**H2DIESEL
      HOLDINGS, INC.**




**Stock
      Option Agreement**




**1.****Grant
      of Option****.**In
      accordance with and subject to the terms and conditions of this Stock Option
      Agreement (the “Agreement”),
      H2Diesel Holdings, Inc., a Florida corporation (the “Corporation”
which
      term shall include any entity which acquires, through merger, share exchange,
      purchase of assets or otherwise, substantially all of the capital stock or
      assets of the Corporation), grants to the person identified onSchedule
      1attached
      hereto (the “Optionee”)
      a
      nonqualified stock option (the “Option”)
      to
      purchase the number of shares (the “Option
      Shares”)
      of its
      Common Stock, par value $.001 per share (“Common
      Stock”),
      set
      forth onSchedule
      1,
      at the
      initial option exercise price set forth inSchedule
      1(such
      price, as it may be adjusted hereunder from time to time, the “Exercise
      Price”).




**2.**  **Acceptance
      by Optionee** **.** The
      exercise of the Option or any portion thereof is conditioned upon acceptance
      by
      the Optionee of the terms and conditions of this Agreement, as evidenced by
      the
      Optionee’s execution of Schedule
      1 to this
      Agreement and the delivery of an executed copy of this Agreement to the
      Corporation.




**3.**  **Vesting
      of Option** **.** The
      Option shall vest and be exercisable as set forth in Schedule
      1 .





(A)
      Pursuant to a Consulting Services Agreement executed simultaneously with this
      Agreement (the “Consulting Agreement”) the Corporation has entered into
      arrangements with the firm eBarton, LLC, which is controlled by the Optionee.
      Except as specifically herein provided, the Consulting Agreement is deemed
      incorporated herein and the Definitions therein shall be referenced for purposes
      of interpretation hereof. The Consulting Agreement contains as Exhibit A a
      list
      of firms that are designated as Potential Customers (“Potential Customers”) for
      the purpose of vesting under Schedule 1. Corporation and eBarton have agreed
      pursuant to the Consulting Agreement that additional firms may be added to
      Exhibit A as Potential Customers, and that nominees of eBarton shall not be
      unreasonably excluded from Exhibit A. The termination of the Consulting
      Agreement shall not be deemed to terminate the designation of Persons as
      Potential Customers under this Agreement so long as an introduction has been
      made.




(B)
      The
      Corporation shall specifically require any person with whom it enters any of
      the
      transaction contemplated by Sections 6(c)(iii), Section 8 hereof, or similar
      transactions (“Successors”) to provide, as a condition of the closing of such
      transactions, specific assurances to Optionee that, notwithstanding any prior
      contacts of any type Such Successor has had or subsequent with Potential
      Customers, whether with respect to the proprietary biofuel; or otherwise, that
      the vesting and exercise provisions of this Option Agreement shall continue
      to
      apply in full force and effect to the vesting of Optionee’s shares in accordance
      with the terms of Schedule 1 hereof.




**4.**  **Expiration
      of Option** **.** The
      Option shall expire on the expiration date set forth in Schedule 1 (the
“ Expiration
      Date ”)
      and
      may not be exercised after such date.




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**5.**  **Conditions
      to Exercise of Option.** The
      Optionee may exercise the Option or any portion thereof to the extent then
      vested at any time or from time to time during the period commencing on the
      Grant Date set forth on Schedule
      1 and
      ending on the Expiration Date (the “ Option
      Term ”).
      The
      Option may be exercised only by the Optionee or, in the event of his death
      or
      incompetence, his personal representative or heirs, as the case may
      be.




**6.**  **Procedure
      for Exercise** **.** (a) The
      vested portion of the Option may be exercised for the number of Option Shares
      specified in a written notice delivered to the Corporation at least five days
      prior to the date on which purchase is requested (such notice, an “ Exercise
      Notice ”),
      accompanied by full payment in cash of the aggregate Exercise Price in respect
      of such Option Shares. If specified in the Exercise Notice, payment of such
      Exercise Price may also be made by means of the Corporation retaining from
      the
      Option Shares to be delivered upon exercise of the Option, or portion thereof,
      that number of Option Shares having an aggregate Fair Market Value (as defined
      below) on the date that the Exercise Notice is delivered to the Corporation
      (the
      date that the Exercise Notice is delivered to the Corporation being referred
      to
      as the “ Valuation
      Date ”; **provided, however** , that
      if such date is not a day on which securities markets are open for trading,
      then
      the Valuation Date shall be the first succeeding date that such markets are
      open) equal to the aggregate Exercise Price of the total number of Option Shares
      with respect to which the Optionee shall then be exercising the Option. If
      upon
      exercise of all or a portion of the Option there shall be payable by the
      Corporation or a subsidiary any amount for withholding taxes, then, at the
      Corporation’s election and as a condition to such exercise, either (i) the
      Corporation shall reduce the number of Option Shares to be issued to the
      Optionee by a number of Option Shares of Common Stock having an aggregate Fair
      Market Value on the Valuation Date equal to the amount of such withholding
      tax
      or (ii) the Optionee shall pay such amount to the Corporation or its subsidiary,
      as applicable.




(b)
      If
      any applicable law requires the Corporation to take any action with respect
      to
      the Option Shares specified in the Exercise Notice, or if any action remains
      to
      be taken under the Certificate of Incorporation or Bylaws of the Corporation,
      as
      in effect at the time, to effect due issuance of Option Shares, then the
      Corporation shall take such action and the day for delivery of such Option
      Shares shall be extended for the period necessary to take such action. The
      Optionee shall not have any of the rights of a shareholder of the Corporation
      under the Option.




(c)
      As
      used herein, the phrase “Fair Market Value” shall mean (i) if the Common
      Stock is listed or admitted for trading on a national securities exchange,
      an
      automated quotation system or the Over-the-Counter Bulletin Board, the last
      reported sale price per share of the Common Stock on the Valuation Date, or,
      in
      case no such reported sale takes place on such day or is reported, then the
      average of the last reported per share bid and ask prices for shares of the
      Common Stock on such date (or if such bid and ask prices are not available
      on
      such date, the most recent preceding date), in either case as officially
      reported by such securities exchange, quotation system or Bulletin Board on
      which the Common Stock is listed or admitted to trading, (ii) if not so
      listed or admitted for trading, the fair market value of a share of the Common
      Stock as determined by the Corporation’s board of directors in good faith, or
      (iii) if such exercise is in connection with a merger or consolidation of the
      Corporation in which the Corporation is not the survivor or in which the Common
      Stock is exchanged for cash or other securities or a sale of all or
      substantially all of the assets of the Corporation (collectively, a
“ Sale ”),
      the
      implied price per share of the Common Stock resulting from such
      Sale.




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**7.**  **Adjustment
      of Exercise Price and Option Shares** **.** (a)
      If,
      at any time prior to the Expiration Date, the number of outstanding shares
      of
      Common Stock is (i) increased by a stock dividend payable in shares of Common
      Stock or by a subdivision or split-up of shares of Common Stock, or (ii)
      decreased by a combination of shares of Common Stock, then, following the record
      date fixed for the determination of holders of Common Stock entitled to receive
      the benefits of such stock dividend, subdivision, split-up, or combination,
      the
      Exercise Price shall be adjusted to a new amount equal to the product of (A)
      the
      Exercise Price in effect on such record date, and (B) the quotient obtained
      by
      dividing (x) the number of Option Shares for which the Option was exercisable
      on
      such record date without giving effect to the event referred to in the foregoing
      clause (i) or (ii) (such number of Option Shares, the “ Record
      Date Option Shares ”),
      by
      (y) the aggregate number of shares to which the Record Date Option Shares would
      have been increased or decreased immediately after and as a result of the event
      referred to in the foregoing clause (i) or (ii) had the Record Date Option
      Shares been issued immediately prior to such record date.





(b) Upon
      each adjustment of the Exercise Price as provided in Section 8(a) ,
      the
      Optionee shall thereafter be entitled to subscribe for and purchase, at the
      Exercise Price resulting from such adjustment, the number of Option Shares
      equal
      to the product of (i) the number of Record Date Option Shares and (ii) the
      quotient obtained by dividing (A) the Exercise Price existing prior to such
      adjustment by (B) the new Exercise Price resulting from such
      adjustment.




**8.**  **Reclassification,
      Etc** **.** In
      case
      of any reclassification or change of the outstanding Common Stock of the
      Corporation (other than as a result of a subdivision, combination or stock
      dividend), or in case of any consolidation of the Corporation with, or merger
      of
      the Corporation into, another corporation or other business organization (other
      than a consolidation or merger in which the Corporation is the continuing
      corporation and which does not result in any reclassification or change of
      the
      outstanding Common Stock of the Corporation) at any time prior to the Expiration
      Date, then, as a condition of such reclassification, reorganization, change,
      consolidation or merger, lawful provision shall be made, and duly executed
      documents evidencing the same from the Corporation or its successor shall be
      delivered to the Optionee, so that the Optionee shall have the right prior
      to
      the Expiration Date to purchase, at a total price not to exceed that payable
      upon the exercise of this Option as to the number of Option Shares is then
      exercisable, the kind and amount of shares of stock and other securities and
      property receivable upon such reclassification, reorganization, change,
      consolidation or merger by a holder of the number of Option Shares which might
      have been purchased by the Optionee immediately prior to such reclassification,
      reorganization, change, consolidation or merger, and in any such case
      appropriate provisions shall be made with respect to the rights and interest
      of
      the Optionee to the end that the provisions hereof (including provisions for
      the
      adjustment of the Exercise Price and of the number of shares purchasable upon
      exercise of the Option) shall thereafter be applicable in relation to any shares
      of stock and other securities and property thereafter deliverable upon exercise
      of the Option.




**9.**  **Non-Transferability
      of Option** **.** The
      Option granted hereunder to the Optionee shall not be transferable by the
      Optionee otherwise than by will, or by the laws of descent and
      distribution.




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**10.**  **Compliance
      With Applicable Law** **.** The
      issuance of the Option Shares pursuant to the exercise of the Option is subject
      to compliance with all applicable laws, including without limitation laws
      governing withholding from employees and nonresident aliens for income tax
      purposes. ****




**11.**  **Representations
      and Warranties of Optionee.**





(a)  The
      Optionee acknowledges his understanding that the grant of the Option is intended
      to be exempt from registration under the Securities Act of 1933, as amended
      (the
“ Securities
      Act ”),
      by
      virtue of Section 4(2) of the Securities Act and the provisions of Regulation
      D
      promulgated thereunder (“ Regulation
      D ”).
      In
      furtherance thereof, the Optionee represents and warrants to the Company as
      follows:





(i)  The
      Optionee realizes that the basis for the exemption from registration may not
      be
      available if, notwithstanding the Optionee’s representations contained herein,
      the Optionee is merely acquiring the Option for a fixed or determinable period
      in the future, or for a market rise, or for sale if the market does not rise.
      The Optionee does not have any such intention.




(ii)  The
      Optionee is acquiring the Option solely for the Optionee’s own account and not
      with view to, or resale in connection with, any distribution of the Option
      or
      the Option Shares.




(iii)  The
      Optionee has the financial ability to bear the economic risk of the Option,
      has
      adequate means for providing for his current needs and contingencies, and has
      no
      need for liquidity with respect to the Option or the Option Shares.




(iv)  The
      Optionee and the Optionee’s attorney, accountant, purchaser representative
      and/or tax advisor, if any (collectively, “ Advisors ”),
      have
      received this Agreement and all other documents provided by the Company pursuant
      to the requests of the Optionee or its Advisors, if any, and have carefully
      reviewed them and they understand the information contained therein, prior
      to
      the execution of this Agreement.




(v)  The
      Optionee (together with his, her or its Advisors, if any) has such knowledge
      and
      experience in financial and business matters as to be capable of evaluating
      the
      merits and risks of the Option and the Option Shares. If other than an
      individual, the Optionee also represents it has not been organized solely for
      the purpose of acquiring the Option or the Option Shares.




(b)  The
      Optionee is an “accredited investor,” as that term is defined in Rule 501(a) of
      Regulation D.




(c)  The
      Optionee acknowledges that each of the Company and H2Diesel, Inc., its wholly
      owned subsidiary (“ Subsidiary ”,
      and
      together with the Company, the “ H2Diesel
      Companies ”),
      is a
      development stage company with no or a limited operating history or revenues,
      and no or few employees. The Optionee further acknowledges that the Company
      has
      not made any representations to the Optionee regarding its or Subsidiary’s
      business prospects or the Company’s or Subsidiary’s ability to generate revenues
      in the future.




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(d)  The
      Optionee represents, warrants and agrees that he, she or it will not sell or
      otherwise transfer the Option or any Option Shares without registration under
      the Securities Act or an exemption therefrom, and fully understands and agrees
      that the Optionee must bear the economic risk of his, her or its purchase
      because, among other reasons, the Option and the Option Shares have not been
      registered under the Securities Act or under the securities laws of any state
      and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
      unless they are subsequently registered under the Securities Act and under
      the
      applicable securities laws of such states, or an exemption from such
      registration is available. In particular, the Optionee is aware that the Option
      is and any Option Shares will be “restricted securities,” as such term is
      defined in Rule 144 promulgated under the Securities Act (“ Rule
      144 ”),
      and
      they may not be sold pursuant to Rule 144 unless all of the conditions of Rule
      144 are met. The Optionee also understands that the Company is under no
      obligation to register the Option or any Option Shares on his, her or its behalf
      or to assist them in complying with any exemption from registration under the
      Securities Act or applicable state securities laws. The Optionee understands
      that any sales or transfers of the Option and any Option Shares are further
      restricted by state securities laws and the provisions of this
      Agreement.




(e)  No
      representations or warranties have been made to the Optionee by any of the
      H2Diesel Companies, or any of their respective officers, employees, agents,
      sub-agents, affiliates or subsidiaries, other than any representations of the
      Company contained herein, and in accepting the Option the Optionee is not
      relying upon any representations other than those contained herein.




(f)  The
      Optionee understands and acknowledges that the Option and the value of the
      Option Shares is speculative and may ultimately become worthless and has
      carefully read and considered the matters set forth in the public reports filed
      with the Securities and Exchange Commission, and, in particular, acknowledges
      that the Company has a limited operating history and is engaged in a highly
      competitive business.




(g)  The
      Optionee’s overall commitment to investments that are not readily marketable is
      not disproportionate to the Optionee’s net worth, and the Option and the Option
      Shares will not cause such overall commitment to become excessive.




(h)  The
      Optionee and his, her or its Advisors, if any, have had a reasonable opportunity
      to ask questions of and receive answers from a person or persons acting on
      behalf of the Company concerning the Option and the Option Shares and the
      business, financial condition, results of operations and prospects of the
      Company, and all such questions have been answered to the full satisfaction
      of
      the Optionee and his, her or its Advisors, if any.




(i)  The
      Optionee has taken no action which would give rise to any claim by any person
      for brokerage commissions, finders’ fees or the like relating to this Agreement
      or the transactions contemplated hereby.




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**12.** **Restrictions on Option Shares** **.** Unless a
      current registration statement under the Securities Act shall be in effect
      with
      respect to the Option Shares to be issued upon exercise of the Option, the
      Optionee, by accepting the Option, covenants and agrees that, at the time of
      exercise the Option, the Optionee will deliver to the Corporation such written
      representations that the Company may deem necessary or appropriate to ensure
      that the Option Shares are not required to be registered under the Securities
      Act or applicable state securities laws. The Optionee agrees that certificates
      representing Option Shares may bear a legend substantially as
      follows:







**THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS.
      THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR TRANSFERRED UNTIL THE
      HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE
      DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO
      THE
      ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
      VIOLATE APPLICABLE FEDERAL OR STATE LAWS.**




**13.**  **Notices
      Generally** **.** Any
      notice, request, consent, other communication or delivery pursuant to the
      provisions hereof shall be in writing and shall be sent by one of the following
      means: (i) by registered or certified first class mail, postage prepaid, return
      receipt requested; (ii) by facsimile transmission with confirmation of receipt;
      (iii) by overnight courier service; or (iv) by personal delivery, and shall
      be
      properly addressed to the Optionee at the last known address or facsimile number
      appearing on the books of the Corporation, or, except as herein otherwise
      expressly provided, to the Corporation at its principal executive office
      Attention: Chief Executive Officer, or such other address or facsimile number
      as
      shall have been furnished to the party giving or making such notice, demand
      or
      delivery.




**14.**  **Miscellaneous** .




(a) This
      Agreement has been duly authorized on behalf of the Corporation by the Board.
      The Optionee represents that he is free to enter into this Agreement and that
      his entering into this Agreement does not violate any obligation that he has
      to
      any other person or legal entity.




(b) In
      the event that any provision of this Agreement would be held to be invalid
      or
      unenforceable for any reason unless narrowed by construction, this Agreement
      shall be construed as if such invalid or unenforceable provision had been more
      narrowly drawn so as not to be invalid or unenforceable. If, notwithstanding
      the
      foregoing, any provision of this Agreement shall be held to be invalid or
      unenforceable for any reason, such invalidity or unenforceability shall attach
      only to such provision and shall not affect or render invalid or unenforceable
      any other provision of this Agreement.




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(c)
      This
      Agreement sets forth the entire understanding of the Corporation and the
      Optionee with respect to the subject matter hereof and cannot be amended or
      modified except by a writing signed by both parties.




(d) Except
      as otherwise expressly provided herein, this Agreement shall be binding upon
      and
      inure to the benefit of the parties hereto, and their respective permitted
      successors and assigns, heirs and personal representatives.




(d) This
      Agreement shall be interpreted, construed and administered in accordance with
      the laws of the State of Florida without regard to its choice of law provisions
      that would cause the laws of another jurisdiction to apply.




(e) This
      Agreement may be executed in counterparts which, taken together, shall
      constitute a single original document.




**IN
      WITNESS WHEREOF** ,
      the
      Corporation has caused this Agreement to be executed as of the Date of Grant
      set
      forth in Schedule 1.







H2DIESEL
      HOLDINGS, INC.











By:


___/s/
      David A. Gillespie _______


Name:
      David A. Gillespie


Title: Chief
      Executive Officer






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**Schedule
      1**


**Stock
      Option Agreement**





1.
                Name of Optionee:
            Kim
                Loreen Johnson2.
                Number of Option Shares:
            1,500,000
                shares of Common Stock3.
                Option Exercise Price Per Share:
            $6.004.
                Date of Grant:
            April
                24, 20075.
                Expiration Date:
            April
                23, 20126.
                Vesting Schedule:
            Options
                will vest as follows:
              25,000
                shares on execution by the company of each Test Burn Agreement with
                a
                counter party introduced to the Company by the Optionee.
              25,000
                shares on completion of the physical testing included in such Test
                Burn
                Agreement.
              50,000
                shares for each 10,000,000 gallons per year of biofuel delivered
                to
                customers that have completed such Test Burns, or have been otherwise
                introduced to the Company by the Optionee. 50,000 shares for each
                10,000,000 gallon per year increment above the initial annual volumes
                for
                each such customer. Any unvested portion of the Option on April 23,
                2010
                will expire.

















Accepted
      and agreed to as of the date first above written:














/s/
      Kim L. Johnson


Kim
      L.
      Johnson


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