies, becomes Totally Disabled or retires involuntarily the restrictions on all Restricted Shares awarded to a participant shall lapse on the date of such termination. 6.4 Performance Awards Performance Awards may be granted under this Plan from time to time. If Performance Awards are granted they shall be upon the following terms and conditions and such additional terms and conditions, not inconsistent with the express provisions of this Plan, as the Board or Committee in its discretion shall deem advisable: (a) Performance Awards are Awards which are based upon the long-term performance of all or a portion of the Corporation or which are based upon the long-term individual performance of a Participant. Performance Awards may be in the form of performance units, performance shares and such other forms of Performance Awards which the Board or Committee shall determine to be desirable. Performance Awards are Awards which are granted to participants contingent upon (i) the future performance of all or a portion of the Corporation which may include, without limitation, performance relative to a group of companies in the same or related industries, achievement of specific business objectives, attainment of certain growth rates, profitability goals and such other - 9 - measurements as the Board or Committee determines to be appropriate, (ii) the future performance of a Participant, which may include, without limitation, attainment of specified goals and objectives and such other measurements as the Board or Committee determines to be appropriate, (iii) the future performance of a combination of all or a portion of the Corporation and a participant, or (iv) such other measurements and criteria as may be considered appropriate by the Board or Committee. Performance Awards may contain multiple performance measurements. (b) Award Agreements for Performance Awards shall conform to the requirements of this Plan and may contain such other terms and conditions as the Board or Committee shall deem desirable, including but not limited to, applicable performance measurements, a description of whether performance measurements are to be used singly or in combination, a description of whether different performance measurements may be used for different performance periods, the length of performance periods, the ability of the Board or Committee to amend and adjust measurements, payouts and performance periods of performance Awards and any requirements of employment during performance periods. (c) Award Agreements for Performance Awards shall provide for a required minimum period of continuous employment during a performance period of a Performance Award. If such minimum period of continuous employment shall have elapsed, the Award Agreement may provide, or the Board or Committee may determine, the portion of the payment of the Performance Award which the Participant or the Participant's beneficiary, as applicable, is to receive at the end of the performance period. 6.5 Bonuses Bonuses may be granted under this Plan from time to time on an annual or one-time basis. The amount of Bonuses which may be awarded shall be as determined by the Board or Committee. The Board or Committee may establish a basis upon which aggregate Bonus expenditures for any year shall be determined, which may include measurements of financial performance of the Corporation or of a unit or department thereof, relative performance of the Corporation or of a department thereof within the same or related industries, competitive compensation considerations and other measurements and criteria. (a) Each Bonus may be made at the discretion of the Board or Committee either in cash, in Shares, in Share Units, or in another form as determined by the Board or Committee and may be made partly in one form and partly in one or more other forms. In the case of an Award of a Bonus in Shares or Share - 10 - Units, the number shall be determined by using the Fair Market Value Per Share on the date of the Award of the Bonus. (b) The payment of any Bonus shall be subject to such obligations or conditions as the Board or Committee may specify in making or recommending the Award of the Bonus, but Bonuses need not be evidenced by Award Agreements. (c) When payment of all or part of a Bonus is deferred in the form of Shares or Share Units, the account of the Participant to whom the Bonus was made will be credited with an amount per Share equal to the dividends payable on each issued and outstanding Share ("dividend equivalents"). Amounts thus credited shall, in the discretion of the Board or Committee, either: (i) be paid in cash as and when each such credit shall be made, or (ii) be credited in Shares or Share Units, with the number determined by using the Fair Market Value Per Share on the date of the dividend payment and delivered in such form and at such time or times as may be determined by the Board or Committee. (d) When payment of all or part of a bonus is deferred in cash, the Committee may provide that the account of the Participant to whom the Bonus was made shall be credited with amounts equivalent to interest ("interest equivalents"). Amounts thus credited shall be at the rate determined by the Board or Committee. (e) Any Bonus payable in Shares may, in the discretion of the Board or Committee, be paid in cash, on each date on which payment in Shares would otherwise have been made, in an amount equal to the Fair Market Value Per Share on each such date, multiplied by the number of Shares which would otherwise have been paid on such date. (f) Bonuses may be awarded in Share Units in accordance with the following terms and conditions and such other terms and conditions as the Board or Committee may impose: (i) The number of Share Units awarded with respect to any Bonus shall be the number determined by using the Fair Market Value Per Share on the date of the Award of the Bonus. (ii) Any Bonus made in Share Units may, in the discretion or on the recommendation of the Board or Committee, be paid in Shares on each date on which payment in cash would otherwise be made. - 11 - (g) In lieu of the foregoing forms of payment of Bonuses, the Board or Committee may specify or recommend any other form of payment which it determines to be of substantially equivalent economic value to the cash value of the Bonus including, without limitation, forms involving payments to a trust or trusts for the benefit of one or more Participants. (h) Each payment of a Bonus that is to be made in cash shall be from the general funds of the Corporation or its respective subsidiary or affiliate, as the case may be. (i) In the event of the death of a Participant to whom a Bonus is to be or shall have been made, the Bonus or any portion thereof remaining unpaid shall be paid to such Participant's Beneficiary under the Participant's will or pursuant to the relevant laws of descent and distribution. 6.6 Other Awards (a) The Board or Committee may grant other Share based Awards under this Plan, including without limitation, those Awards pursuant to which Shares are or may in the future be acquired, Awards denominated in Share Units, securities convertible into Shares and dividend equivalents. The Board or Committee shall determine the terms and conditions of such other Share based Awards. Shares issued in connection with such other Share based Awards shall be issued for such minimum consideration as shall be required by applicable law, rules and regulations, including the then applicable Rule 16b-3, and such additional consideration, if any, as may be determined by the Board or Committee. (b) The Board or Committee may also grant other non-Share based Awards under this Plan and shall determine the terms and conditions of such other non-Share based Awards in tandem or combination with other Awards or each other, in exchange of other Awards, or in tandem or combination with, or as alternatives to grants or rights under any other employee plan of the Corporation, including any plan of any acquired entity. The Board or Committee shall have the authority to determine the Participants for such Awards and all other terms and conditions of such other Awards. No amendment of this Plan is required for the creation of another type of Award. 7. Adjustments Upon Changes in Capitalization (a) Subject to any required action by the Corporation's stockholders, in the event of a reorganization, recapitalization, stock split, stock dividend, exchange of Shares, combination of Shares, merger, consolidation or any other change in corporate structure of the Corporation affecting the Shares, or in the event of a sale by the Corporation of all or a significant part of its - 12 - assets, or any distribution to its shareholders other than a normal cash dividend, the Board or Committee may make appropriate adjustment in the number, kind, price and value of Shares authorized by this Plan and any adjustments to outstanding Awards as it determines appropriate so as to prevent dilution or enlargement of rights. (b) The existence of an Award under this Plan shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks, ahead of or affecting the Stock or rights thereunder or convertible thereto, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. (c) Awards granted hereunder prior to June 30, 1995 with respect to Shares shall be adjusted as to the number thereof, in the event of the issuance or reacquisition of Shares for any reason by the Corporation, so as to maintain the ratio of the number of Shares with respect to such Awards outstanding on June 30, 1995 to the number of the Corporations's issued and outstanding Shares on such date; provided, however, that (i) where the Corporation shall issue securities convertible into Shares or options or warrants for purchase of Shares, no such adjustment shall be required until the conversion of securities into or the purchase of Shares and (ii) upon any such adjustment the exercise price of additional Shares upon a Participant's Award shall be the purchase price (or fair market value of consideration therefor) of Shares issued which initiated the adjustment and the Shares originally granted by the Award shall carry the original exercise price therof. This Section 7 (c) shall expire and be of no further force and effect after the first public offering of common stock of the Corporation. The adjustments contemplated by this Section, however, shall be effected with respect to shares issued in such public offering. A "Public Offering" shall mean shares issued only pursuant to an effective registration statement filed with the Securities and Exchange Commission. 8. Change in Control 8.1 Definition of Change in Control A "Change in Control" shall be deemed to have occurred if any one or more of the events described in paragraphs (a), (b) or (c) below occurs. (a) Any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (including any group of persons - 13 - with which any person or its affiliates or associates, as such terms are defined in Rule 12b-2 under the Exchange Act has any agreement, arrangement or understanding, oral or written, regarding the acquiring, holding, voting or disposing of any of the Corporation's securities, but excluding a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation) (i) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing fifty one percent (51%) or more of the combined voting power of the Corporation's then outstanding securities (hereinafter referred to as an "Acquiring Person"); or (b) In any two year period persons being a majority of the Board shall cease to be so unless the nomination of the new directors during such period was approved by at least a majority of the directors then still in office who were directors at the beginning of the period; or (c) A consolidation or merger or "Business Combination," as that term is defined as of the effective date of this Plan in Section 203(c)(3) of The General Corporation Law of Delaware, of the Corporation shall occur (with the term "interested shareholder" as used in that Section being deemed to refer to an Acquiring Person) in which the Corporation is not the surviving Corporation and pursuant to which the Corporation's shares are converted to cash, securities or other property, but not a business combination where shareholders of the Corporation prior to the business combination have substantially the same proportionate ownership in a business entity after the merger; or (d) The Shareholders of the Corporation shall approve any plan for liquidation or dissolution of the Corporation not otherwise involving a transaction where shareholders of the Corporation prior to the transaction have substantially the same proportionate ownership of a business entity after the transaction. (e) In no event, however, shall a Change in Control be deemed to have occurred with respect to a Participant, if that Participant is part of an Acquiring Person which consummates the Change in Control transaction. A Participant shall be deemed "part of an Acquiring Person" for purposes of the preceding sentence if the Participant is an equity participant or has agreed to become an equity participant in the Acquiring Person (except for (i) passive ownership of less than three percent of the securities of the Acquiring Person; or (ii) ownership of equity participation in the Acquiring Person which is otherwise not deemed to be significant, as determined prior to the Change in Control by a majority of the disinterested Continuing Directors). - 14 - 8.2 Effect of Change in Control Upon the occurrence of an event of Change in Control, unless otherwise with respect to any Award specifically prohibited by the terms of the second paragraph of Section 6: (a) Any and all Options and Stock Appreciation Rights shall become immediately exercisable. (b) Any restriction periods and restrictions imposed on Restricted Shares (except such as may be required by relevant securities laws) shall lapse, and within ten (10) business days after the occurrence of a Change in Control, the stock certificates representing Restricted Shares, without any restrictions or legend thereon (except a legend as may be required by relevant securities laws), shall be delivered to the applicable Participants; (c) The goal, objective, target value or the like, attainable under all performance Awards shall be deemed to have been fully earned for the entire performance period as of the effective date of the Change in Control, except that all performance Awards which shall have been outstanding less than six (6) months on the effective date of the Change in Control shall not be deemed to have earned the goal, objective, target value, or the like; and (d) Subject to ss. 14.3 hereof, all such other actions and modifications to the Awards as determined by the Board or Committee to be appropriate before the Change in Control of the Corporation shall become effective. 9. Relationship of the Plan to Benefit Plans The amount of Bonuses to any Participant under this Plan shall be eligible for inclusion in the Participant's earnings base for the purpose of determining the benefits to which the Participant is entitled under retirement, pension, excess benefit, thrift, savings, profit-sharing, insurance, long-term disability and other benefit plans, if any, of the Corporation as determined by the Board or Committee. No other income of a Participant attributable to this Plan shall be included in the Participant's earnings for purposes of any benefit plan in which the Participant may be eligible to participate. 10. Effect of the Plan On Right to Continued Employment and Interest in Particular Property (a) None of the existence of this Plan, any Awards granted pursuant hereto or any Award Agreement shall create any right to continued employment of any Participant by the Corporation. No Participant shall have, under any circumstances, any interest - 15 - whatsoever, vested or contingent, in any particular property or asset of the Corporation or in any particular Share or Shares of the Corporation that may be held by the Corporation (other than Restricted Shares held by a custodian) by virtue of any Award. A Participant may be granted additional Awards under this Plan under such circumstances and at such times as the Board or Committee may determine; provided, however, that no Participant shall be entitled to any Award in the absence of a specific grant by the Board or Committee of an Award, notwithstanding the prior grant of an Award to such Participant. (b) This Plan shall not be deemed a substitute for, and shall not preclude the establishment or continuation of any other plan, practice or arrangement that may now or hereafter be provided for the payment of compensation, special awards or benefits to directors, officer, employees, consultants and agents of the Corporation and its subsidiaries generally, or to any class or group of employees, including without limitation, any retirement, pension, excess benefit, thrift, savings, profit-sharing, insurance, long-term disability, health care plans or other employee benefit plans. Any such arrangements may be authorized by the Corporation and payment thereunder made independently of this Plan. 11. Withholding Taxes and Deferrals 11.1 Cash Withholding The Corporation and its participating subsidiaries shall have the right to deduct from any cash payment made under Awards under this Plan any federal, state, provincial or local income, or other taxes required by law to be withheld with respect to such payment or to take such other action as may be necessary in the opinion of the Corporation to satisfy all obligations for the payment of such taxes. 11.2 Share Withholding Any Share based Award may provide by the grant thereof that the recipient of such Award may elect, in accordance with any applicable laws, rules and regulations, to pay a portion or all of the amount of such minimum required withholding taxes in Shares. In such event, the Participant shall authorize the Corporation to withhold, or shall agree to deliver to the Corporation, Shares owned by such Participant or a portion of the Shares that otherwise would be distributed to such Participant, having a Fair Market Value equal to the amount of withholding tax liability. 11.3 Deferrals The Board or Committee may require or permit a Participant to defer such Participant's receipt of the payment of cash or the - 16 - delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, the satisfaction of any requirements or goals or lapse or waiver of restrictions of an Award made under this Plan. If any such deferment election is required or permitted, the Board or Committee shall establish rules and procedures for such payment deferrals. 12. Compliance With Applicable Legal Requirements No certificate for Shares distributable pursuant to this Plan shall be issued and delivered unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the Securities Act of 1933, as amended from time to time or any successor statute, the Exchange Act and the requirements of the exchanges on which Shares may, at the time, be listed, and the provisions of any foreign securities laws or the rules of foreign securities exchanges, where applicable. 13. Amendments 13.1 Plan Amendments The Board may, insofar as permitted by law, from time to time, with respect to any Shares at the time not subject to Awards, suspend or discontinue this Plan or revise or amend it in any respect whatsoever, provided, however, unless the Committee or the Board, as appropriate, specifically otherwise provides, any revision or amendment that would cause this Plan to fail to comply with any requirement of applicable law, regulation or rule if such amendment were not approved by the stockholders of the Corporation shall not be effective unless and until the approval of the stockholders of the Corporation is obtained. 13.2 Award Amendments Subject to the terms and conditions and within the limitations of this Plan, the Board or Committee may amend, cancel, modify, or extend outstanding Awards granted under this Plan. 13.3 Rights of Participants No amendment, suspension or termination of this Plan nor any amendment, cancellation or modification of any outstanding Award or Award Agreement that would adversely affect the right of any Participant with respect to an Award previously granted under this Plan will be effective without the written consent of the affected Participant. Such written consent may be obtained simultaneously with the grant of any Award. - 17 - 13.4 Rule 16b-3 This Plan is intended to comply with Rule 16b-3 with respect to Participants, if any, who are subject to ss. 16 of the Exchange Act and in the event that the Corporation shall become subject to said ss. 16. Should the requirements of Rule 16b-3 change, the Board or the Committee, as appropriate, may amend the Plan to comply with the requirements of the amended Rule 16b-3 or its successor provision or provisions. 14. Miscellaneous Provisions 14.1 Awards in Various Countries The Board or Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of various countries in which the Corporation or its subsidiaries may operate to assure the viability of the benefits of Awards made to participants employed in such countries and to meet the objectives of this Plan. 14.2 Transferability (a) Awards may not be pledged or assigned and may otherwise be transferred only to the extent provided herein or in an Award Agreement not inconsistent herewith, provided, however, that an Option or Stock Appreciation Right or any other benefit or Award hereunder deemed to be a derivative security shall not be transferable other than by will or the laws of descent and distribution and shall be exercisable during a Participant's lifetime only by him or by his guardian or legal representative or pursuant to a "qualified domestic relations order" as defined by the Code, or such order under the laws of other jurisdictions as shall be similar in effect to a qualified domestic relations order. (b) Notwithstanding the foregoing, however, a Participant may, with the consent of the Board or Committee and subject to such terms and conditions as they may impose, assign or transfer an Award to or among immediate family members, their issue or spouses or to a trust or family partnership of which such immediate family members, their issue or spouses, are beneficiaries or partners, as the case may be. 14.3 Cancellation of Awards Except as otherwise provided in this Plan or in applicable Award Agreements, the terms of which need not be uniform among Participants, if a participant to whom an Award is granted ceases to be employed by the Corporation all of such Participant's unexercised Awards and Awards on which there are restrictions shall be immediately canceled. - 18 - 14.4 Arbitration; Governing Law (a) The Shares are registered in the United States under the Exchange Act and are listed for trading on the United States stock exchange known as The NASDAQ Stock Market, Inc. Any and all disputes whatsoever between a Participant and the Corporation concerning the administration of this Plan, the interpretation and effect of an Award Agreement or of this Plan or the rights of a Participant under an Award Agreement shall be finally determined before one neutral arbitrator in the City of Stamford, Connecticut, U.S.A. under the rules of commercial arbitration of the American Arbitration Association then in effect and judgment upon any award by such arbitrator may be entered in any Court having jurisdiction or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. The arbitrator hereunder shall have no power or authority to award consequential, punitive or statutory damages. (b) This Plan, its administration and all Awards granted hereunder, the terms and provisions of any related Award Agreements and the rights of all Participants shall be governed and interpreted in accordance with the laws of Connecticut U.S.A. - 19 - EX-4.3 3 STOCK OPTION AWARD AGREEMENT Exhibit 4.3 CLEAN DIESEL TECHNOLOGIES, INC. 1994 INCENTIVE PLAN STOCK OPTION AWARD AGREEMENT STOCK OPTION AWARD AGREEMENT dated as of between Clean Diesel Technologies, Inc., a Delaware corporation ("the Company"), of 300 Atlantic Street, Stamford, Connecticut, and , a director, officer, employee of or consultant to the Company or an affilliate thereof ("the Participant"). WHEREAS, the Company desires, to afford to the Participant an opportunity to purchase shares of the Company's Common Stock pursuant to the grant of an option under the Company's 1994 Incentive Plan; and WHEREAS, the Participant desires to obtain such opportunity; NOW THEREFORE, the parties agree, as follows: 1. Option Grant. The Company grants to the Participant the right and option ("this Option"), to purchase shares of Common Stock of the Company, par value $.05 per share ("the Stock") at the exercise price per share of U.S. $ , subject, in all respects, to the terms and conditions of the Plan and to the following terms and conditions. 2. Term. The term of this Option shall be a period ending on the day (the "Expiration Date) ten (10) years from the date first set out above. 3. Vesting. (a) This Option shall only be first exercisable, in whole or in part, with respect to the following number of shares on the following dates: Shares Dates ------ ----- (b) This option shall terminate and all option shares granted hereunder, whether vested or unvested, shall become non-exercisable immediately upon the termination of the Participant's status as a director, officer, employee of or consultant to the Company or an affilliate thereof; provided, however, that if such status of the Participant shall be terminated with the prior consent of the Board, and provided that such termination is not for cause (of which the Board shall be the sole judge), the Board may permit options hereunder to be exercised by the Participant at any time, Option Award Agreement, p. 2. during the period ending not later than the Expiration Date as the Board shall agree, provided such option would have been able to have been excercised according to its terms absent such termination. (c) In the event of the Participant's death, total disability or retirement, such portion of this Option as shall have vested and shall remain unexercised, may be exercised by the Participant or the Participant's Beneficiary at any time during the period ending not later than the Expiration Date, provided that such option would have been able to have been exercised according to its terms absent such death, total disability or retirement. (d) Pursuant to and as defined in the Plan, this Option shall immediately vest upon a "Change of Control" of the Company. 4. Method of Exercise. This Option may be exercised only by one or more notices from time to time in writing of the Participant's intent to exercise this Award, or a portion thereof, delivered to the Secretary of the Company accompanied by the Participant's check in the amount of the exercise price. 5. Taxes. At the time of exercise of this Option, the Participant shall deliver to the Company, if required by the Company, a check payable to the Company equal, in the sole opinion of the Company, to the applicable National, State or Provincial and local income or other taxes legally required to be withheld, stopped or paid by reason of such exercise. 6. Transferability. This Option may not be transferred, assigned or pledged except in accordance with the Plan. IN WITNESS WHEREOF, the Company and the Participant have each executed this Agreement, all as of the day and year first above written. CLEAN DIESEL TECHNOLOGIES, INC By: ------------------------------- ----------------------------------- (Vice) President Participant EX-5.0 4 OPINION GENERAL COUNSEL Exhibit 5.0 November 27, 1996 Board of Directors Clean Diesel Technologies, Inc. Suite 702, 300 Atlantic Street Stamford CT 06901 Dear Sirs: This opinion is rendered in connection with the registration on Form S-8 ("the Registration Statement") of 312,500 shares of Common Stock (the "Shares") of Clean Diesel Technologies, Inc. (the "Company") pursuant or subject to the 1994 Incentive Plan of the Company. In rendering this opinion I have reviewed the Articles of Incorporation of the Company, as amended, and such other documents as I deemed relevant in the circumstances. In my opinion such of the Shares as are to be issued under stock option agreements extant as of the date hereof have been duly authorized, and, when approved by resolution of the Board of Directors of the Company and covered by future stock option agreements, the remainder of the Shares shall have been duly authorized. Further, in my opinion, when payment of the exercise price is made to and certificates therefor are issued by the Transfer Agent and Registrar of the Company, the Shares evidenced by such certificates shall be validly issued and non-assessable. I consent to the reference to this opinion in the Registration Statement and to its inclusion as an exhibit to the Registration Statement. Very truly yours, /s/ C.W. Grinnell Charles W. Grinnell Vice President, General Counsel & Corporate Secretary EX-23.1 5 CONSENT OF INDEPENDENT AUDITORS Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8) of Clean Diesel Technologies, Inc. pertaining to the 1994 Incentive Plan of Clean Diesel Technologies, Inc., as amended through August 8, 1996, of our report dated March 11, 1996 with respect to the fiancial statements of Clean Diesel Technologies, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1995,filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Ernst & Young LLP Stamford, Connecticut November 27, 1996 -----END PRIVACY-ENHANCED MESSAGE-----