REGISTRATION RIGHTS AGREEMENT
 
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), made as of _________________,
2008 (the “Effective Date”), by and between H2Diesel Holdings, Inc., a Florida
corporation (the “Company”), and each of the persons and entities listed on
Exhibit A attached hereto (the “Holders”).
 
RECITALS
 
WHEREAS, simultaneously with the execution and delivery of this Agreement, the
Holders have committed to purchase up to $10,000,000 in shares of the Company’s
Series B Non-Redeemable Convertible Preferred Stock (the “Preferred Stock”) at a
purchase price of $100 per share, together with Warrants exercisable for a
number of shares of Common Stock equal to 25% of the number of shares of Common
Stock that would be issuable upon initial conversion of the Preferred Stock, at
an exercise price of $6.25 per share (the “Offering”); and
 
WHEREAS, the Company desires to grant the registration rights set forth herein.
 
AGREEMENT
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
 
1. Definitions. As used in this Agreement, the following capitalized terms have
the following respective meanings:
 
“Business Day” means a day other than a Saturday or Sunday or any day on which
banking institutions in New York City, New York are authorized or obligated by
law or executive order to close.
 
“Common Stock” means the Common Stock of the Company, par value $.001 per share.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute then in effect, and a reference to a particular section
thereof is deemed to include a reference to the comparable section, if any, of
any such similar federal statute.
 
“Majority of Holders” means Holders holding more than 50% in aggregate principal
amount of the Registrable Securities outstanding at the time of any
determination in question.
 
“Person” means any individual, corporation, partnership, limited partnership,
limited liability company, syndicate, trust, association or other entity.
 
“Preferred Stock” means the Series B Non-Redeemable Convertible Preferred Stock
of the Company, par value $.001 per share.
 

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Prospectus” means the prospectus included in any Shelf Registration Statement,
as amended or supplemented by any Prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Shelf Registration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.
 
“Registrable Securities” means any shares of Common Stock issued or issuable to
a Holder upon conversion of any shares of Preferred Stock or upon the exercise
of any Warrants. Registrable Securities also means any shares actually issued to
a Holder as payment of dividends on the Preferred Stock, any shares of Common
Stock that may be issued or distributed in respect thereof by way of stock
dividend or stock split or other distribution, recapitalization or
reclassification and any shares of Common Stock described in Section 2(c) of
this Agreement. Any particular Registrable Securities that are issued will cease
to be Registrable Securities when (i) a registration statement with respect to
the sale by the Holder of such securities becomes effective under the Securities
Act and such securities have been disposed of in accordance with such
registration statement, (ii) such securities have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) all of the Registrable Securities then owned by such Holder could be sold
pursuant to Rule 144(b), or (iv) such securities have ceased to be outstanding.
For the avoidance of doubt, the Company is under no obligation to register the
resale of any Preferred Stock or Warrants.
 
“Registration Expenses” means any and all expenses incident to performance of or
compliance with this Agreement, including, without limitation, (i) all SEC and
stock exchange or National Association of Securities Dealers, Inc. (the “NASD”)
registration and filing fees (including, if applicable, the fees and expenses of
any “qualified independent underwriter,” as such term is defined in NASD conduct
rule 2720, and of its counsel), (ii) all fees and expenses of complying with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange, (v) the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits and/or “cold comfort” letters required by or
incident to such performance and compliance, and (vi) the reasonable fees and
disbursements of counsel selected pursuant to Section 4(b) hereof.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute then in effect, and a reference to a particular section thereof
will be deemed to include a reference to the comparable section, if any, of any
such similar federal statute.
 
“SEC” means the Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act or the Exchange Act.
 
“Selling Expenses” means underwriting or brokerage discounts, fees and
commissions and transfer taxes, if any, applicable to the sale of Registrable
Securities.
 
“Underwritten Offering” means an offering pursuant to the Shelf Registration
Statement in which Registrable Securities are sold to an underwriter for
reoffering to the public.
 
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“Warrants” shall mean any warrants to purchase Common Stock issued to a Holder
by the Company in connection with the Holder’s purchase of shares of Preferred
Stock from the Company.
 
2. Shelf Registration.
 
(a) The Company shall:
 
(i) not later than 30 days after the Effective Date (the “Shelf
Filing Deadline”), cause to be filed a registration statement on an appropriate
form pursuant to Rule 415 (or any successor rule) under the Securities Act
(together with any amendments thereto, and including any documents incorporated
by reference therein if permitted by such form, the “Shelf
Registration Statement”), which Shelf Registration Statement shall provide for
resales of all Registrable Securities held by Holders that have provided the
information required pursuant to the terms of Section 2(b) hereof;
 
(ii) use its commercially reasonable efforts to cause the Shelf Registration
Statement to be declared effective by the SEC as promptly as is practicable
after the date it is first filed with the SEC, but in no event later than 180
days after the Effective Date (the “Effectiveness Target Date”); and
 
(iii) use its commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Section 3 hereof to the extent necessary to ensure that: (A) it is
available for resales by the Holders of Registrable Securities entitled to the
benefit of this Agreement and (B) conforms with the requirements of this
Agreement and the Securities Act, in each case, for a period (the “Effectiveness
Period”) that will terminate when all Registrable Securities cease to be
Registrable Securities in accordance with this Agreement.
 
(b) To have its Registrable Securities included in the Shelf Registration
Statement pursuant to this Agreement, each Holder shall complete the Selling
Shareholder Notice and Questionnaire, the form of which is contained in Exhibit
B to this Agreement (the “Questionnaire”). Holders that do not complete and
deliver the Questionnaire will not be named as selling shareholders in the
Prospectus. In addition, upon receipt of written request for additional
information from the Company, each Holder who intends to be named as a selling
shareholder in the Shelf Registration Statement shall furnish to the Company in
writing, within 10 Business Days after such Holder’s receipt of such request,
such additional information regarding such Holder and the proposed distribution
by such Holder of its Registrable Securities, in connection with the Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein
and in any application to be filed with or under state securities law, as the
Company may reasonably request. Each Holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make any
information previously furnished to the Company by such Holder not materially
misleading.
 
(c) The Company shall be entitled to include in the Shelf Registration Statement
other shares of Common Stock (i) to be sold for its own account or (ii) which
the Company is obligated to register for resale by others, and such shares shall
be Registrable Securities for all purposes hereof.
 
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(d) Notwithstanding anything contained herein to the contrary, the Company shall
be entitled to exclude from any Shelf Registration Statement such Registrable
Securities as the Company determines is reasonably necessary for the offering to
qualify as a secondary (rather than a primary) offering pursuant to Rule 415
under the Securities Act in response to comments from the staff of the SEC. To
the extent any Registrable Securities are so excluded, the Penalty Amount or the
Penalty Shares (as defined herein) will not apply to such excluded shares, and
the Company agrees to register such excluded shares in accordance with this
Section 2 when eligible to do so under applicable federal securities laws,
rules, regulations and policies, as reasonably determined in consultation with
the Company’s counsel.
 
(e) The Company and the Holders agree that the Holders will suffer damages if
the Company fails to fulfill its obligations under this Section 2 and that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if:
 
(i) except as provided in Section 3(b)(i) hereof, the Shelf Registration
Statement is not filed with the SEC prior to or on the Shelf Filing Deadline;
 
(ii) except as provided in Section 3(b)(i) hereof, the Shelf Registration
Statement has not been declared effective by the SEC prior to or on the
Effectiveness Target Date;
 
(iii) except as provided in Section 3(b)(i) hereof, the Shelf Registration
Statement is filed and declared effective but, during the Effectiveness Period,
shall thereafter cease to be effective or fail to be usable for its intended
purpose without such disability being cured within 10 Business Days by an
effective post-effective amendment to the Shelf Registration Statement, a
supplement to the Prospectus or a report filed with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such failure; or
 
(iv) (A) prior to or on the 45th or 60th day, as may be permitted under
Section 3(b), of any Suspension Period (as such term is defined herein), such
suspension has not been terminated or (B) Suspension Periods exceed an aggregate
of 180 days in any 360-day period, (each such event referred to in foregoing
clauses (i) through (iv), a “Registration Default”);
 
the Company hereby agrees to pay to each Holder, at the Company’s election, an
amount equal to 1.0% of the aggregate purchase price of the Preferred Stock
purchased by the Holder in the Offering in either cash (the “Penalty Amount”) or
additional shares of Common Stock (the “Penalty Shares”) based on the closing
price of the Common Stock on the primary trading market on which the Common
Stock is listed or traded on the date of the closing of the Offering, for each
full 30 day period (each, a “Penalty Period”) that elapses during the period
beginning on and including the day following the Registration Default and ending
on but excluding the day on which the Registration Default(s) have been cured;
provided, however, that in no event shall the maximum amount payable for all
Registration Defaults collectively exceed an aggregate of 6.0% of the aggregate
purchase price of the Preferred Stock purchased by the Holder in the Offering
(the “Maximum Penalty”), and, provided further, a Holder will not be entitled to
the Penalty Amount or the Penalty Shares unless it has provided all information
requested by the Questionnaire prior to the deadline specified therein.
 
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(f) The Maximum Penalty shall constitute the maximum aggregate amount of
penalties available to each Holder for any and all penalties contained in this
Agreement (including, but not limited to, any penalties as a result of a
Registration Defaults).
 
(g)  The Penalty Amount to be paid and the Penalty Shares to be issued pursuant
to this Section 2 shall be the exclusive remedy available to Holders for such
Registration Defaults.
 
3. Registration Procedures.
 
(a) In connection with the Shelf Registration Statement, the Company shall use
its reasonable best efforts to effect such registration to permit the sale of
the Registrable Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto, shall expeditiously
prepare and file with the SEC a Shelf Registration Statement relating to the
registration on any appropriate form under the Securities Act.
 
(b) In connection with the Shelf Registration Statement and any Prospectus
required by this Agreement to permit the sale or resale of Registrable
Securities, the Company shall:
 
(i) Use its best efforts to keep the Shelf Registration Statement continuously
effective during the Effectiveness Period; upon the occurrence of any event that
would cause the Shelf Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not be effective and
usable for the resale of Registrable Securities during the Effectiveness Period,
the Company shall file promptly an appropriate amendment to the Shelf
Registration Statement, a supplement to the Prospectus or a report filed with
the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in
the case of clause (A), correcting any such misstatement or omission, and, in
the case of either clause (A) or (B), use its best efforts to cause any such
amendment to be declared effective and the Shelf Registration Statement and the
related Prospectus to become usable for their intended purposes as soon as
practicable thereafter. Notwithstanding anything to the contrary contained
herein, the Company may delay the filing or declaration of effectiveness, and/or
suspend the effectiveness, of the Shelf Registration Statement by written notice
to the Holders for a period (each such period, a “Suspension Period”) not to
exceed an aggregate of 45 days in any 90-day period, and not to exceed an
aggregate of 180 days in any 360-day period, if:
 
(x) an event occurs and is continuing as a result of which the Shelf
Registration Statement would, in the Company’s reasonable judgment, 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 not misleading;
and
 
(y) the Company reasonably determines that the disclosure of such event at such
time would be seriously detrimental to the Company or its business;
 
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provided, that in the event that the disclosure relates to a previously
undisclosed proposed or pending material business transaction, the disclosure of
which would impede the Company’s ability to consummate such transaction, the
Company may extend a Suspension Period from 45 days to 60 days during any 90-day
period.
 
(ii) Notify each selling Holder of the effectiveness of the Shelf Registration
Statement and prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep the
Shelf Registration Statement continuously effective during the Effectiveness
Period; cause the Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
sellers thereof set forth in the Shelf Registration Statement or supplement to
the Prospectus.
 
(iii) Advise the underwriter(s), if any, and selling Holders:
 
(A) of the issuance by the SEC of any stop order suspending the effectiveness of
the Shelf Registration Statement under the Securities Act or of the suspension
by any state securities commission of the qualification of the Registrable
Securities for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, or
 
(B) of the existence of any fact or the happening of any event, during the
Effectiveness Period, that makes any statement of a material fact made in the
Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein, untrue, or that
requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading. Each Holder of Registrable Securities, by accepting the same, agrees
to hold any communication from the Company pursuant to this Section 3(b)(iii) in
confidence.
 
If at any time the SEC shall issue any stop order suspending the effectiveness
of the Shelf Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Registrable Securities under state
securities or “blue sky” laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time and will
provide to the each Holder who is named in the Shelf Registration Statement
prompt notice of the withdrawal of any such order.
 
(iv) Furnish to each selling Holder and to each of the underwriter(s), if any,
and their respective counsel, if any, before filing with the SEC, a copy of the
Shelf Registration Statement (including any amendments thereto) and copies of
any Prospectus (including any supplements thereto) included therein or any
amendments or supplements to the Shelf Registration Statement or Prospectus
(other than documents incorporated by reference after the initial filing of the
Shelf Registration Statement), which documents shall reflect such comments as
the Holders (and their counsel) may reasonably and timely propose.
 
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(v) Make reasonably available for inspection by one or more representatives of
the selling Holders designated in writing by a Majority of Holders whose
Registrable Securities are included in the Shelf Registration Statement, any
underwriter participating in any distribution pursuant to the Shelf Registration
Statement, and any attorney or accountant retained by such selling Holders or
any of the underwriter(s), all relevant financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company’s
officers, directors and employees to supply all information reasonably requested
by any such representative or representatives of the selling Holders,
underwriter, attorney or accountant in connection with the Shelf Registration
Statement as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, provided, however, that any
information designated by the Company as confidential at the time of delivery of
such information shall be kept confidential by the recipient thereof; and
provided, further, that in no event shall the Company be required to furnish any
material nonpublic information pursuant to this subsection (v).
 
(vi) If requested by any selling Holders or the underwriter(s), if any, promptly
incorporate in the Shelf Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to have
included therein and to which the Company does not reasonably object, including,
without limitation: (A) information relating to the “Plan of Distribution” of
the Registrable Securities, (B) information with respect to the number of
Registrable Securities being sold, (C) the purchase price being paid therefor
and (D) any other terms of the offering of the Registrable Securities to be sold
in such offering; provided, however, that with respect to any information
requested for inclusion by a selling Holder, this clause (vi) shall apply only
to such information that relates to the Registrable Securities to be sold by
such selling Holder; and make all required filings of such prospectus supplement
or post-effective amendment as soon as reasonably practicable after the Company
is notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment.
 
(vii) If an underwriting agreement is entered into in connection with the
registration, the Company shall:
 
(A) upon reasonable request, furnish to each selling Holder and each
underwriter, in such substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings for selling security holders,
upon the date of closing of any sale of Registrable Securities in an
Underwritten Offering:
 
(1) opinions, each dated the date of such closing, of counsel to the Company
covering such of the matters as are customarily covered in legal opinions to
underwriters in connection with underwritten offerings of securities; and
 
(2) customary comfort letters, dated the date of such closing, from the
Company’s independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in connection
with primary underwritten offerings of securities;
 
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(B) set forth in full in the underwriting agreement, if any, indemnification
provisions and procedures which provide rights no less protective than those set
forth in Section 5 hereof with respect to all parties to be indemnified; and
 
(C) deliver such other documents and certificates as may be reasonably requested
by such parties to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the selling Holders pursuant to this clause (vii).
 
(viii) Before any public offering of Registrable Securities, use its best
efforts to register or qualify the Registrable Securities under the securities
or Blue Sky laws of such jurisdictions in the United States as the selling
Holders or underwriter(s), if any, may reasonably request and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Shelf Registration
Statement; provided, however, that the Company shall not be required (A) to
register or qualify as a foreign corporation or a dealer of securities where it
is not now so qualified or to take any action that would subject it to the
service of process in any jurisdiction where it is not now so subject or (B) to
subject itself to taxation in any such jurisdiction if it is not now so subject.
 
(ix) Cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends
(unless required by applicable securities laws) and enable such Registrable
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least three Business Days
before any sale of Registrable Securities.
 
(x) Subject to Section 3(b)(i) hereof, if any fact or event contemplated by
Section 3(b)(iii)(B) hereof shall exist or have occurred, use its reasonable
best efforts to prepare a supplement or post-effective amendment to the Shelf
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Registrable Securities, the Prospectus will not
contain an 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 in which they were made, not misleading.
 
(xi) Provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of the Shelf Registration Statement.
 
(xii) Cooperate and assist in any filings required to be made with the NASD and
in the performance of any due diligence investigation that is required to be
retained in accordance with the rules and regulations of the NASD.
 
(xiii) Otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC and all reporting requirements of
the Exchange Act.
 
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(xiv) Enter into such customary agreements (including underwriting agreements in
customary form) and take all such other lawful actions as a Majority of Holders
or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of Registrable Securities (including effecting a
stock split or combination of shares).
 
(xv) Cause all Registrable Securities covered by the Shelf Registration
Statement to be listed or quoted, as the case may be, on each securities
exchange or automated quotation system on which similar securities issued by the
Company are then listed or quoted.
 
(c) Each Holder agrees that, upon receipt of any notice (a “Suspension Notice”)
from the Company of the existence of any fact of the kind described in Section
4(b)(x) or Section 4(b)(iii)(B) hereof, such Holder will, and will use its
reasonable efforts to cause any underwriter(s) in an Underwritten Offering to,
forthwith discontinue disposition of Registrable Securities pursuant to the
Shelf Registration Statement until:
 
(i) such Holder has received copies of the supplemented or amended Prospectus
contemplated by Section 4(b)(xiii) hereof; or
 
(ii) such Holder is advised in writing by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus.
 
If so directed by the Company, each Holder will deliver to the Company all
copies, other than permanent file copies then in such Holder’s possession, of
the Prospectus covering such Registrable Securities that was current at the time
of receipt of such notice of suspension.
 
(d) If a Holder is identified in the Shelf Registration Statement as an
“underwriter” (any such Holder, an “Identified Holder”), then at the request of
such Identified Holder the Company shall furnish to such Identified Holder, on
the date of the effectiveness of the Shelf Registration Statement and thereafter
from time to time on such dates as such Identified Holder may reasonably
request, (i) a letter, dated such date, from the Company’s independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to such Identified Holder, and (ii) an opinion, dated as of such date,
of counsel representing the Company for purposes of the Shelf Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to such Identified Holder.
 
4. Registration Expenses.
 
(a) The Company shall pay all Registration Expenses incident to the Company’s
performance of or compliance with this Agreement. The Company shall bear its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal, accounting or other duties), the
expenses of any annual audit or quarterly review, the expense of any liability
insurance and the fees and expenses of any Person, including special experts,
retained by the Company.
 
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(b) In connection with the Shelf Registration Statement required by this
Agreement, including any amendment or supplement thereto, and any other
documents delivered to any Holders, the Company shall reimburse the Holders of
Registrable Securities being registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel (including local counsel), which shall be chosen by a Majority
of Holders for whose benefit the Shelf Registration Statement is being prepared.
The Company shall not be required to pay any underwriting discount, commission
or similar fee related to the sale of any securities.
 
(c) Each Holder shall bear its Selling Expenses.
 
5. Indemnification and Contribution.
 
(a) The Company shall indemnify and hold harmless, to the fullest extent
permitted by law, each Holder, such Holder’s officers, directors, members,
agents, partners and employees and each person, if any, who controls such Holder
within the meaning of the Securities Act (each, an “Indemnified Holder”), from
and against any loss, claim, damage, liability or expense, joint or several, or
any action in respect thereof (including, but not limited to, any loss, claim,
damage, liability, expense, or action relating to resales of the Registrable
Securities), together with reasonable costs and expenses (including reasonable
attorney’s fees) to which such Indemnified Holder may become subject, insofar as
any such loss, claim, damage, liability, expense or action arises out of, or is
based upon:
 
(i) any untrue statement or alleged untrue statement of a material fact
contained in (A) the Shelf Registration Statement or Prospectus or any amendment
or supplement thereto or (B) any blue sky application or other document or any
amendment or supplement thereto prepared or executed by the Company (or based
upon written information furnished by or on behalf of the Company expressly for
use in such blue sky application or other document or amendment on supplement)
filed in any jurisdiction specifically for the purpose of qualifying any or all
of the Registrable Securities under the securities law of any state or other
jurisdiction (such application or document being hereinafter called a “Blue Sky
Application”); or
 
(ii) the omission or alleged omission to state therein any 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, and
shall promptly reimburse each Indemnified Holder promptly upon demand for any
legal or other expenses reasonably incurred by such Indemnified Holder in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability, expense or action as such 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, liability, expense or
action arises out of, or is based upon, (A) any untrue statement or alleged
untrue statement or omission or alleged omission made in the Shelf Registration
Statement or Prospectus or amendment or supplement thereto or Blue Sky
Application or other document referred to in Section 5(a)(i) hereof in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any Holder (or its related Indemnified Holder) specifically for use
therein or (B) the failure by the Holder or Indemnified Holder to deliver to any
purchaser of its Registrable Securities the Prospectus and any supplement or
amendment thereto after the Company has furnished such Holder or Indemnified
Holder with a sufficient number of copies of the same. The foregoing indemnity
agreement is in addition to any liability that the Company may otherwise have to
any Indemnified Holder.
 
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(b) Each Holder, severally and not jointly, shall indemnify and hold harmless,
to the fullest extent permitted by law, the Company, each other Holder, their
respective officers, directors, agents and employees and each person, if any,
who controls the Company or such other Holder within the meaning of the
Securities Act, from and against any loss, claim, damage, liability or expense,
joint or several, or any action in respect thereof, to which the Company, such
other Holder or any such officer, director, agent, employee or controlling
person may become subject, insofar as any such loss, claim, damage, liability,
expense or action arises out of, or is based upon:
 
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Shelf Registration Statement or Prospectus or any amendment or
supplement thereto or any Blue Sky Application or other document referred to in
Section 5(a)(i) hereof; or
 
(ii) the omission or the alleged omission to state therein 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, but in
each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information prepared and furnished to the Company by or
on behalf of such Holder (or its related Indemnified Holder) specifically for
use therein, and shall reimburse the Company and any such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Company or any such officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability, expense or action as such
expenses are incurred, provided that the obligation to indemnify will be
individual, not joint and several, for each Holder and shall be limited to the
net amount of proceeds received by such Holder from the sale of Registrable
Securities pursuant to the Shelf Registration Statement.
 
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 5, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve the indemnifying party from any
liability which it may have under this Section 5 except to the extent the
indemnifying party has been prejudiced by such failure. If any such claim or
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 thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that a
Majority of Holders shall have the right to employ at the expense of such
Holders a single counsel to represent jointly the Holders and their respective
directors, officers, members, agents, partners, employees and controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by Holders against the Company under this Section
5; and provided, further, that if a Majority of Holders shall have reasonably
concluded that there may be one or more legal defenses available to them and
their respective officers, employees and controlling persons that are different
from or additional to those available to the Company and its officers,
directors, employees and controlling persons, then the fees and expenses of such
single separate counsel shall be paid for by the indemnifying party. No
indemnifying party shall:
 
11

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(i) without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld or delayed) settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or
 
(ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld or delayed),
but if settled with its written consent or if there be a final judgment for the
plaintiff in any such action, 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.
 
(d) If the indemnification provided for in this Section 5 shall for any reason
be unavailable or insufficient to hold harmless an indemnified party under
Section 5(a) or 5(b) in respect of any loss, claim, damage, liability or expense
(or action in respect thereof) referred to therein, each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability (or action in respect thereof):
 
(i) in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Holders on the other, or
 
(ii) if the allocation provided by clause 5(d)(i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative fault
referred to in clause 5(d)(i) but also the relative benefits received by the
Company from the offering and sale of the Registrable Securities on the one hand
and a Holder with respect to the sale by such Holder of the Registrable
Securities on the other in connection with the statements or omissions or
alleged statements or alleged omissions that resulted in such loss, claim,
damage or liability (or action in respect thereof), as well as any other
relevant equitable considerations.
 
The relative benefits received by the Company on the one hand and a Holder on
the other with respect to such offering and such sale shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Registrable Securities (before deducting expenses) received by the Company, on
the one hand, bear to the total proceeds received by such Holder (before
deducting expenses) with respect to its sale of Registrable Securities on the
other. The relative fault of the parties 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 Holders on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission.
 
12

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The Company and each Holder agree that it would not be just and equitable if the
amount of contribution pursuant to this Section 5(d) were determined by pro rata
allocation (even if the selling Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid or payable by an indemnified party as a result of the loss,
claim, damage, liability or expense, or action in respect thereof, referred to
above in this Section 5 shall be deemed to include, for purposes of this Section
5 and subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim.
 
Notwithstanding the provisions of this Section 5, no Holder shall be required to
contribute any amount in excess of the amount by which net proceeds received by
such Holder from the sale of Registrable Securities covered by the Shelf
Registration Statement exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. 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. The Holders’ obligations to contribute as provided
in this Section 5(d) are several and not joint.
 
6. Participation in Underwritten Offerings.
 
No Holder may participate in any Underwritten Offering hereunder unless such
Holder:
 
(a) agrees to sell such Holder’s Registrable Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements; and
 
(b) completes and executes all reasonable and customary questionnaires, powers
of attorney, custody agreements, indemnities, underwriting agreements, lock-up
letters and other documents required under the terms of such underwriting
arrangements, provided that no Holder shall be required to make any
representations or warranties to the Company or the underwriters (other than
representations and warranties regarding such Holder and such Holder’s intended
method of distribution) or to undertake any indemnification obligations to the
Company or the underwriters with respect thereto, except as otherwise provided
in Section 5 hereof.
 
7. Selection of Underwriters.
 
The Holders of Registrable Securities covered by the Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banking
firm or firms and manager or managers that will administer the offering will be
selected by a Majority of Holders whose Registrable Securities are included in
such offering; provided, that such investment banking firms must be reasonably
satisfactory to the Company.
 
13

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8. Miscellaneous.
 
(a) Amendments and Waivers. This Agreement may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, unless the Company has obtained the written consent of
a Majority of Holders.
 
(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
 
(i) if to a Holder, at the address set forth on the records Company of or the
transfer agent of the Registrable Securities, as the case may be; and

 
(ii)
if to the Company:
H2Diesel Holdings, Inc.
     
11111 Katy Freeway, Suite 910
     
Houston, Texas 77079
     
Phone: (713) 973-5720
     
Fax: (713) 973-5777
     
Attn: Chief Executive Officer

 
All such notices and communications shall be deemed to have been duly given at:
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if transmitted by facsimile; and on the next
Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
 
(d) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including
without limitation subsequent Holders of Registrable Securities; provided,
however, that (i) this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Registrable Securities from such Holder and agreed in writing
to be bound by the terms of this Agreement and (ii) nothing contained herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of any Subscription Agreement or other
agreement with the Company which restricts the sale or disposition of
Registrable Securities. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement.
 
(e) Counterparts. This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
 
14

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(f) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
 
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its
principles of conflict of laws that would cause the laws of another jurisdiction
to apply.
 
(h) Severability. If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
 
(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
 
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
15

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

H2DIESEL HOLDINGS, INC.
   
By:
   
Name:
 
Title:

 
[Holder Signature Page Follows]
 
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The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.

 
Name of Holder
 
By:
   
Name:
 
Title:

 

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EXHIBIT A

HOLDERS
 
[Names of each Holder shall be inserted upon the Closing]
 

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EXHIBIT B
 
NOTICE AND QUESTIONNAIRE
 
(TIME SENSITIVE MATERIAL)
 
THIS NOTICE AND QUESTIONNAIRE MUST BE RETURNED TO H2DIESEL HOLDINGS, INC. (AT
THE ADDRESS LISTED BELOW) ON OR BEFORE THE 15TH BUSINESS DAY FOLLOWING DELIVERY
OF THE NOTICE AND QUESTIONNAIRE BY H2DIESEL TO THE REGISTERED HOLDER.
 
Capitalized terms used but not defined herein shall have the respective meanings
set forth in the Registration Rights Agreement, dated as of _____ ___, 2008 (the
“Registration Rights Agreement”), between the Company and Holders named therein.
 
Form of Selling Securityholder Notice and Questionnaire
 
The undersigned Holder of the Registrable Securities of the Company understands
that the Company has filed, or intends to file, with the SEC a Shelf
Registration Statement for the registration and resale under Rule 415 of the
Securities Act, Registrable Securities in accordance with the terms of the
Registration Rights Agreement. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below.
 
Each beneficial owner of Registrable Securities that has agreed in writing to be
bound by the Registration Rights Agreement is entitled to the benefits of the
Registration Rights Agreement. In order to sell or otherwise dispose of any
Registrable Securities pursuant to the Shelf Registration Statement, a
beneficial owner of Registrable Securities generally will be required to be
named as a selling securityholder in the related Prospectus, deliver a
Prospectus either to purchasers of Registrable Securities or, if relying on Rule
172 of the Securities Act, confirm that a current prospectus is deemed delivered
in connection with the sale of Registrable Securities, and be bound by those
provisions of the Registration Rights Agreement applicable to such beneficial
owner (including certain indemnification provisions, as described below).
Beneficial owners are encouraged to complete and deliver this Notice and
Questionnaire prior to the effectiveness of the Shelf Registration Statement so
that such beneficial owners may be named as selling securityholders in the
related prospectus.
 
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and the related Prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and the related Prospectus.
 
B-1

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NOTICE
 
The undersigned Holder (the “Selling Securityholder”) of Registrable Securities
hereby gives notice to the Company of its intention to sell or otherwise dispose
of Registrable Securities beneficially owned by it and listed below in Item 3
(unless otherwise specified under Item 3) pursuant to the Shelf Registration
Statement. The undersigned, by signing and returning this Notice and
Questionnaire, understands that it will be bound by the terms and conditions of
this Notice and Questionnaire and the Registration Rights Agreement.
 
Pursuant to Section 5(b) of the Registration Rights Agreement, the undersigned
has agreed to indemnify and hold harmless the Company and certain other persons,
from and against certain losses arising in connection with statements concerning
the undersigned made in the Shelf Registration Statement or the related
Prospectus in reliance upon the information provided in this Notice and
Questionnaire.
 
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:
 
QUESTIONNAIRE
 

1.
Information Regarding Selling Securityholder

 

 
(a)
Full legal name of Selling Securityholder:

______________________________________________________________________________________________________________
 

 
(b)
Full legal name of registered holder (if not the same as (a) above) through
which Registrable Securities listed in Item (3) below are held:

______________________________________________________________________________________________________________
 

 
(c)
Full legal name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):

______________________________________________________________________________________________________________
 

 
(d)
Is the Selling Securityholder an SEC-reporting company? If the Selling
Securityholder is not an SEC-reporting company, list below the individual or
individuals who exercise the voting and/or dispositive powers with respect to
the Securities:

______________________________________________________________________________________________________________
 

 
(e)
Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act?

 
q Yes.
 
B-2

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q No.
 
Note: If yes, the SEC’s staff has indicated that you should be identified as an
underwriter in the Shelf Registration Statement.
 

 
(f)
If your response to Item 1(e) above is “no,” are you an “affiliate” of a
broker-dealer registered pursuant to Section 15 of the Exchange Act?

 
q Yes.
 
q No.
 
For purposes of this Item 1(f), an “affiliate” of a registered broker-dealer
shall include any company that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such broker-dealer, and does not include any individuals employed by such
broker-dealer or its affiliates.
 

 
(g)
If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities to be resold, and at the time of the purchase of the
Registrable Securities to be resold, you had no agreements or understandings,
directly or indirectly, with any person to distribute the Registrable
Securities?

 
q Yes.
 
q No.
 
Note: If no, the SEC’s staff has indicated that you should be identified as an
underwriter in the Shelf Registration Statement.
 

 
(h)
Full legal name of person through which you hold the Registrable Securities -
(i.e. name of your broker or the DTC participant, if applicable, through which
your Registrable Securities are held):

 
Name of
broker:________________________________________________________________________
 
DTC
No:_____________________________________________________________________________
 
Contact
person:_______________________________________________________________________
 
Telephone No. (including area
code):_______________________________________________________
 
E-mail
address:________________________________________________________________________
 
B-3

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2.
Address for Notices to Selling Securityholder

 
Telephone:___________________________________________________________________________
 
Fax:_________________________________________________________________________________
 
Contact
Person:________________________________________________________________________
 
Email address:________________________________________
 

3.
Beneficial Ownership of Registrable Securities

 
Number of shares of Registrable Securities of the Company beneficially owned:
______________________________________________________________________________________________________________
 
CUSIP No(s). of such Registrable Securities beneficially owned:
______________________________________________________________________________________________________________
 

4.
Nature of Beneficial Ownership

 

 
(a)
Check if the Selling Securityholder set forth in your response to Item 1(a) is
any of the below:

 
(A) A reporting company under the Exchange Act. q
 
(B) A majority owned subsidiary of a reporting company under the Exchange Act. q
 
(C) A registered investment fund under the Investment Company Act of 1940.q
 

 
(b)
If the Selling Securityholder set forth in your response to Item 1(a) above is a
limited partnership, state the names of the general partners of such limited
partnership:

______________________________________________________________________________________________________________

______________________________________________________________________________________________________________
 

 
(A)
With respect to each general partner listed in Item 4(b) above who is not a
natural person, and is not publicly-held, name each shareholder (or holder of
partnership interests, if applicable) of such general partner. If any of these
named shareholders are not natural persons or publicly-held entities, please
provide the same information. This process should be repeated until you reach
natural persons or a publicly-held entity.

________________________________________________________________________________________________________
 
B-4

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

______________________________________________________________________________________________________________
 

 
(c)
Name your controlling shareholder(s) (the “Controlling Entity”). If the
Controlling Entity is not a natural person and is not a publicly-held entity,
name each shareholder of such Controlling Entity. If any of these named
shareholders are not natural persons or publicly-held entities, please provide
the same information. This process should be repeated until you reach natural
persons or a publicly-held entity.

 

(A)
(i) Full legal name of Controlling Entity(ies) or natural person(s) who have
sole or shared voting or dispositive power over the Registrable Securities:

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
 
(ii) Business address (including street address) (or residence if no business
address), telephone number and facsimile number of such person(s):
 
Address:_____________________________________________________________________________
 
Telephone
No.:________________________________________________________________________
 
Fax
No.:______________________________________________________________________________
 

(B)
(i) Full legal name of Controlling Entity(ies):

_________________________________________________________________________________________________________
 
(ii) Business address (including street address) (or residence if no business
address), telephone number and facsimile number of such person(s):
 
Address:_____________________________________________________________________________
 
Telephone
No.:________________________________________________________________________
 
Fax
No.:_________________________________________________________________________
 
(iii) Name of shareholders: 
 

5.
Beneficial Ownership of the Company’s Securities Owned by the Selling
Securityholder

 
Except as set forth below in this Item (5), the undersigned is not the
beneficial or registered owner of any securities of the Company other than the
Registrable Securities listed above in Item (3) (“Other Securities”).
 
B-5

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Type and amount of Other Securities beneficially owned by the Selling
Securityholder:
_________________________________________________________________________________________________________
 
CUSIP No(s). of such Other Securities beneficially owned:
 
6.
Relationship with the Company

 
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (5% or more) has held any
position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.
 
State any exceptions here:
__________________________________________________________________________________________________________
 
7.
Plan of Distribution

 
Except as set forth below, the undersigned (including its donees or pledgees)
intends to distribute the Registrable Securities listed above in Item (3)
pursuant to the Shelf Registration Statement only as follows (if at all). Such
Registrable Securities may be sold from time to time directly by the undersigned
or, alternatively, through underwriters, broker-dealers or agents. If the
Registrable Securities are sold through underwriters or broker-dealers, the
Selling Securityholder will be responsible for underwriting discounts or
commissions or agent’s commissions. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve crosses or
block transactions):
 

 
(a)
on any national securities exchange or quotation service on which the
Registrable Securities may be listed or quoted at the time of sale;

 

 
(b)
in the over-the-counter market;

 

 
(c)
in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or

 

 
(d)
through the writing of options.

 
In connection with sales of the Registrable Securities or otherwise, the
undersigned may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the Registrable Securities and deliver
Registrable Securities to close out such short positions, or loan or pledge
Registrable Securities to broker-dealers that in turn may sell such securities.
 
B-6

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

 
State any exceptions here:___________________________________________
______________________________________________
 
Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.
 

8.
Acknowledgments

 
The undersigned acknowledges that it understands its obligation to comply with
the provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M thereunder (or any successor rules or
regulations), in connection with any offering of Registrable Securities pursuant
to the Shelf Registration Statement. The undersigned agrees that neither it nor
any person acting on its behalf will engage in any transaction in violation of
such provisions.
 
The Selling Securityholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein. Pursuant to the Registration Rights Agreement, the Company
has agreed under certain circumstances to indemnify the Selling Securityholders
against certain liabilities.
 
In accordance with the undersigned’s obligation under the Registration Rights
Agreement to provide such information as may be required by law for inclusion in
the Shelf Registration Statement, the undersigned agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof at any time while the Shelf Registration
Statement remains effective. All notices hereunder and pursuant to the
Registration Rights Agreement shall be made in writing at the address set forth
below.
 
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to items (1) through (7) above and the inclusion
of such information in the Shelf Registration Statement and the related
Prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of the Shelf
Registration Statement and the related Prospectus.
 
Once this Notice and Questionnaire is executed by the undersigned and received
by the Company, the terms of this Notice and Questionnaire, and the
representations and warranties contained herein, shall be binding on, shall
inure to the benefit of and shall be enforceable by the respective successors,
heirs, personal representatives and assigns of the Company and the undersigned
with respect to the Registrable Securities beneficially owned by the undersigned
and listed in Item (3) above.
 
This Notice and Questionnaire shall be governed in all respects by the laws of
the State of Florida.
 
B-7

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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Beneficial Owner
 
By:
   
Name:
   
Title:
 

Dated:_____________

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO H2DIESEL
HOLDINGS, INC. NOT LATER THAN THE 15TH BUSINESS DAY AFTER THIS NOTICE AND
QUESTIONNAIRE HAVE BEEN DELIVERED TO THE REGISTERED HOLDER AT:

H2Diesel Holdings, Inc.
11111 Katy Freeway, Suite 910
Houston, Texas 77079
Phone: (713) 973-5720
Fax: (713) 973-5777
Attn: Chief Executive Officer
 
B-8

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