Exhibit 10.61

 

SEPARATION AGREEMENT AND RELEASE

 

THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”) is made by and between
Pedro J. Lopez-Baldrich (“Executive”) and Clean Diesel Technologies, Inc.  (the
“Company”), together with each and every of its predecessors, successors (by
merger or otherwise), parents, subsidiaries, affiliates, divisions and related
entities, legal representatives, directors, officers, employees and agents,
whether present or former and both in their individual and corporate capacities
(collectively the “Releasees”);

 

WHEREAS, the Executive has served as the General Counsel and Corporate Secretary
pursuant to an Employment Agreement dated March 25, 2014, (the “Employment
Agreement”);

 

WHEREAS, the Parties desire to amicably terminate their relationship;

 

WHEREAS, the parties desire to separate on amicable terms and Executive and the
Company wish to resolve any and all claims or disputes they may have through the
Termination Date (as defined below);

 

NOW, THEREFORE, the parties agree as follows, in consideration of the covenants
and obligations contained herein, and intending to be legally held bound:

 

1.                                      Separation and Resignation for Good
Reason.  By this Agreement, Executive hereby acknowledges and agrees to his
resignation, effective as of December 11, 2015, (the “Termination Date”), from
all officer and director positions with the Company or any Releasee, including
without limitation as General Counsel and Corporate Secretary.  Executive
acknowledges and agrees that as of such date, he shall not have any authority or
power to bind the Company or the Releasees, or act on behalf of the Company or
the Releasees in any manner.  Subject to Executive’s compliance with his
obligations hereunder, the Company agrees to treat Executive’s resignation as a
“Resignation for Good Reason,” as described in the Employment Agreement.  This
agreement attaches hereto, incorporates and makes a part hereof the Employment
Agreement entered into by the parties on March 25, 2014, as Exhibit A, which
dictates the parties’ obligations upon Resignation for Good Reason.  If this
Agreement is expressly inconsistent with the Employment Agreement, the terms of
the Employment Agreement shall prevail.

 

2.                                      Consideration.  In consideration for and
subject to the releases and other covenants of Executive set forth in this
Agreement, after the Effective Date as defined below in Paragraphs 8(g) of this
Agreement, the Company agrees to provide Executive the following payments and
benefits as provided in the Employment Agreement (the “Severance Benefits”). 
These payments shall begin on the first regularly scheduled payroll date
following January 7, 2016, or the Effective Date, whichever is later:

 

(a)                                 Payment in the gross amount of $270,833
(which equals 13 months of Executive’s base salary rate as in effect at the
Termination Date), subject to all legally required withholdings and payable in
installments in accordance with the Company’s normal payroll schedule and
payroll practices in effect from time to time, on a biweekly basis (the
“Severance Period”).  Executive agrees that such payments will be issued by the
Company via direct deposit, and that if Executive’s bank account information
changes at any time, Executive will notify the

 

1

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

 

Company in writing and confirm receipt of such notice.  Executive understands
that any change in bank account information may cause delay in direct deposit of
any Severance Benefits.

 

(b)                                 The Company will provide Executive with a
one-time payment in the amount of $10,756.86 (which includes applicable tax
gross-up), less all applicable withholdings and deductions, to help defray costs
incurred for medical insurance whether Executive obtains coverage through his
spouse, elects coverage under the provisions of Section 4980 of the Internal
Revenue Code of 1986 (“COBRA”), or obtains coverage through the State or Federal
Health Insurance Marketplaces, known as the “Exchanges”.  Executive understands
that obtaining medical insurance coverage through these means will be solely his
responsibility.

 

(c)                                  Executive acknowledges that the Employment
Agreement provides that it is solely within the Board’s discretion to determine
if it will accelerate the vesting of the balance, or some lesser portion of,
Executive’s restricted share units.  Executive understands that the Board has
exercised its discretion and the Company agrees, subject to Executive’s
compliance and execution of this Agreement, to accelerate, effective as of the
Termination Date, the vesting of the unvested portions of the restricted share
units, all as identified in Exhibit B attached to this Agreement.  Subject to
the foregoing, upon the Termination Date Executive will be vested in a total of
16,667 restricted share units on December 18, 2015, subject to the applicable
award documents.  Executive acknowledges that, as of the Termination Date,
Executive is entitled to only those interests in the equity securities of the
Company described in Exhibit B attached to this Agreement, subject to this
paragraph and the terms of the applicable award agreements, including
satisfaction of the Tax Obligations described in such agreements (by way of the
Company’s sell to cover program), and but for this Agreement, Executive would
not otherwise be entitled to any accelerated vesting of the unvested portions of
his restricted share units. Notwithstanding the previous, the Company agrees and
accepts that Executive will satisfy his tax obligations by way of the Company’s
sell to cover program, and the Company will facilitate such process.

 

(d)                                 Payment of a discretionary, prorated Annual
Bonus consistent with Paragraph 4(b)(ii)(C) of Executive’s Employment Agreement,
in the amount of $53,315, less applicable withholdings and deductions, to be
paid in a lump sum on the first payroll date after the Effective Date or
January 7, 2016, whichever is later.

 

(e)                                  Outplacement services and support for a
maximum period of six (6) months through Syntesis Global.  Executive’s
eligibility for outplacement services shall commence on the date of the
execution of this Agreement, but in no circumstance shall such services and
support extend beyond December 31, 2016.  Executive acknowledges that this
benefit will cease in the event that Executive accepts new employment. 
Executive acknowledges and understands that this Severance Benefit is not
required by the Employment Agreement and is subject to Executive complying with
the promises herein.

 

Executive acknowledges that Severance Benefits constitute consideration to which
he would not otherwise be entitled.

 

3.                                      Other Payments.  Benefits, and
Acknowledgments.

 

2

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

 

(a)                                 Executive confirms that as of the date he
executes this Agreement and regardless of whether Executive executes this
Agreement, Executive received all wages for all hours worked and that as of his
Termination Date, he will be paid for all final wages for all hours worked and
for accrued and earned but unused vacation pay through the Termination Date,
subject to all applicable withholdings and deductions.

 

(b)                                 Executive agrees that he has been reimbursed
all business expenses and provided all supporting documentation related thereto
as of the date he executes this Agreement.  Executive agrees that he has not
incurred any other business expenses, for which he has not been reimbursed.

 

(c)                                  Executive acknowledges that Executive will
not be entitled to any additional bonus payments for 2015 or any subsequent
year.

 

(d)                                 The Company acknowledges that Executive
shall continue to be entitled to only those benefits to which he may be entitled
under the Company’s Executive Long-Term Incentive Plan as of the Termination
Date.

 

(e)                                  Executive represents and confirms that he:
(i) is not aware of any unpaid wages, vacation, bonuses, or other amounts owed
to Executive by Company, other than the Consideration and payments specifically
promised in this Agreement; (ii) Executive has not been denied any request for
leave to which Executive believes he was legally entitled, and Executive was not
otherwise deprived of his rights under the Family and Medical Leave Act or any
similar state or local statute; and (iii) under this Agreement, Executive has
been provided everything owed and due under his Employment Agreement and any
Company plans or equity grant documents.

 

4.                                      Executive’s and the Company’s Release. 
Executive hereby generally releases and discharges the Releasees from any and
all suits, causes of action, complaints, obligations, demands, or claims of any
kind, whether in law or in equity, direct or indirect, known or unknown,
suspected or unsuspected (hereinafter “claims”), which Executive ever had or now
has against the Releasees, or any one of them, arising out of or relating to any
matter, thing or event occurring up to and including the date of this Agreement,
exclusive of a claim for breach of this Agreement.  Similarly, the Company
hereby generally releases and discharges Executive from any and all suits,
causes of action, complaints, obligations, demands, or claims of any kind,
whether in law or in equity, direct or indirect, known or unknown, suspected or
unsuspected (hereinafter “claims”), which the Company ever had or now has
against Executive arising out of or relating to any matter, thing or event
occurring up to and including the date of this Agreement, exclusive of a claim
for breach of this Agreement.  THIS IS A GENERAL RELEASE OF ALL CLAIMS. 
Executive’s release, and the Company’s release as applicable, specifically
includes, but is not limited to:

 

(a)                                 any and all claims relating to or arising
from Executive’s employment relationship with the Company and the termination of
that relationship;

 

(b)                                 any and all claims for wages and benefits
including, without limitation, salary or other wages, stock, options,
commissions, royalties, license fees, health and welfare

 

3

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

 

benefits, severance pay, vacation pay, and bonuses, but excluding claims to
vested benefits, including but not limited to claims under the following
statutes: the Fair Labor Standards Act, as amended, the California Labor Code,
the California Industrial Wage Orders, the Private Attorney General Act, the
California Business and Professions Code, or any comparable statute of any
state, country or locality.

 

(c)                                  any and all claims for wrongful discharge,
breach of contract (whether express or implied), or for breach of the implied
covenant of good faith and fair dealing;

 

(d)                                 any and all claims for employment
discrimination on the basis of age, race, color, religion, sex, national origin,
veteran status, disability and/or handicap, sexual orientation, marital status
or any other characteristic protected by law, and any and all claims in
violation of any federal, state or local statute, ordinance, judicial precedent
or executive order, including but not limited to claims for discrimination under
the following statutes: Title VII of the Civil Rights Act of 1964, 42 U.S.C. 
Section 2000e et seq., the Civil Rights Act of 1866, 42 U.S.C.  Section 1981,
the Age Discrimination in Employment Act, as amended, 29 U.S.C.  Section 621 et
seq., the Older Workers Benefit Protection Act, 29 U.S.C.  Section 626(f), the
Americans with Disabilities Act, 42 U.S.C.  Section 12101 et seq., or any claims
under the Family and Medical Leave Act of 1993, as amended, the California Fair
Employment and Housing Act, as amended, the Fair Labor Standards Act, as
amended, the Employee Retirement Income Security Act of 1974, as amended, or any
comparable statute of any state, country or locality.

 

(e)                                  any and all claims in tort (including but
not limited to any claims for misrepresentation, defamation, interference with
contract or prospective economic advantage, intentional or negligent infliction
of emotional distress, duress, loss of consortium, invasion of privacy and
negligence);

 

(f)                                   any and all claims for violation of the
federal, or any state, constitution;

 

(g)                                  any claim for any loss, costs, damage, or
expense arising out of any dispute over the non-withholding or other tax
treatment of any of the proceeds received by Executive as a result of this
Agreement; and

 

(h)                                 any and all claims for attorneys’ fees and
costs.

 

5.                                      Mutual Release of Unknown Claims. 
Executive and the Company understand that this release extends to all of the
aforementioned claims and potential claims forever and to the fullest extent
permissible by law, whether now known or unknown, suspected or unsuspected, and
that this constitutes an essential term of this Agreement.  Executive and the
Company further understand and acknowledge the significance and consequence of
this Agreement and of each specific release and waiver, and expressly consent
that this Agreement shall be given full force and effect according to each and
all of its express terms and provisions, including those relating to unknown and
unsuspected claims, demands, obligations, and causes of action, if any, as well
as those relating to any other claims, demands, obligations or causes of action
herein above-specified.  Executive and the Company expressly waives any right or
benefit

 

4

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

 

available to him in any capacity under the provisions of California Civil Code
section 1542, which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

6.                                      Cooperation in Legal Proceedings.  In
consideration for the severance and other payments and promises set forth above,
Executive shall provide to Releasee, and to any or all of its subsidiaries,
divisions, and affiliated companies, such cooperation in legal proceedings as is
reasonably requested, including by furnishing information and/or testimony in
connection with such legal proceedings.

 

7.                                      Remedies.  All remedies at law or in
equity shall be available to the Releasees for the enforcement of this
Agreement.  This Agreement may be pleaded as a full bar to the enforcement of
any claim that Executive may assert against the Releasees.

 

8.                                      Age Discrimination in Employment Act. 
Executive acknowledges, agrees and understands that:

 

(a)                                 under the general release detailed above,
Executive is waiving and releasing, among other claims, any rights and claims
that may exist under the Age Discrimination in Employment Act (“ADEA”);

 

(b)                                 the waiver and release of claims set forth
in the release above does not apply to any rights or claims that may arise under
the ADEA after the date of execution of this Agreement;

 

(c)                                  the payments and other consideration that
are being provided to Executive are of significant value and are in addition to
what Executive otherwise would be entitled;

 

(d)                                 Executive is being advised in writing to
consult with an attorney before signing this Agreement;

 

(e)                                  Executive is being given a period of
twenty-one (21) days within which to review and consider this Agreement before
signing it, though Executive may sign earlier, and if Executive fails to sign
and return this Agreement within the twenty-one (21) day consideration period,
the Company’s offer and this Agreement will expire on its own terms and the
Company may assert that Executive was terminated for cause or otherwise;

 

(f)                                   Executive may revoke her/his acceptance of
this Agreement by providing written notice to the Company within seven (7) days
following its execution, and any notice of revocation of this Agreement must be
in writing and transmitted by hand or certified mail to:

 

Clean Diesel Technologies, Inc.

1621 Fiske Place

 

5

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

 

Oxnard, CA 93033

Attn: Matthew Beale

Chief Executive Officer

Email: mbeale@cdti.com

 

(g)                                  Because of Executive’s right to revoke this
Agreement, this Agreement shall not become effective and enforceable until the
eighth (8th) day after the return of an executed copy of this Agreement by
Executive to the Company (the “Effective Date”), and Executive will not be
entitled to any of the benefits set forth in this Agreement until after the
Effective Date.

 

9.                                      No Admissions.  Neither the execution of
this Agreement by the Releasees, nor the terms hereof, constitute an admission
by the Releasees of liability to Executive.  Similarly, neither the execution of
this Agreement by Executive, nor the terms hereof, constitute an admission by
Executive of liability to the Company and/or the Releasees.

 

10.                               No Disparagement.  Executive agrees to refrain
from making disparaging comments about the Releasees, and further agrees not to
take any action that would harm the business or professional reputation of any
of the Releasees.

 

11.                               No Disparagement by Releasees.  Senior
Management of Company agrees that they will not disparage or defame Executive,
and will use reasonable efforts to prevent the Releasees from disparaging or
defaming Executive.

 

12.                               Confidentiality.  Except to the extent the
terms are publicly disclosed in the SEC filings of the Company, Executive shall
not disclose or publicize the terms or fact of this Agreement, directly or
indirectly, to any person or entity, except to his accountant, attorney, spouse,
and to others as required by law.  Nothing in this Agreement shall be construed
to prohibit Executive from reporting alleged improper or unlawful conduct to, or
participating in any investigation or proceeding conducted by any federal or
state government agency or self-regulatory organization.  Executive also may
disclose Paragraph 14 of this Agreement to a prospective employer, if necessary.

 

13.                               Return of Property.  Executive confirms that
as of the date of this Agreement, he has returned to the Company in good working
order all the Company property within his possession, custody and control.  Such
property includes, but is not limited to, strategic plans and files, technical
and intellectual property data and files, electronic equipment, memory sticks or
USB flash drives, keys, software, calculators, equipment, credit cards, forms,
files, manuals, correspondence, business cards, personnel data, lists of or
other information regarding customers, contacts and/or employees, contracts,
contract information, agreements, leases, plans, brochures, catalogues, training
materials, computer tapes and diskettes or other portable media. 
Notwithstanding anything to the contrary in this Paragraph, Executive will be
permitted to retain Executive’s Company-issued cell phone (including the
telephone number), following the Termination Date, following the reformatting
and removal of any confidential and proprietary information of the Company.  To
the extent Executive at any point discovers Company property that Executive
failed to return, Executive shall return any and all such Company property
immediately.

 

6

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

 

14.                               Continuing Obligations.  Executive
acknowledges that in the course of his employment he has obtained confidential
and proprietary information about the Company, including but not limited to
financial, business, product, customer and marketing information, plans,
forecasts, and strategies, and that he is required to maintain the
confidentiality of all such non-public information following the termination of
his employment.  The Executive shall at all times, both before and after
termination of employment, cooperate with the Company in executing and
delivering documents and taking any other actions that are necessary or
requested by the Company.  Executive specifically acknowledges and agrees to
advise and provide any information related to the Company including but not
limited to emails, telephone calls, documents, or any other communications
Executive receives after the Termination Date to the Company and that Executive
will make reasonable efforts to advise the Company of such dealings by
contacting Matthew Beale.  Executive also specifically acknowledges that
post-termination, he will be bound by Paragraphs 5 (Protection of Confidential
Information), 6 (Protection of Intellectual Property), and 7 (Post-Employment
Covenants) of his Employment Agreement, in their entirety to the fullest extent
permitted by law, as well as any other confidentiality obligations to which the
Executive is subject.  If any provision of the Employment Agreement or any other
similar obligation is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other obligation under this
Paragraph 14, such term shall be modified to the extent necessary to make it
enforceable, and notwithstanding the foregoing, Executive agrees to be bound by
all other obligations under this Paragraph 14.  In the event that Executive
breaches his obligations under this Paragraph 14, in addition to, and not
limiting other legal and equitable remedies, the Company shall have no further
obligation to continue rendering payments, benefits, or permit Executive’s
continued participation in any Company program under Paragraph 2 herein.

 

15.                               Essential Terms.  Executive understands and
acknowledges that the promises in Paragraphs 8, 9, 11, 12 and 13 are a material
inducement for Releasees to enter this Agreement and are of the essence of this
Agreement.  Executive therefore agrees that if he should breach any of the
provisions of the aforementioned paragraphs, he will be obligated to return to
Releasees any payments made under this Agreement, to the extent permitted by
law.

 

16.                               No Knowledge of Wrongdoing.  Executive
represents that Executive has no knowledge of any wrongdoing involving improper
or false claims against a federal or state governmental agency, or any other
wrongdoing that involves Executive or other present or former Company employees.

 

17.                               Fees and Costs.  The parties shall bear their
own attorneys’ fees and costs associated with negotiation and execution of this
Agreement.

 

18.                               Entire Agreement.  This Agreement and its
Exhibits contain the entire agreement of the parties with respect to the subject
matter hereof, and supersede any prior agreements or understandings with respect
to the subject matter hereof.  The parties acknowledge that in signing this
Agreement, they do not rely upon and have not relied upon any representation or
statement made by any of the parties or their agents with respect to the subject
matter, basis or effect of this Agreement, other than those specifically stated
in this written Agreement.

 

7

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

 

19.                               Legally Binding.  The terms of this Agreement
contained herein are contractual, and not a mere recital.  This Agreement shall
be binding upon the parties to this Agreement and upon their heirs,
administrators, representatives, executors and assigns.  Executive represents
and warrants that he has not transferred to any person or entity any rights,
causes of action or claims released in this Agreement.

 

20.                               Severability.  If any term or provision of
this Agreement shall be held to be invalid or unenforceable for any reason, the
validity or enforceability of the remaining terms or provisions shall not be
affected, and such term or provision shall be deemed modified to the extent
necessary to make it enforceable.

 

21.                               Advice of Counsel: Revocation Period. 
Executive is hereby advised in writing to consult with an attorney prior to the
execution of this Agreement.  Executive acknowledges that he is acting of his
own free will, that he has been afforded a reasonable time to read and review
the terms of this Agreement, and that he is voluntarily entering into this
Agreement with full knowledge of its provisions and effects.  Executive intends
that this Agreement shall not be subject to any claim for duress.  Executive
further acknowledges that he has been given at least twenty-one (21) days within
which to consider this Agreement, and has utilized the full 21-day review period
with his own chosen counsel and has entered into this Agreement voluntarily and
knowingly, after substantial negotiations.  Executive also acknowledges that he
has seven (7) days following his execution of this Agreement to revoke his
acceptance of the Agreement, with the Agreement not becoming effective until the
revocation period has expired.

 

22.                               No Representations.  The Parties represent
that they each have had the opportunity to consult with an attorney, at their
own expense, and have carefully read and understand the scope and effect of the
provisions of this Agreement.  Neither Party has relied upon any representations
or statements made by the other Party hereto which are not specifically set
forth in this Agreement.

 

23.                               Amendments.  Neither this Agreement nor any
term hereof may be orally changed, waived, discharged, or terminated, and may be
amended only by a written agreement between the parties hereto.

 

24.                               Governing Law and Jurisdiction.  This
Agreement shall be governed by the laws of the State of California without
regard to the conflict of law principles of any jurisdiction and the Company and
Executive each submit to the exclusive jurisdiction and venue of any state or
federal court in the County of Ventura, California.

 

25.                               Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

 

26.                               Good Faith Compliance.  The Parties agree to
cooperate in good faith and to do all things necessary to effectuate this
Agreement.

 

IN WITNESS WHEREOF, the parties, acknowledging that they are acting of their own
free will, have caused the execution of this Agreement as of this day and year
written below.

 

8

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

 

EXECUTIVE:

 

 

 

 

 

/s/ Pedro J. Lopez-Baldrich

 

Witness:

/s/ Alicia MacCracken

Pedro J. Lopez-Baldrich

 

 

 

Date:

December 10, 2015

 

 

 

 

 

 

COMPANY:

 

 

 

By:

/s/ Matthew Beale

 

Witness:

/s/ Alicia MacCracken

 

 

Name:

Matthew Beale

 

 

 

 

Title:

CEO

 

 

 

 

Date:

December 14, 2015

 

 

 

9

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