Document:

Employment Agreement with L. Rosen

     

    Exhibit
      10.6

    
 

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT
      (this
“Agreement”),
      is
      entered into on May 5, 2006, by and between H2Diesel, Inc., a Delaware
      corporation (the “Company”),
      and
      Lee S. Rosen (the “Executive”).

     

    WHEREAS,
      the
      Company desires to employ Executive, and Executive desires to be employed by
      the
      Company, upon the terms and conditions hereinafter set forth.

     

    NOW,
      THEREFORE,
      in
      consideration of the covenants herein contained, and other good and valuable
      consideration, the receipt and adequacy of which are hereby forever
      acknowledged, the parties, with the intent of being legally bound hereby, agree
      as follows:

     

    1.  Term.
      

     

    (a) The
      term
      of this Agreement shall commence on the date (the “Effective
      Date”)
      that
      the Company completes its offering of up to $30 million shares of the Company’s
      common stock, par value $.0001 per share (the “Offering”)
      as set
      forth in greater detail in the Subscription Agreements of even date herewith
      between the Company and the Subscribers set forth therein and shall end on
      the
      date which is the third anniversary of the Effective Date unless the Executive’s
      employment is terminated earlier in accordance with this Agreement (the
“Initial
      Term”);
      provided, however, that the term of this Agreement shall automatically be
      extended beyond the Initial Term for a one year period, effective upon the
      third
      anniversary of the Effective Date (the “Renewal
      Term”)
      unless
      either party notifies the other by a date which is ninety (90) days prior to
      the
      expiration of the Initial Term that such party desires not to extend the Initial
      Term beyond the third anniversary of the Effective Date. This Agreement shall
      continue for successive one-year Renewal Terms unless and until either party
      gives ninety (90) days notice to the other of its desire not to extend further
      the term of this Agreement beyond the end of the then-current Renewal Term,
      or
      this Agreement is otherwise terminated pursuant to Section
      5
      hereof.
      The term of this Agreement, whether during the Initial Term or any Renewal
      Term,
      shall be referred to as the “Term.”

     

    (b) Notwithstanding
      the provisions set forth in Section 1(a), this Agreement shall automatically
      terminate without Cause (as defined below) if the Executive is not reelected
      as
      a director or Chairman of the Board of Directors (the “Board”)
      by the
      Company.

     

    2.  Position
      and Responsibilities.

     

    2.1  Position. 
       Executive will be employed by the Company to render services to the
      Company in the position of Chairman of the Board. In that capacity, Executive
      shall have general supervision over the operations of the Company and provide
      executive leadership to the Company and its management. The Executive shall
      also
      supervise the activities of the Board, including, as appropriate, in
      consultation with the Company’s management, determining the timing and frequency
      of meetings of the Board, establishing the agenda of such meetings,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    structuring
      its committees, presiding at its meetings, acting as primary liaison between
      the
      Board and the Company’s management and such other duties as may be consistent
      with Executive’s position. The Executive shall report directly to the Board.
      Executive shall, in all material respects, abide by all material and written
      Company rules, policies, and practices as adopted or modified, from time to
      time, in the Company’s sole discretion; and Executive shall attempt to use his
      best efforts in the performance of his duties hereunder.

     

    2.2  Other
      Activities.  
      While employed by the Company, Executive shall devote such portion as he shall
      reasonably determine of his business time, attention, and skill to perform
      his
      assigned duties, services, and responsibilities hereunder, and shall act at
      all
      times in the furtherance of the Company’s business and interests. Executive
      shall not, during the term of this Agreement engage, directly or indirectly,
      in
      any other business activity (whether or not pursued for pecuniary advantage)
      which could reasonably be expected to materially interfere with Executive’s
      duties and responsibilities hereunder or create a conflict of interest with
      the
      Company. The foregoing limitations shall not prohibit Executive from: (i)
      serving as a consultant to another entity provided that such service would
      not
      violate Section 6.1 below or (ii) making and managing his personal and family
      investments in such form or manner as will neither require Executive’s services
      in the operation or affairs of the companies or enterprises in which such
      investments are made nor materially interfere with the performance of the
      Executive’s duties hereunder. The Company acknowledges that Executive will from
      time-to-time serve on the boards of corporations, advisory committees, trade
      organizations, philanthropic organizations or other entities. Accordingly,
      the
      foregoing limitations shall not prohibit Executive from serving on the boards
      of
      corporations, advisory committees, trade organizations, philanthropic
      organizations or other entities, provided that such service does not create
      a
      material conflict of interest with the Company.

     

    2.3  No
      Conflict. 
       Executive represents and warrants that Executive’s execution of this
      Agreement, Executive’s employment with the Company, and the performance of
      Executive’s proposed duties under this Agreement shall not violate any
      obligations Executive may have to any other employer, person, or entity,
      including but not limited to any obligations with respect to not disclosing
      any
      proprietary or confidential information of any other person or
      entity.

     

    3.  Compensation
      and Benefits.

     

    3.1  Base
      Salary. 
       In consideration of the services to be rendered under this Agreement, the
      Company shall pay Executive an initial base salary of Fifteen Thousand Dollars
      ($15,000.00) per month (“Base
      Salary”)
      in
      accordance with the Company’s standard payroll practices. Such Base Salary shall
      be subject to such withholding or deductions as may be mutually agreed between
      the Company and Executive or as required by law. Executive’s Base Salary will be
      reviewed, from time to time, and may be adjusted (upward, but not downward)
      at
      the discretion of the Board.

     

    3.2  Equity
      Compensation. 
       To the extent that the Board and the stockholders of the Company approve
      an equity compensation or incentive plan (the “Plan”),
      the
      Executive shall be eligible to participate in such plan. The amount of any
      equity awards to the Executive and terms and conditions thereof shall be
      determined not less frequently than annually by a committee of

     

    
      
        
        

      

      
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    the
      Board
      appointed pursuant to the Plan, or by the Board, in its discretion and pursuant
      to the Plan.

     

            3.3  Benefits.  
      Executive shall be entitled to participate in the pension and health and welfare
      benefit plans and perquisites that the Company generally makes available to
      its
      employees or other executives, at a level commensurate with his position (the
      “Executive
      Benefits”).

     

    3.4  Vacation. 
      During the Term, Executive shall be entitled to vacation each year in accordance
      with the Company’s policies in effect from time to time, but in no event less
      than four (4) weeks paid vacation per calendar year. The Executive shall also
      be
      entitled to such periods of sick leave as is customarily provided by the Company
      for its senior executive employees.

     

    3.5  Business
      Expenses.  
      Throughout the term of Executive’s employment hereunder, the Company shall
      reimburse Executive for all reasonable and necessary travel, entertainment,
      promotional, and other business expenses that may be incurred by Executive
      in
      the course of performing Executive’s duties. Authorized expenses shall be
      reimbursed by the Company in accordance with policies and practices adopted,
      from time to time, by the Company concerning expense reimbursement for employees
      and shall be reimbursed upon timely presentation to the Company of an itemized
      expense statement with respect thereto, including substantiation of expenses
      incurred and such other documentation as may be required by the Company’s
      reimbursement policies from time to time and in accordance with Internal Revenue
      Service guidelines.

     

    3.6  Bonus
      Plan.  
      To the extent that the Board of the Company establishes an annual cash bonus
      plan (“Bonus
      Plan”),
      the
      Executive shall be eligible to participate in such Bonus Plan. The amount of
      any
      bonus to be paid to the Executive and the terms and conditions thereof shall
      be
      determined not less frequently than annually by a committee of the Board or
      by
      the Board in accordance with the terms of any such Bonus Plan. Any bonus paid
      under this Section shall be paid in accordance with the Company’s
      practices.

     

    4.  Nondisclosure
      of Confidential and Proprietary Information.  
      At all times before and after the termination of Executive’s service (for any
      reason by the Company or by Executive), Executive agrees to keep all
      Confidential or Proprietary Information in strict confidence and secrecy, and
      not to disclose or use the Confidential or Proprietary Information in any way
      outside of Executive’s assigned responsibilities for the Company. “Confidential
      or Proprietary Information” means any non-public information or idea (whether or
      not a trade secret) relating to the business of the Company that is not
      generally known outside the Company or not generally known in the industry
      or by
      persons engaged in businesses similar to that of the Company (including
      information which may be available from sources outside the Company, but not
      in
      the form, arrangement, or compilation in which it exists within the Company)
      that the Company considers confidential, including, but not limited to: (i)
      customer lists and records of current, former, and prospective customers; (ii)
      special needs and characteristics of current, former, or prospective customers;
      (iii) present or future business plans; (iv) trade secrets, proprietary, or
      confidential information of any customer or other entity to which the Company
      owes an obligation not to disclose such information; (v) marketing, financing,
      business development, or

     

    
      
        
        

      

      
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    strategic
      plans; (vi) sales methods, practices, and procedures; (vii) personnel
      information; (viii) research and development data and projections; (ix)
      information or data concerning the Company’s competitive position in its various
      lines of business; (x) existing, new, or envisioned products, programs,
      services, methods, techniques, processes, projects, or systems; and (xi) sales,
      pricing, billing, costs, and other financial data and projections. All documents
      containing this information will be considered Confidential or Proprietary
      Information whether or not marked with any proprietary or confidential notice
      or
      legend. Notwithstanding the foregoing, nothing herein shall prohibit the
      Executive from disclosing any information: (1) in connection with performance
      of
      his duties hereunder as he deems in good faith to be necessary or desirable;
      or
      (2) if compelled pursuant to the order of a court or other governmental or
      legal
      body having jurisdiction over such matter. In the event Executive is compelled
      by order of a court or other governmental or legal body to communicate or
      divulge any such information, knowledge or data, he shall promptly notify the
      Company.

     

    5.  Termination;
      Rights and Obligations on Termination. The
      Executive’s employment under this Agreement may be terminated in any one of the
      followings ways:

     

    (a)  Death. 
       The death of Executive shall immediately and automatically terminate the
      Executive’s employment under this Agreement. If Executive dies while employed by
      the Company, any unvested equity compensation granted to Executive under the
      Plan shall immediately vest and any vested options may be exercised on or before
      the earlier of (i) the option’s expiration date or (ii) twelve months after the
      Executive’s death. Any option that remains unexercised after this period shall
      be forfeited. Upon the Executive’s death, the Executive’s legal representative
      shall receive: (1) any compensation earned but not yet paid, including and
      without limitation, any bonus if declared or earned but not yet paid for a
      completed fiscal year, any amount of Base Salary earned but unpaid, any accrued
      vacation pay payable pursuant to the Company’s policies, and any unreimbursed
      business expenses, which amounts shall be promptly paid in a lump sum, and
      (2)
      any other amounts or benefits owing to the Executive under the then applicable
      employee benefit plans, long term incentive plans or equity plans and programs
      of the Company which shall be paid or treated in accordance with the terms
      of
      such plans and programs (subsections (1) and (2) shall be collectively referred
      to as, the “Accrued
      Amounts”).
      Other
      than the benefits described above, no further compensation or benefits shall
      be
      due or owing upon the Executive’s death.

     

    (b)  Disability.  
      If as a result of incapacity due to physical or mental illness or injury,
      Executive shall have been absent from Executive’s duties hereunder for six (6)
      consecutive months, then thirty (30) days after receiving written notice (which
      notice may occur before or after the end of such six (6) month period, but
      which
      shall not be effective earlier than the last day of such six (6) month period),
      the Company may terminate Executive’s employment hereunder provided Executive is
      unable to substantially perform his duties hereunder at the conclusion of such
      notice period (a “Disability”),
      as
      determined by a physician mutually selected by the parties hereto. In the event
      the Executive’s employment is terminated as a result of Disability, Executive
      shall receive from the Company, in a lump-sum payment due within ten (10) days
      of the effective date of termination, an amount equal to the sum of the Base
      Salary and bonus, if any, that would have been paid to Executive through the
      end
      of the then remaining Term if the Executive was not disabled or for six months,
      whichever is less (assuming that Executive would have received no further
      increases in his Base Salary after his termination of

     

    
      
        
        

      

      
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    employment
      and assuming achievement of all performance factors applicable to Executive’s
      participation in any Bonus Plan). The Executive shall also be entitled to the
      Accrued Amounts. Additionally, if Executive is terminated due to a Disability,
      any unvested equity compensation granted to Executive under the Plan shall
      immediately vest and any vested options may be exercised on or before the
      earlier of: (i) the option’s expiration date or (ii) twelve months after the
      Executive’s termination due to the Disability. Any option that remains
      unexercised after this period shall be forfeited. Other than the benefits
      described above, no further compensation or benefits shall be due or owing
      upon
      the Executive’s termination due to a Disability.

     

    (c)  Cause. 
       The Company may terminate this Agreement immediately upon written notice
      to Executive for “Cause,” which shall mean: (i) the Executive’s willful,
      material, and irreparable breach of this Agreement; (ii) Executive’s willful
      misconduct in the performance of any of his material duties and responsibilities
      hereunder that has a material adverse effect on the Company; (iii) Executive’s
      intentional and continued non-performance (other than by reason of disability
      or
      incapacity) of any of the Executive’s material duties and responsibilities
      hereunder or of any reasonable, lawful instructions from the Board, which
      continues for ten (10) days after receipt by Executive of written notice from
      the Company; (iv) Executive’s material and willful dishonesty or fraud with
      regard to the Company (other than good faith expense account disputes) that
      has
      a material adverse effect on the Company (whether to the business or reputation
      of the Company; or (v) Executive’s conviction of a felony (other than as a
      result of vicarious liability or a traffic related offense). For purposes of
      this paragraph, no act, or failure to act, on Executive’s part shall be
      considered “willful” unless done or omitted to be done, by him not in good faith
      and without reasonable belief that his action or omission was in the best
      interests of the Company. In the event of the Executive’s termination of
      employment by the Company for Cause the Executive shall receive the Accrued
      Amounts.

     

    Notwithstanding
      the foregoing, following the Executive’s receipt of written notice from the
      Company of any of the events described in subsections (i) through (iv) above,
      the Executive shall have ten (10) days in which to cure the alleged conduct
      (if
      curable).

     

    (d)  Without
      Cause.  
      At any time after Executive’s commencement of employment, the Company may,
      without Cause, terminate the Executive’s employment, effective thirty (30) days
      after written notice is provided to Executive. In the event Executive is
      terminated by the Company without Cause, Executive shall receive from the
      Company within ten (10) days after such termination, in a lump sum payment,
      an
      amount equal to the sum of the Base Salary and bonus, if any, that would have
      been paid to Executive through the end of the then remaining Term if the
      Executive had not been terminated or for six months, whichever is less (assuming
      that Executive would have received no further increases in his Base Salary
      after
      his termination of employment and assuming achievement of all performance
      factors applicable to Executive’s participation in any Bonus Plan). The
      Executive shall also receive the Accrued Amounts. Additionally, if Executive
      is
      terminated by the Company without Cause, any unvested equity compensation
      granted to Executive under the Plan shall immediately vest and any vested
      options may be exercised on or before the earlier of: (i) the option’s
      expiration date or (ii) twelve months after the Executive’s termination. Any
      option that remains unexercised after this period shall be
      forfeited.

     

    
      
        
        

      

      
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    (e)    
      Resignation for Good Reason. 
       At any time after Executive’s commencement of employment, the Executive
      may resign for Good Reason (as defined below) effective thirty (30) days after
      written notice is provided to the Company. Upon the Executive’s termination of
      employment for Good Reason, the Executive shall be entitled to all payments
      and
      benefits as if his employment was terminated by the Company without Cause as
      provided in subsection (d) above. For purposes of this Agreement, Good Reason
      means: (i) any
      adverse change in the Executive’s position, title or reporting relationship or a
      material diminution of his then duties, responsibilities or authority or the
      assignment to Executive of duties or responsibilities that are inconsistent
      with
      the Executive’s then position; (ii) the
      failure of the Executive to be reelected as a member of the Board; (iii) the
      failure by the Company to continue in effect any material compensation or
      benefit plan or arrangement in which Executive participates unless an equitable
      and substantially comparable arrangement (embodied in a substitute or
      alternative plan) has been made with respect to such plan or arrangement, or
      the
      failure by the Company to continue Executive’s participation therein (or in such
      substitute or alternative plan or arrangement) on a basis not less favorable,
      both in terms of the amount of benefits provided and the level of participation
      relative to other participants, as existed at the time of the Executive’s
      termination of employment; (iv) any
      breach of this Agreement (or any other written agreement entered into between
      the Executive and the Company) by the Company; or (v) failure
      of any successor to the Company (whether direct or indirect and whether by
      merger, acquisition, consolidation or otherwise) to assume in a writing
      delivered to Executive upon the assignee becoming such, the obligations of
      the
      Company hereunder.

     

    Notwithstanding
      the foregoing, following the Company’s receipt of written notice from the
      Executive of any of the events described in subsections (i) through (v) above,
      the Company shall have ten (10) days in which to cure the alleged conduct (if
      curable).

     

    (f)  Resignation
      without Good Reason or Retirement by Executive.  
      The Executive may resign without Good Reason or retire upon thirty (30) days’
written notice, and upon such termination of employment he shall receive the
      Accrued Amounts.

     

    (g)  Superseding
      Agreement.  
      This Agreement shall be terminated immediately and automatically if the parties
      enter into another employment agreement which supersedes this Agreement. In
      the
      event the parties enter into a superseding agreement, no severance pay or other
      compensation shall be due to Executive with respect to the termination of this
      Agreement.

     

    6.  Use
      and Return of Company Property.  
      Executive acknowledges the Company’s proprietary rights and interests in its
      tangible and intangible property. Accordingly, Executive agrees that upon
      termination of Executive’s employment with the Company, for any reason, and at
      any time, Executive shall deliver to the Company all Company property,
      including: (a) all documents, contracts, writings, disks, diskettes, computer
      files or programs, computer-generated materials, information, documentation,
      or
      data stored in any medium, recordings and drawings pertaining to trade secrets,
      proprietary or confidential information, or other inventions and works of the
      Company; (b) all records, designs, plans, sketches, specifications, patents,
      business plans, financial statements, accountings, flow charts, manuals,
      notebooks, memoranda, lists, and other property delivered to or compiled by
      Executive, by or on behalf of the Company or any of its representatives,
      vendors, or customers which pertain to the business of the Company, all of
      which
      shall be and remain the property of the Company, and shall be subject, at all
      times, to its

     

    
      
        
        

      

      
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    discretion
      and control; (c) all equipment, devices, products, and tangible property
      entrusted to Executive by the Company; and (d) all correspondence, reports,
      records, notes, charts, advertisement materials, and other similar data
      pertaining to the business, activities, or future plans of the Company, in
      the
      possession or control of Executive, shall be delivered promptly to the Company
      without request by it. Executive shall certify to the Company, in writing,
      within five (5) days of any request by the Company, that all such materials
      have
      been returned to the Company. Notwithstanding the foregoing, the Executive
      may
      retain his rolodex and similar address and telephone directories (whether in
      writing or electronic format).

     

    6.1  Non-competition.  
      At all times while the Executive is employed by the Company and for a period
      of:
      (i) two (2) years after any termination of the Executive’s employment for Cause
      or the Executive’s termination of his employment without Good Reason; (ii) the
      lesser of one (1) year or the remainder of the Term after any termination of
      the
      Executive’s employment by the Company without Cause or the Executive’s
      termination for Good Reason; and (iii) one (1) year following the non-renewal
      of
      this Agreement or any termination pursuant to Section
      5,
      the
      Executive shall not, directly or indirectly, engage in or have any interest
      in
      any person (whether as an employee, officer, director, partner, agent, security
      holder, creditor, consultant or otherwise) that directly or indirectly (or
      through any affiliated entity) competes with the Company’s Business (as defined
      below); provided that such provision shall not apply to the Executive’s
      ownership of securities of the Company or the acquisition by the Executive,
      solely as an investment, of securities of any issuer that is registered under
      Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended and
      that are listed or admitted for trading on any United States national securities
      exchange or that are quoted on the National Association of Securities Dealers
      Automated Quotations System, or any similar system or automated dissemination
      of
      quotations of securities prices in common use, so long as the Executive does
      not
      control, acquire a controlling interest in or become a member of a group which
      exercises direct or indirect control of, more than five percent of any class
      of
      capital stock of such issuer. For purposes of this Section
      6.1,
      the
      term “Business” shall mean the Business and any other business in which the
      Company is engaged prior to the delivery of a notice of termination by the
      Company or the Executive hereunder and which business the Company is engaged
      at
      the date of termination of the Executive’s employment.

     

    6.2  Non-Solicitation.  
      At all times while the Executive is employed by the Company and for a period
      of:
      (i) two (2) years after any termination of the Executive’s employment for Cause
      or the Executive’s termination of his employment without Good Reason; (ii) the
      lesser of one (1) year or the remainder of the Term after any termination of
      the
      Executive’s employment by the Company without Cause or the Executive’s
      termination for Good Reason; and (iii) one (1) year following the non-renewal
      of
      this Agreement or any termination pursuant to Section
      5,
      the
      Executive shall not, directly or indirectly, for himself or for any other person
      (a) employ or attempt to employ or enter into any contractual arrangement with
      any employee or former employee of the Company, or (b) call on or solicit any
      of
      the actual or targeted prospective customers or suppliers of the Company on
      behalf of any person in connection with any business that competes with the
      Business of the Company nor shall the Executive make known the names and
      addresses of such customers or suppliers or any information relating in any
      manner to the Company’s trade or business relationships with such customers or
      suppliers, other than in connection with the performance of Executive’s duties
      under this Agreement.

     

    
      
        
        

      

      
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    6.3    Reasonable
      Restrictions. Executive hereby acknowledges and agrees that the limits on
      his ability to engage in activities that are competitive with the Company,
      as
      defined above, are warranted in order to protect the Company’s trade secrets and
      Confidential or Proprietary Information, and further, are warranted to protect
      the Company in developing and maintaining its reputation, goodwill, and status
      in the marketplace. Executive specifically agrees that the time period,
      geographic scope, and nature of the restrictions set forth in Sections
6.1
      and
6.2
      are
      reasonable and necessary to protect the Company’s legitimate business interests
      and do not impose any limitations greater than those necessary to protect those
      interests.

     

    6.4. Remedies.
      Executive hereby acknowledges and agrees that the services Executive has
      rendered and will continue to render to the Company are of a special and unique
      character, which gives this Agreement a peculiar value to the Company, and
      further acknowledges and agrees that the loss of those services to a direct
      competitor or the direct competition by Executive against the Company cannot
      be
      reasonably or adequately compensated for by damages in an action at law.
      Executive further acknowledges and agrees that any material breach by Executive
      of any provision of Sections
      4
      or
6
      of this
      Agreement shall cause irreparable harm to the Company, which harm cannot be
      reasonably or adequately compensated for by damages in an action at law.
      Accordingly, without prejudice to the rights and remedies otherwise available
      to
      the Company, Executive agrees that, in addition to any other right or remedy
      the
      Company may have, upon adequate proof of a material breach the Company shall
      be
      entitled to a temporary restraining order and to a preliminary and permanent
      injunction enjoining or restraining the breach of this Agreement by Executive,
      without the necessity of proving the inadequacy of monetary damages or the
      posting of any bond or security. Executive acknowledges and agrees that the
      preceding remedies shall be in addition to any and all other rights available
      to
      the Company at law or in equity. The failure of the Company to promptly
      institute legal action upon any breach of this Agreement shall not constitute
      a
      waiver of that or any other breach hereof.

     

    7.  Indemnification;
      Insurance.

     

    7.1  Indemnification
      of Executive.  
      Except as otherwise provided by applicable law, while the Executive is employed
      by the Company and thereafter while potential liability exists (but in no event
      less than three (3) years after termination), in the event Executive is made
      a
      party to any threatened, pending, or contemplated action, suit, or proceeding,
      whether civil, criminal, administrative, or investigative (other than an action
      by the Company against Executive), by reason of the fact that Executive is
      or
      was performing services under this Agreement, then the Company shall indemnify
      Executive to the fullest extent permitted by applicable law against all expenses
      (including attorneys’ fees), judgments, fines, and amounts paid in settlement,
      as actually and reasonably incurred by Executive in connection therewith. In
      the
      event that both Executive and the Company are made a party to the same third
      party action, complaint, suit, or proceeding, the Company will engage competent
      legal representation, and Executive will use the same representation, provided
      that if counsel selected by the Company shall have a conflict of interest that
      prevents such counsel from representing Executive, then the Company may engage
      separate counsel on Executive’s behalf, and subject to the provisions of this
Section
      7,
      the
      Company will pay all attorneys’ fees of such separate counsel.

     

    
      
        
        

      

      
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    7.2    Insurance
      Provided by Company.  
      As soon as practicable after the Effective Date, the Company shall obtain a
      directors and officers liability insurance policy covering all directors and
      officers of the Company, including Executive, which insurance policy shall
      provide adequate insurance coverage for each of such persons, as shall be
      approved by the Board. The Executive shall be entitled to such coverage while
      employed and thereafter while potential liability exists.

     

    8.  Assignment;
      Binding Effect.  
      Executive shall have no right to assign this Agreement to another party other
      than by will or by the laws of descent and distribution. This Agreement may
      be
      assigned or transferred by the Company only to an acquirer of all or
      substantially all of the assets of the Company, provided such acquirer promptly
      assumes all of the obligations hereunder of the Company in a writing delivered
      to the Executive and otherwise complies with the provisions hereof with regard
      to such assumption. Nothing in this Agreement shall prevent the consolidation,
      merger, or sale of the Company or a sale of any or all or substantially all
      of
      its assets. Subject to the foregoing restriction on assignment by Executive,
      this Agreement shall be binding upon, inure to the benefit of, and be
      enforceable by the parties hereto and their respective heirs, legal
      representatives, successors, and assigns.

     

    9.  Additional
      Provisions.

     

    9.1  Damages.  
      Nothing contained herein shall be construed to prevent the Company or the
      Executive from seeking and recovering from the other damages sustained by either
      or both of them as a result of its or his breach of any term or provision of
      this Agreement. In the event that either party hereto brings suit for the
      collection of any damages resulting from, or the injunction of any action
      constituting, a breach of any of the terms or provisions of this Agreement,
      then
      the party found to be at fault shall pay all reasonable court costs and
      attorneys’ fees of the other.

     

    9.2  Amendments;
      Waivers; Remedies.  
      This Agreement may not be amended, and no provision of this Agreement may be
      waived, except by a writing signed by Executive and by a duly authorized
      representative of the Company. Failure to exercise any right under this
      Agreement shall not constitute a waiver of such right. Any waiver of any breach
      of this Agreement shall not operate as a waiver of any subsequent breaches.
      All
      rights or remedies specified for a party herein shall be cumulative and in
      addition to all other rights and remedies of the party hereunder or under
      applicable law.

     

    9.3  Notices. 
       Any notice under this Agreement must be in writing and addressed to the
      Company or to Executive at the corresponding address below. Notices under this
      Agreement shall be effective upon: (a) hand delivery, when personally delivered;
      (b) written verification of receipt, when delivered by overnight courier or
      certified or registered mail; or (c) acknowledgment of receipt of electronic
      transmission, when delivered via electronic mail or facsimile. Executive shall
      be obligated to notify the Company, in writing, of any change in Executive’s
      address. Notice of change of address shall be effective only when done in
      accordance with this Section
      9.3.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              Company’s
                Notice Address:

            	
              H2Diesel,
                Inc.

              c/o
                Xethanol Corporation

              1185
                Avenue of the Americas 

              New
                York, New York 10036

              Attn.:
                Christopher d’Arnaud-Taylor

              Telephone:
                646-723-4000

              Facsimile:
                

            
	
              Executive’s
                Notice Address:

            	
              H2Diesel,
                Inc.

              17698
                Foxborough Lane

              Boca
                Raton, Florida 33496

              Attn.:
                Lee S. Rosen

              Telephone:
                

              Facsimile:
                

            

    

     

    9.4  Severability.  
      If any provision of this Agreement shall be held by a court of competent
      jurisdiction to be invalid, unenforceable, or void, such provision shall be
      enforced to the fullest extent permitted by law, and the remainder of this
      Agreement shall remain in full force and effect. In the event that the time
      period or scope of any provision is declared by a court of competent
      jurisdiction to exceed the maximum time period or scope that such court deems
      enforceable, then such court shall reduce the time period or scope to the
      maximum time period or scope permitted by law.

     

    9.5  Taxes.  
      All amounts paid under this Agreement (including, without limitation, Base
      Salary) shall be reduced by all applicable state and federal tax withholdings
      and any other withholdings required by any applicable jurisdiction.

     

    9.6  Governing
      Law. 
       The validity, interpretation, enforceability and performance of this
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Florida, without regard to conflict of laws principles that would
      cause
      the laws of another jurisdiction to apply.

     

    9.7  Venue.  
      Each of the parties hereto irrevocably submits to the exclusive jurisdiction
      of
      the courts of the State of Florida located in Broward County and the Federal
      Courts of the United States of America located in Broward County, Florida,
      for
      the purposes of any suit, action, or other proceeding arising out of this
      Agreement or any transaction contemplated hereby.

     

    9.8  Interpretation.  
      This Agreement shall be construed as a whole, according to its fair meaning,
      and
      not in favor of or against any party. Sections and section headings contained
      in
      this Agreement are for reference purposes only, and shall not affect, in any
      manner, the meaning or interpretation of this Agreement. Whenever the context
      requires, references to the singular shall include the plural and the plural
      the
      singular.

     

    9.9  Survival.  
      All of those portions of this Agreement that require performance by Executive
      following termination of Executive’s employment hereunder shall survive any
      termination of this Agreement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    9.10  Counterparts.
      This
      Agreement may be executed in several counterparts (including by means of
      telecopied signature pages), each of which shall be deemed an original but
      all
      of which shall constitute one and the same instrument.

     

    9.11  Authority.  
      Each party represents and warrants that such party has the right, power, and
      authority to enter into and execute this Agreement and to perform and discharge
      all of the obligations hereunder, and that this Agreement constitutes the valid
      and legally binding agreement and obligation of such party and is enforceable
      in
      accordance with its terms.

     

    9.12  Additional
      Assurances.  
      The provisions of this Agreement shall be self-operative and shall not require
      further agreement by the parties except as may be herein specifically provided
      to the contrary; provided, however, that at the request of the Company,
      Executive shall execute such additional instruments and take such additional
      acts as the Company may deem necessary to effectuate this
      Agreement.

     

    9.13  Entire
      Agreement.  
      This Agreement is the final, complete, and exclusive agreement of the parties
      with respect to the subject matter hereof and supersedes and merges all prior
      or
      contemporaneous representations, discussions, proposals, negotiations,
      conditions, communications, and agreements, whether written or oral, between
      the
      parties relating to the subject matter hereof and all past courses of dealing
      or
      industry custom. No oral statements or prior written material not specifically
      incorporated herein shall be of any force and effect, and no changes in or
      additions to this Agreement shall be recognized unless incorporated herein
      by
      amendment, as provided herein (such amendment to become effective on the date
      stipulated therein).

     

    9.14  Executive
      Acknowledgment.  
      Executive acknowledges that, before signing this Agreement, Executive was
      advised of his right to consult with an attorney of his choice to review this
      Agreement and that Executive had sufficient opportunity to have an attorney
      review the provisions of this Agreement and negotiate its terms. Executive
      further acknowledges that Executive had a full and adequate opportunity to
      review this Agreement before signing it; that Executive carefully read and
      fully
      understood all the provisions of this Agreement before signing it, including
      the
      rights and obligations of the parties; and that Executive has entered into
      this
      Agreement knowingly and voluntarily.

     

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

    COMPANY:

    

    

    H2DIESEL,
      INC.

    

    

    By:
      /s/
      Lee S. Rosen

    Name:
      Lee
      S.
      Rosen

    Title:
      President

    

    

    

    EXECUTIVE:

    

    /s/
      Lee S. Rosen

    Lee
      S.
      RosenEmployment Agreement with A. Festuccia

     

    Exhibit
      10.7

    AMENDED
      AND RESTATED

    EMPLOYMENT
      AGREEMENT

     

    THIS
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT
      (this
“Agreement”),
      is
      entered into as of September 19, 2006, by and between H2Diesel, Inc., a Delaware
      corporation (the “Company”),
      and
      Andrea Festuccia (the “Executive”).

     

    WHEREAS,
      the
      Company and the Executive are parties to that certain Employment Agreement
      dated
      April 1, 2006 (the “Original
      Agreement”);
      

     

    WHEREAS,
      the
      Company and the Executive now desire to amend and restate the Original Agreement
      on the terms and conditions hereinafter set forth;

     

    NOW,
      THEREFORE,
      in
      consideration of the covenants herein contained, and other good and valuable
      consideration, the receipt and adequacy of which are hereby forever
      acknowledged, the parties, with the intent of being legally bound hereby, agree
      as follows:

     

    1.  Term.  
      The term of this Agreement shall commence effective on April 1, 2006
      (the “Effective
      Date”)
      and
      shall end on the date which is the third anniversary of the Effective Date
      unless the Executive’s employment is terminated earlier in accordance with this
      Agreement (the “Initial
      Term”);
      provided, however, that the term of this Agreement shall automatically be
      extended beyond the Initial Term for a one year period, effective upon the
      third
      anniversary of the Effective Date (the “Renewal
      Term”)
      unless
      either party notifies the other by a date which is ninety (90) days prior to
      the
      expiration of the Initial Term that such party desires not to extend the Initial
      Term beyond the third anniversary of the Effective Date. This Agreement shall
      continue for successive one-year Renewal Terms unless and until either party
      gives ninety (90) days notice to the other of its desire not to extend further
      the term of this Agreement beyond the end of the then-current Renewal Term,
      or
      this Agreement is otherwise terminated pursuant to Section
      5
      hereof.
      The term of this Agreement, whether during the Initial Term or any Renewal
      Term,
      shall be referred to as the “Term.”

     

    2.  Position
      and Responsibilities.

     

    2.1  Position.  
      Executive will be employed by the Company to render services to the Company
      in
      the position of Chief Technology Officer. In that capacity, Executive shall
      be
      responsible for the Company’s long-term and short-term technology strategy,
      which includes, but is not limited to overseeing the Company’s research and
      development, implementing improvements and enhancements to the Company’s
      technology and related processes and operations and establishing policies and
      procedures for addressing technology related issues that may arise at the
      Company with respect to its technology. The Executive shall also perform such
      other duties as may be consistent with Executive’s position. The Executive shall
      report directly to the Chief Executive Officer and the Chairman of the Company.
      Executive shall, in all material respects, abide by all material and written
      Company rules, policies, and practices as adopted or modified, from time to
      time, in the Company’s sole discretion; and Executive shall attempt to use his
      best efforts in the performance of his duties hereunder.

     

    2.2  Other
      Activities.  
      While employed by the Company, Executive shall devote such portion as he shall
      reasonably determine of his business time, attention, and skill to perform
      his

     

    
      
         

         

         

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    assigned
      duties, services, and responsibilities hereunder, and shall act at all times
      in
      the furtherance of the Company’s business and interests. Executive shall not,
      during the term of this Agreement engage, directly or indirectly, in any other
      business activity (whether or not pursued for pecuniary advantage) which could
      reasonably be expected to materially interfere with Executive’s duties and
      responsibilities hereunder or create a conflict of interest with the Company.
      The foregoing limitations shall not prohibit Executive from making and managing
      his personal and family investments in such form or manner as will neither
      require Executive’s services in the operation or affairs of the companies or
      enterprises in which such investments are made nor materially interfere with
      the
      performance of the Executive’s duties hereunder. The Company acknowledges that
      Executive will from time-to-time serve on the boards of corporations, advisory
      committees, trade organizations, philanthropic organizations or other entities.
      Accordingly, the foregoing limitations shall not prohibit Executive from serving
      on the boards of corporations, advisory committees, trade organizations,
      philanthropic organizations or other entities, provided that such service does
      not create a material conflict of interest with the Company.

     

    2.3  No
      Conflict.  
      Executive represents and warrants that Executive’s execution of this Agreement,
      Executive’s employment with the Company, and the performance of Executive’s
      proposed duties under this Agreement shall not violate any obligations Executive
      may have to any other employer, person, or entity, including but not limited
      to
      any obligations with respect to not disclosing any proprietary or confidential
      information of any other person or entity.

     

    3.  Compensation
      and Benefits.

     

    3.1  Base
      Salary.  
      In consideration of the services to be rendered under this Agreement, the
      Company shall pay Executive an initial base salary of Twelve Thousand Five
      Hundred Dollars ($12,500.00) per month (“Base
      Salary”)
      in
      accordance with the Company’s standard payroll practices. Such Base Salary shall
      be subject to such withholding or deductions as may be mutually agreed between
      the Company and Executive or as required by law. Executive’s Base Salary will be
      reviewed, from time to time, and may be adjusted (upward, but not downward)
      at
      the discretion of the Board.

     

    3.2  Stock
      Options.  
      In consideration of the services to be rendered under this Agreement, the
      Company hereby grants Executive the option to purchase 500,000 shares of the
      Company’s Common Stock at a price of $1.50 per share, of which 100,000 shares
      shall vest on the date hereof, 200,000 shares shall vest on the first
      anniversary of the Effective Date and 200,000 shall vest on the second
      anniversary of the Effective Date. Such options shall be more fully documented
      in a Stock Option Agreement containing customary terms and conditions. The
      options set forth in this Section 3.2 shall expire on the tenth (10th)
      anniversary of the Effective Date. 

     

    3.3  Equity
      Compensation.  
      To the extent that the Board and the stockholders of the Company approve an
      equity compensation or incentive plan (the “Plan”),
      the
      Executive shall be eligible to participate in such plan. The amount of any
      equity awards to the Executive and terms and conditions thereof shall be
      determined not less frequently than annually by a committee of the Board
      appointed pursuant to the Plan, or by the Board, in its discretion and pursuant
      to the Plan.

     

    
      
         

         

        

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    3.4  Benefits.
      Executive shall be entitled to participate in the pension and health and welfare
      benefit plans and perquisites that the Company generally makes available to
      its
      employees or other executives, at a level commensurate with his position (the
      “Executive
      Benefits”).

     

    3.5  Vacation.  
      During the Term, Executive shall be entitled to vacation each year in accordance
      with the Company’s policies in effect from time to time, but in no event less
      than four (4) weeks paid vacation per calendar year. The Executive shall also
      be
      entitled to such periods of sick leave as is customarily provided by the Company
      for its senior executive employees.

     

    3.6  Business
      Expenses.  
      Throughout the term of Executive’s employment hereunder, the Company shall
      reimburse Executive for all reasonable and necessary travel, entertainment,
      promotional, and other business expenses that may be incurred by Executive
      in
      the course of performing Executive’s duties. Authorized expenses shall be
      reimbursed by the Company in accordance with policies and practices adopted,
      from time to time, by the Company concerning expense reimbursement for employees
      and shall be reimbursed upon timely presentation to the Company of an itemized
      expense statement with respect thereto, including substantiation of expenses
      incurred and such other documentation as may be required by the Company’s
      reimbursement policies from time to time and in accordance with Internal Revenue
      Service guidelines.

     

    3.7  Bonus
      Plan.  
      To the extent that the Board of the Company establishes an annual cash bonus
      plan (“Bonus
      Plan”),
      the
      Executive shall be eligible to participate in such Bonus Plan. The amount of
      any
      bonus to be paid to the Executive and the terms and conditions thereof shall
      be
      determined not less frequently than annually by a committee of the Board or
      by
      the Board in accordance with the terms of any such Bonus Plan. Any bonus paid
      under this Section shall be paid in accordance with the Company’s
      practices.

     

    4.  Nondisclosure
      of Confidential and Proprietary Information.  
      At all times before and after the termination of Executive’s service (for any
      reason by the Company or by Executive), Executive agrees to keep all
      Confidential or Proprietary Information in strict confidence and secrecy, and
      not to disclose or use the Confidential or Proprietary Information in any way
      outside of Executive’s assigned responsibilities for the Company. “Confidential
      or Proprietary Information” means any non-public information or idea (whether or
      not a trade secret) relating to the business of the Company that is not
      generally known outside the Company or not generally known in the industry
      or by
      persons engaged in businesses similar to that of the Company (including
      information which may be available from sources outside the Company, but not
      in
      the form, arrangement, or compilation in which it exists within the Company)
      that the Company considers confidential, including, but not limited to: (i)
      customer lists and records of current, former, and prospective customers; (ii)
      special needs and characteristics of current, former, or prospective customers;
      (iii) present or future business plans; (iv) trade secrets, proprietary, or
      confidential information of any customer or other entity to which the Company
      owes an obligation not to disclose such information; (v) marketing, financing,
      business development, or strategic plans; (vi) sales methods, practices, and
      procedures; (vii) personnel information; (viii) research and development data
      and projections; (ix) information or data concerning the Company’s competitive
      position in its various lines of business; (x) existing, new, or envisioned
      products, programs, services, methods, techniques, processes, projects, or
      systems; and (xi) sales,

     

    
      
         

         

         

        

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    pricing,
      billing, costs, and other financial data and projections. All documents
      containing this information will be considered Confidential or Proprietary
      Information whether or not marked with any proprietary or confidential notice
      or
      legend. Notwithstanding the foregoing, nothing herein shall prohibit the
      Executive from disclosing any information: (1) in connection with performance
      of
      his duties hereunder as he deems in good faith to be necessary or desirable;
      or
      (2) if compelled pursuant to the order of a court or other governmental or
      legal
      body having jurisdiction over such matter. In the event Executive is compelled
      by order of a court or other governmental or legal body to communicate or
      divulge any such information, knowledge or data, he shall promptly notify the
      Company.

     

    5.  Termination;
      Rights and Obligations on Termination. The
      Executive’s employment under this Agreement may be terminated in any one of the
      followings ways:

     

    (a)  Death.  
      The death of Executive shall immediately and automatically terminate the
      Executive’s employment under this Agreement. If Executive dies while employed by
      the Company, any unvested equity compensation granted to Executive under the
      Plan shall immediately vest and any vested options may be exercised on or before
      the earlier of (i) the option’s expiration date or (ii) twelve months after the
      Executive’s death. Any option that remains unexercised after this period shall
      be forfeited. Upon the Executive’s death, the Executive’s legal representative
      shall receive: (1) any compensation earned but not yet paid, including and
      without limitation, any bonus if declared or earned but not yet paid for a
      completed fiscal year, any amount of Base Salary earned but unpaid, any accrued
      vacation pay payable pursuant to the Company’s policies, and any unreimbursed
      business expenses, which amounts shall be promptly paid in a lump sum, and
      (2)
      any other amounts or benefits owing to the Executive under the then applicable
      employee benefit plans, long term incentive plans or equity plans and programs
      of the Company which shall be paid or treated in accordance with the terms
      of
      such plans and programs (subsections (1) and (2) shall be collectively referred
      to as, the “Accrued
      Amounts”).
      Other
      than the benefits described above, no further compensation or benefits shall
      be
      due or owing upon the Executive’s death.

     

    (b)  Disability.  
      If as a result of incapacity due to physical or mental illness or injury,
      Executive shall have been absent from Executive’s duties hereunder for six (6)
      consecutive months, then thirty (30) days after receiving written notice (which
      notice may occur before or after the end of such six (6) month period, but
      which
      shall not be effective earlier than the last day of such six (6) month period),
      the Company may terminate Executive’s employment hereunder provided Executive is
      unable to substantially perform his duties hereunder at the conclusion of such
      notice period (a “Disability”),
      as
      determined by a physician mutually selected by the parties hereto. In the event
      the Executive’s employment is terminated as a result of Disability, Executive
      shall receive from the Company, in a lump-sum payment due within ten (10) days
      of the effective date of termination, an amount equal to the sum of the Base
      Salary and bonus, if any, that would have been paid to Executive through the
      end
      of the then remaining Term if the Executive was not disabled or for six months,
      whichever is less (assuming that Executive would have received no further
      increases in his Base Salary after his termination of employment and assuming
      achievement of all performance factors applicable to Executive’s participation
      in any Bonus Plan). The Executive shall also be entitled to the Accrued Amounts.
      Additionally, if Executive is terminated due to a Disability, any unvested
      equity compensation granted to Executive under the Plan shall immediately vest
      and any vested options may be

     

    
      
         

        

        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    exercised
      on or before the earlier of: (i) the option’s expiration date or (ii) twelve
      months after the Executive’s termination due to the Disability. Any option that
      remains unexercised after this period shall be forfeited. Other than the
      benefits described above, no further compensation or benefits shall be due
      or
      owing upon the Executive’s termination due to a Disability.

     

    (c)  Cause.  
      The Company may terminate this Agreement immediately upon written notice to
      Executive for “Cause,” which shall mean: (i) the Executive’s willful, material,
      and irreparable breach of this Agreement; (ii) Executive’s willful misconduct in
      the performance of any of his material duties and responsibilities hereunder
      that has a material adverse effect on the Company; (iii) Executive’s intentional
      and continued non-performance (other than by reason of disability or incapacity)
      of any of the Executive’s material duties and responsibilities hereunder or of
      any reasonable, lawful instructions from the Board, which continues for ten
      (10)
      days after receipt by Executive of written notice from the Company; (iv)
      Executive’s material and willful dishonesty or fraud with regard to the Company
      (other than good faith expense account disputes) that has a material adverse
      effect on the Company (whether to the business or reputation of the Company;
      or
      (v) Executive’s conviction of a felony (other than as a result of vicarious
      liability or a traffic related offense). For purposes of this paragraph, no
      act,
      or failure to act, on Executive’s part shall be considered “willful” unless done
      or omitted to be done, by him not in good faith and without reasonable belief
      that his action or omission was in the best interests of the Company. In the
      event of the Executive’s termination of employment by the Company for Cause the
      Executive shall receive the Accrued Amounts.

     

    Notwithstanding
      the foregoing, following the Executive’s receipt of written notice from the
      Company of any of the events described in subsections (i) through (iv) above,
      the Executive shall have ten (10) days in which to cure the alleged conduct
      (if
      curable).

     

    (d)  Without
      Cause.  
      At any time after Executive’s commencement of employment, the Company may,
      without Cause, terminate the Executive’s employment, effective thirty (30) days
      after written notice is provided to Executive. In the event Executive is
      terminated by the Company without Cause, Executive shall receive from the
      Company within ten (10) days after such termination, in a lump sum payment,
      an
      amount equal to the sum of the Base Salary and bonus, if any, that would have
      been paid to Executive through the end of the then remaining Term if the
      Executive had not been terminated or for six months, whichever is less (assuming
      that Executive would have received no further increases in his Base Salary
      after
      his termination of employment and assuming achievement of all performance
      factors applicable to Executive’s participation in any Bonus Plan). The
      Executive shall also receive the Accrued Amounts. Additionally, if Executive
      is
      terminated by the Company without Cause, any unvested equity compensation
      granted to Executive under the Plan shall immediately vest and any vested
      options may be exercised on or before the earlier of: (i) the option’s
      expiration date or (ii) twelve months after the Executive’s termination. Any
      option that remains unexercised after this period shall be
      forfeited.

     

    (e)  Resignation
      for Good Reason.  
      At any time after Executive’s commencement of employment, the Executive may
      resign for Good Reason (as defined below) effective thirty (30) days after
      written notice is provided to the Company. Upon the Executive’s termination of
      employment for Good Reason, the Executive shall be entitled to all payments
      and
      benefits as if

     

    
      
         

        

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    his
      employment was terminated by the Company without Cause as provided in subsection
      (d) above. For purposes of this Agreement, Good Reason means: (i) any
      adverse change in the Executive’s position, title or reporting relationship or a
      material diminution of his then duties, responsibilities or authority or the
      assignment to Executive of duties or responsibilities that are inconsistent
      with
      the Executive’s then position; (ii) the failure by the Company to continue
      in effect any material compensation or benefit plan or arrangement in which
      Executive participates unless an equitable and substantially comparable
      arrangement (embodied in a substitute or alternative plan) has been made with
      respect to such plan or arrangement, or the failure by the Company to continue
      Executive’s participation therein (or in such substitute or alternative plan or
      arrangement) on a basis not less favorable, both in terms of the amount of
      benefits provided and the level of participation relative to other participants,
      as existed at the time of the Executive’s termination of employment;
      (iii) any breach of this Agreement (or any other written agreement entered
      into between the Executive and the Company) by the Company; or (iv) failure
      of any successor to the Company (whether direct or indirect and whether by
      merger, acquisition, consolidation or otherwise) to assume in a writing
      delivered to Executive upon the assignee becoming such, the obligations of
      the
      Company hereunder.

     

    Notwithstanding
      the foregoing, following the Company’s receipt of written notice from the
      Executive of any of the events described in subsections (i) through (iv) above,
      the Company shall have ten (10) days in which to cure the alleged conduct (if
      curable).

     

    (f)  Resignation
      without Good Reason or Retirement by Executive.  
      The Executive may resign without Good Reason or retire upon thirty (30) days’
written notice, and upon such termination of employment he shall receive the
      Accrued Amounts.

     

    (g)  Superseding
      Agreement.  
      This Agreement shall be terminated immediately and automatically if the parties
      enter into another employment agreement which supersedes this Agreement. In
      the
      event the parties enter into a superseding agreement, no severance pay or other
      compensation shall be due to Executive with respect to the termination of this
      Agreement.

     

    6.  Use
      and Return of Company Property.  
      Executive acknowledges the Company’s proprietary rights and interests in its
      tangible and intangible property. Accordingly, Executive agrees that upon
      termination of Executive’s employment with the Company, for any reason, and at
      any time, Executive shall deliver to the Company all Company property,
      including: (a) all documents, contracts, writings, disks, diskettes, computer
      files or programs, computer-generated materials, information, documentation,
      or
      data stored in any medium, recordings and drawings pertaining to trade secrets,
      proprietary or confidential information, or other inventions and works of the
      Company; (b) all records, designs, plans, sketches, specifications, patents,
      business plans, financial statements, accountings, flow charts, manuals,
      notebooks, memoranda, lists, and other property delivered to or compiled by
      Executive, by or on behalf of the Company or any of its representatives,
      vendors, or customers which pertain to the business of the Company, all of
      which
      shall be and remain the property of the Company, and shall be subject, at all
      times, to its discretion and control; (c) all equipment, devices, products,
      and
      tangible property entrusted to Executive by the Company; and (d) all
      correspondence, reports, records, notes, charts, advertisement materials, and
      other similar data pertaining to the business, activities, or future plans
      of
      the Company, in the possession or control of Executive, shall be delivered
      promptly to the Company without request by it. Executive shall certify to the
      Company, in writing, within

     

    
      
         

        

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    five
      (5)
      days of any request by the Company, that all such materials have been returned
      to the Company. Notwithstanding the foregoing, the Executive may retain his
      rolodex and similar address and telephone directories (whether in writing or
      electronic format).

     

    6.1  Non-competition.  
      At all times while the Executive is employed by the Company and for a period
      of:
      (i) two (2) years after any termination of the Executive’s employment for Cause
      or the Executive’s termination of his employment without Good Reason; (ii) the
      lesser of one (1) year or the remainder of the Term after any termination of
      the
      Executive’s employment by the Company without Cause or the Executive’s
      termination for Good Reason; and (iii) one (1) year following the non-renewal
      of
      this Agreement or any termination pursuant to Section
      5,
      the
      Executive shall not, directly or indirectly, engage in or have any interest
      in
      any person (whether as an employee, officer, director, partner, agent, security
      holder, creditor, consultant or otherwise) that directly or indirectly (or
      through any affiliated entity) competes with the Company’s Business (as defined
      below); provided that such provision shall not apply to the Executive’s
      ownership of securities of the Company or the acquisition by the Executive,
      solely as an investment, of securities of any issuer that is registered under
      Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended and
      that are listed or admitted for trading on any United States national securities
      exchange or that are quoted on the National Association of Securities Dealers
      Automated Quotations System, or any similar system or automated dissemination
      of
      quotations of securities prices in common use, so long as the Executive does
      not
      control, acquire a controlling interest in or become a member of a group which
      exercises direct or indirect control of, more than five percent of any class
      of
      capital stock of such issuer. For purposes of this Section
      6.1,
      the
      term “Business” shall mean the Business and any other business in which the
      Company is engaged prior to the delivery of a notice of termination by the
      Company or the Executive hereunder and which business the Company is engaged
      at
      the date of termination of the Executive’s employment.

     

    6.2  Non-Solicitation.  
      At all times while the Executive is employed by the Company and for a period
      of:
      (i) two (2) years after any termination of the Executive’s employment for Cause
      or the Executive’s termination of his employment without Good Reason; (ii) the
      lesser of one (1) year or the remainder of the Term after any termination of
      the
      Executive’s employment by the Company without Cause or the Executive’s
      termination for Good Reason; and (iii) one (1) year following the non-renewal
      of
      this Agreement or any termination pursuant to Section
      5,
      the
      Executive shall not, directly or indirectly, for himself or for any other person
      (a) employ or attempt to employ or enter into any contractual arrangement with
      any employee or former employee of the Company, or (b) call on or solicit any
      of
      the actual or targeted prospective customers or suppliers of the Company on
      behalf of any person in connection with any business that competes with the
      Business of the Company nor shall the Executive make known the names and
      addresses of such customers or suppliers or any information relating in any
      manner to the Company’s trade or business relationships with such customers or
      suppliers, other than in connection with the performance of Executive’s duties
      under this Agreement.

     

    6.3  Inventions
      Retained and Licensed.
      Executive represents and warrants that Executive has disclosed to the Company
      all inventions, original works of authorship, developments, improvements, and
      trade secrets which were conceived of, reduced to practice, created or otherwise
      developed prior to Executive’s employment with the Company which belong to
      Executive, which relate to the Company’s proposed business, products or research
      and

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    development,
      and which are not assigned to the Company hereunder. If in the course of
      Executive’s employment with the Company, Executive incorporates into a Company
      product, service or process any of the foregoing, Executive hereby grants to
      the
      Company a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
      to make, have made, modify, use and sell same as part of or in connection with
      such product, process or machine.

     

    6.4  Work
      Product. Executive agrees that, during his or her employment with the
      Company:

     

    (a) Executive
      will disclose promptly and fully to the Company all works of authorship, ideas,
      inventions, discoveries, improvements, designs, processes, formulae, software,
      or any improvements, enhancements, or documentation of or to the same that
      Executive makes, works on, conceives, or reduces to practice, individually
      or
      jointly with others, in the course of Executive’s employment by the Company or
      with the use of the Company’s time, materials or facilities, in any way related
      or pertaining to or connected with the present or anticipated business,
      development, work or research of the Company or which results from or is
      suggested by any work Executive may do for the Company and whether produced
      during normal business hours or on personal time (collectively the “Work
      Product”).

     

    (b) All
      Work
      Product of Executive shall be deemed, as applicable, to be a “work made for
      hire” within the meaning of §101 of the Copyright Act. All intellectual property
      rights, including patent, trademark, trade secret and copyright rights, in
      and
      to the Work Product are and shall be the sole property of the Company. To the
      extent that the Work Product is deemed not to be “work made for hire,” this
      Agreement shall constitute an irrevocable assignment by the Executive to the
      Company of all right, title and interest in and to all intellectual property
      rights in and to the Work Product. Any and all rights of whatever kind and
      nature, now or hereafter, to make, use, sell, license, distribute or otherwise
      transfer and reproduce such Work Product in any and all media throughout the
      world, are and shall be the sole property of the Company. Executive hereby
      agrees to assist the Company in any manner as shall be reasonably requested
      by
      the Company to protect the Company’s interest in such intellectual property
      rights and to execute and deliver such legal instruments or documents as the
      Company shall request in order for the Company to obtain protection of the
      Work
      Product throughout the world, including but not limited to, declarations of
      inventorship, powers of attorney and assignment documents. Likewise, Executive
      hereby agrees to assist the Company by executing such other documents and
      instruments which the Company deems necessary to enable it to evidence, perfect
      and protect its rights, title and interest in and to the Work Product. Executive
      further agrees that Executive’s obligation to execute or cause to be executed
      any such instrument or document shall continue after Executive’s cessation of
      employment with the Company, regardless of reason for cessation of employment.
      If the Company is unable because of Executive’s mental or physical incapacity or
      for any other reason to secure Executive’s signature to apply for or to pursue
      any application for any United States or foreign patents or copyright
      registrations assigned to the Company in accordance herewith, then Executive
      hereby irrevocably designates and appoints the Company and its duly authorized
      officers and agents as Executive’s agent and attorney in fact, to act for and in
      Executive behalf and stead to execute and file any such applications and to
      do
      all other lawfully permitted acts to further the prosecution and issuance of
      patent or copyright registrations thereon with the same legal force and effect
      as if executed by Executive. Executive will at any time, including after
      termination of Executive’s employment with the Company, upon 

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

       

      request,
        communicate to the Company, its successors, assigns, or other legal
        representatives, such facts relating to the Work Product as may be known
        to
        Executive, and to testify, at the Company’s expense, as to the same in any
        interference or other legal proceeding.

    

     

    (c) Executive
      shall make and maintain adequate and current written records and evidence of
      all
      Work Product, including drawings, work papers, graphs, computer code,
      documentation, records and any other document which shall be and remain the
      property of the Company, and which shall be surrendered to the Company upon
      request and upon the cessation of Executive’s employment with the Company,
      regardless of the reason for such cessation.

     

    (d) Executive
      hereby waives, and further agrees not to assert, any moral rights in or to
      the
      Work Product, including, but not limited to, rights to attribution and
      identification of authorship, rights to approval of modifications or limitations
      on subsequent modifications, and rights to restrict, cause or suppress
      publication or distribution of the Work Product.

     

    6.5  Reasonable
      Restrictions. Executive hereby acknowledges and agrees that the limits on
      his ability to engage in activities that are competitive with the Company,
      as
      defined above, are warranted in order to protect the Company’s trade secrets and
      Confidential or Proprietary Information, and further, are warranted to protect
      the Company in developing and maintaining its reputation, goodwill, and status
      in the marketplace. Executive specifically agrees that the time period,
      geographic scope, and nature of the restrictions set forth in Sections
6.1
      and
6.2
      are
      reasonable and necessary to protect the Company’s legitimate business interests
      and do not impose any limitations greater than those necessary to protect those
      interests.

     

    6.6 Remedies.
      Executive hereby acknowledges and agrees that the services Executive has
      rendered and will continue to render to the Company are of a special and unique
      character, which gives this Agreement a peculiar value to the Company, and
      further acknowledges and agrees that the loss of those services to a direct
      competitor or the direct competition by Executive against the Company cannot
      be
      reasonably or adequately compensated for by damages in an action at law.
      Executive further acknowledges and agrees that any material breach by Executive
      of any provision of Sections
      4
      or
6
      of this
      Agreement shall cause irreparable harm to the Company, which harm cannot be
      reasonably or adequately compensated for by damages in an action at law.
      Accordingly, without prejudice to the rights and remedies otherwise available
      to
      the Company, Executive agrees that, in addition to any other right or remedy
      the
      Company may have, upon adequate proof of a material breach the Company shall
      be
      entitled to a temporary restraining order and to a preliminary and permanent
      injunction enjoining or restraining the breach of this Agreement by Executive,
      without the necessity of proving the inadequacy of monetary damages or the
      posting of any bond or security. Executive acknowledges and agrees that the
      preceding remedies shall be in addition to any and all other rights available
      to
      the Company at law or in equity. The failure of the Company to promptly
      institute legal action upon any breach of this Agreement shall not constitute
      a
      waiver of that or any other breach hereof.

     

    7.  Indemnification;
      Insurance.

     

    7.1  Indemnification
      of Executive.  
      Except as otherwise provided by applicable law, while the Executive is employed
      by the Company and thereafter while potential liability exists

     

     

    
      
        
        

      

      
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      (but
        in
        no event less than three (3) years after termination), in the event Executive
        is
        made a party to any threatened, pending, or contemplated action, suit, or
        proceeding, whether civil, criminal, administrative, or investigative (other
        than an action by the Company against Executive), by reason of the fact that
        Executive is or was performing services under this Agreement, then the Company
        shall indemnify Executive to the fullest extent permitted by applicable law
        against all expenses (including attorneys’ fees), judgments, fines, and amounts
        paid in settlement, as actually and reasonably incurred by Executive in
        connection therewith. In the event that both Executive and the Company are
        made
        a party to the same third party action, complaint, suit, or proceeding, the
        Company will engage competent legal representation, and Executive will use
        the
        same representation, provided that if counsel selected by the Company shall
        have
        a conflict of interest that prevents such counsel from representing Executive,
        then the Company may engage separate counsel on Executive’s behalf, and subject
        to the provisions of this Section
        7,
        the
        Company will pay all attorneys’ fees of such separate
        counsel.

    

     

    7.2  Insurance
      Provided by Company.  
      As soon as practicable after the Effective Date, the Company shall obtain a
      directors and officers liability insurance policy covering all directors and
      officers of the Company, including Executive, which insurance policy shall
      provide adequate insurance coverage for each of such persons, as shall be
      approved by the Board. The Executive shall be entitled to such coverage while
      employed and thereafter while potential liability exists.

     

    8.  Assignment;
      Binding Effect.  
      Executive shall have no right to assign this Agreement to another party other
      than by will or by the laws of descent and distribution. This Agreement may
      be
      assigned or transferred by the Company only to an acquirer of all or
      substantially all of the assets of the Company, provided such acquirer promptly
      assumes all of the obligations hereunder of the Company in a writing delivered
      to the Executive and otherwise complies with the provisions hereof with regard
      to such assumption. Nothing in this Agreement shall prevent the consolidation,
      merger, or sale of the Company or a sale of any or all or substantially all
      of
      its assets. Subject to the foregoing restriction on assignment by Executive,
      this Agreement shall be binding upon, inure to the benefit of, and be
      enforceable by the parties hereto and their respective heirs, legal
      representatives, successors, and assigns.

     

    9.  Additional
      Provisions.

     

    9.1  Damages.  
      Nothing contained herein shall be construed to prevent the Company or the
      Executive from seeking and recovering from the other damages sustained by either
      or both of them as a result of its or his breach of any term or provision of
      this Agreement. In the event that either party hereto brings suit for the
      collection of any damages resulting from, or the injunction of any action
      constituting, a breach of any of the terms or provisions of this Agreement,
      then
      the party found to be at fault shall pay all reasonable court costs and
      attorneys’ fees of the other.

     

    9.2  Amendments;
      Waivers; Remedies. 
       This Agreement may not be amended, and no provision of this Agreement may
      be waived, except by a writing signed by Executive and by a duly authorized
      representative of the Company. Failure to exercise any right under this
      Agreement shall not constitute a waiver of such right. Any waiver of any breach
      of this Agreement shall not operate as a waiver of any subsequent breaches.
      All
      rights or remedies 

     

     

    
      
        
        

      

      
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      specified
        for a party herein shall be cumulative and in addition to all other rights
        and
        remedies of the party hereunder or under applicable law.

    

     

    9.3  Notices.  
      Any notice under this Agreement must be in writing and addressed to the Company
      or to Executive at the corresponding address below. Notices under this Agreement
      shall be effective upon: (a) hand delivery, when personally delivered; (b)
      written verification of receipt, when delivered by overnight courier or
      certified or registered mail; or (c) acknowledgment of receipt of electronic
      transmission, when delivered via electronic mail or facsimile. Executive shall
      be obligated to notify the Company, in writing, of any change in Executive’s
      address. Notice of change of address shall be effective only when done in
      accordance with this Section
      9.3.

     

    
      	
              Company’s
                Notice Address:

            	
              H2Diesel,
                Inc.

              20283
                State Road 7, Suite 40

              Boca
                Raton, Florida 33498

              Attn.:
                Lee S. Rosen

              Telephone:
                561-807-6325

              Facsimile:
                561-807-6326

            
	
              Executive’s
                Notice Address:

            	
              Circonvallazione
                Gianicolense, 295

              00152
                Rome-Italy

              Attn.:
                Andrea Festuccia

              Telephone:
                

              Facsimile:
                

            

    

     

    9.4  Severability. 
       If any provision of this Agreement shall be held by a court of competent
      jurisdiction to be invalid, unenforceable, or void, such provision shall be
      enforced to the fullest extent permitted by law, and the remainder of this
      Agreement shall remain in full force and effect. In the event that the time
      period or scope of any provision is declared by a court of competent
      jurisdiction to exceed the maximum time period or scope that such court deems
      enforceable, then such court shall reduce the time period or scope to the
      maximum time period or scope permitted by law.

     

    9.5  Taxes.  
      All amounts paid under this Agreement (including, without limitation, Base
      Salary) shall be reduced by all applicable state and federal tax withholdings
      and any other withholdings required by any applicable jurisdiction.

     

    9.6  Governing
      Law.  
      The validity, interpretation, enforceability and performance of this Agreement
      shall be governed by and construed in accordance with the laws of the State
      of
      Florida, without regard to conflict of laws principles that would cause the
      laws
      of another jurisdiction to apply.

     

    9.7  Venue.  
      Each of the parties hereto irrevocably submits to the exclusive jurisdiction
      of
      the courts of the State of Florida located in Broward County and the Federal
      Courts of the United States of America located in Broward County, Florida,
      for
      the purposes of any suit, action, or other proceeding arising out of this
      Agreement or any transaction contemplated hereby.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    9.8  Interpretation.  
      This Agreement shall be construed as a whole, according to its fair meaning,
      and
      not in favor of or against any party. Sections and section headings contained
      in
      this Agreement are for reference purposes only, and shall not affect, in any
      manner, the meaning or interpretation of this Agreement. Whenever the context
      requires, references to the singular shall include the plural and the plural
      the
      singular.

     

    9.9  Survival.  
      Sections 4, 6.1, 6.2, 6.3, 6.4 and any other provision in this Agreement that
      requires performance by Executive following termination of Executive’s
      employment hereunder shall survive any termination of this
      Agreement.

     

    9.10  Counterparts.  
      This Agreement may be executed in several counterparts (including by means
      of
      telecopied signature pages), each of which shall be deemed an original but
      all
      of which shall constitute one and the same instrument.

     

    9.11  Authority.  
      Each party represents and warrants that such party has the right, power, and
      authority to enter into and execute this Agreement and to perform and discharge
      all of the obligations hereunder, and that this Agreement constitutes the valid
      and legally binding agreement and obligation of such party and is enforceable
      in
      accordance with its terms.

     

    9.12  Additional
      Assurances.  
      The provisions of this Agreement shall be self-operative and shall not require
      further agreement by the parties except as may be herein specifically provided
      to the contrary; provided, however, that at the request of the Company,
      Executive shall execute such additional instruments and take such additional
      acts as the Company may deem necessary to effectuate this
      Agreement.

     

    9.13  Entire
      Agreement.  
      This Agreement is the final, complete, and exclusive agreement of the parties
      with respect to the subject matter hereof and supersedes and merges all prior
      or
      contemporaneous representations, discussions, proposals, negotiations,
      conditions, communications, and agreements, whether written or oral, between
      the
      parties relating to the subject matter hereof and all past courses of dealing
      or
      industry custom. No oral statements or prior written material not specifically
      incorporated herein shall be of any force and effect, and no changes in or
      additions to this Agreement shall be recognized unless incorporated herein
      by
      amendment, as provided herein (such amendment to become effective on the date
      stipulated therein).

     

    9.14  Executive
      Acknowledgment.  
      Executive acknowledges that, before signing this Agreement, Executive was
      advised of his right to consult with an attorney of his choice to review this
      Agreement and that Executive had sufficient opportunity to have an attorney
      review the provisions of this Agreement and negotiate its terms. Executive
      further acknowledges that Executive had a full and adequate opportunity to
      review this Agreement before signing it; that Executive carefully read and
      fully
      understood all the provisions of this Agreement before signing it, including
      the
      rights and obligations of the parties; and that Executive has entered into
      this
      Agreement knowingly and voluntarily.

     

     

     

    
      
        
        

      

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

     

    COMPANY:

    

    

    H2DIESEL,
      INC.

    

    

    By:
      /s/
      Lee S. Rosen

    Name:
      Lee
      S. Rosen

    Title:
      Chairman of the Board

    

    

    

    EXECUTIVE:

    

    /s/
      Andrea Festuccia

    Andrea
      Festuccia

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