STOCK PURCHASE AND TERMINATION AGREEMENT
 
This Stock Purchase and Termination Agreement (the “Agreement”), dated as of
October 5, 2007, is entered into by and among H2Diesel Holdings, Inc., a Florida
corporation (“Holdings”), H2Diesel, Inc., a Delaware corporation and
wholly-owned subsidiary of Holdings (“H2Diesel”), and Xethanol Corporation, a
Delaware corporation (“Xethanol”).
 
RECITALS
 
WHEREAS, Xethanol beneficially owns 5,850,000 shares of common stock, par value
$0.001 per share, of Holdings; and
 
WHEREAS, Xethanol desires to sell 5,460,000 shares (the “Shares”) and to retain
390,000 shares (the “Retained Shares”) of such common stock; and
 
WHEREAS, H2Diesel and Xethanol are parties to an Amended and Restated Sublicense
Agreement, dated June 15, 2006 (the “Sublicense Agreement”), a Technology Access
Agreement, dated June 15, 2006 (the “Technology Access Agreement”), and a Letter
Agreement regarding Registration Rights, dated October 16, 2006 (the “Letter
Agreement”, together with the Sublicense Agreement and Technology Access
Agreement, the “H2Diesel/Xethanol Agreements”); and
 
WHEREAS, Holdings desires to purchase and Xethanol desires to sell to Holdings
all the Shares beneficially owned by Xethanol and all parties desire to
terminate the H2Diesel/Xethanol Agreements; and
 
WHEREAS, the parties hereto desire to effect the releases and waivers
contemplated hereby in connection with the sale and purchase hereunder.
 
NOW THEREFORE, for good and adequate consideration, the receipt and sufficiency
of which is hereby acknowledged, Holdings, H2Diesel and Xethanol agree as
follows:
 
TERMS
 
1. PURCHASE AND SALE OF SHARES
 
Subject to the terms and conditions set forth in this Agreement, in reliance on
the respective representations, warranties and covenants contained herein and in
consideration for the releases set forth herein:
 
1.1 At the Closing (as hereinafter defined), Xethanol will sell, convey, assign
and transfer to Holdings free and clear of all Liens (as hereinafter defined),
and Holdings will purchase and redeem from Xethanol, all of the Shares for an
aggregate purchase price equal to $7,000,000 (the “Purchase Price”); and
 

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1.2 Upon execution of this Agreement, Holdings will pay Xethanol a
non-refundable deposit of $250,000, which amount will be deducted from the
Purchase Price payable at the Closing.
 
2. CLOSING
 
2.1 Condition to Closing. The Closing (as hereinafter defined) is conditioned
upon the closing of a transaction in which Holdings obtains a minimum of
$10,000,000 of new financing (the “Financing Transaction”). Holdings may waive
this condition in its sole discretion by providing written notice to the other
parties.
 
2.2 Closing Date. The Closing will occur simultaneously with or at a reasonably
prompt time after the closing of the Financing Transaction, or at such date,
time and location as mutually agreed upon by all parties in writing (the
“Closing”).
 
2.3 Termination. If the Closing does not occur on or before November 9, 2007, or
such later date as may be agreed by the parties in writing, each party shall
have an independent right to terminate this Agreement upon ten (10) calendar
days’ written notice to the other party. No party shall incur any obligation to
the other party as a result of such termination, unless such termination results
from a failure to close arising from a breach by a party of its obligations
hereunder, in which case the non-breaching party shall be entitled to pursue
remedies at law or equity. The failure of Holdings to satisfy the condition
specified in Section 2.1 shall not be a breach. However, in the event of a
termination other than as a result of a breach by Xethanol of its obligations
hereunder, Xethanol shall retain the non-refundable deposit of $250,000.
 
2.4 Deliveries at Closing. At the Closing,
 
(a) Xethanol shall deliver to Holdings
 

 
(i)
The stock certificates representing the Shares, duly endorsed in blank or
accompanied by assignments separate from the certificates duly endorsed in
blank;

 

 
(ii)
Any other documents necessary to transfer to Holdings good, valid and marketable
title to the Shares, and

 

 
(iii)
Originals of all promissory notes and instruments, each marked cancelled,
evidencing any and all debt owed by Holdings or H2Diesel to Xethanol (the
“Debt”); and

 

 
(iv)
Such other documents as may reasonably be requested by Holdings or H2Diesel to
further document the termination and release occurring effective as of the
Closing.

 
(b) Holdings shall deliver to Xethanol $6,750,000, which is the Purchase Price
for the Shares minus the $250,000 deposit previously delivered to Xethanol upon
execution of the Agreement, by wire transfer of immediately available funds to a
bank account previously designated by Xethanol. Holdings and H2Diesel shall also
deliver such other documents as may reasonably be requested by Xethanol to
further document the termination and release occurring effective as of the
Closing.
 

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3. TERMINATION AND RELEASE
 
3.1 Termination of H2Diesel/Xethanol Agreements. Effective as of the occurrence
of the Closing, but not in the event that this Agreement terminates prior to the
Closing occurring, the H2Diesel/Xethanol Agreements are hereby terminated, and
are of no further force and effect, and no party thereto shall have any further
rights or obligations thereunder; provided, however, that all provisions
regarding confidential information shall survive such termination, including but
not limited to section 2.6 of the Sublicense Agreement regarding intellectual
property rights and any defined terms included therein, and all confidential
information given by Holdings or H2Diesel to Xethanol is returned within thirty
days from the Closing.
 
3.2 Release by Holdings and H2Diesel. Effective as of the occurrence of the
Closing, but not in the event that this Agreement terminates prior to the
Closing occurring, Holdings and H2Diesel, on their own behalf and on behalf of
their officers, directors, employees, agents, representatives, predecessors,
successors and assigns (collectively, “Representatives”), hereby irrevocably,
unconditionally and forever (i) waive and relinquish any rights granted to
H2Diesel pursuant to the H2Diesel/Xethanol Agreements and the other agreements
and documents contemplated thereby, and (ii) release and discharge Xethanol and
its Representatives from any and all manner of claims, liabilities and
obligations whatsoever, whether known or unknown, accrued or not accrued, direct
or indirect, in law or equity, arising from any source or manner whatsoever,
including without limitation those arising from or relating to the
H2Diesel/Xethanol Agreements or the other agreements and documents contemplated
thereby, which may exist as of the date hereof or as of the date of Closing, or
which may arise in the future based upon events that have occurred or documents
signed at any time prior to the date hereof or the date of Closing.
 
3.3 Release by Xethanol. Effective as of the occurrence of the Closing, but not
in the event that this Agreement terminates prior to the Closing occurring,
Xethanol, on behalf of itself and its Representatives, hereby irrevocably,
unconditionally and forever (i) waives and relinquishes any rights it may have
against or with respect to Holdings or H2Diesel or their Representatives
pursuant to the H2Diesel/Xethanol Agreements and the other agreements and
documents contemplated thereby, (ii) waives and relinquishes any right to
repayment of principal and interest on any and all Debt, which the parties
believe to be an aggregate amount of $50,000, and (iii) releases and discharges
Holdings and H2Diesel and their respective Representatives from any and all
manner of claims, liabilities and obligations whatsoever, whether known or
unknown, accrued or not accrued, direct or indirect, in law or equity, arising
from any source or manner whatsoever, including without limitation those arising
from or relating to the H2Diesel/Xethanol Agreements or the other agreements and
documents contemplated thereby, which may exist as of the date hereof or as of
the date of Closing, or which may arise in the future based upon events that
have occurred or documents signed at any time prior to the date hereof or the
date of Closing.
 
3.4 Effectiveness of Termination and Release. For the avoidance of doubt, the
parties agree that the terminations, waivers and releases in this Article 3
shall be effective immediately when, but only when, the sale and purchase of the
Shares and payment therefor has taken place at the Closing. In the event this
Agreement terminates prior to the Closing the terminations, waivers and releases
in this Article 3 shall be of no force or effect, and the
H2Diesel/Xethanol Agreements shall continue in full force and effect.
 

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4. REPRESENTATIONS AND WARRANTIES
 
4.1 Representations and Warranties of Xethanol. Xethanol represents and warrants
to to Holdings and H2Diesel both on the date hereof and on the date of the
Closing as follows:
 
(a) Xethanol has the requisite power and authority to execute, deliver and carry
out the terms and provisions of this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement;
 
(b) The execution of this Agreement by Xethanol does not, and the performance by
Xethanol of its obligations hereunder will not, constitute a violation of,
conflict with or result in a default under any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which Xethanol is a
party or by which Xethanol is bound or any judgment, decree or order applicable
to Xethanol;
 
(c) To the best of its knowledge, neither the execution and delivery of this
Agreement nor the performance by Xethanol of its obligations hereunder will
violate any provision of law applicable to Xethanol or require any consent or
approval of, or filing with or notice to any public body or authority under any
provision of law applicable to Xethanol other than notices or filings pursuant
to the federal securities laws; and
 
(d) Xethanol is the sole record and beneficial owner (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of the Shares, has
good and marketable title to all of the Shares, and there exist no liens,
claims, options, proxies, voting agreements, charges, security interests, or
encumbrances of whatever nature (“Liens”) affecting such Shares. Upon transfer
of the Shares to Holdings by Xethanol, Holdings will have good and marketable
title to the Shares free and clear of all Liens. Other than the Shares and the
Retained Shares, Xethanol and its subsidiaries or affiliates do not beneficially
own any other securities of Holdings or H2Diesel and do not have any outstanding
option, warrant or other right to acquire, directly or indirectly, any
securities of Holdings or H2Diesel which are or may by their terms become
entitled to vote or any securities which are convertible or exchangeable into or
exercisable for any securities of Holdings or H2Diesel which are or may by their
terms become entitled to vote, and Xethanol is not subject to any offer,
contract, arrangement, understanding or relationship (whether or not legally
enforceable) which allows or obligates Xethanol to vote, dispose of or acquire
any securities of Holdings or H2Diesel.
 
4.2 Representations and Warranties of Holdings and H2Diesel. Holdings and
H2Diesel represent and warrant to Xethanol both on the date hereof and on the
date of the Closing as follows:
 
(a) Holdings and H2Diesel have the requisite corporate power and authority to
execute, deliver and to consummate the transactions contemplated hereby, and
have taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement; and
 

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(b) The execution of this Agreement by Holdings and H2Diesel does not, and the
performance by Holdings and H2Diesel of their obligations hereunder will not, to
the best of their knowledge, constitute a violation of, conflict with or result
in a default under any contract, commitment, agreement, understanding,
arrangement or restriction of any kind to which the Holdings or H2Diesel is a
party or by which Holdings or H2Diesel is bound.
 
(c) To the best of their knowledge, neither the execution and delivery of this
Agreement nor the performance by Holdings and H2Diesel of their obligations
hereunder will violate any provision of law applicable to Holdings and H2Diesel
or require any consent or approval of, or filing with or notice to any public
body or authority under any provision of law applicable to Holdings and H2Diesel
other than notices or filings pursuant to the federal securities laws.
 
5. MISCELLANEOUS.
 
5.1 Entire Agreement. This Agreement sets forth the entire agreement and
supersedes any and all prior agreements of the parties with respect to the
transactions set forth herein.
 
5.2 Amendment, Waiver. No change, amendment or modification of any provision of
this Agreement shall be valid unless set forth in a written instrument signed by
the parties hereto, and no waiver of any provision of this Agreement shall be
valid unless set forth in a written instrument signed by the party subject to
enforcement of such waiver.
 
5.3 Governing Law. The validity, construction and interpretation of this
Agreement shall be governed by the laws of the State of New York, excluding any
otherwise applicable rules of conflict that would cause the laws of another
jurisdiction to apply.
 
5.4 Further Assurances.  Each party shall take such action (including, the
execution, acknowledgment and delivery of documents) as may reasonably be
requested by any other party for the implementation or continuing performance of
this Agreement.
 
5.5 Construction; Severability. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is to be construed
or if any such provision is held invalid by a court with jurisdiction over the
parties to this Agreement, (i) such provision shall be deemed to be restated to
reflect as nearly as possible the original intentions of the parties in
accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
 
5.6 Headings; Interpretation. The captions and headings used in this Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement. Whenever the words “include”, “includes,” or
“including” are used in this Agreement, they shall be deemed followed by the
words “without limitation.”
 
5.7 Confidentiality. Each Party agrees to keep any Confidential Information of
the other parties confidential and agrees not to disclose such information.
Notwithstanding the foregoing, the parties may make disclosures to the extent
required by law or by the applicable rules and regulations of a securities
exchange or national market system on which a disclosing Party’s shares are
listed or traded.
 

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5.8 Counterparts; Facsimile. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same document. This Agreement, and written amendments
hereto, may be executed by facsimile. 
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date above first written.

 

       
H2DIESEL HOLDINGS, INC.
 
   
   
  By:   /s/ David A. Gillespie  

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Name: David A. Gillespie
 
Title:   President

 

       
H2DIESEL, INC.
 
   
   
  By:   /s/ David A. Gillespie  

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Name: David A. Gillespie
 
Title:   President

 

       
XETHANOL CORPORATION
 
   
   
    By:   /s/ David Ames  

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Name: David Ames
 
Title:   Chief Executive Officer

 

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