Exhibit 10.2

CLEAN DIESEL TECHNOLOGIES INC.

2,030,000 Units

Each Unit Consisting

of

One Share of Common Stock

and

0.4 of a Warrant, each Warrant to Purchase One Share of Common Stock

PLACEMENT AGENT AGREEMENT

April 1, 2014

Roth Capital Partners, LLC

888 San Clemente Drive

Newport Beach, CA 92660

Craig-Hallum Capital Group LLC

222 South Ninth Street, Suite 350

Minneapolis, MN 55402

Dear Sirs:

1. INTRODUCTION. Clean Diesel Technologies Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to the purchasers, pursuant to the terms
and conditions of this Placement Agent Agreement (this “Agreement”) and the
Subscription Agreements in the form of Exhibit A attached hereto (the
“Subscription Agreements”) entered into with the purchasers identified therein
(each a “Purchaser” and collectively, the “Purchasers”), up to an aggregate of
(i) 2,030,000 shares (the “Shares”) of common stock, $0.01 par value per share
(the “Common Stock”) of the Company and (ii) warrants (the “Warrants”) to
purchase an aggregate of up to 812,000 shares of Common Stock (the “Warrant
Shares”). The form of the Warrant is attached hereto as Exhibit B. The Shares
and Warrants shall be sold together as units (the “Units”), each Unit consisting
of one Share and 0.4 of one Warrant, each Warrant to purchase one share of
Common Stock. The Units will not be separately issued or certificated and the
Shares and the Warrants shall be immediately separable and transferable upon
issuance. The Shares, the Warrants and the Warrant Shares are collectively
referred to herein as the “Securities.” The Company hereby confirms its
agreement with Roth Capital Partners, LLC (“Roth”) and Craig-Hallum Capital
Group LLC (each a “Placement Agent” and collectively, the “Placement Agents”) to
act as Placement Agents in accordance with the terms and conditions hereof.

2. AGREEMENT TO ACT AS PLACEMENT AGENT; PLACEMENT OF SECURITIES. On the basis of
the representations, warranties and agreements of the Company herein contained,
and subject to all the terms and conditions of this Agreement:

(a) The Company hereby authorizes the Placement Agents to act as its exclusive
agents to solicit offers for the purchase of all or part of the Units from the
Company in connection with the proposed offering of the Shares and the Warrants
(the “Offering”). Until the Closing Date (as defined in Section 4 hereof) or
earlier upon termination of this Agreement pursuant to Section 9 the Company
shall not, without the prior written consent of the Placement Agents, solicit or
accept offers to purchase the Units otherwise than through the Placement Agents.

(b) The Company hereby acknowledges that the Placement Agents have agreed, as
agents of the Company, to use their reasonable efforts to solicit offers to
purchase the Units from the Company on the terms and subject to the conditions
set forth in the Prospectus (as defined below). The Placement Agents shall use
reasonable efforts to assist the Company in obtaining performance by each
Purchaser whose offer to purchase Units has been solicited by the Placement
Agents and accepted by the Company, but the Placement Agents shall not, except
as otherwise provided in this Agreement, be obligated to disclose the identity
of any potential purchaser or

 

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have any liability to the Company in the event any such purchase is not
consummated for any reason. Under no circumstances will either of the Placement
Agents be obligated to underwrite or purchase any Units for its own account and,
in soliciting purchases of the Units, each of the Placement Agents shall act
solely as the Company’s agent and not as principal.

(c) Subject to the provisions of this Section 2, offers for the purchase of the
Units may be solicited by the Placement Agents as agents for the Company at such
times and in such amounts as the Placement Agents deem advisable. Each of the
Placement Agents shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Units received by it as agent of the Company. The
Company shall have the sole right to accept offers to purchase Units and may
reject any such offer, in whole or in part. Each of the Placement Agents shall
have the right, in its discretion reasonably exercised, without notice to the
Company, to reject any offer to purchase Units received by it, in whole or in
part, and any such rejection shall not be deemed a breach of this Agreement.

(d) The Units are being sold to the Purchasers at an aggregate initial public
offering price of $3.40 per Unit (the “Public Offering Price”). The purchases of
Units by the Purchasers shall be evidenced by the execution of Subscription
Agreements by each of the Purchasers and the Company.

(e) As compensation for services rendered, on the Closing Date (as defined in
Section 4 hereof), the Company shall pay to each Placement Agent by wire
transfer of immediately available funds to an account or accounts designated by
such Placement Agent, an aggregate amount equal to seven percent (7%) of the
gross proceeds received by the Company (the “Placement Fee”) from the sale of
the Units on such Closing Date that were solicited by such Placement Agent. Each
of the Placement Agents may retain other brokers or dealers to act as sub-agents
on its behalf in connection with the Offering, the fees of which shall be paid
out of the Placement Fee paid to such Placement Agent.

(f) No Units which the Company has agreed to sell pursuant to this Agreement and
the Subscription Agreements shall be deemed to have been purchased and paid for,
or sold by the Company, until such the Shares and Warrants comprising such Units
shall have been delivered to the Purchaser thereof against payment by such
Purchaser. If the Company shall default in its obligations to deliver the Shares
and Warrants comprising the Units to a Purchaser whose offer it has accepted,
the Company shall indemnify and hold each of the Placement Agents harmless
against any loss, claim, damage or expense arising from or as a result of such
default by the Company in accordance with the procedures set forth in
Section 8(c) herein.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to, and agrees with, the Placement Agents that:

(a) The Company has prepared and filed in conformity with the requirements of
the Securities Act of 1933, as amended (the “Securities Act”), and published
rules and regulations thereunder (the “Rules and Regulations”) adopted by the
Securities and Exchange Commission (the “Commission”), a “shelf” Registration
Statement (as hereinafter defined) on Form S-3 (File No. 333-181443), which
became effective on May 21, 2012 (the “Effective Date”), including a base
prospectus relating to the securities registered pursuant to such Registration
Statement (the “Base Prospectus”), and such amendments and supplements thereto
as may have been required to the date of this Agreement. The term “Registration
Statement” as used in this Agreement means such registration statement
(including all exhibits, financial schedules and all documents and information
deemed to be a part of the Registration Statement pursuant to Rule 430A under
the Rules and Regulations), as amended and/or supplemented to the date of this
Agreement, including the Base Prospectus. The Registration Statement is
effective under the Securities Act and no stop order preventing or suspending
the effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus has been issued by the Commission and no proceedings for
that purpose have been instituted or, to the knowledge of the Company, are
threatened by the Commission. The Company, if required by the Rules and
Regulations of the Commission, will file the Prospectus (as defined below), with
the Commission pursuant to Rule 424(b) under the Rules and Regulations. The term
“Prospectus,” as used in this Agreement means the Prospectus, in the form in
which it is to be filed with the Commission pursuant to Rule 424(b) under the
Rules and Regulations, or, if the Prospectus is not to be filed with the
Commission pursuant to Rule 424(b), the Prospectus in the form included as part
of the Registration Statement as of the Effective Date, except that if any
revised prospectus or prospectus supplement shall be provided to the Placement
Agents by the

 

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Company for use in connection with the offering and sale of the Shares and the
Warrants which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b) under the Rules and Regulations), the term “Prospectus”
shall refer to such revised prospectus or prospectus supplement, as the case may
be, from and after the time it is first provided to the Placement Agents for
such use. Any preliminary prospectus or prospectus subject to completion
included in the Registration Statement or filed with the Commission pursuant to
Rule 424 under the Rules and Regulations is hereafter called a “Preliminary
Prospectus.” Any reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), on or before the last to occur of the Effective Date, the date
of the Preliminary Prospectus, or the date of the Prospectus, and any reference
herein to the terms “amend,” “amendment,” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include (i) the filing of any document under the Exchange
Act after the Effective Date, the date of such Preliminary Prospectus or the
date of the Prospectus, as the case may be, which is incorporated by reference
and (ii) any such document so filed. If the Company has filed an abbreviated
registration statement to register additional securities pursuant to Rule 462(b)
under the Rules and Regulations (the “462(b) Registration Statement”), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement.

(b) As of the Applicable Time (as defined below) and as of the Closing Date,
neither (i) any General Use Free Writing Prospectus (as defined below) issued at
or prior to the Applicable Time, and the Pricing Prospectus (as defined below)
and the information included on Schedule A hereto, all considered together
(collectively, the “General Disclosure Package”), (ii) any individual Limited
Use Free Writing Prospectus (as defined below), nor (iii) the bona fide
electronic road show (as defined in Rule 433(h)(5) under the Rules and
Regulations), if any, that has been made available without restriction to any
person, when considered together with the General Disclosure Package, included
or will include, any untrue statement of a material fact or omitted or as of the
Closing Date will omit, to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from any
Issuer Free Writing Prospectus, in reliance upon, and in conformity with,
written information furnished to the Company by the Placement Agents
specifically for inclusion therein, which information the parties hereto agree
is limited to the Placement Agents’ Information (as defined in Section 17). As
used in this paragraph (b) and elsewhere in this Agreement:

“Applicable Time” means 9:00 A.M., New York time, on the date of this Agreement.

“General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is identified on Schedule A to this Agreement.

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 under the Rules and Regulations relating to the Securities
in the form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s records pursuant to
Rule 433(g) under the Rules and Regulations.

“Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus
that is not a General Use Free Writing Prospectus.

“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base
Prospectus, each as amended and supplemented immediately prior to the Applicable
Time, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof.

(c) No order preventing or suspending the use of the Base Prospectus, any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus
relating to the Offering has been issued by the Commission, and no proceeding
for that purpose or pursuant to Section 8A of the Securities Act has been
instituted or threatened by the Commission, and each Preliminary Prospectus (if
any), at the time of filing thereof, conformed in all material respects to the
requirements of the Securities Act and the Rules and Regulations, and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;

 

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provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from any Preliminary Prospectus, in reliance
upon, and in conformity with, written information furnished to the Company by
the Placement Agents specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’ Information (as defined
in Section 17).

(d) At the time the Registration Statement became or becomes effective, at the
date of this Agreement and at the Closing Date, the Registration Statement
conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing representations and warranties in this paragraph (d) shall
not apply to information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17).

(e) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Shares and the Warrants or until any earlier date that the Company notified or
notifies the Placement Agents as described in Section 5(e), did not, does not
and will not include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement, Pricing Prospectus
or the Prospectus, including any document incorporated by reference therein and
any prospectus supplement deemed to be a part thereof that has not been
superseded or modified, or includes an untrue statement of a material fact or
omitted or would omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances prevailing at the subsequent time, not misleading. The foregoing
sentence does not apply to statements in or omissions from any Issuer Free
Writing Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agents specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement
Agents’ Information (as defined in Section 17).

(f) The documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder
and none of such documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

(g) The Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering other than any
Pricing Prospectus, the Prospectus and other materials, if any, permitted under
the Securities Act and consistent with Section 5(b) below. The Company is not an
“ineligible issuer” in connection with the offering pursuant to Rules 164, 405
and 433 under the Securities Act. The Company will file with the Commission all
Issuer Free Writing Prospectuses (other than a “road show,” as defined in Rule
433(d)(8) under the Rules and Regulations), if any, in the time and manner
required under Rules 163(b)(2) and 433(d) under the Rules and Regulations.

(h) The Company and each Subsidiary (as defined below) has been duly organized
and is validly existing as a corporation in good standing (or the foreign
equivalent thereof) under the laws of each of their respective jurisdictions of
organization. The Company and each Subsidiary is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
its ownership or lease of property or the conduct

 

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of its business requires such qualification and has all power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged, except where the failure to so qualify, be in good standing or have
such power or authority (i) would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise), results of
operations, assets, properties or business or prospects of the Company or any
Subsidiary, taken as a whole, or (ii) impair in any material respect the ability
of the Company to perform its obligations under this Agreement or to consummate
any transactions contemplated by the Agreement, the Registration Statement, the
General Disclosure Package or the Prospectus (any such effect as described in
clauses (i) or (ii), a “Material Adverse Effect”). The Company owns or controls,
directly or indirectly, only the following corporations, partnerships, limited
liability partnerships, limited liability companies, associations or other
entities: Clean Diesel Technologies Limited, Catalytic Solutions, Inc., CSI
Aliso, Inc., Catalytic Solutions Holdings, Inc., Catalytic Solutions Czechia
s.r.o., ECS Holdings, Inc., Engine Control Systems, Ltd., Engine Control Systems
Limited, and CDTI Sweden AB (each, a “Subsidiary” and, collectively, the
“Subsidiaries”).

(i) The Company has the full right, power and authority to enter into this
Agreement, the Warrants and each of the Subscription Agreements and to perform
and to discharge its obligations hereunder and thereunder; and each of this
Agreement, the Warrants and each of the Subscription Agreements have been duly
authorized, executed and delivered by the Company, and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity.

(j) The shares of Common Stock and Warrants to be issued and sold by the Company
to the Purchasers hereunder and under the Subscription Agreements and the
Warrant Shares have been duly authorized and the Common Stock, when issued and
delivered against payment therefor as provided herein and in the Subscription
Agreements and the Warrant Shares, when issued and delivered against payment
therefore as provided in the Warrants, will be validly issued, fully paid and
non-assessable and free of any preemptive or similar rights and will conform to
the description thereof contained in the General Disclosure Package and the
Prospectus.

(k) The Company has an authorized capitalization as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus, and
all of the issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in all material respects in compliance with United States federal and
state securities laws, and conform to the description thereof contained in the
Registration Statement, the General Disclosure Package and the Prospectus. As of
March 31, 2014, there were 10,150,575 shares of Common Stock issued and
outstanding and no shares of Preferred Stock, par value $0.01 of the Company,
issued and outstanding. In addition, as of March 31, 2014, 11,666,319 shares of
Common Stock were issuable upon the exercise of all options, warrants and
convertible securities outstanding as of such date. Since such date, the Company
has not issued any securities, other than Common Stock of the Company issued
pursuant to the exercise of previously outstanding warrants, or the exercise of
stock options previously outstanding under the Company’s stock option plans. All
of the Company’s options and warrants have been duly authorized and validly
issued and were issued in all material respects in compliance with United States
federal and state securities laws. None of the outstanding shares of Common
Stock was issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding shares of capital stock, options,
warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any Subsidiary other than
those described above or accurately described in the Registration Statement, the
General Disclosure Package and the Prospectus. The description of the Company’s
stock incentive plan, and other stock plans or arrangements, and the options or
other rights granted thereunder, as described in the Registration Statement, the
General Disclosure Package and the Prospectus, accurately and fairly present the
information required to be shown with respect to such plans, arrangements,
options and rights.

(l) All the outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable and,
except to the extent set forth in the Registration Statement, the General
Disclosure Package and the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned Subsidiaries, free and clear of any
claim, lien, encumbrance, security interest, restriction upon voting or transfer
or any other claim of any third party.

 

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(m) The execution, delivery and performance of this Agreement, the Subscription
Agreements and the Warrants by the Company, the issue and sale of the Securities
by the Company and the consummation of the transactions contemplated hereby and
thereby will not (with or without notice or lapse of time or both): (i) conflict
with or result in a breach or violation of any of the terms or provisions of,
constitute a default or Debt Repayment Triggering Event (as defined below)
under, give rise to any right of termination or other right or the cancellation
or acceleration of any right or obligation or loss of a benefit under, or give
rise to the creation or imposition of any lien, encumbrance, security interest,
claim or charge upon any property or assets of the Company or any Subsidiary
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of the property or
assets of the Company or any Subsidiary is subject (each, a “Contract” and,
collectively, the “Contracts”); (ii) result in any violation of the provisions
of the charter or by-laws (or analogous governing instruments, as applicable) of
the Company or any Subsidiary; or, (iii) to the Company’s knowledge, result in
the violation of any law, statute, rule, regulation, judgment, order or decree
of any court or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their properties or
assets, except with respect to clauses (i) and (iii), any breaches, violations
or defaults which, singularly or in the aggregate, would not have a Material
Adverse Effect. A “Debt Repayment Triggering Event” means any event or condition
that gives, or with the giving of notice or lapse of time would give the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder’s behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
Subsidiary.

(n) Except for the registration of the securities offered in the Offering under
the Securities Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange Act and applicable state
or foreign securities laws and the Financial Industry Regulatory Authority
(“FINRA”) in connection with the offering and sale of the Securities by the
Company and the Nasdaq Stock Market LLC in connection with the listing of the
Shares by the Company, no consent, approval, authorization or order of, or
filing, qualification or registration with, any court or governmental agency or
body, foreign or domestic, which has not been made, obtained or taken and is not
in full force and effect, is required for the execution, delivery and
performance of this Agreement, the Subscription Agreements and the Warrants by
the Company, the offer or sale of the Securities or the consummation of the
transactions contemplated hereby or thereby.

(o) BDO USA LLP, who have certified certain financial statements and related
schedules included or incorporated by reference in the Registration Statement,
the General Disclosure Package and the Prospectus, is an independent registered
public accounting firm as required by the Securities Act and the Rules and
Regulations and the Public Company Accounting Oversight Board (United States)
(the “PCAOB”). Except as pre-approved in accordance with the requirements set
forth in Section 10A of the Exchange Act, BDO USA LLP has not been engaged by
the Company to perform any “prohibited activities” (as defined in Section 10A of
the Exchange Act).

(p) The financial statements, together with the related notes and schedules,
included or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus fairly present in all material respects
the financial position and the results of operations and changes in financial
position of the Company and its Subsidiaries and other consolidated entities at
the respective dates or for the respective periods therein specified. Such
statements and related notes and schedules have been prepared in accordance with
the generally accepted accounting principles in the United States (“GAAP”)
applied on a consistent basis throughout the periods involved except as may be
set forth in the related notes included or incorporated by reference in the
General Disclosure Package. The financial statements, together with the related
notes and schedules, included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus comply in all
material respects with the Securities Act, the Exchange Act, and the Rules and
Regulations and the rules and regulations under the Exchange Act. No other
financial statements or supporting schedules or exhibits are required by the
Securities Act or the Rules and Regulations to be described, or included or
incorporated by reference in the Registration Statement, the General Disclosure
Package or the Prospectus. There is no pro forma or as adjusted financial
information which is required to be included in the Registration Statement, the
General Disclosure Package, or the Prospectus or a document incorporated by
reference therein in accordance with the Securities Act and the Rules and
Regulations which has not been included or incorporated as so required. The pro
forma and pro forma as adjusted financial information and the related notes
included or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus have been properly compiled and

 

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prepared in accordance with the applicable requirements of the Securities Act
and the Rules and Regulations and present fairly the information shown therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein.

(q) Neither the Company nor any Subsidiary has sustained, since the date of the
latest audited financial statements included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the Prospectus, any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Registration Statement, the General Disclosure Package and
the Prospectus; and, since such date, there has not been any change in the
capital stock or long-term debt of the Company or any Subsidiary or any material
adverse changes, or any development involving a prospective material adverse
change, in or affecting the business, assets, management, financial position,
prospects, stockholders’ equity or results of operations of the Company or any
Subsidiary, otherwise than as set forth or contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus.

(r) Except as set forth in the Registration Statement, the General Disclosure
Package and the Prospectus, there is no legal or governmental action, suit,
claim or proceeding pending to which the Company or any Subsidiary is a party or
of which any property or assets of the Company or any Subsidiary is the subject
which is required to be described in the Registration Statement, the General
Disclosure Package or the Prospectus or a document incorporated by reference
therein and is not described therein, or which, singularly or in the aggregate,
if determined adversely to the Company or any Subsidiary could have a Material
Adverse Effect or prevent the consummation of the transactions contemplated
hereby; and to the best of the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.

(s) Neither the Company nor any Subsidiary is in (i) violation of its charter or
by-laws (or analogous governing instrument, as applicable), (ii) default in any
respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject or
(iii) to the Company’s knowledge, violation of any law, ordinance, governmental
rule, regulation or court order, decree or judgment to which it or its property
or assets is subject except, in the case of clauses (ii) and (iii) of this
paragraph(s), for any violations or defaults which, singularly or in the
aggregate, would not have a Material Adverse Effect.

(t) The Company and each Subsidiary possesses all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings
with, the appropriate local, state, federal or foreign regulatory agencies or
bodies which are necessary or desirable for the ownership of its properties or
the conduct of their respective businesses as described in the Registration
Statement, the General Disclosure Package and the Prospectus (collectively, the
“Governmental Permits”) except where any failures to possess or make the same,
singularly or in the aggregate, would not have a Material Adverse Effect. The
Company and each Subsidiary is in compliance with all such Governmental Permits,
and all such Governmental Permits are valid and in full force and effect, except
where any non-compliance or the validity or failure to be in full force and
effect would not, singularly or in the aggregate, have a Material Adverse
Effect. To the Company’s knowledge, all such Governmental Permits are free and
clear of any restriction or condition that are in addition to, or materially
different from those normally applicable to similar licenses, certificates,
authorizations and permits. Neither the Company nor any Subsidiary has received
notification of any revocation or modification (or proceedings related thereto)
of any such Governmental Permit and, to the Company’s knowledge, there is no
reason to believe that any such Governmental Permit will not be renewed.

(u) Neither the Company nor any Subsidiary is or, after giving effect to the
offering of the Securities and the application of the proceeds thereof as
described in the Registration Statement, the General Disclosure Package and the
Prospectus, will become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.

(v) Neither the Company nor any Subsidiary, nor to the Company’s knowledge, any
of the Company’s and any Subsidiary’s officers, directors or affiliates has
taken or will take, directly or indirectly, any

 

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action designed or intended to stabilize or manipulate the price of any security
of the Company, or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any security of the Company.

(w) Except as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, to the best of the Company’s knowledge, the Company
and each Subsidiary owns or possesses the right to use all patents, trademarks,
trademark registrations, service marks, service mark registrations, trade names,
copyrights, licenses, inventions, software, databases, know-how, Internet domain
names, trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, and other intellectual property
(collectively, “Intellectual Property”) necessary to carry on their respective
businesses as currently conducted, and as proposed to be conducted and described
in the Registration Statement, the General Disclosure Package and the
Prospectus, and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company or any Subsidiary
with respect to the foregoing except for those that could not have a Material
Adverse Effect. The Intellectual Property licenses described in the Registration
Statement, the General Disclosure Package and the Prospectus are valid, binding
upon, and enforceable by or against the parties thereto in accordance with their
terms. Except as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, the Company and each Subsidiary has complied with,
and is not in breach nor has received any asserted or threatened claim of breach
of, any Intellectual Property license, and the Company has no knowledge of any
breach or anticipated breach by any other person to any Intellectual Property
license, except for any such breach or noncompliance that, individually or in
the aggregate, would not have a Material Adverse Effect. To the best of the
Company’s knowledge, the Company’s and each Subsidiary’s business as now
conducted and as proposed to be conducted does not and will not infringe or
conflict with any valid patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses or other Intellectual Property or franchise
right of any person, except for any such acts that would not have a Material
Adverse Effect. No claim has been made against the Company or any Subsidiary
alleging the infringement by the Company or any Subsidiary of any patent,
trademark, service mark, trade name, copyright, trade secret, license in or
other intellectual property right or franchise right of any person. Except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, the Company and each Subsidiary has taken all reasonable steps to
protect, maintain and safeguard its rights in all Intellectual Property,
including the execution of appropriate nondisclosure and confidentiality
agreements, other than those that would not have a Material Adverse Effect. The
consummation of the transactions contemplated by this Agreement will not result
in the loss or impairment of or payment of any additional amounts with respect
to, nor require the consent of any other person in respect of, each of the
Company’s and each Subsidiary’s right to own, use, or hold for use any of the
Intellectual Property as owned, used or held for use in the conduct of its
business as currently conducted. The Company and each Subsidiary has at all
times complied in all material respects with all applicable laws relating to
privacy, data protection, and the collection and use of personal information
collected, used, or held for use by the Company or any Subsidiary in the conduct
of the Company’s or any Subsidiary’s business. No claims have been asserted or
threatened against the Company or any Subsidiary alleging a violation of any
person’s privacy or personal information or data rights and the consummation of
the transactions contemplated hereby will not breach or otherwise cause any
violation of any law related to privacy, data protection, or the collection and
use of personal information collected, used, or held for use by the Company or
any Subsidiary in the conduct of the Company’s or any Subsidiary’s business. The
Company and each Subsidiary takes reasonable measures to ensure that such
information is protected against unauthorized access, use, modification, or
other misuse.

(x) The Company and each Subsidiary has good and marketable title in fee simple
to, or have valid rights to lease or otherwise use, all items of real or
personal property which are material to the business of the Company and any
Subsidiary, free and clear of all liens, encumbrances, security interests,
claims and defects that do not, singularly or in the aggregate, materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any Subsidiary; and all
of the leases and subleases material to the business of the Company or any
Subsidiary, and under which the Company or any Subsidiary holds properties
described in the Registration Statement, the General Disclosure Package and the
Prospectus, are in full force and effect, and neither the Company nor any
Subsidiary has received any notice of any material claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any Subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any Subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease.

 

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(y) No organized labor disturbance by the employees of the Company or any
Subsidiary exists or, to the best of the Company’s knowledge, is imminent, and
the Company has no actual knowledge of any existing or imminent labor
disturbance by the employees of any of its or any Subsidiary’s principal
suppliers, manufacturers, customers or contractors, that could reasonably be
expected, singularly or in the aggregate, to have a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of
the Company or any Subsidiary plans to terminate employment with the Company or
any Subsidiary.

(z) No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the thirty (30)-day notice requirement under Section 4043 of ERISA has
been waived) has occurred or could reasonably be expected to occur with respect
to any employee benefit plan of the Company or any Subsidiary which could,
singularly or in the aggregate, have a Material Adverse Effect. Each employee
benefit plan of the Company or any Subsidiary is in compliance in all material
respects with applicable law, including ERISA and the Code. The Company and each
Subsidiary has not incurred and could not reasonably be expected to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan (as defined in ERISA). Each pension plan for
which the Company or any Subsidiary would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified, and nothing has
occurred, whether by action or by failure to act, which could, singularly or in
the aggregate, cause the loss of such qualification to the extent such loss
would have a Material Adverse Effect.

(aa) To the best of the Company’s knowledge, the Company and each Subsidiary is
in compliance with all foreign, federal, state and local rules, laws and
regulations relating to the use, treatment, storage and disposal of hazardous or
toxic substances or waste and protection of health and safety or the environment
which are applicable to its businesses (“Environmental Laws”), except where the
failure to comply would not, singularly or in the aggregate, have a Material
Adverse Effect. There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of toxic
or other wastes or other hazardous substances regulated by Environmental Laws
(“Hazardous Substances”) by or caused by the Company or any Subsidiary (or, to
the Company’s knowledge and without independent investigation, any other entity
for whose acts or omissions the Company or any Subsidiary is or may otherwise be
liable) upon any of the property now or previously owned or leased by the
Company or any Subsidiary, or upon any other property, in violation of any law,
statute, ordinance, rule, regulation, order, judgment, decree or permit or which
would, under any law, statute, ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse Effect;
to the Company’s actual knowledge and without independent investigation, there
has been no disposal, discharge, emission or other release onto property now
leased by the Company or any Subsidiary or into the environment surrounding such
property of any Hazardous Substance, except for any such disposal, discharge,
emission, or other release in violation of Environmental Laws which would not
have, singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.

(bb) The Company and each Subsidiary (i) has timely filed (or filed an extension
to file) all necessary federal, state, local and foreign tax returns, and all
such filed returns were true, complete and correct, (ii) has paid all federal,
state, local and foreign taxes, assessments, governmental or other charges due
and payable for which it is liable, including, without limitation, all sales and
use taxes and all taxes which the Company or any Subsidiary is obligated to
withhold from amounts owing to employees, creditors and third parties, and
(iii) does not have any tax deficiency or claims outstanding or assessed or, to
the best of its knowledge, proposed against any of them, except those, in each
of the cases described in clauses (i), (ii) and (iii) of this paragraph (bb),
that would not, singularly or in the aggregate, have a Material Adverse Effect.
The Company and each Subsidiary has not engaged in any transaction which is a
corporate tax shelter or which could be characterized as such by the Internal
Revenue Service or any other taxing authority. The accruals and reserves on the
books and records of the Company in respect of tax liabilities for any taxable
period not yet finally determined are adequate to meet any assessments and
related liabilities for any such period, and since December 31, 2010, the
Company and each Subsidiary has not incurred any liability for taxes other than
in the ordinary course.

 

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(cc) The Company and each Subsidiary carries, or is covered by, insurance
provided by recognized, financially sound and reputable institutions with
policies in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of its properties and as is
customary for companies engaged in similar businesses in similar industries. The
Company has no reason to believe that it or any Subsidiary will not be able
(i) to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct their respective businesses as now conducted and at a
cost that would not result in a Material Adverse Effect. Neither the Company nor
any Subsidiary has been denied any insurance coverage that it has sought or for
which it has applied.

(dd) The Company and each Subsidiary maintains a system of internal accounting
and other controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Registration Statement, the General
Disclosure Package and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (A) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (B) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

(ee) The minute books of the Company and each Subsidiary have been made
available to the Placement Agents and counsel for the Placement Agents, and such
books (i) contain a complete summary in all material respects of all meetings
and actions of the board of directors (including each board committee) and
stockholders of the Company and each Subsidiary (or analogous governing bodies
and interest holders, as applicable), since January 1, 2008 through the date of
the latest meeting and action, and (ii) accurately, in all material respects,
reflect all transactions referred to in such minutes.

(ff) There is no franchise, lease, contract, agreement or document required by
the Securities Act or by the Rules and Regulations to be described in the
Registration Statement, the General Disclosure Package and the Prospectus or a
document incorporated by reference therein or to be filed as an exhibit to the
Registration Statement or a document incorporated by reference therein which is
not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the
Registration Statement, the General Disclosure Package and the Prospectus or in
a document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than as described
in the Registration Statement, the General Disclosure Package and the
Prospectus, no such franchise, lease, contract or agreement has been suspended
or terminated for convenience or default by the Company or any Subsidiary or any
of the other parties thereto, and neither the Company nor any Subsidiary has
received notice nor does the Company have any other knowledge of any such
pending or threatened suspension or termination, except for such pending or
threatened suspensions or terminations that would not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect.

(gg) No relationship, direct or indirect, exists between or among the Company
and any Subsidiary on the one hand, and the directors, officers, stockholders
(or analogous interest holders), customers or suppliers of the Company or any
Subsidiary or any of their affiliates on the other hand, which is required to be
described in the Registration Statement, the General Disclosure Package and the
Prospectus or a document incorporated by reference therein and which is not so
described.

(hh) No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company or any Subsidiary because of the
filing or effectiveness of the Registration Statement or otherwise, except for
persons and entities who have expressly waived such right in writing or who have
been given timely and proper written notice and have failed to exercise such
right within the time or times required under the terms and conditions of such
right. Except as described in the Registration Statement, the General Disclosure
Package and the Prospectus, there are no persons with registration rights or
similar rights to have any securities registered by the Company or any
Subsidiary under the Securities Act.

 

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(ii) Neither the Company nor any Subsidiary owns any “margin securities” as that
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System (the “Federal Reserve Board”), and none of the proceeds of the sale of
the Securities will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Securities
to be considered a “purpose credit” within the meanings of Regulation T, U or X
of the Federal Reserve Board.

(jj) Except for this Agreement, neither the Company nor any Subsidiary is a
party to any contract, agreement or understanding with any person that would
give rise to a valid claim against the Company or either of the Placement Agents
for a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Shares and the Warrants or any transaction contemplated
by this Agreement, the Registration Statement, the General Disclosure Package or
the Prospectus.

(kk) No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in either the
Registration Statement, the General Disclosure Package or the Prospectus has
been made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.

(ll) The Company is subject to and in compliance in all material respects with
the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.
The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and
is listed on the Nasdaq Capital Market under the symbol “CDTI”, and the Company
has taken no action designed to, or reasonably likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq Capital Market, nor has the Company
received any notification that the Commission, the Nasdaq Capital Market or
FINRA is contemplating terminating such registration or listing. The Company has
obtained or will have obtained, or has made or will have made, as applicable,
all necessary consents, approvals, authorizations or orders of, or filing,
notification or registration with, the Nasdaq Capital Market as required for the
listing and trading of the Shares and the Warrant Shares on the Nasdaq Capital
Market.

(mm) The Company is in material compliance with all applicable provisions of the
Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder
or implementing the provisions thereof (the “Sarbanes-Oxley Act”).

(nn) The Company is in material compliance with all applicable corporate
governance requirements of the Nasdaq Capital Market.

(oo) Neither the Company nor any Subsidiary, nor, to the best of the Company’s
knowledge, any employee or agent of the Company or any Subsidiary, has made any
contribution or other payment to any official of, or candidate for, any federal,
state, local or foreign office in violation of any law (including the Foreign
Corrupt Practices Act of 1977, as amended) or of the character required to be
disclosed in the Registration Statement, the General Disclosure Package or the
Prospectus or a document incorporated by reference therein.

(pp) There are no transactions, arrangements or other relationships between
and/or among the Company or any Subsidiary, any of their affiliates (as such
term is defined in Rule 405 of the Securities Act) and any unconsolidated
entity, including, but not limited to, any structured finance, special purpose
or limited purpose entity that could reasonably be expected to materially affect
the Company’s or any Subsidiary’s liquidity or the availability of or
requirements for their capital resources required to be described in the
Registration Statement, the General Disclosure Package and the Prospectus or a
document incorporated by reference therein which have not been described as
required.

(qq) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus.

 

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(rr) The statistical and market related data included in the Registration
Statement, the General Disclosure Package and the Prospectus are based on or
derived from sources that the Company believes to be reliable and accurate, and
such data agree with the sources from which they are derived.

(ss) The operations of the Company and each Subsidiary are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and
regulations thereunder (collectively, the “Money Laundering Laws”), and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any Subsidiary with
respect to the Money Laundering Laws is pending, or to the best knowledge of the
Company, threatened.

(tt) Neither the Company nor any Subsidiary nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or
any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and
the Company will not directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.

(uu) Neither the Company, nor any Subsidiary, nor any of their affiliates
(within the meaning of FINRA Rule 5121(b)(1)(a)) directly or indirectly
controls, is controlled by, or is under common control with, or is an associated
person (within the meaning of Article I, Section l(ee) of the By-laws of FINRA)
of, any member firm of FINRA.

(vv) No approval of the stockholders of the Company under the rules and
regulations of the Nasdaq Capital Market is required for the Company to issue
and sell the Securities.

(ww) Any certificate signed by or on behalf of the Company and delivered to the
Placement Agents or to counsel for the Placement Agents shall be deemed to be a
representation and warranty by the Company to the Placement Agents and the
Purchasers as to the matters covered thereby.

4. THE CLOSING. The time and date of closing and delivery of the documents
required to be delivered to the Placement Agents pursuant to Sections 5 and 7
hereof shall be at 11:00 A.M., New York time, on April 4, 2014 (the “Closing
Date”) at the office of Loeb & Loeb LLP, 345 Park Avenue, New York, New York
10154.

5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the Placement
Agents:

(a) To prepare the Rule 462(b) Registration Statement, if necessary, in a form
approved by the Placement Agents and file such Rule 462(b) Registration
Statement with the Commission on the date hereof; to prepare the Prospectus in a
form approved by the Placement Agents containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on Rules
430A, 430B and 430C of the Rules and Regulations and to file such Prospectus
pursuant to Rule 424(b) under the Rules and Regulations not later than the
second (2nd)business day following the execution and delivery of this Agreement
or, if applicable, such earlier time as may be required by Rule 430A under the
Rules and Regulations; to notify the Placement Agents immediately of the
Company’s intention to file or prepare any supplement or amendment to any
Registration Statement or to the Prospectus and to make no amendment or
supplement to the Registration Statement, the General Disclosure Package or to
the Prospectus to which either of the Placement Agents shall reasonably object
by notice to the Company after a reasonable period to review; to advise the
Placement Agents, promptly after it receives notice thereof, of the time when
any amendment to any Registration Statement has been filed or becomes effective
or any supplement to the General Disclosure Package or the Prospectus or any
amended Prospectus has been filed and to furnish the Placement Agents copies
thereof; to file promptly all material required to be filed by the Company with
the Commission pursuant to Rule 433(d) or 163(b)(2) of the Rules and
Regulations, as the case may be; to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the

 

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Prospectus and for so long as the delivery of a prospectus (or in lieu thereof,
the notice referred to in Rule 173(a) under the Rules and Regulations) is
required in connection with the offering or sale of the Securities; to advise
the Placement Agents, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement, the General Disclosure
Package or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of the Base Prospectus, any Preliminary Prospectus, any Issuer Free Writing
Prospectus or the Prospectus or suspending any such qualification, and promptly
to use its best efforts to obtain the withdrawal of such order.

(b) The Company represents and agrees that, unless it obtains the prior consent
of the Placement Agents, it has not made and will not, make any offer relating
to the Securities that would constitute a “free writing prospectus” as defined
in Rule 405 under the Rules and Regulations unless the prior written consent of
the Placement Agents has been received (each, a “Permitted Free Writing
Prospectus”); provided that the prior written consent of the Placement Agents
hereto shall be deemed to have been given in respect of the Issuer Free Writing
Prospectus[es] included in Schedule A hereto. The Company represents that it has
treated and agrees that it will treat each Permitted Free Writing Prospectus as
an Issuer Free Writing Prospectus, comply with the requirements of Rules 164 and
433 under the Rules and Regulations applicable to any Issuer Free Writing
Prospectus, including the requirements relating to timely filing with the
Commission, legending and record keeping and will not take any action that would
result in the Placement Agents or the Company being required to file with the
Commission pursuant to Rule 433(d) under the Rules and Regulations a free
writing prospectus prepared by or on behalf of the Placement Agents that the
Placement Agents otherwise would not have been required to file thereunder.

(c) If at any time when a Prospectus relating to the Securities is required to
be delivered under the Securities Act, any event occurs or condition exists as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or the Registration Statement, as
then amended or supplemented, would include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary at any time to amend
or supplement any Registration Statement or the Prospectus to comply with the
Securities Act or the Exchange Act, the Company will promptly notify the
Placement Agents, and upon the request of either of the Placement Agents, the
Company will promptly prepare and file with the Commission, at the Company’s
expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects
such compliance and will deliver to the Placement Agents, without charge, such
number of copies thereof as the Placement Agents may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by the Placement Agents.

(d) If the General Disclosure Package is being used to solicit offers to buy the
Securities at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of the Placement Agents, it becomes
necessary to amend or supplement the General Disclosure Package in order to make
the statements therein, in the light of the circumstances then prevailing, not
misleading, or to make the statements therein not conflict with the information
contained or incorporated by reference in the Registration Statement then on
file and not superseded or modified, or if it is necessary at any time to amend
or supplement the General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if required) and
furnish to the Placement Agents and any dealers an appropriate amendment or
supplement to the General Disclosure Package or (ii) prepare and file with the
Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the General Disclosure Package so that the General
Disclosure Package as so amended or supplemented will not, in the light of the
circumstances then prevailing, be misleading or conflict with the Registration
Statement then on file, or so that the General Disclosure Package will comply
with law.

(e) If at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or will conflict with the information contained in
the Registration Statement, the Base Prospectus, any Pricing Prospectus or the

 

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Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof and not superseded or modified
or included or would include an untrue statement of a material fact or omitted
or would omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances prevailing at the subsequent time, not misleading, the Company has
promptly notified or will promptly notify the Placement Agents so that any use
of the Issuer Free Writing Prospectus may cease until it is amended or
supplemented and has promptly amended or will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission. The foregoing sentence does not
apply to statements in or omissions from any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agents specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 17).

(f) To the extent not available on the Commission’s EDGAR system or any
successor system, to furnish promptly to the Placement Agents and to counsel for
the Placement Agents a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.

(g) To the extent not available on the Commission’s EDGAR system or any
successor system, to deliver promptly to the Placement Agents in New York City
such number of the following documents as the Placement Agents shall reasonably
request: (i) conformed copies of the Registration Statement as originally filed
with the Commission (in each case excluding exhibits), (ii) the Base Prospectus,
(iii) each Preliminary Prospectus, (iv) any Issuer Free Writing Prospectus,
(v) the Prospectus (the delivery of the documents referred to in clauses (i),
(ii), (iii), (iv) and (v) of this paragraph (g) to be made not later than 10:00
A.M., New York time, on the business day following the execution and delivery of
this Agreement), (vi) conformed copies of any amendment to the Registration
Statement (excluding exhibits), (vii) any amendment or supplement to the General
Disclosure Package or the Prospectus (the delivery of the documents referred to
in clauses (vi) and (vii) of this paragraph (g) to be made not later than 10:00
A.M., New York City time, on the business day following the date of such
amendment or supplement) and (viii) any document incorporated by reference in
the Registration Statement, the General Disclosure Package or the Prospectus
(excluding exhibits thereto) (the delivery of the documents referred to in
clause (viii) of this paragraph (g) to be made not later than 10:00 A.M., New
York City time, on the business day following the date of such document).

(h) To make generally available to its stockholders as soon as practicable, but
in any event not later than eighteen (18) months after the effective date of
each Registration Statement (as defined in Rule 158(c) under the Rules and
Regulations), an earnings statement of the Company and any Subsidiary (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158); and
to furnish to its stockholders as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet and statements of
income, stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and as soon as
possible after each of the first three fiscal quarters of each fiscal year
(beginning with the first fiscal quarter after the effective date of such
Registration Statement), consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail.

(i) To take promptly from time to time such actions as the Placement Agents may
reasonably request to qualify the Securities for offering and sale under the
securities or Blue Sky laws of such jurisdictions (domestic or foreign) as the
Placement Agents may designate and to continue such qualifications in effect,
and to comply with such laws, for so long as required to permit the offer and
sale of the Securities in such jurisdictions; provided that the Company shall
not be obligated to qualify as foreign corporations in any jurisdiction in which
they are not so qualified or to file a general consent to service of process in
any jurisdiction.

(j) To the extent not available on the Commission’s EDGAR system or any
successor system, during the period of two (2) years from the date hereof, to
deliver to the Placement Agents, (i) as soon as they are available, copies of
all reports or other communications furnished to stockholders (other than
reports, proxy statements and other information that is electronically filed
with the Commission via EDGAR or any successor system), and (ii) as soon as they
are available, copies of any reports and financial statements furnished or filed
with the Commission or any national securities exchange or automatic quotation
system on which the Company’s securities are listed or quoted.

 

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(k) That the Company will not, for a period of ninety (90) days from the date of
the Prospectus, (the “Lock-Up Period”) without the prior written consent of
Roth, directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, other than:
(i) the Company’s sale of the Securities hereunder; (ii) the issuance of options
or restricted stock units to acquire Common Stock pursuant to the Company’s
stock incentive plan or other employee benefit plans as such plans are in
existence on the date hereof and described in the Prospectus; and (iii) the
issuance of Common Stock pursuant to the valid exercises or settlement of
options, warrants, restricted stock units or rights outstanding on the date
hereof and described in the Prospectus. The Company will cause each executive
officer and director, listed in Schedule B to furnish to the Roth, on or prior
to the date of this Agreement, a letter, substantially in the form of Exhibit C
hereto, pursuant to which each such person shall agree, among other things, not
to directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, not to engage
in any swap or other agreement or arrangement that transfers, in whole or in
part, directly or indirectly, the economic risk of ownership of Common Stock or
any such securities and not to engage in any short selling of any Common Stock
or any such securities, during the Lock-Up Period, without the prior written
consent of Roth, except as otherwise provided therein. The Company also agrees
that during such period, the Company will not file any registration statement,
preliminary prospectus or prospectus, or any amendment or supplement thereto,
under the Securities Act for any such transaction or which registers, or offers
for sale, Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, except for a registration statement on Form S-8
relating to employee benefit plans or as Roth may otherwise consent. The Company
hereby agrees that (i) if it issues an earnings release or material news, or if
a material event relating to the Company occurs, during the last seventeen
(17) days of the Lock-Up Period, or (ii) if prior to the expiration of the
Lock-Up Period, the Company announces that it will release earnings results
during the sixteen (16)-day period beginning on the last day of the Lock-Up
Period, the restrictions imposed by this paragraph (k) or the letter shall
continue to apply until the expiration of the eighteen (18)-day period beginning
on the issuance of the earnings release or the occurrence of the material news
or material event.

(l) To supply the Placement Agents with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with the
registration of the Securities under the Securities Act or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto or document incorporated by reference therein.

(m) Prior to the Closing Date, to furnish to the Placement Agents, as soon as
they have been prepared, copies of any unaudited interim consolidated financial
statements of the Company for any periods subsequent to the periods covered by
the financial statements appearing in the Registration Statement and the
Prospectus.

(n) Prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or earnings, business
affairs or business prospects (except for routine oral marketing communications
in the ordinary course of business and consistent with the past practices of the
Company and of which the Placement Agents are notified), without the prior
written consent of the Placement Agents, unless in the judgment of the Company
and its counsel, and after notification to the Placement Agents, such press
release or communication is required by law.

(o) Until the Placement Agents shall have notified the Company of the completion
of the offering of the Securities, that the Company will not, and will cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act) not
to, either alone or with one or more other persons, bid for or purchase, for any
account in which it or any of its affiliated purchasers has a beneficial
interest, any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause its affiliated purchasers not to, make bids
or purchase for the purpose of creating actual, or apparent, active trading in
or of raising the price of the Securities.

(p) Not to take any action prior to the Closing Date which would require the
Prospectus to be amended or supplemented pursuant to Section 5.

 

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(q) To at all times comply in all material respects with all applicable
provisions of the Sarbanes-Oxley Act in effect from time to time.

(r) To apply the net proceeds from the sale of the Shares and the Warrants as
set forth in the Registration Statement, the General Disclosure Package and the
Prospectus under the heading “Use of Proceeds.”

(s) To list the Shares and the Warrant Shares on the Nasdaq Capital Market and
to maintain the listing of the Common Stock on the Nasdaq Capital Market.

(t) To use its best efforts to assist the Placement Agents with any filings with
FINRA and obtaining clearance from FINRA as to the amount of compensation
allowable or payable to the Placement Agents.

(u) To use its best efforts to do and perform all things required to be done or
performed under this Agreement by the Company prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Shares and the Warrants.

6. PAYMENT OF EXPENSES. The Company agrees to pay, or cause to be paid (a) all
expenses incurred in connection with the delivery to the Purchasers of the
Securities; (b) all expenses and fees (including, without limitation, fees and
expenses of the Company’s counsel, but excluding fees and expenses of the
Placement Agents’ counsel) in connection with the preparation, printing, filing,
delivery and shipping of the Registration Statement, the Base Prospectus, any
Preliminary Prospectus, any Pricing Prospectus, Any Issuer Free Writing
Prospectus, the General Disclosure Package, the Prospectus, and any amendments,
supplements and exhibits thereto or any document incorporated by reference
therein; (c) all reasonable filing fees and reasonable fees and disbursements of
the Company’s counsel incurred in connection with the qualification of the
Securities for offering and sale by the Company to the Purchasers under the
securities or blue sky laws of the states and other jurisdictions that the
Placement Agents shall designated and any associated work performed by the
Placement Agents’ counsel; (d) the fees and expenses of any transfer agent or
registrar; (d) the reasonable filing fees and reasonable fees and disbursements
of Placement Agents’ counsel incident to any required review and approval by
FINRA, of the terms of the sale of Securities; (e) listing fees, if any, and
(f) all other costs and expenses incident to the performance of the obligations
of the Company under this Agreement, including the fees and expenses of the
Company’s independent accountants and the travel and other reasonable documented
expenses incurred by the Company personnel in connection with any “road show”
hereunder that are not otherwise specifically provided for herein (all of the
foregoing, the “Company Expenses”). The Company will also reimburse the
Placement Agents for all out-of-pocket accountable expenses, including, but not
limited to, reasonable fees and disbursements of counsel, travel expenses,
postage, facsimile and telephone charges) incurred by the Placement Agents in
connection with their respective obligations hereunder. Notwithstanding anything
contained herein, the maximum amount payable by the Company for the Placement
Agents’ counsel fees, disbursements and other out of pocket expenses pursuant to
this Section 6, exclusive of the Company Expenses, shall be $75,000.

7. CONDITIONS TO THE OBLIGATIONS OF THE PLACEMENT AGENTS AND THE PURCHASERS, AND
THE SALE OF THE SHARES AND THE WARRANTS. The respective obligations of the
Placement Agents hereunder and the Purchasers under the Subscription Agreements,
and the Closing of the sale of the Shares and the Warrants, are subject to the
accuracy, when made and as of the Applicable Time and on the Closing Date, of
the representations and warranties of the Company contained herein, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:

(a) No stop order suspending the effectiveness of the Registration Statement or
any part thereof, preventing or suspending the use of any Base Prospectus, any
Preliminary Prospectus, any Pricing Prospectus, the Prospectus or any Permitted
Free Writing Prospectus or any part thereof shall have been issued and no
proceedings for that purpose or pursuant to Section 8A under the Securities Act
shall have been initiated or threatened by the Commission, and all requests for
additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of the
Placement Agents; the Rule 462(b) Registration Statement, if any, each Issuer
Free Writing Prospectus, if any, and the Prospectus shall have been filed with
the Commission within the applicable time period prescribed for such filing by,
and in compliance with, the Rules and Regulations

 

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and in accordance with Section 5(a) and the Rule 462(b) Registration Statement,
if any, shall have become effective immediately upon its filing with the
Commission; and FINRA shall have raised no objection to the fairness and
reasonableness of the terms of this Agreement or the transactions contemplated
hereby.

(b) The Placement Agents shall not have discovered and disclosed to the Company
on or prior to the Closing Date that the Registration Statement or any amendment
or supplement thereto contains an untrue statement of a fact which, in the
opinion of counsel for the Placement Agents, is material or omits to state any
fact which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the General Disclosure Package, any Issuer Free Writing Prospectus or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of such counsel, is material or omits to state any
fact which, in the opinion of such counsel, is material and is necessary in
order to make the statements, in the light of the circumstances in which they
were made, not misleading.

(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Subscription
Agreements, the Securities, the Registration Statement, the General Disclosure
Package, each Issuer Free Writing Prospectus, if any, and the Prospectus and all
other legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to counsel for
the Placement Agents, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.

(d) DLA Piper LLP (US) shall have furnished to the Placement Agents such
counsel’s written opinion and negative assurance statement, as counsel to the
Company, addressed to the Placement Agents and dated the Closing Date, to the
effect set forth in Schedule C attached hereto, and Stewart McKelvey, as counsel
to Engine Control Systems Limited shall have furnished to the Placement Agents
such counsel’s written opinion to the effect as set forth in Schedule D.

(e) The Placement Agents shall have received from BDO USA LLP, a letter,
addressed to the Placement Agents, executed and dated on the Closing Date, in
form and substance satisfactory to the Placement Agents (i) confirming that they
are an independent registered accounting firm with respect to the Company and
any Subsidiary within the meaning of the Securities Act and the Rules and
Regulations and PCAOB and (ii) stating the conclusions and findings of such
firm, of the type ordinarily included in accountants’ “comfort letters” to
underwriters, with respect to the financial statements and certain financial
information contained or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus.

(f) The Company shall have furnished to the Placement Agents a certificate,
dated the Closing Date, of its Chief Executive Officer, its President or a Vice
President and its Chief Financial Officer stating that (i) such officers have
carefully examined the Registration Statement, the General Disclosure Package,
any Permitted Free Writing Prospectus and the Prospectus and, in their opinion,
the Registration Statement and each amendment thereto, at the Applicable Time
and as of the date of this Agreement and as of the Closing Date did not include
any untrue statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the General Disclosure Package, as of the Applicable Time
and as of the Closing Date, any Permitted Free Writing Prospectus as of its date
and as of the Closing Date, the Prospectus and each amendment or supplement
thereto, as of the respective date thereof and as of the Closing Date, did not
include any untrue statement of a material fact and did not omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances in which they were made, not misleading, (ii) since the
effective date of the Registration Statement, no event has occurred which should
have been set forth in a supplement or amendment to the Registration Statement,
the General Disclosure Package or the Prospectus, (iii) to the best of their
knowledge after reasonable investigation, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true and
correct and the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and (iv) there has not been, subsequent to the date of the most
recent audited financial statements included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the Prospectus, any
material adverse change in the financial position or results of operations of
the Company or any Subsidiary, or any change or development that, singularly or
in the aggregate, would involve a material adverse change or a prospective
material adverse change, in or affecting the condition (financial or otherwise),
results of operations, business, assets or prospects of the Company or any
Subsidiary, except as set forth in the Registration Statement, the General
Disclosure Package and the Prospectus.

 

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(g) The Company shall have furnished to the Placement Agents, satisfactory
evidence of the good standing of the Company and each of its subsidiaries in the
respective jurisdictions of organization, in each case, in writing or any
standard form of telecommunication from the appropriate governmental authorities
of such jurisdictions.

(h) Since the date of the latest audited financial statements included in the
Registration Statement, the General Disclosure Package and the Prospectus or
incorporated by reference therein as of the date hereof, (i) neither the Company
nor any Subsidiary shall have sustained any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth in the Registration Statement, the
General Disclosure Package and the Prospectus, and (ii) there shall not have
been any change in the capital stock or long-term debt of the Company or any
Subsidiary, or any change, or any development involving a prospective change, in
or affecting the business, management, financial position, stockholders’ equity
or results of operations of the Company, otherwise than as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus, the
effect of which, in any such case described in clause (i) or (ii) of this
paragraph (h) is, in the judgment of the Placement Agents, so material and
adverse as to make it impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated in the
General Disclosure Package.

(i) No action shall have been taken and no law, statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would prevent the issuance or sale of the Securities or materially
and adversely affect or potentially materially and adversely affect the business
or operations of the Company or any Subsidiary; and no injunction, restraining
order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued which would prevent the issuance or sale of
the Securities or materially and adversely affect or potentially materially and
adversely affect the business or operations of the Company or any Subsidiary.

(j) Subsequent to the execution and delivery of this Agreement there shall not
have occurred any of the following: (i) trading in securities generally on the
New York Stock Exchange or the NASDAQ Stock Market or in the over-the-counter
market, or trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or materially limited, or
minimum or maximum prices or maximum range for prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or market or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States,
(iii) the United States shall have become engaged in hostilities, or the subject
of an act of terrorism, or there shall have been an outbreak of or escalation in
hostilities involving the United States, or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Placement Agents, impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated in the
Registration Statement, the General Disclosure Package and the Prospectus.

(k) The Nasdaq Capital Market shall have approved the listing of the Shares and
the Warrant Shares, subject only to official notice of issuance.

(l) The Placement Agents shall have received on or prior to the date of this
Agreement the written agreements, substantially in the form of Exhibit C hereto,
of the executive officers and directors, of the Company listed in Schedule B to
this Agreement.

(m) The Company shall have entered into Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.

 

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(n) FINRA shall have raised no objection as to the amount of compensation
allowable or payable to the Placement Agents as described in the General
Disclosure Package, any Pricing Prospectus or any Preliminary Prospectus.

(o) Prior to the Closing Date, the Company shall have furnished to the Placement
Agents such further information, opinions, certificates, letters or documents as
the Placement Agents shall have reasonably requested.

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agents.

8. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company shall indemnify and hold harmless each of the Placement Agent,
their respective affiliates and each of their respective directors, officers,
members, employees, representatives and agents and their respective affiliates,
and each of their respective directors, officers, members, employees,
representatives and agents and each person, if any, who controls either of the
Placement Agents within the meaning of Section 15 of the Securities Act of or
Section 20 of the Exchange Act (collectively the “Placement Agent Indemnified
Parties,” and each a “Placement Agent Indemnified Party”) against any loss,
claim, damage, expense or liability whatsoever (or any action, investigation or
proceeding in respect thereof), joint or several, to which such Placement Agent
Indemnified Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, expense, liability, action, investigation
or proceeding arises out of or is based upon (A) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Base Prospectus, any Preliminary Prospectus, any Pricing Prospectus, any Issuer
Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) under the Rules and Regulations, or the Prospectus, or
in any amendment or supplement thereto or document incorporated by reference
therein, (B) the omission or alleged omission to state in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Pricing
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) under the Rules and Regulations,
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (C) any breach of
the representations and warranties of the Company contained herein or in the
Subscription Agreements or failure of the Company to perform its obligations
hereunder or thereunder or pursuant to any law, any act or failure to act, or
any alleged act or failure to act, by either or both of the Placement Agents in
connection with, or relating in any manner to, the Securities or the Offering,
and which is included as part of or referred to in any loss, claim, damage,
expense, liability, action, investigation or proceeding arising out of or based
upon matters covered by subclause (A), (B) or (C) above of this Section 8(a)
(provided that the Company shall not be liable in the case of any matter covered
by this subclause (C) to the extent that it is determined in a final judgment by
a court of competent jurisdiction that such loss, claim, damage, expense or
liability resulted directly from any such act or failure to act undertaken or
omitted to be taken by either or both of the Placement Agents through its gross
negligence or willful misconduct), and shall reimburse the Placement Agent
Indemnified Party promptly upon demand for any legal fees or other expenses
reasonably incurred by that Placement Agent Indemnified Party in connection with
investigating, or preparing to defend, or defending against, or appearing as a
third party witness in respect of, or otherwise incurred in connection with, any
such loss, claim, damage, expense, liability, action, investigation or
proceeding, as such fees and expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, expense or liability arises out of or is based upon an untrue
statement or alleged untrue statement in, or omission or alleged omission from
the Registration Statement, the Base Prospectus, any Preliminary Prospectus, any
Pricing Prospectus, any Issuer Free Writing Prospectus, any “issuer information”
filed or required to be filed pursuant to Rule 433(d) under the Rules and
Regulations, or the Prospectus, or in any amendment or supplement thereto or
document incorporated by reference therein made in reliance upon and in
conformity with written information furnished to the Company by either of the
Placement Agents specifically for use therein, which information the parties
hereto agree is limited to the Placement Agents’ Information (as defined in
Section 17). This indemnity agreement is not exclusive and will be in addition
to any liability, which the Company might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to the
Placement Agent Indemnified Party.

 

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(b) Each of the Placement Agents shall indemnify and hold harmless the Company
and its directors, its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively the “Company
Indemnified Parties” and each a “Company Indemnified Party”) against any loss,
claim, damage, expense or liability whatsoever (or any action, investigation or
proceeding in respect thereof), joint or several, to which such Company
Indemnified Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, expense, liability, action, investigation
or proceeding arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Base Prospectus, any Preliminary Prospectus, any Pricing Prospectus, any Issuer
Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) under the Rules and Regulations, or the Prospectus, or
in any amendment or supplement thereto or document incorporated by reference
therein, or (ii) the omission or alleged omission to state in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Pricing
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) under the Rules and Regulations,
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Placement Agent
specifically for use therein, which information the parties hereto agree is
limited to the Placement Agents’ Information as defined in Section 17 and shall
reimburse the Company for any legal or other expenses reasonably incurred by
such party in connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such loss,
claim, damage, liability, action, investigation or proceeding, as such fees and
expenses are incurred. Notwithstanding the provisions of this Section 8(b) in no
event shall any indemnity by a Placement Agent under this Section 8(b) exceed
the total compensation received by such Placement Agent in accordance with
Section 2.5.

(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 8 notify such indemnifying party in writing of the commencement of that
action; provided, however, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have under this Section 8
except to the extent it has been materially prejudiced by such failure; and,
provided, further, that the failure to notify an indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 8. If any such action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense of such action with counsel reasonably satisfactory to the
indemnified party (which counsel shall not, except with the written consent of
the indemnified party, be counsel to the indemnifying party). After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such action, except as provided herein, the indemnifying party shall
not be liable to the indemnified party under Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense of such action other than reasonable costs of investigation; provided,
however, that any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense of such action but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized in writing by the Company in
the case of a claim for indemnification under Section 8(a) or Section 2.6 or a
Placement Agent in the case of a claim for indemnification under Section 8(b),
(ii) such indemnified party shall have been advised by its counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party within a reasonable
period of time after notice of the commencement of the action or the
indemnifying party does not diligently defend the action after assumption of the
defense, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of (or, in the case of a failure to diligently defend the action
after assumption of the defense, to continue to defend) such action on behalf of
such indemnified party and the indemnifying party shall be responsible for legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense of such action; provided, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be

 

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liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such indemnified parties (in addition to any local
counsel), which firm shall be designated in writing by the Placement Agents if
the indemnified parties under this Section 8 consist of any Placement Agent
Indemnified Party or by the Company if the indemnified parties under this
Section 8 consist of any Company Indemnified Parties. Subject to this
Section 8(c), the amount payable by an indemnifying party under Section 8 shall
include, but not be limited to, (x) reasonable legal fees and expenses of
counsel to the indemnified party and any other expenses in investigating, or
preparing to defend or defending against, or appearing as a third party witness
in respect of, or otherwise incurred in connection with, any action,
investigation, proceeding or claim, and (y) all amounts paid in settlement of
any of the foregoing. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of judgment with respect to any pending or threatened action or any claim
whatsoever, in respect of which indemnification or contribution could be sought
under this Section 8 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party in form and
substance reasonably satisfactory to such indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party. Subject to the provisions of the following sentence, no
indemnifying party shall be liable for settlement of any pending or threatened
action or any claim whatsoever that is effected without its written consent
(which consent shall not be unreasonably withheld or delayed), but if settled
with its written consent, if its consent has been unreasonably withheld or
delayed or if there be a judgment for the plaintiff in any such matter, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
In addition, if at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated herein effected without its written
consent if (i) such settlement is entered into more than forty-five (45) days
after receipt by such indemnifying party of the request for reimbursement,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least thirty (30) days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.

(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or
Section 8(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid, payable or otherwise incurred
by such indemnified party as a result of such loss, claim, damage, expense or
liability (or any action, investigation or proceeding in respect thereof), as
incurred, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Placement Agents on the
other hand from the offering of the Securities, or (ii) if the allocation
provided by clause (i) of this Section 8(d) is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) of this Section 8(d) but also the relative fault of
the Company on the one hand and the Placement Agents on the other with respect
to the statements, omissions, acts or failures to act which resulted in such
loss, claim, damage, expense or liability (or any action, investigation or
proceeding in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Placement Agents on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by the Company bear to the total Placement Fee received by the
Placement Agents in connection with the Offering, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault of the Company
on the one hand and the Placement Agents on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Placement
Agents on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement, omission, act or failure to act; provided that the parties hereto
agree that the written information furnished to the Company by the Placement
Agents for use in the Registration Statement, the Base Prospectus, any
Preliminary Prospectus, any Pricing Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) under the Rules and Regulations, or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein,
consists solely of the Placement Agent’s Information as defined in Section 17.
The Company and the Placement Agents agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable

 

21

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by an indemnified party as a result of the loss, claim, damage, expense,
liability, action, investigation or proceeding referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d). any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating, preparing to defend or defending against or
appearing as a third party witness in respect of, or otherwise incurred in
connection with, any such loss, claim, damage, expense, liability, action,
investigation or proceeding. Notwithstanding the provisions of this
Section 8(d), neither of the Placement Agents shall be required to contribute
any amount in excess of the total compensation received by such Placement Agent
in accordance with Section 2.5 less the amount of any damages which such
Placement Agent has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement, omission or alleged omission, act or alleged
act or failure to act or alleged failure to act. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

9. TERMINATION. The obligations of the Placement Agents and the Purchasers
hereunder and under the Subscription Agreements may be terminated by the
Placement Agents in their absolute discretion by notice given to the Company
prior to delivery of and payment for the Shares and the Warrants if, prior to
that time, (i) any of the conditions to closing in Section 7 shall not have been
satisfied in full and shall not have been expressly waived in writing by the
Placement Agents, (ii) any of the events described in Section 7(a), (b), (h) or
(i) shall have occurred or (iii) the Purchasers shall decline to purchase the
Shares and the Warrants for any reason permitted under this Agreement or the
Subscription Agreements.

10. REIMBURSEMENT OF PLACEMENT AGENTS’ EXPENSES. Notwithstanding anything to the
contrary in this Agreement, if (a) this Agreement shall have been terminated
pursuant to Section 9, (b) the Company shall fail to tender the Shares and the
Warrants for delivery to the Purchasers for any reason not permitted under this
Agreement, (c) the Purchasers shall decline to purchase the Shares and the
Warrants for any reason permitted under this Agreement or (d) the sale of the
Shares and the Warrants is not consummated because any condition to the
obligations of the Placement Agents set forth herein is not satisfied or because
of the refusal, inability or failure on the part of the Company to perform any
agreement herein or to satisfy any condition or to comply with the provisions
hereof, then subject to the limitations set forth in Section 6 the Company shall
reimburse each of the Placement Agents for the reasonable documented and
accountable fees and expenses of the Placement Agents’ counsel and for such
other out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Shares and the
Warrants, and upon demand the Company shall pay the full amount thereof.

11. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees that:

(a) the responsibility of each of the Placement Agents to the Company is solely
contractual in nature, the Placement Agents have been retained solely to act as
Placement Agents in connection with the Offering and no fiduciary, advisory or
agency relationship between the Company and either of the Placement Agents has
been created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether a Placement Agent has advised or is advising
the Company on other matters;

(b) the price of the Shares and the Warrants set forth in this Agreement was
established by the Company following discussions and arms-length negotiations
with the Placement Agents and the Purchasers, and the Company is capable of
evaluating and understanding, and understands and accepts, the terms, risks and
conditions of the transactions contemplated by this Agreement;

(c) it has been advised that the Placement Agents and their respective
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that neither of the
Placement Agents has any obligation to disclose such interests and transactions
to the Company by virtue of any fiduciary, advisory or agency relationship; and

(d) it waives, to the fullest extent permitted by law, any claims it may have
against the Placement Agents for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that the Placement Agents shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf of or in right
of the Company, including stockholders, employees or creditors of the Company.

 

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12. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Placement Agents, the Company,
and their respective successors and assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person (including
the Purchasers), other than the persons mentioned in the preceding sentences,
any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Company contained in this Agreement shall also be for the benefit of the
Placement Agents Indemnified Parties and the indemnities of the Placement Agents
shall be for the benefit of the Company Indemnified Parties. It is understood
that the responsibility of the Placement Agents to the Company is solely
contractual in nature and the Placement Agents do not owe the Company, or any
other party, any fiduciary duty as a result of this Agreement.

13. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the Placement Agents, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agents, the Company, the Purchasers or any person controlling
any of them and shall survive delivery of and payment for the Securities.
Notwithstanding any termination of this Agreement, including without limitation
any termination pursuant to Sections 9 or 10, the indemnity and contribution
agreements contained in Section 8 and the covenants, representations, warranties
set forth in this Agreement shall not terminate and shall remain in full force
and effect at all times.

14. NOTICES. All statements, requests, notices and agreements hereunder shall be
in writing, and:

(a) if to the Placement Agents, shall be delivered or sent by mail, telex,
facsimile transmission or overnight courier to Roth Capital Partners, LLC, 888
San Clemente Drive, Newport Beach, California 92660, Attention: Aaron Gurewitz,
Fax: (949) 720-7227; and Craig-Hallum Capital Group LLC ,222 South Ninth Street,
Suite 350, Minneapolis, MN 55402: Attention Patricia Bartholomew, Fax
(612) 334-6399 with a copy (which shall not constitute notice) to: Loeb & Loeb
LLP, 345 Park Avenue, New York, New York 10154, Attention: Mitchell S. Nussbaum,
Esq. Fax: (212) 407-4990; and

(b) if to the Company, shall be delivered or sent by mail, telex, facsimile
transmission or overnight courier to Clean Diesel Technologies, Inc., 4567
Telephone Road, Suite 100, Ventura, California 93003, Attention: Nikhil Mehta,
Chief Financial Officer, Fax: (805) 639-9466, with a copy (which shall not
constitute notice) to: DLA Piper LLP (US), 2525 East Camelback Road, Suite 1000,
Phoenix, Arizona 85016, Attention: Steven Pidgeon, Esq., Fax: (480) 646-5524.

Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof, except that any such statement, request, notice or
agreement delivered or sent by email shall take effect at the time of
confirmation of receipt thereof by the recipient thereof.

15. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, “business day”
means any day on which the New York Stock Exchange, Inc. is open for trading.

16. GOVERNING LAW, AGENT FOR SERVICE AND JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
including without limitation Section 5-1401 of the New York General Obligations
Law. No legal proceeding may be commenced, prosecuted or continued in any court
other than the courts of the State of New York located in the City and County of
New York or in the United States District Court for the Southern District of New
York, which courts shall have jurisdiction over the adjudication of such
matters, and the Company and each of the Placement Agents each hereby consents
to the jurisdiction of such courts and personal service with respect thereto.
The Company and each of the Placement Agents hereby consents to personal
jurisdiction, service and venue in any court in which any legal proceeding
arising out of or in any way relating to this Agreement is brought by any third
party against the Company or either of the Placement Agents. The Company and
each of Placement Agents hereby waives all right to trial by jury in any legal
proceeding (whether based upon contract, tort or otherwise) in any way arising
out of or

 

23

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relating to this Agreement. The parties agree that a final judgment in any such
legal proceeding brought in any such court shall be conclusive and binding upon
the Company and each of the Placement Agents and may be enforced in any other
courts in the jurisdiction of which the parties are or may be subject, by suit
upon such judgment.

17. PLACEMENT AGENT’S INFORMATION. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Placement Agents’ Information
consists solely of the following information in the Prospectus: the information
in the second paragraph under the heading “Plan of Distribution.”

18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any section,
paragraph, clause or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph, clause or provision hereof.
If any section, paragraph, clause or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make
it valid and enforceable.

19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The Section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and each of the Placement Agents.

20. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument and such signatures may be
delivered by facsimile.

If the foregoing is in accordance with your understanding of the agreement
between the Company and the Placement Agents, kindly indicate your acceptance in
the space provided for that purpose below.

 

Very truly yours, CLEAN DIESEL TECHNOLOGIES, INC. By:  

/s/ Nikhil A. Mehta

Name:   Nikhil A. Mehta Title:   Member of the Interim Office of the Chief
Executive Officer and Chief Financial Officer

 

  Accepted as of the date first above written:   ROTH CAPITAL PARTNERS, LLC By:
 

/s/ Aaron M. Gurewitz

  Name:   Aaron M. Gurewitz   Title:   Head of Equity Capital Markets  
CRAIG-HALLUM CAPITAL GROUP LLC   By:  

/s/ John Flood

  Name:   John Flood   Title:   Managing Partner

 

24

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SCHEDULE A

General Use Free Writing Prospectuses

[None]

 

Schedule A-1

--------------------------------------------------------------------------------

SCHEDULE B

Lon E. Bell

Pedro J. Lopez-Baldrich

Stephen Golden

Nikhil Mehta

David Shea

Alexander Ellis III

Bernard Cherry

Charles Engles

Derek Gray

Mungo Park

Terri Schnexnaydre

 

Schedule B-1

--------------------------------------------------------------------------------

SCHEDULE C

--------------------------------------------------------------------------------

SCHEDULE D

--------------------------------------------------------------------------------

EXHIBIT A

Form of Subscription Agreement

 

Exhibit A-1

--------------------------------------------------------------------------------

EXHIBIT B

Form of Warrant

 

Exhibit B-1

--------------------------------------------------------------------------------

EXHIBIT C

Form of Lock Up Agreement

March 31, 2014

ROTH Capital Partners, LLC

888 San Clemente Drive

Newport Beach, CA 92660

Re: CLEAN DIESEL TECHNOLOGIES, INC. OFFERING

Dear Sirs:

In order to induce Roth Capital Partners, LLC (“Roth”), to enter in to a certain
placement agent agreement with Clean Diesel Technologies, Inc., a Delaware
corporation (the “Company”), with respect to the public offering (the
“Offering”) of shares of the Company’s Common Stock, par value $0.01 per share
(“Common Stock”) and warrants to purchase Common Stock, the undersigned hereby
agrees that for a period (the “lock-up period”) of ninety (90) days following
the date of the final prospectus filed by the Company with the Securities and
Exchange Commission in connection with such public offering, the undersigned
will not, without the prior written consent of Roth, directly or indirectly,
(i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise
dispose of, any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock (including, without limitation,
shares of Common Stock or any such securities which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares or securities, the
“Beneficially Owned Shares”)), (ii) enter into any swap, hedge or other
agreement or arrangement that transfers in whole or in part, the economic risk
of ownership of any Beneficially Owned Shares, Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock, or
(iii) engage in any short selling of any Beneficially Owned Shares, Common Stock
or securities convertible into or exercisable or exchangeable for Common Stock.

Notwithstanding the foregoing or anything to the contrary herein, the
restrictions contained in this Agreement shall not apply to (i) shares of Common
Stock acquired in open market transactions by the undersigned after the
consummation of the Offering, (ii) bona fide gifts, shares transferred by will
or intestate succession, sales or other dispositions of shares of any class of
the Company’s capital stock, in each case that are made exclusively between and
among the undersigned or members of the undersigned’s immediate family, or
affiliates of the undersigned, including its partners (if a partnership) or
members (if a limited liability company), (iii) shares transferred to a trust
for the benefit of the undersigned’s family or, if the undersigned is a trust,
shares transferred to its grantor or beneficiaries pursuant to its terms,
(iv) shares of the Company’s capital stock transferred to any corporation,
partnership, limited liability company, or other entity all of beneficial
ownership interests of which are held by the undersigned, the undersigned’s
immediate family or affiliates of the undersigned, or (v) the exercise of stock
options to purchase shares of Common Stock granted under an equity incentive
plan of the Company shares received upon settlement of restricted stock units
granted under an equity incentive plan of the Company, or, upon such exercise or
receipt, the transfer or sale of such shares in the open market or to the
Company to cover taxes incurred upon such the settlement of such restricted
stock units provided that any shares of Common Stock obtained by such exercise
or exchange shall remain subject to the terms of this Agreement except as such
transfer or sale is permitted by clause (v); provided that, in the case of
clauses (ii), (iii) and (iv) above, (A) it shall be a condition to any such
transfer that (a) the transferee/donee agrees to be bound by the terms of this
Lock-Up Letter Agreement (including, without limitation, the restrictions set
forth in the preceding sentence) to the same extent as if the transferee/donee
were a party hereto, and (b) each party (donor, donee, transferor or transferee)
shall not be required by law (including without limitation the disclosure
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) to make, and shall agree
to not voluntarily make, any public announcement of the transfer or disposition
during the 90-day period referred to above, and (B)

 

Exhibit C-1

--------------------------------------------------------------------------------

that no filing by any party (donor, donee, transferor or transferee) under the
Exchange Act shall be required or shall be voluntarily made in connection with
such transfer or distribution (other than a filing on a Form 4, Form 5, Schedule
13D or Schedule 13G (or 13D-A or 13G-A) made after the expiration of the 30-day
period referred to above). As used herein, the term “immediate family” shall
mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and shall include adoptive relationships.

If (i) the Company issues an earnings release or material news or a material
event relating to the Company occurs during the last seventeen (17) days of the
lock-up period, or (ii) prior to the expiration of the lock-up period, the
Company announces that it will release earnings results during the sixteen
(16)-day period beginning on the last day of the lock-up period, the
restrictions imposed by this Agreement shall continue to apply until the
expiration of the eighteen (18)-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event.

In addition, the undersigned hereby waives, from the date hereof until the
expiration of the ninety (90) day period following the date of the Company’s
final prospectus, any and all rights, if any, to request or demand registration
pursuant to the Securities Act of 1933, as amended, of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock that are registered in the name of the undersigned or that are
Beneficially Owned Shares. In order to enable the aforesaid covenants to be
enforced, the undersigned hereby consents to the placing of legends and/or stop
transfer orders with the transfer agent of the Common Stock with respect to any
shares of Common Stock, securities convertible into or exercisable or
exchangeable for Common Stock or Beneficially Owned Shares.

 

[Signatory] By:  

 

  Name:   Title:

 

Exhibit C-2