Exhibit 10.4

                     Amendment No. 1 to Employment Agreement

Amendment  No.  1  of  September  30, 2002 to Agreement of December 2, 1996 (the
"Agreement")  between  Jeremy  D.  Peter-Hoblyn  ("Employee")  and  Clean Diesel
Technologies,  Inc.  (the  "Company").

The parties agree to amend the Agreement by:

1.  Revoking in its entirety Section 3 thereof and substituting in its place the
following  text:

"(a)  The  Company as from March 15, 2002 will cause Employee to be paid for his
services  hereunder  an  increased  base  salary of $300,000 per year.  Employee
shall  be  paid  such  base  salary  by  the Company according to its normal and
customary  procedures  but  not  less  often  than  monthly.  Employee  shall be
entitled to participate in such benefit plans, or equivalent, as have heretofore
been  extended  to  him  by the Company and to such plans, or equivalent, as the
Company  may  in  the  future  extend  to  officers as a class.  The Company may
rescind  Employee's  participation in such benefit plans, or equivalent, so long
as  such  rescission  applies  to  officers  as  a  class.
(b)  By  agreement  between  the  Employee  and  the  Company  the  total sum of
$135,416.73  of  Employee's  salary has been deferred to date and accrued on the
Company's  books as a general unsecured liability of the Company and will not be
paid  out  to  the  Employee  until  the  Payout  Date.
(c)  The  Company  until the Payout Date shall pay up to $50,000 per year (or an
allocable portion thereof for periods of less than one year) for the premium for
an  annuity  or  for  a  pension  plan  contribution for the Employee (less such
amounts,  if  any,  of  Company contributions as shall be credited to Employee's
account  in  the Company's 401(k) or profit sharing plans).  The Company and the
Employee  have  agreed,  however,  that such amount of $50,000 shall be deferred
annually  and  shall  accrue  on  the  Company's  books  as  a general unsecured
liability  of  the  Company  and  will not be paid out to the Employee until the
Payout  Date,  or earlier, on the retirement of the Employee from service to the
Company.  The  Company  and  the  Employee  agree  that the total amount of such
accrued  annuity  payment  as  at  September  30, 2002 on the Company's books is
$270,000."
(d)  The  Payout Date shall be such time as the Company (or any successor to the
Company)  shall  have attained the amount of $5 million in annual gross revenues
as evidenced by the Company's audited statement of operations.  Retirement shall
mean  voluntary  or  involuntary  termination  of  service as an employee of the
Company  or  an  affiliate  of  the  Company  after  the  age of sixty-two (62).

2.  Adding  the  following  text  to  the  text  of  Section  9:

"Provided,  however, that the Company may assign this Agreement to any affiliate
of the Company which undertakes to pay and perform all of the obligations of the
Company  hereunder,  provided  that  the  Company  shall  remain liable for such
payment  and  performance  in  default  of  same  by  the  assignee."

The  parties have signed and delivered this agreement as of the date first above
written.

Clean Diesel Technologies, Inc.

By: /s/ David  W.  Whitwell            /s/  J.  D.  Peter-Hoblyn
    -------------------------        ---------------------------------
    David  W.  Whitwell              Jeremy  D.  Peter-Hoblyn
    Vice  President                  Employee


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