Document:

Extension of License Agreement

    Exhibit
      10.2

    
 

    H2Diesel,
      Inc.

    20283
      State Road 7, Suite 40

    Boca
      Raton, Florida 33498

    

    September
      11, 2006

    

    Mr.
      Ferdinando Petrucci

    Via
      Stazione, 133A

    Arce
      [Frosinone], Italy

    

    
      	 	
              Re:

            	
              Exclusive
                License Agreement dated March 20, 2006 (the “License
                Agreement”),
                between Ferdinano Petrucci and H2Diesel, Inc. (“H2”)
                

            

    

    

    Dear
      Ferdinando:

    

    To
      memorialize our recent discussions, please acknowledge your agreement that
      the
      License Agreement is amended to extend each of the following deadlines to
      December 31, 2006, by executing this letter in the space provided below:

    
      

      	(1)  	the date of payment of $1 million required by Section
              1.b.(i)B of the License Agreement;

       

    

    
      	(2)  	
              the
                expiration of the exercise period for H2’s option to acquire exclusive
                licensing rights in South America under Section 1.c. of the License
                Agreement; and

            

    

    

    
      	(3)  	
              the
                date by which H2 must use reasonable efforts to cause a registration
                statement to be filed with the Securities and Exchange Commission
                under
                Section 2.d. of the License Agreement.

            

    

    

    In
      consideration of the foregoing, H2 hereby agrees that the right of first offer
      under Section 1.d of the License Agreement shall not apply to any rights with
      respect to the Product (as defined in the License Agreement) in or with respect
      to the country of Romania.

    

    Kindest
      regards,

    

    H2
      Diesel, Inc.

    

    By:___/s/
      Lee S. Rosen

     Lee
      S. Rosen

     Chief
      Executive Officer

    

    

    

    Acknowledged
      and agreed to this 11th
      day of
      September, 2006:

    

    

    /s/
      Ferdinando Petrucci

    Ferdinando
      PetrucciAmended and Restated Sublicense Agreement

    Exhibit
      10.3

    

    AMENDED
      AND RESTATED SUBLICENSE AGREEMENT

    

    This
      Amended and Restated Sublicense Agreement (the “Agreement”) is made by and
      between H2Diesel, Inc., a Delaware corporation (hereinafter “Sublicensor”) and
      Xethanol Corporation, a Delaware corporation (hereinafter “Sublicensee”), as of
      the 15th day of June, 2006 (the “Effective Date”). 

    

    WHEREAS,
      Sublicensor
      and Sublicensee are parties to a Sublicense Agreement entered into as of the
      14th
      day of
      April, 2006, pursuant to which Sublicensor granted a license to Sublicensee
      with
      respect to intellectual property rights relating to a certain chemical additive
      for use in making bio-fuel for internal combustion engines (the “Additive”);
      and

    

    WHEREAS,
      the
      parties desire to amend and restate the terms of said Sublicense Agreement
      effective retroactively as of the date of said Sublicense Agreement on the
      terms
      and conditions set forth herein.

    

      NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and terms expressed herein, and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, Parties hereby agree, covenant, and undertake as
      follows:

    

    1. DEFINITIONS.
      In
      addition to other capitalized terms defined elsewhere herein, the following
      terms as used in this Agreement shall have the meanings set forth
      below:

    

    “Actual
      Cost”
shall
      be the price per applicable quantity unit of the Additive which shall be equal
      to Sublicensor’s actual cost of raw materials used in making that quantity of
      the Additive as determined in accordance with generally accepted accounting
      principles (“GAAP”), plus ten percent (10%). As of the date of this Agreement
      Sublicensor’s actual cost of the raw materials for the Additive in solid form is
      not more than 10 cents ($0.10) per Gallon of biodiesel fuel producible in
      accordance with the blending formulations currently forming part of the Know-How
      to be provided to Sublicensee under this Agreement. 

     

    “Affiliate”
shall
      mean any person or entity directly or indirectly Controlling or having the
      power
      to Control, or Controlled by or being under common Control with another person
      or entity. 

     

    “Consolidated
      Entity”
shall
      mean an entity the financial results of which are consolidated with those of
      Sublicensor for financial accounting purposes in accordance with
      GAAP.

     

    “Control”
      means
      the direct or indirect possession of power to direct or cause the direction
      of
      the management or policies of such party, whether through ownership of stock
      or
      other securities, by contract or otherwise. Ownership of more than fifty percent
      (50%) of the beneficial interest of an entity shall be conclusive evidence
      that
      control exists.

     

    “Exclusive
      License Agreement”
      means
      the Exclusive License Agreement between Ferdinando Petrucci as Licensor and
      Sublicensor as Licensee, dated March 28, 2006.

     

    “Gallon”
      shall
      mean a liquid unit equal to 4 quarts or 3.785 liters.

     

    “Improvement”
shall
      mean any enhancement, refinement, discovery, invention, trade secret or
      additional technology, whether patentable or non-patentable under the laws
      of
      any country (including, without limitation, any test or other proprietary data,
      experience, methods, processes, know-how, new apparatus, equipment, machinery,
      Products, specifications, designs and information) of or related to
      the

     

    

    
      
        
           

          

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Know-How
      licensed hereunder, the Additive or any Product developed, conceived or
      otherwise arising after the date hereof. 

     

    “Know-How”
shall
      mean technical information, including without limitation trade secrets, whether
      or not patentable, relating to, used in, or useful in connection with, the
      use
      of the Additive for production of a Product (as defined below) for internal
      combustion engines, including, without limitation, suggested chemical plant
      configurations, plans and formulation(s) for blending of the Additive with
      other
      raw materials to create a Product. 

    

    “License”
shall
      mean the license granted in Section 2 hereof.

    

      “Licensor”
      means
      Ferdinando Petrucci.

    

    “Patent
      Rights”
shall
      mean all claims of such patent applications and issued patents that are directed
      to the Additive, production of the Additive, Know-How or Improvements (each
      as
      defined herein) hereafter filed or issued to which Sublicensor may acquire
      rights during the term of this Agreement. 

    

    “Product(s)”
shall
      mean any fuel or chemical which is manufactured using the Additive.

    

    “Specifications”
      shall
      mean the specifications applicable to the use of the Additive to produce
      Products and the performance of those Products, as proposed by Sublicensor
      in
      good faith and reasonably agreed to by Sublicensee from time to time. The
      Specifications shall at all times reflect the best commercial product being
      delivered by Sublicensor to Sublicensee or any other party or being used by
      Sublicensor for its own account.

    

            “Territory”
shall
      mean the geographic areas defined in Annex
      A.

     

    2. SUPPLY
      OF THE ADDITIVE FOR USE IN PRODUCTION OF PRODUCTS; GRANT
      OF SUBLICENSE

    

    2.1
       Sublicensor
      agrees to supply the Additive to Sublicensee for use solely in manufacturing
      Products made with the Additive blended therein while this Agreement is in
      effect. The parties acknowledge and agree that the Additive as well as Products
      utilizing the Additive have not yet been mass produced by either party and
      that
      therefore the parties will work cooperatively so that as Sublicensee’s capacity
      to produce Products is established and increases over time, Sublicensor can
      increase its capacity to produce sufficient quantities of the Additive to supply
      Sublicensee’s requirements for same. In furtherance thereof, Sublicensee shall
      inform Sublicensor when Sublicensee commences construction of manufacturing
      facilities for Products as well as the timeframe for such facilities to commence
      production of Products and will notify Sublicensor reasonably in advance of
      such
      facilities actually commencing production of Products to enable Sublicensor
      to
      coordinate its production capacity for the Additive accordingly to meet
      Sublicensee’s supply needs for same. Additionally, Sublicensee shall thereafter
      notify Sublicensor reasonably in advance of any increases in its Product
      production capacity to enable Sublicensor to increase its Additive production
      capacity such that Sublicensor can maintain a level of Additive production
      capacity sufficient to supply one hundred ten percent (110%) of Sublicensee’s
      needs for supply of the Additive. Subject to such cooperation, Sublicensor
      agrees to supply all of the Additive required to fill all of Sublicensee’s
      orders for same; provided, however, that, unless Sublicensor determines
      otherwise, in no event shall orders for the Additive be made or accepted until
      Sublicensor (or its designated supplier) has commenced manufacturing of the
      Additive and all required regulatory and other legal approvals and requirements
      have been obtained and/or satisfied. Quantities of

     

    
      
        
        

      

      
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    the
      Additive to be supplied to Sublicensee shall be confirmed to Sublicensee after
      the receipt by Sublicensor of a purchase order for same from Sublicensor shall
      undertake commercially reasonable efforts to fill orders within the timeframe
      specified in such order; provided, however, that Sublicensor shall not have
      any
      liability for failure to ship orders for the Additive within such timeframe
      due
      to circumstances beyond its control. The purchase price for the Additive to
      be
      paid by Sublicensee shall be equal to the lesser of (a) Sublicensor’s then
      current Actual Cost or (b) the lowest price charged by Sublicensor to any other
      third party purchaser of Additive which is not an affiliate of Sublicensor,
      unless (c) another price is determined by mutual agreement of Sublicensor and
      Sublicensee. In
      addition to the applicable purchase price, Sublicensor shall be entitled to
      separately invoice for, and Sublicensee shall pay, all sales, use, excise,
      value
      added, gross receipts, turnover and other taxes and charges imposed by law
      or
      required to be paid or collected by Sublicensor in connection with the purchase,
      delivery, sale or use of the Additive pursuant to this Agreement, excluding
      taxes based on Sublicensor’s net income.
      All
      payments relating to purchases of the Additive shall be due to Sublicensor
      from
      Sublicensee within thirty (30) days after the date on which the ordered Additive
      is shipped to Sublicensee. Payments shall be made by check or wire transfer
      or
      as otherwise specified by Sublicensor in the invoice for the applicable
      shipment. Each order shall constitute an independent transaction and Sublicensee
      shall pay the invoice for each such transaction strictly in accordance with
      these payment terms. All orders for the Additive shall be deemed to incorporate
      the warranty disclaimers, limitations of liability and other applicable terms
      of
      this Agreement, and shall be nonreturnable and the price paid nonrefundable
      unless the Additive does not meet the Specifications for the Additive in effect
      at the time of order. Sublicensee shall designate the shipping method and pay
      all costs incurred in connection with shipment of the Additive to Sublicensee’s
      designated destination, including the cost of the shipper and any in transit
      insurance (which shipping costs shall be paid directly by Sublicensee and not
      as
      reimbursement to Sublicensor). Risk of loss with respect to orders of the
      Additive purchased and sold hereunder shall pass to Sublicensee at the time
      that
      the order is deposited with Sublicensee’s designated shipper. No less often than
      every calendar quarter while this Agreement is in effect, Sublicensee shall
      provide to Sublicensor forecasts of Sublicensee’s anticipated Additive purchase
      requirements. Without Sublicensor’s prior written consent or unless Sublicensor
      fails to fulfill its obligations to provide Additive pursuant to this Agreement,
      Sublicensee may not procure the Additive from any third party other than
      Sublicensor or a Sublicensor designated supplier or produce the
      Additive.

     

    2.2 Subject
      to the terms and conditions of this Agreement, Sublicensor hereby grants to
      Sublicensee while this Agreement in effect, a non-transferable, exclusive
      license, with no right to grant sub-sublicenses other than to (a) any holding
      company formed to hold all of the equity interests in Sublicensor and any wholly
      owned subsidiaries of Sublicensee or such holding company and (b) entities
      in
      which it has an equity interest (determined in accordance with GAAP) of not
      less
      than twenty percent (20%) and which are not competitors of Sublicensor
(it
      being
      understood that an entity that produces Product using the Additive and sells
      such Product shall not be deemed by reason thereof to be a competitor of
      Sublicensor), provided
      that any such holding company, subsidiary or other entity agrees in writing
      to
      observe all of the obligations and limitations set forth under this Agreement,
      including the payment of Royalties, and Sublicensee guarantees performance
      of
      such obligations by such other party, under the Patent Rights and under the
      Know-How to make, cause to be made, use and sell any Product in the Territory
      and the non-exclusive right to sell any Product anywhere else within North
      America, namely, the United States of America, its possessions and territories,
      Canada and Mexico), Central America (namely, Belize, Costa Rica, El Salvador,
      Guatemala, Honduras, Nicaragua, Panama), and Caribbean countries (namely,
      Antigua & Barbuda, Aruba, Bahamas, Cayman Islands, Cuba (currently subject
      to U.S. embargo), Dominica, Dominican Republic, Grenada, Guadeloupe, Haiti,
      Jamaica, Martinique, St. Kitts & Nevis, St. Lucia, St. Vincent and the
      Grenadines, Trinidad & Tobago, Turks & Caicos Islands, and Virgin
      Islands). Sublicensee shall not engage any third party to make any Product
      without the prior written approval of Sublicensor, which approval shall not
      be
      withheld or delayed unreasonably, and shall not directly or indirectly re-sell
      the Additive or any Product which has the

    

    
      
        
           

          

          

          
          

        

        
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    Additive
      as a component outside the Territory. In the event that Sublicensor acquires
      rights in South America under Section 1(c) of the License, the permitted
      non-exclusive resale territory shall be expanded to include South America
      (namely, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, French Guiana,
      Guyana, Peru, Suriname, Uruguay and Venezuela), but specifically excluding
      Paraguay.

    

    Sublicensee
      shall undertake reasonable efforts to ensure compliance with the foregoing
      restrictions, including, without limitation, imposing contractual restrictions
      in connection with its sale of Products to third parties. Sublicensee shall
      handle and treat all Know-How provided hereunder with the highest degree of
      secrecy and care in accordance with the requirements of Section 18.8 hereof.
      Sublicensee shall not reproduce or provide access to any of the Know-How to
      any
      person except as necessary to perform its obligations hereunder, or in the
      exercise of its right to engage others to make the Product if approved by
      Sublicensor as provided above, and any such person receiving disclosure of
      any
      Know-How pursuant hereto shall be required to comply with the confidentiality
      obligations imposed herein with respect to same, with Sublicensee remaining
      fully responsible for such compliance. Sublicensee shall not directly or
      indirectly reverse engineer, attempt to reverse engineer or otherwise attempt
      to
      derive the formula or other trade secrets with respect to the Additive, or
      assist or permit others to do so.

     

    2.3 Sublicensor
      shall use its commercially reasonable efforts on a continual basis throughout
      the term of this Agreement to make Improvements to the Additive and shall use
      all such improvements that result in an improvement in the Additive or the
      performance of the Product in the production of the Additive.

     

    2.4 Sublicensee
      shall be jointly and severally obligated with Sublicensor and liable to Licensor
      for all of the obligations of Sublicensor to pay royalties under the Exclusive
      License Agreement, to the extent that such obligations arise from the exercise
      by Sublicensee of the rights granted to it in this Agreement; provided, however,
      that Sublicensee shall have no obligation to make any payments to Licensor
      in
      excess of the unpaid Royalty payments due from Sublicensee to Sublicensor at
      the
      relevant time.

     

    

    2.5 This
      Agreement creates no relationship of partnership, joint venture, employment,
      franchise, or agency between the parties. This Agreement shall not constitute
      the designation of either party as the representative or agent of the other,
      nor
      shall either party to this Agreement have the right or authority to make any
      promise, guarantee, warranty, or representation, or to assume, create, or incur
      any liability or other obligation of any kind, express or implied, against
      or in
      the name of, or on behalf of, the other party, without the other party’s prior
      written consent and approval.

    

    2.6 Sublicensee
      agrees not to contest, challenge or attack the ownership of the intellectual
      property rights relating to the Additive, the Know-How or anything else provided
      by Sublicensor hereunder, or Sublicensor's right to grant licenses or
      sublicenses to use same on whatever terms and conditions acceptable to
      Sublicensor in its sole and absolute discretion, or assist others in doing
      any
      of same. 

    

    3. ROYALTIES

    

    3.1 In
      consideration of the grant of license hereunder, Sublicensee agrees to pay
      to
      Sublicensor a royalty per Gallon of Product sold directly or indirectly by
      or
      through Sublicensee, its agents, affiliates, subsidiaries and permitted
      sub-sublicensees, equal to the lesser of (a) ten U.S. cents ($0.10) and (b)
      the
      lowest royalty per Gallon of Product that is charged as a royalty to any other
      third party that is not a Consolidated Entity, which third party is licensed
      or
      otherwise authorized to make or sell any fuel or chemical using the Additive
      (the “Royalties”). 

    

    
      
        
           

          

          

          
          

        

        
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    3.2 In
      the
      first twelve (12) months from the date on which (a) Sublicensor notifies
      Sublicensee that it is able to produce and deliver to Sublicensee Additive
      conforming to the Specifications in quantities that are necessary to meet
      Sublicensee’s requirements (and provided that Sublicensor is in fact then able
      to do so), and (b) Sublicensor provides Sublicensee with the necessary technical
      and engineering specifications for a process plant to produce the Products
      (the
“Trigger Date”), Sublicensee shall be obligated to pay Royalties with respect to
      at least twenty million (20,000,000) Gallons of Products (the “Initial Mandatory
      Minimum Sales”). The mandatory minimum sales with respect to which Royalties are
      required to be paid shall increase by ten million (10,000,000) Gallons of
      Products for each subsequent twelve (12) month period following the first
      anniversary of the Trigger Date while this Agreement is in effect as compared
      to
      the mandatory minimum for the immediately prior twelve (12) month period (the
      “Follow-On Mandatory Minimum Sales”). For example, the Follow-On Mandatory
      Minimum Sales for the twelve (12) month period commencing twelve (12) months
      after the Trigger Date shall be thirty million (30,000,000) Gallons of Products,
      and so on. Sublicensee’s obligation to pay Royalties on the Initial Mandatory
      Minimum Sales is irrevocable, whether or not Sublicensee actually achieves
      such
      Initial Mandatory Minimum Sales. In the event that Sublicensee fails to achieve
      the Initial Mandatory Minimum Sales requirement or the Follow-On Mandatory
      Minimum Sales requirements in any period during the first two (2) twelve (12)
      month periods after the first anniversary of the Trigger Date, Sublicensor
      shall
      have the right, at its option, to either terminate this Agreement and
      Sublicensee’s rights hereunder or convert Sublicensee’s exclusive rights
      hereunder to non-exclusive rights (in addition to its right to payment of the
      Royalties payable on the Initial Mandatory Minimum Sales) unless Sublicensee
      shall pay the difference between the amount of Royalties actually due for such
      period under this Agreement and the amount of Royalties that would have been
      due
      had Sublicensee sold the minimum amounts required as set forth above during
      such
      period, within the time provided herein for payment of Royalties for such period
      (the “Cure Right”). In the event that Sublicensee fails to achieve the Follow-On
      Mandatory Minimum Sales for the fourth twelve (12) month period after the
      Trigger Date or any subsequent twelve (12) month period while this Agreement
      is
      in effect, Sublicensee’s exclusive rights shall automatically be converted to
      non-exclusive, unless Sublicensee exercises the Cure Right with respect thereto.
      If Sublicensee shall elect, in its sole discretion, not to exercise the Cure
      Right with respect to a failure to achieve the Follow-On Mandatory Minimum
      Sales
      for any twelve (12) month period after the first two (2) twelve (12) month
      periods after the first anniversary of the Trigger Date, then the obligation
      of
      Sublicensee to pay Royalties based upon Follow-On Mandatory Minimum Sales for
      any subsequent period, commencing with the period as to which the Cure Right
      was
      not exercised, shall also terminate. 

    

    3.3 All
      Royalties shall be paid by Sublicensee to Sublicensor on a quarterly basis,
      with
      all Royalties payable with respect to sales of Products in a particular calendar
      quarter due within thirty (30) days after the end of the calendar quarter in
      which sales of Products caused such Royalties to be accrued. Royalty amounts
      not
      paid when due shall accrue interest at the rate of one and one-half percent
      (1
      1/2%) per month or the highest rate permitted by law, whichever is less, until
      paid in full. Each such payment shall be accompanied by an accounting statement,
      which shall include:

    

       (i)
      the
      quantity of Products sold; and 

    

       (ii)
      the
      total of all Royalties payable to Sublicensor. 

    

    3.4 Sublicensee
      shall keep proper books of account showing sales of Products. Sublicensor's
      designated auditing firm shall have access to the books and records of
      Sublicensee once per twelve (12) month period to independently determine the
      amount of Royalties payable hereunder, but for no other purpose. All information
      obtained by Sublicensor and its auditing firm shall be kept strictly
      confidential by Sublicensor and its auditing firm; provided that such
      information may be used by

    

    
      
        
           

          

          

          
          

        

        
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    Sublicensor
      and its counsel in enforcing its rights under this Agreement. In the event
      that
      an underpayment of Royalties in excess of five percent (5%) of the total
      Royalties that should have been paid is determined to have occurred, Sublicensee
      shall promptly pay to Sublicensor the amount of the deficiency together with
      interest accrued thereon, as well as the expenses incurred by Sublicensor in
      connection with verifying Royalty payments pursuant hereto.

    

    4. RETENTION
      OF RIGHTS.
      Notwithstanding any other provisions herein, Licensor, Sublicensor and
      Sublicensor's other sublicensees will have the absolute, right to use the
      technology covered by the Patent Rights and Know-How and all Improvements
      thereof, for conducting research and for any other purposes permitted pursuant
      to the Exclusive License Agreement or any valid sublicense
      agreements.

    

    5. OWNERSHIP
      OF IMPROVEMENTS; PATENT
      PROSECUTION. Sublicensee
      acknowledges and agrees that, except as otherwise expressly provided below,
      Sublicensor shall own the intellectual property rights with respect to any
      Improvements that are developed by or for Sublicensee. In the event that
      Sublicensee, or any person employed or engaged by Sublicensee (including any
      person employed or engaged by any entity engaged by Sublicensee), develops
      or
      creates Improvements, Sublicensee promptly shall offer to, and upon
      Sublicensor’s acceptance, shall assign, or shall cause any and all such persons
      to grant back and assign, to Sublicensor or Sublicensor’s designated Affiliate,
      free of charge, all rights of ownership in such Improvements, whether such
      Improvements are patentable or non-patentable under the laws of any country.
      Sublicensee shall retain a right to use such Improvements solely in accordance
      with the license and other terms of this Agreement, provided that Sublicensee
      treats the Improvements with the same obligations of secrecy and care that
      apply
      to Know-How and Confidential Information. Sublicensee hereby agrees to assist
      Sublicensor in any manner as shall reasonably be requested by Sublicensor to
      evidence, perfect and protect Sublicensor’s rights with respect to the Know-How
      and the Additive and Sublicensor’s ownership of intellectual property rights
      with respect to Improvements and to execute and deliver such legal instruments
      and other documents as Sublicensor may reasonably request in connection
      therewith, including, but not limited to, declarations of inventorship, powers
      of attorney and assignment documents. Sublicensee will at any time, including
      after termination of this Agreement, upon request, communicate to Sublicensor,
      its successors, assigns, or other legal representatives, such facts relating
      to
      any Improvements as may be known to the Sublicensee, and to testify, at
      Sublicensor’s or such successors’, assigns’ or other legal representatives’
expense, as to the same in any interference or other legal proceeding related
      thereto. Sublicensee will make and maintain adequate and current written records
      and evidence of all Improvements, all of which shall be provided to Sublicensor
      upon request and upon the termination of this Agreement, regardless of the
      reason for such termination, and shall not be disclosed to any third party
      without the prior written consent of Sublicensor. Sublicensee will not
      incorporate or allow to be incorporated into any Improvement anything which
      is
      subject to the intellectual property rights of any third party, unless
      Sublicensee has the right to copy and incorporate such material. 

     

    As
      between Sublicensor and Sublicensee, Sublicensor, and not Sublicensee, shall
      be
      responsible for prosecuting all United States patent applications, and foreign
      patent applications in such foreign jurisdictions as Sublicensor chooses, with
      respect to Improvements, the Know-How, the Additive and any Product, and for
      taking action at its discretion as shall perfect or effect its title to the
      Patent Rights. If Sublicensor shall elect not to take any action to perfect,
      effect or maintain any Patent Right with respect to an Improvement, it shall
      give Sublicensee prompt (and in any event not less that thirty days prior to
      the
      last date on which such action may be taken) notice of its election not to
      do
      so, and Sublicensee may take such action, at its own expense; provided, however,
      that if Sublicensee’s efforts to perfect, effect or maintain any Patent Right
      are successful, then Sublicensor shall reimburse Sublicensee for the reasonable
      costs of such action from any royalties or other revenues derived by Sublicensor
      attributable to the perfection effectuation or maintaining of any such Patent
      Right. Sublicensor shall

    

    
      
        
           

          

          

          
          

        

        
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    cooperate
      with Sublicensee in all respects as Sublicensee may reasonably request in
      connection with the taking of any such action.

    

    Notwithstanding
      the foregoing, the requirements of this Section 5 shall not apply to new
      developments with respect to vegetable oil feedstock processes, or any know-how,
      designs or other information relating to the design, construction or operation
      of plants or other facilities for the production of Products developed
      independently by Sublicensee, which shall be owned by Sublicensee; provided,
      however, that Sublicensee shall disclose any such developments to Sublicensor
      and Sublicensor shall have a perpetual royalty-free nonexclusive license to
      use
      such developments in connection with its own business with rights to sublicense
      same to its other sublicensees,
      subject, however, to an obligation of Sublicensor to pay Sublicensee all
      royalties that Sublicensee is obligated to pay to third parties as a result
      of
      Sublicensor’s exercise of its rights under this Section 5 plus an amount equal
      to 10 percent of such royalties. 

    

    6. PATENT
      INFRINGEMENT.
      Sublicensee shall promptly notify Sublicensor of all claims, allegations and
      notifications of infringement of third party patents involving any of the
      Products, the Additive, the Know-How or any Improvements. Sublicensor shall
      have
      no obligation or liability in the event that legal action is brought against
      Sublicensee for patent infringement. Such obligation and liability shall be
      borne by Sublicensee. Sublicensee may choose legal counsel and defend the patent
      infringement lawsuit. 

    

    7. PATENT
      MARKING.
      Sublicensee shall use reasonable efforts to place all appropriate patent and
      other intellectual property notices, markings and indicia on product and
      marketing literature for any Products as needed to protect the patent and other
      intellectual property rights of Sublicensor and right for damages for
      infringement thereof.

    

    8. TERM
      OF THE AGREEMENT. The
      Term
      of this Agreement shall commence on the Effective Date and end on the tenth
      (10th)
      anniversary of the Trigger Date (the "Term"), unless earlier terminated pursuant
      to Section 9. This Agreement shall automatically renew for additional successive
      one (1) year terms (each, a “Renewal Period”) unless a party is in default of
      its obligation at the end of the Term, in which case the non-defaulting party
      may elect not to renew this Agreement. In the event of renewal of this Agreement
      on the tenth (10th)
      anniversary of the Trigger Date and any renewal for additional one (1) year
      terms thereafter, the Royalty rate shall be increased or decreased on the
      renewal date, based on the GNP Implicit Price Deflator as published by the
      United States Department of Commerce (the “Index”) which is published
      immediately preceding the applicable adjustment date (the “Current Index”), by
      comparing the Current Index to the Index published immediately preceding Trigger
      Date (for the first adjustment) or the first day of the previous Renewal Period
      (for the adjustment with respect to each successive Renewal Period), as
      appropriate (the “Prior Index”). If the Current Index has increased over the
      Prior Index, then the Royalty rate shall be increased by the percentage amount
      by which the Current Index exceeds the Prior Index. If the Current Index has
      decreased as compared to the Prior Index, then the Royalty rate shall be
      decreased by the percentage amount by which the Current Index is less than
      Prior
      Index. In the event that the Current Index shall be unavailable on the
      applicable adjustment date, Sublicensee shall continue paying Royalties at
      the
      rate required for the preceding year until such time as the required adjustment
      is determined, at which time an accounting shall be made retroactive to the
      applicable adjustment date. If the Index is discontinued or revised, then such
      other governmental index or computation with which it is replaced or with which
      it is similar (as determined by mutual agreement of the parties) shall be used
      in order to obtain substantially the same result if the Index had not be
      discontinued or revised. Notwithstanding the foregoing, if the revised Royalty
      rate that is calculated in accordance with the provisions of this Section 8
      for
      any Renewal Period exceeds the Royalty rate that is prescribed by Section
      3.1(b), then the Royalty rate for such Renewal Period shall be the Royalty
      rate
      that is prescribed by Section 3.1(b).

    

    
      
        
           

          

          

          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

    

    

    9. TERMINATION

    

    9.1 In
      addition to other termination rights mentioned elsewhere in this Agreement,
      Sublicensor may terminate this Agreement upon the occurrence of any of the
      following:

    

    (i)
      A
      default in the payment of Royalties payable on the Initial Mandatory Minimum
      Sales, or in the payment of Royalties payable on the Follow-On Mandatory Minimum
      Sales required in the first three (3) twelve (12) month periods after the first
      anniversary of the Trigger Date (if Sublicensor elects not to convert
      Sublicensee’s exclusive rights hereunder to non-exclusive), or a default in the
      payment of any Royalties when due and payable, or a failure to submit to
      Sublicensor when due a true and complete accounting statement pursuant to
      Section 3.2 of this Agreement, which default or failure continues for a period
      of at least thirty (30) days after Sublicensor has given to Sublicensee written
      notice of such default or failure.

    (ii)
      Sublicensor may also terminate this Agreement immediately by providing written
      notice to Sublicensee in the event that Sublicensee knowingly breaches the
      confidentiality, or non-transferability obligations contained herein or exceeds
      the scope of the license granted hereunder.

    

    

    (iii)
      Immediately upon a material breach of any obligation of Sublicensee under this
      Agreement, which breach shall not have been cured with thirty (30) days after
      Sublicensor has given to Sublicensee written notice of such breach, in which
      notice Sublicensor shall have specified in reasonable detail the nature of
      such
      breach.

    

    9.2 Upon
      termination of this Agreement regardless of the reason for termination,
      Sublicensee shall immediately cease and desist from further use of the rights
      licensed hereunder as well as further manufacture, distribution or sale of
      Products, except that, Sublicensor shall either repurchase all inventories
      of
      Additive then owned by Sublicensee, at the same price paid for same by
      Sublicensee, or permit Sublicensee to use such Additive to manufacture and
      sell
      Product until its inventory of Additive has been used in its entirety, provided
      that it pays Royalties timely with respect to such sales in accordance with
      this
      Agreement. When all inventories of Additive have been used by Sublicensee or
      delivered by Sublicensee to Sublicensor, then Sublicensee shall provide written
      certification of same together with payment of all Royalties remaining to be
      paid within ten (10) days after the disposition of all such inventories of
      Additive. 

    

    10. REMEDIES.
      Sublicensee acknowledges and agrees that any violation of this Agreement by
      Sublicensee would result in irreparable harm to Sublicensor. Accordingly,
      Sublicensee consents and agrees that, if Sublicensee violates any of the
      provisions of this Agreement, Sublicensor shall be entitled, in addition to
      other remedies available to it, to an injunction to be issued by any court
      of
      competent jurisdiction restraining Sublicensee from committing or continuing
      any
      violation of this Agreement, without the need for posting any bond or any other
      undertaking. 

    

    11. NOTICES,
      REPORTS AND PAYMENTS. Any
      notice, report or payment permitted or required under this Agreement shall
      be in
      writing, and shall be sent or delivered to the receiving party at the address
      set forth below or at such address as either Party may from time to time
      designate in writing. 

    

    

    
      
        
           

          

          

          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    

     

    
      
        
          	
                  If
                    Sublicensor to: H2Diesel, Inc. 

                	 	
                  If
                    to Sublicensee: Xethanol Corporation

                
	
                  17698
                    Foxborough Lane

                	 	
                  1185
                    Avenue of the Americas, 20th
                    Floor

                
	
                  Boca
                    Raton, Florida 33496

                	 	
                  New
                    York, New York 10036

                
	
                  Attention:
                    Lee Rosen, CEO

                	 	
                  Attention:
                    Christopher d'Arnaud-Taylor, CEO

                
	
                  Telephone:
                    (561) 702-5432

                	 	
                  Telephone:
                    (646) 723-4000

                
	
                  Facsimile:
                    (212) 805-9425

                	 	
                  Facsimile:
                    (212) 656-1129

                

        

      

    

     

    12. SEVERABILITY.
       Should
      any term or provision of this Agreement be finally determined by a court of
      competent jurisdiction to be void, invalid, unenforceable or contrary to law
      or
      equity, the offending term or provision shall be modified and limited (or if
      strictly necessary, deleted) only to the extent required to conform to the
      requirements of law and the remainder of this Agreement (or, as the case may
      be,
      the application of such provisions to other circumstances) shall not be affected
      thereby but rather shall be enforced to the greatest extent permitted by
      law.

     

    13. CONTROLLING
      LAW, JURISDICTION AND VENUE.
      

     

    13.1 The
      validity, construction, and interpretation of this Agreement shall be solely
      and
      exclusively governed by and construed in accordance with the laws of the State
      of New York, USA, excluding any otherwise applicable rules of conflict of laws
      that would cause the laws of another jurisdiction to apply. 

    

    13.2 The
      courts of the State of New York shall have sole and exclusive jurisdiction
      over
      the parties with respect to any legal proceedings brought by either party with
      respect to this Agreement. For implementation of this Agreement and all its
      consequences, each party waives such of its rights and privileges under any
      other law or legal system, such as the law of the place of performance, as
      is
      necessary to give effect to the term and conditions hereof. Each party hereby
      expressly consents to personal jurisdiction in the courts of the State of New
      York with respect to legal proceedings involving this Agreement, and expressly
      waives any right to object to such personal jurisdiction, or the convenience
      of
      such forum. In the event that there is a default under this Agreement and it
      becomes reasonably necessary for any party to employ the services of any
      attorney, either to enforce or terminate this Agreement, with or without
      arbitration, the non-defaulting party shall be entitled to collect from the
      defaulting party its reasonable attorneys fees and such other costs and expenses
      as are incurred by it in enforcing or terminating this Agreement. EACH
      PARTY ACKNOWLEDGES THAT A JURY TRIAL IS A CONSTITUTIONAL RIGHT BUT HEREBY WAIVES
      ANY RIGHT TO A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO THIS
      AGREEMENT. 

     

    14. NEGATION
      OF CERTAIN WARRANTIES; SUBLICENSEE REPRESENTATIONS AND
      WARRANTIES

    

    14.1 Nothing
      in this Agreement shall be construed as: 

    

    (i)
      a
      warranty or representation by Sublicensor as to the validity or scope of any
      of
      the Patent Rights (as the only Patent Rights are pending applications which
      have
      not yet been examined) or the usefulness, commercial viability or value of
      any
      of the Additive (as neither the Additive nor any Products containing the
      Additive have been mass produced or have received required regulatory
      approvals), the Patent Rights, Know-How or anything else provided or licensed
      hereunder; provided, however, that Sublicensor warrants to Sublicensee that
      the
      Additive and Products produced in accordance

    

    
      
        
           

          

          

          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    

    with
      the
      Specifications will at all times conform to the Specification and applicable
      regulations of the United States Department of Energy s then in effect,
      or

    

    (ii)
      a
      warranty or representation other than it has no actual knowledge that any
      Products made, used, sold or otherwise disposed of under any license granted
      in
      this Agreement infringes or will infringe any patents of third parties;
      or

    

    (iii)
      any
      obligation to furnish any Know-How not provided by Licensor to Sublicensor;
      provided that Sublicensor shall use its commercially reasonable efforts to
      obtain such Know-How from Licensor. 

    

    14.2 EXCEPT
      AS
      OTHERWISE EXPRESSLY SET FORTH HEREIN, SUBLICENSOR MAKES NO EXPRESS OR IMPLIED
      WARRANTIES OF ANY KIND, AND DISCLAIMS ANY IMPLIED WARRANTIES, INCLUDING, WITHOUT
      LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
      PURPOSE. SUBLICENSOR DOES NOT REPRESENT OR WARRANT THAT THE USE OF THE ADDITIVE
      SUPPLIED OR THE RIGHTS GRANTED HEREUNDER WILL RESULT IN PRODUCTS THAT ARE
      COMMERCIALLY VIABLE, BUT DOES WARRANT THAT THE ADDITIVE AS SUPPLIED TO
      SUBLICENSEE WILL CONFORM TO THE SPECIFICATIONS IN EFFECT AT THE TIME OF THE
      CORRESPONDING ORDER OF SUCH ADDITIVE.

    

      14.3
      Sublicensee represents and warrants to Sublicensor the following:

     

    (i)  It
      is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the jurisdiction of its formation, with full power and authority to execute,
      deliver and perform its obligations under this Agreement.

     

    (ii)  The
      execution, delivery and performance of this Agreement and the consummation
      of
      the transactions contemplated hereby by it has been duly and validly authorized
      and no further authorization is required on its part to consummate the
      transactions contemplated hereby.

     

    (iii)  This
      Agreement and all other documents executed and delivered by it pursuant to
      this
      Agreement constitute its legal, valid and binding obligations, enforceable
      against it in accordance with their respective terms.

     

    (iv)  The
      individual executing this Agreement on its behalf has been duly authorized
      and
      empowered to execute this Agreement for the purpose of binding it to this
      Agreement. Its performance of this Agreement does not require any third party
      consents or governmental approvals, filings, registrations or permits that
      have
      not already been obtained or will not be obtained prior to Sublicensee’s
      commencement of manufacturing and sale of Products, or that will not be
      maintained during the Term. The execution, delivery and performance of this
      Agreement by it does not and will not violate any contract or other arrangement
      between it and any third party, or any applicable law or regulation, or infringe
      or otherwise violate any third party right.

     

    14.4 It
      shall
      be Sublicensee’s sole responsibility to comply with any and all applicable
      local, state, or federal laws and regulations with respect to the manufacture
      and sale of Products and Sublicensee shall obtain any required licenses,
      permits, and approvals at its sole cost and expense. Sublicensee shall provide
      Sublicensor with a copy of any required licenses, permits, and approvals, upon
      the written request of the Sublicensor. 

    

    14.5 Sublicensor
      represents and warrants to Sublicensee the following:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    

      (i) It
        is a
        corporation duly organized, validly existing and in good standing under the
        laws
        of the jurisdiction of its formation, with full power and authority to execute,
        deliver and perform its obligations under this Agreement.

       

      (ii) The
        execution, delivery and performance of this Agreement and the consummation
        of
        the transactions contemplated hereby by it has been duly and validly authorized
        and no further authorization is required on its part to consummate the
        transactions contemplated hereby.

       

      (iii) This
        Agreement and all other documents executed and delivered by it pursuant to
        this
        Agreement constitute its legal, valid and binding obligations, enforceable
        against it in accordance with their respective terms.

       

                              
        (iv) The
        individual executing this Agreement on its behalf has been duly authorized
        and
        empowered to execute this Agreement for the purpose of binding it to this
        Agreement. Its performance of this Agreement does not require any third party
        consents or governmental approvals, filings, registrations or permits that
        have
        not already been obtained or will not be obtained prior to Sublicensee’s
        commencement of manufacturing and sale of Products, or that will not be
        maintained during the Term. The execution, delivery and performance of this
        Agreement by it does not and will not violate any contract or other arrangement
        between it and any third party.  

    

     

    15. INDEMNITY;
      LIMITATION OF LIABILITY

    

               
       15.1 Sublicensee
      shall defend, indemnify and hold harmless Sublicensor and its partners,
      employees, officers, directors, stockholders and agents, and their respective
      successors, heirs and assigns (the "Indemnitees"), against all liabilities,
      demands, losses, costs, and expenses (including, without limitation, attorneys'
      fees) incurred by or imposed upon the Indemnitees or any one of them in
      connection with any claims, suits, actions, demands or judgments arising out
      of
      any theory of liability (including but not limited to, actions in the form
      of
      tort, warranty, or strict liability) for death, personal injury, illness, or
      property damage arising from Sublicensee's use, sale, or other disposition
      of
      any Products, or exercise of any of rights hereunder, except any such claims,
      suits, actions, demands or judgments that arise from a breach by Sublicensor
      of
      its agreements, representations and warranties with respect to the Additive
      set
      forth in this Agreement. 

    

              
        15.2 Sublicensee
      agrees, at its own expense, to provide attorneys reasonably acceptable to
      Sublicensor to defend against any actions brought or filed against any party
      indemnified hereunder with respect to the subject of indemnity contained herein,
      whether or not such actions are rightfully brought. Notwithstanding the
      foregoing, any of the indemnified parties may participate with counsel of their
      own choosing at their expense. 

    

    15.3 IN
      NO
      EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY THIRD PARTY WITH RESPECT
      TO ANY PUNITIVE, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES RELATING
      TO OR ARISING OUT OF THIS AGREEMENT, OR WITH RESPECT TO THE ADDITIVE, THE KNOW
      HOW OR ANY PRODUCT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
      SUCH DAMAGES. IN NO EVENT SHALL EITHER PARTY’S LIABILITY HEREUNDER EXCEED THE
      TOTAL AMOUNT OF ROYALTIES PAID TO SUBLICENSOR BY SUBLICENSEE HEREUNDER FOR
      THE
      TIME PERIOD OR TRANSACTIONS GIVING RISE TO THE PARTICULAR CLAIM.

     

    

    

    

    
      
        
           

          

          

          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    

    16. NON-TRANSFERABILITY

    

              This
      Agreement shall not be assignable or otherwise transferable by Sublicensee
      except in connection with (a)
      any
      transaction the purpose of which is to reorganize the corporate structure of
      Sublicensee, reincorporate Sublicensee in another jurisdiction or undertake
      any
      other action which does not materially affect the ownership and control of
      Sublicense at the time of such transaction and (b) any
      transfer (whether by sale, merger or otherwise) of all of the stock or assets
      of
      Sublicensee or of that portion of the business of Sublicensee in which this
      Agreement and the rights conveyed hereby are used, other than any such transfer
      of this Agreement to a competitor of Sublicensor and provided that such
      assignee, acquiror or resulting person shall assume all of the obligations
      of
      Sublicensee hereunder and that no such assignment shall relieve Sublicensee
      of
      any of its obligations hereunder.
      Sublicensor may freely assign this Agreement to an Affiliate or in connection
      with a sale of all or substantially all of its assets or stock (whether by
      sale,
      merger, or otherwise), provided that such
      assignee, acquiror or resulting person shall assume all of the obligations
      of
      Sublicensor hereunder and that no such assignment shall relieve Sublicensor
      of
      any of its obligations hereunder.

    

    17. MISCELLANEOUS

    

    17.1 Entire
      Agreement. The parties hereto have read this Agreement and agree to be bound
      by
      all its terms. The parties further agree that this Agreement, together with
      the
      Investment Agreement entered into as of the 14th
      day of
      April, 2006 by and among Crestview Capital Master, LLC, TOIBB Investment, LLC,
      Sublicensor and Sublicensee, as amended, and the Management Services Agreement
      entered into on the same date by and between Sublicensor and Sublicensee
      constitute the full, complete and exclusive statement of the agreements between
      them and supersedes all proposals, oral or written, and all other communications
      between them relating to the subject matter of this Agreement, including
      specifically, but without limitation, the Sublicense Agreement entered into
      by
      the parties as of the 14th
      day of
      April, 2006 which is superseded by this Agreement effective retroactively as
      of
      said date.

     

    17.2 Modifications.
      No agreement changing, modifying, amending, extending, superseding, discharging,
      or terminating this Agreement or any provisions hereof shall be valid unless
      it
      is in writing and is dated and signed by duly authorized representatives of
      the
      party against which enforcement is sought.

     

    17.3 Waiver.
      Failure of any of the parties hereto to enforce any of the provisions of this
      Agreement or any rights with respect thereto or to exercise any election
      provided for therein, shall in no way be considered a waiver of such provisions,
      rights, or election or in any way to affect the validity of this Agreement.
      No
      term or provision hereof shall be deemed waived and no breach excused, unless
      such waiver or consent shall be in writing and signed by the party claimed
      to
      have waived or consented. Any consent by any party to, or waiver of, a breach
      by
      the other, whether express or implied, shall not constitute a consent or waiver
      of, or excuse for any other, different or subsequent breach. All remedies herein
      conferred upon any party shall be cumulative and no one shall be exclusive
      of
      any other remedy conferred herein by law or equity.

     

    17.4 Currency;
      Days; Time of the Essence. All monetary amounts referred to herein are in U.S.
      Dollars and all references to days mean calendar days. Time is of the essence
      in
      the performance of each and every obligation and covenant imposed by this
      Agreement.

     

    17.5 Binding
      Agreement. This Agreement shall be binding not only upon the parties hereto,
      but
      also upon their respective successors and permitted assigns.

     

    

    
      
        
           

          

          

          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    

    17.6 Expenses.
      Except as provided elsewhere in this Agreement, all of the legal, accounting,
      and other miscellaneous expenses incurred in connection with this Agreement
      and
      the performance of the various provisions of this Agreement shall be paid by
      the
      party who incurred the expense.

     

    17.7 Survival.
      All covenants, agreements, representations, warranties, indemnities and
      provisions of this Agreement which by their nature are intended survive the
      termination of this Agreement (including, without limitation, Sections 1, 2.4,
      2.5, 2.6, 3-5 and 9-18) shall so survive after the effective date of termination
      of this Agreement.

     

    17.8 Confidentiality.
      Each party acknowledges that it has in the past and may in the future receive
      Confidential Information belonging to, and disclosed to it, by the other party
      and/or its authorized representatives, and that all of the other party’s
      Confidential Information is material and confidential and greatly affects the
      goodwill and the effective and successful conduct of the other party and its
      business and operations, and that maintaining confidentiality of the other
      party’s Confidential Information is reasonably necessary to protect the
      legitimate business interests of the other party. Accordingly, each party hereby
      agrees to receive all such Confidential Information provided by the other party
      in strict confidence and that neither it nor any of its officers, directors,
      representatives, employees or agents (including any consultants, subcontractors
      or advisors) shall, at any time while this Agreement is in effect or thereafter,
      directly or indirectly, divulge, reveal or communicate any such Confidential
      Information to any person, firm, corporation or entity whatsoever, or use,
      pursue or exploit any such Confidential Information for its own benefit or
      for
      the benefit of others. Each party shall disclose to and enforce the
      confidentiality provisions of this Agreement in writing with respect to all
      of
      its officers, directors, representatives, employees or agents (including any
      consultants, subcontractors or advisors), as applicable. 

     

    For
      purposes of this Agreement, “Confidential Information” means information
      relating to a party hereto and the Additive, the Patent Rights, the Know-How
      and
      other information with respect to the technology licensed hereunder, as well
      as
      a party’s assets, operations, clients, and past, present, and future businesses,
      including but not limited to drawings, manuals, reports, formulae, algorithms,
      processes, trade secrets, research products, inventions, technical data,
      specifications, designs, ideas, product plans, research and development efforts,
      personal and customer information, financial information, quotations, price
      lists, customer lists, business methods and marketing programs, all of which
      are
      proprietary with such party and involve trade secrets, know-how, techniques,
      and
      combinations of known information of a character regarded by such party as
      confidential.

     

    The
      foregoing restrictions shall not apply to the extent that, with respect to
      either party, such information:

     

    (i) is
      or
      becomes public knowledge (other than by breach of that
      restriction);

     

    (ii) was
      obtained by the recipient party from a third party having the right to disclose
      it, without the obligation to keep such information confidential;
      or

     

    (iii) is
      required to be provided by law (including, without limitation, the rules and
      regulations of the Securities and Exchange Commission), legal process (including
      subpoena, civil investigative demand or similar process) or any regulatory
      authority; provided, that the recipient party shall promptly notify the
      disclosing party in writing so the disclosing party may seek a protective order
      and/or other motion to prevent or limit the production of such
      Information.

     

    

    
      
        
           

          

          

          
          

        

        
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    17.9 Quality
      Control.
      Sublicensee acknowledges that if the Additive can be used to produce Products
      of
      a commercially acceptable quality, then the Products made by or for Sublicensee
      must be of a consistent quality and standard, and that Sublicensee’s production
      and sale of the Products pursuant to this Agreement must be in a manner that
      does not have a detrimental impact on Sublicensor’s reputation or the goodwill
      associated with Sublicensor’s business and technologies. Sublicensee agrees that
      to the extent that the Additive is such that it can do so, it shall maintain
      a
      high standard of quality with respect to the Products manufactured and sold
      pursuant to this Agreement. The quality control requirements expressed above
      are
      subject to confirmation via testing that Products of a commercially consistent
      quality and standard are possible using the Additive, the Know-How and the
      other
      information licensed to Sublicensee under this Agreement

     

    17.10 Negative
      Events. Sublicensee acknowledges that Sublicensor has an overriding interest
      in
      protecting the market and quality of the Products. Accordingly, if Sublicensee,
      at any time, has a reasonable basis to believe that any act or occurrence
      related to the Products presents or has presented any threat to public health
      or
      safety or otherwise are likely to draw negative attention from any governmental
      agency, consumer or environmental group, media or other organization or any
      individual (any of such occurrences being a “Negative Event”), Sublicensee will
      promptly notify Sublicensor of the facts giving rise to such belief or
      suspicion. In all such cases, (and subject to obligations of either party under
      applicable law, including, without limitation, its disclosure obligations under
      the Securities Exchange Act of 1934, as amended) Sublicensee will closely
      coordinate with Sublicensor with respect to any actions Sublicensee might take
      or permit and in respect to all public statements Sublicensee might make
      regarding the particular Negative Event, and shall, after consultation with
      Sublicensor, follow all reasonable advice and instructions of Sublicensor with
      respect thereto.

     

    17.11 Insurance.
      Sublicensee shall provide to Sublicensor insurance certificates and other
      evidence of insurance benefits and coverage for general commercial liability
      including claims relating to its performance of this Agreement as well as
      product liability coverage, with coverage amounts reasonably satisfactory to
      Sublicensor, and shall maintain such insurance in effect while this Agreement
      is
      in effect and for a period of six (6) years thereafter. Sublicensee shall
      provide a copy of its insurance policies to Sublicensor promptly following
      a
      request therefor, shall cause Sublicensor to be added to such policy as an
      additional insured party and shall require that the insurer provide notification
      directly to Sublicensor in the event of any cancellation, termination,
      nonrenewal or denial of coverage. 

     

    17.12 Further
      Assurances. Each party agrees to execute and deliver such other and further
      documents and instruments as may be necessary to effectuate the intent and
      purposes of this Agreement upon request by the other party.

     

    17.13 Construction;
      Counterparts. The headings used in this Agreement are for reference purposes
      only and shall not be considered a part of this Agreement. This Agreement may
      be
      executed in counterparts, each of which shall be deemed to be an original and
      all of which shall constitute one and the same agreement.

     

    17.14 
      Force
      Majeure. Neither party shall be deemed in default or otherwise liable for any
      delay in or failure of its performance under this Agreement (other than the
      payment of money) by reason of any act of God, fire, natural disaster, accident,
      riot, terrorism, act of government, strike or labor dispute, shortage of
      materials or supplies, or any other cause beyond the reasonable control of
      such
      party, and which cannot be reasonably circumvented by such party, provided
      that
      the party invoking force majeure (a) gives the other party prompt notice of
      such
      cause, and (b) uses its commercially reasonable best efforts to correct promptly
      such failure or delay in performance. In the event of a force majeure event
      which prevents performance permanently or for more than twelve (12) months
      in
      duration, either party may terminate this Agreement without further obligation
      except with respect to those provisions that

     

     

    
      
        
        

      

      
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    survive
      termination; provided, however, that if such force majeure event prevents
      Sublicensee from performing its obligations hereunder but does not prevent
      Sublicensor from performing its obligations hereunder, Sublicensor shall have
      the option to convert the license granted to Sublicensee under Section 2.2
      above
      from exclusive to nonexclusive or terminate this Agreement, and if Sublicensor
      elects to terminate such exclusivity, this Agreement shall remain in effect
      but
      Sublicensee shall continue to be deemed not to be in default for failing to
      perform its obligations hereunder while prevented by such force majeure
      event.

     

    

     

    

     

    

     

    

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    

    
      
        
           

          

          

          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

    

    

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

    

    

    H2Diesel,
      Inc.

    

    

    By:
       /s/
      Lee Rosen 

    Lee
      Rosen, CEO and President

    

    Xethanol
      Corporation

    

    

    By:
      /s/
      Christopher d'Arnaud-Taylor

    Christopher
      d'Arnaud-Taylor, CEO

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    

    

    Annex
      A

    

    The
      Territory

    

    U.S.
      states of Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode
      Island, New York, Pennsylvania, Delaware, New Jersey, Virginia, West Virginia,
      North Carolina, South Carolina, Georgia, Florida, and other areas that may
      be
      added by written agreement of the parties.

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