Document:

Form of Registration Rights Agreement

     

    Exhibit
      10.8

    
 

    FORM
      OF REGISTRATION
      RIGHTS AGREEMENT

     

    REGISTRATION
      RIGHTS AGREEMENT
      (this
“Agreement”),
      made
      as of the __ day of _________, 2006, by and between H2Diesel, Inc., a Delaware
      corporation, (“H2”)
      and
      each of the persons and entities listed on Exhibit A
      attached
      hereto (the “Holders”).
      For
      purposes of this Agreement, H2, together with Pubco (as defined in those certain
      subscription agreements of even date herewith (the “Subscription
      Agreements”),
      each
      between H2 and a Holder signatory thereto), are referred to as the “Company”.
      Capitalized terms used but not defined herein shall have the respective meanings
      set forth in the Subscription Agreements. This Agreement shall be automatically
      effective upon the effectiveness of the Merger (the “Effective
      Date”).

     

    W
      I T N E S S E T H

     

    WHEREAS,
      the
      Company has agreed to provide the registration rights set forth in this
      Agreement.

     

    NOW,
      THEREFORE,
      for
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereby agree as follows:

     

    AGREEMENT

     

    1.  Definitions. 
       As used in this Agreement, the following capitalized terms have the
      following respective meanings:

     

    “Business
      Day”
means
      a
      day other than a Saturday or Sunday or any day on which banking institutions
      in
      Miami, Florida and New York City, New York are authorized or obligated by law
      or
      executive order to close.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any similar federal statute
      then in effect, and a reference to a particular section thereof is deemed to
      include a reference to the comparable section, if any, of any such similar
      federal statute.

     

    “Majority
      of Holders”
means
      Holders holding more than 50% in aggregate principal amount of the Registrable
      Securities outstanding at the time of any determination in
      question.

     

    “Person”
means
      any individual, corporation, partnership, limited partnership, limited liability
      company, syndicate, trust, association or other entity.

     

    “Prospectus”
means
      the prospectus included in any Shelf Registration Statement, as amended or
      supplemented by any Prospectus supplement with respect to the terms of the
      offering of any portion of the Registrable Securities covered by such Shelf
      Registration Statement and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference in such Prospectus.

     

    “Registrable
      Securities”
means
      any shares of Pubco Common Stock acquired by each Holder pursuant to a
      Subscription Agreement and the Merger, issuable to a Holder upon the exercise
      of
      any Warrants and Options or held by any other Holder on the Effective Date,
      any
      shares of Pubco Common Stock which may be issued or distributed in respect
      thereof by way of stock dividend or stock split or other distribution,
      recapitalization or reclassification and any shares of Pubco Common Stock
      described in Section 2(c) of this Agreement. Any particular Registrable
      Securities that are issued will cease to be Registrable Securities when (i)
      a
      registration statement with respect to the sale by the Holder

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    of
      such
      securities becomes effective under the Securities Act and such securities have
      been disposed of in accordance with such registration statement, (ii) such
      securities have been distributed to the public pursuant to Rule 144 (or any
      successor provision) under the Securities Act, (iii) all of the Registrable
      Securities then owned by such Holder could be sold pursuant to Rule 144(k),
      or
      (iv) such securities have ceased to be outstanding. For the avoidance of doubt,
      the Company is under no obligation to register the resale of any Warrants and
      Options.

     

    “Registration
      Expenses”
means
      any and all expenses incident to performance of or compliance with this
      Agreement, including, without limitation, (i) all SEC and stock exchange or
      National Association of Securities Dealers, Inc. (the “NASD”)
      registration and filing fees (including, if applicable, the fees and expenses
      of
      any “qualified independent underwriter,” as such term is defined in NASD conduct
      rule 2720, and of its counsel), (ii) all fees and expenses of complying with
      securities or blue sky laws (including fees and disbursements of counsel for
      the
      underwriters in connection with blue sky qualifications of the Registrable
      Securities), (iii) all printing, messenger and delivery expenses, (iv) all
      fees
      and expenses incurred in connection with the listing of the Registrable
      Securities on any securities exchange, (v) the fees and disbursements of counsel
      for the Company and of its independent public accountants, including the
      expenses of any special audits and/or “cold comfort” letters required by or
      incident to such performance and compliance, and (vi) the reasonable fees and
      disbursements of counsel selected pursuant to Section 5(b) hereof.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any similar federal statute then
      in
      effect, and a reference to a particular section thereof will be deemed to
      include a reference to the comparable section, if any, of any such similar
      federal statute.

     

    “SEC”
means
      the Securities and Exchange Commission or any other federal agency at the time
      administering the Securities Act or the Exchange Act.

     

    “Selling
      Expenses”
means
      underwriting or brokerage discounts and commissions and transfer taxes, if
      any,
      applicable to the sale of Registrable Securities.

     

    “Underwritten
      Offering”
means
      an offering pursuant to the Shelf Registration Statement in which Registrable
      Securities are sold to an underwriter for reoffering to the public.

     

    2.  Shelf
      Registration.

     

    (a)  The
      Company shall:

     

    (i)  not
      later
      than 30 days after the Effective Date (the “Shelf
      Filing Deadline”),
      cause
      to be filed a registration statement on an appropriate form pursuant to
      Rule 415 (or any successor rule) under the Securities Act (together with
      any amendments thereto, and including any documents incorporated by reference
      therein if permitted by such form, the “Shelf
      Registration Statement”),
      which
      Shelf Registration Statement shall provide for resales of all Registrable
      Securities held by Holders that have provided the information required pursuant
      to the terms of Section 2(b) hereof;

     

    (ii)  use
      its
      commercially reasonable efforts to cause the Shelf Registration Statement to
      be
      declared effective by the SEC as promptly as is practicable after the date
      it is
      first filed with the SEC, but in no event later than 180 days after the
      Effective Date (the “Effectiveness
      Target Date”);
      and

     

    (iii)  use
      its
      commercially reasonable efforts to keep the Shelf Registration Statement
      continuously effective, supplemented and amended as required by the provisions
      of Section 4

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      hereof
        to
        the extent necessary to ensure that: (A) it is available for resales by the
        Holders of Registrable Securities entitled to the benefit of this Agreement
        and
        (B) conforms with the requirements of this Agreement and the Securities
        Act, in each case, for a period (the “Effectiveness
        Period”)
        that
        will terminate upon the earlier of (x) the first anniversary of the
        Effective Date and (y) when all Registrable Securities cease to be
        Registrable Securities in accordance with this Agreement.

    

     

    (b)  To
      have
      its Registrable Securities included in the Shelf Registration Statement pursuant
      to this Agreement, each Holder shall complete the Selling Shareholder Notice
      and
      Questionnaire, the form of which is contained in Exhibit B
      to this
      Agreement (the “Questionnaire”).
      The
      Company shall mail the Questionnaire to each Holder not less than 10 Business
      Days (but not more than 60 Business Days) prior to the time the Company intends
      in good faith to have the Shelf Registration Statement declared effective by
      the
      SEC. Holders are required to complete and deliver the Questionnaire to the
      Company prior to or on the 20th Business Day after the date of a written request
      therefor by the Company (which request shall include a copy of the
      Questionnaire) (such deadline, the “Questionnaire
      Deadline”).
      Holders that do not complete and deliver the Questionnaire will not be named
      as
      selling shareholders in the Prospectus. Prior to such time, each Holder may
      complete the Questionnaire and deliver it to the Company prior to such request
      and, as a result, shall be entitled to have its Registrable Securities included
      in the initial Shelf Registration Statement filed with the SEC. In addition,
      upon receipt of written request for additional information from the Company,
      each Holder who intends to be named as a selling shareholder in the Shelf
      Registration Statement shall furnish to the Company in writing, within 20
      Business Days after such Holder’s receipt of such request, such additional
      information regarding such Holder and the proposed distribution by such Holder
      of its Registrable Securities, in connection with the Shelf Registration
      Statement or Prospectus or preliminary Prospectus included therein and in any
      application to be filed with or under state securities law, as the Company
      may
      reasonably request. Each Holder as to which the Shelf Registration Statement
      is
      being effected agrees to furnish promptly to the Company all information
      required to be disclosed in order to make information previously furnished
      to
      the Company by such Holder not materially misleading. 

     

    (c) The
      Company shall be entitled to include in the Shelf Registration Statement other
      shares of Pubco Common Stock (i) to be sold for its own account or (ii) which
      the Company is obligated to register for resale by others, and such shares
      shall
      be Registrable Securities for all purposes hereof.

     

    3.  Additional
      Shares.

     

    (a)  The
      Company and the Subscribers agree that the Subscribers will suffer damages
      if
      the Company fails to fulfill its obligations under Section 2 hereof and
      that it would not be feasible to ascertain the extent of such damages with
      precision. Accordingly, if:

     

    (i)  except
      as
      provided in Section 4(b)(i) hereof, the Shelf Registration Statement is not
      filed with the SEC prior to or on the Shelf Filing Deadline;

     

    (ii)  except
      as
      provided in Section 4(b)(i) hereof, the Shelf Registration Statement has not
      been declared effective by the SEC prior to or on the Effectiveness Target
      Date;

     

    (iii)  except
      as
      provided in Section 4(b)(i) hereof, the Shelf Registration Statement is filed
      and declared effective but, during the Effectiveness Period, shall thereafter
      cease to be effective or fail to be usable for its intended purpose without
      such
      disability being cured within ten Business Days by an effective post-effective
      amendment to the Shelf Registration Statement, a supplement to the Prospectus
      or
      a report filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
      of the Exchange Act that cures such failure; or

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iv)  (A) prior
      to or on the 45th
      or
      60th
      day, as
      may be permitted under Section 4(b), of any Suspension Period (as such term
      is
      defined herein), such suspension has not been terminated or (B) Suspension
      Periods exceed an aggregate of 120 days in any 360-day period, (each such event
      referred to in foregoing clauses (i) through (iv), a “Registration
      Default”),
      the
      Company hereby agrees to issue to each Subscriber additional shares of Pubco
      Common Stock (“Penalty
      Shares”)
      in an
      amount equal to 1.0% of the number of Registrable Securities held by such
      Subscriber on the Effective Date (the “Subject
      Shares”)
      for
      each full 30 day period (each, a “Penalty
      Period”)
      that
      elapses during the period beginning on and including the day following the
      Registration Default and ending on but excluding the day on which the
      Registration Default has been cured; provided, however, that in no event shall
      the number of Penalty Shares exceed an aggregate of 6.0% of the number of
      Subject Shares, and, provided further, a Subscriber will not be entitled to
      Penalty Shares unless it has provided all information requested by the
      Questionnaire prior to the deadline specified therein. 

     

    (b)  Any
      Penalty Shares issuable in respect of Subject Shares pursuant to clause (a)
      of this Section 3 will be issued not later than 20 days after the end of
      the Penalty Period in respect of which such Penalty Shares are issuable to
      each
      Subscriber in whose name such Subject Shares are registered on the books of
      the
      Company or its transfer agent. 

     

    (c)  Except
      as
      set forth in Section 9 hereto, the Penalty Shares to be issued pursuant to
      this
      Section 3 shall be the exclusive remedy available to Subscribers for such
      Registration Default.

     

    4.  Registration
      Procedures.

     

    (a)  In
      connection with the Shelf Registration Statement, the Company shall comply
      with
      all the provisions of Section 4(b) hereof and shall use its reasonable best
      efforts to effect such registration to permit the sale of the Registrable
      Securities being sold in accordance with the intended method or methods of
      distribution thereof, and pursuant thereto, shall expeditiously prepare and
      file
      with the SEC a Shelf Registration Statement relating to the registration on
      any
      appropriate form under the Securities Act.

     

    (b)  In
      connection with the Shelf Registration Statement and any Prospectus required
      by
      this Agreement to permit the sale or resale of Registrable Securities, the
      Company shall:

     

    (i)  Subject
      to any notice by the Company in accordance with this Section 4(b) of the
      existence of any fact or event of the kind described in Section 4(b)(iii)(D),
      use its best efforts to keep the Shelf Registration Statement continuously
      effective during the Effectiveness Period; upon the occurrence of any event
      that
      would cause the Shelf Registration Statement or the Prospectus contained therein
      (A) to contain a material misstatement or omission or (B) not be
      effective and usable for the resale of Registrable Securities during the
      Effectiveness Period, the Company shall file promptly an appropriate amendment
      to the Shelf Registration Statement, a supplement to the Prospectus or a report
      filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
      Exchange Act, in the case of clause (A), correcting any such misstatement
      or omission, and, in the case of either clause (A) or (B), use its best
      efforts to cause any such amendment to be declared effective and the Shelf
      Registration Statement and the related Prospectus to become usable for their
      intended purposes as soon as practicable thereafter. Notwithstanding anything
      to
      the contrary contained herein, the Company may delay the filing or declaration
      of effectiveness, and/or suspend the effectiveness, of the Shelf Registration
      Statement by written notice to the Holders for a period (each such period,
      a
“Suspension
      Period”)
      not to
      exceed an aggregate of 45 days in any 90-day period, and not to exceed an
      aggregate of 120 days in any 360-day period, if:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      
      (x)  an
      event
      occurs and is continuing as a result of which the Shelf Registration Statement
      would, in the Company’s reasonable judgment, contain an untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading; and

     

    (y) the
      Company reasonably determines that the disclosure of such event at such time
      would be seriously detrimental to the Company or its business;

     

    provided,
      that in
      the event that the disclosure relates to a previously undisclosed proposed
      or
      pending material business transaction, the disclosure of which would impede
      the
      Company’s ability to consummate such transaction, the Company may extend a
      Suspension Period from 45 days to 60 days during any 90-day period.

     

    (ii)  Notify
      in
      writing each selling Holder of the effectiveness of the Shelf Registration
      Statement and prepare and file with the SEC such amendments and post-effective
      amendments to the Shelf Registration Statement as may be necessary to keep
      the
      Shelf Registration Statement continuously effective during the Effectiveness
      Period; cause the Prospectus to be supplemented by any required prospectus
      supplement, and as so supplemented to be filed pursuant to Rule 424 under
      the Securities Act, and to comply fully with the applicable provisions of
      Rules 424 and 430A under the Securities Act in a timely manner; and comply
      with the provisions of the Securities Act with respect to the disposition of
      all
      securities covered by the Shelf Registration Statement during the applicable
      period in accordance with the intended method or methods of distribution by
      the
      sellers thereof set forth in the Shelf Registration Statement or supplement
      to
      the Prospectus.

     

    (iii)  Advise
      the underwriter(s), if any, and selling Holders promptly (but in any event
      within two Business Days) and, if requested by such Persons, to confirm such
      advice in writing:

     

    (A)  when
      the
      Prospectus or any prospectus supplement or post-effective amendment has been
      filed, and, with respect to the Shelf Registration Statement or any
      post-effective amendment thereto, when the same has become
      effective,

     

    (B)  of
      any
      request by the SEC for amendments to the Shelf Registration Statement or
      amendments or supplements to the Prospectus or for additional information
      relating thereto,

     

    (C)  of
      the
      issuance by the SEC of any stop order suspending the effectiveness of the Shelf
      Registration Statement under the Securities Act or of the suspension by any
      state securities commission of the qualification of the Registrable Securities
      for offering or sale in any jurisdiction, or the initiation of any proceeding
      for any of the preceding purposes,

     

    (D)  of
      a
      pending proceeding against the Company under Section 8A of the Securities Act
      in
      connection with the offering of the Registrable Securities, or

     

    (E)  of
      the
      existence of any fact or the happening of any event, during the Effectiveness
      Period, that makes any statement of a material fact made in the Shelf
      Registration Statement, the Prospectus, any amendment or supplement thereto,
      or
      any document incorporated by reference therein, untrue, or that requires the
      making of any additions to or changes in the Shelf Registration Statement or
      the
      Prospectus in order to make the statements therein not misleading. Each Holder
      of Registrable Securities, by accepting the same, agrees to hold any
      communication from the Company pursuant to this Section 4(b)(iii) in
      confidence.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If
      at any
      time the SEC shall issue any stop order suspending the effectiveness of the
      Shelf Registration Statement, or any state securities commission or other
      regulatory authority shall issue an order suspending the qualification or
      exemption from qualification of the Registrable Securities under state
      securities or “blue sky” laws, the Company shall use its best efforts to obtain
      the withdrawal or lifting of such order at the earliest possible time and will
      provide to the each Holder who is named in the Shelf Registration Statement
      prompt notice of the withdrawal of any such order.

     

    (iv)  Furnish
      to each selling Holder and to each of the underwriter(s), if any, and their
      respective counsel, if any, before filing with the SEC, a copy of the Shelf
      Registration Statement and copies of any Prospectus included therein or any
      amendments or supplements to the Shelf Registration Statement or Prospectus
      (other than documents incorporated by reference after the initial filing of
      the
      Shelf Registration Statement), which documents will be subject to the review
      of
      such selling Holders, underwriter(s) and counsel for a period of at least five
      Business Days, and the Company will not file the Shelf Registration Statement
      or
      Prospectus or any amendment or supplement to the Shelf Registration Statement
      or
      Prospectus (other than documents incorporated by reference) to which a selling
      Holder of Registrable Securities covered by the Shelf Registration Statement
      or
      the selling Holders, underwriter(s), if any, shall reasonably object within
      five
      Business Days after the receipt thereof. The Company shall also furnish to
      each
      of the underwriter(s), if any, and their respective counsel, if any, before
      filing with the SEC, if reasonably practicable, or otherwise promptly after
      filing with the SEC, copies of any amendments to the Shelf Registration
      Statement or supplements to the Prospectus (other than documents incorporated
      by
      reference after the initial filing of the Shelf Registration Statement), and
      make the Company’s representatives available for discussion of such amendments
      or supplements and make such changes in such amendments or supplements prior
      to
      the filing thereof, if reasonably practicable, or prepare and file further
      amendments or supplements, as the selling Holders, underwriter(s), if any,
      or
      their respective counsel, if any, may reasonably request. An objection by a
      selling Holder or an underwriter or by counsel to a selling Holder or an
      underwriter shall be deemed to be a reasonable objection to such filing if
      the
      Shelf Registration Statement, amendment, Prospectus or supplement, as
      applicable, as proposed to be filed, would contain a material misstatement
      or
      omission.

     

    (v)  Make
      available at reasonable times for inspection by one or more representatives
      of
      the selling Holders designated in writing by a Majority of Holders whose
      Registrable Securities are included in the Shelf Registration Statement, any
      underwriter participating in any distribution pursuant to the Shelf Registration
      Statement, and any attorney or accountant retained by such selling Holders
      or
      any of the underwriter(s), all financial and other records, pertinent corporate
      documents and properties of the Company as shall be reasonably necessary to
      enable them to exercise any applicable due diligence responsibilities, and
      cause
      the Company’s officers, directors, managers, employees and independent
      accountants to supply all information reasonably requested by any such
      representative or representatives of the selling Holders, underwriter, attorney
      or accountant in connection with the Shelf Registration Statement after the
      filing thereof and before its effectiveness, provided, however, that any
      information designated by the Company as confidential at the time of delivery
      of
      such information shall be kept confidential by the recipient thereof; and
      provided, further, that in no event shall the Company be required to furnish
      any
      material nonpublic information pursuant to this
      subsection (v).

     

    (vi)  If
      requested by any selling Holders or the underwriter(s), if any, promptly
      incorporate in the Shelf Registration Statement or Prospectus, pursuant to
      a
      supplement or post-effective amendment if necessary, such information as such
      selling Holders and underwriter(s), if any, may reasonably request to have
      included therein, including, without limitation: (A) information relating
      to the “Plan of Distribution” of the Registrable Securities,
      (B) information with respect to the number of Registrable Securities being
      sold, (C) the purchase price being paid therefor and (D) any other
      terms of the offering of the Registrable Securities to be sold in such offering;
      provided, however, that with respect

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    to
      any
      information requested for inclusion by a selling Holder, this clause (vi)
      shall apply only to such information that relates to the Registrable Securities
      to be sold by such selling Holder; and make all required filings of such
      prospectus supplement or post-effective amendment as soon as reasonably
      practicable after the Company is notified of the matters to be incorporated
      in
      such prospectus supplement or post-effective amendment.

     

    (vii)  Furnish
      to each selling Holder and each of the underwriter(s), if any, without charge,
      at least one copy of the Shelf Registration Statement, as first filed with
      the
      SEC, and of each amendment thereto (and any documents incorporated by reference
      therein or exhibits thereto (or exhibits incorporated in such exhibits by
      reference) as such Person may request).

     

    (viii)  Deliver
      to each selling Holder and each of the underwriter(s), if any, without charge,
      as many copies of the Prospectus (including each preliminary prospectus) and
      any
      amendment or supplement thereto as such Persons reasonably may request; subject
      to any notice by the Company in accordance with this Section 4(b) of the
      existence of any fact or event of the kind described in Section 4(b)(iii)(D),
      the Company hereby consents to the use of the Prospectus and any amendment
      or
      supplement thereto by each of the selling Holders and each of the
      underwriter(s), if any, in connection with the offering and the sale of the
      Registrable Securities covered by the Prospectus or any amendment or supplement
      thereto.

     

    (ix)  If
      an
      underwriting agreement is entered into in connection with the registration,
      the
      Company shall:

     

    (A)  upon
      request, furnish to each selling Holder and each underwriter, in such substance
      and scope as they may reasonably request and as are customarily made by issuers
      to underwriters in primary underwritten offerings for selling security holders,
      upon the date of closing of any sale of Registrable Securities in an
      Underwritten Offering:

     

    (1)  opinions,
      each dated the date of such closing, of counsel to the Company covering such
      of
      the matters as are customarily covered in legal opinions to underwriters in
      connection with underwritten offerings of securities; and

     

    (2)  customary
      comfort letters, dated the date of such closing, from the Company’s independent
      accountants, in the customary form and covering matters of the type customarily
      covered in comfort letters to underwriters in connection with primary
      underwritten offerings of securities;

     

    (B)  set
      forth
      in full in the underwriting agreement, if any, indemnification provisions and
      procedures which provide rights no less protective than those set forth in
      Section 6 hereof with respect to all parties to be indemnified;
      and

     

    (C)  deliver
      such other documents and certificates as may be reasonably requested by such
      parties to evidence compliance with clause (A) above and with any customary
      conditions contained in the underwriting agreement or other agreement entered
      into by the selling Holders pursuant to this clause (ix).

     

    (x)  Before
      any public offering of Registrable Securities, use its best efforts to register
      or qualify the Registrable Securities under the securities or Blue Sky laws
      of
      such jurisdictions in the United States as the selling Holders or
      underwriter(s), if any, may reasonably request and do any and all other acts
      or
      things necessary or advisable to enable the disposition in such jurisdictions
      of
      the Registrable Securities covered by the Shelf Registration Statement;
      provided, however, that the Company

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    shall
      not
      be required (A) to register or qualify as a foreign corporation or a dealer
      of securities where it is not now so qualified or to take any action that would
      subject it to the service of process in any jurisdiction where it is not now
      so
      subject or (B) to subject itself to taxation in any such jurisdiction if it
      is not now so subject.

     

    (xi)  Cooperate
      with the selling Holders and the underwriter(s), if any, to facilitate the
      timely preparation and delivery of certificates representing Registrable
      Securities to be sold and not bearing any restrictive legends (unless required
      by applicable securities laws) and enable such Registrable Securities to be
      in
      such denominations and registered in such names as the Holders or the
      underwriter(s), if any, may request at least two Business Days before any sale
      of Registrable Securities.

     

    (xii)  Use
      its
      best efforts to cause the Registrable Securities covered by the Shelf
      Registration Statement to be registered with or approved by such other U.S.
      governmental agencies or authorities as may be necessary to enable the seller
      or
      sellers thereof or the underwriter(s), if any, to consummate the disposition
      of
      such Registrable Securities.

     

    (xiii)  Subject
      to Section 4(b)(i) hereof, if any fact or event contemplated by Section
      4(b)(iii)(E) hereof shall exist or have occurred, use its reasonable best
      efforts to prepare a supplement or post-effective amendment to the Shelf
      Registration Statement or related Prospectus or any document incorporated
      therein by reference or file any other required document so that, as thereafter
      delivered to the purchasers of Registrable Securities, the Prospectus will
      not
      contain an untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances in which they were made, not
      misleading.

     

    (xiv)  Provide
      a
      transfer agent and registrar for all such Registrable Securities not later
      than
      the effective date of the Shelf Registration Statement.

     

    (xv)  Enter
      into such customary agreements (including underwriting agreements in customary
      form) and take all such other actions as a Majority of Holders or the
      underwriters, if any, reasonably request in order to expedite or facilitate
      the
      disposition of Registrable Securities (including effecting a stock split or
      combination of shares).

     

    (xvi)  Cooperate
      and assist in any filings required to be made with the NASD and in the
      performance of any due diligence investigation that is required to be retained
      in accordance with the rules and regulations of the NASD.

     

    (xvii)  Otherwise
      use its commercially reasonable efforts to comply with all applicable rules
      and
      regulations of the SEC and all reporting requirements of the Exchange
      Act.

     

    (xviii)  Cause
      all
      Registrable Securities covered by the Shelf Registration Statement to be listed
      or quoted, as the case may be, on each securities exchange or automated
      quotation system on which similar securities issued by the Company are then
      listed or quoted.

     

    (xix)  Provide
      promptly to each Holder upon written request each document filed with the SEC
      pursuant to the requirements of Section 13 and Section 15 of the
      Exchange Act during the Effectiveness Period.

     

    (xx)  If
      reasonably requested by the underwriter(s), make appropriate officers of the
      Company reasonably available to the underwriter(s) for meetings with prospective
      purchasers of the Registrable Securities and prepare and present to potential
      investors customary “road show” or

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    marketing
      material in a manner consistent with other new issuances of other securities
      similar to the Registrable Securities.

     

    (xxi)  File
      each
      Shelf Registration Statement and Prospectus required to be filed in accordance
      with this Agreement and any amendments and/or supplements thereto electronically
      on EDGAR.

     

    (c)  Each
      Holder agrees that, upon receipt of any notice (a “Suspension
      Notice”)
      from
      the Company of the existence of any fact of the kind described in Section
4(b)(x)
      or
      Section 4(b)(iii)(E) hereof, such Holder will, and will use its reasonable
      efforts to cause any underwriter(s) in an Underwritten Offering to, forthwith
      discontinue disposition of Registrable Securities pursuant to the Shelf
      Registration Statement until:

     

    (i)  such
      Holder has received copies of the supplemented or amended Prospectus
      contemplated by Section 4(b)(xiii)
      hereof;
      or

     

    (ii)  such
      Holder is advised in writing by the Company that the use of the Prospectus
      may
      be resumed, and has received copies of any additional or supplemental filings
      that are incorporated by reference in the Prospectus.

     

    If
      so
      directed by the Company, each Holder will deliver to the Company (at the
      Company’s expense) all copies, other than permanent file copies then in such
      Holder’s possession, of the Prospectus covering such Registrable Securities that
      was current at the time of receipt of such notice of suspension.

     

    (d)  If
      a
      Holder is identified in the Shelf Registration Statement as an “underwriter”
(any such Holder, an “Identified
      Holder”),
      then
      at the request of such Identified Holder the Company shall furnish to such
      Identified Holder, on the date of the effectiveness of the Shelf Registration
      Statement and thereafter from time to time on such dates as such Identified
      Holder may reasonably request, (i) a letter, dated such date, from the Company’s
      independent certified public accountants in form and substance as is customarily
      given by independent certified public accountants to underwriters in an
      underwritten public offering, addressed to such Identified Holder, and (ii)
      an
      opinion, dated as of such date, of counsel representing the Company for purposes
      of the Shelf Registration Statement, in form, scope and substance as is
      customarily given in an underwritten public offering, addressed to such
      Identified Holder. 

     

    (e)  Notwithstanding
      anything herein to the contrary, no Holder shall be designated as an
“underwriter” by the Company in the Shelf Registration Statement without the
      consent of such Holder unless otherwise required by law. In connection with
      the
      due diligence efforts of any Identified Holder, the Company shall make available
      for inspection during business hours and upon reasonable advance request by
      (i)
      any Identified Holder, (ii) counsel for the holders of majority of the
      Registrable Securities held by all Identified Holders and (iii) one firm of
      accountants or other agents retained by holders of a majority of Registrable
      Securities held by the Identified Holders (collectively, the “Inspectors”),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree
      in
      writing to hold in strict confidence and shall not make any disclosure (except
      to a Identified Holder) or use of any Record or other information which the
      Company determines in good faith to be confidential, and of which determination
      the Inspectors are so notified, unless (a) the disclosure of such Records is
      necessary to avoid or correct a misstatement or omission in the Shelf
      Registration Statement or is otherwise required under the Securities Act, (b)
      the release of such Records is ordered pursuant to a final, non-appealable
      subpoena or order from

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    a
      court
      or government body of competent jurisdiction, or (c) the information in such
      Records has been made generally available to the public other than by disclosure
      in violation of this or any other agreement of which the Inspector has
      knowledge. Each Holder agrees that it shall, upon learning that disclosure
      of
      such Records is sought in or by a court or governmental body of competent
      jurisdiction or through other means, give prompt notice to the Company and
      allow
      the Company, at its expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order for, the Records deemed
      confidential. Nothing herein (or in any other confidentiality agreement between
      the Company and any Holder) shall be deemed to limit the Holders’ ability to
      sell Registrable Securities in a manner that is otherwise consistent with
      applicable laws and regulations.

     

    5.  Registration
      Expenses.

     

    (a)  The
      Company shall pay all Registration Expenses incident to the Company’s
      performance of or compliance with this Agreement. The Company shall bear its
      internal expenses (including, without limitation, all salaries and expenses
      of
      its officers and employees performing legal, accounting or other duties), the
      expenses of any annual audit or quarterly review, the expense of any liability
      insurance and the fees and expenses of any Person, including special experts,
      retained by the Company.

     

    (b)  In
      connection with the Shelf Registration Statement required by this Agreement,
      including any amendment or supplement thereto, and any other documents delivered
      to any Holders, the Company shall reimburse the Holders of Registrable
      Securities being registered pursuant to the Shelf Registration Statement, as
      applicable, for the reasonable fees and disbursements of not more than one
      counsel (including local counsel), which shall be chosen by a Majority of
      Holders for whose benefit the Shelf Registration Statement is being prepared.
      The Company shall not be required to pay any underwriting discount, commission
      or similar fee related to the sale of any securities.

     

    (c)  Each
      Holder shall bear its Selling Expenses.

     

    6.  Indemnification
      and Contribution.

     

    (a)  The
      Company shall indemnify and hold harmless, to the fullest extent permitted
      by
      law, each Holder, such Holder’s officers, directors, members, agents, partners
      and employees and each person, if any, who controls such Holder within the
      meaning of the Securities Act (each, an “Indemnified
      Holder”),
      from
      and against any loss, claim, damage, liability or expense, joint or several,
      or
      any action in respect thereof (including, but not limited to, any loss, claim,
      damage, liability, expense, or action relating to resales of the Registrable
      Securities), together with reasonable costs and expenses (including reasonable
      attorney’s fees) to which such Indemnified Holder may become subject, insofar as
      any such loss, claim, damage, liability, expense or action arises out of, or
      is
      based upon:

     

    (i)  any
      untrue statement or alleged untrue statement of a material fact contained in
      (A) the Shelf Registration Statement or Prospectus or any amendment or
      supplement thereto or (B) any blue sky application or other document or any
      amendment or supplement thereto prepared or executed by the Company (or based
      upon written information furnished by or on behalf of the Company expressly
      for
      use in such blue sky application or other document or amendment on supplement)
      filed in any jurisdiction specifically for the purpose of qualifying any or
      all
      of the Registrable Securities under the securities law of any state or other
      jurisdiction (such application or document being hereinafter called a
“Blue
      Sky Application”);
      or

     

    (ii)  the
      omission or alleged omission to state therein any material fact required to
      be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      under
        which they were made, not misleading, and shall promptly reimburse each
        Indemnified Holder promptly upon demand for any legal or other expenses
        reasonably incurred by such Indemnified Holder in connection with investigating
        or defending or preparing to defend against any such loss, claim, damage,
        liability, expense or action as such expenses are incurred; provided, however,
        that the Company shall not be liable in any such case to the extent that
        any
        such loss, claim, damage, liability, expense or action arises out of, or
        is
        based upon, (A) any untrue statement or alleged untrue statement or
        omission or alleged omission made in the Shelf Registration Statement or
        Prospectus or amendment or supplement thereto or Blue Sky Application or
        other
        document referred to in Section 6(a)(i) hereof in reliance upon and in
        conformity with written information furnished to the Company by or on behalf
        of
        any Holder (or its related Indemnified Holder) specifically for use therein
        or
        (B) the failure by the Holder or Indemnified Holder to deliver to any
        purchaser of its Registrable Securities the Prospectus and any supplement
        or
        amendment thereto after the Company has furnished such Holder or Indemnified
        Holder with a sufficient number of copies of the same. The foregoing indemnity
        agreement is in addition to any liability that the Company may otherwise
        have to
        any Indemnified Holder.

    

     

    (b)  Each
      Holder, severally and not jointly, shall indemnify and hold harmless, to the
      fullest extent permitted by law, the Company, each other Holder, their
      respective officers, directors, agents and employees and each person, if any,
      who controls the Company or such other Holder within the meaning of the
      Securities Act, from and against any loss, claim, damage, liability or expense,
      joint or several, or any action in respect thereof, to which the Company, such
      other Holder or any such officer, director, agent, employee or controlling
      person may become subject, insofar as any such loss, claim, damage, liability,
      expense or action arises out of, or is based upon:

     

    (i)  any
      untrue statement or alleged untrue statement of any material fact contained
      in
      the Shelf Registration Statement or Prospectus or any amendment or supplement
      thereto or any Blue Sky Application or other document referred to in Section
      6(a)(i) hereof; or

     

    (ii)  the
      omission or the alleged omission to state therein any material fact required
      to
      be stated therein or necessary to make the statements therein, in light of
      the
      circumstances under which they were made, not misleading,

     

    but
      in
      each case only to the extent that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in reliance upon and in
      conformity with written information prepared and furnished to the Company by
      or
      on behalf of such Holder (or its related Indemnified Holder) specifically for
      use therein, and shall reimburse the Company and any such officer, employee
      or
      controlling person promptly upon demand for any legal or other expenses
      reasonably incurred by the Company or any such officer, employee or controlling
      person in connection with investigating or defending or preparing to defend
      against any such loss, claim, damage, liability, expense or action as such
      expenses are incurred, provided that the obligation to indemnify will be
      individual, not joint and several, for each Holder and shall be limited to
      the
      net amount of proceeds receive by such Holder from the sale of Registrable
      Securities pursuant to Shelf Registration Statement.

     

    (c)  Promptly
      after receipt by an indemnified party under this Section 6 of notice of any
      claim or the commencement of any action, the indemnified party shall, if a
      claim
      in respect thereof is to be made against the indemnifying party under this
      Section 6, notify the indemnifying party in writing of the claim or the
      commencement of that action; provided, however, that the failure to notify
      the
      indemnifying party shall not relieve the indemnifying party from any liability
      which it may have under this Section 6 except to the extent the
      indemnifying party has been prejudiced by such failure. If any such claim or
      action shall be brought against an indemnified party, and it shall notify the
      indemnifying party thereof, the indemnifying party shall be entitled to
      participate therein and, to the extent that it wishes,

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    jointly
      with any other similarly notified indemnifying party, to assume the defense
      thereof with counsel satisfactory to the indemnified party. After notice from
      the indemnifying party to the indemnified party of its election to assume the
      defense of such claim or action, the indemnifying party shall not be liable
      to
      the indemnified party under this Section 6 for any legal or other expenses
      subsequently incurred by the indemnified party in connection with the defense
      thereof other than reasonable costs of investigation; provided, however, that
      a
      Majority of Holders shall have the right to employ at the expense of such
      Holders a single counsel to represent jointly the Holders and their respective
      directors, officers, members, agents, partners, employees and controlling
      persons who may be subject to liability arising out of any claim in respect
      of
      which indemnity may be sought by Holders against the Company under this
      Section 6; and provided, further, that if a Majority of Holders shall have
      reasonably concluded that there may be one or more legal defenses available
      to
      them and their respective officers, employees and controlling persons that
      are
      different from or additional to those available to the Company and its officers,
      directors, employees and controlling persons, then the fees and expenses of
      such
      single separate counsel shall be paid for by the indemnifying party. No
      indemnifying party shall:

     

    (i)  without
      the prior written consent of the indemnified parties (which consent shall not
      be
      unreasonably withheld or delayed) settle or compromise or consent to the entry
      of any judgment with respect to any pending or threatened claim, action, suit
      or
      proceeding in respect of which indemnification or contribution may be sought
      hereunder (whether or not the indemnified parties are actual or potential
      parties to such claim or action) unless such settlement, compromise or consent
      includes an unconditional release of each indemnified party from all liability
      arising out of such claim, action, suit or proceeding, or

     

    (ii)  be
      liable
      for any settlement of any such action effected without its written consent
      (which consent shall not be unreasonably withheld or delayed), but if settled
      with its written consent or if there be a final judgment for the plaintiff
      in
      any such action, the indemnifying party agrees to indemnify and hold harmless
      any indemnified party from and against any loss or liability by reason of such
      settlement or judgment.

     

    (d)  If
      the
      indemnification provided for in this Section 6 shall for any reason be
      unavailable or insufficient to hold harmless an indemnified party under
      Section 6(a) or 6(b) in respect of any loss, claim, damage, liability or
      expense (or action in respect thereof) referred to therein, each indemnifying
      party shall, in lieu of indemnifying such indemnified party, contribute to
      the
      amount paid or payable by such indemnified party as a result of such loss,
      claim, damage or liability (or action in respect thereof):

     

    (i)  in
      such
      proportion as is appropriate to reflect the relative fault of the Company on
      the
      one hand and the Holders on the other, or

     

    (ii)  if
      the
      allocation provided by clause (6)(d)(i) is not permitted by applicable law,
      in
      such proportion as is appropriate to reflect not only the relative fault
      referred to in clause 6(d)(i) but also the relative benefits received by the
      Company from the offering and sale of the Registrable Securities on the one
      hand
      and a Holder with respect to the sale by such Holder of the Registrable
      Securities on the other in connection with the statements or omissions or
      alleged statements or alleged omissions that resulted in such loss, claim,
      damage or liability (or action in respect thereof), as well as any other
      relevant equitable considerations.

     

    The
      relative benefits received by the Company on the one hand and a Holder on the
      other with respect to such offering and such sale shall be deemed to be in
      the
      same proportion as the total net proceeds from the offering of the Registrable
      Securities (before deducting expenses) received by the Company, on the one
      hand,
      bear to the total proceeds received by such Holder (before deducting expenses)
      with respect to

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    its
      sale
      of Registrable Securities on the other. The relative fault of the parties shall
      be determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or the omission or alleged omission to
      state
      a material fact relates to information supplied by the Company on the one hand
      or the Holders on the other, the intent of the parties and their relative
      knowledge, access to information and opportunity to correct or prevent such
      statement or omission. The Company and each Holder agree that it would not
      be
      just and equitable if the amount of contribution pursuant to this
      Section 6(d) were determined by pro rata
      allocation (even if the selling Holders were treated as one entity for such
      purpose) or by any other method of allocation that does not take into account
      the equitable considerations referred to in the first sentence of this
      paragraph (d). The amount paid or payable by an indemnified party as a
      result of the loss, claim, damage, liability or expense, or action in respect
      thereof, referred to above in this Section 6 shall be deemed to include,
      for purposes of this Section 6 and subject to the limitations set forth
      above, any legal or other expenses reasonably incurred by such indemnified
      party
      in connection with investigating or defending or preparing to defend any such
      action or claim. Notwithstanding the provisions of this Section 6, no
      Holder shall be required to contribute any amount in excess of the amount by
      which net proceeds received by such Holder from the sale of Registrable
      Securities covered by the Shelf Registration Statement exceeds the amount of
      any
      damages which such Holder has otherwise been required to pay by reason of any
      untrue or alleged untrue statement or omission or alleged omission. No person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of the Securities Act) shall be entitled to contribution from any person who
      was
      not guilty of such fraudulent misrepresentation. The Holders’ obligations to
      contribute as provided in this Section 6(d) are several and not
      joint.

     

    7.  Participation
      in Underwritten Offerings.

     

    No
      Holder
      may participate in any Underwritten Offering hereunder unless such
      Holder:

     

    (a)  agrees
      to
      sell such Holder’s Registrable Securities on the basis provided in any
      underwriting arrangements approved by the Persons entitled hereunder to approve
      such arrangements; and

     

    (b)  completes
      and executes all reasonable and customary questionnaires, powers of attorney,
      custody agreements, indemnities, underwriting agreements, lock-up letters and
      other documents required under the terms of such underwriting arrangements,
      provided that no Holder shall be required to make any representations or
      warranties to the Company or the underwriters (other than representations and
      warranties regarding such Holder and such Holder’s intended method of
      distribution) or to undertake any indemnification obligations to the Company
      or
      the underwriters with respect thereto, except as otherwise provided in
      Section 6 hereof.

     

    8.  Selection
      of Underwriters.

     

    The
      Holders of Registrable Securities covered by the Shelf Registration Statement
      who desire to do so may sell such Registrable Securities in an Underwritten
      Offering. In
      any
      such Underwritten Offering, the investment banking firm or firms and manager
      or
      managers that will administer the offering will be selected by a Majority of
      Holders whose Registrable Securities are included in such offering; provided,
      that
      such investment banking firms must be reasonably satisfactory to the
      Company.

     

    9.  Miscellaneous.

     

    (a)  Remedies.
      The
      Company acknowledges and agrees that any failure by the Company to comply with
      its obligations under Section 2 hereof may result in material irreparable
      injury to the Purchasers or the Holders for which there is no adequate remedy
      at
      law, that it will not be possible

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    to
      measure damages for such injuries precisely and that, in the event of any such
      failure, the Purchasers or any Holder may obtain such relief as may be required
      to specifically enforce the Company’s obligations under Section 2 hereof.
      The Company further agrees to waive the defense in any action for specific
      performance that a remedy at law would be adequate. 

     

    (b)  No
      Inconsistent Agreements.
      The
      Company will not, on or after the date of this Agreement, enter into any
      agreement with respect to its securities that is inconsistent with the rights
      granted to the Holders in this Agreement or otherwise conflicts with the
      provisions hereof. In addition, the Company shall not grant to any of its
      security holders the right to include any of its securities in the Shelf
      Registration Statement provided for in this Agreement other than the Registrable
      Securities. The Company has not previously entered into any agreement (which
      has
      not expired or been terminated) granting any registration rights with respect
      to
      its securities to any Person which rights conflict with the provisions hereof.
      Each Holder which may be party to any other agreement with the Company providing
      for the registration of securities agrees that such agreement is hereby
      terminated in its entirety.

     

    (c)  Amendments
      and Waivers.
      This
      Agreement may not be amended, modified or supplemented, and waivers or consents
      to or departures from the provisions hereof may not be given, unless the Company
      has obtained the written consent of a Majority of Holders.

     

    (d)  Notices.
      All
      notices and other communications provided for or permitted hereunder shall
      be
      made in writing by hand-delivery, first-class mail (registered or certified,
      return receipt requested), telex, telecopier, or air courier guaranteeing
      overnight delivery:

     

    (i)  if
      to a
      Holder, at the address set forth on the records Company of or the transfer
      agent
      of the Registrable Securities, as the case may be; and

     

    
      	
                          
                (ii) if
                to the Company:

            	
              H2Diesel,
                Inc.

              20283
                State Road 7, Suite 40

              Boca
                Raton, FL 33498

              Tel:
                (561) 807-6325

              Fax:
                (561) 807-6326

              Attn:
                Lee S. Rosen

            
	
              with
                a copy to:

            	
              Greenberg
                Traurig, P.A.

              1221
                Brickell Avenue

              Miami,
                FL 33131

              Tel:
                (305) 579-0500

              Fax:
                (305) 5791-0717

              Attn: Ira
                N. Rosner, Esq.

            

    

    

    All
      such
      notices and communications shall be deemed to have been duly given at: the
      time
      delivered by hand, if personally delivered; five Business Days after being
      deposited in the mail, postage prepaid, if mailed; when answered back, if
      telexed; when receipt acknowledged, if transmitted by facsimile; and on the
      next
      Business Day, if timely delivered to an air courier guaranteeing overnight
      delivery.

     

    (e)  Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      assigns of each of the parties, including without limitation subsequent Holders
      of Registrable Securities; provided, however, that (i) this Agreement shall
      not inure to the benefit of or be binding upon a successor or assign of a Holder
      unless and to the extent such successor or assign

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    acquired
      Registrable Securities from such Holder and agreed in writing to be bound by
      the
      terms of this Agreement and (ii) nothing contained herein shall be deemed
      to permit any assignment, transfer or other disposition of Registrable
      Securities in violation of any Subscription Agreement or other agreement with
      the Company which restricts the sale or disposition of Registrable Securities.
      If any transferee of any Holder shall acquire Registrable Securities, in any
      manner, whether by operation of law or otherwise, such Registrable Securities
      shall be held subject to all of the terms of this Agreement, and by taking
      and
      holding such Registrable Securities such person shall be conclusively deemed
      to
      have agreed to be bound by and to perform all of the terms and provisions of
      this Agreement.

     

    (f)  Counterparts.
      This
      Agreement may be executed in any number of counterparts and by the parties
      hereto in separate counterparts, each of which when so executed shall be deemed
      to be an original and all of which taken together shall constitute one and
      the
      same agreement.

     

    (gi)  Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (h)  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Florida without regard to its principles of conflict of laws that
      would
      cause the laws of another jurisdiction to apply.

     

    (i)  Severability.
      If any
      one or more of the provisions contained herein, or the application thereof
      in
      any circumstance, is held invalid, illegal or unenforceable, the validity,
      legality and enforceability of any such provision in every other respect and
      of
      the remaining provisions contained herein shall not be affected or impaired
      thereby.

     

    (j)  Entire
      Agreement.
      This
      Agreement is intended by the parties as a final expression of their agreement
      and intended to be a complete and exclusive statement of the agreement and
      understanding of the parties hereto in respect of the subject matter contained
      herein. There are no restrictions, promises, warranties or undertakings, other
      than those set forth or referred to herein, with respect to the registration
      rights granted by the Company with respect to the Registrable Securities. This
      Agreement supersedes all prior agreements and understandings between the parties
      with respect to such subject matter.

     

    

     

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    H2Diesel,
      Inc.

     

    By:
      ______________________________

    Name:
      ________________________

    Title:
      _________________________

    

     

    [Purchaser
      Signature Page Follows]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Holder
      Signature Page

     

    Registration
      Rights Agreement - H2Diesel Inc.

     

    The
      foregoing Agreement is hereby confirmed and accepted as of the date first above
      written.

     

    

    ______________________   

    [Name
      of
      Holder]

    

    

      By:______________________________   

      Name:____________________________   

      Title:_____________________________  

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    HOLDERS

     

    

     

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

     

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    EXHIBIT
      B

     

    NOTICE
      AND QUESTIONNAIRE

    

    (TIME
      SENSITIVE MATERIAL)

     

    THIS
      NOTICE AND QUESTIONNAIRE MUST BE RETURNED TO H2DIESEL (AT THE ADDRESS LISTED
      BELOW) ON OR BEFORE THE 20TH BUSINESS DAY FOLLOWING DELIVERY OF THE NOTICE
      AND
      QUESTIONNAIRE BY H2DIESEL TO THE REGISTERED HOLDER.

     

    Capitalized
      terms used but not defined herein shall have the respective meanings set forth
      in the Registration Rights Agreement, dated as of _______ ___, 2006 (the
“Registration
      Rights Agreement”),
      between the Company and Holders named therein. 

     

    Form
      of Selling Securityholder Notice and Questionnaire

     

    The
      undersigned Holder of the Registrable Securities of the Company understands
      that
      the Company has filed, or intends to file, with the SEC a Shelf Registration
      Statement for the registration and resale under Rule 415 of the Securities
      Act,
      Registrable Securities in accordance with the terms of the Registration Rights
      Agreement. A copy of the Registration Rights Agreement is available from the
      Company upon request at the address set forth below. 

     

    Each
      beneficial owner of Registrable Securities that has agreed in writing to be
      bound by the Registration Rights Agreement is entitled to the benefits of the
      Registration Rights Agreement. In order to sell or otherwise dispose of any
      Registrable Securities pursuant to the Shelf Registration Statement, a
      beneficial owner of Registrable Securities generally will be required to be
      named as a selling securityholder in the related Prospectus, deliver a
      Prospectus either to purchasers of Registrable Securities or, if relying on
      Rule
      172 of the Securities Act, confirm that a current prospectus is deemed delivered
      in connection with the sale of Registrable Securities, and be bound by those
      provisions of the Registration Rights Agreement applicable to such beneficial
      owner (including certain indemnification provisions, as described below).
      Beneficial owners are encouraged to complete and deliver this Notice and
      Questionnaire prior to the effectiveness of the Shelf Registration Statement
      so
      that such beneficial owners may be named as selling securityholders in the
      related prospectus. 

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Shelf Registration Statement and the related Prospectus. Accordingly, holders
      and beneficial owners of Registrable Securities are advised to consult their
      own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Shelf Registration Statement and the
      related Prospectus.

     

    NOTICE

     

    The
      undersigned Holder (the “Selling
      Securityholder”)
      of
      Registrable Securities hereby gives notice to the Company of its intention
      to
      sell or otherwise dispose of Registrable Securities beneficially owned by it
      and
      listed below in Item 3 (unless otherwise specified under Item 3)
      pursuant to the Shelf Registration Statement. The undersigned, by signing and
      returning this Notice and Questionnaire, understands that it will be bound
      by
      the terms and conditions of this Notice and Questionnaire and the Registration
      Rights Agreement.

     

    
      
        B-1

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Pursuant
      to Section 6(b) of the Registration Rights Agreement, the undersigned has agreed
      to indemnify and hold harmless the Company and certain other persons, from
      and
      against certain losses arising in connection with statements concerning the
      undersigned made in the Shelf Registration Statement or the related Prospectus
      in reliance upon the information provided in this Notice and
      Questionnaire.

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate and
      complete:

     

    QUESTIONNAIRE

     

    1. Information
      Regarding Selling Securityholder

     

    
      
        	 	
                (a)

              	Full legal name of Selling
                Securityholder:

      

    

     

                 
      ________________________________________________________________________________________

     

    
      	 	
              (b)

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

            

    

     

                 
      ________________________________________________________________________________________

     

    
      	 	
              (c)

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

            

    

     

                 
      ________________________________________________________________________________________

     

     

    
      	 	
              (d)

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

            

    

     

                 
      ________________________________________________________________________________________

     

    
      	 	
              (e)

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

            

    

     

    o 
Yes.    

     

    o 
No.

     

    Note:
      If yes,
      the SEC’s staff has indicated that you should be identified as an underwriter in
      the Shelf Registration Statement.

     

    
      	 	
              (f)

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

            

    

     

    o 
Yes.

     

    o 
No.

     

    For
      purposes of this Item 1(f), an “affiliate” of a registered broker-dealer shall
      include any company that directly, or indirectly through one or more
      intermediaries, controls, or

     

    
      
        B-2

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    is
      controlled by, or is under common control with, such broker-dealer, and does
      not
      include any individuals employed by such broker-dealer or its
      affiliates.

     

    
      	 	
              (g)

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

            

    

     

    o 
Yes.

     

    o        
      No.

     

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

     

    
      	 	
              (h)

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

            

    

     

    Name
      of
      broker: 
________________________________________________________________________________  

     

    DTC
      No:______________________________________________________________________________________  

     

    Contact
      person:
      ________________________________________________________________________________ 

     

    Telephone
      No. (including area
      code): ________________________________________________________________

     

    E-mail
      address:_________________________________________________________________________________ 

     

    2. Address
      for Notices to Selling Securityholder

     

    Telephone:____________________________________________________________________________________ 

     

    Fax:_________________________________________________________________________________________  

     

    Contact
      Person:________________________________________________________________________________
       

     

    Email
      address:_________________________________________________________________________________ 

     

    3. Beneficial
      Ownership of Registrable Securities

     

    Number
      of
      shares of Registrable Securities of the Company beneficially owned:

     

            _____________________________________________________________________________________

     

       
      CUSIP No(s). of such Registrable Securities beneficially owned:

     

            _____________________________________________________________________________________

     

    
      
        B-3

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4. Nature
      of
      Beneficial Ownership

     

    
      	 	
              (a)

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

            

    

     

    
      	 	
              (A)

            	
              A
                reporting company under the Exchange Act. o

            

    

     

    
      	 	
              (B)

            	
              A
                majority owned subsidiary of a reporting company under the Exchange
                Act.
                o

            

    

     

    
      	 	
              (C)

            	
              A
                registered investment fund under the Investment Company Act of 1940.
o

            

    

     

    
      	 	
              (b)

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

            

    

     

                 
      __________________________________________________________________________________

     

                 
      __________________________________________________________________________________

     

     

     

    
      	 	
              (A)

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

            

    

     

     

                        ___________________________________________________________________________

     

                        ___________________________________________________________________________

     

     

    
      	 	
              (c)

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

            

    

     

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

     

                __________________________________________________________________________________

     

                __________________________________________________________________________________

                         
      

                         
      (ii) Business
      address (including street address) (or residence if no business address),
      telephone number and facsimile number of such person(s):

     

    Address:______________________________________________________________________________  

     

    Telephone
      No.:_________________________________________________________________________
       

     

    Fax
      No.:_______________________________________________________________________________
       

     

    
      
        B-4

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii) Name
      of
      shareholders:  

     

                        ___________________________________________________________________________

     

                        ___________________________________________________________________________

     

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

     

                        ___________________________________________________________________________

     

    (ii) Business
      address (including street address) (or residence if no business address),
      telephone number and facsimile number of such person(s):

     

    Address: _______________________________________________________________________________

     

    Telephone
      No.:
      __________________________________________________________________________ 

     

    Fax
      No.:________________________________________________________________________________
       

     

    (iii) Name
      of
      shareholders:__________________________________________________________________
             

     

    
      	
              5.

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

            

    

     

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

     

    Type
      and
      amount of Other Securities beneficially owned by the Selling
      Securityholder:

     

            ______________________________________________________________________________________

     

    CUSIP
      No(s). of such Other Securities beneficially owned:

     

            ______________________________________________________________________________________

     

    
      	
              6.

            	
              Relationship
                with the Company

            

    

     

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

     

    State
      any
      exceptions here:

     

            ______________________________________________________________________________________

     

     

    
      	
              7.

            	
              Plan
                of Distribution

            

    

     

    Except
      as
      set forth below, the undersigned (including its donees or pledgees) intends
      to
      distribute the Registrable Securities listed above in Item (3) pursuant to
      the Shelf Registration Statement only as follows (if at all). Such Registrable
      Securities may be sold from time to time directly by the undersigned or,
      alternatively, through underwriters, broker-dealers or agents. If the
      Registrable Securities are sold through underwriters or broker-dealers, the
      Selling Securityholder will be responsible for underwriting discounts or
      commissions or agent’s commissions. Such

     

    
      
        B-5

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Registrable
      Securities may be sold in one or more transactions at fixed prices, at
      prevailing market prices at the time of sale, at varying prices determined
      at
      the time of sale, or at negotiated prices. Such sales may be effected in
      transactions (which may involve crosses or block transactions):

     

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

     

    (b) in
      the
      over-the-counter market;

     

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

     

    (d) through
      the writing of options.

     

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

     

    State
      any
      exceptions
      here: __________________________________________________________________

    ______________________________________________________________________________________

     

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

     

    
      	
              8.

            	
              Acknowledgments

            

    

     

    The
      undersigned acknowledges that it understands its obligation to comply with
      the
      provisions of the Exchange Act and the rules thereunder relating to stock
      manipulation, particularly Regulation M thereunder (or any successor rules
      or
      regulations), in connection with any offering of Registrable Securities pursuant
      to the Shelf Registration Statement. The undersigned agrees that neither it
      nor
      any person acting on its behalf will engage in any transaction in violation
      of
      such provisions.

     

    The
      Selling Securityholder hereby acknowledges its obligations under the
      Registration Rights Agreement to indemnify and hold harmless certain persons
      as
      set forth therein. Pursuant to the Registration Rights Agreement, the Company
      has agreed under certain circumstances to indemnify the Selling Securityholders
      against certain liabilities.

     

    In
      accordance with the undersigned’s obligation under the Registration Rights
      Agreement to provide such information as may be required by law for inclusion
      in
      the Shelf Registration Statement, the undersigned agrees to promptly notify
      the
      Company of any inaccuracies or changes in the information provided herein that
      may occur subsequent to the date hereof at any time while the Shelf Registration
      Statement remains effective. All notices hereunder and pursuant to the
      Registration Rights Agreement shall be made in writing at the address set forth
      below.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to items (1) through (7) above and the inclusion
      of such information in the Shelf

     

    
      
        B-6

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Registration
      Statement and the related Prospectus. The undersigned understands that such
      information will be relied upon by the Company in connection with the
      preparation or amendment of the Shelf Registration Statement and the related
      Prospectus.

     

    Once
      this
      Notice and Questionnaire is executed by the undersigned and received by the
      Company, the terms of this Notice and Questionnaire, and the representations
      and
      warranties contained herein, shall be binding on, shall inure to the benefit
      of
      and shall be enforceable by the respective successors, heirs, personal
      representatives and assigns of the Company and the undersigned with respect
      to
      the Registrable Securities beneficially owned by the undersigned and listed
      in
      Item (3) above.

     

    This
      Notice and Questionnaire shall be governed in all respects by the laws of the
      State of Florida.

     

    
      
        B-7

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    Beneficial
      Owner

     

    By:_________________________________________
      

    Name:
      __________________________________

    Title:___________________________________
      

    Dated:_____________

     

    PLEASE
      RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO H2DIESEL, INC.
      NOT
      LATER THAN THE 20TH BUSINESS DAY AFTER THIS NOTICE AND QUESTIONNAIRE HAVE BEEN
      DELIVERED TO THE REGISTERED HOLDER AT:

     

    H2Diesel,
      Inc.

    20283
      State Road 7, Suite 40

    Boca
      Raton, FL 33498

    Attn:
      Lee S. Rosen

    Phone:
      (561) 807-6325

    Fax:
      (561) 807-6326Xethanol letter regarding Registration Rights

    Exhibit
      10.9

    
 

    

    H2Diesel,
      Inc.

    20283
      State Road 7, Suite 40

    Boca
      Raton, FL 33498

    

    October
      16, 2006

    

    Xethanol
      Corporation

    1185
      Avenue of the Americas

    20th
      Floor

    New
      York,
      NY 10036

    

    Re:
      Consent to Reverse Merger of H2Diesel, Inc.

    

    Gentlemen:

    

    In
      consideration of your execution and delivery of a written consent of the
      stockholders of H2Diesel, Inc. (the “Company”) with respect to its contemplated
      reverse merger with a wholly-owned subsidiary of a publicly traded corporation
      (“Pubco”), the Company hereby agrees that upon the written request of Xethanol
      Corporation (“Xethanol”), but not prior to six months after the date of
      effectiveness of the registration statement contemplated by the Registration
      Rights Agreement entered into by the Company in connection with its currently
      pending private offering, to file a registration statement with the Securities
      and Exchange Commission in a form and in substance sufficient to facilitate
      the
      spin off to Xethanol’s stockholders of the shares of Company common stock held
      by Xethanol on the date hereof (which for purposes of this agreement shall
      include shares of common stock of Pubco) and to use its commercially reasonable
      efforts to cause such registration to be declared effective as soon as
      practicable thereafter.

    

    If
      this
      agreement is satisfactory, please sign the attached written consent on the
      appropriate counterpart signature page and return such signed copy of the
      consent by telecopy to 305-961-5844, confirmed by mail to the address written
      above.

    

    Very
      truly yours,

    

    H2DIESEL,
      INC.

    

    By:
      /s/
      Lee S. Rosen

                                            Lee
      S. Rosen

                                            President,
      CEO and          

                                                         Chairman
      of the Board

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