Exhibit 99.1
SEPARATION AGREEMENT
AND RELEASE
This will acknowledge the termination of the employment of James M.
Valentine (hereinafter referred to as "You," "Your" or "Employee") with Clean
Diesel Technologies, Inc. (hereinafter referred to as "Employer") effective
January 19, 2006 and will set forth the terms and conditions of your
termination. You agree to furnish the Employer with a letter of resignation of
even date herewith in the form attached to this Agreement as Exhibit A.
Notwithstanding the letter of resignation, this termination is pursuant to the
Company termination provisions of paragraph 5 c of your August 1, 1996
employment agreement (the "Employment Agreement"). This Agreement is intended by
the parties to avoid the difficulties and vexation of litigation. This Agreement
is not intended to rescind or diminish your rights under your Employment
Agreement, the terms and conditions of any of your vested option agreements or
the March 15, 1997 CDT-4 Agreement, provided that Employer disclaims any
financial obligations under the CDT-4 Agreement, including with respect to the
patent estate related thereto, absent Employer's further written consent,
provided further that Employer agrees to assign said patent to you upon request
for a payment of $100.
1. Employer agrees to provide you with up to 52 weeks of salary
continuation paid bi-weekly (less applicable deductions and withholding
taxes) and benefits, based on your salary in effect as of the date of your
termination, pursuant to and subject to the terms of paragraph 5 c of your
Employment Agreement with the Employer, such salary continuation to
commence on the date of your termination. You will make yourself available
to Employer's representatives for phone discussions on a mutually agreeable
basis for not more than a total of twelve (12)
hours in the first thirty (30) days of your salary continuation period
for advice and information relating to your activities during your
employment. Your occasional unavailability, or inability to answer
questions, shall not impact your rights under this Agreement. Your vested
options are set out on Schedule A. Your vested options shall remain vested
and exercisable after your termination for the lesser of five (5) years or
the remaining life of the option. The details of your compensation and
benefits are: annual salary $ 324,450 - and benefits include medical and
dental for employee and family with $20.00 - contribution semi-monthly,
life and disability insurance for employee. In addition, as consideration
for this Agreement you shall be given a non-qualified stock option
agreement evidencing your 40,000 December 20, 2005 option grant of which
the parties agree that you shall only be fully vested in and entitled to
acquire 13,333 shares of Employer's common stock at the exercise price of
$1.02 per share expiring at the close of business on December 19, 2010 and
that 26,667 shares of such option shall lapse upon your resignation and may
not be exercised. Your COBRA rights shall continue for eighteen (18) months
after the termination of your salary continuation. Your 401(k) Plan
participation and match shall terminate upon your resignation but Employer
shall assist you in rolling over your 401(k) account to another plan or
account. Your automobile allowance terminated effective December 31, 2005
as with all other employees. Employer shall assist you as best it can in
transferring your Employer cell number and account to your own account. You
will submit your final expense account for approval as soon as possible and
Employer shall reimburse you in due course. You will furnish us with the
completed January 3, 2006 update to the November 14, 2005 revenue
assumptions and projections as promptly as possible.
2. You affirm that your leaving Employer is not prompted or occasioned
by any act or attitude of discrimination by Employer, its past and present
and future parent corporations, and its past and present and future
divisions, subdivisions, affiliates and related companies and their
successors and assigns and all past and present and future directors,
officers, employees and agents, personally, and as directors, officers,
employees and agents of these entities. You covenant not to make any claims
of any kind against Employer (other than for enforcement of this
Agreement), its past and present and future parent corporations and its
past and present and future divisions, subdivisions, affiliates and related
companies and their successors and assigns and/or any past and present and
future directors, officers, employees or agents, personally, and as
directors, officers, employees and agents, before any agency, court or
other forum and release Employer, its past and present and future parent
corporations, and its past and present and future divisions, subdivisions,
affiliates, and related companies and their successors and assigns and all
past and present and future directors, officers, employees and agents,
personally, and as directors, officers, employees and agents, personally,
and as directors, officers, employees and agents from any and all liability
from any claims under common law or under federal or state constitutions,
statutes, laws or regulations, or municipal ordinances or regulations
including but not limited to, the Connecticut Fair Employment Practice Act,
C.G.S. Sec.46a-51 et seq., Title VII of the Civil Rights Act of 1964, as
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amended, 42 U.S.C. Sec.2000e et seq., Sections 1981 through 1988 of Title
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42 of the United States Code, the Equal Pay Act of 1963, 29 U.S.C.
Sec.206(d), the Age Discrimination in Employment Act of 1967, as amended,
29 U.S.C. Sec.621 et seq., the Americans with Disabilities Act, as amended,
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42 U.S.C. Sec.12101 et seq., the
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Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
Sec.1001 et seq., for any reason whatsoever, arising out of you employment
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and separation therefrom by Employer, up to and including the date of this
Release and Agreement. Employer hereby releases you of and from any
liability for your acts and omissions during your employment with Employer,
covenants not to bring any claims against you for such liability and will
indemnify you as a former officer and director of the Company from the
costs and expenses involved in any action brought by third parties against
you relating to your employment with Employer, consistent, however, with
the Employer's authority to do so under Delaware law and the Certificate of
Incorporation of the Company.
3. You further agree that you shall abide by the provisions of your
Employment Agreement regarding intellectual property and proprietary and
confidential information of Employer. You agree that paragraphs 6, 7 and 8
of your employment agreement shall continue according to their terms
following the termination of your employment.
4. You also represent that you were given a copy of this Release at
your termination meeting on January 19, 2006 and that you shall have a
period of up to 21 days thereafter in which to consider the terms of this
Release. Employee also represents that if he/she elects to accept this
Release, he/she understands that he/she will have seven (7) days following
its execution to revoke this Release by written notification. This
Separation Agreement and Release will not become effective or enforceable
until the expiration of the seven (7) day revocation period.
5. You recognize and agree that this Agreement is not intended to
imply any wrongdoing on the part of you or on the part of Employer with
respect to your employment or its termination and shall not constitute
evidence of the same.
6. All parties to this Agreement will maintain as confidential all
terms and conditions of this Agreement.
7. The provisions of this Agreement shall be deemed severable, and in
the event of a finding of invalidity or unenforceability of any one or more
of its provisions shall not affect the validity and enforceability of the
other provisions.
8. The terms of this Agreement cannot be changed or modified in any
respect except in writing signed by both parties hereto.
9. You and Employer mutually agree that this Release represents the
full and entire agreement between the parties and supersedes any and all
prior agreements (with the exception of your August 1, 1996 employment
agreement) or discussions between the parties with respect to the
termination of your employment with Employer.
10. You and Employer mutually agree not to disparage each other in any
way. You agree to refer customers and other third parties communicating
with you on matters relating to Employer's business occurring during your
employment to Walter Copan.
11. You agree to resign from the Employer's Board of Directors
effective upon the end of the seven day revocation period (which will be
the effective date of your resignation).
12. You agree, pursuant to paragraph 7 of your employment agreement,
to promptly return all proprietary information in your possession to the
Employer.
13. You agree to promptly return all Company property in your
possession to the employer. You may, however, retain the Company computer
in your possession. You acknowledge that you have read the aforementioned
carefully and fully understand its terms. You have had an opportunity to
consult with counsel and you are executing this Release voluntarily and
knowingly. I understand and hereby agree to the terms of this Separation
Agreement and Release.
/s/ James M. Valentine Date: January 19, 2006
Employee
/s/ Bernhard Steiner Date: January 19, 2006
Employer
ACKNOWLEDGMENT
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I hereby acknowledge that I have been given the opportunity for seven days
to revoke the Release relating to my termination of employment that I had signed
and returned to Employer and have decided not to revoke that Release.
/s/ James M. Valentine Date: January 26, 2006
Employee
EXHIBIT A
January 19, 2006
To: Derek R. Gray
Chairman of the Board
Clean Diesel Technologies, Inc.
cc: Bernhard Steiner
CEO
Clean Diesel Technologies, Inc.
From: James M. Valentine
In accordance with the terms of my Separation Agreement and Release, I
hereby resign as an employee, officer and director of Clean Diesel Technologies,
Inc. with immediate effect.
Sincerely,
/s/ James M. Valentine
James M. Valentine
SCHEDULE A
CLEAN DIESEL
TECHNOLOGIES, INC. Schedule A
COMMON STOCK
OPTIONS Jim Valentine
2005 OUTSTANDING
EXERCISE ACTIVITY @ 12/31/05
------------------------------------------
GRANT NON-
--------- ------
NAME DATE PRICE GRANTED VESTED LAPSED EXERCISED VESTED VESTED
- ---------- --------- ----- ------- ------ ------ --------- ------- ------
17-Mar-
Valentine 94 0.200 25,000 0 0
Valentine 28-Oct-94 2.000 25,000 0 0
Valentine 26-Dec-
95 6.820 10,000 10,000 0 0
Valentine 6-Feb-97 4.625 10,000 10,000 0
Valentine
6-Feb-97 4.625 25,000 25,000 0
Valentine 5-Jun-98 2.000 7,500 7,500 0
Valentine 14-Jun-99 0.900 60,000 2,000 29,885 0
10-Feb-
Valentine 00 2.500 75,000 75,000 0
14-Mar-
Valentine 01 1.965 60,000 60,000 0
13-Mar-
Valentine 02 2.900 100,000 100,000 0
Valentine 11-Jun-03 1.650 80,000 26,667 80,000 0
Valentine 2-Dec-03 3.070 40,000 13,334 40,000 0
Valentine 9-Dec-04 1.940 30,000 20,000 30,000 0
20-Dec-
Valentine 05 1.02 40,000 13,333 13,333 26,667
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587,500 470,719 26,666