-----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, UQpLG/vkmTwWPUFyNOqXsmNPurIEWLmUyFdsGrAwPyIlTo/aEZruU2XuE2ocCa1x wUTnUZ1uPttQ4COx3otYrQ== 0001140361-09-007185.txt : 20090316 0001140361-09-007185.hdr.sgml : 20090316 20090316173125 ACCESSION NUMBER: 0001140361-09-007185 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090316 DATE AS OF CHANGE: 20090316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAN DIESEL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000949428 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 061393453 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33710 FILM NUMBER: 09685654 BUSINESS ADDRESS: STREET 1: 300 ATLANTIC ST STREET 2: STE 702 CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2033277050 MAIL ADDRESS: STREET 1: 300 ATLANTIC ST STREET 2: STE 702 CITY: STAMFORD STATE: CT ZIP: 06901 10-K 1 form10k.htm CLEAN DIESEL TECHNOLOGIES 10-K 12-31-2008 form10k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
_____________

Form 10-K
_____________
(Mark One)
T
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2008
or

£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________

Commission File No.:  001-33710

CLEAN DIESEL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
  
06-1393453
 (State or other jurisdiction of incorporation or organization
  
 (I.R.S. Employer Identification No.)

Suite 1100, 10 Middle Street
Bridgeport, CT  06604
_________________________________________
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:  (203) 416-5290

Securities registered pursuant to Section 12(b):

Title of each class
  
Name of each exchange on which registered
Common Stock, $0.01 par value
  
The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g): None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in rule 405 of the Securities Act.  Yes £ No T

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes £ No T

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes T No £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer £         Accelerated filer T         Non-accelerated filer £         Smaller reporting company £
                                                                                                                                (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes £ No T

The aggregate market value of the voting stock held by non-affiliates of the registrant based on the last sale price as of June 30, 2008 was $94,164,815.

As of March 10, 2009, the outstanding number of shares of the registrant’s common stock, par value $0.01 per share, was 8,138,304.

Documents incorporated by reference:

Certain portions of the proxy statement for the annual meeting of stockholders to be held on May 13, 2009 are incorporated by reference into Part III of this report.
 
 
1
 
 
CLEAN DIESEL TECHNOLOGIES, INC.

Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2008


Table of Contents

PART I
        
1.
    
3
1A.
    
14
1B.
    
19
2.
    
19
3.
    
19
4.
    
19
PART II
        
5.
    
19
6.
    
22
7.
    
23
7A.
    
33
8.
    
34
9.
    
58
9A.
    
58
9B.
    
59
PART III
        
10.
    
60
11.
    
60
12.
    
60
13.
    
60
14.
    
60
PART IV
        
15.
    
61
     
65

_____________________________


The information called for by Part III, Items 10, 11, 12, 13 and 14, to the extent not included in this Annual Report on Form 10-K, is incorporated herein by reference to the information to be included under the captions “Election of Directors,” “Directors and Executive Officers of Clean Diesel Technologies,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Committees of the Board,” “Executive Compensation,” “Directors’ Compensation,” “Employment Contracts and Termination of Employment and Change in Control Arrangements,” “Compensation Committee Interlocks and Insider Participation,” “Report of the Compensation Committee on Executive Compensation,” “Security Ownership of Certain Owners,” “Security Ownership of Officers and Directors” and “Appointment of Independent Registered Public Accounting Firm” in the definitive proxy statement to be filed in connection with Clean Diesel Technologies, Inc.’s 2009 annual meeting of stockholders.


PART I

Business

Pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, this Annual Report on Form 10-K contains forward-looking statements that reflect our estimates, expectations and projections about our future results, performance, prospects and opportunities.  Forward-looking statements include all statements that are not historical facts.  These statements are often identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “plan,” “may,” “should,” “will,” “would” and similar expressions.  These forward-looking statements are based on information available to us and are subject to numerous risks and uncertainties that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, the forward-looking statements we make in this Annual Report.  The discussion in the section “Risk Factors” in Item 1A. of this Annual Report highlight some of the more important risks identified by management but should not be assumed to be the only factors that could affect our future performance.  Additional risk factors may be described from time to time in our future filings with the Securities and Exchange Commission (SEC).  Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.  You should not place undue reliance on any forward-looking statements.  Risk factors are difficult to predict, contain material uncertainties that may affect actual results and may be beyond our control.  Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.  

Unless otherwise indicated or required by the context, as used in this Annual Report on Form 10-K, “CDT” and the terms “Company,” “we,” “our” and “us” refer to Clean Diesel Technologies, Inc. and its wholly-owned subsidiary, Clean Diesel International, LLC.

The Clean Diesel Technologies, Inc. name and logo, Platinum Plus®, ARIS® and Biodiesel Plus™ are either registered trademarks or trademarks of Clean Diesel Technologies, Inc. in the United States and/or other countries.  All other trademarks, service marks or trade names referred to in this Annual Report are the property of their respective owners.

General

We develop, design, market and license patented technologies and solutions that reduce harmful emissions from internal combustion engines while improving fuel economy and engine power.  We are a Delaware corporation formed in 1994 as a wholly-owned subsidiary of Fuel Tech, Inc., a Delaware corporation (formerly known as Fuel-Tech N.V., a Netherlands Antilles limited liability company) (“Fuel Tech”).  We were spun-off by Fuel Tech in a rights offering in December 1995.  Since inception, we have developed a substantial portfolio of patents and related proprietary rights and extensive technological know-how.

Key operating activities in 2008 include the following:

 
·
Licensed wire mesh filter technology to Headway Machine Co., Ltd. (Zhucheng City, China), the largest commercial diesel engine exhaust company in China which enables Headway to develop the wire mesh filter technology to provide particulate matter emission reduction solutions to China-based truck manufacturers.
 
·
Received approval for the inclusion of our Purifier e4 retrofit technology in the Scottish Government Emissions Reduction Register program.
 
·
Executed a worldwide, non-exclusive license agreement with Hilite International, Inc., a leading supplier of automotive powertrain components headquartered in Cleveland, Ohio that covers our patented Advanced Reagent Injector System (ARIS) airless injection technology for selective catalytic reduction (SCR) control of vehicle oxides of nitrogen emissions and rights to our patented combination of the use of exhaust gas recirculation (EGR) in conjunction with SCR for reducing fuel consumption while meeting stringent emissions standards.
 
·
Executed non-exclusive worldwide license agreement with Eaton Corp. (Ohio US) that covers our patented ARIS® technologies for control of oxides of nitrogen using SCR emission control and the combination of EGR with SCR technologies.  Eaton will use our technology for injection of hydrocarbon fuel in emissions reduction applications, including Eaton's Aftertreatment System.  This technology can also be applied to regeneration of diesel particulate filters and lean NOx traps in various global applications.
 
 
 
·
Supplied our Purifier particulate matter emission control technology as a retrofit solution to commercial operators owning older vehicles to comply with requirements for the London Low Emission Zone (LEZ).

Ongoing Operations Update

The Company’s key technologies and products are detailed below and they continue to fuel the growth of the Company as key deadlines approach to meet more stringent global emissions regulations.  Among them, the ARIS® technology continues to be used by leading industry players, while the great majority of engine manufacturers have publicly stated their intent to use the combination of exhaust gas recirculation (EGR) and selective catalytic reduction (SCR) technologies to meet more stringent emission regulations.  In addition, global retrofit opportunities continue to expand as both countries and locales worldwide attempt to address clean air issues.  As a result, the Company is intensifying efforts to position its technologies as key, market-proven enablers to reduce diesel emissions.  As a means to that end, executive and structural changes have been made to aid in the Company’s evolution from a research and development mindset to that of commercialization and monetization of its intellectual property.  Moreover, critical focus has been placed on firm operational controls further supporting the Company’s transition to profitable growth.

Technology and Intellectual Property

Our technology is comprised of patents, patent applications, trade or service marks, data and know-how.  Our technology was initially acquired by assignment from Fuel Tech and has subsequently been primarily developed internally.  As owner, we maintain the technology at our expense.  The agreement with Fuel Tech provided for annual royalties which commenced in 1998 and terminated in 2008 of 2.5% of the gross revenue derived from the sale of the Platinum Plus® fuel-borne catalyst, a diesel fuel additive for emissions control and fuel economy improvement in diesel engines.

In 2008, we filed 29 foreign patent applications.  In 2007, we filed ten U.S. and two foreign patent applications.  During 2006, we filed three U.S. and five foreign patent applications.

As of December 31, 2008, we held 192 patents and an extensive library of performance data and technological know-how.  We have patent coverage in North America, Europe, Asia and South America.  Our patent portfolio as of December 31, 2008 includes 27 U.S. patents and 165 corresponding foreign patents along with 127 pending U.S. and foreign patent applications.  We continue to make invention disclosures for which we are in the process of preparing patent applications.  Our patents have expiration dates ranging from 2009 through 2026, with the majority of the material patents upon which we rely expiring in 2018 and beyond.  We believe that we have sufficient patent coverage surrounding our core patents that effectively serves to provide us longer proprietary protection.

We have made substantial investments in our technology and intellectual property and have incurred development costs for engineering prototypes, pre-production models, verifications by U.S. Environmental Protection Agency (EPA) and others and field-testing of several products and applications.  Our intellectual property strategy has been to build upon our base of core technology that we have developed or acquired with newer advanced technology patents developed by or purchased by us.  In many instances, we have incorporated the technology embodied in our core patents into patents covering specific product applications, including product design and packaging.  We believe this building-block approach provides greater protection to us and our licensees than relying solely on the core patents.



Our core patents, advanced patents and patent applications cover the means of controlling the principal emissions from diesel engines:

·
nitrogen oxides (NOx);
·
particulate matter (PM);
·
carbon monoxide (CO);
·
hydrocarbon (HC); and
·
carbon dioxide (CO2).

Our core patents, advanced patents and patent applications include the following:

 
·
Fuel-borne catalysts;
 
·
Selective catalytic reduction;
 
·
Catalyzed wire mesh diesel particulate filters;
 
·
Biofuels; and
 
·
Emission control systems.

Our key technologies include the following:

 
·
The cost effective means of controlling the principal emissions from diesel engines (nitrogen oxides, particulate matter, carbon monoxide and hydrocarbon).
 
·
Reduction of carbon dioxide and other greenhouse gas emissions by enhancing combustion efficiency and by enabling long-term reliable performance of emission control systems.
 
·
Effective utilization of strategic catalytic materials such as platinum enables reduced emission control system costs, recycling strategies and low nitrogen dioxide emission levels.
 
·
Low cost, reliable and durable diesel particulate filter performance through catalyzed wire mesh filter systems in retrofit applications.

Protecting our intellectual property rights is costly and time consuming.  We incur patent-related expenses for patent filings, prosecution, maintenance and annuity fees which amounted to $227,000, $364,000 and $235,000 for the years ended December 31, 2008, 2007 and 2006, respectively.  We incur maintenance fees to maintain our granted U.S. patents and annuity fees to maintain foreign patents and the pending patent applications.

We rely on a combination of patent, trademark, copyright and trade secret protection in the U.S. and elsewhere as well as confidentiality procedures and contractual provisions to protect our proprietary technology.  Further, we enter into confidentiality and invention assignment agreements with our employees and confidentiality agreements with our consultants and other third parties.  There can be no assurance that pending patent applications will be approved or that the issued patents or pending applications will not be challenged or circumvented by competitors.  Certain critical technology incorporated in our products is protected by patent laws, trade secret laws, confidentiality agreements and licensing agreements.  There can be no assurance that such protection will prove adequate or that we will have adequate remedies for disclosure of the trade secrets or violations of the intellectual property rights.

Business Strategy

Our strategy is to maximize our revenue by penetrating the diesel emission reduction market to the greatest extent possible.  To achieve this objective, we will use licensing agreements with OEMs, Tier One suppliers, retrofit system integrators and other suppliers.  Our standard licensing agreements are structured so that we derive revenue from license fees and on-going royalties.  In 2009, we will seek broader market coverage by not only strengthening our marketing and distribution channels but also stressing value propositions that highlight our unique environmental benefits, fuel economy improvements and practical, lower cost emission control.  We intend to spur the market demand for current and potential licensees and ensure that the full value of our technology is realized by the end user.

Solutions and Products

We have succeeded in developing technologies and products that, when combined with other after-treatment devices, reduce particulates and nitrogen oxides emissions from diesel engines to or below the U.S. and international regulated emission levels, while also improving fuel economy.  This results in a reduction in fuel costs and greenhouse gas emissions, primarily carbon dioxide, as well as a reduction in emissions of particulate matter, nitrogen oxides, carbon monoxide and unburned hydrocarbons.


As described below, our products and solutions include the Platinum Plus fuel-borne catalyst; ARIS®, an advanced reagent injection system used in selective catalytic reduction systems for control of emissions of nitrogen oxides from diesel engines and for hydrocarbon injection applications; diesel particulate filter technology based on catalyzed wire mesh filter elements; and biofuels technology including Biodiesel Plus™.

Platinum Plus Fuel-Borne Catalyst

We have developed and patented our Platinum Plus fuel-borne catalyst as a diesel fuel soluble additive, which contains minute amounts of organo-metallic platinum and cerium catalysts.  Platinum Plus is used to improve combustion which acts to reduce emissions and improve the performance and reliability of emission control equipment.  Platinum Plus fuel-borne catalyst takes catalytic action into engine cylinders where it improves combustion, thereby reducing particulates, unburned hydrocarbons and carbon monoxide emissions, which also results in improving fuel economy.  Thus, Platinum Plus fuel-borne catalyst lends itself to a wide range of enabling solutions including fuel economy, diesel particulate filtration, low emission biodiesel, carbon reduction and exhaust emission reduction.

Field trials in 2008 using Platinum Plus fuel-borne catalyst demonstrated improvement in fuel economy from 9% to 12%.  Our Platinum Plus fuel-borne catalyst can be used alone with diesel fuels, from regular to ultra-low sulfur diesel, as well as biodiesel fuel blends; to reduce particulate emissions by 10% to 25% from the engine, while also improving the performance of diesel oxidation catalysts and particulate filters.  Use of fuel-borne catalysts also keeps particulate filters cleaner by burning off the soot particles at lower temperatures and further reducing toxic emissions of carbon monoxide and unburned hydrocarbons.  Platinum Plus has also been shown to provide energy efficiency and emissions reduction benefits when applied with two-stroke gasoline powered engines, including those commonly used in Asian markets.

Through our strategic use of independent test laboratories from 1996 to the present, we have conducted research and development programs on platinum fuel-borne catalysts which were conducted by Delft Technical University (Netherlands), Ricardo Consulting Engineers (U.K.), Cummins Engine Company (U.S.), West Virginia University (U.S.), the Technical University of Dresden (Germany) and Southwest Research Institute (U.S.).  This approach allows our technical team to execute programs on a cost effective basis while bringing in a wide range of expertise.  Most importantly, the results have been independently derived.

We received EPA registration in December 1999 for the Platinum Plus fuel-borne catalyst for use in bulk fuel by refiners, distributors and fleets.  In 2000, we completed the certification protocol for particulate filters and additives for use with particulate filters with VERT, the main recognized authority in Europe that tests and verifies diesel particulate filters for emissions and health effects.  In 2001, the Swiss environmental agency BUWAL approved the Platinum Plus fuel-borne catalyst for use with particulate filters.  In 2002, the U.S. Mining, Safety and Health Administration accepted Platinum Plus fuel-borne catalyst for use in all underground mines.  In July 2008, the EPA released a general statement regarding emissions from platinum-based fuel additives which indicated that the EPA is evaluating available emissions data and health effects studies in an effort to assess potential health risks associated with platinum- or cerium-based fuel additives.  We are cooperating with the EPA to plan and conduct further definitive testing with respect to these questions, which testing costs we have included in our 2009 budget.

Platinum Plus for Diesel Emission Reduction

The Platinum Plus fuel-borne catalyst can be used alone with all diesel fuels, including regular sulfur diesel, ultra-low sulfur diesel, arctic diesel (kerosene) and biodiesel fuels to reduce particulate emissions by 10% to 25%.  Environmentally conscious corporations and fleets can utilize this solution to voluntarily reduce emissions while obtaining an economic benefit.

We received the EPA’s Environmental Technology Verification in 2003 for our Platinum Plus fuel-borne catalyst and a diesel-oxidation catalyst (the Platinum Plus “Purifier e2 System”) for pre-1996 manufactured engines, which are higher emitters of particulates and nitrogen oxides than newer engines, as well as verification extension for our fuel-borne catalysts with diesel-oxidation catalysts to cover engines manufactured between 1994 and 2003.  We were recognized early as a company making enabling, cost-effective emission reduction technologies available for the retrofit market.  Effective January 1, 2009, the EPA adopted new regulations for nitrogen dioxide (NO2) emissions testing, now harmonized with the newly implemented California Air Resources Board (CARB) requirements.  We provided a dossier of information to the EPA based on our prior testing to demonstrate the low NO2 performance features of this verified product.  Although the test results were positive, EPA determined that further testing in accordance with the new protocols was required to restore the verified status.  We are cooperating with the EPA in evaluating the requirements for a new testing and verification program in accordance with the new EPA and CARB protocol.  Until satisfactorily completing test programs to meet these EPA requirements, our verification status has been moved by the EPA to the “Formerly Verified Systems” section of the EPA website.  We do not believe this has a material impact on our business.


Diesel particulate filters trap up to 95% of the exhaust particulate matter but, in doing so, can become clogged with carbon soot.  Use of fuel-borne catalysts reduces the amount of particulate matter which the filter is exposed to, and further reduces emissions of toxic carbon monoxide and unburned hydrocarbons.  Our fuel-borne catalyst also significantly lowers the temperature at which the captured soot will burn, thereby allowing the particulate filters to regenerate themselves and stay cleaner during a wider range of operating conditions.

Platinum Plus fuel-borne catalyst is increasingly utilized as a diesel particulate filter regeneration additive.  In Europe, it is currently being supplied into the U.K., Denmark, Belgium, Switzerland, Sweden, Austria and Holland markets through distribution sources for aftermarket retrofit applications.  The Platinum Plus fuel-borne catalyst has also found application in the U.K. to alleviate soot blocking from light drive cycle bus applications.  In Asia, we are conducting field trials and developing relationships with Asian distributors to fully exploit this growing market.  In the U.S., the Platinum Plus fuel-borne catalyst has been accepted for use by the Mine Safety and Health Administration in underground mines and has been successfully used as a regeneration aid for vehicles fitted with lightly catalyzed diesel particulate filters.

Furthermore, in the passenger car market where fuel-borne catalyst technology dominates the diesel particulate filter regeneration market, engine testing conducted most recently in 2006 at a European testing institute reconfirmed the ability to reduce total platinum usage of an emission control device by up to 70%, thus, offering significant cost saving for passenger car manufacturers.

Platinum Plus for Fuel Economy

We believe that recent volatility in the cost of fuel has made the economic impact of greater fuel economy an important consideration in many industries.  Further, recent media focus on global warming and the effects of fuel consumption on the environment has resulted in an increased interest in Platinum Plus fuel-borne catalyst from a standpoint of corporate social responsibility.  The improvement attributable to Platinum Plus fuel-borne catalyst may vary as a result of engine age, application in which the engine is used, load, duty cycle, speed, fuel quality, tire pressure and ambient air temperature.  Generally, after use of Platinum Plus fuel-borne catalyst during a conditioning period (dependent on the amount of platinum that gets introduced into the engine, which period varies by the surface area of the motor), our customers derive economic benefits from the use of our Platinum Plus fuel-borne catalyst whenever the price of diesel fuel is in excess of $0.81 per U.S. gallon.  In other words, at or above that level, the economic benefit our customers derive from use of our Platinum Plus fuel-borne catalyst exceeds the cost of the additive.  When coupled with the demand to reduce carbon dioxide emissions from transportation and distributed power generation, the argument for use of Platinum Plus is a persuasive one.

In 2008, we conducted fuel economy field trials for the purpose of demonstrating the fuel economy benefits and emission reduction attributable to Platinum Plus fuel-borne catalyst.  The improvement in fuel economy from using Platinum Plus fuel-borne catalyst in these field demonstrations for rail and on-road fleets was from 9% to 12%.

Platinum Plus for Biodiesel

When used with blends of biodiesel and ultra-low sulfur diesel, our Biodiesel Plus™ product, Platinum Plus fuel-borne catalyst prevents the normal increase in nitrogen oxides associated with biodiesel, as well as offering emission reduction in particulates and reduced fuel consumption.  This enables biodiesel producers to differentiate and offer a premium biodiesel with reduced environmental impact and improved performance.  The biodiesel market is still in its infancy and is expected to expand over the next several years.


ARIS Selective Catalytic Reduction

The ARIS (Advanced Reagent Injection System) is our patented airless, return-flow system for the injection of reducing reagents for such applications as the low NOx trap, active diesel particulate filter regeneration, and selective catalytic reduction.  The primary use of the ARIS system to date has been in conjunction with selective catalytic reduction for both stationary diesel engines for power generation and mobile diesel engines used in transportation.  The system is comprised of our patented single fluid computer-controlled injector that provides precise injection of nontoxic urea-based reagents into the exhaust of a stationary or mobile engine, where the system then converts harmful nitrogen oxides across a catalyst to harmless nitrogen and water vapor.  The system works well with various reagents including hydrocarbon and has shown reduction of nitrogen oxides of up to 90% on a steady-state operation and of up to 85% in transient operations.  This process, known as selective catalytic reduction, has been in use for many years in power stations, and it is well proven in mobile and stationary applications.  The ARIS system is a compact version of the selective catalytic reduction injection system.  A principal advantage of the patented ARIS system is that compressed air is not required to operate the system and that a single fluid is used for both nitrogen oxides reduction and injector cooling.  The system is designed for high-volume production and is compact, with very few components, making it inherently cheaper to manufacture, install and operate than the compressed air systems, which were first developed for heavy-duty engines.  ARIS technology is applicable for reduction of nitrogen oxides from all combustion engine types, ranging from passenger car and light duty to large scale reciprocating and turbine engines, including those using gaseous fuels such as liquefied petroleum gas and compressed natural gas.

Combined Use of EGR and SCR

As legislation tightens across the globe, exhaust gas recirculation in combination with selective catalytic reduction is becoming the preferred solution to meet strict nitrogen oxides (NOx) levels.  Once considered competing solutions, we recognized the benefits of combining these technologies to achieve very high levels of emissions reduction with maximum fuel economy.  EGR can be activated to reduce NOx when starting a cold engine, whereas SCR operates at higher temperature when its catalyst is fully active, and at low EGR rates.  With both EGR and SCR in place, engine systems can be fine-tuned to optimize fuel efficiency together with emissions reduction.  We have intellectual property holdings for the design and implementation of these systems.  Most heavy duty manufacturers in the U.S. have now announced their intentions to meet new regulations using the combination of EGR-SCR.  Several leading providers to the industry have already licensed this patent from us.  We are launching a new program to offer commercial licenses to vehicle manufacturers and other suppliers, and conveying to them the rights to practice this patented innovation from the Company.

Catalyzed Wire Mesh Diesel Particulate Filter

The catalyzed wire mesh filter technology was initially developed by Mitsui Co., Ltd. for use in conjunction with our fuel-borne catalyst as a lower cost and reliable alternative to the traditional heavily catalyzed filter systems.  It also provides lower nitrogen dioxide emissions levels relative to traditional, heavily catalyzed filter systems.  The catalyzed wire mesh filter technology was transferred to us under a technology transfer agreement with Mitsui and PUREarth in 2005.  Under the agreement, we acquired the worldwide title (excluding Japan) to the patents and other intellectual properties.  The catalyzed wire mesh filter technology is designed for use in a wide range of diesel engine particulate emission control applications.

We had verified the system (“Purifier e3”) under the EPA’s Environmental Technology Verification protocol in June 2004 as reducing toxic particulates by up to 76%, carbon monoxide by 60%, hydrocarbons by 80% and nitrogen oxides by 9%.  Effective January 1, 2009, the EPA adopted new regulations for NO2 emissions testing, now harmonized with the newly implemented CARB requirements.  We provided a dossier of information to the EPA based on our prior testing to demonstrate the low NO2 performance features of this verified product.  Although the test results were positive, EPA determined that further testing in accordance with the new protocols was required to restore the verified status.  We are cooperating with the EPA in evaluating the requirements for a new testing and verification program in accordance with the new EPA and CARB protocol.  Until satisfactorily completing test programs to meet these EPA requirements, our verification status has been moved by the EPA to the “Formerly Verified Systems” section of the EPA website.

The catalyzed wire mesh filter technology is a durable, low-cost filter designed to bridge the gap between low efficiency diesel-oxidation catalysts and expensive, heavily catalyzed wall-flow particulate filters.  The wire-mesh filter system is designed to work synergistically with a fuel-borne catalyst for reliable performance on a wide range of engines and with a broad range of fuels.  This combined Platinum Plus fuel-borne catalyst/catalyzed wire mesh filter technology is especially suited to solving the challenging problem of delivering a reliable pollution control solution which can be easily retrofitted for the older, higher-emission diesel engines expected to be in service for years to come, and in markets and applications where ultra-low sulfur diesel is not available.


In addition to reducing the cost to achieve these emission reductions, the patented combination with a fuel-borne catalyst permits the catalyzed wire mesh filter to operate effectively at the lower exhaust temperatures found in many stop-and-go service applications.  The fuel-borne catalyst reduces emissions and allows soot captured in the catalyzed wire mesh filter to be reliably combusted at lower exhaust temperatures.  Commercial systems of Platinum Plus fuel-borne catalyst with this durable catalyzed wire mesh filter have demonstrated performance in buses, delivery vehicles, refuse trucks, cranes and off-road equipment.

The Market and the Regulatory Environment

We estimate that worldwide annual consumption of diesel fuel exceeds 260 billion U.S. gallons, including approximately 53 billion in the U.S., 66 billion in Europe and 78 billion in Asia.

New Diesel Engines

While engine manufacturers have traditionally met emissions regulations by engine design changes, we believe that further reduction in emissions can be achieved best by using combinations of cleaner-burning fuels and after-treatment systems such as diesel-particulate filters and catalytic systems for reducing nitrogen oxides.  Like many of the engine-based emissions control strategies, these also generally increase fuel consumption.  The use of our technologies decreases fuel consumption relative to the alternatives.

Emissions regulations for new mobile diesel engines in the major markets of North America, Europe and Asia have continued to tighten and are now 40% to 90% lower than previous regulations.  Regulations in effect by 2010 in the U.S. and by 2009 in Europe and in Asia are expected to reduce the emissions level for new mobile diesel engines from 85% to 99% of the levels mandated in the mid-1980s.  Management expects the market for nitrogen oxide reduction systems in mobile applications to develop between 2009 and 2010.  European engine manufacturers decided to use urea selective catalytic reduction in 2006, beginning with heavy-duty vehicles and likely for use on medium and light vehicles and passenger cars, as well.  There is a clear preference to use a single fluid system for the medium and light trucks, passenger cars and SUVs which have no compressed air system.  It also seems likely that European manufacturers will adopt particulate filters to meet 2009 regulations which have been ratified by the European Parliament.  We have intellectual property holdings for the design and implementation of these systems.

In the non-road sector, new regulations stemming from EPA proposals first made in 2004, will be phased in from 2008 to 2014.  Targeted vehicles include a wide range of construction equipment and agricultural equipment, as well as railroad and marine applications.

We believe the U.S. market for diesel engines is poised for growth due to favorable fuel economy performance of diesel engines, coupled with the increased ability to reduce particulate matter and emissions of nitrogen oxides from such engines.  Europe and Asia already use significantly more mobile diesel engines than the U.S., particularly for passenger and light-duty vehicles.  Engine manufacturers have all employed particulate filters to meet U.S. heavy-duty diesel vehicle regulations effective for the 2007 model year and have indicated their intent to continue this for particulate matter control in 2010.  Major U.S. and European engine manufacturers have committed to adopt urea selective catalytic reduction.  We believe that both particulate filters and nitrogen oxides control technology will be required in Europe and the U.S. in the 2009 to 2010 timeframe.

Existing Diesel Engines and the Retrofit Market

While much of the regulatory pressure and resulting action from engine manufacturers has focused on reducing emissions from new engines, there is increasing concern over pollution from existing diesel engines, many of which have from 20- to 30-year life cycles.  The EPA has estimated that in the U.S. alone there are approximately 11 million diesel powered vehicles which need to be retrofitted over the next ten years.  There is growing interest in the potential market that may exist for retrofitting diesel engines with emissions reduction systems.  Stationary diesel engines, construction equipment and public transportation vehicles such as buses and commercial and municipal truck fleets will all be included in such a retrofit diesel engine market.


The California Air Resources Board declared diesel particulates to be toxic in 1998, and in 2000, it proposed reductions in particulate emissions from over one million existing engines in California as well as more stringent controls for new engines.  The EPA stated its objective for retrofitting vehicles with particulate controls and developed the Clean School Bus U.S.A. program and the Smartway Transport Program to reduce both diesel emissions and fuel consumption on over-the-road trucks and buses.

Competition

Because our principal strategy is the licensing of our technologies, those companies that could be considered as competitors should also be considered as our potential customers.

We face direct competition from companies with far greater financial, technological, manufacturing and personnel resources, including BASF (formerly Engelhard), Donaldson, Cummins Filtration, Innospec (formerly Octel), Oxonica, Rhodia and Johnson Matthey.  We also face indirect competition in the form of alternative fuel consumption vehicles such as those using methanol, hydrogen, ethanol and electricity.

We believe that our technologies and products occupy a strong competitive position relative to others in the diesel emissions reduction technology market.  Competition in EPA verified, or formerly verified, particulate reduction systems for retrofit is from catalyst systems suppliers like Johnson Matthey and BASF.  These companies employ systems that rely on much greater quantities of platinum than we do and that have the undesirable effect of increasing emissions of nitrogen dioxide, a component of nitrogen oxides and a strong lung irritant.  Competition in the diesel fuel additive market is from additive suppliers such as Innospec and Rhodia, who market an iron-based product, and Oxonica, who markets a cerium product for fuel economy improvement.  Our EPA-registered Platinum Plus fuel-borne catalyst provides fuel economy benefits as it competes on performance in regenerating filters and lowering system cost for the system provider by enabling reduced platinum levels and lower overall metal usage which results in less ash buildup on filters.  Platinum Plus fuel-borne catalyst also offers better performance in terms of carbon monoxide and hydrocarbon reduction.  Finally, in the nitrogen oxides control market, competition is from other suppliers of reagent-based post-combustion nitrogen oxides control systems such as Johnson Matthey (including Argillion which it acquired in 2007), Hilite International and KleenAir Systems for retrofit, and Bosch and Hilite International for OEMs.  Each of Bosch and Hilite has a worldwide, non-exclusive technology license agreement with us for the right to use our proprietary technology for a single fluid system which requires no compressed air.

Market Opportunity

We believe our technologies are applicable to all existing diesel engines, all new engines designed to meet upcoming emission standards and all types of fuel, including biodiesel and ultra-low sulfur diesel.  We view the market opportunity as one that may be divided by application and market drivers.  Because of the financial benefit of improved fuel economy along with reduction of greenhouse gases, we have continued to emphasize fuel economy in the markets we serve.

Our intellectual property and technologies are now at the center of developments in the on-road diesel market.  Selective catalytic reduction which utilizes our ARIS technology and diesel particulate filtration which can utilize our Platinum Plus technology are core technologies to the development of the pending generation of cleaner diesels.  We believe this places us in a strong position going forward.  To meet 2010 requirements, some alternative fuels’ strategies will also need to consider means of reducing nitrogen oxides emissions.  Current projects are demonstrating the effective application of our ARIS-based systems with these alternative fuels’ vehicles.

The two principal market drivers for our products are legislative compliance for emission control and fuel economy improvement.  Platinum Plus fuel-borne catalyst is an “enabling technology” that enables emission reductions from the engine itself and enhances performance of the exhaust after-treatment systems while improving fuel economy.  The continued tightening of clean air standards, emissions control regulations, pressure for fuel efficiency and growing international awareness of the greenhouse effect should provide us with substantial opportunities in local markets throughout North America, Europe and Asia.


Without compromising the fuel economy benefits of diesel, a significant reduction of particulate and nitrogen oxides emissions can only be achieved by using combinations of improved engine design, cleaner burning fuels and after-treatment systems such as diesel particulate filters and catalytic systems.  The Platinum Plus fuel-borne catalyst (which improves combustion catalytically and enables higher performance of exhaust treatment devices) and the ARIS selective catalytic reduction technology can form key components of both of these after-treatment systems.

The convergence of greater interest in regulated and greenhouse gas emissions reduction and economic benefit of our products makes the use of our products an attractive benefit to end-users.  Our Platinum Plus fuel-borne catalyst in field trials during 2008 showed 9% to 12% fuel economy improvement.  In Europe, where diesel fuel retails in some countries for as much as four times the U.S. selling price because of the higher tax rate on fuels, potential fuel economy benefits are even more pronounced.

Marketing Strategy and Commercialization
 
After-treatment systems for emissions reduction from diesel engines are now penetrating the diesel market.  The introduction of selective catalytic reduction in Europe and Japan for heavy-duty applications and the move to include diesel particulate traps for diesel passenger cars has confirmed our technology as central to the diesel market.  PSA Peugeot has taken the lead and offers particulate filter systems with fuel-borne catalysts on several of its models.  Other manufacturers such as Volkswagen and Daimler Benz offer diesel particulate filters for their larger vehicles.  In the U.S., Daimler Benz is now promoting the “clean diesel” passenger car under the “Bluetec” brand name which uses selective catalytic reduction to achieve the high nitrogen oxides reduction standards and will likely use airless urea injection.

The EPA and California Air Resources Board programs are accelerating the activities toward creation of active markets for diesel emissions reduction technologies and products in the U.S.  These markets include applications for new vehicles from 2007 onward and retrofit applications in on- and off-road segments, as well as for stationary power generation.  Thus, the market for diesel emissions reduction technologies and products is still emerging.  We expect growing demand for diesel emissions reduction technologies and products for the diesel engine market, owners of existing fleets of diesel-powered vehicles, and expanding requirements from the off-road, marine and railroad sectors.  At the same time, engine OEMs are looking to subsystem suppliers to provide complete exhaust subsystems including particulate filters and/or nitrogen oxides abatement systems and eventually both.

It is an essential requirement of the U.S. retrofit market that emissions control products and systems are verified under the EPA and/or California Air Resources Board protocols to qualify for credits within the EPA and/or California Air Resources Board programs.  Funding for these emissions control products and systems is generally limited to those products and technologies that have already been verified.  As of the date of this report, we do not have EPA verifications which may disadvantage us in attracting customers with access to governmental funding for retrofit programs.  In 2009, we intend to verify our Platinum Plus fuel-borne catalyst in combination with a high performance diesel particulate filter and may also seek to verify our Platinum Plus fuel-borne catalyst with additional emissions control devices manufactured by other vendors.  We may receive recurring revenue from sales of such systems or devices in the event sales of these devices include the Platinum Plus fuel-borne catalyst product as part of the devices’ verification.

We currently manufacture and ship the Platinum Plus fuel-borne catalyst product from a toll blender in the U.S., a toll blender in the U.K. and from a warehouse in the U.S.  However, as demand for the product increases, we intend to expand the manufacturing and distribution by supplying platinum concentrate to third parties with U.S. and foreign facilities pursuant to licensing agreements so that these licensees may market the finished Platinum Plus fuel-borne catalyst products to fuel suppliers and end users.

We have entered into non-exclusive worldwide license agreements for our ARIS nitrogen oxides reduction technology.  We believe this strategy of licensing the products and technologies represents the most efficient way to gain widespread distribution quickly and to exploit demand for the technologies.

We intend to utilize our catalyzed wire mesh filter technology by selling products based upon that technology alone and in combination with our Platinum Plus fuel-borne catalyst.  We developed patent applications in cooperation with external research institutions, which are intended to expand the market uses of the catalyzed wire mesh-based diesel particulate filter technology.


Health Effects, Environmental Matters and Registration of Additives

We are subject to environmental laws in all the countries in which we do business.  Management believes that the Company is in compliance with applicable laws, regulations and legal requirements.

Engine tests in the U.S. and Switzerland show that, when used in conjunction with a diesel particulate filter, from 99% to 99.9% of the Platinum Plus catalyst metal introduced to the fuel system by the fuel-borne catalyst is retained within the engine and exhaust and that the amount of platinum emitted from the use of Platinum Plus fuel-borne catalyst is roughly equivalent to platinum attrition from automotive and diesel catalytic converters.

Metallic fuel additives have come under scrutiny for their possible effects on health.  We registered our platinum additive in 1997 in both the U.S. and the U.K.  The platinum-cerium bimetallic additive required further registration in the U.S. that involved a 1,000-hour engine test and extensive emission measurements and analysis.  The registration of the platinum-cerium bimetallic additive was completed in 1999 and issued in December 1999.

Germany, Austria and Switzerland have set up a protocol (VERT) for approving diesel particulate filters and additive systems used with them.  We completed the required tests under the VERT protocol in 2000 and in January 2001, the Swiss authority BUWAL approved our Platinum Plus fuel-borne catalyst fuel additive for use with a diesel particulate filter.

The U.K. Ministry of Health’s Committee on Toxicity reviewed our Platinum Plus product and all the data submitted by us in December 1996 and stated, “The Committee is satisfied that the platinum emission from vehicles would not be in an allergenic form and that the concentrations are well below those known to cause human toxicity.”  Radian Associates, an independent research consulting firm, reviewed our data and the literature on platinum health effects in 1997 and concluded, “The use of Clean Diesel Technologies’ platinum containing diesel fuel additive is not expected to have an adverse health effect on the population under the condition reviewed.”  Radian Associates also concluded that emissions of platinum from the additive had a margin of safety ranging from 2,000 to 2,000,000 times below workplace standards.

The U.S. Mining Safety and Health Administration accepted the use of Platinum Plus fuel-borne catalyst with particulate filters in 2002, and also allowed its use in all fuel used in underground mining, even without filters.

In 2009, we intend to file with the EPA completed third-party evaluations regarding secondary emissions from our fuel-born catalyst.  We initiated independent tests in 2005 to address questions from the EPA on the use of our fuel-borne catalyst resulting from growing commercial interest in its diesel emission control products.  The results from testing of our Platinum Plus fuel-borne catalyst over eight months at laboratories recognized and approved by the EPA confirmed that any potentially allergenic platinum emissions from the use of the Platinum Plus fuel-borne catalyst were hundreds to thousands of times below the lowest published safe level and were consistent with reported platinum emissions from catalyzed control devices, in the opinion of the scientists.

Revenue

We generate revenue from product sales comprised of fuel-borne catalysts, including our Platinum Plus fuel-borne catalyst products and concentrate, and hardware (primarily, our patented ARIS advanced reagent injector and dosing systems for selective catalytic reduction of nitrogen oxides, our Platinum Plus Purifier System, our fuel-borne catalyst and a diesel-oxidation catalyst, and catalyzed wire mesh filters, including catalyzed wire mesh filters used in conjunction with our Platinum Plus fuel-borne catalyst); license and royalty fees from the ARIS system and other technologies; and consulting fees and other (primarily, engineering and development consulting services).  The following table sets forth the percentage contribution of our revenue sources in relation to total revenue for the years ended December 31, 2008, 2007 and 2006.



(in thousands)
    
   
For the years ended December 31,
 
 
2008
    
2007
    
2006
 
                                 
Product sales
   $ 7,024       94.0%     $ 1,466       29.8%     $ 860       76.6%  
License and royalty revenue
     451       6.0%       3,459       70.2%       74       6.6%  
Consulting and other
  
 
    
   
   
      189       16.8%  
Total
   $ 7,475       100.0%     $ 4,925       100.0%     $ 1,123       100.0%  

The mix of our revenue sources during any reporting period may have a material impact on our operating results.  In particular, our execution of technology licensing agreements, and the timing of the revenue recognized from these agreements, has not been predictable.  To date, we have been dependent on a few customers for a significant portion of our revenue (see “Significant Customers” in Note 2 of Notes to Consolidated Financial Statements).  The geographic areas from which our revenue was recognized for the years ended December 31, 2008, 2007 and 2006 are outlined in Note 14 of Notes to Consolidated Financial Statements.

Our Platinum Plus fuel-borne catalyst concentrate and finished product are sold to distributors, resellers and various transportation segments, including on-road, off-road, rail and marine, among other end users.  Our products and solutions are sold to customers through our distribution network, direct sales and the efforts of our sales consultants and agents.  We license the ARIS nitrogen oxides reduction system and the combination of EGR with SCR to others, generally with an up-front fee for the technology and know-how transfer and an on-going royalty per unit.  We also sell finished ARIS-based selective catalytic reduction systems to potential ARIS licensees and end users.  We believe that the ARIS system can most effectively be commercialized through licensing several companies with a related business in these markets.  We are actively seeking additional ARIS licensees for both mobile and stationary applications in the U.S., Europe and Asia.  We offer rights to the catalyzed wire mesh technology through license agreements as well as selling finished filters for use with our Platinum Plus fuel-borne catalyst.

Sources of Supply

Platinum and cerium are the principal raw materials used in the production of the Platinum Plus fuel-borne catalyst and account for a substantial portion of our product costs. These metals are generally available from multiple sources, and we believe the sources of these are adequate for our current operations.  The cost of platinum or the processing cost associated with converting the metal may have a direct impact on the future pricing and profitability of our Platinum Plus fuel-borne catalyst.  We have a strategy of passing our cost increases along to our customers and have identified opportunities to lower the lifetime platinum cost within the overall system cost.  We do not anticipate a shortage in the supply of the raw materials used in the production of the fuel-borne catalyst in the foreseeable future.  While we have outsourcing arrangements with two companies in the precious metal refining industry to procure platinum, there are no fixed commitments with these parties to provide supplies, and we may make procurement arrangements with others to fulfill our raw materials requirements.  We also have ample licensed and qualified manufacturers for the manufacture on our behalf of hardware components, catalysts, filters and electronics.

Research and Development

We anticipate that we will continue to make significant research and development expenditures to maintain and expand our competitive position.  This includes improving our current technologies and products and developing and acquiring newer technologies and products.

Our research and development costs include verification programs, evaluation and testing projects, salary and benefits, consulting fees, materials and testing gear and are charged to operations as they are incurred.  Our research and development expenses, exclusive of patent costs, totaled approximately $430,000, $428,000 and $510,000, respectively, for the years ended December 31, 2008, 2007 and 2006.   

Insurance

We maintain coverage for the customary risks inherent in our operations.  Although we believe our insurance policies to be adequate in amount and coverage for current operations, no assurance can be given that this coverage will be, or continue to be, available in adequate amounts or at a reasonable cost, or that such insurance will be adequate to cover any future claims.


Employees

As of March 1, 2009, we had 19 full-time employees and two part-time employees.  We also retain outside consultants, including sales and marketing consultants and agents.  As of March 1, 2009, our sales and marketing team consisted of nine employees, sales consultants and agents supported by our executive officers and members of our Board of Directors.

We enjoy good relations with our employees and are not a party to any labor management agreements.

Available Information

We file reports, proxy statements and other documents with the Securities and Exchange Commission ("SEC").  You may read and copy any document we file with the SEC at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549.  You should call 1-800-SEC-0330 for more information on the public reference room.  Our SEC filings are also available to you on the SEC's Internet site at http://www.sec.gov.

We maintain an Internet site at http://www.cdti.com/.  The information posted on our website is not incorporated into this Annual Report on Form 10-K.


Item 1A. 
Risk Factors

Set forth below are the risks that we believe are material to our investors.  This section contains forward-looking statements.  You should refer to the explanation of the qualifications and limitations on forward-looking statements set forth at the beginning of Item 1 of this Annual Report.

Risks Related to Regulatory Matters

We face constant changes in governmental standards by which our products are evaluated.

We believe that, due to the constant focus on the environment and clean air standards throughout the world, a requirement in the future to adhere to new and more stringent regulations both domestically and abroad is possible as governmental agencies seek to improve standards required for certification of products intended to promote clean air.  In the event our products fail to meet these ever-changing standards, some or all of our products may become obsolete.

Future growth of our business depends, in part, on successful verification of our products and retention of our verifications.

We believe that it is an essential requirement of the U.S. retrofit market that emissions control products and systems are verified under the EPA and/or California Air Resources Board protocols to qualify for credits within the EPA and/or California Air Resources Board programs.  Funding for these emissions control products and systems is generally limited to those products and technologies that have already been verified.  In 2009, we intend to verify our Platinum Plus fuel-borne catalyst in combination with a high performance diesel particulate filter with California Air Resources Board.  We have no assurance that our product will be verified by California Air Resources Board or that such a verification will be acceptable to the EPA.  Verification is also useful for commercial acceptability.

EPA verifications were withdrawn on two of our products in January 2009 because available test results were not accepted by EPA as meeting new emissions testing requirements for NO2 measurement.  Although prior testing indicates satisfactory performance can be achieved, we have no assurance that the EPA will determine that the results of the proposed evaluations will meet the new standards, nor whether additional testing which may be required by EPA will be adequate to remove any remaining concern the EPA may have regarding use of our fuel-borne catalyst.


Future growth of our business depends, in part, on enforcement of existing emissions-related environmental regulations and further tightening of emission standards worldwide.

We expect that the future business growth will be driven, in part, by the enforcement of existing emissions-related environmental regulations and tightening of emissions standards worldwide.  If such standards do not continue to become stricter or are loosened or are not enforced by governmental authorities, it could have a material adverse effect on our business, operating results, financial condition and long-term prospects.

New metal standards, lower environmental limits or stricter regulation for health reasons of platinum or cerium could be adopted and affect use of our products.

New standards or environmental limits on the use of platinum or cerium metal by a governmental agency could adversely affect our ability to use our Platinum Plus fuel-borne catalyst in some applications.  In addition, California Air Resources Board requires “multimedia” assessment (air, water, soil) of the fuel-borne catalyst.  The EPA could require a “Tier III” test of the Platinum Plus fuel-borne catalyst at any time to determine additional health effects of platinum or cerium which tests may involve additional costs beyond our current resources.

Risks Related to Our Business and Industry

We face competition and technological advances by competitors.

There is significant competition among companies that provide solutions for pollutant emissions from diesel engines.  Several companies market products that compete directly with our products.  Other companies offer products that potential customers may consider to be acceptable alternatives to our products and services.  We face direct competition from companies with greater financial, technological, manufacturing and personnel resources.  Newly developed products could be more effective and cost efficient than our current or future products.  We also face indirect competition from vehicles using alternative fuels, such as methanol, hydrogen, ethanol and electricity.

We depend on intellectual property and the failure to protect our intellectual property could adversely affect our future growth and success.

We rely on patent, trademark and copyright law, trade secret protection, and confidentiality and other agreements with employees, customers, partners and others to protect our intellectual property.  However, some of our intellectual property is not covered by any patent or patent application, and, despite precautions, it may be possible for third parties to obtain and use our intellectual property without authorization.

We do not know whether any patents will be issued from pending or future patent applications or whether the scope of the issued patents is sufficiently broad to protect our technologies or processes.  Moreover, patent applications and issued patents may be challenged or invalidated.  We could incur substantial costs in prosecuting or defending patent infringement suits.  Furthermore, the laws of some foreign countries may not protect intellectual property rights to the same extent as do the laws of the U.S.

Some of our patents, including a platinum fuel-borne catalyst patent, expired in 2008.  However, we believe that other longer lived patents, including those for platinum and other fuel-borne catalyst materials in combination with after-treatment devices, will provide adequate protection of our proprietary technology, but there can be no assurance we will be successful in protecting our proprietary technology.

As part of our confidentiality procedures, we generally have entered into nondisclosure agreements with employees, consultants and corporate partners.  We also have attempted to control access to and distribution of our technologies, documentation and other proprietary information.  We plan to continue these procedures.  Despite these procedures, third parties could copy or otherwise obtain and make unauthorized use of our technologies or independently develop similar technologies.  The steps that we have taken and that may occur in the future might not prevent misappropriation of our solutions or technologies, particularly in foreign countries where laws or law enforcement practices may not protect the proprietary rights as fully as in the U.S.


There can be no assurance that we will be successful in protecting our proprietary rights.  Any infringement upon our intellectual property rights could have an adverse effect on our ability to develop and sell commercially competitive systems and components.

Our results may fluctuate due to certain regulatory, marketing and competitive factors over which we have little or no control.

The factors listed below, some of which we cannot control, may cause our revenue and results of operations to fluctuate significantly:

 
·
Actions taken by regulatory bodies relating to the verification, registration or health effects of our products.
 
·
The extent to which our Platinum Plus fuel-borne catalyst and ARIS nitrogen oxides reduction products obtain market acceptance.
 
·
The timing and size of customer purchases.
 
·
Customer concerns about the stability of our business which could cause them to seek alternatives to our solutions and products.
 
·
Increases in raw material costs, especially platinum.

An extended interruption of the supply or a substantial increase in the price of platinum could have an adverse effect on our business.

The cost of platinum or the processing cost associated with converting the metal may have a direct impact on the future pricing and profitability of our Platinum Plus fuel-borne catalyst.  The market price for platinum increased from $480 per ounce in early 2002 to $965 per ounce at December 31, 2005, $1,120 per ounce at December 31, 2006, $1,530 per ounce at December 31, 2007 and decreased to $910 per ounce at December 31, 2008.  On January 30, 2009, the London Metal Exchange afternoon fixing for platinum was $990 per ounce.  Although we may minimize this risk through various purchasing and hedging strategies, there can be no assurance that this will be successful.  A shortage in the supply of platinum or a significant, prolonged increase in the price of platinum, in each case, could have a material adverse effect on our business, operating results and financial condition.

Failure to attract and retain key personnel could have a material adverse effect on our future success.

Our success will depend, in large part, on our ability to retain current key personnel, attract and retain future key personnel, additional qualified management, marketing, scientific, and engineering personnel, and develop and maintain relationships with research institutions and other outside consultants.  The loss of key personnel or the inability to hire or retain qualified personnel, or the failure to assimilate effectively such personnel could have a material adverse effect on our business, operating results and financial condition.

We currently depend on the marketability of a limited number of primary products and technologies, including Platinum Plus fuel-borne catalyst, ARIS advanced reagent injection system for selective catalytic reduction, Purifier Systems and catalyzed wire mesh filters.

Our Platinum Plus fuel-borne catalyst, ARIS advanced reagent injection system for selective catalytic reduction, Purifier Systems and our catalyzed wire mesh filter are currently our primary products and technologies.  Failure of any of our products or technologies to achieve market acceptance may limit our growth potential.  Further, our gross profit may vary widely in relation to the mix of products and technologies that we sell during any reporting period.  We may have to cease operations if all of our primary products fail to achieve market acceptance or fail to generate significant revenue.  Additionally, the marketability of our products may be dependent upon obtaining verifications from regulatory agencies such as the EPA, California Air Resources Board, or similar European agencies, as well as the effectiveness of our products in relation to various environmental regulations in the many jurisdictions in which we market and sell our products.

We may not be able to successfully market new products that are developed or obtain direct or indirect verification or approval of our new products.

We plan to market other emissions reduction devices used in combination with the Platinum Plus fuel-borne catalyst, ARIS injector, EGR-SCR, catalyzed wire mesh filter and diesel particulate filter regeneration.  There are numerous development and verification issues that may preclude the introduction of these products for commercial sale.  If we are unable to demonstrate the feasibility of these products or obtain verification or approval for the products from regulatory agencies, we may have to abandon the products or alter our business plan.  Such modifications to our business plan will likely delay achievement of revenue milestones and profitability.


Risks Related to Our Financial Condition

We have incurred losses in the past and expect to incur losses in the future.

We have incurred losses since inception totaling $58.9 million as of December 31, 2008, which amount includes approximately $4.8 million of non-cash preferred stock dividends.  At the date of this Annual Report on Form 10-K, our cash and cash equivalents and investments are estimated to be sufficient for our needs through mid-2010.

We have recognized limited revenues through December 31, 2008 and expect to continue to incur operating losses at least through 2009.  There can be no assurance that we will achieve or sustain significant revenues, positive cash flows from operations or profitability in the future.  See the discussion below under the caption “Liquidity and Capital Resources” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We have no assurances of additional funding.

We may seek additional funding in the form of a private or public offering of equity securities.  Debt financing would be difficult to obtain because of limited assets and cash flows as well as current general economic conditions.  Any equity funding may depend on prior stockholder approval of an amendment to our certificate of incorporation authorizing additional capital.  Any offering of shares of our common stock may result in dilution to our existing stockholders.  Our ability to consummate financing will depend on the status of our marketing programs and commercialization progress, as well as conditions then prevailing in the relevant capital markets.  There can be no assurance that such funding will be available if needed, or on acceptable terms.  In the event that we need additional funds and are unable to raise such funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going commercialization, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects.  See the discussion below under the caption “Liquidity and Capital Resources” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

If third parties claim that our products infringe upon their intellectual property rights, we may be forced to expend significant financial resources and management time litigating such claims and our operating results could suffer.

Third parties may claim that our products and systems infringe upon third-party patents and other intellectual property rights.  Identifying third-party patent rights can be particularly difficult, especially since patent applications are not published until up to 18 months after their filing dates.  If a competitor were to challenge our patents, or assert that our products or processes infringe its patent or other intellectual property rights, we could incur substantial litigation costs, be forced to make expensive product modifications, pay substantial damages or even be forced to cease some operations.  Third-party infringement claims, regardless of their outcome, would not only drain financial resources but also divert the time and effort of management and could result in customers or potential customers deferring or limiting their purchase or use of the affected products or services until resolution of the litigation.

We have been dependent on a few major customers for a significant portion of our revenue and our revenue could decline if we are unable to maintain or develop relationships with current or potential customers.

Historically, we have derived a significant portion of our revenue from a limited number of customers.  For the year ended December 31, 2008, one customer accounted for approximately 15% of our revenue.  For the year ended December 31, 2007, three customers accounted for approximately 70% of our revenue and for the year ended December 31, 2006, two customers accounted for approximately 42% of our revenue.  We intend to establish long-term relationships with existing customers and continue to expand our customer base.  While we diligently seek to become less dependent on any single customer, it is likely that certain contractual relationships may result in one or more customers contributing to a significant portion of our revenue in any given year for the foreseeable future.  The loss of one or more of our significant customers may result in a material adverse effect on our revenue, our ability to become profitable or our ability to continue our business operations.


Foreign currency fluctuations could impact financial performance.

We have increased our activities in the U.K., Europe and Asia, and consequently, are exposed to fluctuations in foreign currency rates.  We may manage the risk to such exposure by entering into foreign currency futures and option contracts.  Foreign currency fluctuations may have a significant effect on our operations in the future.

An inability to realize proceeds from our auction rate securities right issued by UBS may significantly impact our liquidity.

On November 6, 2008, the Company accepted from UBS an Offer to acquire a “put” right to sell to UBS commencing June 30, 2010 the Company's holdings of $11.7 million par value in auction rate securities (ARS).  Also, UBS has established a loan facility whereby the Company may borrow up to 75% of the UBS-determined value of these ARS collateralized by the securities.   There can be no assurance that the financial position of UBS will be such as to afford the Company the ability to acquire the par value of ARS upon exercise of the put right.

We have not and do not intend to pay dividends on shares of our common stock.

We have not paid dividends on our common stock since inception, and do not intend to pay any dividends to our stockholders in the foreseeable future.  We intend to reinvest earnings, if any, in the development and expansion of our business.

The price of our common stock may be adversely affected by the sale of a significant number of new common shares.

The sale, or availability for sale, of substantial amounts of our common stock, including shares issued upon exercise of outstanding options and warrants or shares of common stock that may be issued in the public market or a private placement to fund our operations or the perception by the market that these sales could occur, could adversely affect the market price of our common stock and could impair our ability to raise additional working capital through the sale of equity securities.  The perceived risk of dilution may cause existing stockholders to sell their shares of stock, which would contribute to a decrease in the stock price.  In that regard, downward pressure on the trading price of our common stock may also cause investors to engage in short sales, which would further contribute to downward pressure on the trading price of our stock.

Our common stock is currently listed on The NASDAQ Capital Market and the Alternative Investment Market of the London Stock Exchange.  Our common stock trades on these exchanges in the U.S. and the U.K. and in Germany on various regional stock exchanges and the national electronic exchange (Xetra), and an investor’s ability to trade the stock may be limited by trading volume and price volatility.

The trading volume in our common stock has been relatively limited and a consistently active trading market for our common stock may not develop.  Our common stock began trading on The NASDAQ Capital Market effective October 3, 2007.  Prior to this date, our common stock was traded on the OTC Bulletin Board.  The average daily trading volume in our common stock on these exchanges in 2008 was approximately 7,915 shares.

There has been significant volatility in the market prices of publicly traded shares of emerging growth technology companies, including our shares.  Factors such as announcements of technical developments, verifications, establishment of distribution agreements, significant sales orders, changes in governmental regulation and developments in patent or proprietary rights may have a significant effect on the market price of our common stock.  As outlined above, there has been a low average daily trading volume of our common stock.  To the extent this trading pattern continues, the price of our common stock may fluctuate significantly as a result of relatively minor changes in demand for our shares and sales of our stock by holders.


Unresolved Staff Comments

None.

Properties

We have a five-year lease which expires on March 31, 2009 for 3,925 square feet of administrative office space in Stamford, Connecticut.  The annual cost of the lease including rent, utilities and parking is approximately $128,000.  We entered into a seven-year lease expiring December 2015 for our relocated U.S. headquarters to 10 Middle Street, Bridgeport, Connecticut (5,515 square feet) at an annual cost of approximately $141,000, including utilities.  We have a lease for 1,942 square feet of office space outside London, U.K. through March 2013 at an annual cost of approximately $65,000, including utilities and parking.  We also lease 2,750 square feet of warehouse space in Milford, Connecticut at an annual cost of approximately $21,000 (including utilities) through July 2009.

Legal Proceedings

We are not involved in any legal proceedings.

Item 4. 
Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of our security holders in the fourth quarter of 2008.


Part II

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is listed on The NASDAQ Capital Market in the U.S. effective October 3, 2007, and prior to that date, it traded on the Over-The-Counter Bulletin Board.  Our common stock is also listed on the London Stock Exchange through the Alternative Investment Market (AIM) and also trades in Germany on various regional stock exchanges, including Frankfurt, as well as on the national electronic exchange Xetra.  Reports of transactions of our shares are available on The NASDAQ Capital Market under the trading symbol “CDTI”, on the AIM under the symbol “CDT” and on the Frankfurt exchange under the symbol “CDI”.

The following table sets forth the high and low bid prices of our common stock on the U.S. Over-The-Counter Bulletin Board (OTCBB) or the high and low sale prices of our common stock on The NASDAQ Capital Market and AIM for each of the periods listed.  Prices indicated below with respect to our share price include inter-dealer prices, without retail mark up, mark down or commission and may not necessarily represent actual transactions.

   
OTC Bulletin Board or
    
AIM of the
  
   
NASDAQ Capital Market
    
London Stock Exchange
  
   
High
    
Low
    
High
    
Low
  
   
(In U.S. $)
    
(In GBP)
  
2007
                        
1st Quarter
   $ 12.25     $ 9.00     £ 6.00     £ 4.25  
2nd Quarter
   $ 17.00     $ 10.25     £ 7.75     £ 4.65  
3rd Quarter
   $ 15.00     $ 11.00     £ 8.00     £ 5.50  
4th Quarter
   $ 30.00     $ 12.50     £ 13.24     £ 6.10  
2008
                                
1st Quarter
   $ 24.85     $ 8.74     £ 11.50     £ 5.00  
2nd Quarter
   $ 15.98     $ 10.50     £ 7.05     £ 5.00  
3rd Quarter
   $ 12.25     $ 3.00     £ 6.23     £ 2.98  
4th Quarter
   $ 4.79     $ 1.54     £ 3.00     £ 1.10  


Holders

At February 18, 2009, there were 240 holders of record of our common stock representing approximately 1,600 beneficial owners.

Dividends

No dividends have been paid on our common stock and we do not anticipate paying cash dividends in the foreseeable future.

Sales and Uses of Unregistered Securities During the Period

None.

Equity Compensation Plan Information as of December 31, 2008

The following table represents options and warrants outstanding as of December 31, 2008:

                   
Plan Category
  
Number of Shares to be
Issued Upon Exercise of
Outstanding Options, Warrants and Rights
    
Weighted Average
Exercise Price of
Outstanding Options, Warrants and Rights
    
Number of Shares Remaining Available for Future Issuance
  
Options:
                  
Equity compensation plans approved by security holders
     972,5781     $ 10.19       451,6251  
Equity compensation plans not approved by security holders
     —       —       —  
    Total Options
     972,578     $ 10.19       451,625  
Warrants:
                        
Equity compensation plans approved by shareholders
     —       —       —  
Equity compensation plans not approved by shareholders
     424,992     $ 11.35       —  
    Total Warrants
     424,992     $ 11.35       —  

1 
 Represents awards issued under the Incentive Plan.  The maximum number of awards allowed under the Incentive Plan is 17.5% of our issued and outstanding common stock less the outstanding options, and is subject to a sufficient number of shares of authorized capital.


Stock Price Performance Graph

The graph below compares the cumulative total return to stockholders on the common stock of the Company, the Russell 2000 Index and the NASDAQ Composite Index since December 31, 2003, assuming a $100 investment.  The stock price performance shown on the graph below is not necessarily indicative of future price performance.


Graph

   
12/31/03
    
12/31/04
    
12/31/05
    
12/31/06
    
12/31/07
    
12/31/08
  
 
Clean Diesel Technologies, Inc.
   $ 100     $ 60     $ 35     $ 63     $ 161     $ 18  
 
Russell 2000 Index
      100       117        121        141        138        90  
 
NASDAQ Composite Index
      100       109        111        122        132        64  


Selected Financial Data

The following selected financial data has been derived from our audited consolidated financial statements.  The Statements of Operations Data relating to 2008, 2007 and 2006, and the Balance Sheet Data as of December 31, 2008 and 2007 should be read in conjunction with the audited consolidated financial statements, including the notes thereto in Item 8, “Consolidated Financial Statements and Supplementary Data” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Historical results for any prior period are not necessarily indicative of future results for any period.

   
For the years ended December 31,
  
   
2008
    
2007
    
2006
    
2005
    
2004
  
   
(in thousands, except per share amounts)
  
STATEMENTS OF OPERATIONS DATA
                              
Revenue:
                              
Product sales
   $ 7,024     $ 1,466     $ 860     $ 760     $ 659  
License and royalty revenue
     451       3,459       74       47       54  
Consulting and other
  
─
    
─
       189       5       9  
Total revenue
     7,475       4,925       1,123       812       722  
                                         
Operating costs and expenses:
                                        
Cost of total revenue
     5,717       1,126       658       471       455  
Selling, general and administrative
     9,992       8,041       5,278       4,963       3,962  
Research and development
     430       428       510       439       506  
Patent amortization and other expense
     227       364       235       170       90  
                                         
Loss from operations
     (8,891 )     (5,034 )     (5,558 )     (5,231 )     (4,291 )
Foreign currency exchange (loss) gain
     (845 )     (11 )     104       (221 )     101  
Interest income
     602       509       58       26       47  
Other income (expense), net
     (239 )     1       12    
─
    
─
  
Net loss
   $ (9,373 )   $ (4,535 )   $ (5,384 )   $ (5,426 )   $ (4,143 )
                                         
Basic and diluted loss per common share
   $ (1.15 )   $ (0.66 )   $ (1.03 )   $ (1.48 )   $ (1.29 )
                                         
Basic and diluted weighted-average shares outstanding
     8,138       6,886       5,212       3,678       3,214  
                                         
                                         
   
As of December 31,
  
   
2008
    
2007
    
2006
    
2005
    
2004
  
   
(in thousands)
  
BALANCE SHEET DATA
                                        
Current assets
   $ 12,219     $ 11,871     $ 8,287     $ 5,505     $ 4,868  
Total assets
     18,747       24,663       9,018       6,274       5,513  
Current liabilities
     4,056       1,663       1,070       496       391  
Long-term liabilities
  
─
    
─
    
─
    
─
    
─
  
Working capital
     8,163       10,208       7,217       5,009       4,477  
Stockholders’ equity
     14,691       23,000       7,948       5,778       5,122  


Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We design products and license environmentally-proven technologies and solutions for the global emission reduction market based upon our portfolio of patents and extensive library of performance data and know-how.  We believe our core competence is the innovation, application, development and marketing of technological products and solutions to enable emission control.  Our suite of technologies offers a broad range of market-ready solutions to reduce emissions while saving costs through fuel economy improvement and reduction of engine wear.

We believe that clean air, energy efficiency and sustainability continue to attract increasing attention around the world, as does the need to develop alternative energy sources.  Increasingly, combustion engine development is influenced by concern over global warming caused by carbon dioxide emissions from fossil fuels and toxic exhaust emissions.  Because carbon dioxide results from the combustion of fossil fuels, reducing fuel consumption is often cited as the primary way to reduce carbon dioxide emissions.  Further, because diesel engines are 35% or more fuel-efficient than gasoline engines, the increased use of diesel engines relative to gasoline engines is one way to reduce overall fuel consumption, and thereby, significantly reduce carbon dioxide emissions.  We believe the diesel engine is and will remain a strategic and economic source of motive power.  However, diesel engines emit higher levels of two toxic pollutants – particulate matter and nitrogen oxides – than gasoline engines fitted with catalytic converters.  Both of these pollutants affect human health and damage the environment.  These factors, among others, have led to legislation and standards that may drive demand for our products and solutions.

Our operating revenue consists of product sales, technology licensing fees and royalties, and consulting and other (primarily, engineering and development consulting services).  The following table sets forth the percentage contribution of our revenue sources in relation to total revenue for the years ended December 31, 2008, 2007 and 2006.

(in thousands)
      
   
For the years ended December 31,
  
   
2008
    
2007
    
2006
  
                                     
Product sales
   $ 7,024       94.0%     $ 1,466       29.8%     $ 860       76.6%  
License and royalty revenue
     451       6.0%       3,459       70.2%       74       6.6%  
Consulting and other
  
 
    
   
   
      189       16.8%  
Total
   $ 7,475       100.0%     $ 4,925       100.0%     $ 1,123       100.0%  

The mix of our revenue sources during any reporting period may have a material impact on our operating results.  In particular, our execution of technology licensing agreements, and the timing of the revenue recognized from these agreements, has not been predictable.

Product sales include our patented Platinum Plus® fuel-borne catalyst products and concentrate and hardware (primarily, our patented ARIS® advanced reagent injector and dosing systems for selective catalytic reduction of nitrogen oxides, our Platinum Plus Purifier Systems and catalyzed wire mesh filters).  Our Platinum Plus fuel-borne catalyst is registered with the U.S. Environmental Protection Agency (EPA) and other environmental authorities around the world.  Our products are sold to distributors, resellers, various transportation segments, including on-road, off-road, rail and marine, among other end users, through our distribution network and direct sales.

We license our ARIS nitrogen oxides selective catalytic reduction (SCR) system and the combination of exhaust gas recirculation (EGR) with SCR to others, generally with an up-front fee for the technology and know-how and an on-going royalty per unit.  We also sell finished ARIS-based SCR systems to potential ARIS licensees and end users.  We are actively seeking additional licensees for both mobile and stationary applications.  We offer rights to our catalyzed wire mesh technology through license agreements as well as selling finished filters for use with our Platinum Plus fuel-borne catalyst.

Since inception, we have devoted efforts to the research and development of technologies and products in various areas, including platinum fuel-borne catalysts for emission reduction and fuel economy improvement and nitrogen oxides reduction systems to control emissions from diesel engines.  Although we believe we have made progress in commercializing our technologies, we have experienced recurring losses from our operations.  Our accumulated deficit amounted to approximately $58.9 million as of December 31, 2008.  The internally generated funds from our revenue sources have not been sufficient to cover our operating costs.  The ability of our revenue sources, especially product sales and technology license fees and royalties, to generate significant cash for our operations is critical to our long-term success.  We cannot predict whether we will be successful in obtaining market acceptance of our products or technologies or in completing our current licensing agreement negotiations.  To the extent our internally generated funds are inadequate, we believe that we will need to obtain additional working capital through equity financings.  However, we can give no assurance that any additional financing will be available to us on acceptable terms or at all.


Critical Accounting Policies

The preparation of our financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes to the consolidated financial statements.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based upon assumptions about matters that are uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.  Management believes that of our significant accounting policies (see Note 2 of Notes to Consolidated Financial Statements), the following critical accounting policies involve a higher degree of judgment and complexity used in the preparation of the consolidated financial statements.

Revenue Recognition

Revenue is recognized when earned.  For technology licensing fees paid by licensees that are fixed and determinable, accepted by the customer and nonrefundable, revenue is recognized upon execution of the license agreement, unless it is subject to completion of any performance criteria specified within the agreement, in which case it is deferred until such performance criteria are met.  Royalties are frequently required pursuant to license agreements or may be the subject of separately executed royalty agreements.  Revenue from royalties is recognized ratably over the royalty period based upon periodic reports submitted by the royalty obligor or based on minimum royalty requirements.  Revenue from product sales is recognized when title has passed and our products are shipped to our customer, unless the purchase order or contract specifically requires us to provide installation for hardware purchases.  For hardware projects in which we are responsible for installation (either directly or indirectly by third-party contractors), revenue is recognized when the hardware is installed and/or accepted, if the project requires inspection and/or acceptance.  Other revenue primarily consists of engineering and development consulting services.  Revenue from technical consulting services is generally recognized and billed as the services are performed.

Generally, our license agreements are non-exclusive and specify the geographic territories and classes of diesel engines covered, such as on-road vehicles, off-road vehicles, construction, stationary engines, marine and railroad engines.  At the time of the execution of our license agreement, we convey the right to the licensee to use our patented technologies.  The up-front fees are not subject to refund or adjustment.  We recognize the license fee as revenue at the inception of the license agreement when we have reasonable assurance that the technologies transferred have been accepted by the licensee and collectability of the license fee is reasonably assured.  The nonrefundable up-front fee is in exchange for the culmination of the earnings process as the Company has accomplished what it must do to be entitled to the benefits represented by the revenue.  Under our license agreements, there is no significant obligation for future performance required of the Company.  Each licensee must determine if the rights to our patented technologies are usable for their business purposes and must determine the means of use without further involvement by the Company.  In most cases, licensees must make additional investments to enable the capabilities of our patents, including significant engineering, sourcing of and assembly of multiple components.  Our obligation to defend valid patents does not represent an additional deliverable to which a portion of an arrangement fee should be allocated.  Defending the patents is generally consistent with our representation in the license agreement that such patents are legal and valid.


Research and Development Costs

Costs relating to the research, development and testing of our technologies and products are charged to operations as they are incurred.  These costs include verification programs, evaluation and testing projects, salary and benefits, consulting fees, materials and testing gear.  Our research and development expenses totaled approximately $430,000, $428,000 and $510,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

Patents and Patent Expense

Patents, which include all direct incremental costs associated with initial patent filings and costs to acquire rights to patents under licenses, are stated at cost and amortized using the straight-line method over the remaining useful lives, ranging from one to twenty years.  Indirect and other patent-related costs are expensed as incurred.  Patent amortization expense for the years ended December 31, 2008, 2007 and 2006 was $51,000, $41,000 and $44,000, respectively.

We evaluate the remaining useful life of our patents each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.  If the evaluation determines that the patent’s remaining useful life has changed, the remaining carrying amount of the patent is amortized prospectively over that revised remaining useful life.  We also evaluate our patents for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable.  The testing for impairment includes evaluating the undiscounted cash flows of the asset and the remaining period of amortization or useful life.  The factors used in evaluating the undiscounted cash flows include current operating results, projected future operating results and cash flows and any other material factors that may affect the continuity or the usefulness of the asset.  If impairment exists or if we decide to abandon a patent, the patent is written down to its fair value based upon discounted cash flows.  At December 31, 2008 and 2007, the Company’s patents, net were $1,027,000 and $817,000, respectively.

Newly Adopted Accounting Standards

Effective January 1, 2008, we adopted the provisions of the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” for assets and liabilities measured at fair value on a recurring basis.  SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  Specifically, SFAS No. 157 sets forth a definition of fair value, and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs.  The provisions of SFAS No. 157 are generally required to be applied on a prospective basis, except to certain financial instruments accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” for which the provisions of SFAS No. 157 should be applied retrospectively.

In October 2008, the FASB issued FASB Staff Position (“FSP”) 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”).  FSP 157-3 clarified the application of FAS 157.  FSP 157-3 demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued.  The guidance provided by FSP 157-3 is consistent with our approach to valuing our auction rate securities for which there is no active market.

In the first quarter of 2008, we adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115.”  SFAS No. 159 permits an entity to elect fair value as the initial and subsequent measurement attribute for many financial assets and liabilities.  Entities electing the fair value option would be required to recognize changes in fair value in earnings.  Entities electing the fair value option are required to distinguish, on the face of the statement of financial position, the fair value of assets and liabilities for which the fair value option has been elected and similar assets and liabilities measured using another measurement attribute.  The adjustment to reflect the difference between the fair value and the carrying amount would be accounted for as a cumulative-effect adjustment to retained earnings as of the date of initial adoption.  SFAS No. 159 did not have a material impact on the on the Company’s consolidated financial position, results of operations or cash flows as the Company did not have any such financial assets and liabilities as of January 1, 2008.


Recent Accounting Pronouncements (not yet adopted)

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”).  SFAS No. 141R provides revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination.  SFAS No. 141R also expands required disclosures surrounding the nature and financial effects of business combinations.  SFAS No. 141R will be applied prospectively for acquisitions beginning in 2009 or thereafter.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.”  SFAS No. 160 establishes requirements for ownership interests in subsidiaries held by parties other than the Company (sometimes called “minority interests”) be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity.  All changes in the parent’s ownership interests are required to be accounted for consistently as equity transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value.  The Company does not expect the adoption of SFAS No. 160 will have a material effect on the Company financial position, results of operations or cash flows.

In February 2008, the FASB issued Staff Position 157-2 (“FSP 157-2”).  FSP 157-2 permits delayed adoption of SFAS 157 for certain non-financial assets and liabilities, which are not recognized at fair value on a recurring basis, until fiscal years and interim periods beginning after November 15, 2008.  As permitted by FSP 157-2, the Company has elected to delay the adoption of SFAS 157 for qualifying non-financial assets and liabilities, such as fixed assets and patents.  The Company does not expect the adoption of FSP 157-2 to have a material impact on the on the Company’s consolidated financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161").  SFAS 161 requires enhanced disclosures about an entity's derivative and hedging activities.  These enhanced disclosures will discuss: (a) how and why a company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and its related interpretations and (c) how derivative instruments and related hedged items affect a company’s financial position, results of operations and cash flows.  The Company does not expect the adoption of SFAS No. 161 will have a material impact on the Company’s financial position, results of operations or cash flows.

In April 2008, the FASB issued FSP FAS No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS No. 142-3”).  FSP FAS No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets.  The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007), Business Combinations, and other US generally accepted accounting principles.  FSP FAS No. 142-3 is effective for the Company for fiscal years beginning after December 15, 2008.  The Company does not expect this standard to have any material impact on the Company’s financial position, results of operations or cash flows.

In April 2008, the FASB issued EITF 07-05, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-05”).  EITF 07-05 provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in paragraph 11(a) of SFAS No. 133.  EITF 07-05 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and early application is not permitted.  The Company does not expect the adoption of EITF 07-05 to have a material impact on the Company’s financial position, results of operations or cash flows.


Results of Operations

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Revenue was $7,475,000 in 2008 compared to $4,925,000 in 2007, an increase of $2,550,000, or 51.8%, due primarily to sales of our Purifier Systems as an emission reduction solution that meets the standards established for the London Low Emission Zone.  Of our 2008 operating revenue, 94.0% was from product sales and 6.0% was from technology licensing fees and royalties.  Of our operating revenue for the year ended December 31, 2007, approximately 29.8% was from product sales and 70.2% was from technology licensing fees and royalties.  The mix of our revenue sources during any reporting period may have a material impact on our operating results.  In particular, our execution of technology licensing agreements, and the timing of the revenue recognized from these agreements, has not been predictable.

Product sales increased $5,558,000, or 379.1%, to $7,024,000 in 2008 from $1,466,000 in 2007.  The increase in product sales is attributable primarily to demand for our Platinum Plus Purifier Systems, a product comprised of a diesel particulate filter along with our Platinum Plus fuel-borne catalyst to enable regeneration.  We received approval in October 2007 from Transport for London to supply our Purifier Systems as an emission reduction solution that meets the standards established for the London Low Emission Zone.  The deadlines for compliance with the London Low Emission Zone are being phased in over time for different classifications of vehicles.  February 2008 was the compliance deadline for vehicles greater than 12 metric tons and July 2008 was the compliance deadline for motor coaches and vehicles greater than 3.5 metric tons.  The next compliance deadline is October 2010 for large vans and minibuses, followed by further compliance deadlines in 2012.  We believe sales of our Purifier Systems for compliance with the requirements of the London Low Emission Zone may provide us with recurring revenue from use of our Platinum Plus fuel-borne catalyst that enables the regeneration of the diesel particulate filter.  We believe we will have the opportunity to expand this business model as additional Low Emission Zones are established throughout Europe.  

Our technology license fees and royalties were $451,000 in 2008 compared to $3,459,000 in 2007, a decrease of $3,008,000, or 87.0%, with the decrease attributable to recognition of significant up-front license fees in 2007.  In 2008 and 2007, we executed new technology licensing agreements and recognized revenue from license fees for the use of our ARIS® technologies for control of oxides of nitrogen (NOx) using our selective catalytic reduction (SCR) emission control, the combination of exhaust gas recirculation (EGR) with SCR technologies, and hydrocarbon injection for lean NOx traps, NOx catalysts and diesel particulate filter regeneration.  Our license agreements executed in 2008 include Headway Machinery Co., Ltd. (Zhucheng City, China), Hilite International, Inc. (Cleveland, Ohio) and Eaton Corporation.  The new license agreements executed in 2007 included Robert Bosch GmbH and Tenneco Automotive Operating Company Inc. and amendment of license agreement with Combustion Components Associates, Inc.  We are continuing our efforts to consummate technology license agreements with manufacturers and component suppliers for the use of our technologies.

Total cost of revenue was $5,717,000 for the year ended December 31, 2008 compared to $1,126,000 for the year ended December 31, 2007, an increase of $4,591,000, or 407.7%, due to higher costs and higher product sales volume in 2008 compared to 2007.  Total gross profit as a percentage of revenue was 23.5% and 77.1% for the years ended December 31, 2008 and 2007, respectively, with the decrease attributable to the mix that included higher product sales.  The gross margin for products compliant with the LEZ requirements was initially set at a low level, based on low prices for our products, to attract interest in our offering to establish greater visibility of the Company in the marketplace.  Our international operation implemented price increases late in the third quarter of 2008.  Gross margin for product sales in 2008 was $1,307,000, or 18.6% of product sales, compared to $340,000 in 2007, or 23.2% in 2007.  Our cost of license fee and royalty revenue was zero in 2008 and 2007 resulting in $451,000 and $3,459,000 gross margin, respectively.

Our cost of product sales includes the costs we incur to formulate our finished products into salable form for our customers, including material costs, labor and processing costs charged to us by our outsourced blenders, installers and other vendors, packaging costs incurred by our outsourced suppliers, freight costs to customers and inbound freight charges from our suppliers.  Our inventory is primarily maintained off-site by our outsourced suppliers.  To date, our purchasing, receiving, inspection and internal transfer costs have been insignificant and have been included in cost of product sales.  In addition, the costs of our warehouse of approximately $21,000 per year are included in selling, general and administrative expenses.  Our gross margins may not be comparable to those of other entities, because some entities include all of the costs related to their distribution network in cost of revenue and others like us exclude a portion of such costs from gross margin, including such costs instead within operating expenses.  Cost of consulting and other revenue includes incremental out of pocket costs to provide consulting services.  Cost of licensing fees and royalties is zero as there are no incremental costs associated with the revenue.


Selling, general and administrative expenses were $9,992,000 for the year ended December 31, 2008 compared to $8,041,000 in 2007, an increase of $1,951,000, or 24.3%.  The increase in selling, general and administrative costs is primarily attributable to higher compensation and benefit costs, as well as higher professional fees, occupancy costs and bad debt provision, as discussed further below.  Selling, general and administrative expenses are summarized below:

(in thousands)
            
   
Years ended December 31,
  
   
2008
    
2007
  
Non-cash stock-based compensation
   $ 1,204     $ 1,966  
Compensation and benefits
     4,386       2,997  
Total compensation and benefits
   $ 5,590     $ 4,963  
Professional services
     1,683 *     1,487 *
Travel
     712       622  
Occupancy, property and business taxes, supplies, postage and delivery
     859       511  
Sales and marketing expenses
     400       341  
Bad debt expense
     629       28  
Depreciation and all other
     119       89  
Total
   $ 9,992     $ 8,041  

*  Professional services includes $227,000 of non-cash stock-based compensation charges for fair value of warrants.

The Company’s aggregate non-cash charges for the fair value of stock options and warrants in 2008 were $1,444,000, of which $1,431,000 has been included in selling, general and administrative expenses ($1,204,000 in compensation and $227,000 in professional services) and $13,000 in research and development expenses.  This compares to $2,208,000 in total non-cash stock-based compensation expense in 2007.  Effectively, the 2007 charge reflects two grants of stock options to employees, one grant by the Board of Directors in December 2007 and another in January 2007.

Excluding the non-cash stock-based charges, compensation and benefit expenses were $4,386,000 for 2008 compared to $2,997,000 in 2007, an increase of $1,389,000, or 46.3%, due to new personnel, recruitment and relocation costs, and higher salary rates in 2008 compared to 2007.  The 2008 compensation includes approximately $310,000 in bonuses, whereas, the 2007 compensation includes approximately $400,000 bonus expense based upon achievement of milestones.

Professional fees include investor relations and financial advisory fees along with audit-related costs, including costs of complying with the requirements of Sarbanes-Oxley.  Included in each of 2008 and 2007 is a $227,000 non-cash compensation expense for stock warrants issued for financial advisory services.  The 2008 investor relations program costs were higher than 2007.  Occupancy costs include office rents, insurance, telephone and communications, office supplies and related costs, along with property and various other taxes.  We moved our U.K. administrative offices in November 2007 and our U.S. headquarters in January 2009.  The lease for the new U.S. office provides for more square feet at a lower per square foot cost resulting in total rent expense at a slightly higher rate than 2008 but with lower cash outlay in the early years of the new lease.  Bad debt provision as a percentage of product sales for the year ended December 31, 2008 and 2007 was 9.0% and 1.9%, respectively.  The 2008 provision is attributable to specific aged accounts.

Research and development expenses were $430,000 for the year ended December 31, 2008 compared to $428,000 in 2007, a decrease of $2,000, or 0.5%.  The research and development expenses include $13,000 and $14,000, respectively, in 2008 and 2007 of non-cash charges for the fair value of stock options granted in accordance with SFAS No. 123R.  The 2008 projects included laboratory testing on additive formulations, fuel economy and carbon reduction along with field testing of emission control technologies.  Our 2007 research and development projects included testing required to meet Transport for London’s certification standards for the London Low Emission Zone.  In October 2007, we received approval from Transport for London to supply our Purifier System as an emission reduction solution that meets the standards established for the London LEZ.


Patent amortization and other patent costs decreased to $227,000 in 2008 from $364,000 in 2007, a decline of $137,000, or 37.6%, due to additional costs incurred in 2007 associated with the protection of our patents.  Included are $38,000 and $58,000 in 2008 and 2007, respectively, related to abandonment of some patents in jurisdictions that we deemed unnecessary.  Patent amortization expense for the years ended December 31, 2008 and 2007 was $51,000 and $41,000, respectively.

Interest income was $602,000 for the year ended December 31, 2008 compared to $509,000 in 2007, an increase of $93,000, or 18.3%, due to higher invested balances during the 2008 period, although at lower rates than 2007.

Foreign currency transaction losses, net of gains, were $845,000 and $11,000, respectively for the year ended December 31, 2008 and 2007 due to the strengthening U.S. dollar.

Other expense was $239,000 in 2008 and is comprised of interest expense ($56,000), impairment loss on investments, net ($185,000) and miscellaneous other income.

Interest expense was $56,000 in 2008 compared to zero in 2007 and is due to our borrowing of all of the $3.0 million line of credit we had established with UBS.

The fair value of our auction rate securities (“ARS”) was approximately $10.2 million (par value of $11.7 million) and $18.8 million (par value of $18.8 million) as of December 31, 2008 and 2007, respectively.  We sold $7.1 million of these investments in 2008.  The fair value declined $1.5 million from par value in 2008, which loss was charged to operations.  The fair value of the ARS was determined utilizing a discounted cash flow approach and market evidence with respect to the ARS’s collateral, ratings and insurance to assess default risk, credit spread risk and downgrade risk.  The Company also recorded an auction rate securities right (“ARSR”) at a fair value of $1.3 million and recognized the gain in operations, which, together with the $1.5 million decline in fair value of the ARS, resulted in a net charge to operations in 2008 of $0.2 million included in other expense.  The fair value of the ARSR was based on an approach in which the present value of all expected future cash flows was subtracted from the current fair market value of the securities and the resultant value was calculated as a future value at an interest rate reflective of counterparty risk.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Revenue was $4,925,000 in 2007 compared to $1,123,000 in 2006, an increase of $3,802,000, or 338.6%, reflecting increases in all of our revenue sources, except consulting and other.  Of our operating revenue for the year ended December 31, 2007, approximately 29.8% was from product sales and 70.2% was from technology licensing fees and royalties.  Of our operating revenue for the year ended December 31, 2006, approximately 76.6% was from product sales, 6.6% was from technology licensing fees and royalties and 16.8% was from consulting and other revenue.  The mix of our revenue sources during any reporting period may have a material impact on our operating results.  In particular, our execution of technology licensing agreements, and the timing of the revenue recognized from these agreements, has not been predictable.

In 2007, we made progress in our ongoing initiative to consummate technology license agreements with manufacturers and component suppliers, including execution of new and amended technology licensing agreements for the use of our ARIS technologies for control of oxides of nitrogen (NOx) using our selective catalytic reduction (SCR) emission control, the combination of exhaust gas recirculation (EGR) with SCR technologies, and hydrocarbon injection for lean NOx traps, NOx catalysts and diesel particulate filter regeneration.  Our technology license fees and royalties were $3,459,000 in 2007 compared to $74,000 in 2006 and were primarily attributable to upfront license fees from new and amended licenses.

Product sales increased $606,000, or 70.5%, to $1,466,000 in 2007 from $860,000 in 2006.  The increase in product sales is attributable primarily to higher demand for our Platinum Plus Purifier Systems, a bundled product comprised of a diesel particulate filter along with our Platinum Plus fuel-borne catalyst to enable regeneration.  In October 2007, we received approval from Transport for London to supply our Purifier System as an emission reduction solution that meets the standards established for the London Low Emission Zone.  


Total cost of revenue was $1,126,000 for the year ended December 31, 2007 compared to $658,000 for the year ended December 31, 2006, an increase of $468,000, or 71.1%, due to higher costs and higher product sales volume in 2007 compared to 2006.  Total gross profit as a percentage of revenue was 77.1% and 41.4% for the years ended December 31, 2007 and 2006, respectively, with the increase attributable to the mix that included higher technology license fees and royalty revenue.  Gross margin for product sales in 2007 was $340,000, or 23.2% of product sales, compared to $248,000 in 2006, or 28.8%.  Our cost of license fee and royalty revenue was zero in 2007 resulting in $3,459,000 gross margin.

Our cost of revenue – product sales includes the costs we incur to formulate our finished products into salable form for our customers, including material costs, labor and processing costs charged to us by our outsourced blenders, installers and other vendors, packaging costs incurred by our outsourced suppliers, freight costs to customers and inbound freight charges from our suppliers.  Our inventory is primarily maintained off-site by our outsourced suppliers.  To date, our purchasing, receiving, inspection and internal transfer costs have been insignificant and have been included in cost of revenue – product sales.  In addition, the costs of our warehouse of approximately $21,000 per year are included in selling, general and administrative expenses.  Our gross margins may not be comparable to those of other entities, because some entities include all of the costs related to their distribution network in cost of revenue and others like us exclude a portion of such costs from gross margin, including such costs instead within operating expenses.  Cost of revenue – consulting and other includes incremental out of pocket costs to provide consulting services.  Cost of revenue – licensing fees and royalties is zero as there are no incremental costs associated with the revenue.

Selling, general and administrative expenses were $8,041,000 for the year ended December 31, 2007 compared to $5,278,000 in 2006, an increase of $2,763,000, or 52.3%.  The increase in selling, general and administrative costs is primarily attributable to higher non-cash charges for the fair value of stock options and warrants as discussed further below.  Selling, general and administrative expenses are summarized below:

(in thousands)
            
   
Years ended December 31,
  
   
2007
    
2006
  
Non-cash stock-based compensation
   $ 1,966     $ 304  
Severance
  
      357  
Compensation and benefits
     2,997       2,400  
    Total compensation and benefits
   $ 4,963     $ 3,061  
Professional services
     1,487 *     792  
Travel
     622       538  
Occupancy
     511       406  
Sales and marketing expenses
     341       279  
Bad debts
     28       33  
Depreciation and all other
     89       169  
    Total
   $ 8,041     $ 5,278  

*  Includes $227,000 of non-cash stock-based compensation charges for fair value of warrants.

Compensation and benefit expense for the year ended December 31, 2007 includes $1,966,000 of non-cash charges for the fair value of stock options granted in accordance with SFAS No. 123R, which we adopted in January 2006 compared to $304,000 of non-cash charges for the fair value of stock options in 2006.  Historically, the Board of Directors has granted employee stock options in December each year but did not grant stock options in December 2006 because of financing activities then underway and determined to make those grants in January 2007.  Effectively, the 2007 charge reflects two grants of stock options to employees, one grant by the Board of Directors in December 2007 and another in January 2007 (the grant that would typically have been made in December with respect to the 2006 year).

Professional fees include public relations, investor relations and financial advisory fees along with audit-related costs.  Included in 2007 is a $227,000 non-cash compensation expense for stock warrants issued for financial advisory services.  The significant component of the increase in professional fees is attributable to the high costs of complying with the requirements of Sarbanes-Oxley.  Occupancy costs include office rents, insurance and related costs.  We moved our U.K. administrative offices in November 2007 and expect higher occupancy costs in the future.  We increased our investment in sales and marketing in 2007 with the objective of laying the groundwork for sales growth and licensing of our core technologies in 2008.


Research and development expenses were $428,000 for the year ended December 31, 2007 compared to $510,000 in 2006, a decrease of $82,000, or 16.1%, due to fewer verification projects and test programs conducted in 2007.  The 2007 research and development expenses include $14,000 of non-cash charges for the fair value of stock options granted in accordance with SFAS No. 123R compared to zero in 2006.  Our 2007 research and development projects included testing required to meet Transport for London’s certification standards for the London Low Emission Zone.  In October 2007, we received approval from Transport for London to supply our Purifier System as an emission reduction solution that meets the standards established for the London LEZ.

Patent amortization and other patent costs increased to $364,000 in 2007 from $235,000 in 2006.  Included are $58,000 and $17,000 in 2007 and 2006, respectively, related to abandonment of some patents in jurisdictions that we deemed unnecessary.  Patent amortization expense for the years ended December 31, 2007 and 2006 was $41,000 and $44,000, respectively.

Interest income was $509,000 for the year ended December 31, 2007 compared to $58,000 in 2006, an increase of $451,000 due to the higher average balance of invested funds in 2007 from the December 2006 private placement funding and exercise of warrants issued in that placement as further outlined in the section entitled “Liquidity and Capital Resources” below.

Liquidity and Capital Resources

Net cash used for operating activities was $6.8 million for the year ended December 31, 2008 and was used primarily to fund the 2008 net loss of $9.4 million, adjusted for non-cash items.  Included in the 2008 non-cash items was share-based compensation expense of $1.4 million accounted for in accordance with SFAS No. 123R.

Accounts receivable, net decreased to $637,000 at December 31, 2008 from $1,927,000 at December 31, 2007 primarily due to collection of receivables from sales of our Purifier System to meet the requirements of the London Low Emission Zone (February and July 2008 were LEZ compliance deadlines in 2008).  In addition, accounts receivable, net declined due to an increase in the allowance for doubtful accounts due to more aged accounts caused by slower collections attributable to a difficult economic environment.  Inventories, net decreased to $974,000 at December 31, 2008 from $1,093,000 at December 31, 2007 due to the timing of our platinum metal purchases.  Our accounts payable and accrued expenses decreased $572,000 reflecting slower general business activities at the end of 2008 compared to the end of 2007 when the Company was involved in launching its accredited Platinum Plus Purifier Systems in response to demand for retrofit systems to comply with the London LEZ.

Investing activities provided $6.6 million in 2008, primarily from sales of auction rate securities.  We capitalized $212,000 of fixed assets primarily associated with our U.S. headquarters to which we relocated in January 2009.  We used $299,000 for investments in our patents, including patent applications in foreign jurisdictions.  We expect to continue to invest in our patents.

Cash provided by financing activities was $3.0 million for the year ended December 31, 2008 and is attributable primarily to proceeds from borrowing from a demand loan facility.  We are using the proceeds from short-term debt for general working capital purposes.

At December 31, 2008 and 2007, we had cash and cash equivalents of $4.0 million and $1.5 million, respectively, an increase of $2.5 million.  Our working capital was $8.2 million at December 31, 2008 compared to $10.2 million at December 31, 2007, a decrease of $2.0 million primarily attributable to the $1.3 million decrease in accounts receivable, net.

At December 31, 2008, our investments are recorded at fair value in accordance with SFAS No. 157 and comprise auction rate securities (“ARS”) and an ARS put right (“ARSR”).  At December 31, 2008 and 2007, we held approximately $10.2 million ($11.7 million par value) and $18.8 million ($18.8 million par value), respectively, in investments in ARS collateralized by student loans, primarily AAA/Aaa-rated, which are substantially guaranteed by the U.S. Department of Education.  We sold $7.1 million of these investments in 2008.  However, starting on February 15, 2008 and continuing to date in 2009, the Company experienced difficulty in effecting additional sales of such securities because of the failure of the auction mechanism as a result of sell orders exceeding buy orders.  Liquidity for these ARS is typically provided by an auction process that resets the applicable interest rate at pre-determined intervals.  These failed auctions represent liquidity risk exposure and are not defaults or credit events.  Holders of the securities continue to receive interest on the investments, and the securities continue to be auctioned at the pre-determined intervals (typically every 28 days) until the auction succeeds, the issuer calls the securities, or they mature.


In May 2008, we arranged a $3 million demand loan facility using our ARS as collateral and in July 2008, borrowed those funds as a matter of financial prudence to secure available cash (see Note 9 of Notes to Consolidated Financial Statements).  In January 2009, UBS approved a $6.5 million credit facility.  The ARS serve as collateral for the loan which is due upon demand (see Note 15 of Notes to Consolidated Financial Statements).

In October 2008, the Company received an offer (the “Offer”) from UBS for a put right permitting us to sell to UBS at par value all ARS previously purchased from UBS at a future date (any time during a two-year period beginning June 30, 2010).  The Offer also included a commitment to loan us 75% of the UBS-determined value of the ARS at any time until the put is exercised.  The Offer was non-transferable and expired on November 14, 2008.  On November 6, 2008, the Company accepted the Offer.  The Company’s right under the Offer is in substance a put option (with the strike price equal to the par value of the ARS) which it recorded as an asset, measured at its fair value (pursuant to SFAS No. 159), with the resultant gain recognized in earnings.

At December 31, 2007 and for the period through the date the Company accepted the Offer, the Company classified the ARS as available-for-sale under SFAS No. 115.  Thereafter, the Company transferred the ARS to the trading category.

The fair value of the ARS was approximately $10.2 million and $18.8 million at December 31, 2008 and 2007, respectively.  We sold $7.1 million of these investments in 2008.  The fair value declined $1.5 million from par value in 2008, which loss was charged to operations.  The fair value of the ARS was determined utilizing a discounted cash flow approach and market evidence with respect to the ARS’s collateral, ratings and insurance to assess default risk, credit spread risk and downgrade risk.  The Company also recorded the ARSR at a fair value of $1.3 million and recognized the gain in operations, which, together with the $1.5 million decline in fair value of the ARS, resulted in a net charge to operations in 2008 of $0.2 million included in other expense.  The fair value of the ARSR was based on an approach in which the present value of all expected future cash flows was subtracted from the current fair market value of the securities and the resultant value was calculated as a future value at an interest rate reflective of counterparty risk.  The Company used an independent third party valuation firm to assist it with its determination of fair value of the ARS and ARSR.

Classification of investments as current or non-current is dependent upon management’s intended holding period, the security’s maturity date and liquidity considerations based on market conditions.  At December 31, 2008, the Company classified $3.0 million of the ARS as current based on management’s intention to use such securities as consideration if UBS demands payment on its loan prior to the date the Company exercises the ARSR.

The Company will be exposed to credit risk should UBS be unable to fulfill its commitment under the Offer.  There can be no assurance that the financial position of UBS will be such as to afford the Company (a) the ability to acquire the par value of its ARS upon exercise of the put right, or (b) that the Company may receive significant loan proceeds from the UBS loan facility.

Our management believes that based upon the Company’s cash and cash equivalents and investments at December 31, 2008, the current lack of liquidity in the credit and capital markets will not have a material impact on our liquidity, cash flow, financial flexibility or our ability to fund our operations for at least the next 12 months.

We have incurred losses since inception aggregating $58.9 million, which amount includes $4.8 million of non-cash preferred stock dividends.  We expect to incur losses through the foreseeable future, until our products and technological solutions achieve greater awareness.  Although we have generated revenue from sales of our Platinum Plus fuel-borne catalyst, Purifier Systems, ARIS advanced reagent injector and dosing systems for selective catalytic reduction, catalyzed wire mesh filters and from technology licensing fees and royalties, revenue to date has been insufficient to cover our operating expenses, and we continue to be dependent upon sources other than operations to finance our working capital requirements.  Historically, we have been primarily dependent upon funding from new and existing stockholders.  The Company can provide no assurance that it will be successful in any future financing effort to obtain the necessary working capital to support operations or if such financing is available, that it will be on acceptable terms.


In the event that our business does not generate sufficient cash and external financing is not available or timely, we would be required to substantially reduce our level of operations and capital expenditures in order to conserve cash and possibly seek joint ventures or other transactions, including the sale of assets.  These reductions could have an adverse effect on our relationships with our customers and suppliers.  Our long-term continuation is dependent upon the achievement of profitable operations and the ability to generate sufficient cash from operations, equity financings and other funding sources to meet our obligations.

No dividends have been paid on our common stock and we do not anticipate paying cash dividends in the foreseeable future.  

Capital Expenditures

As of December 31, 2008, we had no commitments for capital expenditures and no material commitments are anticipated in the near future.

Contractual Obligations

The following is a summary of our contractual obligations as of December 31, 2008:

(in thousands)
                              
               
2 to 3
    
4 to 5
    
Over 5
  
   
Total
    
1 Year
    
Years
    
Years
    
Years
  
Operating Leases
   $ 1,215     $ 201     $ 361     $ 349     $ 304  
                                         
The operating leases include our facilities in the U.S. and U.K. and consist of leases with the following remaining terms:  three months of a five-year lease for our executive offices, 84 months under a new lease for our relocated U.S. headquarters, seven months under a one-year lease for warehouse space and 51 months under a 64-month lease for administrative offices.

Off-Balance Sheet Arrangements

As part of our on-going business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.  As of December 31, 2008, there were no off-balance sheet transactions.

Factors Affecting our Business and Prospects

See Item 1A. “Risk Factors.”

Quantitative and Qualitative Disclosures about Market Risk

In the opinion of management, with the exception of exposure to fluctuations in the cost of platinum, exchange rates for pounds sterling and Euros, and current turmoil in the capital markets, we are not subject to any significant market risk exposure.  We monitor the price of platinum and exchange rates and adjust our procurement strategies as needed.  See Item 1A. “Risk Factors—Platinum Price.”  Please also see Item 1A. “Risk Factors—Auction Rate Securities Right” for discussion of factors relating to our investments that may impact the Company.


Consolidated Financial Statements and Supplementary Data


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Clean Diesel Technologies, Inc.


We have audited the accompanying consolidated balance sheets of Clean Diesel Technologies, Inc. and subsidiary (the "Company") as of December 31, 2008 and 2007 and the related consolidated statements of operations, comprehensive loss, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2008.  Our audits also included the financial statement Schedule II - Valuation and Qualifying Accounts for each of the years in the three-year period ended December 31, 2008 listed in Item 15(a)(2) in the accompanying index.  These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Clean Diesel Technologies, Inc. and subsidiary as of December 31, 2008 and 2007 and the consolidated results of their operations and their consolidated cash flows for each of the years in the three-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, the referred financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information stated therein.

As described in Note 2 to the Consolidated Financial Statements, effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Liabilities.”

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Clean Diesel Technologies, Inc.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 13, 2009 expressed an unqualified opinion thereon.


/s/  Eisner LLP

New York, New York
March 13, 2009


CLEAN DIESEL TECHNOLOGIES, INC.
Consolidated Balance Sheets
(in thousands, except share data)

   
December 31,
  
   
2008
    
2007
  
Assets
            
Current assets:
            
Cash and cash equivalents
   $ 3,976     $ 1,517  
Accounts receivable, net of allowance of $359 and $49, respectively
     637       1,927  
Investments
     6,413       7,100  
Inventories, net
     974       1,093  
Other current assets
     219       234  
Total current assets
     12,219       11,871  
                 
Investments
     5,127       11,725  
Patents, net
     1,027       817  
Fixed assets, net of accumulated depreciation of $505 and $421, respectively
     296       175  
Other assets
     78       75  
Total assets
   $ 18,747     $ 24,663  
                 
Liabilities and Stockholders’ Equity
                
Current liabilities:
                
Accounts payable
   $ 501     $ 757  
Accrued expenses
     534       850  
Short-term debt
     3,013    
─
  
Customer deposits
     8       56  
Total current liabilities
     4,056       1,663  
                 
Commitments (Note 10)
                
                 
Stockholders’ equity:
                
Preferred stock, par value $0.01 per share: authorized 100,000; no shares issued and outstanding
  
─
    
─
  
Common stock, par value $0.01 per share: authorized 12,000,000; issued and outstanding 8,138,304 and 8,124,056 shares, respectively
     81       81  
Additional paid-in capital
     73,901       72,447  
Accumulated other comprehensive loss
     (406 )     (16 )
Accumulated deficit
     (58,885 )     (49,512 )
Total stockholders’ equity
     14,691       23,000  
Total liabilities and stockholders’ equity
   $ 18,747     $ 24,663  
                 
The accompanying notes are an integral part of the consolidated financial statements.
  


CLEAN DIESEL TECHNOLOGIES, INC.
Consolidated Statements of Operations
(in thousands, except per share amounts)

       
   
For the years ended December 31,
  
Revenue:
  
2008
    
2007
    
2006
  
Product sales
   $ 7,024     $ 1,466     $ 860  
Technology licensing fees and royalties
     451       3,459       74  
Consulting and other
  
─
    
─
       189  
Total revenue
     7,475       4,925       1,123  
                         
Costs and expenses:
                        
Cost of product sales
     5,717       1,126       612  
Cost of licensing fees and royalties
  
─
    
─
    
─
  
Cost of consulting and other revenue
  
─
    
─
       46  
Selling, general and administrative
     9,992       8,041       5,278  
Research and development
     430       428       510  
Patent amortization and other expense
     227       364       235  
Operating costs and expenses
     16,366       9,959       6,681  
 
                       
Loss from operations
     (8,891 )     (5,034 )     (5,558 )
                         
Other income (expense):
                        
Foreign currency exchange (loss) gain
     (845 )     (11 )     104  
Interest income
     602       509       58  
Other
     (239 )     1       12  
                         
Net loss
   $ (9,373 )   $ (4,535 )   $ (5,384 )
Basic and diluted loss per common share
   $ (1.15 )   $ (0.66 )   $ (1.03 )
Basic and diluted weighted-average number of common shares outstanding
     8,138       6,886       5,212  
                         
                         
Consolidated Statements of Comprehensive Loss
                        
(in thousands)
      
   
For the years ended December 31,
  
   
2008
    
2007
    
2006
  
                         
Net loss
   $ (9,373 )   $ (4,535 )   $ (5,384 )
Other comprehensive income (loss):
                        
Foreign currency translation adjustment
     (390 )     (20 )     4  
Comprehensive loss
   $ (9,763 )   $ (4,555 )   $ (5,380 )
                         
The accompanying notes are an integral part of the consolidated financial statements.
  


CLEAN DIESEL TECHNOLOGIES, INC.
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands)
 
                           
Additional Paid-in Capital
    
Accumulated Other Comprehensive Income (Loss)
    
Accumulated Deficit
    
Total Stockholders’ Equity
  
               
Common Stock
                  
   
Common Stock
    
To be Issued
                  
   
Shares
    
Amount
    
Shares
    
Amount
                  
                                                 
Balance at December 31, 2005
     5,073     $ 51       141     $ 1     $ 45,319    
$ ─
     $ (39,593 )   $ 5,778  
                                                               
Net loss
  
─
    
─
    
─
    
─
    
─
    
─
       (5,384 )     (5,384 )
Options exercised
     3    
─
    
─
    
─
       14    
─
    
─
       14  
Compensation expense for stock options
  
─
    
─
    
─
    
─
       304    
─
    
─
       304  
Issuance of common stock
     876       9       (141 )     (1 )     4,718    
─
    
─
       4,726  
Common stock subscribed and to be issued
  
─
    
─
       668       7       4,306    
─
    
─
       4,313  
Subscriptions receivable, net (unpaid as of March 23, 2007)
  
─
    
─
    
─
    
─
       (1,901 )  
─
    
─
       (1,901 )
Foreign currency translation
  
─
    
─
    
─
    
─
    
─
       4    
─
       4  
Payment of directors’ fees in common stock
     12    
─
    
─
    
─
       94    
─
    
─
       94  
                                                                 
Balance at December 31, 2006
     5,964     $ 60       668     $ 7     $ 52,854     $ 4     $ (44,977 )   $ 7,948  
                                                                 
Net loss
  
─
    
─
    
─
    
─
    
─
    
─
       (4,535 )     (4,535 )
Warrants exercised
     1,400       14    
─
    
─
       15,159    
─
    
─
       15,173  
Options exercised
     72    
─
    
─
    
─
       353    
─
    
─
       353  
Compensation expense for stock options
  
─
    
─
    
─
    
─
       2,208    
─
    
─
       2,208  
Issuance of common stock
     668       7       (668 )     (7 )     1,901    
─
    
─
       1,901  
Foreign currency translation
  
─
    
─
    
─
    
─
    
─
       (20 )  
─
       (20 )
Expenses of registration and reverse split
  
─
    
─
    
─
    
─
       (168 )  
─
    
─
       (168 )
Payment of directors’ fees in common stock
     20    
─
    
─
    
─
       140    
─
    
─
       140  
                                                                 
Balance at December 31, 2007
     8,124     $ 81    
─
    
$ 
─
     $ 72,447     $ (16 )   $ (49,512 )   $ 23,000  
                                                                 
Net loss
  
─
    
─
    
─
    
─
    
─
    
─
       (9,373 )     (9,373 )
Options exercised
     14    
─
    
─
    
─
       24    
─
    
─
       24  
Compensation expense for stock options
  
─
    
─
    
─
    
─
       1,444    
─
    
─
       1,444  
Expenses of registration
  
─
    
─
    
─
    
─
       (14 )  
─
    
─
       (14 )
Foreign currency translation
  
─
    
─
    
─
    
─
    
─
       (390 )  
─
       (390 )
                                                                 
Balance at December 31, 2008
     8,138     $ 81    
─
    
$ 
─
     $ 73,901     $ (406 )   $ (58,885 )   $ 14,691  
                                                                 
   
   
The accompanying notes are an integral part of the consolidated financial statements.
  


CLEAN DIESEL TECHNOLOGIES, INC.
Consolidated Statements of Cash Flow
(in thousands)

   
For the years ended December 31,
  
   
2008
    
2007
    
2006
  
Operating activities
  
Net loss
   $ (9,373 )   $ (4,535 )   $ (5,384 )
Adjustments to reconcile net loss to cash used in operating activities:
                        
Depreciation and amortization
     142       112       138  
Provision for inventory
  
─
       22       27  
Provision for doubtful accounts, net
     629       28       23  
Compensation expense for stock options and warrants
     1,444       2,208       304  
Loss on disposition/abandonment of fixed assets/patents
     38       58       23  
Loss on investments, net
     185    
─
    
─
  
Changes in operating assets and liabilities:
                        
Accounts receivable
     661       (1,855 )     2  
Inventories
     119       (750 )     (107 )
Other current assets and other assets
     12       (177 )     (12 )
Accounts payable and accrued expenses
     (572 )     677       678  
Other liabilities
     (48 )     56       (9 )
Net cash used for operating activities
     (6,763 )     (4,156 )     (4,317 )
                         
Investing activities
                        
Sale (purchase) of investments, net
     7,100       (18,825 )  
─
  
Patent costs
     (299 )     (313 )     (94 )
Purchase of fixed assets
     (212 )     (154 )     (20 )
Net cash provided by (used for) investing activities
     6,589       (19,292 )     (114 )
                         
Financing activities
                        
Proceeds from short-term debt
     3,013    
─
    
─
  
Proceeds from issuance of common stock, net
  
─
       4,313       5,214  
Proceeds from exercise of warrants
  
─
       15,173    
─
  
Proceeds from exercise of stock options
     24       353       14  
Stockholder-related charges
     (14 )     (168 )  
─
  
Net cash provided by financing activities
     3,023       19,671       5,228  
Effect of exchange rate changes on cash
     (390 )     (20 )     4  
                         
Net increase (decrease) in cash and cash equivalents
   $ 2,459     $ (3,797 )   $ 801  
Cash and cash equivalents at beginning of the year
     1,517       5,314       4,513  
                         
Cash and cash equivalents at end of the year
   $ 3,976     $ 1,517     $ 5,314  
                         
Supplemental non-cash activities:
                        
Common stock subscribed, net
  
$ 
─
    
$ 
 ─
     $ 4,313  
Payment of accrued directors’ fees in common stock
  
─
       140       94  
                         
The accompanying notes are an integral part of the consolidated financial statements.
  

38
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

1.         Business and Basis of Presentation

Clean Diesel Technologies, Inc. (“CDT,” the “Company,” “we,” “us” or “our”) (a Delaware corporation) is a developer of technological solutions to reduce harmful emissions from internal combustion engines while improving fuel economy.   The Company licenses its patented technologies to leading manufacturers and suppliers, addressing original equipment (OEM) and retrofit markets globally.  The Company’s products and patented technologies include Platinum Plus®, a fuel-borne catalyst; a range of Purifier™ Systems, which combines its fuel-borne catalyst in integrated emission control aftertreatment systems with diesel particulate filters, diesel oxidation catalysts, or with catalyzed wire mesh filter systems; and the ARIS® nitrogen oxides selective catalytic reduction (SCR) system.   CDT is establishing a network of licensed distributors to sell and market its selective catalytic products and solutions.   For market development and technology validation purposes, CDT also directly markets and sells products based on its suite of technologies to end-users, such as corporate fleets, generating demand, proving product performance, and creating further innovations.  CDT’s strategy for commercialization of its technologies, including the patented combination of exhaust gas recirculation (EGR) with SCR and the ARIS nitrogen oxides reduction system, is to enter into license agreements with OEMs, Tier 1 suppliers and retrofit providers for the patents and related know-how, compensating the Company by market-appropriate up-front license fee structures and on-going royalties.   The success of the Company’s technologies will depend upon the commercialization opportunities as supported by federal, state and local governmental regulations and by incentives driving adoption around the world.

During 2008, 2007 and 2006, the Company incurred net losses of approximately $9.4 million, $4.5 million and $5.4 million, respectively, and at December 31, 2008, has an accumulated deficit of approximately $58.9 million.  Net cash used for operating activities for the year ended December 31, 2008 was approximately $6.8 million.  As of December 31, 2008, the Company’s cash and cash equivalents were $4.0 million, investments were $11.5 million and working capital was $8.2 million.  Based upon the Company’s operating and cash plan for 2009, management believes that the Company will have sufficient working capital to fund its operations through December 31, 2009.

2.         Significant Accounting Policies

Consolidation:

The consolidated financial statements include the accounts of CDT and Clean Diesel International, LLC (“CD International”), its wholly-owned subsidiary, after elimination of all significant intercompany transactions and balances.

Reverse Split of Common Stock:

On June 15, 2007, the Company effected a five-for-one reverse split of its common stock.  All historical share numbers and per share amounts in these financial statements have been adjusted to give effect to this reverse split (see Note 7).

Use of Estimates:

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported.  These estimates include assessing the collectibility of accounts receivable, the use and realizability of inventories, useful lives for depreciation, amortization periods of intangible assets and the fair value of investments.  The markets for our products and services are characterized by rapid technological development and evolving standards, all of which could impact the future realizability of our assets.  Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary.  Actual results could differ from those estimates.

39
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Revenue Recognition:

The Company generates revenue from product sales comprised of fuel-borne catalysts, including the Platinum Plus fuel-borne catalyst products and concentrate and hardware including the Purifier System, ARIS advanced reagent injection system injectors and dosing systems; license and royalty fees from the ARIS System and other technologies; and consulting fees and other.

Revenue is recognized when earned.  For technology licensing fees paid by licensees that are fixed and determinable, accepted by the customer and nonrefundable, revenue is recognized upon execution of the license agreement, unless it is subject to completion of any performance criteria specified within the agreement, in which case it is deferred until such performance criteria are met.  Royalties are frequently required pursuant to license agreements or may be the subject of separately executed royalty agreements.  Revenue from royalties is recognized ratably over the royalty period based upon periodic reports submitted by the royalty obligor or based on minimum royalty requirements.  Revenue from product sales is recognized when title has passed and our products are shipped to our customer, unless the purchase order or contract specifically requires us to provide installation for hardware purchases.  For hardware projects in which we are responsible for installation (either directly or indirectly by third-party contractors), revenue is recognized when the hardware is installed and/or accepted, if the project requires inspection and/or acceptance.  Other revenue primarily consists of engineering and development consulting services.  Revenue from technical consulting services is generally recognized and billed as the services are performed.

Generally, our license agreements are non-exclusive and specify the geographic territories and classes of diesel engines covered, such as on-road vehicles, off-road vehicles, construction, stationary engines, marine and railroad engines.  At the time of the execution of our license agreement, we convey the right to the licensee to use our patented technologies.  The up-front fees are not subject to refund or adjustment.  We recognize the license fee as revenue at the inception of the license agreement when we have reasonable assurance that the technologies transferred have been accepted by the licensee and collectability of the license fee is reasonably assured.  The nonrefundable up-front fee is in exchange for the culmination of the earnings process as the Company has accomplished what it must do to be entitled to the benefits represented by the revenue.  Under our license agreements, there is no significant obligation for future performance required of the Company.  Each licensee must determine if the rights to our patented technologies are usable for their business purposes and must determine the means of use without further involvement by the Company.  In most cases, licensees must make additional investments to enable the capabilities of our patents, including significant engineering, sourcing of and assembly of multiple components.  Our obligation to defend valid patents does not represent an additional deliverable to which a portion of an arrangement fee should be allocated.  Defending the patents is generally consistent with our representation in the license agreement that such patents are legal and valid.

Cost of Revenue:

Our cost of product sales includes the costs we incur to formulate our finished products into salable form for our customers, including material costs, labor and processing costs charged to us by our outsourced blenders, installers and other vendors, packaging costs incurred by our outsourced suppliers, freight costs to customers and inbound freight charges from our suppliers.  Our inventory is primarily maintained off-site by our outsourced suppliers.  To date, our purchasing, receiving, inspection and internal transfer costs have been insignificant and have been included in cost of product sales.  In addition, the costs of our warehouse of approximately $21,000 per year are included in selling, general and administrative expenses.  Cost of consulting and other revenue includes incremental out of pocket costs to provide consulting services.  Cost of licensing fees and royalties is zero as there are no incremental costs associated with the revenue.

Cash and cash equivalents:

Cash and cash equivalents include all highly liquid investments with original maturities of three months or less at date of acquisition.  At times, the Company maintains cash and cash equivalents in accounts in excess of the Federal Deposit Insurance Corporation (“FDIC”) limits.

40
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Inventories:

Inventories are stated at the lower of cost or market with cost determined using the average cost method.  We assess the realizability of inventories by periodically conducting a physical inventory and reviewing the movement of inventory to determine the value of items that are slow moving and obsolete.  The potential for near-term product engineering changes and/or technological obsolescence and current realizability are considered in determining the adequacy of inventory reserves.  At each of December 31, 2008 and 2007, our inventory reserves were $22,000.

Fixed Assets:

Our fixed assets, comprised of leasehold improvements, furniture and fixtures, purchased software, office and computer equipment, are stated at cost.  Depreciation is computed over the estimated useful lives of the depreciable assets ranging from three to five years using the straight-line method.  Depreciation expense was $91,000, $71,000 and $94,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

Patents:

Patents, which include all direct incremental costs associated with initial patent filings and costs to acquire rights to patents under licenses, are stated at cost and amortized using the straight-line method over the remaining useful lives, ranging from one to twenty years.  Indirect and other patent-related costs are expensed as incurred.

We evaluate the remaining useful life of our patents at each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.  If the evaluation determines that the patent’s remaining useful life has changed, the remaining carrying amount of the patent is amortized prospectively over that revised remaining useful life.  We also evaluate our patents for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable.  The testing for impairment includes evaluating the undiscounted cash flows of the asset and the remaining period of amortization or useful life.  The factors used in evaluating the undiscounted cash flows include current operating results, projected future operating results and cash flows and any other material factors that may affect the continuity or the usefulness of the asset.  If impairment exists or if we decide to abandon a patent, the patent is written down to its fair value based upon discounted cash flows.  At December 31, 2008 and 2007, the Company’s patents, net were $1,027,000 and $817,000, respectively.

Comprehensive Loss:

We report comprehensive loss in accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income.”  The provisions of SFAS No. 130 require that the Company report the changes in stockholders’ equity from all sources during the period other than those resulting from investments by and distributions to stockholders.  Accordingly, the consolidated statements of comprehensive loss are presented, while the caption “accumulated other comprehensive loss” is included on the consolidated balance sheets as a component of stockholders’ equity.  Due to availability of net operating losses and the resultant deferred tax benefit being fully reserved, there is no tax effect associated with any component of other comprehensive loss.  Comprehensive loss is comprised of net loss and other comprehensive income (loss).  Other comprehensive income (loss) includes certain changes in stockholders’ equity that are excluded from net loss, including foreign currency translation adjustments.

Foreign Currency Translation:

Gains or losses on foreign currency transactions are included in other income (expense) in the consolidated statements of operations and aggregated a loss of $845,000 in 2008, a loss of $11,000 in 2007 and a gain of $104,000 in 2006. Prior to 2006, the U.S. dollar was considered the functional currency for CD International, the Company’s U.K. branch.  During 2006, the activities of CD International increased, including transacting business in local currency.  Accordingly, commencing in 2006, the functional currency changed to the British pound sterling and thereafter assets and liabilities of CD International are translated at the exchange rates in effect at the balance sheet date, and revenue and expenses are translated at the average exchange rates for the period.  The resulting foreign currency translation adjustment of $(390,000) and $(20,000) for the years ended December 31, 2008 and 2007, respectively, is included in accumulated other comprehensive loss as a component of stockholders’ equity.  The resulting effect of remeasurement of CD International’s accounts into its functional currency as a result of the change was not significant.  The Company’s policy is that exchange differences arising from the translation of the balance sheets of entities that have functional currencies other than the U.S. dollar are taken to accumulated other comprehensive loss, a component of stockholders’ equity.  In entities where the U.S. dollar is the functional currency, unrealized gains and losses due to remeasurement of monetary assets held in currencies other than the U.S. dollar are reflected in foreign currency exchange gain (loss) on the consolidated statement of operations.

41
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Valuation of Accounts Receivable:
 
The Company makes judgments as to the collectability of accounts receivable based upon the historic trends and future expectations.  Management estimates an allowance for doubtful accounts, which adjusts gross trade accounts receivable downward to its estimated net realizable value.  To determine the allowance for doubtful accounts, management reviews specific customer risks and the accounts receivable aging.

Basic and Diluted Loss per Common Share:

Basic and diluted loss per share is calculated in accordance with SFAS No. 128, “Earnings Per Share.”  Basic loss per share is computed by dividing net loss by the weighted-average shares outstanding during the reporting period.  Diluted loss per share is computed in a manner similar to basic earnings per share except that the weighted-average shares outstanding are increased to include additional shares from the assumed exercise of stock options and warrants, if dilutive, using the treasury stock method.  The Company’s computation of diluted net loss per share for 2008, 2007 and 2006 does not include common share equivalents associated with 972,578, 812,800 and 648,100 options, respectively, and 424,992, 424,992 and 1,557,400 warrants, respectively, as the result would be anti-dilutive.  Further, the per share effects of the common stock subscribed and to be issued have not been included as the effect would be anti-dilutive.

Fair Value of Financial Instruments:

Our instruments are carried at fair value (see below under caption “Investments”).  Certain financial instruments are carried at cost on our consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature.  These instruments include cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable, customer deposits, accrued expenses and short-term debt.

Investments:

The Company’s investments consist of auction rate securities (“ARS”) and an auction rate securities right (“ARSR”) (see Note 5).  The Company accounts for its ARS investments using the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities” and its ARSR investment using the provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities.”  SFAS No. 115 provides for determination of the appropriate classification of investments.  Available-for-sale securities are carried at fair value, with unrealized holding gains and losses, net of tax, reported as a separate component of stockholders’ equity.  Trading securities are carried at fair value, with unrealized holding gains and losses included in other income (expense) on our consolidated statements of operations.

SFAS No 159, which the Company adopted on January 1, 2008, provides a fair value option election that allows entities to irrevocably elect fair value as the initial and subsequent measurement attribute for certain assets and liabilities. Changes in fair value are recognized in earnings as they occur for those assets or liabilities for which the election is made. The election is made on an instrument by instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument.

The Company’s investments are reported at fair value in accordance with SFAS No. 157, “Fair Value Measurements,” which was adopted on January 1, 2008. SFAS 157 accomplishes the following key objectives:

42
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

 
·
Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date;
 
·
Establishes a three-level hierarchy (“valuation hierarchy”) for fair value measurements;
 
·
Requires consideration of the Company’s creditworthiness when valuing liabilities; and
 
·
Expands disclosures about instruments measured at fair value.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.  A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  The three levels of the valuation hierarchy are as follows:

 
·
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
·
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
·
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

In October 2008, the FASB issued FASB Staff Position (“FSP”) FSP FAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS No. 157-3”), to provide guidance on determining the fair value of financial instruments in inactive markets.  FSP FAS No. 157-3 became effective for the Company upon issuance.  This standard had no impact on the Company’s financial position, results of operations or cash flows.

Concentrations of Credit Risk:

Financial instruments, which potentially subject us to concentration of credit risk, consist of cash and cash equivalents, investments and accounts receivables.  We maintain cash and cash equivalents in accounts with various financial institutions in amounts which, at times, may be in excess of the FDIC insurance limit.  We do not believe we are exposed to any significant risk with respect to cash and cash equivalents.

We sell our products and services to distributors and end users in various industries worldwide.  We regularly assess the realizability of accounts receivable and also take into consideration the value of past due accounts receivable and the collectibility of such receivables based upon credit worthiness and historic collections from past due accounts.  We do not require collateral or other security to support customer receivables.

Significant Customers:

In each of the years ended December 31, 2008, 2007 and 2006, revenue derived from certain customers comprised 10% or more of our consolidated revenue (“significant customers”) as set forth in the table below:

As a percentage of consolidated revenue:
  
   
Years ended December 31,
  
   
2008
    
2007
    
2006
  
Customer A
     15.1 %     *       *  
Customer B
     *       30.5 %     *  
Customer C
     *       24.3 %     *  
Customer D
     *       15.5 %     *  
Customer E
     *       *       29 %
Customer F
     *       *       13 %

 
*
Represents less than 10% revenue for that customer in the applicable year.    There were no other customers that represented 10% or more of revenue for the years indicated.

43
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

At December 31, 2008, no one customer represented greater than 10% of the Company’s gross accounts receivable balance.  At December 31, 2007, the Company had one customer that represented 57% of its gross accounts receivable balance (Customer B).

Stock-Based Compensation:

The Company adopted SFAS No. 123 (Revised 2004), “Share Based Payment,” effective January 1, 2006.  SFAS No. 123R requires the Company to measure the cost of employee, officer and director services received in exchange for stock-based awards at the fair value of the award on the date of grant.

Research and Development Costs:

Costs relating to the research, development and testing of our technologies and products are charged to operations as they are incurred.  These costs include verification programs, evaluation and testing projects, salary and benefits, consulting fees, materials and testing gear.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses are comprised of the following:

(in thousands)
                  
   
Years ended December 31,
  
   
2008
    
2007
    
2006
  
Non-cash stock-based compensation
   $ 1,204     $ 1,966     $ 304  
Severance
  
   
      357  
Compensation and benefits
     4,386       2,997       2,400  
Total compensation and benefits
   $ 5,590     $ 4,963     $ 3,061  
Professional services
     1,683 *     1,487 *     792  
Travel
     712       622       538  
Occupancy, property and business taxes, supplies, postage and delivery
     859       511       406  
Sales and marketing expenses
     400       341       279  
Bad debt expense
     629       28       33  
Depreciation and all other
     119       89       169  
Total
   $ 9,992     $ 8,041     $ 5,278  

*  Includes $227,000 of non-cash stock-based compensation charges for fair value of warrants.

Aggregate non-cash share-based compensation charges incurred by the Company in 2008, 2007 and 2006, were $1,444,000, $2,208,000 and $304,000, respectively, all of which was included in selling, general and administrative expenses, except $13,000 and $14,000 in 2008 and 2007, respectively, included in research and development expenses.

Income Taxes:

Deferred income taxes are provided for the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

Recent Accounting Pronouncements (not yet adopted):

In February 2008, the FASB issued Staff Position 157-2 (“FSP 157-2”).  FSP 157-2 permits delayed adoption of SFAS 157 for certain non-financial assets and liabilities, which are not recognized at fair value on a recurring basis, until fiscal years and interim periods beginning after November 15, 2008.  As permitted by FSP 157-2, the Company has elected to delay the adoption of SFAS 157 for qualifying non-financial assets and liabilities, such as fixed assets and patents.  The Company is in the process of evaluating the impact, if any, that the application of SFAS 157 to its non-financial assets will have on the Company’s consolidated results of operations or financial position.

44
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”).  SFAS No. 141R provides revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination.  SFAS No. 141R also expands required disclosures surrounding the nature and financial effects of business combinations.  SFAS No. 141R will be applied prospectively for acquisitions beginning in 2009 or thereafter.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.”  SFAS No. 160 establishes requirements for ownership interests in subsidiaries held by parties other than the Company (sometimes called “minority interests”) be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity.  All changes in the parent’s ownership interests are required to be accounted for consistently as equity transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value.  The Company does not expect the adoption of SFAS No. 160 to have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161").  SFAS 161 requires enhanced disclosures about an entity's derivative and hedging activities.  These enhanced disclosures will discuss: (a) how and why a company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and its related interpretations and (c) how derivative instruments and related hedged items affect a company’s financial position, results of operations and cash flows.  The Company does not expect the adoption of SFAS No. 161 to have a material impact on the Company’s financial position, results of operations or cash flows.

In April 2008, the FASB issued FSP FAS No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS No. 142-3”).  FSP FAS No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets.  The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007), Business Combinations, and other US generally accepted accounting principles.  FSP FAS No. 142-3 is effective for the Company for fiscal years beginning after December 15, 2008.  The Company does not expect this standard to have any material impact on the Company’s financial position, results of operations or cash flows.

In April 2008, the FASB issued EITF 07-05, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock,” (“EITF 07-05”).  EITF 07-05 provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in paragraph 11(a) of SFAS No. 133.  EITF 07-05 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and early application is not permitted.  The Company does not expect the adoption of EITF 07-05 to have a material impact on the Company’s financial position, results of operations or cash flows.

45
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

3.           Inventories

Inventories are comprised of the following:

(in thousands)
      
   
December 31,
  
   
2008
    
2007
  
Finished Platinum Plus fuel-borne catalyst
   $ 144     $ 165  
Platinum concentrate/metal
     578       656  
Hardware
     268       260  
Other
     6       34  
    $ 996     $ 1,115  
Less: inventory reserves
     (22 )     (22 )
Inventories, net
   $ 974     $ 1,093  

At December 31, 2008 and 2007, U.S. inventories were approximately 80% and foreign inventories were approximately 20% of the total inventories, net.

4.         Patents

Patents held by the Company consist of capitalized patent costs net of accumulated amortization and are as follows:

(in thousands)
      
   
December 31,
  
   
2008
    
2007
  
Patents
   $ 1,220     $ 975  
Less: accumulated amortization
     (193 )     (158 )
Patents, net
   $ 1,027     $ 817  

Patent amortization expense for the years ended December 31, 2008, 2007 and 2006 was $51,000, $41,000 and $44,000, respectively.  Patent amortization expense for each of the five succeeding years based upon patents as of December 31, 2008 is estimated to be approximately $50,000 annually.  In each of 2008, 2007 and 2006, the Company wrote off net patent costs in jurisdictions the Company determined to abandon totaling approximately $38,000, $58,000 and $23,000, respectively.

5.         Investments

In accordance with SFAS No. 157, the Company’s investments as of December 31, 2008 have been classified within level 3 as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market due to the lack of trading in the securities.  The fair value of the investments may be revised in future periods as market conditions evolve.  Investments are comprised of the following:

(in thousands)
      
   
December 31,
  
   
2008
    
2007
  
             
Auction rate securities
   $ 10,235     $ 18,825  
Auction rate securities right
     1,305    
─
  
Total investments
   $ 11,540     $ 18,825  
Classified as current assets
     6,413       7,100  
Classified as non-current assets
   $ 5,127     $ 11,725  

Our ARS are variable-rate debt securities, most of which are AAA/Aaa rated, that are collateralized by student loans substantially guaranteed by the U.S. Department of Education.  While the underlying securities have a long-term nominal maturity, the interest rate is reset through dutch auctions that are typically held every 28 days. The contractual maturities of our ARS range from 2027 to 2047. Auctions for our ARS have failed since February 2008 resulting in illiquid investments for the Company.  Our ARS were purchased and held through UBS.  In October 2008, the Company received an offer (the “Offer”) from UBS AG for a put right permitting us to sell to UBS at par value all ARS previously purchased from UBS at a future date (any time during a two-year period beginning June 30, 2010).  The Offer also included a commitment to loan us 75% of the UBS-determined value of the ARS at any time until the put is exercised.  We accepted the Offer on November 6, 2008.  Our right under the Offer is in substance a put option (with the strike price equal to the par value of the ARS) which we recorded as an asset, measured at its fair value (elected pursuant to SFAS No. 159), with the resultant gain recognized in operations.

46
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements
 
At December 31, 2007 and for the period through the date the Company accepted the Offer, the Company classified the ARS as available-for-sale under SFAS No. 115. Thereafter, the Company transferred the ARS to the trading category.

The fair value of the ARS was approximately $10.2 million (par value of $11.7 million) and $18.8 million (par value of $18.8 million) as of December 31, 2008 and 2007, respectively.  We sold $7.1 million of these investments in 2008.  The fair value declined $1.5 million from par value in 2008, which loss was charged to operations.  The fair value of the ARS was determined utilizing a discounted cash flow approach and market evidence with respect to the ARS’s collateral, ratings and insurance to assess default risk, credit spread risk and downgrade risk.  The Company also recorded the ARSR at a fair value of $1.3 million and recognized the gain in operations, which, together with the $1.5 million decline in fair value of the ARS, resulted in a net charge to operations in 2008 of $0.2 million included in other expense.  The fair value of the ARSR was based on an approach in which the present value of all expected future cash flows were subtracted from the current fair market value of the securities and the resultant value was calculated as a future value at an interest rate reflective of counterparty risk. 

Classification of investments as current or non-current is dependent upon management’s intended holding period, the security’s maturity date and liquidity considerations based on market conditions.  At December 31, 2008, the Company classified $6.4 million of the ARS as current based on management’s intention to use such securities as consideration if UBS demands payment on its loan prior to the date the Company exercises the ARSR (see Notes 9 and 15).

The Company will be exposed to credit risk should UBS be unable to fulfill its commitment under the Offer.  There can be no assurance that the financial position of UBS will be such as to afford the Company the ability to acquire the par value of its ARS upon exercise of the ARSR.

Accrued interest receivable at December 31, 2008 and 2007 was approximately $11,000 and $49,000, respectively.

The table below includes a rollforward of the Company’s investments in ARS and ARSR from January 1, 2008 to December 31, 2008:

(in thousands)
      
   
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
  
Fair value, January 1, 2008
   $ 18,825     $ —  
Purchases
     —       —  
Sales
     (7,100 )     —  
Transfers (out) in
     (11,725 )     11,725  
Unrealized loss included in statement of operations
     —       (185 )
Fair value, December 31, 2008
   $ —     $ 11,540  
Change in unrealized loss
           $ ( 185 )

47
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

6.         Accrued Expenses

Accrued expenses are comprised of the following:

(in thousands)
      
   
December 31,
  
   
2008
    
2007
  
Professional fees
   $ 168     $ 264  
Accrued compensation
     234       254  
Accrued directors’ and technical advisory board fees
  
─
       44  
Accrual for inventory received
  
─
       106  
Value added taxes payable
     9       98  
Travel and all other
     123       84  
Accrued expenses
   $ 534     $ 850  

7.           Stockholders’ Equity

Authorized Capital Stock

As of December 31, 2008, the Company has 12.1 million shares authorized, 12 million shares of which are $0.01 par value common stock and 100,000 of which are $0.01 par value preferred stock.  At the Company’s annual meeting of stockholders held on June 7, 2007, the stockholders approved a five-to-one reverse split of the Company’s common stock, a reduction of the par value of the Company’s common stock from $0.05 per share to $0.01 per share and an increase to the number of shares of common stock the Company is authorized to issue from 9 million to 12 million.  Such actions became effective on June 15, 2007 when the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of Delaware.  The historical share numbers and per share amounts in these financial statements for all periods presented have been adjusted to give effect to the reverse split.  At the Company’s annual meeting of stockholders held on June 15, 2006, the stockholders approved an amendment to increase the number of shares of common stock the Company is authorized to issue from 6 million to 9 million.  Such amendment became effective on June 21, 2006 when the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of Delaware.  The Company believes that there is a sufficient number of shares authorized to cover its current needs.

In 2007 in conjunction with the reverse split, we incurred costs aggregating approximately $33,000, primarily from our transfer agents and outside legal counsel which were charged to additional paid-in capital.  We also charged an aggregate of $83,000 to additional paid-in capital for costs incurred in connection with our filing of a Registration Statement on Form S-1 with the SEC and approximately $52,000 related to our initial listing on The NASDAQ Capital Market.  On October 3, 2007, our common stock began trading on The NASDAQ Capital Market under the symbol “CDTI.”

We acquired 86 shares of our common stock from the fractional shares that were paid in cash in lieu of fractional shares to stockholders as stockholders surrendered old stock certificates for new stock certificates.  The cash value of the fractional shares was determined based upon the average of our high and low prices on June 15, 2007 on the U.S. Over-the-Counter market and the U.K. AIM of the London Stock Exchange with the average AIM price translated at the foreign exchange rate then in effect.  The Company retired all treasury shares on August 9, 2007.

Issuance of Common Shares

In 2008, we issued 14,247 shares of our common stock upon the exercise of 27,166 stock options.  In connection therewith, we received approximately $24,000 in cash and the surrender of 12,920 stock options.

In 2008, the Company charged approximately $14,000 to additional paid-in capital for costs incurred in connection with our filing of a Post-effective Amendment to a Registration Statement on Form S-1.

48
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

In 2007, we issued 2,159,649 shares of our common stock as follows:

Shares subscribed in the 2006 private placement
     667,999  
Shares issued upon exercise of Class A warrants
     699,883  
Shares issued upon exercise of Class B warrants
     699,990  
Shares issued upon exercise of options
     72,178  
Shares issued for services
     19,599  
      2,159,649  

We issued 667,999 shares of our common stock upon collection of approximately $4.3 million, net of expenses, representing all of the remaining subscriptions from the December 2006 private placement (the private placement is outlined below).

We received gross proceeds of $15.7 million from the exercise of 699,883 of our Class A warrants and 699,990 of our Class B warrants.  The newly issued shares are covered by an effective Registration Statement on file with the Securities and Exchange Commission.  Proceeds from the exercise of the Class A and B warrants, net of approximately $575,000 in placement agent fees, totaled $15.2 million.  We also issued 143,432 five-year warrants to the placement agent as additional compensation (see Note 8).  The proceeds from the exercise of warrants were used for general corporate purposes.

In 2007, we issued 72,178 shares of our common stock upon exercise of 93,609 options.  In connection therewith, we received approximately $353,000 in cash and the surrender of 21,431 shares.

In January and June 2007, we issued 17,142 and 2,457, respectively, of our common stock to non-executive members of our board of directors in lieu of approximately $115,000 and $25,000 of directors’ fees earned for services provided during the year ended December 31, 2006 and the first quarter of 2007.  In June 2006, the Company issued 12,438 shares of its common stock to non-executive members of its board of directors in lieu of approximately $94,000 of directors’ fees earned for services provided during the year ended December 31, 2005.  The number of shares of our common stock issued to the directors was determined based upon the average of the high and low share prices during each quarter.  The grant date for such shares of common stock for purposes of measuring compensation is the last day of the quarter in which the shares are earned, which is the date that the director begins to benefit from, or be adversely affected by, subsequent changes in the price of the stock.  Directors’ compensation charged to operations did not materially differ from such measurement.

On December 29, 2006, the Company secured commitments for the purchase of 1,400,000 shares of its common stock, par value $0.01, and warrants for the purchase of an additional 1,400,000 shares of common stock for aggregate gross cash proceeds of $9.5 million (net proceeds of approximately $9.0 million).  Of such total, $5.0 million ($4.7 million, net) had been received by December 31, 2006 and comprised 732,001 shares of our common stock.  Of the remaining balance of $4.5 million ($4.3 million, net), $2.5 million was paid by subscribers by March 23, 2007.  This amount, net of the related placement fee of approximately $0.1 million, was classified in current assets as subscriptions receivable on the December 31, 2006 balance sheet and represented 373,554 shares of our common stock.  Net subscriptions receivable of $1.9 million (net of the related placement fees of approximately $0.1 million) that had not paid as of March 23, 2007 was classified as a reduction of stockholders’ equity at December 31, 2006 and represented 294,444 shares of our common stock.  The securities were sold in investment units consisting of one share of common stock, one Class A warrant and one Class B warrant, each warrant entitling the holder to purchase one additional share of common stock for every two shares of common stock acquired in the offering at a purchase price of $6.75 per unit (see Note 8).  The material terms of the agreements between the Company and the investors were as follows:

 
(i)
The Company sold and the investors bought units of one share of common stock and warrants (effectively, one-half of each of Class A and B warrants) to buy one share of common stock for the consideration of $6.75 per unit;

(ii)
The investors represented that they were acquiring the shares, the warrants and the shares of common stock underlying the warrants for their own accounts as an investment, and undertook with respect to these securities to comply with the transfer restrictions of Regulation S or Regulation D under the Securities Act of 1933, as the case may be;

49
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

(iii)
The Company undertook to apply for the listing of its outstanding shares on the American Stock Exchange or another recognized U.S. stock exchange at such time as the Company should satisfy the applicable listing requirements; and

(iv)
The Company undertook to file a registration statement under the Securities Act of 1933 covering the shares and the shares of common stock underlying the warrants following completion of the audit of its financial statements for the year 2006.  The agreements did not contain a penalty provision for the Company’s failure to file that registration statement.

In connection with the offering, the Company incurred expenses including initial commissions to the placement agent of approximately $410,000.  In addition, the Company agreed to issue warrants to the placement agent for the purchase of 140,542 shares of the Company’s common stock, at an exercise price of $8.44 per share expiring on December 29, 2011, as additional compensation for services, subject to the availability of authorized shares of common stock not otherwise committed.  

8.         Stock Options and Warrants

Stock Options

The Company maintains an equity award plan approved by its stockholders, the Incentive Plan (the “Plan”).  Under the Plan, awards may be granted to participants in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance awards, bonuses or other forms of share-based awards or cash, or combinations of these as determined by the board of directors.  Awards are granted at fair market value on the date of grant and typically expire 10 years after date of grant.  Participants in the Plan may include the Company’s directors, officers, employees, consultants and advisors (except consultants or advisors in capital-raising transactions) as the board of directors may determine.  The maximum number of awards allowed under the Plan is 17.5% of the Company’s outstanding common stock less the then outstanding awards, subject to sufficient authorized shares.  In general, the policy of the board of directors is to grant stock options that vest in equal amounts on the date of grant and the first and second anniversaries of the date of grant, except that awards to non-executive members of the board of directors typically vest immediately.

The Company estimates the fair value of stock options using a Black-Scholes valuation model.  Key input assumptions used to estimate the fair value of stock options include the expected term, expected volatility of the Company’s stock, the risk free interest rate, option forfeiture rates, and dividends, if any.  The expected term of the options is based upon the historical term until exercise or expiration of all granted options.  The expected volatility is derived from the historical volatility of the Company’s stock on the U.S. NASDAQ Capital Market (the Over-the-Counter market prior to October 3, 2007) for a period that matches the expected term of the option.  The risk-free interest rate is the constant maturity rate published by the U.S. Federal Reserve Board that corresponds to the expected term of the option.  SFAS No. 123R requires forfeitures to be estimated at the time of grant in order to estimate the amount of share-based awards ultimately expected to vest.  The estimate is based on the Company’s historical rates of forfeitures.  SFAS No. 123R also requires estimated forfeitures to be revised, if necessary in subsequent periods if actual forfeitures differ from those estimates.  The dividend yield is assumed as 0% because the Company has not paid dividends and does not expect to pay dividends in the future.

50
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

The weighted-average fair values at the date of grant for options granted during the years ended December 31, 2008, 2007 and 2006 were $3.18, $11.65 and $7.47, respectively, and were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:

   
Years ended December 31,
  
   
2008
    
2007
    
2006
  
Expected term in years
     8.84       8.75       8.64  
Risk-free interest rate
     2.46%       2.38%       4.56%  
Expected volatility
     89.1%       97.5%       104.7%  
Dividend yield
     0%       0%       0%  

Share-based compensation expense recognized by the Company in 2008 and 2007 includes compensation expense for share-based awards based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R.  Share-based compensation expense recognized by the Company in 2006 included (i) compensation expense for share-based awards granted prior to, but not yet vested as of December 31, 2005, based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS No. 123 and (ii) compensation expense for the share-based payment awards granted subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R.

For the years ended December 31, 2008, 2007 and 2006, share-based compensation for options and warrants was $1,444,000, $2,208,000 and $304,000, respectively.  Compensation costs for stock options which vest over time are recognized over the vesting period.  As of December 31, 2008, the Company had $1.0 million of unrecognized compensation cost related to granted stock options and warrants that remained to be recognized over vesting periods.  These costs are expected to be recognized over a weighted average period of one year.

The following table summarizes the Company’s stock option activity and related information for the years ended December 31:

   
2008
    
2007
    
2006
  
   
Shares
    
Weighted
Average
Exercise
Price
    
Shares
    
Weighted
Average
Exercise
Price
    
Shares
    
Weighted
Average
Exercise
Price
  
Outstanding at beginning of year
     812,844     $ 11.72       648,087     $ 10.08       649,187     $ 10.31  
Options granted
     202,500     $ 4.18       291,166     $ 14.57       21,000     $ 8.32  
Options exercised
     (27,166 )   $ 10.37       (93,609 )   $ 7.55       (3,000 )   $ 4.50  
Options expired
     (1,500 )   $ 10.00       (20,333 )   $ 23.02       (9,667 )   $ 23.08  
Options forfeited
     (14,100 )   $ 11.19       (12,467 )   $ 6.17       (9,433 )   $ 10.00  
Outstanding at end of year
     972,578     $ 10.19       812,844     $ 11.72       648,087     $ 10.08  
                                                 
Options exercisable at year-end
     780,744     $ 10.62       657,177     $ 11.21       597,931     $ 10.41  
Options available for grant at year-end
     451,625               608,866               144,853          
Weighted-average fair value of options granted during the year
           $ 3.18             $ 11.65             $ 7.47  
Aggregate intrinsic value – options exercised
           $ 288,414             $ 880,974             $ 3,000  
Aggregate intrinsic value – options outstanding
           $ —                                  
Aggregate intrinsic value – options exercisable
           $ —                                  

51
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

The following table summarizes information about stock options outstanding at December 31, 2008:

     
Options Outstanding
    
Options Exercisable
  
Range of
Exercise Prices
    
Number
Outstanding
    
Weighted
Average
Remaining
Contractual
Life
(In Years)
    
Weighted
Average
Exercise
Price
    
Number
Exercisable
    
Weighted
Average
Exercise
Price
  
  $2.705       174,500       9.98       $       2.71         80,500       $       2.71  
  $3.60  –  $7.875       119,767       5.49       $       5.63       114,767       $       5.57  
  $8.25  –  $9.10         199,910       7.23       $       8.78       161,244       $       8.73  
    $9.20  –  $10.125       128,200       4.81       $       9.65       128,200       $       9.65  
  $12.50  –  $16.50        184,700       3.35       $     14.28       178,867       $     14.28  
  $16.99  –  $19.125       165.501       8.98       $     18.97       117,167       $     19.05  
                                             
  $2.705  –  $19.125       972,578       6.75       $     10.19       780,744       $     10.62  

Warrants

In 2008, there was no activity in the Company's 424,992 outstanding warrants.

In 2007, we issued 50,000 warrants to an adviser on the Company’s investor matters.  The computed fair value of the warrants was approximately $455,000 and was estimated using the Black-Scholes option pricing model with the following assumptions:  five year expected term, 4.04% risk-free interest rate, 77.6% expected volatility and 0% dividend yield.  The fair value of this warrant is being expensed over the four-month term of the agreement.  We included $227,000 of this stock compensation in our selling, general and administrative expenses in 2007.  Also in 2007, we issued the remaining 74,142 warrants, representing the balance due the placement agent for the 2006 private placement (see below).  The computed fair value of the placement agent’s 140,542 warrants was approximately $748,000 and was estimated using the Black-Scholes option pricing model with the following assumptions:  five year expected term, 4.65% risk-free interest rate, 83.2% expected volatility and 0% dividend yield.  There was no accounting impact on our financial statements because the fair value chargeable to stockholders’ equity was fully offset by the corresponding credit to stockholders’ equity.  Further, we are obligated to issue the placement agent 143,432 warrants as partial compensation for the financings generated upon exercise of our Class A and B warrants (see below).  Of this amount, 70,255 are exercisable at $12.50 per share and expire on July 2, 2012 and 73,177 warrants are exercisable at $15.625 per share and expire on December 29, 2012.  The computed fair value of the placement agent’s 143,432 warrants was approximately $1,599,000 and was estimated using the Black-Scholes option pricing model with the following assumptions:  five year expected term, 3.63% and 4.65% risk-free interest rates, 77.3% and 80.3% expected volatility and 0% dividend yield.  There was no accounting impact on our financial statements because the fair value chargeable to stockholders’ equity was fully offset by the corresponding credit to stockholders’ equity.

In 2007, 1,399,873 warrants were exercised for total gross proceeds of $15.7 million (net proceeds of $15.2 million).  The warrants exercised were those that had been issued in connection with the 2006 private placement and included 699,883 of our Class A warrants and 699,990 of our Class B warrants.

As discussed in Note 7, the December 2006 private placement offered investment units that consisted of one share of common stock, one Class A warrant and one Class B warrant.  The Class A and B warrants were immediately exercisable.  The Class A warrants entitled the holder until July 2, 2007 to purchase, at a price of $10.00 per share, one share of common stock for every two shares of common stock acquired in the offering.  The Class B warrants entitled the holder until December 29, 2007 to purchase, at a price of $12.50 per share, one share of common stock for every two shares of common stock acquired in the offering.  Based upon 1,400,000 investment units sold and subscribed, an aggregate of 0.7 million of each of Class A and Class B warrants were issuable.  In addition, the Company agreed to issue five-year warrants to purchase 140,542 shares of the Company’s common stock, at an exercise price of $8.44 per share, to the placement agent as additional compensation for its services, subject to the availability of authorized capital not otherwise committed (the initial number of warrants agreed to be issued was 66,400).  The Company’s warrant activity for the year December 31, 2006 included warrants to be issued comprised of 0.7 million Class A warrants, 0.7 million Class B warrants and 66,400 of the warrants due to the placement agent.

52
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Warrant activity for the years ended December 31 is summarized as follows:

   
2008
    
2007
    
2006
  
   
Shares
    
Weighted
Average
Exercise
Price
    
Shares
    
Weighted
Average
Exercise
Price
    
Shares
    
Weighted
Average
Exercise
Price
  
Outstanding at beginning of year
     424,992     $ 11.35       1,557,424     $ 10.98       101,346     $ 8.84  
Warrants to be issued
  
─
    
$ ─
       143,432     $ 14.09       1,466,400     $ 11.13  
Warrants issued
  
─
    
$ ─
       124,142     $ 11.67    
─
    
$ 
 ─
  
Warrants exercised
  
─
    
$ ─
       (1,399,873 )   $ 11.25    
─
    
$ 
 ─
  
Warrants expired / forfeited
  
─
    
$ ─
       (133 )   $ 7.71       (10,322 )   $ 10.00  
Outstanding and to be issued at end of year
     424,992     $ 11.35       424,992     $ 11.35       1,557,424     $ 10.98  
Warrants exercisable at year-end
     424,992     $ 11.35       424,992     $ 11.35       1,557,424     $ 10.98  
                                                 
Aggregate intrinsic value
          
$ ─
             $ 4,953,662             $ 102,325  

The following table summarizes information about warrants outstanding as of December 31, 2008:

     
Warrants Outstanding and Exercisable
  
Range of
Exercise Prices
    
Number
Outstanding
And
Exercisable
    
Weighted
Average Remaining
Contractual
Life
(In Years)
    
Weighted Average
Exercise
Price
  
$     7.50 – $8.15      
  63,053
      
3.54
    
$  7.97
  
$                   8.44
      
140,542
 
    
3.00
    
$   8.44
  
$  10.00 - $16.45
      
221,397
      
3.53
    
$ 14.15
  
                           
       
424,992
      
3.35
    
$ 11.35
  

9.         Short-term Debt

On July 25, 2008, the Company borrowed $3.0 million from the demand loan facility with UBS collateralized by our ARS, a facility we had arranged on May 8, 2008.  Management determined to draw down the entire facility as a matter of financial prudence to secure available cash.  The loan facility was available for our working capital purposes and required that we continue to meet certain collateral maintenance requirements, such that our outstanding borrowings may not exceed 50% of the value of our ARS as determined by the lender.  No facility fee was required.  Borrowings bear interest at a floating interest rate per annum equal to the sum of the prevailing daily 30-day Libor plus 25 basis points.  Interest expense for the year ended December 31, 2008 was $56,000.

In November 2008, the Company accepted the Offer from UBS AG (see Note 5).  UBS committed to loan us 75% of the value of the ARS as determined by UBS at any time until the ARS right is exercised.  We applied for the loan which UBS committed would be on a no net cost basis to the Company.  UBS approved our application on January 14, 2009 (see Note 15 “Subsequent Events”).

10.         Commitments

The Company is obligated under a five-year sublease agreement through March 31, 2009 for its principal office (3,925 square feet) at an annual cost of approximately $128,000, including utilities and parking.  The Company is obligated under a seven-year lease that expires December 2015 for its relocated U.S. headquarters (5,515 square feet) at an annual cost of approximately $141,000, including utilities.  The Company is obligated under a one-year lease through July 2009 for 2,750 square feet of warehouse space at an annual cost of approximately $21,000, including utilities.  In addition, the Company is obligated under a 64-month lease through March 2013 for 1,942 square feet of administrative space in the U.K. at an annual cost of approximately $65,000, including utilities and parking.  For the years ended December 31, 2008, 2007 and 2006, rental expense approximated $225,000, $205,000 and $181,000, respectively.  Our contractual obligations for each of the next five years ended December 31 are as follows: $201,000, $175,000, $186,000, $186,000 and $163,000; and $304,000 thereafter.

53
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Effective October 28, 1994, Fuel-Tech N.V., the company that spun CDT off in a rights offering in December 1995, granted two licenses to the Company for all patents and rights associated with its platinum fuel-based catalyst technology.  Effective November 24, 1997, the licenses were canceled and Fuel Tech assigned to CDT all such patents and rights on terms substantially similar to the licenses.  In exchange for the assignment commencing in 1998, the Company is obligated to pay Fuel Tech a royalty of 2.5% of its annual gross revenue attributable to sales of the platinum fuel catalysts.  The royalty obligation expired in 2008.  CDT, as assignee and owner, maintains the technology at its expense.  Royalty expense incurred under this obligation in 2008, 2007 and 2006 amounted to $20,700, $14,300 and $14,500, respectively.  Royalties payable to Fuel Tech at December 31, 2008 and 2007 amounted to $20,700 and $14,300, respectively.

11.         Related Party Transactions

The Company has a Management and Services Agreement with Fuel Tech that requires the Company to reimburse Fuel Tech for management, services and administrative expenses incurred on its behalf at a rate from 3% to 10% of the costs paid on the Company’s behalf, dependent upon the nature of the costs incurred.  For the last three years, the Company has reimbursed Fuel Tech for the expenses associated with one Fuel Tech officer/director who also serves as an officer/director of CDT.  The Company’s financial statements include charges from Fuel Tech of certain management and administrative costs of approximately $70,000, $71,000 and $70,000 for the years ended December 31, 2008, 2007 and 2006, respectively.  The Company believes the charges under this Management and Services Agreement are reasonable and fair.  The Company and Fuel Tech terminated the Management and Services Agreement effective February 1, 2009.

As outlined in Note 7, we issued 19,599 and 12,438 shares of our common stock in 2007 and 2006, respectively, to non-executive members of our board of directors in lieu of approximately $25,000, $115,000, and $94,000 of directors’ fees earned in the first quarter of 2007 and the years ended December 31, 2006 and 2005, respectively.  Such directors’ fees had been accrued and charged to expense during the respective periods.  The number of shares of our common stock issued to the directors was determined based upon the average of the high and low share prices during each quarter.  The grant date for such shares of common stock for purposes of measuring compensation is the last day of the quarter in which the shares are earned, which is the date that the director begins to benefit from, or be adversely affected by, subsequent changes in the price of the stock.  Directors’ compensation charged to operations did not materially differ from such measurement.

In conjunction with the December 2006 private placement (see Note 7), directors and management invested $106,321 for a total of 15,751 common shares and 15,751 warrants.  In 2007, all of such warrants were exercised by the directors and management or assignees of them.  During 2007, directors and management exercised 14,446 of these warrants for an aggregate of $162,749 to acquire 14,446 shares of common stock.

12.         Technology Licensing Agreements and Other Revenue

In each of 2008 and 2007, we executed license agreements with new licensees for our selective catalytic reduction (SCR) emission control (our patented ARIS technologies for control of oxides of nitrogen) and the combination of exhaust gas recirculation (EGR) with SCR technologies.  The agreements provided for up-front fees and quarterly per-unit royalty payments during the term of the licenses.  The licenses will stay in effect for the remaining life of the underlying patents.  The licenses are non-exclusive and cover specific geographic territories.  For the year ended December 31, 2008, technology licensing fees and royalties totaled $451,000.  The year ended December 31, 2007 includes approximately $3.5 million in technology licensing fees and royalties, including approximately $0.2 million from an existing licensee’s September 2004 license and $0.5 million due to amendment of a license agreement with an existing licensee.

54
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Consulting and Other

The 2006 revenue included consulting fees from services rendered on various projects, including provision of certain consulting and market analysis services pursuant to a consulting contract.

13.         Income Taxes

The Company follows the liability method of accounting for income taxes.  Such method requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

As of December 31, 2008, the Company has tax losses available for offset against future years’ taxable income of approximately $48.4 million, of which $9.5 million will expire over the next five years and the remaining tax losses expire from 2018 through 2028.  The Company also has research and development tax credit carryforwards of approximately $1.8 million, expiring between 2011 and 2028.  The Company has provided a full valuation allowance to reduce the related deferred tax asset to zero because of the uncertainty relating to realizing such tax benefits in the future.  The total valuation allowance increased by $3.3 million during the year ended December 31, 2008.  Deferred tax assets and valuation allowance at December 31, 2008 and 2007 are as follows:

   
December 31,
  
   
2008
    
2007
  
Research and development
   $ 1,789     $ 1,746  
Net operating loss carryforwards
     18,867       16,229  
Reserves
     140    
 
Options
     968       531  
Deferred tax assets
     21,764       18,506  
Less: valuation allowance
     (21,764 )     (18,506 )
Deferred tax assets, net
  
$ 
 
    
$ 
 
  

We adopted FASB Interpretation No. 48 (“FIN 48”) effective January 1, 2007.  There were no unrecognized tax benefits at the date of adoption of FIN 48, and there were no unrecognized tax benefits at December 31, 2007 and 2008.  It is the Company’s policy to classify in the financial statements accrued interest and penalties attributable to a tax position as income taxes.

Utilization of CDT's U.S. federal tax loss carryforwards for the period prior to December 12, 1995 is limited as a result of the ownership change in excess of 50% attributable to the 1995 Fuel Tech rights offering to a maximum annual allowance of $735,000.  Utilization of CDT's U.S. federal tax loss carryforwards for the period after December 12, 1995 and before December 30, 2006 is limited as a result of the ownership change in excess of 50% attributable to the private placement which was effective December 29, 2006 to a maximum annual allowance of $2,519,000.  Utilization of CDT's tax losses subsequent to 2006 may be limited due to cumulative ownership changes in any future three-year period.

We file our tax returns as prescribed by the tax laws of the jurisdictions in which we operate.  Our tax years ranging from 2005 through 2008 remain open to examination by various taxing jurisdictions as the statute of limitations has not expired.

55
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Reconciliations of the differences between income taxes computed at federal statutory rates (34%) and consolidated provisions (benefits) for income taxes for the years ended December 31, 2008, 2007 and 2006 are as follows:

   
Years ended December 31,
  
   
2008
    
2007
    
2006
  
Federal taxes (benefits) at statutory rates
     (34% )     (34% )     (34% )
State taxes (benefits) rate
     (5% )     (5% )     (5% )
Change in valuation allowance
     39%       39%       39%  
Income taxes (benefits)
  
%
    
%
    
%
  

14.           Geographic Information

CDT sells its products and licenses its technologies throughout the world.  A geographic distribution of revenue consists of the following:

(in thousands)
                  
   
Years ended December 31,
  
   
2008
    
2007
    
2006
  
U.S.
   $ 905     $ 2,563     $ 684  
Europe
     6,405       2,255       117  
Asia
     165       107       322  
Total revenue
   $ 7,475     $ 4,925     $ 1,123  

The Company has patent coverage in North and South America, Europe, Asia, Africa and Australia.  As of December 31, 2008 and 2007, the Company’s assets comprise the following:

(in thousands)
            
   
December 31,
  
   
2008
    
2007
  
U.S.
   $ 17,214     $ 22,680  
Foreign
     1,533       1,983  
Total assets
   $ 18,747     $ 24,663  

15.         Subsequent Events

In January 2009, we received $3.4 million proceeds from UBS under the approved no net cost loan (see Note 9).  UBS approved a $6.5 million credit facility based upon acceptance of our credit application pursuant to its Offer.  Our ARS serve as collateral for the loan which is payable upon demand.  If UBS should demand repayment prior to the commencement of the exercise period for our ARSR (June 30, 2010), UBS will arrange alternative financing with substantially the same terms and conditions.  If alternative financing cannot be established, UBS will purchase our pledged ARS at par value.  Interest is calculated at the weighted average rate of interest we earn on the ARS.  Interest is payable monthly.  At March 4, 2009, the principal amount of the loan outstanding amounted to $6.4 million ($3.0 million borrowed in July 2008 and $3.4 million in January 2009).

On February 10, 2009, the Company’s Board of Directors elected Michael L. Asmussen, 38, as President and Chief Executive Officer replacing Dr. Bernhard Steiner.  Mr. Asmussen was also appointed to serve as a Director of the Company.  Effective February 11, 2009, Dr. Steiner resigned as a Director of the Company.  As a consequence of his termination of employment, Dr. Steiner is entitled to salary of approximately $315,445 (EUR 241,500) per annum until September 13, 2010, the remainder of his contract term, along with specified expenses not to exceed an aggregate of approximately $4,300, to be paid in monthly installments.  In addition, Dr. Steiner will receive approximately $47,317 in respect of the 2008 incentive plan.  The Company expects to incur a severance charge of approximately $510,000 in the first quarter of 2009 in connection with Dr. Steiner’s departure to be paid in monthly installments until September 2010.

56
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

16.         Quarterly Financial Data (unaudited)

The table below presents the Company’s unaudited quarterly information for the last eight quarters.

   
Three Months Ended
  
2008
  
March 31
    
June 30
    
September 30
    
December 31
  
Total revenue
   $ 2,601     $ 2,619     $ 1,580     $ 675  
Gross profit *
     536       626       406       190  
Net loss attributable to common stockholders
     (1,590 )     (2,143 )     (2,381 )     (3,259 )
Basic and diluted net loss per common share
     (0.20 )     (0.26 )     (0.29 )     (0.40 )
 
   
Three Months Ended
  
2007
  
March 31
    
June 30
    
September 30
    
December 31
  
Total revenue
   $ 216     $ 1,243     $ 2,460     $ 1,006  
Gross profit *
     100       1,138       2,293       268  
Net (loss) income attributable to common stockholders
     (1,815 )     (519 )     651       (2,852 )
Basic and diluted net (loss) income per common share
     (0.30 )     (0.08 )     0.09       (0.38 )

*  Gross profit is defined as total revenue less total cost of revenue.

57
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Controls and Procedures

(a) Disclosure Controls and Procedures.  As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b) Management’s Annual Report on Internal Control over Financial Reporting.  Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on that evaluation, our management concluded that our internal control over financial reporting is effective as of December 31, 2008.

Attestation Report of the Registered Public Accounting Firm.  Eisner LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included below, on the effectiveness of our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
Clean Diesel Technologies, Inc.

We have audited the internal control over financial reporting of Clean Diesel Technologies, Inc. and subsidiary (the “Company”) as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

58
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Clean Diesel Technologies, Inc. and subsidiary as of December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated March 13, 2009 expressed an unqualified opinion thereon, and included an explanatory paragraph with respect to the Company’s adoption of Statement of Financial Accounting Standard No. 159, “The Fair Value Option for Financial Assets and Liabilities.”


/s/  Eisner LLP
New York, New York
March 13, 2009


(c) Changes in Internal Control over Financial Reporting.  The Company is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal controls.  This results in refinements to processes throughout the year.  We continue to enhance the design and documentation of our internal control processes to ensure suitable controls over our financial reporting.

There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during our fourth fiscal quarter of 2008.

Other Information

None.

59
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Part III

Directors, Executive Officers and Corporate Governance

Information required by this item regarding directors and executive officers of the Company will be set forth under the captions “Election of Directors,” “Directors and Executive Officers of Clean Diesel Technologies,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Committees of the Board,” “Audit Committee” and “Audit Committee Financial Experts” in the Company’s proxy statement related to the 2009 annual meeting of stockholders and is incorporated by reference.  Information regarding our directors is available on our Internet site under “Investors” as follows: http://www.cdti.com/corporate.html.

The Company has adopted a code of Ethics and Business Conduct (the “Code”) that applies to all employees, officers and Directors, including the Chief Executive Officer and Chief Financial Officer.  A copy of the code is available free of charge on written or telephone request to the secretary of the Company at the address or telephone number of the Company set out in the Company’s annual report to stockholders.  The Code may also be viewed on our website under “Investors” as follows: http://www.cdti.com/corporate.html.

Executive Compensation

Information required by this item will be set forth under the caption “Executive Compensation,” “Directors’ Compensation,” “Report of Compensation and Nominating Committee on Executive Compensation” and “Compensation and Nominating Committee Interlocks and Insider Participation” in the proxy statement related to the 2009 annual meeting of stockholders and is incorporated by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item will be set forth under the caption “Principal Stockholders and Stock Ownership of Management” in the proxy statement related to the 2009 annual meeting of stockholders and is incorporated by reference.

Certain Relationships and Related Transactions, and Director Independence

Information required by this item will be set forth under the captions “Compensation and Nominating Committee Interlocks and Insider Participation,” “Certain Relationships and Related Transactions” and “Director Independence” in the proxy statement related to the 2009 annual meeting of stockholders and is incorporated by reference.

Principal Accounting Fees and Services

Information required by this item will be set forth under the caption “Audit Fees” in the proxy statement related to the 2009 annual meeting of stockholders and is incorporated by reference.

60
CLEAN DIESEL TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements

Part IV

Item 15. 
Exhibits and Financial Statement Schedules

(a)
(1)  Financial Statements

The Financial Statements identified below and required by Part II, Item 8 of this Form 10-K are set forth above.
Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2008 and 2007

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2008, 2007 and 2006

 
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
 
(2)  Financial Statement Schedules

The following financial statement schedule is included herein and should be read in conjunction with the consolidated financial statements referred to above.

Valuation and Qualifying Accounts – Page 64

Other schedules have been omitted because of the absence of the conditions under which they are required or because the required information where material is shown in the consolidated financial statements or the notes thereto.

(b)
Exhibits

The following exhibits are, as indicated by reference symbol, filed herewith or incorporated by reference.  Portions of Exhibits 10(o) and 10(p) have been omitted pursuant to a request for confidential treatment.

3(i)(a)
  
Restated Certificate of Incorporation dated as of March 21, 2007 (incorporated by reference to Exhibit 3(i)(a) to Annual Report on Form 10-K filed on March 20, 2007).
     
3(i)(b)
  
Certificate of Amendment to Restated Certificate of Incorporation dated as of June 15, 2007 (incorporated by reference to Exhibit 3(i)(b) to Registration Statement on Form S-1 [No. 333-144201] dated on June 29, 2007).
     
3(i)(c)
  
Certificate of Elimination of Series A Convertible Preferred Stock dated June 18, 2004 (incorporated by reference to Exhibit to Registration Statement on Form S-8 [No. 333-117057] dated July 1, 2004).
     
3(ii)
  
By-Laws as amended through November 6, 2008 (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed on November 10, 2008).
     
4
  
Specimen Stock Certificate, Common Stock (incorporated by reference to Exhibit to Registration Statement on Form S-1 (No. 33-95840) dated as of August 16, 1995).
     
10(a)
  
Assignment of Intellectual Property Rights by Fuel-Tech N.V. to Platinum Plus, Inc. as of November 5, 1997 (incorporated by reference to Exhibit to Form 10-K for the year ended December 31, 1997).


10(b)
  
Assignment of Intellectual Property Rights by Fuel Tech, Inc. to Clean Diesel Technologies, Inc. as of November 5, 1997 (incorporated by reference to Exhibit to Form 10-K for the year ended December 31, 1997).
     
10(c)
  
Assignment Agreement as of November 5, 1997 among Platinum Plus, Inc., Fuel-Tech N.V. and Clean Diesel Technologies, Inc. (incorporated by reference to Exhibit to Form 10-K for the year ended December 31, 1997).
     
10(d)
  
Incentive Plan as amended through June 11, 2002 (incorporated by reference to Exhibit 10(d) to Annual Report on Form 10-K filed on March 30, 2007).
     
10(e)
  
Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10(g) to Annual Report on Form 10-K filed on March 30, 2007).
     
10(f)
  
Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10(h) to Form 10-K filed on March 30, 2007).
     
10(g)
  
Form of Non-Executive Director Stock Option Agreement (incorporated by reference to Exhibit to Registration Statement on Form S-8 [No. 333-117057] dated July 1, 2004).
     
10(h)
  
Management Services Agreement between Clean Diesel Technologies, Inc., Fuel Tech, Inc. and Fuel-Tech N.V. as of June 1, 1996 (incorporated by reference to Exhibit to Form 10-Q for the quarter ended September 30, 1996).
     
10(i)
  
Office Lease dated as of January 29, 2004 (incorporated by reference to Exhibit to Form 10-Q for quarter ended June 30, 2004).
     
10(j)
  
Registration Rights Agreement between Clean Diesel Technologies, Inc. and Fuel-Tech N.V. of November 5, 1997 (incorporated by reference to Exhibit to Form 10-K for the year ended December 31, 1997).
     
10(k)
  
Registration Rights Agreement between Clean Diesel Technologies, Inc. and Fuel-Tech N.V. of March 24, 1997 (incorporated by reference to Exhibit to Form 10-K for the year ended December 31, 1996).
     
10(l)
  
Registration Rights Agreement between Clean Diesel Technologies, Inc. and the holders of Series A Convertible Preferred Stock as of November 11, 1998 (incorporated as reference to Exhibit to Form 10-Q for the period ended September 30, 1998).
     
10(m)
  
License Agreement of July 13, 2001 between Clean Diesel Technologies, Inc. and Mitsui Co., Ltd  as amended by Amendment No. 1 of December 18,  2002 (incorporated as reference to Exhibit to Form 10-Q for quarter ended June 30, 2004).
     
10(n)
  
License Agreement of March 31, 2003 between Clean Diesel Technologies, Inc. and Combustion Components Associates, Inc. (incorporated by reference to Exhibit to Exhibit to Form 10-Q for quarter ended June 30, 2004).
     
10(o)
  
Employment Agreement dated September 23, 2003 between Tim Rogers and the Company (incorporated by reference to Exhibit10(x) to Annual Report on Form 10-K filed on March 30, 2007).
     
10(p)
  
Employment Agreement dated June 14, 2005 between Walter Copan and the Company (incorporated by reference to Exhibit to Form 8-K dated as of August 3, 2005).
     
10(q)
  
Employment Agreement dated November 29, 2006 between Ann B. Ruple and the Company (incorporated by reference to Exhibit 10(z) to Annual Report on Form 10-K filed on March 30, 2007).


10(r)
  
Employment Agreement dated as of January 1, 2008 between Bernhard Steiner and the Company.
     
 
Employment Agreement dated August 21, 2008 and Addendum thereto dated August 26, 2008 between Michael Asmussen and the Company.
     
 
Office lease dated as of September 2008.
     
14
  
Code of Ethics and Business Conduct (incorporated by reference to Exhibit to Annual Report on Form 10-K for the year ended December 31, 2004).
     
 
Subsidiaries.
     
 
Consent of Eisner LLP.
     
 
Section 302 CEO Certification.
     
 
Section 302 CFO Certification.
     
 
Section 906 Certification by CEO and CFO.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
#
  
Filed herewith.


Clean Diesel Technologies, Inc. and Subsidiary
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
Accounts Receivable Allowance


(in thousands)
  
Balance at Beginning of Period
    
Additions Charged to Costs and Expenses
    
Additions Charged to Other Accounts
    
Deductions*
    
Balance at End of Period
  
Year Ended
                              
December 31, 2006
   $ 11    
$
 34     $ -     $ 11     $ 34  
December 31, 2007
   $ 34    
$ 
 28     $ -     $ 13     $ 49  
December 31, 2008
   $ 49    
$ 
 629     $ -     $ 319     $ 359  
                                         
* Uncollected receivables written off, net of recoveries and translation adjustment
  



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Clean Diesel Technologies, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    CLEAN DIESEL TECHNOLOGIES, INC.
         
         
March 16, 2009
  
By:
/s/   Michael L. Asmussen
  
Date
    
Michael L. Asmussen
     
Chief Executive Officer, President and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of Clean Diesel Technologies, Inc. and in the capacities and on the date indicated have duly signed this report below.


/s/   Michael L. Asmussen
  
Chief Executive Officer, President and Director
Michael L. Asmussen
  
(principal executive officer)
     
/s/   Ann B. Ruple
  
Chief Financial Officer, Vice President and Treasurer
Ann B. Ruple
  
(principal financial and accounting officer)
     
     
/s/   John A. de Havilland
  
Director
John A. de Havilland
    
     
/s/   Derek R. Gray
  
Director, Non-Executive Chairman of the Board of Directors
Derek R. Gray
    
     
/s/   Charles W. Grinnell
  
Director, Vice President and Corporate Secretary
Charles W. Grinnell
    
     
/s/   John J. McCloy
  
Director
John J. McCloy
    
     
/s/   David F. Merrion
  
Director
David F. Merrion
    
     
/s/   David Gammon
  
Director
David Gammon
    


Dated:  March 16, 2009
 
 
65
 EX-10.S 2 ex10_s.htm EXHIBIT 10(S) ex10_s.htm
Exhibit 10(s)
 
EMPLOYMENT AGREEMENT

Clean Diesel Technologies, Inc. – Michael L. Asmussen

 
AGREEMENT made as of the date set forth below by and between Michael L. Asmussen, 1731 Centennial Drive, Canton, MI  48187 (“Executive”) and Clean Diesel Technologies, Inc., a Delaware corporation (the “Company”), having a place of business at Suite 702, 300 Atlantic Street, Stamford, CT  06901.

WHEREAS, the Company desires certain services for itself and Executive desires to contract with the Company to perform such services;

NOW THEREFORE, in consideration of the mutual covenants hereinafter recited, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Term:  This Agreement shall commence on the date of September 3, 2008, or as reasonably soon thereafter as may be agreed by Executive’s designated supervisor below (the “Commencement Date”), and shall continue thereafter until terminated by either party as provided below, provided that the Commencement Date shall not be any date earlier than the Executive’s first day of full time employment.

2. Scope of Work; Title:  On the Commencement Date, Executive shall be Vice President – Sales Americas of the Company.  In such employment, Executive shall on a full-time basis direct all of Executive’s efforts toward the performance of such duties as shall be assigned to Executive by the Executive Vice President American Operations who shall be Executive’s designated supervisor.  “Full time” shall mean no other outside business activities without the company’s prior consent.  Executive will be proposed for election as Vice President Sales at the Board of Directors meeting next following the Commencement Date or sooner by written action of the directors at their convenience. Executive's place of employment shall be the Company's corporate headquarters, and, pending relocation, the Executive shall maintain a home office and visit the corporate headquarters whenever required.

3. Compensation; Benefits:  (a) Salary. The Company agrees to cause Executive to be paid for Executive’s services hereunder at the initial rate of Two Hundred Ten Thousand Dollars ($210,000) per year.  Executive shall be paid such amounts by the Company according to its normal and customary procedures from time to time in effect but not less often than monthly.
 
(b) Options. When employed, Executive from time to time shall be entitled to participate in stock option Awards under the Company’s 1994 Incentive Plan in the discretion of the Board of Directors.  The Company will arrange for you to receive a stock option award to purchase Ten Thousand (10,000) shares of the Company's common stock, $0.01 par value, at an exercise price which shall be the fair market value of the stock on the Award Date, as determined pursuant to the terms of the Plan. The option Award Date shall be the Commencement Date. Such option shall have a term of ten (10) years and shall vest in increments of one-third (1/3) of the options on the first anniversary of the Commencement Date, and the second and third one-third (1/3) option portions on the second and third anniversaries of the Award Date. Such option shall, nevertheless, lapse and be forfeited in its entirety, if the Executive shall not be employed by the Company on the first anniversary of the Commencement Date.  In the event of a “Change in Control”, as defined in and in accordance with Company’s 1994 Incentive Plan, any and all eligible Option rights shall become fully vested and immediately exercisable.

 
1
 

(c) Bonus. Executive shall be eligible for a variable compensation performance bonus program.  The bonus shall have an initial targeted payout of up to 50% of salary, with a portion of this amount, or Twenty Thousand Two Hundred Dollars ($20,200) guaranteed in the first year.  After the first year of employment, Executive will be eligible to participate in such performance bonus/variable compensation programs of Company in the discretion of the Directors.

(d) Benefits. Executive shall participate also in such other benefit programs as the Company may customarily extend to its Employees as a class.  This Agreement may not be construed to prevent the Company from rescinding any benefit programs for Executive so long as such rescission applies to Employees as a class.

4. Expenses:  Executive shall be reimbursed by the Company in accordance with Company policies for all ordinary and necessary out-of-pocket expenses incurred by Executive in performing Executive’s services hereunder.  Such expenses shall be reported from time-to-time by Executive on the Company’s customary forms of expense report and submitted for approval to the Company pursuant to its policies from time to time in effect.

5. Termination of Employment:  (a) Just Cause.  The Company may at any time terminate this Agreement for Just Cause.  “Just Cause” shall mean, as determined by the Board of Directors in its sole discretion, conviction of Executive under, or a plea of guilty by the Executive to, any charge which would constitute a felony under the laws of Connecticut, regardless of jurisdiction; any instance of fraud, embezzlement, self-dealing, insider trading or similar malfeasance with respect to the Company regardless of the amount involved; any instance of material disloyalty, insubordination, or disparagement of the Company to an outside party; or any instance of substance abuse of a controlled substance or, otherwise, a pattern of substance abuse which limits Executive’s performance of Executive’s duties.

(b) Disability.  The Company may terminate this Agreement at any time upon the physical disability of Executive, if the Directors in their sole discretion shall determine that, as a result of physical disability Executive has for a period of six months been substantially absent from Executive’s customary place of work and unable to perform Executive’s customary duties.

(c) At Will.  Either of Executive or Company may terminate this Agreement at any time on two (2) month’s written notice one to the other.  Where Company shall terminate this Agreement for other than just cause or physical disability after six (6) months of employment, the Company shall continue the Executive’s Basic Salary and Benefits (in the amount and form then enjoyed by the Executive) but offset by any income from personal services earned by the Executive from sources other than the Company for a period which ends on the earlier of eight (8) months after termination or until the Executive accepts other substantially comparable employment.  If this employment is terminated by the Employee, he will, at any time, give two (2) months advance notice and shall not be entitled to any further compensation after such notice period. Termination at will under this sub-section (c) shall also include constructive discharge within one year following a change in control of the Company. “Constructive discharge” means that the responsibilities of the Employee have been materially diminished at the time of change in control. “Change in control” has the same meaning as set out in the Company’s 1994 Incentive Plan.

 
2
 

6. Discoveries and Inventions:   All patentable and unpatentable inventions, discoveries and ideas which are made or conceived or reduced to practice by Executive during the term of Executive’s employment, and which are based upon or arise out of Executive’s services hereunder (“Developments”) are or shall become the Company’s property.  Executive agrees to disclose promptly to the Company each such Development and, upon the Company’s request and at its expense, Executive will assist the Company, or its designee, in making application for Letters Patent, Trade or Service Marks or Copyrights in any country in the world.  Executive further agrees, at no expense to Executive, to execute all papers and do all things which may be necessary or advisable to prosecute such applications, and to transfer to and vest in the Company, or its designee, all the right, title and interest in and to such Developments, and all applications for patents and Letters Patent, Trademarks and Service Marks and Copyrights issued thereon.  If for any reason Executive is unable to effectuate a full assignment of any such Development, Executive agrees to transfer to the Company, or its designee, Executive’s transferable rights, whether they be exclusive or non-exclusive, or as a joint inventor or partial owner of the Development.  No action or inaction by the Company shall in any event be construed as a waiver or abandonment of its rights to any such Development except an instrument in writing assigned by an authorized official of the Company by which it specifically states it intends to be bound in such respect.

7. Proprietary Information:  Executive will not at any time, either during the term of this Agreement or thereafter, disclose to others, or use for Executive’s own benefit or the benefit of others, any of the Developments or any confidential, proprietary or secret information owned, possessed or used by the Company or any of its subsidiaries or affiliates (collectively, “Proprietary Information”), which, by way of illustration, but not limitation, includes devices, structures, machines, data, know-how, business opportunities, marketing plans, forecasts, unpublished financial statements, budgets, licenses and information concerning prices, costs, Executives, customers and suppliers.  Executive’s undertakings and obligations under this Paragraph 7 will not apply to any Proprietary Information which: (a) is or becomes generally known to the public through no action on the part of the Executive or (b) is generally disclosed to third parties by the Company or any of its subsidiaries or affiliates without restriction on such third parties.  Upon termination of this Agreement or at any other time upon request, Executive will promptly deliver to the Company all keys, notes, memoranda, notebooks, computers, computer disks or drives, drawings, designs, three dimensional figures, photographs, layouts, diagrams, records, reports, files and other documents (and all copies or reproductions of such materials) in Executive’s possession or under Executive’s control, whether prepared by him or others, which contain Proprietary Information.  Executive acknowledges that this material is the sole property of the Company or a subsidiary or an affiliate of the Company.

 
3
 

8. Subsequent Employment:  Following the termination of Employment for any reason, Executive agrees that Executive will not recruit, entice, induce or encourage any of the Company’s other Executives or consultants to engage in any activity which, were it done by Executive, would violate any provision of Executive’s Agreement. For a two-year period after termination of employment and before performing any services for others, as Executive or consultant or otherwise, in the actual lines of business in which Executive has performed services for the Company, its subsidiaries or affiliates, Executive will notify the Company of the general nature of the services to be performed and the party for whom they will be performed and Executive will, also, prior to undertaking such service or employment inform the other party of the existence of the covenants in Sections 6, 7 and 8 of this Agreement. Executive admits that breach of Executive’s covenants hereunder regarding the Company’s Proprietary information is likely to cause serious economic injury to the Company.

9. Assignment:  This Agreement may not be assigned by either party without the prior written consent of the other party; provided, however,  that the acquisition by any person of all or substantially all of the assets or capital stock of the Company shall not be considered an assignment of this Agreement by the Company.

10. Continuing Obligations:  The Executive’s covenants set forth in Sections 6, 7, and 8 above shall continue according to their terms following the termination of this Agreement.

11. Governing Law; Waiver of Trial by Jury; Equitable Remedies. This Agreement, the interpretation hereof and the resolution of any and all disputes between the Company and Executive shall be governed by and interpreted under the internal substantive and procedural laws of the State of Connecticut without any reference to conflicts of laws rules. In the resolution of any disputes the parties agree to submit to the exclusive jurisdiction of the Superior Court of Connecticut, Stamford/Norwalk District and waive any claims of forum non conveniens with respect to that jurisdiction and also waive any claim to trial by jury in any proceeding. The parties further agree that any violations of Executive’s covenants set forth in Sections 6, 7 and 8 above may cause irreparable harm to the Company which harm is not capable of accurate determination and for which the remedy of damages may be insufficient. Accordingly, in any proceeding to enforce the Company’s rights under such Sections 6,7 and 8, the Company may seek, in addition to damages, equitable remedies such as injunctions, temporary injunctions and restraining orders and the parties hereby waive any requirement of bond in any such proceeding or in any appeal therefrom.

12. Legal Advice; Rescission. Executive agrees that this Agreement involves Executive’s waiver of certain legal rights. Executive may, if Executive so chooses, consult with an attorney about the terms of this Agreement before signing it. Executive further acknowledges that (a) the Company has given Executive a twenty one (21) day period in which to consider the terms and binding effect of this Agreement, which twenty one (21) day period Executive may waive, and (b) that, if Executive does sign this Agreement, Executive shall have seven (7) days thereafter to change Executive’s mind and revoke it. Executive agrees that if Executive decides to revoke this Agreement, Executive will inform the Company within that seven (7) day period and obtain a written acknowledgment of the revocation which the Company agrees to provide. Executive understands that revocation of this Agreement will affect Executive’s employment status. Executive states that Executive has carefully read this Agreement; that Executive understands its final and binding effect and agrees to be bound by its terms; and that Executive has signed this Agreement voluntarily.

 
4
 

13. Notices.  All notices hereunder shall be in writing and shall be deemed effective upon receipt, if hand delivered, or if sent by facsimile and acknowledged electronically, or by courier and receipted on delivery.  Notices by mail shall be deemed received on receipt, if sent first class or priority mail postage prepaid return receipt requested and the sender shall have the signed receipt. Otherwise notices shall be deemed effective five (5) days after transmission.  In each case notices shall be transmitted to the address first given above or such other address as may be given by notice as provided herein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.



EXECUTIVE
  
CLEAN DIESEL TECHNOLOGIES, INC.
  
           
           
           
/s/ Michael L. Asmussen    /s/ Walter G. Copan   
Name: Michael L. Asmussen
  
Name: Walter G. Copan
  
     
Executive Vice President
  
           
Date: 
August 21, 2008   
Date: 
August 20, 2008    
           
           
      /s/ Bernhard Steiner   
     
Name: Bernhard Steiner
  
     
President and Chief Executive Officer
  
           
     
Date: 
August 20, 2008 
   

5
 
Clean Diesel Technologies, Inc.
www.cdti.com

300 Atlantic Street, Suite 702, Stamford, CT 06901-2522 Tel: (203) 327-7050 Fax: (203) 323-0461

Michael L. Asmussen
1731 Centennial Drive
Canton, MI  48187


August 26, 2008

Employment Agreement Addendum


Clean Diesel Technologies, Inc. - Michael L. Asmussen


Dear Mike,

We are excited about having you join the Clean Diesel team and would like to make this transition as attractive and convenient as possible for you, Laura and your growing family. We have discussed alternatives with the Compensation Committee of the Board and with General Counsel, including standard practices and expectations around those practices in a public company environment, and have secured authorization for some additional support for your relocation to the Connecticut area of the Company headquarters.  While we are able to assist in further defraying some potential costs associated with your move, it must also be recognized that there are some constraints that need to be taken into account. We are therefore able to offer the following, which represents the extent to which we are able to provide additional support.

We hope this arrangement to provide further assistance meets with your approval, and look forward to having you join the Clean Diesel team on September 3rd.

 If you are in accord with the following, kindly sign below on the two originals where indicated, and return one fully executed original to me.

-           Relocation to the company headquarters area Bridgeport, CT is expected to be as soon as practical, under the circumstances, and within 12 months of your start date.  The company will pay for two house-hunting visits for you and your spouse.

-           The company will pay for all customary and reasonable moving (e.g., packing, shipping, storage, etc.) and closing (both sale and purchase) costs as reimbursable expenses with receipts to be submitted to the company.

-           A relocation company may be assigned at the company discretion and with your agreement to assist with coordination of home sale, purchase and relocation, including selection of broker(s).  The relocation company may be required to take temporary title to your Michigan home as part of providing its services to you.

 
 
 

-           The company will pay for temporary housing for you for your visits to the company headquarters area prior to the sale of your home in Michigan.  Should temporary housing become necessary due to the sale of your home and/or the timing of the closing date of the home purchase in CT, the company will provide temporary housing for you and your family for a period totaling 60 days, or as otherwise approved by the Chief Executive Officer of the Company. 

-           The company will provide a one-time incidental expense allowance of $5,000, payable after you execute an agreement or other binder document to purchase a new home in CT.

-            Regarding the sale of your home in Michigan, the company is willing to provide an additional “Housing Relocation Payment” if the actual sales price is below your original purchase price.  This original purchase price is to be confirmed by written documentation. 

-           The company will commission a written appraisal on your Michigan home.

-           As your relocation is not likely prior to January 2009, the company would like you to put your home on the market at a price that is agreed by you and your broker, based on market data. 

-            If the home sells at or above your original purchase price, this benefits you and avoids an expense for the company. Our joint intent is that you do not take a substantial loss on your home relative to its purchase cost.

-           When you sell your Canton, MI house to a willing buyer, but at a price below your original purchase price, the company commits to issuing you a further “Housing Relocation Payment”. The value of this payment will be based on the difference between the actual selling price and the original purchase price of your home, up to a maximum Relocation Payment value of $65,000, on a grossed-up basis.  This Relocation Payment may be made by the company in two portions, but in no case shall the final payment be made later than June 30, 2009, subject to the prior disclosure of the actual sales price of the home. 

-           The Housing Relocation Payment will vest over two years, with the prorated amount to be paid back to the company should you resign within two years of the payment.

In order to ensure that any of the foregoing costs are reasonable and customary and entitled to reimbursement, you shall pre-clear in advance with the Chief Executive Officer of the Company by fax or e-mail any of such expenses which individually may exceed the amount of $2,500.

Sincerely yours,
CLEAN DIESEL TECHNOLOGIES, INC.


/s/  Walter G. Copan
      
Dr. Walter G. Copan
  
Accepted and Agreed
Executive Vice President
      
       
/s/  Ann B. Ruple
  
/s/  Michael L. Asmussen
  
Ann B. Ruple
  
Michael L. Asmussen
  
Chief Financial Officer
      
 

2
 EX-10.T 3 ex10_t.htm EXHIBIT 10(T) ex10_t.htm

September 11, 2008
Exhibit 10(t)
 

 
LEASE
BETWEEN
TEN MIDDLE ASSOCIATES
(LANDLORD)
&
CLEAN DIESEL TECHNOLOGIES, INC.
(TENANT)
 


 
 
 
 
 
Table of Contents
ARTICLE 1
1
Demise, Premises, Term, Rents
1
ARTICLE 2
2
Use
2
ARTICLE 3
3
Preparation of the Demised Premises
3
ARTICLE 4
3
When Demised Premises Ready for Occupancy
3
ARTICLE 5
4
Security Deposit
4
ARTICLE 6
5
Adjustments of Rent for Changes in Real Estate Taxes
5
ARTICLE 7
6
Adjustment of Rent for Changes in Operating Costs
6
ARTICLE 8
7
Subordination, Attornment, Notice to Lessor and Mortgagees
7
ARTICLE 9
7
Quiet Enjoyment
7
ARTICLE 10
7
Assignment, Mortgaging, Subletting
7
ARTICLE 11
10
Compliance with Laws and Requirements of Public Authorities
10
ARTICLE 12
11
Insurance
11
ARTICLE 13
11
Rules and Regulations
11
ARTICLE 14
12
Alterations and Tenant's Property
12
ARTICLE 15
13
Repairs and Maintenance
13
ARTICLE 16
14
Electrical Energy & Cleaning & Janitorial Services
14
ARTICLE 17
14
Heat, Ventilation and Air Conditioning
14
ARTICLE 18
15
Landlord's other Services
15
ARTICLE 19
16
Access, Changes in Building Facilities, Name
16
ARTICLE 20
16
Shoring, Notice of Accidents, etc.
16
ARTICLE 21
17
Non-Liability and Indemnification
17
ARTICLE 22
18
Destruction or Damage
18
ARTICLE 23
18
Eminent Domain
18
ARTICLE 24
19
Surrender - Holding Over
19
ARTICLE 25
19
Conditions of Limitation
19
ARTICLE 26
20
Re-Entry By Landlord - Default Provisions
20

 
 
 
 
ARTICLE 27
21
Damages
21
ARTICLE 28
22
Waivers
22
ARTICLE 29
22
No Other Waivers or Modifications
22
ARTICLE 30
23
Curing Tenant's Defaults
23
ARTICLE 31
23
Consents - Broker
23
ARTICLE 32
23
Notices
23
ARTICLE 33
24
Arbitration
24
ARTICLE 34
25
Estoppel Certificate, Recording
25
ARTICLE 35
25
No Other Representations, Construction, Governing Law
25
ARTICLE 36
25
Parties Bound
25
ARTICLE 37
26
Certain Definitions and Constructions
26
ARTICLE 38
28
Restrictions and Mortgagee Approval
28
ARTICLE 39
28
Parking
28
ARTICLE 40
28
Option to Renew
28
ARTICLE 41
28
Termination Right
28
ARTICLE 42
29
Untenantability
29
EXHIBIT "A"
31
Premises Plan
31
EXHIBIT "B"
32
Rules and Regulations
32
EXHIBIT "C"
34
Work Letter
34
INSTRUCTIONS TO TENANT CONTRACTORS
35
INSTRUCTIONS TO MOVING CONTRACTORS
36
 
 
 
 

Lease dated as of September, 2008, between TEN MIDDLE ASSOCIATES, a partnership, having its office at 10 Middle Street, Bridgeport, Connecticut (hereinafter called the "Landlord") and CLEAN DIESEL TECHNOLOGIES, INC., a Delaware corporation with an office at 300 Atlantic Street, Suite 702, Stamford, CT 06901 (hereinafter called the "Tenant")
 
WITNESSETH:
 
In consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, Landlord and Tenant hereby agree as follows:
 
ARTICLE 1
Demise, Premises, Term, Rents
 
1.01.  Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the premises hereinafter described, in the building (referred to herein as the "Building") known as Park City Plaza, 10 Middle Street, in the City of Bridgeport, Connecticut (the "City"), for the term hereinafter stated, for the rents hereinafter reserved and upon and subject to the conditions (including limitations, restrictions and reservations) and covenants hereinafter provided.  Each party hereto expressly covenants and agrees to observe and perform all of the conditions and covenants herein contained on its part to be observed and performed.
 
1.02.  The premises hereby leased to Tenant are 5,515 rentable square feet on the 11th floor in said Building and are outlined on the floor plan(s) annexed hereto as Exhibit "A" and hereby made a part hereof.  Said premises constitute and are hereinafter called the "Demised Premises" or "Premises".
 
1.03.  The term of this Lease, for which the Demised Premises are hereby leased, shall commence on January 1,  2009 or if the Landlord’s contractor does the work under Article 4 of this Lease the date of substantial completion of the Demised Premises as defined in Section 4.01(a) of this Lease if later than January 1, 2009 (hereinafter called the "Commencement Date") and shall end at noon on December 31, 2015 which ending date is hereinafter called the "Expiration Date" or shall end on such earlier date upon which said term may expire or be cancelled or terminated pursuant to any of the conditions or covenants of this Lease or pursuant to law.
 
1.04.  Tenant shall pay to Landlord without notice or demand and without abatement, deduction or set-off, in lawful money of the United States of America, at the office of the Landlord or at such other place as Landlord may designate, the fixed rent and additional rent reserved under this Lease for each year of the term thereof, which payments shall consist of:
 
a) Fixed Rent of Eight Hundred Ninety Three Thousand Four Hundred Thirty Six Dollars ($893,436.00) for the seven-year term of the Lease, payable as follows:
 
(i) Fixed Rent of One Hundred Ten Thousand Three Hundred Four Dollars, ($110,304.), payable in twelve equal monthly installments of  Nine Thousand One Hundred Ninety Two Dollars ($9,192.) in advance on the first day of each calendar month during year one of this Lease;
 
(ii) Fixed Rent of One Hundred Fifteen Thousand Eight Hundred Twelve Dollars, ($115,812.), payable in twelve equal monthly installments of Nine Thousand Six Hundred Fifty One Dollars ($9,651.) in advance on the first day of each calendar month during year two of this Lease;
 
(iii) Fixed Rent of One Hundred Twenty Six Thousand Eight Hundred Forty Dollars, ($126,840.) payable in twelve equal monthly installments of Ten Thousand Five Hundred Seventy Dollars ($10,570.) in advance on the first day of each calendar month during year three of this Lease;
 
(iv) Fixed Rent of One Hundred Twenty Six Thousand Eight Hundred Forty Dollars, ($126,840.) payable in twelve equal monthly installments of Ten Thousand Five Hundred Seventy Dollars ($10,570.) in advance on the first day of each calendar month during year four of this Lease;
 
(v) Fixed Rent of One Hundred Thirty Seven Thousand Eight Hundred Eighty Dollars ($137,880.) payable in twelve equal monthly installments of Eleven Thousand Four Hundred Ninety Dollars ($11,490.) in advance on the first day of each calendar month during year five of this Lease;
 
(vi) Fixed Rent of One Hundred Thirty Seven Thousand Eight Hundred Eighty Dollars ($137,880.) payable in twelve equal monthly installments of Eleven Thousand Four Hundred Ninety Dollars ($11,490.) in advance on the first day of each calendar month during year six of this Lease;
 
(vii) Fixed Rent of One Hundred Thirty Seven Thousand Eight Hundred Eighty Dollars ($137,880.) payable in twelve equal monthly installments of Eleven Thousand Four Hundred Ninety Dollars ($11,490.) in advance on the first day of each calendar month during year seven of this Lease;

 
1
 

The “first day of the month” referred to above for purposes of payment shall mean the first business day of the respective month.  A “business day” shall mean a day when banks are open for business in the State of Connecticut.
 
(b)  Additional rent consisting of all such other sums of money as shall become due from and payable by Tenant to Landlord hereunder (for default in payment of which Landlord shall have the same remedies as for a default in payment of fixed rent).
 
1.05.  Tenant shall pay the fixed rent and additional rent herein reserved promptly as and when the same shall become due and payable.  If the Commencement Date shall occur on a day other than the first day of a calendar month, the fixed rent for such calendar month shall be prorated for the period from the Commencement Date to the last day of the said calendar month and shall be due and payable on the Commencement Date.  Notwithstanding the provisions of the next preceding sentence or of Section 4.01(a), Tenant shall pay the first full calendar monthly installment of fixed rent on the execution of this Lease.  If Tenant shall fail to pay when the same is due any fixed rent or additional rent, such unpaid amounts shall bear interest at the rate of eighteen percent (18%) per annum from the due date to the date of payment.  If Tenant shall fail to pay any rents, charges or other sums, within ten (10) days after the same become due and payable, then Tenant shall also pay to Landlord additional rent to cover Landlord's additional overhead and administrative costs and expenses arising out of each such late payment in the amount of five percent (5%) of the delinquent payment.  Any payments of any kind from the Tenant to the Landlord returned by Landlord’s depository for insufficient funds, account closed or the like will be subject to an additional handling charge of $50.00 per item and upon a reoccurrence thereafter, Landlord may require Tenant and Tenant agrees to pay all future payments of rent or other sums by money order, cashiers check, certified check, or wire transfer.  The provisions herein for interest and late charges shall not be construed to extend the date for payment of any sums required to be paid by Tenant hereunder or to relieve Tenant of its obligation to pay all such sums at the time or times herein stipulated.  Notwithstanding the imposition of such interest and/or late charges, Tenant shall be in default under this Lease if any or all payments required to be made by Tenant are not made at the time herein stipulated in Section 25.02 of this Lease plus any applicable grace period.  Neither the demand for, nor collection by Landlord, of such interest and/or late charges shall be construed as a curing of such default on the part of the Tenant.
 
ARTICLE 2
Use
 
2.01.  Tenant shall use and occupy the Demised Premises for executive offices, sales offices and/or general offices for the conduct of any lawful and reputable business not prohibited by Section 2.02, or by any exclusive use granted to a tenant, or any rule or regulation of governmental authority, and for no other purpose.
 
2.02.  The use of the Demised Premises for the purposes specified in Section 2.01 shall not in any event be deemed to include, and Tenant shall not use, or permit the use of, the Demised Premises or any part thereof for
 
(a) sale of, or traffic in, any spirituous liquors, wines, ale or beer kept in the Demised Premises:
 
(b) sale at retail of any other products or materials kept in the Demised Premises, by vending machines or otherwise, or demonstrations to the public, except as may be specifically agreed to by Landlord in writing:
 
(c) manufacturing, printing or electronic data processing, except for the operation of normal business office reproducing and printing equipment, electronic data processing equipment and other business machines for Tenant's own requirements at the Demised Premises; provided only that such use shall not exceed that portion of the mechanical or electrical capabilities of the building equipment allocable to the Demised Premises:
 
(d) The rendition of medical, dental or other diagnostic or therapeutic services:
 
(e) the conduct of a public auction of any kind:
 
(f) a restaurant, bar, or the sale of confectionery, tobacco, newspapers, magazines, soda, beverages, sandwiches, ice cream, baked goods or similar items, or the preparation, dispensing or consumption of food and beverages in any manner whatsoever.

 
2
 

2.03.  Tenant shall not suffer or permit the Demised Premises or any part thereof to be used in any manner, or anything to be done therein, or suffer or permit anything to be brought into or kept therein, which would in any way (i) violate any of the provisions of any grant, lease or mortgage to which this Lease is subordinate, (ii) violate any laws or requirements of public authorities, (iii) make void or voidable any fire or liability insurance policy then in force with respect to the Building, (iv) make unobtainable from reputable insurance companies authorized to do business in the State of Connecticut at standard rates any fire insurance with extended coverage, or liability, elevator or boiler or other insurance required to be furnished by Landlord under the terms of any lease or mortgage to which this Lease is subordinate, (v) cause or in Landlord's opinion be likely to cause physical damage to the Building or any part thereof, (vi) constitute a public or private nuisance, (vii) impair in the opinion of the Landlord the appearance, character or reputation of the Building, (viii) discharge objectionable fumes, vapors or odors into the Building air conditioning system or into the Building flues or vents not designed to receive them or otherwise in such manner as may unreasonably offend other occupants, (ix) impair or interfere with any of the Building services or the proper and economic heating, cleaning, air conditioning or other servicing of the Building or the Demised Premises or impair or interfere with or tend to impair or interfere with the use of any of the other areas of the Building by, or occasion discomfort, annoyance or inconvenience to Landlord or any of the other tenants or occupants of the Building, or (x) cause Tenant to default in any of its other obligations under this Lease.  The provisions of this Section, and the application thereof, shall not be deemed to be limited in any way to or by the provisions of the following Sections of this Article or any of the Rules and Regulations referred to in Article 13 or Exhibit "B" attached hereto, except as may therein be expressly otherwise provided.
 
2.04.  If any governmental license, certificate or permit, shall be required for the proper and lawful conduct of Tenant's business in the Demised Premises, or any part thereof and if failure to secure such license or permit would in any way affect Landlord, the Tenant, at its expense, shall duly procure and thereafter maintain such license, certificate or permit and submit the same to inspection by Landlord.  Tenant shall at all times comply with the terms and conditions of each such license, certificate or permit, but in no event shall failure to procure and maintain same by Tenant affect Tenant's obligations hereunder.
 
2.05.  Tenant shall not at any time use or occupy, or suffer or permit anyone to use or occupy the Demised Premises, or do or permit anything to be done in the Demised Premises, in violation of the Certificate of Occupancy for the Demised Premises or for the Building.
 
2.06.  Tenant shall not place a load upon any floor of the Demised Premises exceeding the floor load per square foot which such floor was designed to carry a total of 70 PSF uniform distributed live load and which is allowed by certificate, rule, regulation, permit or law.  Landlord reserves the right to prescribe the weight and position of all safes and vaults which must be placed by Tenant, at Tenant's expense.  Business machines and mechanical equipment shall be placed and maintained by Tenant, at Tenant's expense, in such manner as shall be sufficient in Landlord's judgment to absorb and prevent vibration, noise and annoyance.
 
ARTICLE 3
Preparation of the Demised Premises
 
3.01.  Prior to the Commencement Date, Landlord will substantially perform all the work in the Demised Premises as set forth in Exhibit "C" (the "Work Letter") upon the terms and conditions specified in the Work Letter.
 
3.02.  Landlord's agreement to do the work in the Demised Premises shall not require it to incur overtime costs and expenses and shall be subject to unavoidable delays due to acts of God, governmental restrictions, strikes, labor disturbances, shortage of materials and supplies and for any other causes or events beyond Landlord's reasonable control.
 
3.03.  Landlord may afford Tenant and its employees, agents and contractors access to the Demised Premises, at reasonable times prior to the Commencement Date and at Tenant's sole risk and expense, for the purposes of making preparations for Tenant's occupancy.  Access for such purposes shall not be deemed to constitute possession or occupancy accelerating the Commencement Date or Tenant's obligation to pay fixed rent under this Lease.
 
3.04.  If Tenant employs or uses any contractor or sub-contractor other than Landlord in the performance of any work in connection with Tenant's initial occupancy, all of Tenant's duties and obligations set forth in Sections 14.05 and 14.06 (relating to Tenant's duties and obligations in making alterations) shall be applicable to and binding upon Tenant with respect to any such work.
 
ARTICLE 4
When Demised Premises Ready for Occupancy
 
4.01.  The Demised Premises shall be deemed ready for occupancy on the earliest date on which all of the following conditions have been met:
 
(a) The Work described in the Work Letter to be performed by Landlord has been substantially completed.  Substantially completed shall mean all walls and partitions, doors and locksets, lighting fixtures and ceiling tiles, electrical outlets and electrical and carpeting identified in the Work Letter shall be completed, the Demised Premises shall be free of ladders, scaffolding, construction equipment and debris and a certificate of occupancy or temporary certificate of occupancy has been issued allowing the Tenant to occupy the Demised Premises.
 
(b) Adequate means of access have been provided, and the use without material interference of the facilities necessary to Tenant's occupancy of the Demised Premises, including corridors, elevators and stairways and heating, ventilating, air conditioning, sanitary, water, and electrical lighting and power facilities are available to Tenant in accordance with Landlord's obligations under this Lease.

 
3
 
 
(c) The facilities and systems serving the Building and passing through the Demised Premises have been completed to the extent required to provide adequate services to the Demised Premises, the exterior of the Building has been substantially completed, including all of the windows of the Demised Premises, and the remaining work to be done in the Building is of such nature as will not materially interfere with Tenant's use of the Demised Premises or access thereto.
 
4.02.  If the occurrence of any of the conditions listed in Section 4.01 and thereby the making of the Demised Premises ready for occupancy shall be delayed due to any act or omission of Tenant or any of its employees, agents or contractors, including but not limited to failure by Tenant to act promptly when any consent or approval may be requested by Landlord, or to plan or execute work to be performed by Tenant diligently and expeditiously, the Demised Premises shall be deemed ready for occupancy on the date when they would have been ready but for any such delay.
 
4.03.  The Commencement Date of this Lease is scheduled to be on January 1, 2009 or if the Landlord’s contractor does the work under Article 4 of this Lease the date of substantial completion of the Demised Premises as defined in Section 4.01 of this Lease if later than January 1, 2009 and Landlord shall attempt to have the Demised Premises ready for Tenant's occupancy on or before such date.  If the Demised Premises are not ready for Tenant's occupancy on or before said date, this Lease shall remain in full force and effect and the Commencement Date shall occur when the Demised Premises shall be deemed ready for occupancy under Section 4.01; provided, however, that if the Demised Premises are not ready for Tenant's occupancy on or before April 1, 2009 for any reason not the fault of Tenant, Tenant shall have the right to cancel this Lease by giving written notice of such cancellation to Landlord at any time after April 1, 2009, unless the Demised Premises are ready for Tenant’s occupancy within ten (10) business days after such notice.  In the event of such cancellation, this Lease shall be null and void, and neither party shall have any liability to the other, except as otherwise provided herein.  If such notice of cancellation is not so given, this Lease shall remain in full force and effect.  Landlord shall have no liability to Tenant for failure to give possession of the Premises on the Commencement Date, in the event of the holding over or retention of possession of any tenant, undertenant or occupant, nor shall any such delay be deemed to extend the Term.
 
4.04.  If the whole of the Demised Premises shall not be ready for occupancy at approximately the same time, Tenant may, with the written consent of Landlord, take possession of any part or parts of the Demised Premises for its use and occupancy before the Commencement Date.  Tenant shall be deemed to have taken possession of a part of the Demised Premises for use and occupancy (herein called "actual possession") when any personnel of Tenant or anyone claiming under or through Tenant shall first occupy such part for the conduct of business.  Tenant's actual possession of any part of the Demised Premises prior to the Commencement Date shall be subject to all of the obligations of this Lease, including the payment of rent, which payment shall be reasonably apportioned.
 
As long as it in no way interferes with Landlord’s Work and upon scheduled approval by Landlord and at Landlord’s direction for placement, Tenant, its agents, employees or vendors may enter the Demised Premises from time to time prior to the Commencement Date to deliver or install Tenant’s personal property and such entry shall not be deemed to be occupancy of the Demised Premises.
 
4.05.  On the Commencement Date or at such time as Tenant shall take actual possession of the whole or part of the Demised Premises, whichever shall be earlier, it shall be conclusively presumed that the same were in satisfactory condition as of the Commencement Date or the date or dates of such taking of possession, unless within thirty (30) days after such date Tenant shall have given Landlord notice specifying in which respects the Demised Premises were not in satisfactory condition.  However, nothing contained in this Section shall be deemed to relieve Landlord from, and Landlord shall perform, its obligation to complete, with reasonable speed and diligence, such details of construction, mechanical adjustment and decoration as shall have been unperformed at the time Tenant took actual possession, but Tenant shall not be entitled to any rent abatement on account of any such incomplete work.
 
ARTICLE 5
Security Deposit
 
5.01.  Tenant, upon the execution of this Lease, shall deposit with Landlord the sum of TWENTY TWO THOUSAND NINE HUNDRED EIGHTY DOLLARS ($22,980) as a Security Deposit.  Said deposit shall be held by Landlord without liability for interest, as security for the faithful performance by Tenant of all of the terms, covenants, and conditions of this Lease by Tenant to be kept and performed during the term hereof.  If at any time during the term of this lease any of the rent herein reserved shall be overdue and unpaid, or any other sum payable by Tenant to Landlord hereunder shall be overdue and unpaid then Landlord may, at the option of Landlord (but Landlord shall not be required to), appropriate and apply any portion of said deposit to the payment of any such overdue rent or other sum.
 
 
4
 
5.02.  In the event of the failure of Tenant to keep and perform any of the terms, covenants and conditions of this Lease to be kept and performed by Tenant, then Landlord at its option may appropriate and apply said entire deposit, or so much thereof as may be necessary, to compensate the Landlord for loss or damage sustained or suffered by Landlord due to such breach on the part of Tenant.  Should the entire deposit, or any portion thereof, be appropriated and applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder, then Tenant shall, upon the written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore said security to the original sum deposited, and Tenant's failure to do so within five (5) days after receipt of such demand shall constitute a breach of this Lease.  Should Tenant comply with all of said terms, covenants and conditions and promptly pay all of the rent herein provided for as it falls due, and all other sums payable by Tenant to Landlord hereunder, the said deposit shall be returned in full to Tenant at the end of the term of this Lease, or upon the earlier termination of this Lease.
 
5.03.  Landlord shall deliver the funds deposited hereunder by Tenant to the purchaser or other successor of Landlord's interest in the Building, in the event that such interest be sold, and thereupon Landlord shall be discharged from any further liability with respect to such deposit.  Landlord will agree to give Tenant an affidavit that it has turned over the Security Deposit to the successor in interest to the Landlord.
 
ARTICLE 6
Adjustments of Rent for Changes in Real Estate Taxes
 
6.01.  (a) The term "Tax Base Year" shall mean the tax fiscal year of July 1 2008 to June 30, 2009.
 
(b) The term "Common Areas" shall mean the land and pedestrian deck, together with the parking garage and loading dock facility.
 
(c) The term "Real Estate Taxes" shall mean 100% of the taxes and assessments levied, assessed or imposed at any time by any governmental authority upon or against the Building, and 100% of such taxes and assessments levied against the Common Areas, and also any tax or assessment levied, assessed or imposed at any time by any governmental authority in connection with the receipt of income or rents from the Building and Common Areas, to the extent that same shall be in lieu of or in addition to all or a portion of any of the aforesaid taxes or assessments upon or against the Building and Common Areas.  The term "Real Estate Taxes" shall not mean any interest or penalties which may become due by reason of the failure to pay any such taxes when due and payable; or any municipal, state or federal income, estate, inheritance, transfer, corporate or franchise taxes assessed against Landlord unless and to the extent that same are assessed in lieu of part or all of real estate taxes as presently constituted and are computed as if Landlord owned no other property.  Landlord shall cooperate with Tenant in Tenant’s application for enterprise zone tax benefits.  Landlord does not guaranty that Tenant will qualify for enterprise zone tax benefits and if Tenant does not get enterprise zone tax benefits, the Lease shall remain in full force and effect.
 
(d) The term "Tenant's Proportionate Share" shall be 2.9 %.
 
6.02.  (a) In addition to the annual fixed rent, Tenant agrees to pay as additional rent an amount equal to Tenant's Proportionate Share of the excess of Real Estate Taxes payable by Landlord for each tax fiscal year of the City or other taxing authority which is subsequent to the Tax Base Year, over the Real Estate Taxes payable by Landlord for the Tax Base Year, netted with any enterprise zone benefit granted to Tenant, if any.
 
Tenant's obligation to pay such additional rent required under (a) above, shall commence on July 1, 2009 and Tenant shall pay such additional rent, with respect to each tax fiscal year subsequent to the Tax Base Year in two equal installments, on each July 1st and January 1st (as the case may be) and each subsequent July 1st and January 1st during the balance of the term of this Lease.
 
Within thirty (30) days after the Expiration Date, Landlord shall pay to Tenant an amount equal to that portion, if any, of any such additional rent which is attributable to the period subsequent to the Expiration Date.
 
Said times for the payment of taxes, July 1 and January 1, are based on the present time for the payment of real estate taxes in the City.  If the City or other governmental authority changes the dates for the payment of Real Estate Taxes, then said changed dates shall be sequentially substituted for the July 1st and January 1st dates contained herein.
 
6.03.  Landlord shall furnish to Tenant a copy of the Assessor's reports showing the assessment for the Building and the Common Areas and the report or reports showing the increased assessment therefor and all applicable tax bills, or such other evidence coming from the Assessor's and/or Tax Collector's office which will show the assessments and tax involved or some other reasonable documentation of the matter.
 
6.04.  Any dispute between Landlord and Tenant arising out of an adjustment provided for in this Article 6 shall be submitted to arbitration pursuant to Article 33 of this Lease.  Pending the determination of such dispute, Tenant shall pay the amount specified in the statement, without prejudice to Tenant's position and subject to refund by Landlord if the dispute shall be determined in Tenant's favor.

 
5
 

ARTICLE 7
Adjustment of Rent for Changes in Operating Costs
 
7.01.  (a) In the event that the Operating Costs for an Operating Year shall exceed the Operating Costs for the Base Year, Landlord shall adopt an Adjustment Date in the succeeding Operating Year or after, and within ten (10) days of the Adjustment Date, Tenant shall pay to Landlord an amount equal to the Tenant's Proportionate Share of such excess (without setoff or deduction of any kind and as additional rent), less the amount of additional rent, if any, which Tenant paid to Landlord, as additional rent under subparagraph (b) below, during the Operating Year in question.
 
(b) Tenant shall also pay to Landlord, as additional rent (in equal monthly installments) in each succeeding Operating Year, retroactive to the first month of such year, a sum equal to Tenant's Proportionate Share of the amount by which the Operating Costs for the immediately preceding Operating Year exceeded the Operating Costs for the Base Year.
 
(c) If the Operating Costs for any Operating Year shall be less than the Operating Costs for the previous year, Landlord shall credit such amount of Tenant's Proportionate Share to Tenant, but in no event will the Annual Fixed Rent be reduced below that amount stated in Article 1.
 
7.02.  For the purposes of this Article, the following terms shall have the following meanings:
 
(a) The term "Base Year" shall mean the year ending September 2009.
 
(b) The term "Operating Year" shall mean each twelve-month period adopted by the Landlord subsequent to the Base Year.
 
(c) The term "Common Areas" shall mean the land and pedestrian deck, together with the parking garage and loading dock facility.
 
(d) The term "Adjustment Date" shall be a date adopted by the Landlord subsequent to each Operating Year.
 
(e) The term "Tenant's Proportionate Share" shall be 2.9%.
 
(f) The term "Operating Costs" shall mean the aggregate of all expenses paid or incurred by Landlord for the operation of the Building and 100% of such expenses paid or incurred by Landlord for the operation of the Common Areas, and shall include without limitation the following:
 
(i)  Wages and salaries paid by Landlord, including all fringe benefits and taxes related thereto paid by Landlord, of employees directly engaged in cleaning, maintenance and repair of the Building, Building equipment and Common Areas, and performing the functions of garbage and snow removal, landscaping and security, including a customary managing agent's fee; or the cost to Landlord of an independent contractor performing any such services;
 
(ii)  Any and all supplies and materials utilized by Landlord or independent contractors of Landlord in the performance of the items set forth in subparagraph (i) immediately preceding;
 
(iii)  The cost of supplying utilities to the Building and Common Areas;
 
(iv)  Insurance premiums paid by Landlord with respect to the Building and Common Areas; and
 
(v)  Legal and Accounting fees and disbursements, and any other expense or charge of any nature whatsoever which, in accordance with generally accepted accounting principles with respect to the operation of a first-class office building, would be construed as an operating expense, excluding, however, real property taxes, depreciation, interest on and amortization of debt, and any items otherwise properly constituting such an operating expense to the extent payment therefor is received from or payable by tenants for services rendered or performed directly for the account of such tenants or for which a tenant pays directly under an electricity schedule.
 
7.03.  Landlord shall advise Tenant by a written statement certified to be correct by Landlord or its agent, of increased Operating Costs for any Operating Year.  The statement shall show the amount of Tenant's Proportionate Share caused by such increase and shall establish the Adjustment Date, and the manner in which the adjustment is computed.
 
7.04.  Tenant and Landlord agree that for all purposes in any way connected with or arising out of this Article 7, the statement delivered by Landlord pursuant to Section 7.03 shall be binding and conclusive on the Tenant unless objected to by Tenant within thirty (30) days after receipt thereof, specifying the respects in which the statement is claimed to be incorrect.  The Tenant shall have the right to require the production of Landlord's books which relate to these items of cost and the right, within said thirty (30) day period, to deliver notice of disagreement with respect to any item of Operating Costs.
 
 
6
 
7.05.  Any dispute between Landlord and Tenant arising out of an adjustment provided for in this Article 7 shall be submitted to arbitration pursuant to Article 33 of this Lease.  Pending the determination of such dispute, Tenant shall pay the amount specified in the statement, without prejudice to Tenant's position and subject to refund by Landlord if the dispute shall be determined in Tenant's favor.
 
ARTICLE 8
Subordination, Attornment, Notice to Lessor and Mortgagees
 
8.01.  This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate in all respects to all present and future ground leases, over-riding leases and underlying leases and/or grants of term of the land and/or the Building or the portion thereof in which the Demised Premises are located in whole or in part now or hereafter existing and to all mortgages and building loan agreements, including leasehold mortgages and building loan agreements, which may now or hereafter affect the land and/or the Building and/or any of such leases, whether or not such mortgages shall also cover other lands and/or buildings, to each and every advance made or hereafter to be made under such mortgages, and to all renewals, modifications, replacements and extensions of such leases and such mortgages and spreaders, consolidations and correlations of such mortgages.    This Section shall be self-operative and no further instrument of subordination shall be required.  In confirmation of such subordination, Tenant shall promptly execute and deliver an instrument, in recordable form, if required, that Landlord, the lessor of any such lease or the holder of any such mortgage or any of their respective successors in interest may request to evidence such subordination, and Tenant hereby constitutes and appoints Landlord attorney-in-fact for Tenant to execute any such instrument for and on behalf of Tenant.  The leases to which this Lease is, at the time referred to, subject and subordinate pursuant to this Article are hereinafter sometimes called "superior leases" and the mortgages to which this Lease is at the time referred to, subject and subordinate are hereinafter sometimes called "superior mortgages" and the lessor of a superior lease or its successor in interest at the time referred to is hereinafter sometimes called a "lessor".
 
8.02.  Landlord hereby notifies Tenant that in accordance with the terms of a superior mortgage, this Lease may not be modified or amended so to reduce the rent, shorten the term, or adversely affect in any other respect to any material extent the rights of the Landlord hereunder, or be cancelled or surrendered without the prior written consent of the holder of the superior mortgage in each instance, except that said Mortgagee's consent shall not be required to the institution or prosecution of any action or proceedings against Tenant by reason of a default on the part of Tenant under the terms of this Lease.
 
8.03.  This Lease shall not terminate or be terminable by Tenant by reason of any termination of the ground lease by summary proceedings, foreclosure of a superior mortgage, or otherwise.  Tenant agrees without further instruments of attornment in each case, to attorn to Lessor under the ground lease, or the Mortgagee under the superior mortgage, as the case may be, to waive the provisions of any statute or rule of law now or hereafter in effect which may give or purport to give Tenant any right of election to terminate this Lease or to surrender possession of the Demised Premises in the event the ground lease is terminated or a superior mortgage is foreclosed, and that unless and until said Lessor, or Mortgagee, as the case may be, shall elect to terminate this Lease, this Lease shall not be affected in any way whatsoever by any such proceeding or termination, and Tenant shall take no steps to terminate this Lease without giving written notice to said Lessor under the ground lease, or Mortgagee under a superior mortgage, and a reasonable opportunity to cure (without such Lessor or Mortgagee being obligated to cure), any default on the part of the Landlord under this Lease.
 
ARTICLE 9
Quiet Enjoyment
 
9.01.  Landlord covenants that if, and so long as, Tenant pays all of the fixed and additional rent due hereunder, and in all material respects keeps and performs each and every covenant, agreement, term, provision and condition herein contained on the part and on behalf of Tenant to be kept and performed, Tenant shall quietly enjoy the Premises without hindrance or molestation by Landlord or by any other person lawfully claiming the same, subject to the covenants, agreements, terms, provisions and conditions of this Lease.
 
ARTICLE 10
Assignment, Mortgaging, Subletting
 
10.01.  Neither this Lease, nor the term and estate hereby granted, nor any part hereof or thereof, nor the interest of Tenant in any sublease or the rentals thereunder, shall be assigned, mortgaged, pledged, encumbered or otherwise transferred by Tenant by operation of law or otherwise, and neither the Demised Premises, nor any part thereof, shall be encumbered in any manner by reason of any act or omission on the part of Tenant or anyone claiming under or through Tenant, or shall be sublet to be used or occupied or permitted to be used or occupied, or utilized for desk space or for mailing privileges, by anyone other than Tenant or for any purpose other than as permitted by this Lease, without the prior written consent of Landlord in every case, except as expressly otherwise provided in this Article.

 
7
 

10.02.  If this Lease be assigned, whether or not in violation of the provisions of this Lease, Landlord may collect rent from the assignee.  If the Demised Premises or any part thereof be sublet or be used or occupied by anybody other than Tenant, whether or not in violation of this Lease, Landlord may, after default by Tenant, and expiration of Tenant's time to cure such default, collect rent from the sub-tenant or occupant.  In either event, Landlord may apply the net amount collected to the rents herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of any of the provisions of Section 10.01, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of Tenant's obligations under this Lease.  The consent by Landlord to assignment, mortgaging, subletting or use or occupancy by others shall not in any way be considered to relieve Tenant from obtaining the express written consent of Landlord to any other or further assignment, mortgaging or subletting or use or occupancy by others not expressly permitted by this Article.  References in this Lease to use or occupancy by others, that is anyone other than Tenant, shall not be construed as limited to subtenants and those claiming under or through sub-tenants but as including also licensees and others claiming under or through Tenant, immediately or remotely.
 
10.03.  Tenant may, upon written notice to Landlord, but without Landlord's written consent, permit any corporations or other business entities which control, are controlled by, or are under common control with Tenant (herein called "related corporations") to use the whole or part of Demised Premises for any of the purposes permitted to Tenant, subject however to compliance with Tenant's obligations under this Lease.  Such use shall not be deemed to vest in any such related corporation any right or interest in this lease or in the Demised Premises, nor shall such use release, relieve, discharge or modify any of Tenant's obligations hereunder.
 
10.04.  Tenant may, upon written notice to Landlord but without Landlord’s written consent, assign or transfer its entire interest in the Lease and the leasehold estate hereby created or sublet the whole of the Demised Premises on one or more occasions to a "wholly owned subsidiary" or "affiliate” of Tenant or to a "successor corporation" of Tenant, as such terms are hereinafter defined, to use the Demised Premises for any of the purposes permitted to Tenant, provided that Tenant shall not be in default in any of the terms, covenants, conditions and agreements of this Lease, including but not limited to the payment of the fixed rent or additional rent payable by Tenant hereunder.  A "wholly owned subsidiary" of Tenant shall mean any corporation all of whose outstanding voting stock shall at the time be owned, directly or indirectly, by Tenant or by one or more of its wholly owned subsidiaries.  An "affiliate" of Tenant shall mean any corporation which directly or indirectly controls or is controlled by or is under common control with Tenant.  For the purposes of this definition "control" (including "controlling", "controlled by" and "under common control with") as used with respect to any corporation, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, or by contract or otherwise.  A "successor corporation" as used in this Article, shall mean (i) a corporation into which or with which Tenant, its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions for the merger or consolidation of corporations, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation the liabilities of the corporations participating in such merger or consolidation are assumed by the corporation surviving such merger or consolidation or (ii) a corporation acquiring this Lease and the term hereby demised, the good-will and all or substantially all of the other property and assets of Tenant, its corporate successors or assigns, and assuming all or substantially all of the liabilities of Tenant, its corporate successors and assigns, or (iii) any corporate successor to a successor corporation becoming such by either of the methods described in Clauses (i) and (ii); provided that, immediately after giving effect to any such merger or consolidation, or such acquisition and assumption as the case may be, the corporation surviving such merger or created by such consolidation or acquiring such assets and assuming such liabilities, as the case may be, shall have assets, capitalization, and a net worth as determined in accordance with generally accepted principles of accounting at least equal to the assets, capitalization and a net worth, similarly determined, of Tenant at the beginning of the term of this Lease or Tenant, its corporate successors or assigns, immediately prior to such merger or consolidation or such acquisition and assumption, as the case may be, whichever is the greater.  The acquisition by Tenant, its corporate successors or assigns, of all or substantially all of the assets, together with the assumption of all or substantially all of the obligations and liabilities of any corporation, shall be deemed to be a merger of such corporation into Tenant for the purpose of this Article.  Reference to corporation in this paragraph shall also refer to limited liability companies or partnerships.
 
10.05.  If Tenant is a corporation, limited liability company or partnership, and if at any time during the term of this Lease the person or persons who, as of the date that this Lease is executed by Tenant, own or owns a majority of such corporation’s voting stock or interest (as hereinafter defined) or the general partner's interest in such partnership, as the case may be, cease or ceases to own a majority of such a voting stock or general partner's interest, as the case may be, then the occurrence of any such event shall be deemed to be an assignment of this Lease with respect to which the Landlord's prior written consent shall be required, except however that this provision shall not be applicable to any corporation, all the outstanding voting stock of which is listed on a National Securities Exchange.  For the purpose of this Section, stock ownership shall be determined in accordance with the principles set forth in Section 544 of the Internal Revenue Code of 1986, as amended, and the term "voting stock" shall refer to share of stock regularly entitled to vote for the election of directors of the corporation.
 
 
8
 
10.06.  Notwithstanding anything contained in Sections 10.01 and 10.02 hereof, but subject to the rights of Tenant under Sections 10.03 and 10.04 hereof, in the event that at any time or from time to time prior to or during the term of this Lease Tenant desires to sublet all or any part of the Demised Premises, Tenant (a) shall notify Landlord in writing of the term of the proposed subletting and the area so proposed to be sublet, (b) shall be deemed to have granted Landlord the option to sublet from Tenant such space so proposed to be sublet upon the covenants, agreements, terms, provisions and conditions hereinafter set forth, (c) shall not offer such space for subletting to anyone other than Landlord until 30 days have elapsed after the receipt of such notice by Landlord.  Such option on the part of Landlord to sublet from Tenant such space so proposed to be sublet shall be exercisable by Landlord in writing during said period of 30 days referred to in clause (c) of the next preceding sentence.  If Landlord fails to exercise such option within the said 30 days and Tenant fails to complete a sublease with a third party (as hereinafter provided) within 90 days thereafter, Tenant shall again comply with all the conditions of the Section, as if the notice and option hereinabove referred to had not been given and received.
 
In the event Landlord exercises Landlord's option to sublet such space, such sublease by Tenant to Landlord shall be at an annual fixed rent equal to the fixed rent and additional rent as provided in this Lease for the entire Demised Premises or equal to an equitable apportionment of such fixed and additional rent if such sublease shall be in respect of less than the whole of the Demised Premises, and shall be for the same term as that of the proposed subletting, and it is hereby expressly agreed that:
 
(1)  The sublease shall be expressly subject to all of the covenants, agreements, terms, provisions and conditions of this Lease except such as are not relevant or applicable, and except as is otherwise expressly set forth to the contrary in this Section 10.06.
 
(2)  Such sublease to Landlord shall give Landlord the unqualified and unrestricted right, without Tenant's permission, to assign such sublease or any interest therein and/or sublet the space covered by such sublease or any part or parts of such space and to make any and all changes, alterations, and improvements in the space covered by such sublease;
 
(3)  Such sublease to Landlord shall provide that any assignee or subtenant of the Landlord may, at the election of the Landlord, be permitted to make alterations, decorations and installments in such space or any part thereof and shall also provide in substance that any such alterations, decorations and installations therein made by any assignee or subtenant of the Landlord may be removed, in whole or in part, by such assignee or subtenant, at its option, prior to or upon the expiration or other termination of such sublease provided that such assignee or subtenant, at its expense, shall repair any damage and injury to such space so sublet caused by such removal; and
 
(4)  Such sublease to Landlord shall also provide that the parties to such sublease expressly negate any intention that any estate created under such sublease be merged with any other estate held by either of said parties.  Tenant covenants and agrees (a) that any such assignment or subletting by the subtenant may be for any purpose or purposes that Landlord, in Landlord's uncontrolled discretion, shall deem suitable or appropriate, (b) that Tenant, at Tenant's expense, shall and will at all times provide and permit reasonably appropriate means of ingress to and egress from such space so sublet by Tenant to Landlord, and (c) that at the expiration of the term of such sublease, Tenant will accept the space covered by such sublease in its then existing condition, subject to the obligations of Landlord to make such repairs thereto as may be necessary to preserve the premises demised by such sublease in good order and condition.
 
10.07.  In the event Landlord does not exercise its option to so sublet such space, Landlord covenants not to unreasonably withhold its consent which must be in writing, to a subletting, provided, however, that Landlord shall not, in any event, be obligated to consent to any such proposed subletting unless:
 
(1)  Tenant shall furnish Landlord with the name and business address of the proposed subtenant, a counterpart of the proposed subleasing agreement, and satisfactory information with respect to the nature and character of the business of the proposed subtenant together with current financial information and references reasonably satisfactory to Landlord;
 
(2)  In the reasonable judgment of Landlord the proposed subtenant is of a character and engaged in a business such as are in keeping with the standards of Landlord in those respects for the Building, and
 
(3)  The purposes for which the proposed subtenant intends to use the portion of the premises sublet to it are uses expressly permitted by and not expressly prohibited by this Lease and do not conflict with any exclusive use granted to any other tenant;
 
(4)  Tenant shall not have (i) advertised or publicized an any way the availability of all or part of the Demised Premises without prior notice to and approval by Landlord, (ii) listed nor publicly advertised the Demised Premises for subletting, whether through a broker, agent, representative, or otherwise at a rental rate less than the fixed rent and additional rent (pursuant to Articles 6 and 7) then payable hereunder for such space; but the provisions of this subsection, however, shall not be deemed to prohibit Tenant from negotiating a sublease at a lesser rate of rent and consummating the same insofar as it may be permitted under the provisions of this Article.

 
9
 

Except for any subletting by Tenant to Landlord pursuant to the provisions of this Article, each subletting pursuant to this Article shall be subject to all the covenants, agreements, terms, provisions and conditions contained in this Lease.  Tenant covenants and agrees that notwithstanding any such subletting to Landlord or any such subletting to any other subtenant and/or acceptance of rent or additional rent by Landlord from any subtenant, Tenant shall and will remain fully liable for the payment of the fixed rent and additional rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on the part of Tenant to be performed and all acts and omissions of any licensee or subtenant or anyone claiming under or through any subtenant which shall be in violation of any of the obligations of this Lease and any such violation shall be deemed to be a violation by Tenant.  Tenant further covenants and agrees that notwithstanding any such subletting, no other and further subletting of the Demised Premises or any part thereof shall or will be made except upon compliance with and subject to the provisions of this Article.
 
10.08. Any of Tenant’s sublease profits are to be shared equally between Tenant and Landlord, net of Tenant’s reasonable expenses such as brokerage, legal, etc.
 
10.09.  With respect to each and every sublease or subletting authorized by the provisions of this Article:
 
(1)  No subletting shall be for a term ending later than one day prior to the Expiration Date of this Lease, and that part, if any, of the proposed term of any sublease or any renewal or extension thereof which shall extend beyond a date one day prior to the Expiration Date or earlier termination of the term of this Lease, is hereby deemed to be a nullity.
 
(2)  Upon the execution of any such sublease as may be authorized by this Article, Tenant shall promptly deliver to Landlord a copy of each such sublease.
 
ARTICLE 11
Compliance with Laws and Requirements of Public Authorities
 
11.01.  Tenant shall promptly notify Landlord of any written notice it receives of the violation of any law or requirement of any Federal, State, Municipal or other public authority, and at its expense Tenant shall comply with all laws and requirements of such public authorities which shall, with respect to the Building or the Demised Premises or the use and occupation thereof or the abatement of any nuisance, impose any violation, order or duty on Landlord or Tenant, arising from (i) Tenant's use of the Demised Premises, (ii) the manner of conduct of Tenant's business or operation of its installations, equipment or other property therein, (iii) any cause or condition created by or at the instance of Tenant, or (iv) breach of any of Tenant's obligations hereunder.
 
11.02.  Tenant represents that it is and will be in compliance with all environmental laws, regulations and orders in the use of the Demised Premises and the Tenant agrees to defend, indemnify and hold the Landlord harmless from any claim, payment, loss or other amount relating to any claim or order under Title 22a of the Connecticut General Statutes, as the same may be amended and/or substituted for, or any federal or state law of like or similar import, arising out of, relating to or caused by the Tenant's and/or its assigns' acts and/or use of the Premises, including but not limited to the illegal storage, dumping, discharge, spillage, controlled or uncontrolled loss, seepage or filtration of hazardous waste of any kind (as defined by any applicable statute, law, regulation or order).
 
11.03.  Landlord represents that it is and will be in compliance with all environmental laws, regulations and orders in the use of the Demised Premises and the Landlord agrees to defend, indemnify and hold the Tenant harmless from any claim, payment, loss or other amount relating to any claim or order under Title 22a of the Connecticut General Statutes, as the same may be amended and/or substituted for, or any federal or state law of like or similar import, arising out of, relating to or caused by the Landlord’s and/or its assigns’ acts and/or use of the Premises, including but not limited to the illegal storage, dumping, discharge, spillage, controlled or uncontrolled loss, seepage or filtration of hazardous waste of any kind (as defined by any applicable statute, law, regulation or order).
 
11.04.  Tenant at its sole expense shall comply with the Americans With Disabilities Act in the Demised Premises.
 
11.05.  Notwithstanding any of the foregoing Article 11, Tenant shall not be liable to incur any expense to perform capital improvements to the Building or Building structure.
 
 
10
 
ARTICLE 12
Insurance
 
12.01.  Tenant shall not do, or permit anything to be done, or keep or permit anything to be kept in the Demised Premises which would increase the fire or other casualty insurance rate on the Building or the property therein over the rate which would otherwise then be in effect (unless Tenant pays the resulting increased amount of premium as provided in Section 12.02) or which would result in insurance companies of good standing refusing to insure the Building or any of such property in amounts and at normal rates reasonably satisfactory to Landlord.
 
12.02.  If, by reason of any act or omission on the part of Tenant, the rate of fire insurance with extended coverage on the Building or equipment or other property of Landlord shall be higher than it otherwise would be, Tenant shall reimburse Landlord, on demand, for that part of the premiums for fire insurance and extended coverage paid by Landlord because of such act or omission on the part of Tenant, which sum shall be deemed to be additional rent and collectible as such.
 
12.03.  In the event that any dispute should arise between Landlord and Tenant concerning rates, a schedule or make up of rates for the Building or the Demised Premises, as the case may be, issued by a Fire Insurance Rating Organization or other similar body making rates for fire insurance and extended coverage for the Premises concerned, shall be presumptive evidence of the facts therein stated and of the several items and charges in the fire insurance rates with extended coverage then applicable to such Premises.
 
12.04.  Tenant shall obtain and keep in full force and effect during the term of this Lease at its own cost and expense Comprehensive Commercial General Public Liability Insurance on an occurrence basis with minimum limits of liability in an amount of not less than $1,000,000 for bodily injury or death including personal injury, and with respect to damage to property including water damage, arising out of any one occurrence, which insurance shall contain contractual liability insurance covering the matters set forth in Article 21.
 
12.05.  All policies of insurance to be obtained and furnished by Tenant hereunder shall be issued and carried in the name of Landlord and Tenant, as their respective interests may appear, together with such other party or parties as may be designated by Landlord, as their interests may appear.  All such policies of insurance shall be issued by a financially responsible company or companies, authorized to issue such policy or policies, and licensed to do business in the State of Connecticut, which shall be reasonably satisfactory to Landlord, and shall contain endorsements providing as follows: (a) that any such insurance shall not be subject to cancellation, termination, reduction or change except after 30 days' prior written notice by registered mail to Landlord by the insurance company; and (b) that Landlord shall not be liable for any damage by fire or other casualty covered by such insurance, no matter how caused, it being understood that Tenant shall look solely to its insurer or insurers for reimbursement.  Landlord and Tenant waive their right to recover damages against each other for any reason whatsoever to the extent the damaged party recovers indemnity from its insurance carrier.  Any insurance policy procured by Tenant which does not name the Landlord as an additional insured shall contain an express waiver of any right of subrogation by the insurance company against Landlord.  All public liability and property damage policies shall contain an endorsement that Landlord, although named as an insured, shall nevertheless be entitled to recover under said policies for any loss or damage occasioned to it, its servants, agents and employees.  The original policy or policies together with satisfactory evidence of payment of the premium thereof, shall be delivered to Landlord on or before the commencement of any Work under this Lease, and upon renewals of such policies, not less than 30 days prior to the expiration of the term of any such coverage.  The minimum limits of any insurance coverage required herein to be carried by Tenant shall not limit Tenant's liability under Article 21 hereof.
 
12.06.  In the event that Tenant at any time or times shall fail to obtain or maintain in full force and effect any or all of the insurance policies and coverages required of it hereunder, or should Tenant violate any of the provisions of Section 12.05 herein, Landlord, at its election after ten (10) days' written notice to Tenant, and as agent for Tenant may obtain such insurance or coverage, or additional insurance or coverage as the case may be, pay the premiums thereon, or take such other steps as may be necessary to meet the requirements of this Article 12 and thereafter, upon demand, obtain reimbursement of the costs so expended from Tenant.  The failure of Landlord to obtain evidence of the required insurance coverage shall not relieve Tenant of its obligations under this Article.
 
12.07.  Landlord shall have the right to insure and maintain its insurance coverages under blanket insurance policies covering other properties owned by Landlord or by any parent, subsidiary or affiliate of Landlord.
 
ARTICLE 13
Rules and Regulations
 
13.01.  Tenant and its employees and agents shall faithfully observe and comply with the Rules and Regulations annexed hereto as Exhibit "B", and such reasonable changes therein (whether by modification, elimination or addition) as Landlord at any time or times hereafter may make and communicate in writing to Tenant, which do not unreasonably affect the conduct of Tenant's business in the Demised Premises; provided, however, that in case of any conflict or inconsistency between the provisions of this Lease and any Rules and Regulations changed subsequent to the date of this Lease the provisions of this Lease shall control.

 
11
 

13.02.  Notwithstanding anything to the contrary in any of the Rules and Regulations set forth in Exhibit "B":
 
(a)  Tenant may bring into and keep in the Demised Premises such small quantities of inflammable or combustible objects or materials as are permitted by local law and as are incidental to the use of the Demised Premises for the purposes permitted by Article 2, but this shall not be deemed to relieve Tenant of responsibility to comply with all other obligations of this Lease that may be applicable to or result from the introduction or maintenance of such objects or materials in the Demised Premises, including but not limited to compliance with the provisions of Sections 12.01 and 12.02 hereof.
 
(b)  Subject to the provisions of Paragraph 2.02(c), Landlord shall not unreasonably withhold its consent to the installation, maintenance and operation by Tenant in the Demised Premises of data processing machines, office duplicating machines, teletype machines and other business machines and machinery customarily used in offices in the ordinary course of business, provided, however, that Tenant shall comply with all other obligations of this Lease that may be applicable to or result from such installation, maintenance or operation.
 
(c)  Landlord shall not unreasonably withhold from Tenant any approval provided for in the Rules and Regulations.
 
(d)  Whenever Landlord shall claim by written notice to Tenant that Tenant is violating any of the provisions of the Rules and Regulations and Tenant shall in good faith dispute such claim by written notice given to Landlord within ten (10) days after service of Landlord's notice of the violation, the dispute shall be determined by arbitration pursuant to Article 33.
 
(e)  Tenant shall only utilize security and cleaning services approved in writing by Landlord.
 
ARTICLE 14
Alterations and Tenant's Property
 
14.01.  Tenant shall not make any alterations, decorations, installations, additions or improvements in or to the Demised Premises without Landlord's prior written consent, which consent Landlord agrees shall not be unreasonably withheld or delayed.
 
14.02.  All Tenant's work shall be done at Tenant's sole expense by contractors approved by Landlord.
 
14.03.  All alterations, decorations, installations, additions or improvements upon the Demised Premises made by any party shall at the expiration of the term hereof, at the option of the Landlord, become the property of the Landlord and be surrendered with said Premises as part thereof at the end of the term.  Tenant's special chandeliers, business and trade fixtures, machinery and equipment, whether or not attached to the Premises, which are installed by or for the account of Tenant, and can be removed without permanent structural damage to the Premises, and all furniture, furnishings and other articles of movable personal property shall be and shall remain Tenant's property and may be removed by it prior to the expiration date of this lease; provided, however, that if any of Tenant's property is removed, Tenant shall repair or pay the cost of repairing any damage to the Demised Premises resulting from such removal.  Any equipment or other property for which Landlord shall have granted any allowance or credit to Tenant shall not be deemed to have been installed by or for the account of Tenant, without expense to Landlord, and shall not be considered Tenant's property.
 
14.04.  At or before the Expiration Date, or the date of any earlier termination of this Lease, Tenant at its expense, shall remove from the Demised Premises all of Tenant's property except such items thereof as Tenant shall have expressly agreed in writing with Landlord were to remain and to become the property of Landlord, and shall repair any damage to the Demised Premises or the Building resulting from any such removal.  Any other items of Tenant's property (except money, securities and other like valuables) which shall remain in the Demised Premises after the Expiration Date or after a period of fifteen (15) days following an earlier termination date, may, at the option of the Landlord, be deemed to have been abandoned, and in such case either may be retained by Landlord as its property or may be disposed of, without accountability, in such manner as Landlord may see fit at Tenant's expense.
 
14.05.  All Tenant's work shall at all times comply with laws, orders and regulations of governmental authorities having jurisdiction thereof, and all rules and regulations of Landlord, and Tenant, at its expense, shall obtain all necessary governmental permits and certificates for the commencement and prosecution of Tenant's work and for final approval thereof upon completion, and shall cause Tenant's work to be performed in compliance therewith and with all applicable requirements of insurance bodies, and in good and first class workmanlike manner, using materials and equipment at least equal in quality and class to the original installations of the Building.  Tenant's work shall be performed in such a manner as not to interfere with the occupancy of any other tenant in the Building nor delay, or impose any additional expense upon Landlord in the construction, maintenance or operation of the Building.  Throughout the performance of Tenant's work, Tenant, at its expense, shall carry, or cause to be carried, worker's compensation insurance in statutory limits, and general liability insurance for any occurrence in or about the Building, in which Landlord and its managing agent shall be named as parties insured, in such limits as Landlord may reasonably prescribe, with insurers reasonably satisfactory to Landlord.  Tenant shall furnish Landlord with reasonably satisfactory evidence that such insurance is in effect at or before the commencement of Tenant's work and, on request, at reasonable intervals thereafter during the continuance of Tenant's work.  No Tenant's work shall involve the removal of any fixtures, equipment or other property in the Demised Premises which are not Tenant's property, unless Landlord's prior written consent is first obtained and unless such fixtures, equipment or other property shall be promptly replaced, at Tenant's expense and free of superior title, liens and claims, with fixtures, equipment or other property (as the case may be) of like utility and at least equal value (which replaced fixture, equipment or other property shall thereupon become the property of Landlord, unless Landlord shall otherwise expressly consent in writing).
 
 
12
 
14.06.  Tenant, at its expense, and with diligence and dispatch, shall procure the cancellation or discharge of all notices of violation arising from or otherwise connected with Tenant's work which shall be issued by any public authority having or asserting jurisdiction.  Tenant shall defend, indemnify and save harmless Landlord against any and all mechanics and other liens in connection with Tenant's work, repairs or installations, including but not limited to the liens of any conditional sale of, or chattel mortgages upon, any materials, fixtures, or articles so installed in and constituting part of Demised Premises and against all costs, attorney's fees, fines, expenses and liabilities reasonably incurred in connection with any such lien, conditional sale or chattel mortgage or any action or proceeding brought thereon.
 
Tenant, at its expense, shall procure the satisfaction or discharge of all such liens within ten (10) days of the filing of such lien against the Demised Premises or the Building.  If Tenant shall fail to cause such lien to be discharged within the period aforesaid, then, in addition to any other right or remedy, Landlord may, but shall not be obligated to discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event Landlord shall be entitled, if Landlord so elects, to compel the prosecution of an action for the foreclosure of such lien by the lienor and to pay the amount of the judgment in favor of the lienor with interest, costs and allowances.  Any amount so paid by Landlord and all costs and expenses including but not limited to reasonable attorney's fees incurred by Landlord, in connection therewith, together with interest thereon at the rate of one percent per month or portion thereof from the respective dates of Landlord's making of the payment or incurring of the cost and expense shall constitute additional rent payable by Tenant under this Lease and shall be paid by Tenant on demand.  If Tenant makes any such payment it shall not be entitled to any set-off against rent due hereunder.  Tenant agrees that it will not at any time prior to or during the term of this Lease, either directly or indirectly, use any contractors, labor or materials in the Demised Premises, if the use of such contractors, labor or materials would, in the Landlord's opinion, create any difficulty with other contractors or labor engaged by Tenant or Landlord or others or would in any way disturb harmonious labor relations in the construction, maintenance or operation of the Building or any part thereof.
 
14.07.  Subject to Sections 14.03 and 14.04, the foregoing provisions of this Article 14 shall not be construed so as to imply that following the Expiration Date Tenant has any liability for demolition expense in the Demised Premises.
 
ARTICLE 15
Repairs and Maintenance
 
15.01.  Tenant shall take good care of the Demised Premises and the fixtures and appurtenances therein, and at its sole cost and expense shall make all repairs thereto, as and when needed to preserve them in good working order and condition.  In addition, Tenant, at its expense, shall promptly make all repairs, ordinary or extraordinary, interior or exterior, structural or otherwise, in and about the Demised Premises and the Buildings as shall be required by reason of (i) the performance or existence of work by Tenant necessary to suit the Demised Premises to Tenant's initial occupancy or Tenant's work (ii) the installation, use or operation of Tenant's property in the Demised Premises, (iii) the moving of Tenant's property in or out of the Building, or (iv) the misuse or neglect of Tenant or any of its employees, agents or contractors.  Tenant shall not be responsible, and Landlord shall be responsible, for any repairs to the Demised Premises as are required by reason of Landlord's neglect or other fault in the manner of performing any work included in the Work Letter or Tenant's work which may be undertaken by Landlord for Tenant's account or are otherwise required by reason of neglect or other fault of Landlord or its employees, agents or contractors.  Tenant, at its sole cost and expense, shall provide and pay for its cleaning and janitorial services to the Demised Premises.
 
15.02.  Landlord shall keep and maintain the Building and its fixtures, appurtenances, systems and facilities serving the Demised Premises, in good working order, condition and repair and shall make all structural repairs, interior and exterior, except as indicated in Section 15.01 as and when needed in the Building, except for those repairs for which Tenant is responsible pursuant to any other provisions of this Lease, and subject to all other provisions of this Lease, including but not limited to the provisions of Article 21.
 
15.03.  Except as expressly otherwise provided in this Lease, Landlord shall have no liability to Tenant by reason of any inconvenience, annoyance, interruption or injury to business arising from Landlord or any tenant making any repairs or changes or performing maintenance services, whether or not Landlord is required or permitted by this lease or by law to make such repairs or changes or to perform such services in or to any portion of the Building or the Demised Premises, or in or to the fixtures equipment or appurtenances of the Building or the Demised Premises, provided that Landlord shall be reasonably diligent with respect thereto and shall perform such work, except in case of emergency, on reasonable notice and at times reasonably convenient to Tenant and otherwise in such manner and to the extent practical as will not unreasonably interfere with Tenant's use and occupancy of the Demised Premises.

 
13
 

15.04.  Any reservation of a right by Landlord to enter upon the Premises and to make or perform any repairs, alterations, or other work in, to, or about the Premises which, in the first instance, is the Tenant’s obligation pursuant to the Lease, shall not be deemed to:  (a) impose any obligation on Landlord to do so; (b) render Landlord liable to Tenant or any third party for the failure to do so; or (c) relieve Tenant from any obligation to indemnify Landlord as otherwise provided elsewhere in this Lease.
 
ARTICLE 16
Electrical Energy & Cleaning & Janitorial Services
 
16.01.  Landlord shall furnish electrical energy for normal and usual office usage by the Tenant in the Demised Premises for lighting and operation of its business machines.
 
16.02.  Tenant shall pay Landlord for “Landlord’s Standard Electrical Service” an annual amount equal to $2.50 per rentable square foot.  The resulting product shall be paid by Tenant to Landlord in advance in twelve (12) equal monthly installments as additional rent.  Tenant agrees that if the electric utility increases its rates that Tenant’s cost for “Landlord’s Standard Electric Service” shall be proportionately increased.  In the event that Landlord determines that Tenant’s use of electricity is in excess of normal and usual office usage, Landlord shall submeter Tenant’s usage of electricity and Tenant shall pay the Landlord the cost of any usage of electricity in excess of “Landlord’s Standard Electrical Service.”
 
16.03.  Landlord shall in no way be liable for any failure of or defect in the character or supply of electrical energy supplied to the Demised Premises.
 
16.04. Tenant shall at its expense, provide and install all lamps (including, but not limited to, incandescent and fluorescent), starters and ballasts used in the Demised Premises.
 
16.05.  Tenant shall, at its sole cost and expense, provide and pay for cleaning and janitorial services for the Demised Premises.
 
ARTICLE 17
Heat, Ventilation and Air Conditioning
 
17.01.  Landlord, at its expense shall furnish heat, ventilation and air conditioning in the Demised Premises during regular business hours, but not before 8:00 A.M. or after 6:00 P.M. on business days (which term is used herein to mean all days except Saturdays, Sundays and the days observed by the Federal or the Connecticut governments as legal holidays).  If Tenant shall require ventilating and air conditioning service or heating service at any other time (hereinafter called "after hours"), Landlord shall furnish after hours ventilating and air conditioning service or heating service upon reasonable advance notice from Tenant, and Tenant shall pay Landlord's then established charges therefor on Landlord's demand.  Such charges shall not exceed 121% of Landlord's actual cost of labor, utilities and equipment depreciation used in providing such after hours air conditioning or heating service.  If any of the other tenants of the Building shall request and receive after hours heating or air conditioning service, pursuant to Landlord's obligation to provide same to them, at the same time as Tenant, only that equitably pro-rated portion of such labor and utilities costs as shall be incurred for such common service shall be charged to Tenant.
 
17.02.  Landlord will not be responsible for the failure of the air conditioning system to meet performance specifications if such failure results from the occupancy of the Demised Premises with more than an average of one person for each 100 square feet or if the Tenant installs and operates machines and appliances, the installed electrical load of which when combined with the load of all lighting fixtures exceeds five watts per square foot of floor area in any one room or other area.  If due to use of the Demised Premises in a manner exceeding the aforementioned occupancy and electrical load criteria, or due to rearrangement of partitioning after the initial preparation of the Demised Premises, interference with normal operation of the air conditioning in the Demised Premises results, necessitating changes in the air conditioning system servicing the Demised Premises, such changes shall be made by Landlord upon written notice to Tenant at Tenant's sole cost and expense.  Tenant agrees to lower and close window coverings when necessary because of the sun's position whenever the said air conditioning system is in operation, and Tenant agrees at all times to cooperate fully with Landlord and to abide by all the regulations and requirements which Landlord may prescribe for the proper functioning and protection of the said air conditioning system.  Landlord, throughout the term of this Lease, shall have free and unrestricted access to any and all air conditioning facilities in the Demised Premises.  Landlord shall not be required to furnish, and Tenant shall not be entitled to receive any air conditioning during any period wherein Tenant shall be in default in any material provisions of this Lease.

 
14
 

17.03.  Tenant may, at Tenant’s sole cost and expense and upon Landlord’s approval, install a supplemental air conditioning unit of approximately 2 tons capacity for its equipment room.  Operation of such supplemental HVAC  shall be allowed 24 hours per day, 7 days per week, at Tenant’s sole cost which shall be separately metered.  Tenant will be responsible for the cost and installation of any submetering equipment.
 
ARTICLE 18
Landlord's other Services
 
18.01.  Landlord, at its expense, shall provide public elevator service, by elevators serving the floors on which the Demised Premises are situated as specified and shown in the Building plans and specifications, during regular hours of business days, and shall have at least one passenger elevator subject to call at all other times.  The elevators, or any of them, may be operated by automatic control and/or by manual control, as Landlord shall determine at any time or from time to time.  Landlord shall not be obligated to furnish an operator for any automatic elevator and shall have no liability to Tenant for discontinuing the service of any operator theretofore furnished.  If Tenant shall require Saturday or after hours service of elevators or of the loading area in the Building under such circumstances as in Landlord's reasonable judgment, will require service or attention by Landlord's personnel.  Tenant shall pay Landlord, on demand, a reasonable charge attributable to such service or attention.  Tenant shall pay to Landlord on demand the costs incurred by Landlord for (a) cleaning work in the Demised Premises or the Building required because of misuse or neglect on the part of the Tenant or its employees or visitors, and (b) removal from the Demised Premises and the Building of (i) so much of any refuse and rubbish of Tenant as shall exceed that normally accumulated daily in the routine of ordinary business office occupancy and (ii) all of the refuse and rubbish of Tenant's machines and the refuse and rubbish of any eating facilities requiring special handling (known as "wet garbage").  Landlord and its contractors and their employees shall have after hours access to the Demised Premises and the use of Tenant's light, power, and water in the Demised Premises as may be reasonably required.  Tenant shall comply with all recycling requirements, rules and regulations made by any governmental authority or the Landlord.
 
18.02.  Landlord, at its expense, shall furnish adequate hot and cold water for drinking, lavatory, toilet, and ordinary cleaning purposes to the plumbing fixtures of central Facilities of the Building serving the Demised Premises.
 
18.03.  Landlord shall keep and maintain the public areas and the public facilities of the Building clean and in good order and the sidewalks adjoining the Building shall be kept in good repair and free of accumulation of snow and ice or unlawful obstruction.
 
18.04.  Landlord, subject to its prior written approval, at its initial expense, and on Tenant's request, shall maintain listings on the Building directory of the names of Tenant, its organizational divisions and any other person or business entities lawfully occupying the Demised Premises or any part thereof, and the names of any of their officers and employees, provided that the names so listed shall not take up more than Tenant's Proportionate Share of the space on the Building directory, the size of which shall be determined by Landlord.  The listing of any name other than that of Tenant on the Building directory or on any of the doors of the Demised Premises shall not be deemed to vest in the person or entity so listed any right or interest in this Lease or in the Demised Premises or to constitute the consent of Landlord required under Article 10, or a waiver thereof.  Notwithstanding anything to the contrary herein, initial listings on the Building directory shall be at Landlord's expense, and any subsequent changes and/or additions shall be at Tenant's expense.
 
18.05.  Landlord reserves the right, without any liability to Tenant, except as otherwise expressly provided in this Lease, and without being in breach of any covenant of this Lease to stop, interrupt or suspend service of any of the heating, ventilating, air conditioning, electric, sanitary, elevator or other Building systems serving the Demised Premises, or the rendition of any of the other services required of Landlord under this Lease, whenever and for so long as may be necessary, by reason of accidents, emergencies, strikes or the making of repairs or changes which Landlord is required by this Lease or by law to make or in good faith deems advisable, or by reason of difficulty in securing proper supplies of fuel, steam, water, electricity, labor or supplies, or by reason of any other cause beyond Landlord's reasonable control, including Governmental restrictions on the use of materials or the use of any of the Building systems.  In each instance Landlord shall exercise reasonable diligence to eliminate the cause of stoppage and to effect restoration of service and shall give Tenant reasonable notice, when practicable, of the commencement and anticipated duration of such stoppage, and if any work is required to be performed in or about the Demised Premises for such purpose, the provisions of Section 15.03 shall apply.  Tenant shall not be entitled to any diminution or abatement of rent or other compensation nor shall this Lease or any of the obligations of Tenant be affected or reduced by reason of the interruption, stoppage or suspense of any of the Building systems or services arising out of the causes set forth in this Section.

 
15
 

ARTICLE 19
Access, Changes in Building Facilities, Name
 
19.01.  All walls, windows and doors bounding the Demised Premises (including exterior Building walls, core corridor walls and doors and any core corridor entrance), except the inside surfaces thereof, any terraces or roofs adjacent to the Demised Premises, and any space in or adjacent to the Demised Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or other Building facilities, and the use thereof, as well as access thereto through the Demised Premises for the purposes of operation, maintenance, decoration and repair are reserved to Landlord.
 
19.02.  Tenant shall permit Landlord to install, use and maintain pipes, ducts and conduits within or through the Demised Premises, or through the walls, columns and ceilings therein, provided that the installation work is performed at such times and by such methods as will not unreasonably interfere with Tenant's use and occupancy of the Demised Premises, or damage the appearance thereof, reduce the floor area thereof by more than two percent (2%) (without an appropriate adjustment in rent) or materially affect Tenant's layout.  Where access doors are required for mechanical trades in or adjacent to the Demised Premises, Landlord shall furnish and install such access doors and confine their location, wherever practical to closets, coat rooms, toilet rooms, corridors and kitchen or pantry rooms.  Landlord and Tenant shall cooperate with each other in the location of Landlord's and Tenant's facilities requiring such access doors.
 
19.03.  Landlord or Landlord's agents or employees shall have the right upon request made on reasonable advance notice to Tenant, or to an authorized employee of Tenant at the Demised Premises, to enter and/or pass through the Demised Premises or any part thereof, at reasonable times during reasonable hours, (i) to examine the Demised Premises or to show them to the fee owners, lessors of superior leases, holders of mortgages, insurance carriers, or prospective purchasers, mortgagees or lessees of the land or the Building, and (ii) for the purpose of making such repairs or changes or doing such repainting in or to the Demised Premises or in or to the Building or its facilities as may be provided for by this Lease or as Landlord may deem necessary or as Landlord may be required to make by law or in order to repair and maintain the Building or its fixtures or facilities.  Landlord shall be allowed to take all materials into and store upon the Demised Premises which may be required for such repairs, changes, repainting or maintenance.  However, Landlord's rights under this Section shall be exercised in such a manner as will not unreasonably interfere with Tenant's use and occupancy of the Demised Premises.  Landlord, its agents or employees, shall also have the right to enter on and/or pass through the Demised Premises, or any part thereof without notice at such times as such entry shall be required by circumstances of emergency affecting the Demised Premises or the Building.
 
19.04.  During the period of 12 months prior to the Expiration Date Landlord may exhibit the Demised Premises to prospective tenants upon the same notice and subject to the same conditions as are provided in Section 19.03.  If during the last month of the term hereof Tenant shall have removed all of Tenant's property therefrom, Landlord may, upon at least 48 hours notice to Tenant, enter and alter, renovate and redecorate the Demised Premises without incurring any liability to Tenant therefor.
 
19.05.  Landlord reserves the right, at any time after completion of the Building, without incurring any liability to Tenant therefor, to make such changes in or to the Building and the fixtures and equipment thereof, as well as in or to the street entrances, halls, passages, elevators, and stairways thereof, as it may deem necessary or desirable; provided that there be no unreasonably lengthy interference with the use of the Demised Premises or in the services furnished to the Demised Premises.  If the floor area of the Demised Premises is reduced by the Landlord’s work, the Tenant’s fixed rent shall be proportionately reduced.
 
19.06.  The Landlord reserves the right to select a name for the Building and to make such change or changes of name as it may deem appropriate during Tenant's occupancy, and Tenant agrees not to refer to the Building by any other name than (i) the name as selected by Landlord, or (ii) the postal address approved by the U.S. Post Office.
 
19.07.  Landlord may limit and restrict, as provided in the Rules and Regulations attached hereto, the means of access to the Demised Premises outside of normal business hours, so long as Tenant's employees and authorized agents have reasonable access to all parts of the Demised Premises.  Tenant and its agents, employees and visitors shall be entitled to access from the Demised Premises to, and the right to use, the toilets, lavatories and powder rooms only on the floor (or floors) on which the Demised Premises are located.
 
ARTICLE 20
Shoring, Notice of Accidents, etc.
 
20.01.  If an excavation or other substructure work shall be undertaken or authorized upon land adjacent to the Building or in the vaults beneath the Building or in subsurface space adjacent to the said vaults, Tenant, without liability on the part of the Landlord therefor, shall afford to the person causing or authorized to cause such excavation or other substructure work license to enter upon the Demised Premises for the purpose of doing such work as such person shall deem necessary to protect or preserve any of the walls or structures of the Building or surrounding lands from injury or damage and to support the same by proper foundations, pinning and/or underpinning, and, except in case of emergency, if so requested by Tenant such entry shall be accomplished in the presence of a representative of Tenant, who shall be designated by Tenant promptly upon Landlord's request.  The said license to enter shall be afforded by Tenant without any claim for damages or indemnity against the Landlord and Tenant shall not be entitled to any diminution or abatement of rent on account hereof.
 
 
16
 
 
20.02.  Tenant shall give notice to Landlord, promptly after Tenant learns thereof, of (i) any accident in or about the Demised Premises or the Building (ii) all fires in the Demised Premises, (iii) all damages to or defects in the Demised Premises, including the fixtures, equipment and appurtenances thereof, for the repair of which Landlord might be responsible or which constitutes Landlord's property, and (iv) all damage to or defects in any parts or appurtenances of the Building's sanitary, electrical, heating, ventilating, air conditioning, elevator and other systems located in or passing through the Demised Premises.
 
ARTICLE 21
Non-Liability and Indemnification
 
21.01.  Neither Landlord nor any agent or employee of Landlord shall be liable to Tenant, its employees, agents, contractors and licensees, and Tenant shall hold Landlord harmless for any injury or damage to Tenant or to any other person or for any damage to, or loss (by theft or otherwise) of, any property of Tenant and /or of any other person, irrespective of the cause of such injury, damage or loss, unless (with respect to personal injury only) such injury was caused by or due to the negligence of Landlord, its agents or employees without contributory negligence on the part of Tenant; it being understood that no property, other than such as might normally be brought upon or kept in the Demised Premises as incident to the reasonable use of the Demised Premises for the purposes herein permitted will be brought upon or be kept in the Demised Premises.  Landlord shall not be liable in any event for loss of or damage to any property entrusted to any of Landlord's employees or agents by Tenant without Landlord's specific written consent.
 
21.02.  Tenant shall defend, indemnify and save harmless Landlord and its agents and employees against and from all liabilities, obligations, damages, penalties claims, costs, charges and expenses, including reasonable architects' and attorney's fees, which may be imposed upon or incurred by or asserted against Landlord and/or its agents by reason of any of the following occurring during the term of this Lease, or during any period of time prior to the Commencement Date that Tenant may have been given access to or possession of all or any part of the Demised Premises pursuant to Section 3.03:
 
(a)  Any work or thing done in or about the Demised Premises or any part thereof by or at the instance of Tenant, its agents, contractors, subcontractors, servants, employees, licensees or invitees:
 
(b)  any negligence or otherwise wrongful act or omission on the part of Tenant or any of its agents, contractors, subcontractors, servants, employees, subtenants, licensees or invitees;
 
(c)  any accident, injury or damage to any person or property occurring in, on or about the Demised Premises or any part thereof;
 
(d)  any failure on the part of Tenant to perform or comply with any of the covenants, agreements, terms, provisions, conditions or limitations contained in this Lease on its part to be performed or complied with.
 
In case any action or proceeding is brought against Landlord by reason of any such claim, Tenant upon written notice from Landlord shall at Tenant's expense resist or defend such action or proceeding by counsel approved by Landlord in writing, which approval Landlord shall not unreasonably withhold.
 
21.03.  Whenever either party shall be obligated under the terms of this Lease to indemnify the other party, the indemnifying party may select legal counsel (subject to the consent of the indemnified party, which consent shall not be unreasonably withheld) and shall keep the indemnified party fully apprised at all times of the status of such defense.  Legal counsel of the insurer for either party is hereby deemed satisfactory to both parties.
 
21.04.  Except as otherwise expressly provided herein, this Lease and the obligations of Tenant to pay rent hereunder and perform all of the other covenants, agreements, terms, provisions and conditions hereunder on the part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease or is unable to supply or is delayed in supplying any service, express or implied, to be supplied or is unable to make or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of any cause whatsoever beyond Landlord's reasonable control, including, but not limited to, Acts of God, mechanical difficulties, strikes, labor troubles, governmental preemption in connection with a national emergency or by reason of any rule, order or regulation of any department or subdivision thereof of any governmental agency or by reason of the conditions of supply and demand which have been or are affected by war, hostilities or other similar emergency; provided that Landlord shall in each instance exercise reasonable diligence to effect performance when and as soon as possible.

 
17
 

ARTICLE 22
Destruction or Damage
 
22.01.  If the Demised Premises and/or access thereto shall be partially or totally damaged or destroyed by fire or other casualty, then, Landlord shall, subject to its rights under Section 22.03 hereof, repair the damage and restore and rebuild the Demised Premises and/or access thereto as nearly as may be reasonably practical to its condition and character immediately prior to such damage or destruction, with reasonable diligence after notice to it of the damage or destruction.
 
22.02.  If the Demised Premises and/or access thereto shall be partially or totally damaged or destroyed by fire or other casualty not attributable to the fault, negligence or misuse of the Demised Premises by the Tenant, its agents or employees under the provisions of this Lease, the rents payable hereunder shall be abated to the extent that the Demised Premises shall have been rendered untenantable from the date of such damage or destruction to the date the damage shall be substantially repaired or restored or rebuilt.  Should Tenant reoccupy a portion of the Demised Premises during the period that the repair, restoration, or rebuilding is in progress and prior to the date that the same are made completely tenantable, rents allocable to such portion shall be payable by Tenant from the date of such occupancy to the date Demised Premises are made tenantable.
 
22.03.  In case the Building shall be so damaged by such fire or other casualty that substantial renovation, reconstruction or demolition of the Building shall, in Landlord's opinion be required (whether or not the Demised Premises shall have been damaged by such fire or other casualty), then Landlord may, at its option, terminate this Lease and the term and estate hereby granted, by notifying Tenant in writing of such termination, within 60 days after the date of such damage.  If at any time prior to Landlord giving Tenant the aforesaid notice of termination or commencing the repair and restoration pursuant to Section 22.01, the holder of a superior mortgage or any person claiming under or through the holder of such superior mortgage takes possession of the Building through foreclosure or otherwise, such holder or person shall have a further period of 60 days from the date of so taking possession to terminate this Lease by appropriate written notice to Tenant.  In the event that such a notice of termination shall be given pursuant to either of the next two preceding sentences, this Lease and the term and estate hereby granted shall expire as of the date of such termination with the same effect as if that were the date hereinbefore set for the expiration of the term of this Lease, and the fixed and additional rent due and to become due hereunder shall be apportioned as of such date if not earlier abated pursuant to Section 22.02.  Nothing contained in this Section 22.03 shall relieve Tenant from any liability to Landlord or to its insurers in connection with any damage to the Demised Premises or the Building by fire or other casualty if Tenant shall be legally liable in such respect.
 
22.04.  No damages, compensation or claim shall be payable by Landlord for inconvenience, loss of business or annoyance arising from any repair or restoration of any portion of the Demised Premises or of the Building pursuant to this Article.  Landlord shall use its best efforts to effect such repair or restoration promptly and in such manner as not unreasonably to interfere with Tenant's use and occupancy.
 
22.05.  Landlord will not carry insurance of any kind on Tenant's property, and, except as provided by law or its breach of any of its obligations hereunder, shall not be obligated to repair any damage thereto or replace the same.
 
22.06.  The provisions of this Article shall be considered an express agreement governing any case of damage or destruction of the Demised Premises by fire or other casualty, and any law to the contrary, now or hereafter in force, shall have no application in such case.
 
22.07.  Notwithstanding any of the foregoing provisions of this Article, if Landlord or the holder of any superior mortgage shall be unable to collect all of the insurance proceeds (including rent insurance proceeds) applicable to damage or destruction of the Demised Premises or the Building by fire or other cause, by reason of some action or inaction on the part of the Tenant or any of its employees, agents or contractors, then, without prejudice to any other remedies which may be available against Tenant, the abatement of Tenant's rents provided for in this Article shall not be effective to the extent of the uncollected insurance proceeds.
 
ARTICLE 23
Eminent Domain
 
23.01.  In the event that the land, Building or any part thereof or the Demised Premises or any part thereof shall be taken in condemnation proceedings or by the exercise of any right of eminent domain or by agreement between the Landlord on the one hand and any governmental authority authorized to exercise such right on the other hand, Landlord shall be entitled to collect from any condemnor the entire award or awards that may be made in any such proceeding without deduction therefrom for any estate hereby vested in or owned by Tenant, to be paid out as in this Article provided.  Tenant hereby expressly assigns to Landlord all of its right, title and interest in or to every such award and also agrees to execute any and all further documents that may be required in order to facilitate the collection thereof by Landlord.
 
 
18
 
 
23.02.  At any time during the term of this Lease if title to the whole or substantially all of the land, Building and/or Demised Premises shall be taken in condemnation proceedings or by the exercise of any right of eminent domain or by agreement between the Landlord on the one hand and any governmental authority authorized to exercise such right on the other hand, this Lease shall terminate and expire on the date of such taking and the fixed rent and additional rent provided to be paid by Tenant shall be apportioned and paid to the date of such taking.  For the purposes of this Article "substantially all of the land, Building and/or Demised Premises" shall be deemed to have been taken if the remaining portion of such land, Building or Demised Premises not so taken cannot reasonably or practicably be repaired or reconverted so as to permit the use thereof for substantially the same purposes for which such land, Building or Demised Premises were used immediately prior to such taking.
 
23.03.  However, if substantially all of the land or Building is not so taken and if only a part of the entire Demised Premises shall be so taken, this Lease nevertheless shall continue in full force and effect, except that Tenant may elect to terminate this Lease if that portion of the Demised Premises then occupied by Tenant shall be reduced by more than 25%.  Tenant shall give notice of such election to Landlord not later than thirty (30) days after (i) notice of such taking is given by Landlord to Tenant, or (ii) the date of such taking, whichever occurs first.  Upon the giving of such notice by Tenant this Lease shall terminate on the date of service of Tenant's notice and the fixed rent and additional rent due and to become due, shall be prorated and adjusted as of the date of the taking.  If Tenant fails to give such notice upon such partial taking, and this Lease continues in force as to any part of the Demised Premises not taken, the rents apportioned to the part taken shall be prorated and adjusted as of the date of taking and from such date the fixed rent and additional rent shall be reduced to the amount apportioned to the remainder of the Demised Premises.
 
23.04.  Notwithstanding the foregoing provisions of this Article and subject to the interests of any mortgagee, Tenant shall be entitled to appear, claim, prove and receive in the proceedings relating to any taking mentioned in the preceding Sections of this Article, such portion of each award made therein as represents the then value of Tenant's property and/or the costs of relocating if any are granted.
 
23.05.  In the event of any such taking of less than the whole of the Building which does not result in a termination of this Lease, or in the event of such a taking of all or any part of the Demised Premises which does not result in a termination of this Lease, Landlord, at its expense, shall proceed with reasonable diligence to repair, alter and restore the remaining parts of the Building and the Demised Premises to substantially the same condition as it was in immediately prior to such taking to the extent that the same may be feasible, so as to constitute a tenantable Building and Demised Premises, provided that Landlord's liability under this Section shall be limited to the amount received by Landlord as an award arising out of such taking.
 
ARTICLE 24
Surrender - - Holding Over
 
24.01.  On the last day of the term of this Lease, or upon any earlier termination of this Lease, or upon any re-entry by Landlord upon the Demised Premises, Tenant shall quit and surrender the Demised Premises to Landlord broom clean, in good order, condition and repair except for ordinary wear and tear and damage by fire or other insured casualty; Tenant shall remove Tenant's property subject to the provisions of Article 14 hereof; and Tenant shall surrender to Landlord all keys to offices, lavatories and mail boxes and all Building identification cards possessed by Tenant's employees.
 
24.02.  If Tenant holds over after the expiration or earlier termination of the Term hereof without the express written consent of Landlord, Tenant shall become a Tenant at sufferance only, and shall pay a fee for use and occupancy equal to one hundred fifty percent (150%) of the fixed monthly rent and all additional rent payments in effect upon the date of such expiration or earlier termination of the Term hereof, and otherwise will be subject to the terms, covenants and conditions herein specified, so far as applicable.  Acceptance by Landlord of rent after such expiration or earlier termination shall not result in a renewal of this Lease.  The foregoing provisions of this Section are in addition to and do not affect Landlord’s right of reentry or any rights of Landlord hereunder or as otherwise provided by law.  If Tenant fails to surrender the Premises upon the expiration of this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss and liability, including, without limitation, any claims made by any succeeding prospective tenant founded on or resulting from such failure to surrender and any attorney’s fees and costs which Landlord incurs as a result of such claims.
 
ARTICLE 25
Conditions of Limitation
 
25.01.  This Lease and the term and estate hereby granted are subject inter alia to the limitation that whenever Tenant shall make an assignment for the benefit of creditors, or shall file a voluntary petition under any bankruptcy or insolvency law, or an involuntary petition alleging an act of bankruptcy or insolvency is filed against Tenant, or whenever a petition shall be filed by or against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or any future federal bankruptcy code or any other present or future applicable federal, state or other statute or law, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties, or whenever a permanent or temporary receiver of Tenant or of or for the property of Tenant shall be appointed, or if Tenant shall plead bankruptcy or insolvency as a defense in any action or proceeding, then, Landlord, (a) at any time after receipt of notice of the occurrence of any such event, or (b) if such event occurs without the acquiescence of Tenant, at any time after the event continues for 60 days, may give Tenant a notice of intention to end the term of this Lease at the expiration of ten (10) days from the service of such notice of intention, and upon the expiration of said ten (10) day period this Lease and the term and estate hereby granted, whether or not the term shall theretofore have commenced, shall terminate with the same effect as if that day were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 27.

 
19
 

25.02.  This Lease and the term and estate hereby granted are subject to the further limitation that:
 
(a) whenever Tenant shall default in the payment of any installment of fixed rent, or in the payment of any additional rent, on any day upon which the same shall be due and payable and such default shall continue for ten (10) days after the date on which the same was due and payable; or
 
(b) whenever Tenant shall do or permit anything to be done, whether by action or inaction, contrary to any of Tenant's obligations hereunder, and if such situation shall continue and shall not be remedied by Tenant within fifteen (15) days after Landlord shall have given to the Tenant a notice specifying the same, or, in the case of a happening or default which cannot with due diligence be cured within a period of fifteen (15) days and the continuance of which for the period required for cure will not subject Landlord to the risk of criminal liability or termination of any superior lease or foreclosure of any superior mortgage, if Tenant shall not duly institute within such fifteen (15) day period and promptly and diligently prosecute to completion all steps necessary to remedy the same; or
 
(c) whenever any event shall occur or any contingency shall arise whereby this Lease or any interest therein or the estate hereby granted or any portion thereof or the unexpired balance of the term hereof would, by operation of law or otherwise, devolve upon or pass to any person, firm or corporation other than Tenant, except as expressly permitted by Article 10;
 
Then in any such event at any time thereafter, Landlord may give to Tenant a notice ending the term of this Lease on the date of the service of such notice and thereupon this Lease and the term and estate hereby granted, whether or not the term theretofore have commenced, shall terminate with the same effect as if that day were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 27.
 
ARTICLE 26
Re-Entry By Landlord - Default Provisions
 
26.01.  If this Lease shall terminate for any reason whatsoever, Landlord or Landlord's agents and employees may without further notice, immediately or at any time thereafter enter upon and re-enter the Demised Premises, or any part thereof, and possess or repossess itself thereof either by summary dispossess proceedings, ejectment or by any suitable action or proceeding at law, or by agreement, or by force or otherwise, and may dispossess and remove Tenant and all other persons and property from the Demised Premises without being liable to indictment, prosecution or damages therefor, and may repossess the Demised Premises and the right to receive all rental income again as and of its first estate and interest therein.  The words "enter" or "re-enter", "possess" or "repossess" as herein used, are not restricted to their technical legal meaning.  In the event of any termination of this Lease under the provisions of Article 25 or re-entry under this Article or in the event of the termination of this Lease, or of re-entry by summary dispossess proceedings, ejectment or by any suitable action or proceeding at law, or by agreement, or by force or otherwise by reason of default hereunder on the part of Tenant, Tenant shall thereupon pay to Landlord the fixed rent and additional rent due up to the time of such termination of this Lease, or such recovery of possession of the Demised Premises by Landlord, as the case may be, and shall also pay to Landlord damages as provided in Article 27.
 
26.02.  In the event of any breach or threatened breach by Tenant of any of the agreements, terms, covenants or conditions contained in this Lease, Landlord shall be entitled to enjoin such breach or threatened breach and shall have the right to invoke any right and remedy allowed at law or in equity or by statute or otherwise as though re-entry summary proceedings and other remedies were not provided for in this Lease.
 
26.03.  Each right and remedy of Landlord provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Landlord of any one or more of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Landlord of any or all other rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise.
26.04.  If this Lease shall terminate under the provisions of Article 25, or if Landlord shall re-enter the Demised Premises under the provisions of this Article, or in the event of the termination of this Lease, or of re-entry, by or under any summary dispossess or other proceeding or action or any provision of law by reason of default hereunder on the part of Tenant, Landlord shall be entitled to retain all monies, if any, paid by Tenant to Landlord, whether as advance rent, security or otherwise, but such monies shall be credited by Landlord against any fixed rent or additional rent due from Tenant at the time of such termination of re-entry or, at Landlord's option, against any damages payable by Tenant under Article 27 or pursuant to law.
 
 
20
 
ARTICLE 27
Damages
 
27.01.  If this Lease is terminated under the provisions of Article 25, or if Landlord shall re-enter the Demised Premises under the provisions of Article 26 or in the event of the termination of this Lease, or of re-entry by summary dispossess proceedings, ejectment or by any suitable action or proceeding at law, or by agreement, or by force or otherwise, by reason of default hereunder on the part of Tenant, Tenant shall pay Landlord as damages, at the election of Landlord, either
 
(a) on demand, a sum which at the time of such termination of this Lease or at the time of any such re-entry by Landlord, as the case may be, represents the excess of (1) the aggregate of the fixed rent and the additional rent payable hereunder which would have been payable by Tenant (conclusively presuming the additional rent to be the same as was payable for the year immediately preceding such termination) for the period commencing with such earlier termination of this Lease or the date of any such re-entry, as the case may be, and ending with the Expiration Date, had this Lease not so terminated or had Landlord not so re-entered the Demised Premises, over (2) the aggregate rental value (calculated as of the date of such termination or re-entry) of the Demised Premises for the same period, or
 
(b) sums equal to the fixed rent and the additional rent (as above presumed) payable hereunder which would have been payable by Tenant had this Lease not so terminated, or had Landlord not so re-entered the Demised Premises, payable quarterly, in advance, but otherwise upon the terms therefor specified herein following such termination or such re-entry and until the Expiration Date, provided however, that if Landlord shall relet the Demised Premises or any portion or portions thereof during said period, Landlord shall credit Tenant with the net rents received by Landlord from such reletting, such net rents to be determined by first deducting from the gross rents as and when received by Landlord from such reletting the expenses incurred or paid by Landlord in terminating the Lease or in re-entering the Demised Premises and in securing possession thereof, as well as the expenses of reletting, including altering and preparing the Demised Premises or any portion or portions thereof for new tenants, brokers' commissions, advertising expenses, and all other expenses properly chargeable against the Demised Premises and the rental therefrom; it being understood that any such reletting may be for a period shorter or longer than the remaining term of this Lease, but in no event shall Tenant be entitled to receive any excess of such net rents over the sums payable by Tenant to Landlord hereunder, nor shall Tenant be entitled in any suit for the collection of damages pursuant to this subsection to a credit in respect of any net rents from a reletting, except to the extent that such net rents are actually received by Landlord.  If the Demised Premises or any part thereof should be relet in combination with other space, then proper apportionment shall be made of the rent received from such reletting and of the expenses of reletting, and Landlord shall have the right to grant reasonable rent concessions to attract one or more new tenants and to permit the term of any new lease covering part or all of the Demised Premises to be for a shorter or longer period than provided for herein.
 
If the Demised Premises or any part thereof be relet by Landlord for the unexpired portion of the term of this Lease, or any part thereof, before presentation of proof of such damages to any court, commission or tribunal, the amount of rent reserved upon such reletting shall, prima facie, be the fair and reasonable rental value for the Demised Premises, or part thereof, so relet during the term of the reletting.  Landlord however shall in no event and in no way be responsible or liable for any failure to relet the Demised Premises or any part thereof or for failure to collect any rent due upon any such reletting.
 
27.02.  In the event Landlord elects to collect damages from Tenant under Section 27.01(b), at any time subsequent to such election and upon ten days prior written notice to Tenant, Landlord may elect to collect a lump sum under Section 27.01(a), crediting Tenant with amounts theretofore received by Landlord as damages.  Landlord shall have no obligation to relet part or all of the Demised Premises subsequent to termination of the Lease upon Tenant's default.
 
27.03.  Suit or suits for the recovery of such damages, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the term of this Lease would have expired if it had not been so terminated under the provisions of Article 25, or under any provision of law, or had Landlord not re-entered the Demised Premises.  Nothing herein contained shall be construed to limit or preclude recovery by Landlord against Tenant of any sums or damages to which, in addition to the damages particularly provided above, Landlord may lawfully be entitled by reason of any default hereunder or otherwise on the part of Tenant.  Nothing herein contained shall be construed to limit or prejudice the right of the Landlord to prove for and obtain as liquidated damages by reason of the termination of this Lease or re-entry on the Demised Premises for the default of Tenant under this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which such damages are to be proved whether or not such amount be greater, equal to, or less than any of the sums referred to in Section 27.01.

 
21
 

27.04.  The foregoing Sections of this Article shall apply even if the default by Tenant has occurred prior to the Commencement Date and/or prior to Tenant taking possession of the Demised Premises.  The parties acknowledge that this instrument is a lease and not a contract to make a lease.
 
27.05.  The Tenant agrees that any legal action or suit brought against Tenant by reason of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant created hereby, Tenant’s use or occupancy of the Premises or any claim for injury or damage or default under this Lease shall be brought in the Courts of the State of Connecticut or any Federal Court sitting therein and the Tenant consents to the non-exclusive jurisdiction of such courts and to service of process in any such legal action or suit being made upon Tenant by mail at the address specified under Article 32 of this Lease.  The Tenant waives any objection that it may now have or hereafter have to the venue of any such legal action or suit or any such court or that such legal action or suit was brought in an inconvenient court.
 
ARTICLE 28
Waivers
 
28.01.  Tenant, for itself, and on behalf of any and all persons claiming through or under Tenant, including creditors of all kinds, does hereby waive and surrender all right and privilege so far as is permitted by law, which they or any of them might have under or by reason of any present or future law, of the service of any notice of intention to re-enter and also waives any and all right of redemption or re-entry or repossession in case Tenant shall be dispossessed or ejected by process of law or in case of re-entry or repossession by Landlord or in case of any expiration or termination of this Lease as herein provided.
 
28.02.  Tenant waives Tenant's rights, if any, to designate the items against which any payments made by Tenant are to be credited, and Tenant agrees that Landlord may apply any payments made by Tenant to any items it sees fit, irrespective of and notwithstanding any designation or request by Tenant as to the items against which any such payments shall be credited.
 
28.03.  Tenant waives Tenant's rights, if any, to assert a counterclaim in any summary proceeding brought by Landlord against Tenant, and Tenant agrees to assert any such claim against Landlord only by way of a separate action or proceeding.
 
28.04.  To the extent permitted by applicable law, Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either against the other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, or Tenant's use or occupancy of the Demised Premises, or any emergency or other statutory remedy with respect thereto.
 
ARTICLE 29
No Other Waivers or Modifications
 
29.01.  The failure of either party to insist in any one or more instances upon the strict performance of any one or more of the agreements, terms, covenants, conditions or obligations of this Lease, or to exercise any right, remedy or election herein contained, shall not be construed as a waiver or relinquishment for the future of the performance of such one or more obligations of this Lease or of the right to exercise such election, but the same shall continue and remain in full force and effect with respect to any subsequent breach, act or omission.  The manner of enforcement or the failure of Landlord to enforce any of the Rules and Regulations set forth herein, or hereafter adopted against the Tenant and/or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations.  No executory agreement hereafter made between Landlord and Tenant shall be effective to change, modify, waive, release, discharge, terminate or effect an abandonment of this Lease, in whole or part, unless such executory agreement is in writing, refers expressly to this Lease and is signed by the party against whom enforcement of the change, modification, waiver, release, discharge or termination or effectuation of the abandonment is sought.

 
22
 

29.02.  The following specific provisions of this Section shall not be deemed to limit the generality of the foregoing provisions of this Article:
 
(a) No agreement to accept a surrender of all or any part of the Demised Premises shall be valid unless in writing and signed by Landlord.  The delivery of keys to an employee of Landlord or of its agent shall not operate as a termination of this Lease or a surrender of the Demised Premises.  If Tenant shall at any time request Landlord to sublet the Demised Premises for Tenant's account, Landlord or its agent is authorized to receive said keys for such purposes without releasing Tenant from any of its obligations under this Lease, and Tenant hereby releases Landlord of any liability for loss or damage to any of Tenant's property in connection with such subletting.
 
(b) The receipt or acceptance by Landlord of rents with knowledge of breach by Tenant of any term, agreement, covenant, condition or obligation of this Lease shall not be deemed a waiver of such breach.
 
(c) No payment by Tenant or receipt by Landlord of a lesser amount than the correct fixed rent or additional rent due hereunder shall be deemed to be other than a payment on account, nor shall any endorsement or statement on any check or any letter accompanying any check or payment be deemed to effect or evidence an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance or pursue any other remedy in this Lease or at law provided.
 
(d) If, in connection with obtaining, continuing or renewing financing for which the Building, and or the leasehold or any interest therein represents collateral in whole or in part, a banking, insurance or other lender shall request reasonable modifications of this Lease as a condition of such financing, Tenant will not unreasonably withhold, delay or defer its consent thereto, provided that such modifications do not increase the obligations of Tenant hereunder or adversely affect to a material degree the Tenant's leasehold interest hereby created.
 
ARTICLE 30
Curing Tenant's Defaults
 
30.01.  If Tenant shall default in the performance of any covenant, agreement, term, provision or condition herein contained, Landlord, without thereby waiving such default, may perform the same for the account and at the expense of Tenant without notice in a case of emergency and in any other case if such default continues after three days from the date of the giving by Landlord to Tenant of written notice of intention so to do.  Bills for any reasonable and necessary expense incurred by Landlord in connection with any such performance by Landlord for the account of Tenant, and reasonable and necessary bills for all costs, expenses and disbursements, including (without being limited to) reasonable counsel fees, incurred in collecting or endeavoring to collect the fixed rent or additional rent or other charge or any part thereof or enforcing or endeavoring to enforce any rights against Tenant under or in connection with this Lease, or pursuant to law, including (without being limited to) any such cost, expense and disbursement involved in instituting and prosecuting summary proceedings, as well as bills for any property, material, labor or services provided, furnished or rendered, or caused to be provided, furnished or rendered, by Landlord to Tenant including (without being limited to) electric lamps and other equipment, construction work done for the account of Tenant, water, ice, drinking water, drinking cups, towel and other services, as well as for any charges for any additional elevator, heating, air conditioning or cleaning services and any charges for other services incurred by Tenant under this Lease, may be sent by Landlord to Tenant monthly, or immediately, at Landlord's option, and shall be due and payable by Tenant in accordance with the terms of said bills and if not paid when due, the amounts thereof shall immediately become due and payable as additional rent under this Lease together with interest thereon at the rate of 18% per annum from the date the said bills should have been paid in accordance with their terms.  Landlord reserves the right, without liability to Tenant and without constituting any claim of constructive eviction, to suspend furnishing or rendering to Tenant any property, material, labor, utility or other service, wherever Landlord is obligated to furnish or render the same at the expense of Tenant, in the event that (but only for so long as) Tenant is in arrears in paying Landlord therefor.
 
30.02.  Any provisions of this Lease which requires Landlord not to unreasonably withhold or delay its consent shall never be the basis for an award of damages or give rise to a right of set-off to Tenant, but shall only be the basis for a declaratory judgment or specific injunction with respect to the matter in question.
 
ARTICLE 31
Consents - - Broker
 
31.01.  It is hereby agreed that wherever it is provided in this Lease that consent or approval is not to be unreasonably withheld, such consent or approval (hereinafter referred to collectively as consent) shall also not be unreasonably delayed.
 
31.02.  Tenant represents and warrants that the sole broker with whom it has dealt with in this transaction is Cushman & Wakefield and that no other broker interested Tenant in the Demised Premises.  Landlord shall be responsible for the payment of the agreed-upon real estate commission to said broker but Tenant shall hold Landlord harmless from the claim of any other real estate broker or salesman claiming to have interested or having been responsible for Tenant's execution of this Lease.

 
23
 

ARTICLE 32
Notices
 
32.01.  Any notice, statement, demand, request or other communication required or permitted to be given, rendered or made by either party to the other, pursuant to this Lease or pursuant to any applicable law or requirement of public authority, shall be in writing (whether or not so stated elsewhere in this Lease) and shall be deemed to have been properly given, rendered or made, if hand delivered (against a written receipt) or sent by registered mail, certified mail, express mail service or other nationally utilized overnight mail or delivery service, return receipt requested, postage prepaid, addressed to the other party at the address  hereinabove set forth (except that after the Commencement Date, Tenant's  address, unless Tenant shall give notice to the contrary, shall be the Building), and shall be deemed to have been given, rendered or made on the date indicated on the written receipt for hand delivery or two business days following the day so mailed, unless so mailed outside of the State of Connecticut, in which case it shall be deemed to have been given, rendered or made three business days after so mailing.  Additionally any such notice, statement, demand, request or other communication may be given by telephone facsimile transmission, provided that an original written copy of said transmission shall be hand delivered or mailed to the addressee as provided in this Section 32.01 on the business day following such transmission.  Telephone facsimile transmissions shall be deemed delivered on the date of such transmission provided that the original copy of said transmission is delivered or mailed as aforesaid.  Either party may, by notice as aforesaid, designate a different address or addresses for notices, statements, requests, demands or other communications intended for it.
 
32.02.  However, notices requesting after hours service pursuant to Sections 17.01 and 18.01 may be given, provided they are in writing, by delivery to the Building Superintendent or any other person in the Building designated by Landlord to receive such notices, and notice of fire, accident, or other emergency shall be given by telegram or by personal delivery of written notice to that address designated for this purpose from time to time by the respective parties hereto.
 
32.03.  Whenever either party shall consist of more than one person or entity, any notice, statement, demand, or other communication required or permitted to be given, rendered or made to or by, and any payment to be made to such party, shall be deemed duly given, rendered, made or paid if addressed to or by (or in the case of payment by check, to the order of) any one of such persons or entities who shall be designated from time to time as the authorized representative of such party.  Such party shall promptly notify the other of the identity of such person or entity who is so to act on behalf of all persons and entities then comprising such party and of all changes in such identity.
 
ARTICLE 33
Arbitration
 
33.01.  The parties hereto shall not have been deemed to have agreed to determination of any dispute arising out of this Lease by arbitration unless determination in such manner shall have been specifically and unequivocally provided for in this Lease or agreed upon in writing by the parties and in no other case or cases.
 
33.02.  Every dispute between the parties which is expressly provided in this Lease to be determined by arbitration shall be resolved in the manner provided in this Article.
 
33.03.  The party requesting arbitration shall do so by giving notice to that effect to the other party, specifying in said notice the name and address of the person designated to act as an arbitrator on its behalf.  Within ten (10) days after the service of such notice, the other party shall give notice to the first party specifying the name and address of the person designated to act as an arbitrator on its behalf.  If the second party fails to notify the first party of the appointment of its arbitrator, as aforesaid, within the time above specified, then the appointment of the second arbitrator shall be made in the same manner as hereinafter provided for the appointment of a third arbitrator in a case where the two arbitrators appointed hereunder and the parties are unable to agree upon such appointment.  If, within twenty (20) days after the second arbitrator is appointed, the two arbitrators shall not have determined the dispute, they shall together appoint a third arbitrator.  In the event of their being unable to agree upon such appointment within thirty (30) days after the appointment of the second arbitrator, the third arbitrator shall be selected by the parties themselves if they can agree thereon within a further period of ten (10) days.  If the parties do not so agree, then either party, on behalf of both and on notice to the other, may request such appointment by the American Arbitration Association (or any organization successor thereto) in accordance with its rules then prevailing or if the American Arbitration Association (or such successor organization) shall fail to appoint said third arbitrator within ten (10) days after such request is made, then either party may apply on notice to the other, to the Superior Court Judicial District of Fairfield at Bridgeport (or any other court having jurisdiction and exercising functions similar to those now exercised by said court) for the appointment of such third arbitrator, and the other party shall not raise any question as to such court's full power and jurisdiction to entertain the application and make the appointment.  Each arbitrator chosen or appointed pursuant to this Section shall be a disinterested person having at least ten (10) years experience in the state of Connecticut in a calling connected with the dispute.
 
33.04.  The arbitration shall be conducted by three arbitrators appointed in accordance with the provisions hereof and, to the extent consistent with this Article, in accordance with the then prevailing rules of the American Arbitration Association (or any organization successor thereto) in the City of Bridgeport.  The arbitrators shall have the right to retain and consult experts and competent authorities skilled in the matters under arbitration.  The arbitrators shall render their decision and award, upon the concurrence of at least two of their number, within thirty (30) days after the appointment of the third arbitrator or fifteen (15) days after the final hearing of the arbitrators, whichever is later.  Such decision and award shall be in writing and counterpart copies thereof shall be delivered to each of the parties.  In rendering such decision and award, the arbitrators shall not add to, subtract from or otherwise modify the provisions of this Lease.  Judgment may be entered on the determination and award made by the arbitrators in any court of competent jurisdiction and may be enforced in accordance with the laws of the State of Connecticut.
 
 
24
 
 
33.05.  If for any reason whatsoever the written decision and award of the arbitrators shall not be rendered within the time limits set forth in Section 33.04, either party may apply to the Superior Court Judicial District of Fairfield at Bridgeport or to any other court having jurisdiction and exercising the functions similar to those now exercised by such court, by action, proceeding or otherwise (but not by a new arbitration proceeding) as may be proper to determine the question in dispute consistently with the provisions of this Lease.
 
33.06.  Each party shall pay the fees and expenses of the one of the two original arbitrators appointed by or for such party and the fees and expenses of the third arbitrator and all other expenses of the arbitration shall be borne by the parties equally.  However, each party shall bear the expense of its own counsel, experts and presentation of proof.
 
33.07.  Notwithstanding anything to the contrary elsewhere provided in this Lease, if the subject matter of a dispute which is provided in this Lease to be determined by arbitration is one which would directly affect the liability of an insurer under any of the policies of insurance referred to in Section 12.05 and 12.06, and the party which is the insured under such policy so notifies the other party, then unless such insurer gives its written consent to the determination of such matter by arbitration pursuant to the provisions of this Lease, the dispute shall not be determined by arbitration and the parties shall be left to such other remedies as they may have.
 
ARTICLE 34
Estoppel Certificate, Recording
 
34.01.  Tenant agrees, at any time and from time to time, as requested by Landlord, upon not less than five (5) days prior notice, to execute and deliver without cost or expense to the Landlord a statement certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), certifying the dates to which the fixed rent and additional rent have been paid, and stating whether or not, to the best knowledge of the Tenant, the Landlord is in default in performance of any of its obligations under this lease, and, if so, specifying each such default of which the Tenant may have knowledge, it being intended that any such statement delivered pursuant thereto may be relied upon by any other person with whom the Landlord may be dealing.
 
34.02.  Should the Tenant fail to execute and deliver to the Landlord the certificate and statement set forth in Section 34.01 above, then the Landlord may execute said statement, limited to the specific items specified in Section 34.01 above,  as attorney-in-fact for the Tenant specifying, to the best of Landlord's knowledge, the items called for in said Section 34.01.
 
34.03.  Tenant agrees that this Lease will not be recorded by Tenant or anyone acting under Tenant on the land records of the Town or City in which the Demised Premises are located.  In the event that the said Lease is recorded, the Tenant irrevocably appoints and constitutes the Landlord as Tenant’s attorney-in-fact for the purpose of executing an instrument or instruments on the Tenant’s behalf that are necessary and desirable to release this Lease because of such recording.
 
ARTICLE 35
No Other Representations, Construction, Governing Law
 
35.01.  Tenant expressly acknowledges and agrees that Landlord has not made and is not making, and Tenant, in executing and delivering this Lease, is not relying upon, any warranties, representations, promises or statements, except to the extent that the same are expressly set forth in this Lease or in any other written agreement which may be made and executed between the parties concurrently with the execution and delivery of this Lease and shall expressly refer to this Lease.
 
35.02.  If any of the provisions of this Lease, or the application thereof to any person or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provision or provisions to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.
 
35.03.  This Lease shall be governed in all respects by the laws of the State of Connecticut.
 
ARTICLE 36
Parties Bound
 
36.01.  The obligations of this Lease shall bind and benefit the successors and assigns of the parties with the same effect as if mentioned in each instance where a party is named or referred to, except that no violation of the provisions of Article 10 shall operate to vest any rights in any successor or assignee of Tenant and that the provisions of this Article shall not be construed as modifying the conditions of limitation contained in Article 25.  However, the obligations of Landlord under this Lease shall not be binding upon Landlord herein named with respect to any period subsequent to the transfer of its interest in the Building as owner or lessee thereof and in event of such transfer said obligations shall thereafter be binding upon each transferee of the interest of Landlord herein named as such owner or lessee of the Building, but only with respect to the period ending with a subsequent transfer within the meaning of this Article, and such transferee, by accepting such interest, shall be deemed to have assumed such obligations except only as may be expressly otherwise provided elsewhere in this Lease.  A lease of Landlord's entire interest in the Building as owner or lessee thereof shall be deemed a transfer within the meaning of this Article 36.

 
25
 

36.02.  Tenant shall look solely to the estate and interest of Landlord, its successors and assigns, in the land and Building (or the proceeds thereof) for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord hereunder, and no other property or assets of Landlord shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to either this Lease, the relationship of Landlord and Tenant hereunder or Tenant's use and occupancy of the Demised Premises.  Landlord represents and warrants that such estate and interest of Landlord shall at all times until the earlier of six (6) months following the Expiration Date or the sale or other disposition of the building to a Successor Landlord, be in value of at least Equal to the Security Deposit, Twenty Two Thousand Nine Hundred Eighty Dollars and to such extent shall indemnify Tenant against any breach of such representation and warranty from assets other than the estate and interest of landlord in said land and Building as well as such estate and interest.
 
ARTICLE 37
Certain Definitions and Constructions
 
37.01.  For the purposes of this Lease and all agreements supplemental to this Lease, unless the context otherwise requires:
 
(a) The term "Mortgage" shall include an indenture of mortgage and deed of trust to a trustee to secure an issue of bonds and debentures, and the term "Mortgagee" shall include such a trustee.
 
(b) The terms "include", "including" and "such as" shall each be construed as if followed by the phrase "without being limited to".
 
(c) The term "obligations of this Lease" and words of like import, shall mean the covenants to pay rent and additional rent under this Lease and all of the other covenants and conditions contained in this Lease.  Any provision in this Lease that one party or the other or both shall do or not do or shall cause or permit or not cause or permit a particular act, condition or circumstance shall be deemed to mean that such party so covenants or both parties so covenant, as the case may be.
 
(d) The term "Tenant's obligations hereunder", and words of like import, and the term "Landlord's obligations hereunder", and words of like import, shall mean the obligations of this Lease which are to be performed or observed by Tenant, or by Landlord, as the case may be.  Reference to "performance" of either party's obligations under this Lease shall be construed as "performance and observance".  Tenant's obligations hereunder shall be construed in every instance as conditions as well as covenants.
 
(e) Reference to Tenant being or not being "in default hereunder", or words of like import, shall mean that Tenant is in default in the performance of one or more of Tenant's obligations hereunder, or that Tenant is not in default in the performance of any of Tenant's obligations hereunder, or that a condition of the character described in Section 25.01 has occurred and continues or has not occurred or does not continue, as the case may be.
 
(f) References to Landlord as having "no liability to Tenant" or being "without liability to Tenant", shall mean that Tenant is not entitled to terminate this Lease, or to claim actual or constructive eviction, partial or total, or to receive any abatement or diminution or rent, or to be relieved in any manner of any of its other obligations hereunder, or to be compensated for loss or injury suffered or to enforce any other kind of liability whatsoever against the Landlord under or with respect to this Lease or with respect to Tenant's use or occupancy of the Demised Premises.
 
(g)  The term "laws and/or requirements of public authorities" and words of like import shall mean laws and ordinances of any or all of the Federal, state, city and county governments and rules, regulations, orders and/or directives of any or all departments, subdivisions, boards, agencies or offices thereof, or any other governmental, public or quasi-public authorities, having jurisdiction in the Premises, and/or the direction of any public officer pursuant to law.
 
(h) The term "requirements of insurance bodies" and words of like import shall mean rules, regulations, orders and other requirements of the Board of Fire Underwriters and/or the Fire Insurance Rating Organization in Connecticut and/or any other similar body performing the same or similar functions and having jurisdiction or cognizance of the Building and/or the Demised Premises.
 
 
26
 
 
(i) The term "repair" shall be deemed to include restoration and replacement as may be necessary to achieve and/or maintain good working order and condition so that the Demised Premises are in as near a condition as reasonably possible under the circumstances as that prior to the events requiring repair, and the term "untenantable" shall be deemed to include being inaccessible.
 
(j) Reference to "termination of this Lease" includes expiration or earlier termination of the term of this Lease or cancellation of this Lease pursuant to any of the provisions of this Lease or pursuant to law.  Upon a termination of this Lease, the term and estate granted by this Lease shall end at noon of the date of termination as if such date were the date of expiration of the term of this Lease and neither party shall have any further obligation or liability to the other after such termination (i) except as shall be expressly provided for in this Lease, or (ii) except for such obligations as by their nature or under the circumstances can only be, or by the provisions of this Lease, may be, performed after such termination, and, in any event, unless expressly otherwise provided in this Lease, any liability for a payment which shall have accrued to or with respect to any period ending at the time of termination shall survive the termination of this Lease.
 
(k) The term "in full force and effect" when herein used in reference to this Lease as a condition to the existence or exercise of a right on the part of Tenant shall be construed in each instance as including the further condition that at the time in question no default on the part of Tenant exists, and no event has occurred which has continued to exist for such period of time (after the notice, if any, required by this Lease), as would entitle Landlord in either such instance to terminate this Lease or to dispossess Tenant.
 
(l) The term "rentable area" shall mean rentable area as defined in, and all rentable areas required to be determined pursuant to this Lease and the Work Letter shall be deemed to have been measured in accordance with, the Standard Method of Floor Measurement for Office Building approved by the Real Estate Board of New York, Inc.
 
(m) The term "Landlord" as used in this Lease means only the owner, or the mortgagee in possession, for the time being of the land and Building (or the owner of a lease of the Building or of the land and Building) of which the Demised Premises form a part, so that in the event of any sale or sales of said land and Building or of said lease, or in the event of a lease of said Building, or of the land and Building, the said Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder, and it shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and the purchaser, at any such sale, or the said lessee of the Building, or of the land and Building, that the purchaser  or the lessee of the Building has assumed and agreed to carry out any and all covenants and obligations of Landlord, hereunder.
 
(n) The term "Tenant" shall mean Tenant herein named or any assignee or other successor in interest (immediate or remote) of Tenant herein named, when Tenant herein named or such assignee or other successor in interest, as the case may be, is in possession of the Demised Premises as owner of the Tenant's estate and interest granted by this Lease, and also if Tenant is not an individual or corporation, all of the individuals, firms and/or corporations or other entities comprising Tenant.
 
(o) Words and phrases used in the singular shall be deemed to include the plural and vice versa, and nouns and pronouns used in any particular gender shall be deemed to include any other gender.
 
(p) The rule of "ejusdem generis" shall not be applicable to limit a general statement following or referable to an enumeration of specific matters to matters similar to the matters specifically mentioned.
 
(q) All references in this Lease to numbered Articles, numbered Sections and Subsections and lettered Exhibits are references to Articles and Sections and Subsections of this Lease, and Exhibits annexed to (and hereby made part of) this Lease, as the case may be unless expressly otherwise designed in the context.
 
(r) The term "rent" or "rents" shall, except where the context expressly implies to the contrary, be deemed to mean fixed rent and additional rent as such terms are defined in Section 1.04.
 
37.02.  The various terms which are defined in other articles of this Lease or are defined in Exhibits annexed hereto, shall have the meaning specified in such other Articles and such Exhibits for all purposes of this Lease and all agreements supplemental thereto, unless the context shall otherwise require.
 
37.03.  The Article headings in this Lease and the Table of Contents and/or Index prefixed to this Lease are inserted only as a matter of convenience or reference, and are not to be given any effect whatsoever in construing this Lease.
 
37.04.  Tenant acknowledges that Tenant has had the opportunity to review and negotiate the terms of this Lease, and that the canon or rule of interpretation requiring construction of any ambiguities herein against Landlord, as the draftsman, shall not be applicable.

 
27
 

ARTICLE 38
Restrictions and Mortgagee Approval
 
38.01.  (a) This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate in all respects to all covenants, agreements and restrictions of record as of the date hereof, with respect to the land and/or the Building, including but not limited to those restrictions and conditions contained in the deed from the City of Bridgeport Connecticut to Landlord or Landlord's predecessor in title.  In said deed, Landlord agreed in part, that in the sale, lease or occupancy of the property, it would not effect or execute any agreement, lease, conveyance or other instrument whereby the property or any part thereof is restricted upon the basis of race, sex, religion, color or national origin, and it would comply with all state and local laws in effect from time to time prohibiting discrimination or segregation by reason of race, sex, religion, color or national origin.
 
(b) Tenant shall not take or permit any action with respect to the Demised Premises which would violate any covenants, agreements and restrictions of record with respect to the land and/or the Building.
 
38.02  (a) Promptly after the execution of this Lease, Landlord shall submit a copy of the Lease to Landlord's mortgagee, if any, for approval.  If the Lease has not been approved by the mortgagee within thirty (30) days after its execution, then Landlord shall have the right to cancel this Lease by written notice to Tenant within five (5) days after the expiration of such thirty (30) day period.  Upon such cancellation, neither party shall have any further liability to the other by reason of this Lease.
 
(b) If Landlord fails to cure any default on its part under this Lease, the holder of any superior mortgage shall have the right, at its option, to cure such default in order to prevent termination of this Lease by Tenant.
 
38.03.  Telephone and data line installation and all costs therefor shall be the sole responsibility of Tenant, and Tenant shall make all necessary arrangements.  Such telephone and data line installations are subject to approval by Landlord and must be performed in strict compliance with all governing codes.
 
38.04.  All window treatments will be the sole expense of the Tenant.  Prior to window treatment installation, written approval from the Landlord must be obtained.
 
ARTICLE 39
Parking
 
39.01.  Landlord, upon request by Tenant, shall provide up to 16 unreserved and unallocated parking spaces at one of the Landlord’s parking facilities for use by Tenant’s employees only at a cost of Seventy Five Dollars ($75.00) plus sales tax for each parking space for the first four years of the Lease Term.  For years five through seven of the Lease Term Landlord, upon request by Tenant, shall provide up to 16 unreserved and unallocated parking spaces at one of the Landlord’s parking facilities for use by Tenant’s employees only at market value plus sales tax for each parking space.  Tenant acknowledges that its employees may have to park in one of the Landlord’s parking facilities other than the parking facility located in the Building.  Tenant also acknowledges that the parking facility located in the Building is not open twenty four hours each day and is closed on Saturdays, Sundays and Holidays.
 
ARTICLE 40
Option to Renew
 
Provided the Tenant is not in default under this Lease beyond any applicable cure period at the time this option to renew this Lease is exercised, the Landlord grants to the Tenant an option to renew the term of this Lease for an additional period of five (5) years upon all of the terms, covenants and conditions of this Lease including but not limited to payments due under Article 6, Article 7 and Article 16 of this Lease, but with the exception of the Fixed Rent which shall be at the then Fair Market Value Rent but not less than the annual amount of One Hundred Thirty Seven Thousand Eight Hundred Eighty Dollars.  In order to exercise this option to renew the term of the Lease the Tenant shall give the Landlord nine months’ prior written notice of its intention to exercise this option to renew and time shall be deemed of the essence in giving such notice.
 
ARTICLE 41
Termination Right
 
Tenant shall have a one-time right to terminate this Lease at the end of the fifth year of the Lease Term by giving Landlord nine (9) months’ prior written notice of Tenant’s intention to terminate on that date (the “Early Termination Date”) specified in Tenant’s notice and upon paying Landlord on or before the Early Termination Date an Early Termination Fee equal to four months’ rent (Forty Five Thousand Nine Hundred Sixty Dollars) ($45,960.00) and the unamortized portion (on a straight line basis with interest at 7% per annum) of the Landlord’s Construction Costs for the Demised Premises, Brokerage fees and Attorney’s Fees. Time shall be deemed of the essence in giving such written notice of intention to terminate this Lease.
 
 
28
 
   
ARTICLE 42
Untenantability
 
Notwithstanding any other terms and conditions of the Lease, if, due to the fault or negligence of Landlord or the failure of systems and equipment over which Landlord shall have control and not due to the fault or negligence of Tenant, third parties, Acts of God, Force Majeure, the Demised Premises are rendered untenantable for a continuous period of at least 96 hours, then the rents reserved hereunder shall after such period of 96 hours abate pro rata per diem until the Demised Premises are again tenantable.
 
IN WITNESS WHEREOF the parties hereto have caused this instrument to be executed by their duly authorized officers and their corporate seals to be hereunder affixed the day and year first above written.
 
 
Signed, Sealed and Delivered
        
In the Presence Of:
  
TEN MIDDLE ASSOCIATES
  
         
/s/ Rosaida Flores
        
         
   
BY:
/s/ Ernest C. Trefz
  
   
Ernest C. Trefz,
  
(As to Landlord)
        
A General Partner
 
      
         
TENANT
  
CLEAN DIESEL TECHNOLOGIES, INC.
  
         
/s/ Joseph Crute
  
BY:
/s/ Ann B. Ruple
  
/s/ Mary Christian-Hein
        
         
   
Its Vice President
  
/s/ Joseph Crute
  
and
  
/s/ Mary Christian-Hein
  
BY:
/s/ Charles W. Grinnell
  
(As to Tenant)
        
   
Its Vice President
  
 
 
STATE OF CONNECTICUT
}
                            }       ss: BRIDGEPORT
COUNTY OF FAIRFIELD
}
 
On this the 22nd day of September, 2008, before me, personally appeared ERNEST C. TREFZ, who acknowledged himself to be a General Partner of TEN MIDDLE ASSOCIATES, a Partnership, and that he being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the Partnership by himself on behalf of said Partnership as a General Partner
 
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 
/s/ Rosaida Flores
  
ROSAIDA FLORES
Notary Public
  
Notary Public
Commissioner Superior Court
  
My Commission Expires July 31, 2012
 
 
STATE OF CONNECTICUT
}
                            }       ss: STAMFORD
COUNTY OF FAIRFIELD
}
 
On this the 18th day of September, 2008, before me, personally appeared ANN B. RUPLE, who acknowledged herself to be a VICE PRESIDENT of CLEAN DIESEL TECHNOLOGIES, INC., a Delaware Corporation, and that as such VICE PRESIDENT, being authorized so to do, executed the foregoing instrument for the purposes therein contained on behalf of Clean Diesel Technologies, Inc.
 
 
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 
/s/ Patricia McCoy
  
PATRICIA MC COY
Notary Public
  
NOTARY PUBLIC
Commissioner Superior Court
  
My Commission Expires January 31, 2011

 
29
 

STATE OF CONNECTICUT
}
                            }       ss: STAMFORD
COUNTY OF FAIRFIELD
}
 
On this the 18 day of September, 2008, before me, personally appeared Charles W. Grinnell, who acknowledged himself to be Vice President of CLEAN DIESEL TECHNOLOGIES, INC., a Delaware Corporation, and that as such Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein on behalf of Clean Diesel Technologies, Inc.
 
 
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 
/s/ Patricia McCoy
  
PATRICIA MC COY
Notary Public
  
NOTARY PUBLIC
Commissioner Superior Court
  
My Commission Expires January 31, 2011

 
30
 

EXHIBIT "A"
Premises Plan
 
 
Floor Plan

 
31
 

EXHIBIT "B"
Rules and Regulations
 
 
1.  The sidewalks, entrances, passages, lobby, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by any tenant or used for any purpose other than ingress and egress to and from the Demised Premises and Tenant shall not permit any of its employees, agents or invitees to congregate in any of said areas.  No door mat of any kind whatsoever shall be placed or left in any public hall or outside any entry door of the Demised Premises.
 
2.  No awnings or other projections shall be attached to the outside walls of the Building.  No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with any window or door of the Demised Premises, without the prior written consent of Landlord.  Such curtains, blinds, shades or screens must be of quality, type, design and color, and attached in the manner, approved by Landlord.
 
3.  No sign, insignia, advertisement, object, notice or other lettering shall be exhibited, inscribed, painted or affixed by any tenant on any part of the outside or inside of the Demised Premises or the Building without the prior written consent of Landlord.  In the event of the violation of the foregoing by any tenant, Landlord may remove the same without any liability, and may charge expense incurred in such removal to the tenant or tenants violating this rule.  Interior signs and lettering on doors and directory tablet shall, if and when approved by Landlord, be inscribed, painted or affixed for each tenant by Landlord at the expense of such tenant, and shall be of a size, color and style acceptable to Landlord.
 
4.  The sashes, sash doors, skylights, windows and doors that reflect or admit light and air into the halls, passageways or other public places in the Building shall not be covered or obstructed by Tenant, nor shall any bottles, parcels, or other articles be placed on the window sills.
 
5.  No showcases or other articles shall be put in front of or affixed to any part of the exterior of the Building, nor placed in the halls, corridors or vestibules.
 
6.  The water and wash closets and other plumbing fixtures shall not be used for any purpose other than those for which they were designed or constructed, and no sweepings, rubbish, rags, acids or other substances shall be thrown or deposited therein.  All damages resulting from any misuse of the fixtures shall be borne by the tenant who, or whose servants, employees, agents, visitors or licensees shall have caused the same.
 
7.  No tenant shall mark, paint, drill into, or in any way deface, any part of the Demised Premises or the Building.  No boring, cutting or stringing of wires shall be permitted, except with the prior written consent of Landlord, and as Landlord may direct.  No tenant shall lay linoleum, or other similar floor covering, so that the same shall come in direct contact with the floor of the Demised Premises.
 
8.  No bicycles, vehicles, animals, fish or birds of any kind shall be brought into or kept in or about the Premises.
 
9.  No noise, including, but not limited to, music or the playing of musical instruments, recordings, radio or television which, in the judgment of Landlord, might disturb other tenants in the Building, shall be made or permitted by any tenant.  Nothing shall be done or permitted in the Demised Premises by Tenant which would impair or interfere with the use or enjoyment by any other tenant of any other space in the Building.  No tenant shall throw anything out of the doors, windows or skylights or down the passageways.
 
10.  Tenant, its servants, employees, agents, visitors or licensees, shall not at any time bring or keep upon the Demised Premises any explosive fluid, chemical or substance, nor any inflammable or combustible objects or materials except subject to the provisions of Section 13.02(a) of the foregoing Lease.
 
11.  Additional locks or bolts of any kind which shall not be operable by the Grand Master Key for the Building shall not be placed upon any of the doors or windows by any tenant, nor shall any changes be made in locks or the mechanism thereof which shall make such locks inoperable by said Grand Master Key.  Each tenant shall, upon the termination of its tenancy, turn over to the Landlord all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by, such tenant and in the event of the loss of any keys furnished by Landlord, such tenant shall pay to Landlord the cost thereof.
 
12.  All removals, or the carrying in or out of any safes, freight, furniture, packages, boxes, crates or any other object or matter of any description must take place during such hours and in such elevators as Landlord or its Agent may determine from time to time.  Landlord reserves the right to inspect all objects and matter to be brought into the Building and to exclude from the Building all objects and matter which violate any of the Rules and Regulations or the Lease of which these Rules and Regulations are a part.  Landlord may require any person leaving the Building with any package or other object or matter to submit a pass, listing such package or object or matter, from the tenant from whose premises the package or object or matter is being removed, but the establishment and enforcement of such requirement shall not impose any responsibility on Landlord for the protection of any tenant against the removal of property from the premises of such tenant.  Landlord shall, in no way, be liable to Tenant for damages or loss arising from the admission, exclusion or ejection of any person to or from the Demised Premises or the Building under the provisions of this Rule 12 or of Rule 15 hereof.
 
 
32
 
13.  Tenant shall not occupy or permit any portion of the Demised Premises to be occupied as an office for a public stenographer or public typist, or for the possession, storage, manufacture or sale of beer, wine or liquor, narcotics, dope, tobacco, in any form, or as an employment bureau.  Tenant shall not engage or pay any employees on the Demised Premises, except those actually working for Tenant on the Demised Premises, nor advertise for laborers giving an address at the Demised Premises. Tenant shall not use the Demised Premises or any part thereof, or permit the Demised Premises or any part thereof to be used, for manufacturing, or sale at auction of merchandise, goods or property of any kind.
 
14.  Landlord shall have the right to prohibit any advertising or identifying sign by any tenant which in Landlord's judgment tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, such tenant shall refrain from or discontinue such advertising or identifying sign.
 
15.  Landlord reserves the right to exclude from the Building during hours other than Business Hours (as defined in the foregoing Lease) all persons who do not present a pass to the Building signed by Landlord.  All persons entering and/or leaving the Building during hours other than Business Hours may be required to sign a register.  Landlord will furnish passes to persons for whom any tenant requests same in writing.  Each tenant shall be responsible for all persons for whom such tenant requests such pass and shall be liable to Landlord for all acts or omissions of such persons.
 
16.  Tenant, before closing and leaving the Demised Premises at any time, shall see that all lights are turned out.  All entrance doors in the Demised Premises shall be left locked by Tenant when the Demised Premises are not in use.  Entrance doors shall not be left open at any time.
 
17.  Unless Landlord shall furnish electrical energy hereunder as a service included in the rent, Tenant shall, at Tenant's expense, provide artificial light and electrical energy for the employees of Landlord and/or Landlord's contractors while doing janitor service or other cleaning in the Demised Premises and while making repairs or alterations in the Demised Premises.
 
18.  The Demised Premises shall not be used for lodging or sleeping or for any immoral or illegal purpose.
 
19.  The requirements of tenants will be attended to only upon application at the office of the Building.  Employees of Landlord shall not perform any work or do anything outside of their regular duties, unless under special instructions from Landlord.
 
20.  Canvassing, soliciting and peddling in the Building are prohibited and each tenant shall cooperate to prevent the same.
 
21.  There shall not be used in any space, or in the public halls of the Building, either by any tenant or by jobbers or any others, in the moving or delivery or receipt of safes, freight, furniture, packages, boxes, crates, paper, office material, or any other matter or thing, any hand trucks except those equipped with rubber tires, side guards and such other safeguards as Landlord shall require.  No hand trucks shall be used in passenger elevators, and no such passenger elevators shall be used for the moving, delivery or receipt of the aforementioned articles.
 
22.  Tenant shall not cause or permit any odors of cooking or other processes or any unusual or objectionable odors to emanate from the Demised Premises which would annoy other tenants or create a public or private nuisance.  No cooking shall be done in the Demised Premises except as is expressly permitted in the foregoing Lease.
 
23.  Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling system by lowering and closing drapes and curtains when the sun's rays fall directly on the windows of the Demised Premises.
 
24.  Landlord reserves the right to rescind, alter or waive any rules or regulation at any time prescribed for the Building when, in its judgment, it deems it necessary or desirable for the reputation, safety, care or appearance of the Building, or the preservation of good order therein, or the operation or maintenance of the Building or the equipment thereof, or the comfort of tenants or others in the Building.  No rescission, alteration or waiver of any rule or regulation in favor of one tenant shall operate as a rescission, alteration or waiver in favor of any other tenant.

 
33
 

EXHIBIT "C"
Work Letter
 
 
Provided that the Tenant agrees to the use of the Landlord’s contractor, the Landlord shall provide Tenant with a turn-key installation using building standard materials according to Tenant’s plans as approved by Landlord.  The Landlord agrees to contribute Twenty Seven and One Half Dollars ($27.50) per rentable square foot of the Premises toward the Tenant Improvements to be performed by Landlord on behalf of Tenant.  If the cost of Tenant Improvements exceeds $151,662.50 then Tenant will, upon submission of an invoice from the Landlord’s contractor, pay the cost of such excess.
 
Tenant shall provide plans to the Landlord immediately upon execution of this Lease, and Landlord shall immediately review plans for approval.  Within 15 days of plan approval, Landlord shall prepare an estimate of the cost of Tenant Improvements and submit to Tenant for its approval.  Within 15 days of receipt of the estimated costs, Tenant will submit written approval to Landlord, and, Landlord shall proceed with the work.   Tenant and Landlord acknowledge that time is of the essence in granting approvals.  Tenant and Landlord agree to work together reasonably to approve plans and finishes.  In the event that Landlord and Tenant cannot agree with regard to the scope of the fit-up work and/or the cost of the fit-up work within 15 days after the Tenant receives receipt of the estimated costs from the Landlord’s contractor, then Tenant shall retain its own contractor to do the fit-up work of Tenant Improvements.
 
If Tenant uses a contractor other than Landlord’s contractor for the Tenant’s fit-up work of Tenant Improvements, Landlord will contribute Twenty Seven and One Half Dollars ($27.50) per rentable square foot of the Premises ($151,662.50) toward the costs of Tenant’s Improvements and Tenant shall pay the balance of Tenant’s fit-up work to Tenant’s contractor.  If Tenant uses a contractor other than the Landlord’s contractor, the Commencement Date of the Lease shall be January 1, 2009.

 
34
 

INSTRUCTIONS TO TENANT CONTRACTORS
 
1.  It shall be Tenant's contractor's responsibility to schedule the performance of his work and notify the Landlord's Project Manager of his proposed schedule, so that the contractor's elevator usage for material deliveries and rubbish removal may be coordinated.
 
2.  The Tenant's contractor shall notify Landlord's Project Manager at least four (4) weeks prior to his proposed starting date to perform Tenant Work and at that time will discuss the arrangements and requirements of his schedule.  At this contact time, Landlord's Project Manager would like to cover the following items to determine reservation time scheduled:
 
a)  Material delivery, schedule - dates - times
b)  Number of vehicles
c)  Elevator Service and hoist reservation time
d)  Docking arrangements and reservation time
e)  Insurance requirements
f)  Names and telephone numbers of contacts and coordinators
g)  General instructions - rules and regulations
 
3.  The Tenant's contractor shall confirm his schedule with the Landlord's Project Manager, not less than 48 hours in advance of his pre-scheduled material deliveries.  It shall be Tenant's contractor's sole responsibility to confirm his reservation times, and in the event that this confirmation is not verified and re-executed it shall be deemed that his reservations are to be voided (canceled) and allocated to others.  He shall then be required to reschedule both his deliveries and his reservations through the Landlord's Project Manager.  In all fairness to the other Tenants going into the Building, if Tenant's contractor fails to meet or confirm this date this contractor will have to wait until there is free time in the material delivery and hoisting schedule before they will be allowed to perform Tenant Work.  Landlord's Project Manager will make every effort to accommodate the Tenant's contractor as early as possible, but it is very likely that to reschedule would effect a serious time delay; you can clearly see, then, that it is extremely important to confirm the schedule not less than 48 hours in advance, and if possible, preferably three to five days ahead of time.
 
4.  Tenant and its contractors shall remain responsible for the scheduling and transportation of materials and equipment used in the performance of Tenant's Work and for the removal from the Building of waste and debris resulting from the performance of Tenant's Work, and Landlord shall not be responsible for coordination of the work of Tenant's contractors with the work of Landlord's contractor.  However, Landlord and Tenant shall cooperate in their respective performances of Landlord's Work and Tenant's Work in order to enable the same to be properly coordinated.  Tenant shall not be under any obligation to employ any of Landlord's contractors or to pay any charge to any of them by reason of Tenant's having other contractors or purchasing any materials or labor or employing any labor from other sources.  Tenant and its contractors shall not be under any obligation to pay for water, electricity, heat, ventilation or cooling provided in the Premises during the performance of any Tenant's Work during normal working hours of the Building Construction project.
 
5.  Temporary staging of materials and equipment in public areas is not permitted.
 
6.  Should large equipment or materials need to be transported via dollies and/or carts, then contractor shall protect all routes over finished floors with a minimum of 3/8" plywood runway, which will be picked up at the close of work each day.
 
7.  All areas traveled are to be broom cleaned at the close of each day.  Elevators are to be swept and debris carried from the car, not swept across the door opening.
 
8.  Workers should use the toilet facilities provided by the general contractor.
 
9.  The hoisting load limit of 3,000 pounds in passenger elevator is not to be exceeded.
 
10.  All packing and crating materials must be removed at the end of each day, and not be left to accumulate overnight (fire hazard).
 
11.  The Tenant's contractor must utilize labor that will work in harmony with other labor in the Building.  In addition, Landlord's Project Manager should receive not later than two weeks prior to contractor's performance of Tenant's Work, insurance certificates evidencing the following minimum coverages:
 
Worker's Compensation Insurance - Statutory Limit
 
Comprehensive Public Liability:
Property Damage Coverage -   Minimum $ 1,000,000
Bodily Injury or Death:
One Person - -            Minimum $1,000,000
More than one person -       Minimum $1,000,000
 
All certificates are to stipulate that ten (10) days' prior notice of cancellation will be given to Tenant and to:
 
Ten Middle Associates
10 Middle Street
Bridgeport, CT 06604

 
35
 

INSTRUCTIONS TO MOVING CONTRACTORS
 
1.  The directions of the Landlord and/or his managing agent will be followed at all times.
 
2.  No furniture and/or materials will be moved in or out of the building from 8 a.m. to 6 p.m., Monday through Friday, unless approved by the Landlord and/or his managing agent.
 
3.  The moving contractor must submit, not later than two (2) weeks prior to the move, a written schedule which indicates the date and time the move will commence and also the same for the completion of the move.
 
4.  All routes over finished floors will be protected with a minimum 3/8" plywood runway, which is to be picked up at the close of work each day.
 
5.  Appropriate warning signs are to be posted in all public corridors and lobbies used.
 
6.  Temporary staging of furniture and equipment in public areas is not permitted.
 
7.  All areas traveled are to be broom cleaned at the close of each day.  Elevators are to be swept and debris carried from the car, not across the door opening.
 
8.  Workers should use the toilet/facilities provided by the general contractor.
 
9.  The load limit of 3,000 pounds in the passenger elevator is not to be exceeded.
 
10.  No more than two trailers will be allowed at the loading dock.
 
11.  Only rubber wheeled dollies and carts, in good operating condition, may be used.  Excess oil and grease must be removed from wheels to prevent staining flooring.
 
12.  Reasonable care must be taken at all times to avoid any personal injury or property damage.
 
13.  All packing and crating materials must be removed at the end of each day, and not be left to accumulate overnight (fire hazard).
 
14.  The moving contractor must utilize labor that will work in harmony with other labor in the building.  In addition, Landlord's office should receive not later than two weeks prior to move, insurance certificates evidencing the following minimum coverages.
 
Worker's Compensation Insurance - Statutory Limit
 
Comprehensive Public Liability:
Property Damage Coverage -  Minimum $1,000,000
Bodily Injury or Death:
One person -     Minimum $1,000,000
More than one person -   Minimum $1,000,000
 
All certificates are to stipulate that ten (10) days' prior notice of cancellation will be given to the Tenant and to:
 
Ten Middle Associates
10 Middle Street
Bridgeport, CT 06604
 
 
36
 EX-21 4 ex21.htm EXHIBIT 21 ex21.htm
Exhibit 21

SUBSIDIARIES OF REGISTRANT

Clean Diesel Technologies, Inc.'s subsidiary as of December 31, 2008 is listed below.


Name
  
Jurisdiction of  Incorporation or Organization
  
Common Equity Ownership
         
Clean Diesel International, LLC
  
Connecticut
  
100%
 
 
 EX-23.A 5 ex23_a.htm EXHIBIT 23 (A) ex23_a.htm
Exhibit 23(a)


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We consent to the incorporation by reference in the registration statements on Form S-1 (Registration No. 333-144201) and Form S-8 (Registration Nos. 333-16939, 333-33276, 333-117057 and 333-151777) of our reports dated March 13, 2009, relating to our audits of the consolidated financial statements as of December 31, 2008 and 2007 and for each of the years in the three-year period ended December 31, 2008, which included an explanatory paragraph regarding the Company’s adoption of the Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Liabilities,” and our audit of internal control over financial reporting as of December 31, 2008, of Clean Diesel Technologies, Inc., included in the 2008 Annual Report on Form 10-K.

We also consent to the reference of our firm under the caption "Experts" on Form S-1 (Registration No. 333-144201), of Clean Diesel Technologies, Inc.


/s/  Eisner LLP
New York, New York
March 13, 2009
 
 
EX-31.A 6 ex31_a.htm EXHIBIT 31 (A) ex31_a.htm
Exhibit 31(a)
CERTIFICATIONS


I, Michael L. Asmussen, certify that:

1.  I have reviewed this Annual Report on Form 10-K (the “report”) of Clean Diesel Technologies, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f)) for the registrant and have:

 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter of 2008 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 
a)
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:  March 16, 2009
By:
/s/ Michael L. Asmussen
   
Michael L. Asmussen
   
Director, President and Chief Executive Officer
 
 
EX-31.B 7 ex31_b.htm EXHIBIT 31 (B) ex31_b.htm
Exhibit 31(b)
CERTIFICATIONS


I, Ann B. Ruple, certify that:

1.  I have reviewed this Annual Report on Form 10-K (the “report”) of Clean Diesel Technologies, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f)) for the registrant and have:

 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter of 2008 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 
a)
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:  March 16, 2009
By:
/s/ Ann B. Ruple
   
Ann B. Ruple
   
Chief Financial Officer,
   
Vice President and Treasurer
 
 
EX-32 8 ex32.htm ex32.htm
Exhibit 32
CERTIFICATIONS


Certification of CEO and CFO Pursuant to18 U.S.C. Section 1350


The undersigned, Michael L. Asmussen and Ann B. Ruple, in their capacities as Chief Executive Officer and Chief Financial Officer, respectively, of Clean Diesel Technologies, Inc. (the “Registrant”) do each hereby certify with respect to the Annual Report on Form 10-K of the Registrant for the period ended December 31, 2008, as filed with the Securities and Exchange Commission on the date thereof (the “Report”), that, to the best of his or her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant as of, and for, the periods presented in this Report.


/s/  Michael L. Asmussen
  
   
Michael L. Asmussen
  
President, Chief Executive Officer and Director
  
March 16, 2009
  
   
   
/s/  Ann B. Ruple
  
   
Ann B. Ruple
  
Chief Financial Officer, Vice President and Treasurer
  
March 16, 2009
  

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (the “Act”), this certification accompanies the Report and shall not, except to the extent required by the Act, be deemed filed by Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Clean Diesel Technologies, Inc. and will be retained by Clean Diesel Technologies, Inc. and will be furnished to the Securities and Exchange Commission or its staff upon request.
 
 
GRAPHIC 9 floorplan.jpg FLOOR PLAN begin 644 floorplan.jpg M_]C_X``02D9)1@`!`0$`2`!(``#_VP!#``8$!08%!`8&!08'!P8("A`*"@D) M"A0.#PP0%Q08&!<4%A8:'24?&ALC'!86("P@(R8G*2HI&1\M,"TH,"4H*2C_ MVP!#`0<'!PH("A,*"A,H&A8:*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H M*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"C_P``1"`,S`D`#`2(``A$!`Q$!_\0` M'``!``$%`0$```````````````8!`@,$!0<(_\0`5Q```0,"`P0%!P<(!P8$ M!@(#`0`"`P01!1(A!A,Q010B47&!!S)289&QT14C0E.2H<$(%B0S0V)RX30U M5&."HK(7)D1S@Y,E-L+2&%5D=*/P-_$G1>+_Q``5`0$!```````````````` M`````?_$`!41`0$````````````````````1_]H`#`,!``(1`Q$`/P#W5NQ] M0.-6PGN*RMV4J&\*IGL*EZ((HW9BI'_%LOW%9H\`JV<*QOL*DJ((^,&K?[:/ M84."UI&M:/85($01QV`5+N-8/LE6'9N<_P#&#[*DR((N=EY3_P`8/LK&[9.4 M_P#&-^PI8AX:((@=CY3_`,JY*#!ZNJA`=)$PN`/!!PW[&Q.XU MDGV0K#L3"1I62?8"Z=#B=765U1!%%$&PQ1/)<3J7@G\%L85BK:MD_2-W"^*9 MT5LW&W-!P_S)AM_3);_PA5&Q,'.LE^R%*A/"382L)_B5=['Z;?:@C#-C8&_\ M7+[`LHV2@'_%2^P*1[QGI-]JKG;Z0]J"/#9:`"PJ9?8%<-F(?[3+[`N_F':/ M:N?M!B#L,P2LK8PU[H(R\`G0V0:/YLP?VB;[E0;+T_\`:)ON76PNI=5X;2U$ M@#7RQM>0.5Q=9*NH92TLL\ERR-I<0..B#C#9BF`MOYON5/S6IKWWTWW+;V?Q M1^*P33.B$<;7Y6:WN++JW0U[2T@D70X&P*#G-V7HA]*4_P") M7C9JB'.7[2V:FLJH(VR".*2,\7,N;>M9(:BIFCSP]&>WM#R@TQLW1`\9?M*O MYN47;+]I;+*JI?(Z-K:G9+_`"0:GYOT7]Y]I7#`:(B_[2L9B. M(O-V87F9R(G:DF)8A&QKG84ZYX@3-T*"[Y`HO1?]I#@%">+'_:5!B=;87PJ; M7C9X*J<5J&R.#\,J1&`#G%C<]ED%#L[AY_9N^T53\W,.YQ.^T5D9BTA\[#JM MNOH@_BK9,8,,=YU-5L M'KB*/QJ!AL8:K_LN08/S9PSZEWVBGYLX9]2[[15[,?IG$YHJIEB=3$>2.VAH M6-!>9FW[8G(+1LUA@X0G[153LWAI_8G[15QVAP\/C;O']>]CNS;19&XYA[O^ M(:.\$(,'YM89_9_\Q5?S;PSZC_,5DEV@PJ(N#ZV(%H)(OR"UH]K,&E<]L57G M+'-:;,/%QL.2#,-G<-'[#_,55NS^'-X0_P"8KK(@Y@P+#Q^Q^\J[Y%H?J?O* MZ*(.>,'HA^Q^]5^2:/ZG[UOH@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("( MB`N/M>,VS5>+VO':Z["XNV1R[-UI%SU1H.\(,3Z:2C9'54LV22H$,3P6W!`T MO]ZZ&&8;'10RM)WKI)'2.C@CV1Q8LC#3T=WN4E4?V M_=EV.Q4D7^8<@SX#0T[\$P]TD8+NCLN;GT0MFKPFFGI9HFLR&1I;FN=+J[`? MZDH+?4,]P6\2`+DV"#@T>#MH:6.-T0F#!JYCBTGP71CHZ6:,.:UV7^(K.*NF M)L*B*_\`&%K13,&)&.)S7,D9G.5U[$(,GR?`#>S_`+93Y/A'`R_]PK;1!PGT M-11XYTRFA,\3H-V09-0;WYJ_#<.EZ575%3GB,\@#?YM/,XW-AU7 M]X1M>&D18A&(''0$F['=Q0:L>&/;&7X?B,K0X7`&4L/W+7929*D&6IFI*D_2 M`&1_W6*WW8<89#-ALNY)U,7&-WAR[PJLKXWGH^(Q""1V@#]6N[B@YU1351(& M(5#K#S9XV#3U^I;1CQ&%C715@GAMYPC!=;VZK;-/-3`FE=O(K?J7GW%8(VM= M*#2O=2S<70OX.\/Q"#$VEEJQO(:X,E'$MBL1WBZOD.)4[KS5#'Q>DV'WBZNE MDC=*&U3'4T_!LK>!\?P*V-_-3@"=AECX"1@O[0@B=#'AQEQ3Y28PU#JISXY! M&;D%HL0MW9KY3I<"IADC,9O:[3F`N>(4A,$\-O0/FE&SY M6CI#[L>+>U;Y9?K1.RWUT MU!6(RV&6I8`";7&H*#0BEKX7W;!))%Z+B+CN*NJ*IU3&8W4U3&X&X+2`;K>$ M+F6-.^S1Q8=0K'S0R.W50W(X\,W/N*#1CK:F`6J*.:5GIM:+^(66'$J:H;=E M-*[M&[U'>MIS:B)PW9$D7,.\[VK#)%2U,MPXPU/:TY7?S0R/$*6,$M#1POR4NVAII(J6HJY<^]C@)T-'#AM+)3@223U<$DKBZY_`N; M_J"#-B?5IJ`&WZZ,:KJKE8J;18>+<9V+JH"(B`B(@*/[9AM=L[7T<%Y99(\N M1FI*ZLSND5!IVDAK`#(1Z^`6S'&R-H:QH:!R`01ZEI<.GFIF,9&UH:\ M:BPYZ*M718W64'X+1TU%##)30/P M##K9FFQ'70=_HM9A[\]%(:BGYT[SJ/X7?@5L4]92X@U\)`+QY\,@ZP[PM,<@L]OV[ M\.E!R^=3R>[U*ADK<._6AU937\]HL]@]8YK88VEQ%K:BG>,XT$C#8CU%!KQR M0RSY!FHZPZY3P=^!6T:IT(#:Q@:.&\;YI^"UZASF,W>(1":+ZY@X=XY*YN^I MX\T#NETY'FD]8=QYH-N.%C+N@(&;7M"KOPUV65N0]IX%:=.8Y"YU#)D>#UXG M#3V\*DE7N!:L;D;PW@\T_ M!4%*^G-Z-UF\XG<#W=BR153'D1SMW#U*E@`.@/$%6FG?$0ZF?E`%MV[4%4AK0XY*B,PR7M9W`]Q07"%\3;TS M[CT7'3VK'(8:DB.ICR2#AF_`K9,9;K$;>KDK7EC^I,VU^W@@X^TL,L6S]*F%KKBQ*W=L6.BV:Q#)+9FZ(L1=:^//::?!F M"X+:J'B.*"4(B("(B`A(%KGBBHYK7$%P!(U'J051$0$1$!$1`1$0$1$!$1`1 M$0$1$!$1`1$0$1$!1_;PD;,51:"YP+"`.)ZP4@7%VP)&!2Y>)UI5&X[AKC9 MM4R_BMUU)3NXPQGP5AH*0\:>/[*"-U.(RQU]0^AQ2@;'*0[+*QQ(TMQ!]2T\ M2VCQ*@H9:J.IPZLW8!W4;7!SM>2Z\V'NGJZIM/1T%HR`-X'7.E^2T\1V;GQ" MCDI70T5,)+9I82[,W7D@E5-)OJ>*0BQ>T.MWA9%93QB&".,&X8T-N?4KT!$1 M`1$0$1$!0B;I,GE-J&TLH8YN'-(#A=I.=3=0A[YF>4ZJD@AWI;AS1ES6OUT$ MEAQ+=N$6)1]&E)L"3=CNXJLV&,WQJ**0T\SM3E\U_>%DBJ*7$(W12-!=;KQ2 M#4>"P=$J:'K4#]Y"/^'D/^D\D!N)NIW;O$X]R;V$@U8[QY>*NGPV.23I-#*: M>9VN9FK7]XYK)3UM/6M=#*S)+P=#*-?YK`[#YJ,Y\+DRMXFG?JP]W8@-Q*2E M::JB=!46UBE'' MN/`JQV'34A,F%2!@)N8)-6'N[$`8A/1N#,3B#6(7<3"[]6_X>""YM M=-2.$>(Q=4Z">,7:>\"#'.V.65O3HMQ.W1D[#^/X%9W&1C2VI:VHI[ M>>!J.\*D&(,D=N*V(T\QTR/U#NX\UD--)!UJ1VG.)WFGN[$%L%Q'GHY-ZST' M'\5D$D-4TQ3QV=S8\+5<(9I[!SJ2K&NG/\"KI)BQN3$HFY!PE;P\>Q!DW-13 MN!IW[R(?LWG4=Q62.I@J2Z&1MGVUC>/_`-NK6F:,!T+A40GE?4#U'FKPZ"L8 M01<\"#H0@Q"DDI]:*2S+WW3]1X=B"LAE?T>KC,4A^B\:'N*H(ZFC'S1-1"/H MN/6'<>:R1S4]=%E<`3S8\6"J^;F9DEMVSN;'BQ"#C[;0G\V:[(XD.: M!E.OT@F/D&/"6D$$5,:LVTCDI]F*XQ/+FV;U7XKHH M"(B`B(@U9VNAGW[&EP(M(!V=JSQRQRM#HWM<#S!5ZBWE#C;!LK7SP?,S6'SC M.J>(YH)2BPT9O20&]^HW7P69`1$0$1$!$1`4'96BF\IU<)8WY!0L.9HS6&;F MIPH=2/MY4*YCB`TT#"!VG,@DLD-+B,396.:[FV6,ZCN*US-6T)M.PU4`_:,' M7'>.?@LM1AP+S+1R&FF)N2T:.[QS6(8E)2N#,3BW8^N9JP]_8@RN90XO`UX+ M9+<'--G,/O!6,=,H&@'-60`\?IM'XJ^?#X*EPJ:=YBF(TEB/G=_:L8K:FALW M$8\\?U\0T\1R09CT+%Z<@Y96@ZC@YI]X*UX\UM34E/6 M`3P/R2$=6:,Z_P`U@Z954+@VOCWD/*>,6FSF.%GL/= MQ"PB.NPTVB)K*4?1NT>H\UEEI*/ M%&,J876DMU9HC9P__>Q8A55F'G+7,W\'*>,:@?O-_$(,\4]'BL+XR`XM-G1O M%G-/=R6$0UF'_P!'<:JG'[-YZ[>X\_%9)Z2CQ1C)XW=<>9-$;.'BL)JJO#CE MK6&HIQPGC&H_B;^(0;,4])B3'1FV=OG1OT>WP53'/3`Y?GX?0/G#QYJDD-)B M<3)F.#B/-EC-G#Q6/>U=`/T@&IAO^L8.LT>L\OH)MU*/.A=P\1R5S MWQR.8VL;T>?Z+P;`GU'\%E+*3$F"6-S7.'![#UFJUXGC&[J&-J*<\76U'>.: M"_>ST_ZUN]BY/9Q\0J204N(,;(T@N'![#9S5ACB=''GPV4/8.,3S<=P/)4CD M@GE'U=$+2@U47IM'7`]8YK,#2XC#=I:\#2XXM/X+&:J:E M(;5QYH_K6TZ\G--B@X6V+98MG*T3.WD)#=;=8= M8>U4Q\Q5#\$#'B[:IAMST"NVM94,P"I9*YLD5V=:UB!F'%5QUT`K,'>P,,AJ M`W,./#@@D:(B`B(@(B("(B`B(@(B("(B`B$V%R@-Q=`1$0$1$!$1`1$0$1$! M$1`7!VU;FP,M/`RQW^T%WEP-MX99L#+8`\O$K#9@N;!PN@W,5-I,.';,/<5T MU\P>4CR@[0X?MG54M#7.%/3R`Q-Q![LB\9IY?*H0,\E(&V)+C'J+#@I#L+CF/U&U];A&.21R-AI63`M9E(+K(/ M141$!1?REW.QM>!Q(;_J"E"BWE,)&QU9;F6#_,$$CHA:C@!]!ON698J72EA_ M@'N65`1$0$1$!%R'8E528G54E+2QOW`:2YTF6]_!;[\0IY7R1;I\<>*" M1VK,/!L75E..7[1H_%;5-5T];&X1N#N3F'B/40M<5\E,X,Q"(QCZYNK#W]BR M5-%3UH;,QV62W5EB-C[>:#7=ACZ5SI,+DW1.IA?K&[PY>"R08HPR;FLC--,= M,K_-=W'FL9J*W#]*J-U5!];&.LWO;S\%MM?2XC3Z;N:)W(ZH,$V'9'NFH).C MRG4BUV.[PD>(&,MCQ&(0/.F:]V.[BL?0ZNBZU!+O8_J93[GJ+L=WA59B.Z]/6Q[F4Z;N7@[N/`H+*K"PZ7I%!,::(<4B%/*=`\&\;^X\NXKD.Q,4L*4\;96Y'3,#A%*/.![.U!?/A@$IJ,/EZ/,=3878_O"1XGNY&PXC'T> M4Z!U[L=W%8^@5-$[F.ABE''NY%!;486-Z: MC#Y333G4EHNQ_>U(,3=$\0XG%T>6]@\&[']Q^*IT*IHB78?+GCX[B0Z#^$\E MDBK*>L#J>ICWF>8*@CSV<#WCFL4>(RT[VQ8I$(G' M03-U8[X>*IT*IHB78=+FC^HD.G@>2RTV(P53C3U###/P,4HX]W(A!EFI&2D2 MP/,.:UYI`8S'BD+0WZUOF]_J5KL.EI"7X7+D;Q,#]6'N[%DI\2BE MDZ/5QFGG.F[DX.[CP*"C!44D8,+C5TYUL3UFCU'FK8(X9G&;#Y-S+?KL(T)] M86=U(^+K43Q'S+#JT_!:T[X)96-JV.IJG@V0'CW'\$&Q#7$2&*LB,+^`=>[7 M=Q626ES.WD$AB?ZN![PL#WS01%M6SI,%M7M&H'K"MIFV:9./7'#M63%HXQ684^)[B'U#>H3<`@?<@DR(B`B(@(B("(B`B(@(B("(B`B+ MB[9XQ)@&S5=B<,397T[,X8XV!0=I%\Z#\H:M!`?@=/X3'X+:I_+]6S/R,P!C MWDZ-9*23]R#Z!1>`N\O=^(O!A^4` M>>S\G_>_DJG\H"%HS/P":PTS;W^2#WA%X8W\H7#K=?!J@'U2!7Q_E"863UL( MJ0/XP@]P1>+-_*!P4CK896`]X65OE]P#G0UH\`@]D1>0L\O6S9M>EK1_A"S- M\NVRYXQU@_P(/6$7EC/+CLH[B:H?]-96>6W9-U_G:@=\:##M7Y*L-Q&NQC&: MR9TLTS72,;P$9#=._53?86E-%LEAE.XW,<(:2H9B'EAV4J,-J8XJJ7>OC>X#?_;!M#V=%B7H2\^V?L?*[M$1?2FB M"#T%$1`44\I__D^JL?IL_P!04K45\II`V1J;^G'_`*@@DU-_1XOX1[ED6.G_ M`%$?\(]RR("(B`B(@XYHZVGQ:JJJ5L,C*@-!#W$$6\%GP.CEHJ:5LY:9))72 MG+P%SP711`4*IYS3^4?&)-V^0"BBN&"Y\XJ:J'4$C(_*7BN\D:V]'$`";"VJJACG<)&.=%,.$D9L?Y MK7;55='U:Z/>QC]M$/>WD@M@Q;=R-AQ.+HLQ-@2;L?W%9ZC#H9I-]$3#-]9& M;7[^U9P::N@_9S1.\0M`X?4T)S87->.]S3RF[?\`">(07BKJ:+JU[-Y'RFC' MO');,L-)B5.,X9-&=6D:V[BL-/B<3Y1!4M-/4$>9)P/<>!27#6MD,U#(:>8\ MT>H\_%963T6*QOA>&N:[N!LIJG!*6AK&#?Q1-:^-XLYI`Y+8;+7T!RU+>EP6\'--G,/O"#"V&MP\_,O-73?5O/7;W'FLTNWN/ M-9&/HL8@RO;FRG5CA9S#^"H)ZNBLVI9TB'ZU@ZP'K'P5\D%+B+1+#)9XX2Q& MS@@PO%;AYS1WJZ;T";/;W=JR!U#C$.5P:\MXM<+.8?>%;TFLHC:L9OX>4T3= M1WM^"OEIJ3$6MGA>!(/-EB-G#_\`>PH,!;78:28RZLI1]$_K&CU=JV8Y:+%J M=S"&R#@YCA9S3W%?+24F(!M1!)ED^C-"ZQ__>]! MB,%9A^7HCNDTXXQ//6:/4>?BMB"JI<08^(V+AH^)XL1X+7%954)]\%Z:K M^EI8W]8YJG2:J@ZM6QU1`!^N8.L/XA\%LCHV(P9XW![3P>PZCQ00G%IJ.'%\ M3=M#3QU#6LA#"+VN;VTY%8\`8R&2F9`3N/E23*";V&7M72VUPTC!YI)XXJ@A M\5I2WKV#QH>U9J_H,53@S*%D;&FKZS6:6=EUN$$M1$0$1$!$1`1$0$1$!%;( M\1QN>XV:T7*TJ7&*"JFCAIZJ-\KQF#`=;=MD&^B(@+B;:8/)C^S-=AD,C8I* MAF4.<+@+MH@^<)_(%5T]/+//C$&2-I<0V,G@.]=C8WR4OP#$,)QL8DV9A>PF M(QV.OK7M..$#!JTD7&Y=[ES(Q_X!A-N&:)!UWX?1O)+J6`D\S&%8["6?E$?\` MD:(?_4M_%!S]G?)%LQC6S6%UD\4T0ZDAP:;Y(D=-B!<"PR&P`YKUK9. M@EPS9O#Z*H`$L,+6.`-Q<+K(@+S_`&:'_P#EC:8W_81+T!>/;/XM4?[;,?I8 MFQWECR`NOIE`L@]A14X$[)S-!M>6,? MYPMK$,5Q&AAC?-!!=\@8!KS6MM%0XEC>&2T,\$;&N$6A8.QH M5^M_4M&.:L9&QII`2&@$[P*X5%5SI/\`\@0;B+3Z15?V0_\`<"KTBI_LA^V$ M&VBUJ6J,T\T3XC&Z.W$WO=;*`B(@*&T$$4_E%QH2L#QT2($'70DJ9*%44$LO ME%QLQRNC!I80'#6Q!*"1BCGI"#02WC'&&4W'@>2R08E$^79:=[J>8_29P/>.:PF MNJ*+3$8LT8_;Q"X\1Q"H*2KH3FHI3-#SAE.H[G+/38E#-+N9`Z&?ZN06)[NU M!F>RFKZ<9@R:)VH/%:)I:VA<744N_A^HF.H_A=\5EEPQK7F6A>::4FYRCJN/ MK"L&)/IB&8G%NO[UFK#\$&2EQ*GJWF"4&*?@Z&46/AVA6NPY\#C)ATNY/$QN MU8?#DMBII:7$(&[UK)6'5KAR]8*TA'78:`(B:VF]%QM(WN/-!L18AD<&5T1I MY+V!)NQW<56JPV&=YFA)@G/[6/0GO[56FK*7$&/B!!DL[ M#I!D'&"34'N/)!9TRKH=,0B$D(_;Q"_VF\EG,%-71BHII`USAI-$=56EQ&.5 MXBG8ZGG/[.3GW'FK)\,;OC/1R.IYCQR^:[O"!TBIH]*MF^A`_71C4=[?@J-I MZ:KRU5#+D<=<\9T/>%C&*/I9-WBD.Y'`3-UC/P6=]%%(_I%))NI':YV>:[O' M-!C=B$M&[+B,5H^`GCU;XCDKI*&*8FHH9=S*_7/'J'=XYJWITE._=8C#9IX3 M,U8>_L574)9:;#)A%?7)Q8[PY(+1B$M*X1XG$&M.@G9JP]_8KGX;&7FHP^7< M2NU)9JUW>%<,0C#Q!7,W+W:#-YKNXJQ^'R4N:3#'AAX[EWF'X(#<1=`\18E% MNB=!*W6-WCR\567#AFWV'S='D)N$@Q&.5_1JV(P3'3(_5KNX\U:)@>>J>X\D%T>(F%S8L2C$#R;!][L=W'EW%7R8=&)344CC!,[4EO MFN[PD57#5YJ:JBWM74VPU`Y]`PPTGSL;W$[D\K?O*68:X- M-".8H7'[PKJ-P-3A''6G>?<@B.#[(QTU;AE52.IH)GM>YKFQNNTC_%P4SV?A MJ):A^)53HR^>%D=F`VZI=K]ZU\-RGY&-_P!C*1]RZ>SEOD:FRFXRD_>@Z2(B M".[>[0OV8V>EQ*.!L[F.#P1NGC$A:#>UU"_+L[+L# M4:VO*SWJ5;&BVRN%`&_Z.SW(.RH;AVP\5'MO4[1BI+I9R;QY=`"+<5,D0$1$ M$?VO%XJ#7_B6>]2!1W;$9F8]2)`1$0$1$&C2F^*5OJ#/Q6\M:"F=%6 MU,Y?<2AMFV\VRV4!$1`4*HI*IOE`QWHS&R9:>$Y7&U[D\U-5!\,KHZ;RA[0& M;,V,0P`NM<`];B@E--B<,LFYF#H)_JY-+]QYJLN'-WAEI)'4\IU.3S7=XX+- M)%35T(SM9-&=0>*TC2UM%UJ*7?Q#]A,=?!WQ09>FS4W5KHCE^MCU;XCB%GEA MI<0@&\;'-'Q!XV]8/)8:3%(*A^YD#H)^!BE%CX=J2X:P2&6D>ZGD.IR>:>\( M+!3UE&Z]/+TB'ZN0]8=SOBLE/B%/4N,,@,"1XDZ%PCQ&(P.^L& MK#X\O%4,-;1`FG?TJ(?LI#9P'J/Q6:GK*>M:Z)[2U]K.BE%B/!`K*"EKPV1[ M1O!YDK#9S>XA:^:OP\=<&M@](:2-'=S5_P`G/IGY\.FW0XF)VK#\%6+$VME$ M-=$ZFE)L,QNUWJ<87@LE^ ME%(+'^:P'#'4SW289*8+ZF(ZQD]W+P6>U%BL`<"R5HX.!U:?P6$LK:'6(FK@ MYL<;/;W'F@HS%6QO;#B<71I':`G5CNX_%930[HNDP^3=$ZY.+#XIWQ5PJ*>JRQ5D1AFY,?Q\"KR* MFC;\W>IB'T2;/'=VH+8JBDQ)CHI6%L@XQR"SFJXMJ:0?-WJ(A]$^LP)P#BV1LT6A%G-.<*_& MX2S$\##GE]J@D%W'S5CVSW%3@HE@V M1U-NQPU%[*3UXS4-0`TNNQW5!M?1<'9*G<-\9XGMDB(#'%[G`@CUH)*B(@(+ M\T1!RMJB1LYB);QW+O4R*>!S<4H_F6&-ARBP:?!>SH@\8@P#RETIIQ'743FP-+ M&7:-`>*V8Z7RC8502YZZB;3T\>9MHP23V+UY;>/WKT3946P*FOV'WE=9!XIMCA7E! MVCPH8?7T]"83(UQ,0L=%U**K\H>%4%/20X5A\T4#&QM-S;08]M^+ MB;9^C/K$A"KLMBFUCML64V/&-E)-$Z7"JN;A MS6C$L2+6@$O;U]5#=GW,&WVTH>YG69`+$\='+L/PB6 M.(U$$Y=B()=O'<''T2.Q1W9]E/6;58['B,,3:@MBSB_/6UB@E809Z;$(*AYAD!BFYQ2"Q\.U628: M&2&6BD-/(=2!JUW>%GEBI<1@&8,FC.H<-;=Q6H8*VBUI).DPC]E*>L.YWQ07 MFODI0!B$18WZV,$M\>Q;$T%-7Q`N#9&G5KVG4=Q"QTV(PSOW4@,,_P!7)H?# MM5DN&M:\R40FY#?-=WA!9DKJ+]6[I<`^B[1X\>:RPU5)B+'PNL7<'PR" MSAX*WITE,X-KH2T?6LU;X]BRU%+2XA&U[@U_HR,.H[B$&J*"HHC?#I;Q!XA9:?$XWR"&J8ZFG.@;)P=W'FJ6K:/S?TN'UZ/'Q5[)Z+$V.A>&/(\Z)X MZS?!!CJL)AEEW],]U-4_61Z7[QP*QBNJJ+3$8<\0_;PBX\1Q"N;1U-";T,IE MBYPS&^G[IY+-38C%,[=S-=!-PR2:7[NU`DIZ/$HF31N:Z^K)8W:CQ"QYZVB_ M6MZ5#R.\ MBQ:G(.25H-B#YS3[P5@,%=0:TKNE4X_92'KCN=S\5L2T=-5EL\9RR#S98S8_ MS6`5-91NRUD6_AY31#4#UM^""^*II,3:8IF991QBE&5S>[XA5$551_J7=(A] M!YZP[CS5\L%'BL#7'+(/HO:>LT^H\E@`K:"]B:NG'(_K&_%!E!IZQUP3%4-\ M'!9G320$"5A>STV\N\+`Q]'BK&N!^<;_`(7L/O"O!J:8V?\`/P^E](=_:@X^ MUD,,N'P20!F9]7!=PY]<)B3Y_E[!XZEC+[QY:YIT(MV+'M2R&>EI'T3F;TUL M.8J@D2(B`B(@(B("(B`B(@P5\SJ>CFF:T.< MQA<`38%0-FL0)X"(JDW]'P<6 M^FS_`$E7[5V_-^MOPR*E4#_X0/[P?Z2@ZZ(B`B(@BFV@OB&$#B-X?>U2L<%% M=L!FQ7!Q?@\G[VJ5("(B`N1M8+[/U@O;J_BNNN+M@]HV?JVYAF+187]:#8V; M;EP6E%[]7\5TES=G`1@E)?T+KI("(M?$9GTU!/-$T.?&PN`/`V0;"C)-]NG# ML@9_ZEUP_$K7$=*X6TZY^"YU/1S#:``#QLHWLS4 M'#I9ZBH@FRS1LL&LN186U4YL.P*F4=@0<4[24@+@Z&I%NV,J,X5T1N.8Y75D M4DE/6&,LZFHR@C\5Z`6M/%H]BID;;S6^Q!%!CD=)(PTU1)+`38Q31F[1^ZX> MXKKR5F&XE!EF;F8>&=A!"Z9BC/%C?8JB-@X,;[$$9?5'#77H*YE1"#UJ:K#^(6EA,5;'AL+Z* M1C@"$&&3"C`]TV&3&GD)N6$9HW=XY>"JS%1% M(V+$8C32'3/>\;CZC\4$5;1:Q/-7#Z#S9X'J/-9X:FEQ!CXB`XC1\4C;$=X* M"D]!'*=[3O,$IUSQ\^\ M[L62GQ1CI!!71.IISI9_FN[CP*"^IH*6N+*AARR@=2:,V/\`-8355F'BU;'T MB`<)XAJ!^\W\0L\M!E<9**0P/.I`U:[O",K71OW=='NCP$@U8[QY(.%M*:&M MCP]]--&)Y*N(->P];SE6M;5C:K!F5+FO#-X1(S3,+2Y^RIE=23NFDWEY3E>;70YMK,% MS[%I[,0&GBJV.9(R\Q<,[0WCV(.TB(@(B(.+MF\1[.5CG"X`'O66J'SV$C]_ M_P!!6#;0!VSU0TBX<6C[PMFK_I>%#]YW^@H.FB(@(B((EM8[_>+!6>LG_,U2 MU1#:Q^7'L-L-`NE\OOUOAU5<>I!W47!&T;;G-0U0`_=1VTD0 M-C1U/L"#I3R.FJ331.+%O.`<+. M`(]:CE#/!!M3B@>0TAD8'U7%I^\C<7P]SK-JX2>'G(-Y%IC%*(N+14QEP M%R`>2K\IT64NZ3&&CB24&VN1A=;5U4,TI9&YK)GL#1H;`V57[1X,R1\;\3I& MR,.5S3*`0>Q8MD'-DPETK"',DFDW2VC@=".]8ND22G] M&8',YO<;#P[5JXA&_IT#8VG=5%VRV[!K_)=(-#8\K0``+`!!IX+6/KJ$32-# M79G-L/4;+>4>V8Q"D9A;8Y*J!L@E>"TO`-\QTLI"@+!B!M05)_NW>Y9UK8G8 M8;57X;IWN*#FT,=8RBC?1R,?8F\;Q8'7D>2R].I:K]&Q*#+4K7Q?6QC,WQ'$(+N@U-&TNPV?.SE!* M;M\#Q"O@Q6,O$-=&:6X\"L$=/(Q@FP:K:^(Z[F0YF'N/$*YU?3RVI ML5@$#W:99!=CNYW!!EFPM@?O:"4TLIUZFK7=[5:,0J*1V3$H,K/KX]6^(XA6 MMPZ:D.?#*EP9QW$IS,/<>(5\>*L!$6(1.I7NT&?5CNX\$&Q)#28E"'$1S,^B MX&]NX\EK;FNH1^COZ5"/VK7=[>!5C:^JI" M&8E3]7AOX=6]Y'$(,]+B5-5.,+B8YN<4@L?YJU^';LE]!(:=W'*!=A\%DDBH ML4@#B(YF'@YIU'<5K"GKJ"PI9#54X_9RGKCN=S\4%XQ!]/9N(Q;H_6,U8?@L M\]+!5@2,=9]NK+&=?:K*?$:>I>89+QS$% MN\K*/]L%A-16 M49`J(^D0_6QCK#O;\%?)3T>(`2--I!P>PY7M0811U5#K02"2$?L)3P[G+/!B M$%0[<3`Q3$:Q2"U^[M5F\K*/29O2H1]-HZX[QS5YZ%BL-CDE`Y?2:?>"@X&U M6'-CFPGHQ`::YAW3]67L3X*N<':W#6.H^CR-BDX`6/#@5;C]'5TM9A&ZE?54 M[:L.;$_SFV:[@[F.]97U,=9M?ASFM>Q[()`YCVD$:A!*41$!$1`1$0$1$!$1 M`1$0$1$!$7F/E[Q:NPC9FEFPVIEIY736+HS;2R"8;;D#`)+FP+V#_,%N5=OE M+"Q?T]/\*^/*K;C:2IB,-1BM3)$2#EA+1B>:\N.4N#.\$!2!OE0V3+K M?*L?L*":V2P[%#_]I.RG_P`W@60>4394\,8INWB@EEAV!4R-]$>Q19OE"V6< MZPQFE^TLXVXV:(!^6:.QX?.!!(T4?_//9S3_`,9HM?[T*_\`.W`71ET>+43K M`D#>A!W47AE-Y%S7S"(2"<\,UK\%[+@])EUB!#P\&J18I7.H8XG,A=,Z20,RM-K7YKA8-33R;35]7+$Z M-DL9`ORX#\$'4V4UP&E-K:'WE;+F,J<0!Q[9``'NT(%^?:@BWD]PG#ZZEQ5]714\QZ<\`O8"=+*?4U/%2P M,AIXVQQ,%FM:+`+QO8_RA8;@F-XA@=3#.^IEQ!X:Y@&74V7M"#2QE]1'A\KJ M0D3#S;`'WK7V:J9ZO"V2U;\\UR'&P'N5^T3Q'A,[C")A;]6?I>I9<&!&'0WC M=&2+Y'$$CU:(('Y3<$PZCHJ&II:.*.IEQ"(N>UNI)=JO2&Z-:/4O//*UB,4= M3L]ASK[ZHK6/!Y`-.OO7H@X!`6KBI`PVJS&PW;A?P6TM''03@]6&BY+"@P87 M2POH620G)(;]=A]:S[ZHI]*F/>Q_61CWA0&3R@[+TD$4;,3$53'<.#.1OP(6 M7"/*M@]35FGJ98^5IHW7:1ZQR034T-/,[?T4AAD.N:(Z'O"LFFEB9NL2IQ-" M=#+&VX\1R7+.U>STY)CQ!C'CZ3=%A;MKA\+PV:IBGB)L)(]".\(.K#1N8!-@ MU6W=<=TXYF'NYA7C$H7'HV+0='>_0"36-_<[@M*+$L%K:EHH*YL52\Z;O2Y] M86_-+,QKHL1IFSTYTWC!<$>MJ"UV&S4W7PFHW8X[J3K1GX+)#BF5VZQ&$TLA M-@7&['=SOBM>"D+&[[!:L9.<+SF8?5VM67Y2C<#!BM/T\<"K>GU%$`,2BZGU\0);WD<0J-PU],,^%U!C''=/ZS#\%<, M4$,@BQ"%U.X_3XL/C\4&S)%28C"TD1S,XM<#>W<5K;BMHG$TTG28?JI#UAW. M^*NDPV)[S444KH)':YHSU7=XX%8^GU-&TZCN/):[8:^A<=U M(*NG]!^CV]QYH+V8A)`X,Q&'=7T$K=6'QY>*SS4<-01+&XLDY21G7^:LI<1I MJMSH7=2;G#(+.]G-6NPXQ/WE#*8#Z%KL/@@M=4U5&0*J(S1?6Q#4=[?@KGTM M)76G@>&R[XJUWDJV1<+?)G_`.1WQ4Y1!Y_+ MY)=E'O%J!S6@1GR%8"8LAK*O-<];2ZU7>27`*#%\+ MH2Z64S"4O<_Z0`T]B]F4?Q,WVOPEM@;12GNX((?!Y*]GZ?&*>.E8Z.6")LH? MQ)<'\?N4VV9(W=>[D:IZV8Q?:"8Z:4S!_F=\%?!A<,+GY'29'N+W,S:$GB@$ M=+K(W#]3#S&S]1M!Y5*R2D>QI@JW3OS MZG9\L^(M<0[9.K`_B/_ M`+4'LL\,<\>25H6J9\K&-V6KBYQM;/S^R@FFVFQQVCQK!JX58@&'R9RTMOGU!\."F`X+R?!/* MO6XSC[,.IMG9HPV41U#WR7W5S;6P7K"`K)M(7G]TJ]8ZC^CRV]$^Y!\_>2C8 MC`]K8\G,LC:DACFN+2`22IO_`+$MD;FT-2+_`-Z=%YYY+MO*38WY6I,2 MH*Z66:8S#=,!L!?M4T'EXV?TOA^)#_`WXH-P^1'9:Y+36M)[)EK8CY&-GJ;# MJN:EZ;+.V)QC89;W=;149Y=MG#Y]'B+>^,?%7_[==F`-8*\&_#=#XH/(=@\$ MQ;!/*'@4>*PST^_F#V-DO<@&W!?5;I*B"YD:)HQK=NCO8O"\1VIH=L?*YLS- MA>_;!$P#-(PL-R25[F^2>DB!>UU2T'4M'6`[N:#6;3T=:\U%*\PU`T+V=5WB M.?BKY'U,+-W60MJH2+%[!K;UM65HI:X![-'C6XZK@KR:B`DD":(=FCA\4'.I MZ5MMY@U7NVWN87]9GLXM6>7$V0N$.)PF$.TSD9HSX_%91'2UASLO'-:UQU7! M62&JIV9)8A60'1Q%@X#UCF@L;A@AM)A,_1V\=V.M&[PY>"K\IOIW9,2IW1-^ MM;UF'X+!'21O>9,)JC3R#C$1=OBT\%G.).IW&/%*.!5@K:RA.7$8=[%RGA%_M-XCP0;%+B--5N, M+KLFYQ2"Q_FL?B@A^#88,5H):S%JNH^4()YBP"8C*6DCJCN7=V9?)+4T; MY'%SC0M+G'B[K%:M3'AM3M)A;&THCDDWQE:YN4WRCB.:WH&MCVV,,30R..A: M&M'`=8H)(B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("X-9' MGVPP]]_,IY/O(7>7"F=?;&G83PI7&W^((-R`WQZL]4$0^]ZZ*YU)E M@E?7S@N8"18=B\+\EI!Q':N0GK&%_P![U]%T`(H:<'CNV^Y!S?D1][]/F^R% MSL>IJC"\/-3%62/<'M`!8WF5*EPMLK'"F`Z@SQC[T$!\CQS[8[7.MIO^S]XK MUM<79K"Z*BADJ:6FCBGJ7%TKFC5YN>*[2`B(@\2Q9VX\L]9NV1Y6T7FE@(X= MBGU/L[TFEBEW=!\XP.L:5O-:^V&"T-/6OQ6*`"OFC>Q\M];!O!2["Q;#J8?W M;?<@C;]E`YMMQAAMR-*UL-!A4ABL2]5=4U=)_2HM_'?]9"-1WM7EFU) MF_VWX`(&ASF4;38FW-R]8AKXW/W<[702^B_2_<>:`WHM>S/$\$CZ339P5'.J MJ87(Z1&.S1UOQ5]10P3/W@!CE^LC-BMJ34,'(Z._F@I+%2UC MK.&28:`^:X=R2=)@8&E@J8^!OH[^:J)::N&[D&60:Y7:."NW=3`1NG"6.^H> M=0/44'/910NE,F&3NI*CBZ/Z)[VGWA9CB4E-U,4@,;>!E8,S#W]BV)!359RS M,RR#AFT<.XJTLJZ?1I%3#Z+M'^WF@PC#H)+5&&S&!SM08C=CN\<$Z?44A+<1 M@.[`_7Q"[?$<0L#:6GEE<^@E?0U7%S+6![V\#X+,<1GH^KB=.0SAOH@7-\1Q M""KJ"FJ[56'S[F4ZB2$Z.[QP*ITZKHB&XA!GC^OA%QXMXA7&@IY_TC#IMP\Z MYX3U7=XX%4Z=4T8MB4.:,?MH02.\CB$&AB<=/B6/X26ELD>[F.9IX:#FF'1- MAVMGA$DDCHZ1G6>;FQ<5AJFT]7M+A[\/F:PN@E=O(B-3=O$)@O21MIBC:PQN M>VFB`Z+W%=!3'_R[*1P-7-;[94N42\E__EB]N-1, M?\Y4M0$1$!$1`6"O.6AJ#:]HW&W@LZT\9=DPBM=>UH7F_@4'SKY(]9=IS;4Q M7L?XU](TG]%A_@'N7SCY$J:6J_.-L32Y[HA8#6_77O%/C!CBBC=A];=K0"=V M@MQ#%*R'&F4D#:AU7]$S'J M7/$Z674VAJ78K30P0TM2QS9F/)DC(%@4'5VH&4T37/E!#0/U3NSN05PS&9:VO=3OHS$P M!UI,]P;'LLM;;\VV:FOSDC'^<+B;'8YAW2<8F=-=K:DM#LAN%N[68I1XIA)I M*&42SNEC.3*1H'`GD@A.TD\<7EVPDRN(#:-FH%_27L)$-5#8Y)(SXKR'%Y(F M^7VB,]FLCHFZGAP*]5=103'?4S]V]VN>,Z'PX%!3H*:"J80QS9&\".SO"#'4T5/5 M@/(&?E(PV(\5K9:^B)RD5D')IZLC?'@?N5789N278?,ZG-[Y.+#X*T8C-2D- MQ&G!6-M7!._:R"G?";T\A MR^@_4>U!SS2P22DTDCZ"J.I`&A[V\"LK:^HI7%F)0=0?MXM6'O'$+8=-#,[< MU,>1XX9AIX%4=#44[2:9XF9]7(=?`H([44E)4;744N'3"*1]-*\OA(L3=O$+ M/@72!M?BS:N2*25L,0S1M(N-;7]:X%3A-9)MU%4T=4VBF?3O(9D`^D-#VKN; M+P5T6T>+?*$D7#K&D_]2[BX+3?;1VGFT@U_Q(-Z@_K3$OXF?Z`N M@M"@_K'$M?VC?]`6^@(B("METB?W%7*R?]3)_"?<@B_DQ-]E8R.VG'`'`=!K+$7N&77S_P"1IY;A^T#Q M>_S0_P#R+Z5A_4L_A""&#%WG;36FK1"8`0,AL3JNY48]3QQ@2PU$>\.1I='; M4\%T^B0=,-5NQORW+F]2X>VV;HM"&VUJF7N@@WD#U=M(;`'I?Q7KB@'DDV:J M]GZ7$Y*TQGIL^^9D-]->*GZ`BYL==,_$3#NX]SF+;AUW#3B1V+I(/&MGZF&E M\M>T4\[LL;(=3:_8O3SCM!8]9_\`VRO,ZW`J_#MN,=Q2J8UM+616B-]38M7K ML,;-RR[1YHY((3L=CE"UV)F1V2U0180EM_NU4G&-X=H3,`"0T$M(U.@6>BPV MGI#*8VEQD=F<7:KD;<,8W!XLK`":J'@/WP@@EB,X_PE>H'# M61NST+S3N[&^:?!>38B^'_X@0VIRY32L:`>9RKULTDD(O12Y1Z#^LW^2"T5= M13V%9!EPB:,'22'C M;UM5^YJJ5OZ._?L'T)#KX'XJ^'$(G.#)@Z"4_1DTOW'F@N=T3$(3'(&2L/%K MAJ/!:G0*JCN[#J@N9]3,;M\#Q"V:O#X*EPD(+)1PDC-G!:[GXA16S-%9#Z3> MK(/#@4%GRC#(-QBU,:=QTM(,S#W.6T898PUU%*"ST':@CU%4IZVCQ!ACNTG@ MZ*06/L*POPM\$F\PVH=`><3NM&[PY>"#;,S"TMJ69+Z=;@?%4;3NA%Z:0Y>. M1QN/Y+3=B6[.ZQ6G,(/[3SHSX\O%;440#-Y12@M.N6]VGN[$')J'Q2[3PMK( MPQPI'<>&KAS5F`1MBVIQMK'.<,L1!)OR.BS&0.VH;TE@9:DL03<&[EK;.QL; MM9M`8[9;P@`']U!*$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$! M$1`7#C/^^,H_^D;_`*BNXHQ-)6,VNJ#30,?^C-'6=:^I0=;#3?$,4TX2M'^1 MJZ*C-#4XHRIQ%S:&-[G3#3>6MU&K<;B&*V!?A8':!+_)!VD7#;BV(7.?"91W M/!_!5;C%98%V$U`OV.!0=M8Z@VIY3^Z?Y!51W;.QIZ`'^U,_%2)1O;9V6GH"!<]): M?N*#L8-_5=+_``!;B@7DCVGJ]I,+K>F11,%)-N6%E]1ZU/4$:P*_YS8N2P#@ M+AI'W\%)5P<+AIX-H:]T<\3Y9@,S6BS@1R/;Q7>00[R@`.W#3P,;O]35+XM( MF=P7DN*[3RX]M/BV%/IV1,P\96O#B2Z[AQ]B]:B_5L[@@N4=VY-L*I];7JX1 M_G"D2CFW.N&T@M>]9#_J"#S#%8F3_E$0-?E($3+AW\"]DZ'+!K1S$-'[.3K- M/XA>,XE3LJ/RB&L?FMNV'0V^@O9GQU=,`:=PG8.+'FSO`H#*TMZM;"83PS'5 MA\5<^C:3O*20Q.(TRZM/>$CKH9.I.TPO.F206O\`%'40:_/2RNA/$@:M/@@Q M]*J:?2K@+V\Y(1?[N*R%E)B#`YCFOL;AS#8@JAJYH7%M3`*F/L?HX>/-7=(IJKYBH:&/(_5RBQ/=VIGK*8-# MVBI9S"#-4T=-6M!D8UQ^ MB]O$=Q6J8:^B'Z/(*J(?0E-GCN/Q61U!D.>@F,)XY>+#X(RMFATKH"S^\CZS M?Y(*T^(4]2[<3M,,QXQ3"Q/=V^"Q280(B7X;,ZD>=LQ3_P"X`_R-737.PH_I.)?_ M`''_`*0NB@:W]2(B`B(@(B("(B`B(@+B[:-+MD\6`O)5#'R14[,[FLXE#6L``5314I%C30_8"#QAOE2@%C\N5-CR-`?BJO M\HV'5CZ=M?BTLL4:+?0"]F:*JGY](C'@[X%`954M7>*2P?SCD%BJ=$DAL:.8L`_9OZS?Y(\TE< MW=3L&;CE>+$*PTU33D&DFSQC]E+^!09!6&,VJHG1_O#5I5QIH)COH3E>?IQF MUU:RN9?)4L=`\\G\#X\%4TC-7TK]TX\V9OUC!<>(5[XJ:K`=U7.'!PT(081!5TQ_1Y1-'Z$O$=S MOBJMK(928:J,Q..F60:'QX(655-K&>D1\ZUHY3%SRG5I\%1U8Z$AM7$YH/TV]9JLZ"^G!-!*6#ZM^K?Y*^.NR]2LB,# M^%SJT]Q06NHH9?G:.0PO=KFBX'O'`H:BJIM*F+>L^LB'O"NDHF.)DI9#"\ZW M9P/>%2*IJ(7F.MAZH&DS-6GO'$((_+A]%C.TU7>64M-*P.#76'G'B%38:@AP M_$L=@ILPB94`6<;_`$05NMIX:O:>JD8^UZ9EGQNL0?4""4D:A$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0%PZ M(WVLQ#340QB_M7<4>I9XXMJ<5=+(UC&11W+C8#B@Z&$F\^('_P"H/N"Z*Y6$ M31-EJPZ6,&6H<6#,.MH."ZJ`B(@(B("(B`B(@(B("CWE!_\`)6,7-OT9_N4A M4<\HI`V(QF_]G=[D'Q/(>L5]?>0]MO)UAUQ:YVO-!U=LF,DJ<.CD87[QY8-;6)LI)31[FGCC]!H:N=B]!+65E&^ M,V;"XN)O;71=5!YPS`,7C\KK\7C8YN%OA#'N#M";=B]'7"BVIPV7:63`FR/^ M4&-S%N72W>NZ@T:'#8Z.KJ9HW.._()!Y'53S%=;78/>$'4V#Q:IQO9:AQ"MR;^9MW9!8<5WU$_)40=@\*R\-W^ M*EA(`))L`@(M/#\2I,1,O0YA*V,Y7.;POWK;S-[1[4'B%'&*G\H+$`Y[FY66 M!:;'S`O6\F)4?ZM[:V(!7C^%L?4_E!8F892PL:=6V/T0O99*FKIC\ M]3[Z._G1<1WA`97TTS@RI:893]&46]A6<0.8+T\AMZ+M0K1+1U["QQCDY%CQ MJ/`K"W#GTY+J&H?&"?U;SF9X#D@RNJ'-!;5P6!^D.LU.C,?E?32NC`X9#H?! M817S0G+7TKF#ZR/K-^(6Q'T>I&>GE:3Z4;D%KYZB!X$L)DC]-G$=X56BFJQG MC(S#FTV(5V:HA'6:)FWXMT-E9)'353AFZDHU%CE<$%7"J@MDM.R^N8V<%0RT MU5\W,P!_HR"Q\%C:RNI;V>*J._!VCP._@57I=)4.W-0`R3ADE%B>Y!DZ+)%8 MTLI:!]!^H5HJ[7960F+6V8ZM/BKMQ-#K329F^@\W'@5453-&5+3&3Z0ZI\4% MKJ.-_7II'0NXW8;@^"MW]5`X-J(=[']9'^(59:*[MY23.@>?1U:[O"KTF6`` M541(YR1BX]B#DTD=+6[05DD#RUVY8,S#E(-RL&Q3MVBQ&1KN$<0:^-UB.*LV,8QD^-Y7%[C6N#B>-PT(),B(@(B("(B`B(@(B( M"(B`B(@(B("(B`B(@(B("(B`B(@(B("@V+PNEQ?'KKL+%(6O,=3U\H\VS2I&N=@^HJ^?Z0]=%`1$0$1$!$ M1`1$0$1$!1KRDM>_8;&6Q^=T=WN4E4=\H;'/:QY: M#8N#=`O:_(WM_A.R>!5-+BS:D2OD#QD9<6LI-^3K!!5;.XA'44\4C1,#UV@\ MEZR[!L,=QP^E/_2:@@3?+3LL0+FK'_25[?++LJ3;>U(]>Y*FPP#"021AM)<_ MW34_-_"/_EM)_P!IJ#Q_8O&*7:#RTU6(4#G.IWPD-+A8G0%.%!?+4;>3S$?\/O0;WDJ`;L% MA`:"/FN?>I/6/W=),_0Y6$ZFW)>2;([&XMB6RF%U%)M17T;'17$36@AO*#L[#P0QX+O8`&B5SB0'7UN>:^5MKMI\ M9IMJL39#B56R-M2\!K9#8:KZ=P_#:NMV)-'0U9H:IY-IFB^4W[%YG5^0*6JG MFGFQX/ED<7$F'B3QOJ@BOD&GJ<0\H#ZBJJ)'2R1.&>1+%\&G=48;M(VGEM;,V,@V]JU=C\%VCQ>?'62[45;/DYQ8 MY$T%>;/`9-PLX97A9=S54S?T>3?M]"4Z^!41\DL[L4V,IWXC M4&KJ,SLSI#=PU4R-/)$#T>6W[K]0@Q-Q*-MFUC'4SCI:3@?'@JOP^FE)EA^; M>[Z<1M=#4G]76TY:#Q<.LTK$V@A(,F'S&$DW^;-VW]805+L0I";M95P\LO5> M/P/W+(VKI*E^ZD(9+Z#QEM2R!X^KDY]QY+%+/3S@0U\&0D<'BX\"J/HJBG%Z">P^JEZS3X\0J M?*)9U,1I7P@\7^P2T,V0'@6&[3X*KIYHNK40;QEM7LU^Y!7HW"2CFR>KSFGP7.VBQJ3!\%J MZF>(-DCC)8[BPNMI?L6[%!33'>T4N[?SR'3Q"T\=I9J["JFAJXP]DK"W>L%[ M'MRH(C+B=33-9B51'1L-2Z"-SZ6JL6W-KV+=>/!2#8$'=XN2_>7KI.O;CH%Q MV[.MQB9M(Y]*QM$^*0OCB(NAE'8$'&?M#3L`SP5`O^XL@QZD)MEF[?,75+&NXM!\%;NH_0;[$ M'+.T%$'6^>O_`,LK9I<5I:F=L,;G"1PN`YMKK:W$7U;/8H^VPVUCN]R#S[\G%[(]GL0, MKVM)F'$VY+U_I,'UT?V@O&_(`PG9:KRLIG$S"^]-N2]-,7'%2\,:6PD`,-P-`O94!07R MV&WD\Q'_``^]3I0+RX$CR>5UK>-UL-"H?L%$UFQ6%PLJ8HX98!G86ZZ]A]:EN`@#":<`6`;^*#< MCCCA8&1M:Q@X!HL$F!=$]K'6<00#V%4FACF:&RMS`&ZU9J&FBA>]L-RUI(`) MU09@3VVOJH-Y,Y&NFVXEZ0R-PDI MH@_4M;(XN'JX\5!/)JTL@VZ>TZ[UXN>YR"0^1Z"&38:CSM;GS.U!L>*FFZJ8 M03#*)1R;)\5"?)#24\^P>'N/T)18^#@@NZ>([" MKC=">TZM]JNZ-3S.WT)#7GZ<9M=6=/C#MW51/A/:]O5]O!7=$@D;FIGF(DWS M1'B@N_2HC]&9OKZI6%\E)5/#:B/=RM.F<92.XK)>L@L+-J&\SYKO@JFHIY3N MIK-<1?)(+(*&*IB%Z>42"_FR=G>J"O8V3=54;X7=KA=I\50T):<])4/B_=\Y MI\"J&>>/,VLIPZ,?3CZU_!!;+AL$KS-22.@D.N:%VA[QP*JU]=3D"5C*EGIL MZKAX*V&GI9;OH9C$X\H\0@Y ME**6KQS$3,'PS6C`N!5=B6!D&*`&X-;)^"4M0PXIB'RC3Y#>,$VS-&G M:FPLC)>QO\`/R>] M=%<_`_Z++?ZY_P#J700$18*VI;24SIG-.Z(00+R!-+MEJNT5-+:?]HZUM%Z:("7:4-`>Z3^2\V\ M@5,';'5#A!!(3.?UIMR7IC*7@114-_W7_P`D'G&R,>?:A@W,3_G*OJN=9HZX M7HCJ4#S,.HC_`-3^2\UV5RC::-TD,;M:LY'.L/U@X*9X)1/EQ?$J>>!D#),D MT8()(!T-CWA!#]D&M'ELQ?1K"V(]5IN!H%[*O'-BX61>6G&V,X-C(U\%[&@+ MS_RZ6_V>UES;KL]Z]`7-VAPW#L5PU]+C#6.I'$%P>[*"@\XV,QV@IMBJ/#ND M4Y?+"/G'5+!D)XWUN++T?9MXDP2D>UV8%@(/:OD/RFT-'0;=5U)A;&1TS'`, M:PW'!?1&S.,[046S.&0T^S;ZB-M.T!XJ`+Z=ED'H4['O:!'*8SV@`K7EBECB M>]]6[*T$DE@T44&U&T@\[9&?PJ&JDFU&//@>)-D:HM<+%N^;J$&TZBDJ6"2. M%YWC@YK]RUAMVW&H4'\E^9N%[=9G'2:07/\`"Y;K]H<=AC&YP'&H,IZ@=(US M&^HCL7-\DCY9-F=LYYQEE?)(7#L.4H)7Y'Z:GEV#P]P($MB"YCK$:J9B.L@O MDE;.WL>+'VA1+R/QQ/V#PXY+.`/6M8\5+G1543LT$S7L)N62#W$(+.GQ@9:V M)T%SE^<'5/CP5PHH''>4KS$3SC=H?#@K7US6#+6PNC!T)(S-]JJRCIWLSTSBK M'8;N^M0U#X#R;?,SV%.DUE./TJF$H'TX=?N*#(&T5=UXW,+Q])ALX(8ZN"VY MD$K?1DX^U86G#Z^2X+1./\+PLNZJX-8)1,ST)>/@4&&:HI)7B.OB,+^3I!8> M#EEW$\30ZCG$C+>9)J/:JOK82=U61&/,/VC;M/CP6/Y-8T%]!.^`NUZINWV( M-##*LLQ+%#6Q&/K,!/%HZO:L6P`:,,K,ELO3);6X<5=ALU735^)]*BZ1UVW? M$/W>Q4V`=GP>HD`+0^JE-B+6ZW8@DJ(B`B(@(B("(B`B(@(B("(B`B(@(B(" M(B`B(@(B("(B`B(@*/;.W^6L>O;2=O\`I"D*CNS;'-QK'W.=?-4-L.SJA!T, M`%J.0'ZZ3_45TESL!OT)]_K7_P"HKHH"LFC$L3F.X.%E>B#6@GL1%/U91H+_ M`$O6%LJV2-DHM(T.'K4 M&;`XP7"XW)"EBC^WE#\I[+UE%O-V)P(RZU[7(003\GN.*?8^H$K&N;O]+B_) M>H_)U'RIX_LJ.[%[-1;&X8ZCI6OFA<[.Y][F]N-E*HY&R,#V$%IYH.!1[./H M9,U'511D%UB:8$@$WM>_K6\*3$@X.^4(2ZUKFF__`.ETUKRU0;+NHF.EDYAO M`=Y0>2;%AS?+9CH+C8&>Q(^=9J#ZUZ*O.O+R;;`S7X;UGO00O`O)EL_B&SU+C$T-^([*X;FJI=P:9F=H9U+VYGDI)35!I- MFFSM:"8XW);YIEE(^R5/:8T#F1](J")">LQT(8`[LX:*`^31K1LQMR6:-, MLMOLE!+O)129]@L,=#++"[*3<&X.O85+Q)50M.^C;,!]*/0GP41\E,$[=@\, M=!/8EA.5PN.*EW2I81^DP$-'TX^L/9Q05AKZ>;JN=D>?H2#*?O59*&![\[08 MW^DPV1DE)7QFQCE;S!Y*TT18/T69\5N7$>PH'Z5!P+:AGKZKA\50ST\P+*F/ M(>R1NGM0S5-.#O(-ZWB71-O.8?! M!55<-Q4TV9H^G$;W\.*NDH&V)II'P//-IN/8J9ZVG'SD;:EO:SJN]A06N%!B M0RO:Q[QR<+.'XJSH=72B]#4YFC]E/UAX.XC[UD<^CK>I*T!XTL\97!!13PF] M+5.R@:,DZP]O%!9\H%@RXA3/B[7>QOUD8SM^(5'45%6$34[LC_`$X76/W(.=05%138ABF^B,P#VW?$/W>Q4V"D M;+A-0]AZIJI3PMS7)CI)(L3Q)T%8R4-E;F9)-D)ZHYKJ;`1M;@KY&DD/GDYW M'G%!)D1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`4?V;:1BN M.DN)!J!;U=4*0*/[-.<[%<=!'5;4@#U]4(.A@?\`0W?\U_\`J*Z"T,$_H1-[ MWD?[RM]`1$0%&J4?[ZU1_N_P"DJC5%KMI6>IGX!!)41$!$1`1$0%R=IY6PX2 M^21P:QKV7)-@.L%UE$O*I2RUNQ5=34]MY*`T$GAJ@[K<9PPMN,0I2/\`FM^* MPX?6P28K-!2312Q.C$OS;@ZBJ,+8YXLXQPL;?[D'K^)U/1*":?3J-OKP6&DJ*.&!H%5`2 M=7.W@U/:O*:VG\JKF[B2:@GBD;9UV,MXZ+39LOY03(T.@P7+S)@9\$'ML51# M,2(I8WD<&T,5*33R4[2Z34D7XZ*3OII3LX:<-. M]W.7+SO96;&`MV4PH'^SL]R[*#DX-A^[P:G@J`YCVCK6=8W]=EM]`CY23#N> M5MH@X.,4P#J>F8Z0[TFY>XD6`NO-?)J"W8O;06%A),`1I?JE>F8VV5SX(W/: MYY<7,`:018=MUYEY.!N]@]LY#Q,DU_LE!,/)91S-V$PMT-1)&XLOE=9PXJ6; M^JA'S\`D'I1'\%&/)K#4C8G"'PS!HW6K'-N#XJ4=)GB!Z13N(]*+K?<@Q!]! M5NL;-EO>QZCEEW%1%^HGS#T9!?[U1LU%7#*3&\^B[1P\#JJ=!=$/T2HDC[&N M.9OL*"XU;XOZ3`Y@])O6"J11U[`?FY1R/,*QT]9#^MIVS-YF(Z^PK%FH*F3K M#=3CM!8X(+^@S0W-)5/:.3).LWXJG3*J"PJZ4EOIPG,/9Q63=540O!.V9O9+ MQ]H5#7/BOTJGD8!])HS#[D%8YZ*O:6ATCSO;^Z[K!6NAH M,0`=:*0\0YIU'CQ5@HZJG-Z6K<]GUP\4&??S1FT\-V^DS7[EK&GH:MV: M%V[F]*,Y7+*:R:&_2:9^4?2CZP^*M4!HY#,5L87!+#48F(9"YHE&DFI\T,,V/J MJIS%N\#FV`Y*9H(QM M3"^3$:,Q/&\TM&`Z[A<=A`]JDZX.-&7Y8HP'-;3C63,W,..G=WKO("+SO8G: M/$L3V^Q_#ZN8/I*6^Z:!YNMEZ(@+SORYTU34[&9*."2:3?M.5C2X^Q>B(;V`GJ)]D\/-7224DK(PPQR<=.:YGE`VWDV2JJ")N%35K:N[6NC=:SK^;PXJ M:+3Q'"Z/$70&MIV3&!^>/,/-=VA!`)_*5B5/8S;'8NT>IM_P6:E\I-3/(&?F MIC32>%X]%)MJJJ>F=A[:61\;I)LKBVW"W.ZW,5Q>@P.DCDQ:LC@:[JA\AMF* M#S:?RE#&*E\>&X-B8JZ(NW@;$)+#@01<*+[&XU646R>/87/@N*/J:Y[]VYL! MRC,+:]BW_(YB._VYVCGIXG30RO,CB@T-FL+J M<,P/#Z>&?*(H&M=%(W2]M?6NF*R6,VJ:9[1Z;.LWXJO1YXS>GJ+M]"07'M05 M4T?])IW`#Z49S!!:108@.,4CO4>L/Q04*"G3)X;"JI7V].+KCV<5E9-1UK"T.CD'-IXCP5G2 MIXOZ13.L/I1G,%;:@Q`\(W/'@X?B@'#]V'%8SAIB%Z*HD@/8>LWV%!7Y2;' M85D4E.3I=PNWVA72TE'6C/E8YQ&DC#K[0L1GK8!:IIFSMYNA/X%:S#AM3*=V M]U+4=E]V[V'B@U\.@JX*C$NBSM?&V7S)1>_5'-9-AR3L_'<6.\DOWYBN51XG M)1XAB$'2(IFF+/ME'"W%=+825K\"8`22'O/#M<4$B1$0$1$!$1`1$0$1 M$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!0>DP@5\V*LB+08J\26X7`'!3@+@; M,,#:K&G>E5D_<$&AA^!1U;Z>5T$;*=ADS-S9B2=.SU+I?FOAP-VL*VL;ZA*;*YNS<37%PJZ@.)OF#K$]Y\%WD0'XKFS4$D>/QT3:VIW&JF:C50S-M MI"[T8_P*#*-G'6/_`(E6:_OG3[U1VS;S;_Q2M%AZ9^*D*(([^;DO5MBM8+?O M'7[U"O*M0RT6S%9`^KGJ&2P.<0\DV(+;>]>KJ+[4,9-C>&0RL:]CPZ[7"X(S M-0>(>0K'*#`,;GBKW2-DJFMBC`:3UB5]+9F]H]JC.TN"X93X345$%!31SMRE MKVQ@$',.:[W0Z=W7=$VYU)09961RMROL1<&UU@Q7$:;"\/FK:Q^2GA;F>X"] M@N=AU-$^OJI'Q_-S$&*Y/`"Q^*P[6TL,>#D,C%I)8V.':"\7"#SSR15<.(>4 M':6LIG9H9NLTVM<9E[*HQ@U'2TFUF(]%IHH28VYBQH%U)T!><^7.HJ:;9.)] M').Q_2&@[EQ#B.S1>C*/[8T\E534D43&O?OVN#2;7MKQ\$'G6'^62DH:"FIJ MK!\3=+%&&/6.:1U`_!Z&K@C$EZC>Q7S-[`O1IH99GF:##'ASC M?1\;FGP*RX;-4R;]E;@\-H7!MX\MSI>^7^:"!57EDP&>2!T^&XD=V;@;O2ZA M_E>V\H]L<'HJ;"Z2K#HI2]^\9;2UE[SN\(JOFI::%CO1DB#2K3@<$3+T38!S MRR1AS3^*#Q+\G0RT6*XF)*:4DQ-.@U`OV+WD55#6?-/,;G>A(+'V%:E/"RAJ M#4/PUDQPL0@JS#VPZTLLD7[M\S?85<9*N$ MV?&V=M^+#8CP5.A.C`Z+.^.VMCUA]ZH:FJIV_I%/O!Z4.OW(+9S150#*J,-= M>PSC*0?45DJ76Y-DZP^*OCJZ6I;E+FW/T'BQ]A1U$P"].]\)_<.GL M06BIJ8A^DT]P/I1&_P!R%U%6]5^4N&MG"SA^*9ZR#SV,G8!YS39WL3?4E2R_!I. M9JH*JIA`%53W'IQ',/9Q06..'8B;.W;I!POU7M_$)T*I@UI*LN'H3#,/;Q5Q M=A]>;.W;W]ATLWXA!3I\\&E92/:/3BZ[?BN5M=5P5& M"'H[XI'.EC;8@$@%P!T*ZGRC+`;5U*^/]^/KM^(5M3185B\9WL<,U^8T(01? M%<._-^IPM^'S5?]^F/ MX^"#HX'IAT?>[WE;ZT<$_JV+Q]ZWD!$1`1$0$1$!1V5Q&V$;1P,8O["I$HV_ MK;9MUMEC&G;H4$D1$0%&MHKC'\*(OS'^9JD,TS(K9B;G@`+E1G$:J.MV@I&Q M!X,#LK@1;6[2@[F-TCJ["YZ>,@/>!:_#0@K)NYI0&R%K(^8;J3XK:1!AEIV/ MC:UO4+?-(Y+G8O1U5=2LIR&&TK'Y[V\UP/!==$'#PYKOSEQ)Q'5RL`/@NXHB MX/DVQR;Q[8RYUPUUKV8%(B9:1[;N,E.38D\6_P`D&XN7C#F,J:`R/:UF]-\Q ML.!6U)))-(Z*`Y6M\Z0C[@HAM?$SY;PJFJ)W.A?UW-D=<.(J M[X(,;ZP9"*ZDD8.9RYV_U<0^T:(+'55%4NW52T1R'Z,SQ!DSU MD+>O&R;^`V-EC;B--*\15#'PO/!LS+`]QX*\OK8?.9'.WM;U3[$=6P>94M,5 M^4C;#V\$%31QDYJ>5\1_<=<>Q5'3(P;F.7_*5B;A\!S/HY7PN=K>-UQ[."N; MTZ!MG;NH':.J4&":>D>XBOIG0D?3>W3[069M/<%]'5N`/`7#VJ_IL>C:ACXK MZ==NGM5O0:62[ZEU7?!4?41.:!5PEG\;;@>*#FX7#,SY0W50XL$SAE>+Z6'-7 M[%"VS\/K<\_YBK,-@:Z+$74TQ9\^\]4W!T"R;%W_`#M_J*#MHB("(B` MB(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`H_LL"!BUS<=,DM]RD"X& MRP:*;$BWG52$]Z#H8$",+AOZ_>M]:.!V^2X+"VGXK>0$1$!$1`1$0%&7#_?9 MIN?U?X%2"6H#'96-=(_T6KC3X3/58H^J);"US`+AQS`CN0=]8JN=M-323.%P MQM[#GZER1@DH&E;-]H_%4&!/+F[RLE>T.#B"3K8W[4'6IHT:NN-5&=L@'XS@DT\ M.5KY-R`[M+FG\%.%$-OOZ;L[PMT]G%!)A21`?,N[#96;NKBN62MF'HO%C[4%QJPW2>)\=^9%PK>CTE0<\=L MWI,-C]RJZLW8'2(9&#F0,P'L3=TE2H#V^A,V_WC^:= M+FCL*BE>.US#F"O%//'^JG)`^B\7^]4=4RQ`;VG<1VQ];[D%I-%7"QR./8=" MJ]#?$/T6=S.QK^NWX_>A?159RN,9<.3M"$Z&^,?HU0]GJ=U@@H9JJ(`3TXE' M-T1_`K%^@U#K'YJ3L\QRSMDJHQ\[$V3UQG\"CJBEF)CFL''3+(+>]!8Z"KB% MZ:H;(WT)A?V.'\U1]6]HM5TCP.9;UPKQ1-:0ZFE?%Z@;CV(75D1U8R=O:TY3 M[$&"*&@J7$TTF23GNW92/!91'70NZDL=1'R:\97>T:?U@M5P21#M(S#VA&04E2TOIG@$_2B=8I) M5SP-O44KGCFZ'K?=Q6'=X?7/SQD,F[6G(\(-AL=9!YLK)V=CQE=[1\$Z:&V% M3"^._:+C[E;N:R%HW$[90.(E&OM"=.=&0*JFDC_>:,[?N0<[#H8)H,2>S0B= MY!8ZW)9=C01L]2WXZ^\K!AT5-54V(NC=J9GG,PV/!;.R((V>I`Z]P#Q[R@[" M(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@$V%SP4IPZLDPH.Q@D\0PNGO+'?+S< M%T1(P\'M/BN)AV$TM5A]/)(UV8L"SG`*0CZ0\!\$'5S-[1[56X[0N+^;M+Z< MA/;63`?Q._\`<@[:P5T_ M1J.:;3J-)UX+F.P1Y;85DPUOR**Q.D4CW9KVXYB@ER(B`B(@(B("(B`B(@*'[>M:[$-G0\BW30;'N4P47VS M8]U7A+X@TN9-=N;MT"#NB!IUIYW,[C<*I?51#6-DP[6FQ]BCN,/QBFIW3O@I M"UI`NPD.U/>MJDJLR065SZ:GG(?D:7/EF&5WW:*_I9983PR,]8%P@IFI*UMC MNW^IW%#1EAO3S21V%@V]Q[%<6TM4+VC?[U3HKXVGH\[V=@=U@$%F]K(C:2%L MK?28;'V%7B>"=N65MK_1D;94,E7';/$R0=K#8^PJTUM.XAM0TQ./`2-M]_!! MDZ*SC"]T9Y93I[%9FK(>+63M[1U2KVT\9L8'N9_`[176G9P-M["L[F5D9^;DCE;V/%C[0K75)R MY:NF>`>)`S!!:*61G6HZIUO1>L#?[3-_J*D9X*-;'$_(M:3_ M`&F>WVB@[.#BV&4P_<"W%J81_5M-_`%MH"(B`B(@*CVA['-<+@BQ540:=/+T M>T%0;9=&O/!P^*VPYIX$'N*/:UXLX`CL*BLL+G;330TSW0O++AS7:#3L02M% MQ!AV)6`Z>_V_R5!AV)`W->\^(^"#N(N!+1XE3Q/EZ=([(+V)!_!=YCLS&N', M7051123%ZP[;28>UQ%-&V,VL+'->_N4K0$1$!$1`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`JKJ,`WAED MB/J-Q["@X>$;RDPG$(MP2T2RZL-^*W]DIA/L]1O;PR66I1&K;0UXCB;,#-(. M-BMO9*,P[/TD;A8M;8@\M4'71$0$1$!$1`1$;>POQ0$1$!$1`1$0$1$!$0FP MN4!$!N+C@B`B(@(B("(B`B(@'@H]LNT#!JL#3Y^;WE2$\%'ME23A%9<<*B8? MYB@ZV$?U93?P!;:U,)TPVG_@"VT!$1`1$0$1$!1R%H.V4I'$1_@%(U&X7WVS MF;;A'^`021$1!1P#FD'@19:E-)T:T$YM;1CCPJDZ`B(@(B("(N968Y0TE1N)9' M;P<(<+@K6?0,;8TSG0O'#*=/8M"3:6CR'<-FFDX M!@C()\3HN0W;:0@7P>H:3R+P@E=+,9`YDEA,S1P'O4?JQ&W:PRRGJL:TGLM9 MRP8;M+!48DZ>HC?2,,0:0\WN;^I914BIVBZ12MWT=F@6TOH>U!WHV4LMGPN: M+ZW8;75PCJ&/);,'L]%PU]JQR-II7@S1%KQH"1;[U-ZUH>.&892 M$`TU3$/T:IO^[*,P]J"JJ(P!4TIMS=&!V.ZP3>U,0.\A;(T MCU40O3U.<>C*+_>%64TE39M0P7XV>VQ512%K M?T6H>P7O:^8?>@QNK98A^F4CP.&:/KA4B%%4?T:4,?QZCLI]BR"2MA'SL3)V M^E&;'V%8IG4%01TF,1O[7MRGVH,[8ZN+S96S-['BQ]H5W2\GZ^-\>MKVN/N6 MN**1@+J*L>T86$8? M)$_-2U4K!Z#^LW[]58R>@GDX[J7L=U'+8;%-&T;J?..QXO\`>@XN'R5,.'X@ M'0YP99>M&?P6YLB'#9VB#[YLFM^/%:M%5.9AM?O87B\LHNP9@%M;(2"79RB> M.!9^*#L(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`N#LR`, M'J@/KI?>5WBHS@%5!#A=1&Z1K7R5$S6CM-S=!V\)_JVF_@"VUSL&J832P4PD M:9V1!SF,$?V50X?2'C3Q_96RB#3.&45[]&C]BX MCQT;:<1T\8R96D-O;6Q4G45KGS-VQB$.2Y:WSCZG()%TD`?/1O9VW%PJ-;3R M@F%S;]K'*U]5)%??4[RT#SF=;[E:.AU!N,K7WU^BY!E$4\?F39QV/"Q336L* MFFV,_@@Q,;32$]&J#$_F&N_`K- M^E1C3)*/858^6DE(W[&L?RWC;%7-IP"7T\[P#ROF""DE3%YM3$Y@[7-N/:C: M:!XO3O+#VQN52^KB;UXV3?P:'[UA=)2.<#-&Z"0\W#+]Z#,&U<0TO0JQ MU2QSU7;^=A.^IR1VQF_W(,+*2ED=O*28 MQN/U;]/8LI%;$[JF.9G8>JY8[4$\@<0ULH[>JY9S#*T?,3'ML_K(,$\U.\6K MJU6LHHG#-0U3XKZV8[,WV%;!EG8/G8,X[6:K5DBP^HD-_F9KZV)8 MY!S<.=618;B`,;)AO)02TV/L6WL4"W9FA#FEK@S4'O6OA\4[*&O-/.',$LMP M\7OXK;V0>Y^SM$YXLXLU'B@["(B`B(@(B("(B`B(@(B("`W"(@(B("(B`B(@ M(B("(B`B(@(B("@V"B3YFJ;3R2,BKJ@N#!<@$V!4Y7"I\"4]/XPG_W)EK?K:<_]-P_]2TXL)FC<3\HU+O42%7Y M-JP>KB4MO6T(-L=-''HY^T$)K>3:?[3O@M-V'UY)MB;P+CZ`57T.('5F(D:< M#&$&W>MYLI_M.^"9JR_F0'_&?@M04.(@?UCK_P`L*AHL4RBV)-OS)B"#EPT"Z+Z+%R#EQ-@_Z/\UJ1X#7,Q%]<,0::AS< MI.ZT]Z#M9ZL?L8S_`(_Y*F\K+C]'CM_S/Y+2Z)B]Q_XC%;_E*Z*GQ7+UZV$F M_*)!N"2KYP,_[G\EYYY<<4Q'#MCFSTSWTLN_:,\] M9-I_ZBJ_X?Q5VSG]24FM^K^)0;#J&/-FC?+'ZF.L/8KXJ5C'YB7O=VO-[+.B M`B(@+PKR[[38GLUM-0285*(W/AS$D7U!(_%>ZJ`^63!\/J=C\3Q&HI625<%. M6QR$:M%^2#@^2';S&=I:"MDQ...5T!:`61G4>"GS\*4 MQ_ANWV%!U!C5&\M94,>R_I,)'M5HFPHW$-4V-W[C[6\%CI\5FCC#*BCJI9/2 M$5M%BJ,3I90XRX957!L7"+50;#ZY\#?F:ZFG;?S9>J[VCX*K<<@)RU4>3U@A MS5SA6!CF[DUK`XV#9(_=DVS-C(/B"@VS)A%2!)'4QQG@"R3 M(5DWKXOZ/B$$P]"8B_VA\%J56)874`QU%'*\#M@)LM&>HPZ,'H[ZBG(/TH"Y MOWA4==^(Q.%JVF;WL<'CXJZFFH*@'H=:&.'(/&G@5R*/&J3>-;.R"6,WZ[(2 M"/!;DF(X"X$R1QBPN;PF]O8H.@9ZN(C6"I9VM=D=[-0M'&,:@IJ9AJ*-[W22 M-B#'6%R?7P6H9L!0=I;LS2WXV?_J"]37F?D,@D_-2FF-L@SM^ M\+TQ`1%1K2V]W$W-]>2#F;3_`-15?\/XJNS0M@=(/W3[RJ;47^0JNWHCWA7; M-W^1*2_HGWE!TD1$!$1`42\K`OY/<:TO\P?>I:HGY5B6^3[&B..X/O0>9_DS M/#G8J.!#6KWA>"?DQZRXN;_1;[RO>T#FB6%[\T0$2VJ("(B!8(0#Q`1$%,C? M1'L5#&P\6-/@KD08A30`DB&.YX]4:JCJ6G>+.@B<.PL"S(@U78?1N=]FC1940$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1` M1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0%Y9^440-AX[\ZEON*]37E/Y1QML M/#?^TM]Q0=+R$.<[8*#-RDB("(B#E[4&V`U9_=_$* M[9S^I*2WH_B59M0+X%5@\,H]X7"PS:>EH:""F='(\QW:7-X'4H)DBC3-KJ1[ MLK892;7Y+*-J:4_L9M?4@D"*/G:JB!LYDH/<%4;54)-LLE^RP0=]1/RK?_Q[ MC=OJ#[UN':N@`)(D%O4/BHYY2\>HZS8'&HX"\NW-M1ZP@@_Y,0&?%SZF^\KW MM>"_DQ<<6]36>\KWI`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$ M0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0%Y1^4@2-A MX0!QJ6^XKU=>4?E'C_E+SOR#_`/\`'],? M[QR]$0$1$%E1#'40OBF8'QO%G-/`A;D>`0:-)A%/2XLPTN]#6,.<.D+@2>`U\ M5V\C?1;[%93PB%A`)))N2>)*R(+3&P\6-]BIN8KWW;/LA7H@QFGA/&*/[(42 M\JT,$?D^QIPB8WYDZAHOQ"F*B'E;T\G>-V^H_$(/+?R9=YTS%0P@0Y&W!X\5 M]`KP'\F`#>8N>>5NGB5[\@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B M(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B(!`/%> M4?E'?^2J?LZ2V_L*]77D_P"4<1^9M,"+WJ6^XH.OY"[?F!2V%NN[WKT%><>1 M..K"UI%DP$WP6C(YQ@K2VEJFNP6<".4'J\6$X?X#\$&VBT_E.EM?>&W'S3\%5BIAE\G>-"*1KCN>1]80><_DP MLZ^+N_=9^*]\7@WY,0TQ?3DS\5[R@(B("(B`B(@(B("(B`B(@(B("(B`B(@( MB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@( MB("\F_*/TV/I#>WZ4/<5ZRO(ORE#_NC1#MJ1[B@D'D0%O)_1Z6ZSO>IS4PMJ M*>2%]\LC2TV]:@WD0`_V>T)',N]ZGJ#1^38N@BE#G[L1[OCR^*VX8FPQM8P: M`65Z(.5M2+X)4#^'WA9L`O\`(E#?CN6^Y8MIOZFF[V^\+-@7]34/_);[D&\L M%73[\,ZY:6FXMSTYK.B#GC#GBAZ.VID;U"S,VU^_5;D$+8HFL&MN9YK(B"F5 MO8/8H9Y8&-'DZQFS1^JY:CXP\VL2S\5[L@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@ M(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(+\P@(L-/4QSOE;'FO$[*Z M[2-5F0$1$!$1`1$0%X]^4NXC9?#AVU/_`*5["O&?RFG`;/86+Z]()_RH);Y% M@!Y/<.MSS'[U.5X1Y`MK\2KY(]GS%`REIXG/$@!+CKWKV\LJN4T?V/YH-A%J MY*R_ZV&W\!^*JYM9IED@\6'XH-#:QV7!)B#;5OO6W@G]3T7_`"6>X+F[4BH^ M19=ZZ(C,WS01S6YA8JFX92-8(;")HUOV!!TT6M>LMYD%_P"(_!4S5OU<'VS\ M$&TBU,];]5!]L_!`^MOK##;U//P0;:@OEL-O)OBO\+?>%,-Y5W_41V_C_DO' MO+WMM#2X94[-S4L@JIXVR"1K@6C7^2"S\F-EL,Q9UN+V"_@5[XKVU`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$ M1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$%'-#K7Y&ZJB("(B`O$?RH7 M$8'A`Y&9_P#I7MR\4_*7I:FKP_!HZ6"68B1Y(8TNMH.Q!!?R=6/EVOE8V0L# MJ=P);QY+Z-.#2V-L1J1XKP?\G?"JRDVMDEJ:6>%FX=8R,+0>':OI!!Q/D6J% MK8M5`#N5_P`E58=<8G/W$!=A$'#JL&J:F`Q2U\CFDAVH[%7Y-Q-NC,3(:!8# M(%VT0<)N&XN!;Y5Y?5A9!0XJ+#Y2N.=XPNRB#A&BQH2$MQ)A;R!C&BJ*3'`? MZPA(OSC7<1!Q#!CH;9M53$]IC7S/Y?I)W[=NCJW-=)'`QIUKQ[\F>/+LI7OMYU0![&KV%`1$0$ M1$!$1`1$0$1$!$1`16D/WE\PR6\VW-7&_)`1<^&LJWXS/2R4+F4C&!S*G,+/ M)XBRZ"`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@ M(B("(B`B(@(B("HYC76S-!MVA51!1K&M\UH'<%5$0$1$!$1`1$0$1$!T>U,S?2'M0514SM](>U,[?2' MM0514S-](>U,S>T>U!5%3,WM'M3,WTA[4%45,[?2;[53.STF^U!Q_6,]J;V/ZQGM""]%9OH_K&?:";Z/ZQGV@@O16;Z+ZQGV@J M;Z+ZQGV@@R(K-]%]8S[03?1?6,^T$%Z+'OXOK6?:"=(A^MC^T$&1%CW\/UL? MV@JB:(\)&?:""]%9OHOK&?:";V/ZQGM07HK=XSTV^U-XSTV^U!U!5%3,WTA[4S-[1[4%45,S>T>U,P[1[4%45,S>T M>U,S?2'M0514S-[1[4S#M""J*F8=H5;CM"`B7':EP@(ET0$1$!$1`1$0$1$! M$1`1$0%IXN2W#YB"1IQ!U6XM+&C;#)B38`7^]!C?AU(R(O>90T"Y.\(P+YC*;6]JT*N3"Y89HQ61M$SP]Q(X& MP'X+/-68;-AKJ,US'%!:ZGPW>0AAED9*[('LE):#V'55?3X-9^>H M:,ARNO.=#V<5BIGX9#&P=-#G"7>D@6N;6X66G%2X3%/)+)B#I,[LQ#F\Q>W+ MUH.P["L/$.\Z^[`S9MZZUO:L,=+A;XX'.<6&;S&NF-W=VJRP8GAD5,R!M4"U MKM M+V-S%HF-[>U6XM4X;B#(VOK3'DN;M83<$6/$+2HZ?!*2KDF95W#V%N5S"2+@ M`ZV]2@Z#:;!QN@]X8^5N9K73&]CXK+38?A=4QSJ8B5H-B62D_BN?*,$DRYZH MG*QK!9IX"_J]:S815X7AL3XXZU\F8@W_%*9S92PV=ED)M]ZQ/B MP..H=`^:(3,'689=1]ZMP^?"\/2&G>$W(5DHP81SNIXXZAT'ZQK'ZM^]68>["J0QACI MWNCO8F!W.W[OJ5M)%A=*VJ9&:G+/>XW+M+F^AMZT'090X3(X,$<9??+ES&][ M7LM7%8L,P]T$9I&ODF=9K;VXTM($#N'L0:,51@&5SG-A8P/R! MSOI:7_%;+G8(!(2V*T1#7=4\>P=JT31X8Z-EV5[G!V8.,9)X`=G#19#'0YY7 M&/$,\EC<1'JD<+:(-MPP;>LC,3-XYN<-R&]C_P#TL#7X&R"*66."-LA<&Z7O M;BMB"LIH7F3=5KY'-#"YT+B3;P]:TZAM!,V-IAKVM87:-B=KFX@Z)1?)+@NX MJGL@8[H]PX9"->];)APA@!DC@8ZP)!Y7%UB$U)^D,W-?DG%G-W+K#2VFBMF= MA\T[)9*6L+FQF+]4ZQ"#9H:;!Z^$RTD4,C`;$@M:XIL,!#C'B M&;BXF-UWZ@ZZ>H(-MSL!$`0;=32X/331Q3M MBCDE-F@DZK5<_9_!N,;6RQ7?YH$A MU^]7S5N'OHA2R&?=M`'ZIU]/!:&ZPGI(F$E2.OG+=TZQ-[CZ/:4'2HZ7"ZZ( MOIK2,!L2'GBM1S<(9734[H\HA`+WF2P%^7%;%#74-(U[&2S.8YQ<`87=6_@L M%5+AQTL;7,&9P,IT'KU58H,'E?&V.1CG2>8!*>MW:K6E^29:.HIY'RD36S.W M3KZ`>KU+6AI\-CGIY&5=0#";AHA-B;_P^M0=6KHL*I6@U3FQ-=H,\A%_O5(Z M'"99S#&6NE&I:)"3[UKXI/AN(!@DFF8YH(NV)W`BQ&H66AK,,I<^Y=)=Q!), M3K\+=GJ5%*R#":26.*4?.R$`,$AOKSXJS+@K8FOEE9&USBUI?-;,1QMJK*EV M&U&(-JW3SM<,MVB)UCEO;EZU@K(,&J8PV624-#W/'S;M"XW/)!N.CP0/>TU$ M8+!=PWYT'M5S:;"'OC:R<%SQF:!,>L.WBN7#18)&^1PJ'97D$AT9OH0>-O4% MLQ_)4=3!,RL+1%2UW1 MV%@OI>_:L]378152PR25D#MT20"X6U%D!U+AH+@:QX+?._2#I]ZN-%0.+6BL MEN1<`5!U';Q7$=18099GQXG2@ODW@+B"1K>QUX+9IHL$ACE:[$J9SI(=UF,C M1;CJ.SBH.BVAH2&9:Z8AQLVU0=4Z#1"_Z=/U38_I'`KD4E'A<+*9L>*40W+L MUVO%^7K]2I3X5A$9D!Q*E<'/+M9!<\>.OK5':%%2%SFMKY\P%R!4:@(*.E!8 MWY0GN[S1O^/(TH!E=(`YX M+1F%NU6#"Z$-.2OIWN+7-<7/'6!`&MCZD'8;AP>V[:VJ(/`B3^2##"/^-K/M MCX)ALE/1T44,E9`\M%LVQQ(D(.HLMSI=/]?%]L+4?*R3&*?=O:ZT;KV-^80=%$1!3*.P>Q,H[`JH@ MIE'8/8F4=@]BJB"F4=@5;#L"(@6'8$L.P(B!8=@2P[`B(%AV!+#L"(@6'8$L MB("(B!8)8=B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(``38<41`1$0$1$!$ M1`1$0$1$!$1`2R(@6'8$L.P(B!8=@5,H[`JH@IE'8/8F1OHCV*J(+=VST&^Q M4W4?U;/8KT06;J/ZMGV0AAB/&-GV0KT08C2TYXP1'_`%3HE/]1%]@+,B#!T. MF_L\/V`J&BI3QIH?L!;"(-8X?1GC24Y_Z85/DVA_L=-_VF_!;2(-7Y-H?['3 M?]IOP62&EIX'%T$$49.EV,`]RS(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B M("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B M("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B M("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B 7("(B`B(@(B("(B`B(@(B("(B`B(@_]D_ ` end GRAPHIC 10 graph.jpg GRAPH begin 644 graph.jpg M_]C_X``02D9)1@`!`0$`2`!(``#_VP!#``8$!08%!`8&!08'!P8("A`*"@D) M"A0.#PP0%Q08&!<4%A8:'24?&ALC'!86("P@(R8G*2HI&1\M,"TH,"4H*2C_ MVP!#`0<'!PH("A,*"A,H&A8:*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H M*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"C_P``1"`':`H4#`2(``A$!`Q$!_\0` M&@`!`0$!`0$!``````````````8%!`,'"/_$`%$0``$$`0,"`04.`P9MPOL04W/`DDC:>Y`__`%V'K(:\C<-=M[0YK%3YF?$0Y*E)EJ[!)-29 M.PSQL/'Q.C!Y`>)OL'Y_YJO4MCOE2U#]38W^O?05*(B`B(@(B("(B`B(@(B("(B`B M(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B M(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`I;'?*EJ'ZFQ MO]>^JE2V.^5+4/U-C?Z]]!4HB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B` MB(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B` MB(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("EL=\J6H?J;&_P!>^JE2V.^5 M+4/U-C?Z]]!4HB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B M(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B M(@(B("(B`B(@(B("(B`B(@(B("AM)RY6;RD:C=FZ=*G9&)QH;'3MOLL+.M>V M)^JE2V.^5+4/U-C?Z]]!4HB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B` MB(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B^6>53RWZ:\GF5AQ5IEG M(Y1W!\U>IQ/F\9^JE2V.^5+4/U-C?Z]]!4HB("(B`B( M@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B( M@(B("(B#XOY$`D*E$1`1$0$1$!$1`1$0$1$!$1`1$0$1$ M!$1`1$0$1$!$1`1$0$1$!$1`4-I._8R/E(U'+;Q-W%2-Q.-:(;CX7/<.M>/( M&*1[=NY'<[]CV]6]RI;'?*EJ'ZFQO]>^@J41$!$1`1$0$1$!$1`1$0$1$!$1 M`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!2WE&_C<)#I\= MG:BF.*+SZF1.BD?.[?YG=".;@=B.99N..ZJ5+8K^]/*!FKKN\6'ACQ4`=VSD`>/(]D'5JS+^C^ELSF>AYQ[G4IK?1Y\.ITV%_'EL=M]MM]CM_)?'/)A_ M:,Q6K\_8H9NA2TU6CK.G;;N95G![P]C1&.3&#)6GOB^3#R+:=\G.?L9?"7 ME,!/9F>Z2667'0N?(\G7O>: M09XJ>G<;CIQ\6SC813L,_GPFAXO;N-P=G#<$@[@D(*E%+>@F(^F:D_$>0_73 MT3MP_!X[5VI*54?$@ZE>UP_G\)8ADE=N=SXGG;?8;```*E%+>C>;C\<&M\W) M*WQ,9:JT7Q.TD;[.:>X>8ZW]H=-_<,_P"\0;6?RL&$PUO( MVF221UV]P&P`WV``V`B]0MUA;S^)PCI,!FFQO;EK4;(YLUDC"TEI((WV)VW!7XH\O.OM7U?*OG(:>6U)@H&]#CCO=$LZ/P$9 M/:&1S!N=W=B?C=^^X7["\F=F>YY-]*6;O)88UP&VT1;W,]CET*T4;IK$_';ETX6`ODX@@GBT[#N=AW0:JQ992T;OFD(`,D MCSXI'G8;O<2X^LDH,7S/4.>[Y.S[A8UW_DZ+P^W(W^4L_JCW:2'-A!1C#00YS4'MHC^\ MYLKJ23N[)3&"L1\44X'O9"6N'9[7DRSM?MW%@#=S6M*J5(5-78KS6&KI'%W< MU6A8UD0Q%=C:K8FC;X.>1T==P:=F\6/+@=QQ\+N/MU]9Y#_`J83"1'QLDM2R M7Y>/S,?"SI-8[ON2V:0`M('('D`ZM9ZNQ&CJ%*YGK'F\%N[#1C>=@T22'UN< M=@UK6ASG.)``:?6=@>6M_P!*96K0'@TW;WCK.=V;0GY-#*X/S12 MF"1)%&WXWY9_(YK_`,H&9J/](,38Q]-CC"+9,);))Q,O!D^1P# M=R\DE?5/)S!;S_DFI8W6)CN6Y*TV+R09)(>98Y\$C7/)Y%_A(>]IV+N1:2"" M@T,C_=WE&Q%K_#@RU*;'S.]?5GB(FKLV];=HS>=N-@?4XD\`JE?-M5Y"UCZP MBRLO4R&GYJ^8AR):&]:B)#%:D+``'2QUWS-D:QI'PL;F!KI&,9])0$1$!$1` M1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0%#:3S6*SOE(U'9PF2 MI9*LS$XV-TM.=DS&O$UXEI+21OL0=O\`<*Y4MCOE2U#]38W^O?05*(B`B(@( MB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B+\[^7WRY9OR?ZXBPFG8,);B M%*.:QYRQ\DD4KG/\!X2-X^`,=L1OLX'U$(/T0N#-9G'82JRQE;<=:.1XBB#C MN^:0@D1QL'BD>=CLQH+CZ@"I#2>:U7K'2V&O,JUL!%2^3B"0.3CL.PV'9:J("(B`B(@(IO/ZY MTW@9+<60RD9LTV=6U6JL?9GKQ\>1DDBB#GL8`02]P#1R;W[C?XCY(_+9F]8> M4#46*HT<;/%=F?P?I)>5NS!3J MS6;P``))*F_<34]S_O'5OFO#XGN-C8H.6_KZGG M!L;^H;<>&VYWY;C;UJ:'T_!:ALS4I,A9@>V2O+E+4U]]=X.X=$9WO,9W`)+- MM^+=]^(V#R]/<%8[866SG7'PL=B*TEN)TGS1F=@,,;O5VD>T-#@7$-.Z>ZFJ M\A_W?IVMC(G>`R9>\TRQN_UB&`2-D:-P=C-&7$$>$;.-2B"6]&[Y[5&2F M8_\`Q:F-:VA7.WQ>#F[V&>H$[3]SO_E/!8FG-+85OE*O9"GCXWR82LVF+TQ= M-9DM3`22B6:4ND>60^;!CM]@V:1@)^*VZRV0JXG%7,ED)>C2IPOL3R<2[A&Q MI'%YV;I7"[N(KG38R&3D?BM>R/HD$G=_0#6@O>75* MX,_BH,WAK>.M/DCCL,XB6$@20O'=LD9(/%['`.:[;LYH/S(,_7>F*NK]+9## MVG=)UB&1D-D`\J\CF.8'MV(/JKU8+DK.[0))02\"68$/I*+EQ>0JY2A%#1U+WIS?@6R\7-XOX>M>-O2MO4E6:+661DEJ3L!W>.7E3BYM^9W" M2PU[=QWXO:UP]1`.X3W4U?8^%IZ8QL$#OBQY+,&*P/F/-L,,S!WWVVD=VVWV M.[14H@EO^M[OLWA>'_V^3ZN__P#&Z>VW_KWW_P`NWB>Y&J[?@R&JJU:(>(/Q M&*;!*7?R+IY)VEOK[!@.X'B`!!J402WHKD7^"SK34D\#NTD7&G%S;\[><==K MV[CMR8YKAZP0=BGH)B/IFI/Q'D/UU4H@EO>YT1[':;^ZX/RK*U!Y'=`Z@FJR M9+3=;^%A\W@96EDK1QQ\W/V#(G-:/$]YWVWW<5?+RLV8*L8DM31PQN>R,.D< M&@O>X-:W<_.7.#0/G)`^=!Y8G'U<3BJ>-Q\71I4X65X(^1=PC8T-:-R23L`. MY.ZZD6+FM4X7"VF4[^0C&0>P21T(0Z>U*S.SMRUIV#7$]@2`VD4 MMZ09V]VPNE++6GQLL9>U'3BDC^8@,ZLS7'<'A)$P@;\N+AQ+W"U#?\&;U1P@ M'8Q8:D*?5:?C-D?(^9X[=@Z)T;F[D[D\2T-_*9&CB:$MW*W*U&E%MU+%F5L4 M;-R`-W.(`W)`_P"2%@>FU&YVTY1R6H?G$F-A;YNYOSN99EF!QV/([C;ON?YK/Q>B]+8F_%=Q6FL)1NQ;].Q6H112,W!!V>;S^H#X6SS>Y4#/41%3EE87.'?Q&=]C8@[%G2[!W)5*`B(@(B();4G]P9N M/4X_[$Z%E'*-'K$75WBL;GL&PF28O^*.$CWDGI-:6=_N_76FK\7_`,1Z^(F8 MWP\_@GV8Y''_`#=/S>5K6GU>LST=`YG&9.:2QDM*LKY;G(XO==JUYS/7^JE2V.^5+ M4/U-C?Z]]!4HB("(B`B(@(B("(B`B+*SFHL1@>@,OD:U66QR%>![QU;#AMNV M*,>*1WB:`U@))<`!N0@U5RY3(T<30ENY6Y6HTHMNI8LRMBC9N0!NYQ`&Y('_ M`"0L#SS4.>[8RM[A8UW_`)R\P/MR-_G%!ZH]VD%KIB7-J,?(64MO7P%1 MIZ;FM=N6F42/'AW>XM:0]/<%8[866SG7'PL=B*TEN)TGS1F=@,,;O5VD>T-# M@7$-.Z>[>I[G_=VDO->'Q_=G)10XV-B@Y;^OJ><&QOZAMQX;;G?EN-N3+>3+3&6Q5RED:MF[YQ"^% MEC(6Y;TM7DT@O@=8=)TG=P=V[;EK=]^(V"5TAY=--9K6.J,1D,EC<=2Q\P;C M[EBRV-ER,#C(0XDL.SP2TAV[F/:>(XN*M??`TQ+_`-W9/W8V^/[C5YI/PYD/T$].<<_P5L=J2>=W:.+W!N1F,;!`[XL>2S!BL#YCS;##,P=]]MI'=MM]CNT//M;^SVF_OZ?]FJE$$MSUO< M^#\WTWA]O%U^O/DN7_IZ?"OMZ]^7,[;;<3ON/B/]H^SY2Y(\;@,7!=R\R.BIP M,A8YY`!<0T`;[`#?_8+O1`1$0$1$!$1`1$0$1$!8&NO:QFH*$,D]G&O='/%$TO?+3E+1,UH&Y):61S`-:7N MZ'!OQRJ1$$AY*+,$FB:=.K-'-!C'R8Z%S'!Q=7B>6UWN([$R0"&7<;!PD#F@ M-<%2Y3'UP;PAZ4+6M:/`R2,$^(`?1$&!IO(6F328;. M2\LM!S?%*6AHN5@_9DS=@`7!I8V0`-XO/Q0Q\9=OK*U!B/=6&J^&?S;(49O. MJ=@LYMBEX.9XF;CFTLD>QPW!V<>):X-<&F\O[L4)))8/-;M>9]6W6+^1BE8= MCWV!+7#B]A(:7,>QVPY;(-5$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$02 M%K7$$6O(--P8V[9;PD\YNPM#F5Y6^;D,+/CN&UJ$N>`6MYM)W`D,>A9U9C*E M_4%:V;,#<%2COW)Y('",1/$IW8=MW["%V_$$;]@2X.`B]3X3)R>6##9#"8/S M.4PO-C,UW-$<\0FI\V63V6/H/F'G.X(:XR`?Q+>Y9_D?_P"GD&V-:5XJU[W1Q>2Q]^KYO_`3 M]%TLOG$AB@XNCD='XY&N8.3QL1N[BW9QU-/YJ/,PVOX6S2M5)O-[52SP,D$G M!L@!+'.8=V2,=NUQ&S@#L00(O*8G,YVUELP,/9HN=[D=*C:F@,\OF5U]F3B8 MY'1CFUX:SD\>('EQ;LXTNC*EV.?4&1OTY*+LKD&VXZLSV.EB8VM!!L_IN4R-CE8Z-QBD=&\`C8\7 MM()KX;RD:CKU)+LD;L3C9";EV:T_L M[=R@N41$!$1`1$0$1$$#Y5?*IA/)G[E^[U7)6/='J]+S*-C^/3X;\IGH][@VL;7]SO..KY[(]G+J=+CQXL=O\0[[[?,GD.T!5\GD-;% MZHQ6$.I'S2RT*(2R`.;*UH>>`#06;EO(B4@-7TVR^H_!AXK,%6 M3Q0OPM;&N#P"=7!XS-U.N[`Z?QN$\[X]7(9> MZ^]?=PWX]=C2>KMN6MWM'BUP/;;IJ^1!+>C^=O=\UJNRUI\#Z^(JQTXI(_G! M+^K,UQW(YQRL(&W'BX$TY>]H! M[@`@`DD#5N MS!3JS6;P``))*P-`5IQ@!E,A#)!D\R_P!TK<4K M2Q\+WL:&0N!V[Q1-BB)V;RZ?(@.<5Y:[_C_<`>+:K#\-+S9_F MB?P97=OX?XAN^^X:ZI0$1$!$1`1$0$1$'S;RP8^U#?TKJ?%Q=7)8BZZ&-KG` M->08+#WEOA#FW^)R%7+8JGDL?+UJ5R%EB"3B6\XWM#F MG8@$;@CL1NLK7V/M9/1V6@QD75RC(38H-Y!NUN(B2`]R&]I61G9WA.VQW&X6 M5IK(5:^=C=0EYX'4T(RF-DXEC6SEH=+&`0./486SM9L7.<+3W;;(+18&>/CD:>/4,C-]$'+BI)?;ZVTYRX$6 M`/\`)$[>3JD;@.+9"&@S2&I0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1 M`1$0%+8[Y4M0_4V-_KWU4J6QWRI:A^IL;_7OH*E$1`1$0$1$!$1`7+E,?5RE M"6G>BZD$FQ(#BUS7`AS7-<""US7`.:YI!:0"""`5U(@P--9"U'T\+GI>>;K0 M@F\-I$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1 M%BZSRL^%TQD+M%DQI.X`WW)`W(#@TY_>^J MDYNWB\U8[=P+=JE<&`Q4&$PU3'57R21 MUV<3+,09)GGNZ20@#D][B7.=MW.X[$+54M;_`.G=5PVV>'%YV;I7"[N(KG38R&3D?BM> MR/HD$G=_0#6@O>75*`I;3W_35^#3,OAQ;86-PTS^QU[&AJHB("(B`B M(@(B("(B`B(@(B("(B`B(@(B("(B`B(@*6RO]Z>4#"TF]XL/#)E9RWLYDLC7 MUZ[3OZVN8ZX2!W!B9N0"`ZI4MY.?XW"3:@/9VHIAE0P>ID3HHV0-V^9W0CAY MCD&ELSANOYO[HTIJG6X<^GU&%G+CN-]M]]MQO M_-![9_%09O#6\=:?)''89Q$L)`DA>.[9(R0>+V.`3N/4XDES2O72>7](-+8;,]#S?W1I M0V^CSY]/J,#^/+8;[;[;[#?^2R]2?W!FX]3C_L3H64L1=7>*QN>P;"9) MB_XHX2/>2>DUI"I1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0%+ M8[Y4M0_4V-_KWU4J&TG0L8[RD:CBMY:[E9'8G&N$UQD+7M'6O#B!%&QNW8GN M-^Y[^K8+E$1`1$0$1$!$1`1$0$1$!961JVPSEPWVY,>W< M(M5"_EPWWXO8[8)*TKR6A[.33)`\@'9DC6\3V=Q/%X:7 M1MVZ\+E8,M5?+"R2&:)YAL5I@!+7E`!,;P"1OL0002US7-B(@(B M("(B`B(@(B("(B`B(@(B("(B`B(@(B();RB?QF*HX(?_`!VZS'R`]FN@XNEL M,*9@+>X^N,IE1XZ6-A&*J/\`FZI=SMN:1V, MDDEKZ\K=F['E4H"(B`B(@(B("(B`B(@(B();0O\`!3:@PLG^+2R<]EKG>%TT M5IYLMD#?F:'RRQ!W<.,#SV.[6TENM!Q!! M((*F[']W^4RI-ZHLQC'UI'R=F]6M)SAC8?\`4YEBTXM[DB+<;!KMZE!-Z,LS MUHYM/9.:2?)8IC!UI'&1UBJYSVUYG//QGN;$X/WV/48\@<2PNI%-ZNK3U[6, MU!0ADGLXU[HYXHFE[Y:^@J41$!$1`1$0$1$!$1`1$0$ M1$!8N:Q4[[3,KAGQPYB)@C(D)$5N($GHS;`G;8;%:8`2UY0`3&\`D;[$$$$MS..U= MJVKI_&6X[=;%676LL83R$4MBQPX=>>1QDEEX[D-YR.>[B.PY;#L`M5$0$1$!$1`1$0$1$!$1`1$0 M2WE"_A:&*S(^-B,G7LDN_P`-D3R:\\DG\FL@GF?RW`:6!Q\((-2N7+8^KEL5 M<;VEKAN""-P3W!W65H'(6LGH[$SY.7JY1D(KWW<0W:W M$3'..P#>TK)!NWPG;<;C8H-]2VD_[ERM_3,GA@AWN8S?L#5>[Q1-]0^!D);Q M:.+(GUQON54K`UKC[5O%17,5%UI MRVW:$&^BEO)QK?&:^P5C*X9_*"&[/4/9P^([P.\36GQ1F-^VW;GQ)W!52@(B M("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`I;'?*EJ'ZFQO]>^JE2V.^5+4/ MU-C?Z]]!4HB("(B`B(@(B("(B`B(@(B("(B`L#*8^U0ORYC!1=2>38W:`<&M MNM``#FDD!L[6@!KB0'@!CR`&/BWUY6ZT%RK-6MPQSUIF.CEBE:',D81L6N![ M$$$@@H/FWDY\M6E]=ZGR6#QLDD%F%Y\R-@8G(?%\3BV M7=W`.K4N9Z'4Q.,%F;.683T&5F?X'+=K999"Q[(6@AQ!>#RZ;@ULCAP/R'R! M>1O4/D\UEF[N0S?]U?\`9X*];;CD&[;MEE:=^''D0`/%RY>+A_B?;L+B*6%J MO@H,D#7O,DDDTSYY97[`;G\O\`U66W#L3N-O4&\%4J6S/] MW^4#3MWXL60ALXJ01]G22\18A<_^;6,@M`'N6F;L-GN("I6!K[!6M3Z.RV#H MY+W,ER$)KNM=`3<8W$!XX$C?DSDW?<$I2[=2O9B;+&_8@C=K@0=B`?\`D!=2();AE],]XWV M7W:C!VVC#6;V6@;'9QZOA<>4SG-8-K"YG'9NJ^QBK<=F.-YBE#3L^&0`$QR, M/BC>-QNQP#AZB`N]8N:P++UIF1HV)*&9B8&16HW.+'@$D,FB#@V9GB>.+N[> M;RQS''D`VD4W4U&^C:AQVJHX\?;D>V"O<+FLJWY"=@V$EQ+(XPY[SL'.( M:#LUKB>P)&?E,U:DORXK3]7SJ^S9L]I^WFU!S@'#J^(.>[B>0C9N3NSD8VR- M>O7"X""C:?DKICNYZ9A9/D'1!K^!(/2C'%V&FARI>WM(V*"0/G;&?]3X!-'MN`X2%I(:XJ MI1`12WDO^"T+C*'K]RNKB.?_`,KYI*^MU-OFY=+EQ[[^@J41$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1!Y6ZT%RK-6MPQSUIF. MCEBE:',D81L6N![$$$@@J;]S,GIOQ:<;Y_BAV]QYI6Q>;,'?:J_C_P#6`BD= MP[L#7PL9Q-2B#@PN7I9JJ^>@^0M8\QR1S0O@EB?L#Q?'(&O8=BUP#@-VN:1V M()[UBYK3E3)6F7X9),=F8V"*/)TVQBPV/K-Q`04B3ZF2-?(YT+O6-W$L.S=GA[Q&`J41$!$65G,U'BNA M%'5LW\A8Y&"C4X=65K=N;O&YK6M;N-W.%YE867;;#WWC+7[UFD;#=PZO MB<.,+FM>?6I@)\C:AOZM-*]9@>V6I4BB)KTG@\@]O/D#Z@()1R-=H&WP88]FS&AC8]W.*?7VGJ-!]G-W?<5T4Z/%SU\I)0R%)X MC!D+I(#"YPZGP>^P>`-P1MRV#7';BY@6MO*WZ&QF2&.BA)MWI0TV+;AOLZ1X`WVW M(#1LUH/%H:T`!I7!U=,ZI,; MD:D$;2\RV*[VSQ,XCNX.?$UI`V)!(!!V*WZEF"Y5ALU)HYZTS&R12Q.#F2,( MW#FD=B""""%ZJ6\G'\+@K&&=X7X6[/CVP^OHP-=SJLY?YOX9]<[[D]_$>7)! M4HB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@*6QWRI:A^IL;_7OJI4- MI._8R/E(U'+;Q-W%2-Q.-:(;CX7/<.M>/(&*1[=NY'<[]CV]6X7*(B`B(@(B M("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B M("(B`B(@(B("(B`B(@(B("EL=_=WE&R]7_#@RU*'(0M]?5GB)AL/W];=HS1; ML=@?6T$\RJE2VL_[ORNGW_:/-7D]B&QNV)W+7 M!4HB("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@*6QWRI:A^IL;_7OJI4 MMCOE2U#]38W^O?05*(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B` MB(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("(B`B(@(B("Q=:XJ?-Z2R^.I M/CCO6*SVU)9"0(;`&\4FX!+2QX:X.`W!:".X"VEBZUQV1R^DLOC\)D),;D[% M9\=:U&_@8Y"/#XN+BT$]B0.0!):0=B`]=*YZCJ?3F.S>*DYTKT+9H]RTN;OZ MV.XD@.:=VN&YV((^9:J^#_V5-!ZDT?ALS-J26[1;8LNBCQ,G`Q@LV:;&X).[ MB"T;;`M:'>,%A;]X0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`4MCOE2 MU#]38W^O?52I;'?*EJ'ZFQO]>^@J41$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1 M$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1 M$!$1`1$0$1$!$1`1$0$1$!$1`1$0$1$!$1`1%P:AO3XS`9*_4I27[-6M+/%4 MBWYV'M87"-NP)W<0`-@?7ZB@[T7RS2>L\W8T3?R-NWC( M;$C8]P">)V#ZG>(^AZD_#F0_005**6].\1]#U)^',A^@GIWB/H>I/PYD/T$%2BEO3O$? M0]2?AS(?H)Z=XCZ'J3\.9#]!!4HI"WY1,%3JS6;<6?@K0L=)+++I_(-9&P#< MN<3!L``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`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`B(@(B("\K<3YZLT44\E:21CFMFB M#2^,D;!S0X%NX]8W!'\P5ZH@^;8#R=WH,9ECE\I6?E[EUMJ*6K7KOOWH@(B("(B`B(@(L6MJG"V]/'.U,A'8Q/-\;;$(<\2O;(8N,8`WD)>.+0 MT'F2./+<;H=48F7#3Y,6)(ZT#Q%*R6O)'.R0\>,9A)OCC+F^-AW\3=^O!9G'9_&,R.&MQW*,CY(V3 MQ'=CRQ[F.XGYQR:X`CL?6"004'>BFZFN-/W+4,%6[)*V5[8VV&U9C7#W'9C3 M/PZ;2_=A8"XBQ:VJ,39S)QD-B0V>;XFO->1L$DC-^<<64U?AL;?EI33V9KL6W.O3ISVI&[@'XL3''L',+O](DBY;=1G(-#&8J#'7^_O)8E<"2!LR M-KG$GB\@;;EL<;VAS3L0"-P1V(W0=2(B`B\ MK=F"G5FLVYHX*T+'22RRN#61L`W+G$]@``225E2ZHQ+,!0S(L22T;[(Y*G1K MR2RV`]G-O")K3(X\-W$!NX:UQ(`:2`VEP9S%09FE'6M/D9''9KVP8R`><,S) MFCN#V+HP#_MOZO6N2;5.%@PT&5GR$<-&9YC;)('-(>.7-KFD'`=,1 MO+^(8XAC=48F_5NV&V)*L=)G5LC(5Y*;X8]B>HYDS6N#/"_9^W$\'#?PG8-I M%P5,SCK6`AS<5N-N)EK-N-LRGIL$)9S#WT-DV(8H=F[#L.,+3WW[D M_P"P&5;UQI^K:F@DNR.=`]S)Y(JLTL5?B=G/ED:PLC8"'M+W$-#HY03O&\-U M79G'-S\>$-N/W6DK.N"L#N\0M>UA>?Y#DX`;^OOMOQ.P=Z+%S6J,3AK3*MZQ M(;;V"1M>O7DL2N!)`V9&USB3Q>0-MRV.5P!$;RU-JC$Q8:#)FQ))6G>8HF15 MY))WR#ERC$+6F0O;P?R9QY-X/Y`<7;!M(B("(O*W9@IU9K-N:."M"QTDLLK@ MUD;`-RYQ/8``$DE!ZHL"?5^&BQ6,R#9[-B#)0BS494ISV)98BUKNITHV.>&@ M/9NXM`!>T'8N`/5?U%B,?BJV2M9&LS'V>)AL!XV#&0#SAF9,T=P>Q=&`?]M_5ZUWK%QNJ,3?J MW;#;$E6.DSJV1D*\E-\,>Q/4#AOX3MZMU!C':UDA M>&.`F8TD$QO&XW^*4&TB(@(BX*F9QUO,W\55MQRY"@R*2U"P[F$2\BSD?4"0 MPG;U[;';8C<.]%BX75&)S5I]?'6)'R!AEC,E>2)EB,$`R0O>T-F9XF^.,N;X MV'?Q-WY:FN-/W+4,%6[)*V5[8VV&U9C7#W'9C3/PZ;2_=A8"X*@PU*2M5?(^.2S8MDR$$\YIGS.'8#L'2$#_;;U^M=ZX*F9QUO,W\55MQR MY"@R*2U"P[F$2\BSD?4"0PG;U[;';8C?/RFK\-C;\M*:>S-=BVYUZ=.>U(W< M`_%B8X]@YA=_I$D7+;J,Y!OHL!NL,$^_7JPWNMU^F&6(89)*P=(`8VNL-:8F MN>',+6N<"[J,V!YMWWT!$1`1$0%P9/%09&[B;,SY&R8VRZW"&$`.>898=G;C MN.,SCVV[@?[@]Z("(B`B(@(B("(B`B(@(B("(B`B(@(B("+`RFM-+8F_+2RN MI<)1NQ;=2O9OQ12,W`(W:YP(W!!_X(7+[XVB/;'3?WI!^9!4HI;WQM$>V.F_ MO2#\R>^-HCVQTW]Z0?F096C,TW%Z#RV2FQF;?T,GD9Q4;C)VV9FR7)98^G$Y MH<[DV5G?;8;GD1Q=ME:>98SUFG#+0R4?G.9DR^6GM49JT4W0CB,$<9D:U_@> MZFUKBR/J"G,XCN0^J]\;1'MCIO[T@_,GOC:(]L=-_>D'YD&?@;)ROE"FRE)F M6FHOQ[H9#D\?+4%)X?'PCKB6.-Q$OPKI#X^\46Y:`P'/P%W)-\FF;.&JY*ME MYLGD(Z?G&/EB=')9NR&"=S)6`F)HGCD<[B0&A^X):6J@]\;1'MCIO[T@_,GO MC:(]L=-_>D'YD$>_"G$R7]-8W&W61S9S$W,>&02R0"G6;0#BZ?8L:6BK*.+W MAYXC8'FWE08&RZ&0Y/'RU!2>'Q\(ZXECC<1+\*Z0^/O%% MN6@,!T/?&T1[8Z;^](/S)[XVB/;'3?WI!^9!4HI;WQM$>V.F_O2#\R>^-HCV MQTW]Z0?F05*D,G,1Y5M/M%:ZZ-N)O1NG94E=`Q\DM9S&NE#>#21!+V)'J'^I MN_M[XVB/;'3?WI!^9/?&T1[8Z;^](/S(,J7--S'E(QU23&9MM7&33,AD?C)V M0OLF%P-@S.:&")C.K"WQ.ZCYR>(#&/=R-D;%HZV_+2:DQF0U---=DGQ6.GEM MUXW%K8F/#(I!#*VNV"(]@>3'%I+@7J@]\;1'MCIO[T@_,GOC:(]L=-_>D'YD M&)AW6X-6Z&AR&)DHV8].6(;,5.E)YG4F>:CA")&@QM`Z$H`Y=@UH_P`S=^7( M5;?I)#JRY1NF"OG#'Q96DDGBI0U+5=GP+`7/#K,\KVEH<3',UQ(:-F4OOC:( M]L=-_>D'YD]\;1'MCIO[T@_,@FJF&U%8P.-;3Q]*6B[+7LK-4R%J2E(_E>?8 MJ$D0R.:!R$CF$,=R#`X@!['4ODJ@O5?)GI6ME:OFEV#&5XI("7%S.,8`#@YK M2UVP')NWA.XW.VY>^-HCVQTW]Z0?F3WQM$>V.F_O2#\R"I12WOC:(]L=-_>D M'YD]\;1'MCIO[T@_,@I+<[*M6:Q*)'1Q,=(X11ND>0!N>+&@NV.F_O2#\R":TG&9'8:::IEAC\)6MY*Q-;QTL$MR_++ M*PV(X0"_=P%QYA^9MJ'9N_$,U=(V2W,ZIS!9EK&-F9%.VS?Q\L5H/;U>=:.( MQLD,,;!$6`,.[Y9?$]Q=MH>^-HCVQTW]Z0?F3WQM$>V.F_O2#\R":P]6W?\` M(UH_`>8W8I+U:GB[\=BM)%T861CSILH<`Y@='%+$UX'=TD?$CD'#RHLL5+^* MJ3T,D)<1G\KE[;FT9G1BM*+QC='(&ELKCYS#\'&7/W<1QW:[:J]\;1'MCIO[ MT@_,GOC:(]L=-_>D'YD'CH2JR"UD9,/1DQFF)&0BE1EK.J\9@9.O(R%P#HF. MWB'$AN[F2/X^/G)7J6]\;1'MCIO[T@_,GOC:(]L=-_>D'YD%2BEO?&T1[8Z; M^](/S)[XVB/;'3?WI!^9!XY.8CRK:?:*UUT;<3>C=.RI*Z!CY):SF-=*&\&D MB"7L2/4/]3=\7-ZF;/K2)TF#U)8JX/SE\,<&)GVL617>3,R1S6L+0SJPL'(] M1\^_$!C'NH/?&T1[8Z;^](/S)[XVB/;'3?WI!^9!*Z@I6,=Y/ZNFW#)6=1OA M\\FCI4)IJ62N/7I&-D$LY=S:71>!VQ+&'94F3F(\JVGVBM==&W$WHW M3LJ2N@8^26LYC72AO!I(@E[$CU#_`%-W]O?&T1[8Z;^](/S)[XVB/;'3?WI! M^9!-9"K;])(=67*-TP5\X8^+*TDD\5*&I:KL^!8"YX=9GE>TM#B8YFN)#1LR M5DQ.9K2Y+(-BS\-ZS6N2Z=CK0R\!:FOW)V&;BWX$%LE,N9.61N["1KC%\']/ M]\;1'MCIO[T@_,GOC:(]L=-_>D'YD%2BEO?&T1[8Z;^](/S)[XVB/;'3?WI! M^9!4KRMSLJU9K$HD='$QTCA%&Z1Y`&YXL:"YQ_D`"3Z@%-^^-HCVQTW]Z0?F M3WQM$>V.F_O2#\R"5Q>0RQROCZ4+&AO)[Y8H6V M6/CW)WFC[.)!;J^^-HCVQTW]Z0?F3WQM$>V.F_O2#\R#/TC9+C(T=@]L+SN6]G4OOC:(]L=-_>D'YD]\;1'M MCIO[T@_,@FO)S5MBUHZO+1NP28#3DF+R!L5I(F,L$TP&L>\!LP_AY?'&7-\( M._B;O5:&K3^:Y3*7(9(+.7R$MPQ/:6<8@&PP'@?$PN@AA M^-HCVQTW]Z0?F3WQM$>V.F_O2#\R"I12WOC:(]L=-_>D'YD]\;1'MCIO[T@_ M,@J5(8R8GRK:@::UUL;L31C;.^I*V![XY;+GM;*6\'$">+L"?6?]+MO;WQM$ M>V.F_O2#\R>^-HCVQTW]Z0?F01]S4-_,Y;+W<1BL_6R8Q\F.PTEG$3Q1U7R3 MQQFQ(Z1@!#WNADX`2<(JKG'BYSHUJYZO7@M::P&`KY;;"V:C8Z#J$QH20M,8 M+I+#X^#C#%RD9\+_`(K&;ASVM:MOWQM$>V.F_O2#\R>^-HCVQTW]Z0?F0>., MF)\JVH&FM=;&[$T8VSOJ2M@>^.6RY[6REO!Q`GB[`GUG_2[:;Q#+&)S>*U9E MJ&2#V.F_O M2#\R>^-HCVQTW]Z0?F00&E\5DL4[36-O86RRU5AQ<4M%L$LE:TZ.!C7VY9V; MP-EA._%KCN[S9OQBZLZ'[0I;WQM$>V.F_O2#\R>^-HCVQTW]Z0?F05**6]\; M1'MCIO[T@_,GOC:(]L=-_>D'YD%2BEO?&T1[8Z;^](/S)[XVB/;'3?WI!^9! M4HI;WQM$>V.F_O2#\RZL7K32V6OQ4L5J7"7KLN_3KUK\4LC]@2=FM<2=@"?^ M`4&^B(@(B("(B`B(@(B("(B`B(@(B("(B"6T=_XBUU]6@R$;Q8JNO96U;@,@!`:]DLCP`0XCDTOCGD7\D$>F-!U:V?L9:+,6'NLVXJ6:L MP11/=L`P"%[&DAK6@GQ>+?9Q:&[?2<+IJCAK3[%2?+22.88R+F6M6F;$@]F2 MR.:#V'<#?UC?N4'EB]31Y._$RKC,D[&S[BME1&QU:P0"=V\7%X:0'<9',:QV MPXN/-G+ETKK2OGX<=-)B\EBHLG"V?'OO='C;:6<]F&.1^SN'BX/XN(#B`0Q_ M%I7&9O!PX["-;C78'&PMKPVS*]UF>)C.,;'1<0UCAX>4@>X.X'9C.>T>5HS3 M&;KXW2=+43,;7BTU#&VN:-E\[K4K:SJ_)_.-G3:&/>>(Y$ES?$T,(>&UIC5, MF=R>1I.T_EL:Z@_HSRW'5BQLI9'((QTIGDDLE8[?;CZQOOV5(L7`8J?'974E MF9\;H\ED&6X0PDEK!5KP[.W'8\H7'MOV(_W`VD!$1`1$0$1$!3B7<(V-+G'8`D[`'L!NO+-8FOF:K*]N2['&UXD!IW9JK]P".[ MXGM<1W/8G;U';L%(:L\FU+)Z6S-#'W;3*X.;N1N M"T@C?L?4@:7\L.A=4YVMAL#G/.LE9Y=*'S2=G+BTO=XG,`'A:3W/S*^7Y8\E M_P#9RU'IS76,RN>R6-=C:_5ZHQM^S#8/*)[6\'M8PCQ.&^SAVW'?U']!U-%X MNK:AL16L^Z2)[9&B7/7I&$@[CDQTQ:X?S!!!]1"#DR>N8J%W,L?A,M+C\,\- MOY*,U^A`.BR9SN)E$K@V.1I/%A)[@`GLJ5F1HOZ/"Y6=UIGUHMI6GG*SGSC; MW[N;TY-VCN.#M_45"Y3R=P7,WF,_YEB9<][K5\EC;4T0<]K(H((S"]Y:2T., M$?AJN3R&0WM1OG=8\[CM^%\7A:&L=:XEG( M]1NYY1D<7!5>FFEOGR!&X+=M]AXAW[J+]#=1C^,CKXUE^/X* ML[W:LNMP,^,/X]T)?+$'DN\VFBD87'P[.<0T-/)Q:`2,INN8I)!3K83+3YMKY&S8IAKB>$,;$YSG M/=*(2.-BN?#(X_"CMNUX;[4,9F\)I')5L0W&SYF2[>M51:E>VN.O;EE9S+6E MWA;(-P!W((!`/)8F-T]J+'VJ.8AH8F3,0LM5[$**G=K1W*QO8^:P(^%VN"P&5@8]SFCX6([2!COA!X M>SN,KAM`97#X^M@H;%*QB39QER:\][XYV/IQU6\&P!KFN#_,VGD9&\>J>SN` MYZNB]+Y7%6L&W)&DVM@,2_#U9*\SY'W&.,'PKVEC1$=JS?`#)_B'Q>'=P:M/ M7&G;%B.M-EJ5*]+9FJ0T[=F..>5\=B2ONQA=NX.?$X-V]?\`SN%ZNU?A!E7T MFY"M)TH;09H#*C%:[K&Q2ZF=Q]J MI6/-^S'RVLA,TO\`#V'&Y$#MOW#O7L"YI!/(-J(B`B(@(B("(L#*: M3QV3ORV[-G-LEDVY-K9JY7C&P`[1QRM:WU?,!N=R>Y*#:MV8*=6:S;FC@K0L M=)++*X-9&P#NO,=F2?45AT<=?;Q-+9K(:XOW#=BUPX\]]CQ* MS_[/ODYS^+TY>Q6O*>;Q_F\P?1=6U%-'&Z-^YS)9'-![#N!OZQOW*AJOD^S>)Q^E)L)P'^;36H22=U9@CW('BL1R1;N+0"PN.S"UY6M8.I8BQS=6>*:O`RG(V`R3. MGE;%'P>V4Q'QNV(,@+0-R`'-+I]GD]OX7HOPF5]UVOA?3NU,\R(Q6JSNRR9_&9T0 M=$U[6-8V)D?"/I@M'C<`%I@\U'E>O%)5LT,A7XF>C;X=6)KM^#O`YS7-=L=G M-2?3^;O5\Q=FGK8_,Y:&MCWBG8>6U*L#7&?C/.YK^+6AW3'$ MAKG/RHO)[?Q&7I7<+E?.F5-K+(+S(H8^O'$:\3&MKPL:UKH)9F.?Q_@R-X!\+G/\(:>Y/8=UY8S5FGW3WD!,NQ<`W=W+K/065FQ=1K64K;1D+(?$Z!]EA9;S=6RTOBV;S8V*-_ M4&X]1[[;N`?29M6:=@PT&7FS^)CQ-AYCANON1B"1XY>%LA/$GPN[`_Y3_(KK MFS6*@S,&(FR5*/+6&&2&D^=@GD8.7B;&3R(\+NX'^4_R*BJNFM14M0RZHA@Q M,V6M/L";'/NR,@B9)'3CW;8$)<\CS%IV,3?\4C?P`O\`+#:%R6&LX2I6]S9L M?3AIQ6++Y)6=<01L:"^F0Z-\O*)CFSA['LVC'B;&6R!2Z+UIAM8-O^XUF.62 MB^..=C9XI>)?$V0=XGN:1XG,W!VY1O`)X[II[7&GXE\=&O7D M!:YC=AR@W:=SN'=PW;O*R>2G*V_)'E]'V+U*&SD'XT><,YO9&R"O2BD.Q`). M]:0M';?=NY;N=@OX-<:=F=)[]BOFN6T#G#.D(WA]$1$0%+:Q_\ M1:%^N9/_`&^XJE2VL?\`Q%H7ZYD_]ON(*E$1`1$0$1$!$1`1$0$1$!$1`1$0 M$1$$M8TC/[KY._C=3YO&>Z,S;$\%9E1\?4;%'%N.K`]PW;$SMRVWW3T8R_MU MJ3[#'_M54H@EO1C+^W6I/L,?^U3T8R_MUJ3[#'_M54H@EO1C+^W6I/L,?^U3 MT8R_MUJ3[#'_`+55*();T8R_MUJ3[#'_`+5/1C+^W6I/L,?^U52B"6]&,O[= M:D^PQ_[5/1C+^W6I/L,?^U52B"6]&,O[=:D^PQ_[5/1C+^W6I/L,?^U52B"6 M]&,O[=:D^PQ_[5/1C+^W6I/L,?\`M54H@EO1C+^W6I/L,?\`M4]&,O[=:D^P MQ_[55*();T8R_MUJ3[#'_M4]&,O[=:D^PQ_[55*();T8R_MUJ3[#'_M4]&,O M[=:D^PQ_[55*();T8R_MUJ3[#'_M4]&,O[=:D^PQ_P"U52B"6]&,O[=:D^PQ M_P"U3T8R_MUJ3[#'_M54H@EO1C+^W6I/L,?^U3T8R_MUJ3[#'_M54H@EO1C+ M^W6I/L,?^U3T8R_MUJ3[#'_M54H@EO1C+^W6I/L,?^U3T8R_MUJ3[#'_`+55 M*();T8R_MUJ3[#'_`+5/1C+^W6I/L,?^U52B"6]&,O[=:D^PQ_[5/1C+^W6I M/L,?^U52B"6]&,O[=:D^PQ_[5/1C+^W6I/L,?^U52B"6]&,O[=:D^PQ_[5/1 MC+^W6I/L,?\`M54H@EO1C+^W6I/L,?\`M4]&,O[=:D^PQ_[55*();T8R_MUJ M3[#'_M4]&,O[=:D^PQ_[55*();T8R_MUJ3[#'_M4]&,O[=:D^PQ_[55*();T M8R_MUJ3[#'_M4]&,O[=:D^PQ_P"U52B"6]&,O[=:D^PQ_P"U3T8R_MUJ3[#' M_M54H@EO1C+^W6I/L,?^U3T8R_MUJ3[#'_M54H@EO1C+^W6I/L,?^U3T8R_M MUJ3[#'_M54H@EO1C+^W6I/L,?^U3T8R_MUJ3[#'_`+55*();T8R_MUJ3[#'_ M`+5/1C+^W6I/L,?^U52B"6]&,O[=:D^PQ_[5/1C+^W6I/L,?^U52B"6]&,O[ M=:D^PQ_[5/1C+^W6I/L,?^U52B"6]&,O[=:D^PQ_[5/1C+^W6I/L,?\`M54H M@EO1C+^W6I/L,?\`M4KZ1G]U\9?R6I\WD_ -----END PRIVACY-ENHANCED MESSAGE-----