Document:

Exhibit
10.25

 

COMMON STOCK AND WARRANT
PURCHASE AGREEMENT

 

This Common Stock
and Warrant Purchase Agreement (this “Agreement”) is made as of October 17,
2007 (the “Execution Date”), by and among

 

O2Diesel
Corporation, a Delaware corporation, with file number 3857061 and publicly traded on the
American Stock Exchange and having its Principal Executive Offices at 100
Commerce Drive, Suite 301, Newark, Delaware 19713 (the “Company”),

 

and

 

Energenics
Holdings Pte Ltd, a company incorporated in Singapore with registration
number 200612991G and having its registered office at 7 Temasek Bvd, #04-01A
Suntec Tower One, Singapore 038987 (the “Purchaser”).

 

In consideration
of the mutual promises and covenants herein, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:

 

1.             AUTHORIZATION AND SALE
OF COMMON STOCK AND WARRANTS

 

1.1          Authorization
of Common Stock and Warrants.

 

(a)       The Company has
authorized the sale and issuance to the Purchaser of 2,551,020 shares (the “Shares”)
of its Common Stock, par value $ 0.0001 per share (the “Common Stock”), and a warrant
to purchase up to 1,275,510 shares of Common Stock at a price per share of
US$0.50 (the “Investment Warrant”), such Investment Warrant having the terms
set forth in the form attached hereto as Exhibit A.

 

(b)       In connection with the
Purchaser’s purchase from the Company of the Company’s equity interest in O2Diesel
Asia Limited (the “Joint Venture Transaction”), the Company has authorized the sale
and issuance to the Purchaser of a warrant to purchase up to 1,500,000 shares
of Common Stock at a price per share of US$0.50 (the “JV Warrant”), such JV
Warrant having the terms set forth in the form attached hereto as Exhibit B.

 

(c)       In connection with an investment
by the Purchaser in the development of the geographic market served by the
Purchaser pursuant to that certain Supply and Distribution Agreement, by and
between the Company and Energenics Pte Ltd, an affiliate of the Purchaser (“Energenics”),
dated as of September 15, 2006 (the “Supply Agreement”), the Company has
authorized the sale and issuance to the Purchaser of additional warrants to
purchase up to an aggregate of 6,500,000 shares of Common Stock at a price per
share equal to the lesser of (i) US$0.50, or (ii) 106% of the closing
price per share (rounded to the nearest cent) of the Company’s Common Stock on
the American Stock Exchange or, if the Company’s Common Stock is not listed on
the American Stock Exchange, the closing price or bid per share on such other
national securities exchange or quotation system upon which the Company’s
Common Stock is listed or quoted, on the date such warrants are earned as
described below (the “Market Development Warrants,” and collectively with the
Investment Warrant and the JV Warrant, the 

 

[*] = CERTAIN INFORMATION
IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.  CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.  OMITTED TEXT IS INDICATED BY A “*”.

 

 

“Warrants”), such Market
Development Warrants having the terms set forth in the form attached hereto as Exhibits
C, D and E and the issuance of such Market Development Warrants to be conditioned
upon the following purchases of O2D05 or equivalent, pursuant to the Supply
Agreement:

 

	
  Purchases (in liters)

  	
   

  	
  Warrant Coverage

  	
   

  
	
  *

  	
   

  	
  1,750,000

  	
   

  
	
  *

  	
   

  	
  2,250,000

  	
   

  
	
  *

  	
   

  	
  2,500,000

  	
   

  

 

“Purchases” shall mean
the total cumulative amount of liters of O2D05 or equivalent purchased by the
Purchaser since September 15, 2006 against which Purchaser or Energenics has
made full and timely payment, in accordance with the Company’s payment terms.  “Warrant Coverage” shall mean the number of shares
of Common Stock purchasable pursuant to a Market Development Warrant issuable
to Purchaser for the corresponding amount of Purchases.  The volumes of Purchases above are applicable
to a Treat-rate of *
parts per million.  If the Treat-rates
decrease, then the amounts required to achieve the next level of Purchases
shall also be decreased by the same percentage as the percentage decrease in
the Treat-rate.  The “Treat-rate” for the
purposes of this Schedule shall mean the volume of the O2D05 or equivalent
required to stabilize one blended unit of ethanol diesel fuel.

 

1.2          Sale and Issuance of
Shares.  Subject to the
terms and conditions hereof, the Company shall issue and sell to the Purchaser
and the Purchaser will buy from the Company the Shares at a per share purchase
price of US$0.49 (the “Per Share Price”), and at the aggregate purchase price
of US$1,249,999.80 (the “Purchase Price”). 
The calculation of the Per Share Price consists of 105% of the closing
price per share of the Company’s Common Stock on the American Stock Exchange on
the day before to the date hereof.

 

1.3          Sale and Issuance of
Investment Warrant.  As
further consideration for the Purchaser’s purchase from the Company of the Shares,
and subject to the terms hereof, at the Closing, the Company shall issue to the
Purchaser the Investment Warrant.

 

1.4          Issuance of JV Warrant.  In consideration of the Purchaser’s
purchase from the Company of the Company’s interest in O2Diesel Asia Limited, and
subject to the terms hereof, the Company shall issue to the Purchaser the JV
Warrant within thirty business days after the receipt by the Company from the
Purchaser or Energenics at or after the Closing of:

 

(i) a
purchase order for a quantity of O2D05 or the equivalent that, together with
all other purchase orders received by the Company from the Purchaser or
Energenics at or after the Closing, totals * liters or more (collectively, the “Purchase
Orders”), and

 

(ii) full and
timely payment on all Purchase Orders in accordance with the Company’s payment
terms.

 

1.5          Issuance of Market
Development Warrant.  Upon
the achievement by the Purchaser and/or Energenics of any of the three levels
of Purchases as described in Section 1.1(c) above, within thirty
business days after achievement of such level, the Company shall issue to 

 

2

 

the Purchaser a Market Development Warrant that
includes the Warrant Coverage corresponding to the level of Purchases
achieved.  By way of example, if on January 1,
2008 Purchaser makes an order for * liters which, together with all other orders made by Purchaser
after the Closing, totals *
liters, then Purchaser shall receive a Market Development Warrant covering
2,250,000 shares of Common Stock. 
Further, the Company would have previously issued to Purchaser a Market
Development Warrant covering 1,750,000 shares of Common Stock for having
achieving total Purchases of *
liters.

 

2.             CLOSING DATE; DELIVERY

 

2.1          Closing Date.  It is anticipated that the purchase and
sale of the Shares hereunder shall be consummated at a closing (the “Closing”)
held at the offices of Arnold & Porter LLP, 1600 Tysons Boulevard, Suite 900,
McLean, VA 22102 on October 26, 2007, at 10:00 a.m., local time, or
at such other date, time and place upon which the Company and the Purchaser
shall agree (the date and time of the Closing is hereinafter referred to as the
“Closing Date”).

 

2.2          Delivery
and Payment.

 

(a)   At the Closing, the
Company will deliver to the Purchaser a certificate or certificates, registered
in the Purchaser’s name, representing the Shares to be purchased by the
Purchaser at the Closing.

 

(b)   At the Closing, the
Purchaser will deliver to the Company the following:

 

(i)                                     payment
of the Purchase Price, by wire transfer per the Company’s instructions; and

 

(ii)                                  an
irrevocable purchase order made by Energenics for 1,000,000 liters of O2DO5,
which purchase order shall be backed by an irrevocable letter of credit
reasonably acceptable to the Company.

 

2.3          Escrow of Funds Pending
Closing.  Concurrent with
the execution of this Agreement, the Purchaser will tender to legal counsel for
the Company funds equal to the Purchase Price for the Shares.  Such funds will be held by such counsel in
escrow pending notice by the Company and Purchaser of the Closing.  If the Closing has not occurred by the
termination date specified in Section 9.1, the parties will instruct
counsel to return the funds to the Purchaser. 
Such funds shall be delivered to Arnold & Porter LLP, 1600 Tysons Boulevard, McLean,
Virginia  22102, Attn.:  Kevin J. Lavin, Esq. by wire
transfer to the following account:

 

	
  Account
  Name:

  	
   

  	
  Arnold &
  Porter LLP Client Trust Account

  
	
  Account
  No.

  	
   

  	
  3700
  3879

  
	
  ABA
  No.

  	
   

  	
  254
  07 0116

  
	
  Bank
  Name:

  	
   

  	
  Citibank
  FSB

  
	
   

  	
   

  	
  1101
  Pennsylvania Avenue, NW

  
	
   

  	
   

  	
  Washington,
  DC 20004

  
	
  Note:

  	
   

  	
  O2Diesel
  Corporation / Equity Subscription

  

 

3

 

3.             REPRESENTATIONS AND
WARRANTIES OF THE COMPANY

 

The Company
represents and warrants to the Purchaser that, as of the Closing Date:

 

3.1          Organization and Standing;
Certificate of Incorporation and Bylaws.  The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws.  The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement, to sell
and to issue the Shares and the Warrants hereunder, and to issue the shares of
Common Stock issuable upon exercise of the Warrants.

 

3.2          Disclosure Documents.  The Disclosure Documents (as hereinafter
defined) are true, correct and complete in all material respects, and do not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  Since the respective dates as of which
information was given in the Disclosure Documents, except as otherwise stated
therein, there has been no material adverse change in the financial condition,
or in the results of operations or affairs of the Company.

 

4.             REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER

 

The Purchaser
hereby represents and warrants to the Company as follows:

 

4.1          Preexisting Relationship
with Company; Business and Financial Experience.  By reason of its business or financial
experience or the business or financial experience of its professional advisors
who are unaffiliated with the Company and who are not compensated by the
Company, the Purchaser has the capacity to protect its own interests in
connection with the purchase of the Shares, the Warrants and the shares of
Common Stock issuable upon exercise of the Warrants.  Purchaser is an “accredited investor” as
defined in Rule 501(a) under the Securities Act of 1933, as amended (“Securities
Act”).

 

4.2          Investment Intent; Blue
Sky.  It is acquiring the Shares,
the Warrants and any shares of Common Stock issued upon exercise of the
Warrants for investment for its own account, not as a nominee or agent, and not
with a view to, or for resale in connection with, any distribution
thereof.  It understands that the
issuance of the Shares, the Warrants and the shares of Common Stock issuable
upon exercise of the Warrants have not been, and will not be, registered under
the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the Purchaser’s investment intent and the
accuracy of the Purchaser’s representations as expressed herein.  The Purchaser’s address set forth herein
represents the Purchaser’s true and correct state of domicile, upon which the
Company may rely for the purpose of complying with applicable “Blue Sky” laws.

 

4.3          Rule 144.  It acknowledges that the Shares, the
Warrants and the shares of Common Stock issuable upon exercise of the Warrants
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available.  It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of 

 

4

 

certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain
current public information about the Company, the resale occurring not less
than one year after a party has purchased and paid for the security to be sold,
the sale being effected through a “broker’s transaction” or in a transaction
directly with a “market maker,” and the number of shares being sold during any
three-month period not exceeding specified limitations.

 

4.4          Restrictions on Transfer;
Restrictive Legends.  It
understands that the transfer of the Shares, the Warrants and the shares of
Common Stock issuable upon exercise of the Warrants is restricted by applicable
state and Federal securities laws and by the provisions of this Agreement, and
that the certificates representing the Shares, the Warrants and the shares of
Common Stock issuable upon exercise of the Warrants will be imprinted with
legends in the following form restricting transfer except in compliance
therewith:

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE HOLDER FOR ITS OWN
ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO THE DISTRIBUTION OF
SUCH SECURITIES.  THESE SECURITIES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS, (II) IN
COMPLIANCE WITH RULE 144 UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR
(III) UPON THE DELIVERY TO O2DIESEL CORPORATION (THE “COMPANY”) OF AN
OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION AND/ OR COMPLIANCE IS NOT REQUIRED.

 

Without in any way limiting the above, the Purchaser agrees not to make
any disposition of all or any portion of the Shares, the Warrants or any
shares of Common Stock issued upon exercise of the Warrants unless and until twelve (12) months after
the Closing Date.  Notwithstanding
anything to the contrary, the legend requirements shall terminate when (i) the
security has been effectively registered under the Securities Act and disposed
of pursuant thereto, or (ii) the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to insure compliance with the Securities Act.

 

4.5          Access to Data; Disclosure
Documents.  Purchaser
acknowledges that it has received all such information as Purchaser deems
necessary and appropriate to enable it to evaluate the financial risk inherent
in making an investment in the Shares, the Warrants and the shares of Common
Stock issuable upon exercise of the Warrants, including but not limited to the
Company’s reports filed under the Securities Exchange Act of 1934, as amended (“Exchange
Act”), with the SEC (“Disclosure Documents”). 
Purchaser further acknowledges that Purchaser has (a) received
satisfactory and complete information concerning the business and financial
condition of the Company in response to all inquiries in respect thereof, and (b) been
given the opportunity to meet with management of the Company.  Purchaser has relied solely upon the 

 

5

 

Disclosure Documents, advice of its representatives,
if any, and independent investigations made by the Purchaser and/or its
representatives, if any, in making the decision to purchase the Shares, the
Warrants and the shares of Common Stock issuable upon exercise of the Warrants
and acknowledges that no representations or agreements other than those set
forth in this Agreement have been made to the Purchaser in respect thereto.

 

4.6          Authorization.  All action on the part of the Purchaser’s
partners, members, board of directors, and stockholders, as applicable,
necessary for the authorization, execution, delivery and performance of this
Agreement by the Purchaser, the purchase of and payment for the Shares and the
Warrants and the performance of all of the Purchaser’s obligations under this
Agreement have been taken or will be taken prior to the Closing.

 

5.             COVENANTS.

 

5.1          Registration.

 

(a)           The Company agrees it
shall include the Shares and all shares of Common Stock issued or issuable upon
the exercise of the Warrants, including the Common Stock issued pursuant to
recapitalizations, stock splits, stock dividends and similar distributions with
respect to such shares (the “Registrable Securities”) on the first new registration
statement on Form S-3 filed by the Company after January 1, 2008 (the
“Registration Statement”) under the Securities Act with the SEC, qualify the
Registrable Securities under all applicable state securities laws and include
such Registrable Securities in all other applicable compliance, which
registration, qualification and compliance shall in no event be later than one
year following the Closing Date (“Deadline”).  The
Company will pay to the Purchaser, in cash or shares of Common Stock at the
Company’s discretion, 1% of the Purchase Price as liquidated damages for every
month after the Deadline that it takes for the Registration Statement to be
declared effective; provided that
the maximum aggregate liquidated damages payable to the Purchaser under this Section 5.1(a) shall
not exceed eight percent (8%) of the Purchase Price.  If a Registration Statement is not
declared effective eighteen (18) months following the Closing Date, the
registration rights set forth in this Section 5.2 may be transferred to
any transferee of Registrable Securities.

 

(b)           The Company will use
its reasonable best efforts to cause such Registration Statements to become
effective within ninety (90) days from filing, or one hundred twenty (120) days
from filing, if such Registration Statement is subject to review by the staff
of the SEC, in each case from the initial filing thereof.

 

(c)           All the costs and
expenses incurred in connection with the registration of the Shares and the shares
of Common Stock issuable upon exercise of the Warrants.

 

6.             INDEMNIFICATION

 

6.1          Indemnification by the Company.  The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Purchaser, and
each subsequent holder of the Registrable Securities (each a “Holder,” and
collectively, the “Holders”), the officers, directors, members, partners,
agents, brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call
of Common Stock), investment advisors and employees (and any other persons with

 

6

 

a functionally equivalent role of a person holding
such titles, notwithstanding a lack of such title or any other title) of each
of them, each person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, members, shareholders, partners, agents and employees (and any other
persons with a functionally equivalent role of a person holding such titles,
notwithstanding a lack of such title or any other title) of each such controlling
person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to (1) any untrue or alleged
untrue statement of a material fact contained in a Registration Statement, any
prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, or (2) any violation or alleged violation
by the Company of the Securities Act, Exchange Act or any state securities law,
or any rule or regulation thereunder, in connection with the performance
of its obligations under this Agreement, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in a Registration Statement, such prospectus or
such form of prospectus or in any amendment or supplement thereto or (ii) the
use by such Holder of an outdated or defective prospectus after the Company has
notified such Holder in writing that the prospectus is outdated or
defective.  The Company shall notify the
Holders promptly of the institution, threat or assertion of any an action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced
or threatened (“Proceeding”) arising from or in connection with the
transactions contemplated by this Agreement of which the Company is aware.

 

6.2          Indemnification by Holders.  Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
persons, to the fullest extent permitted by applicable law, from and against
all Losses, as incurred, to the extent arising out of or based solely upon:  (x) such Holder’s failure to comply with
the prospectus delivery requirements of the Securities Act or (y) any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, any prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading (i) to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in such Registration Statement or such
prospectus or (ii) to the extent that such information relates to such
Holder’s proposed method of distribution of Registrable Securities and was reviewed
and expressly approved in writing by such Holder expressly for use in a
Registration Statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto or (ii) the use 

 

7

 

by such Holder of an outdated or defective prospectus after
the Company has notified such Holder in writing that the prospectus is outdated
or defective. In no event shall the liability of any selling Holder hereunder
be greater in amount than the dollar amount of the net proceeds received by
such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.

 

6.3          Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or
asserted against any person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have prejudiced
the Indemnifying Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed within thirty days of written notice to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and counsel to the Indemnified
Party shall reasonably believe that a material conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not
be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld or
delayed.  No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

 

Subject to the
terms of this Agreement, all reasonable fees and expenses of the Indemnified
Party (including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten business days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined to be not entitled to indemnification hereunder.

 

8

 

7.             CONDITIONS TO CLOSING OF THE PURCHASER

 

The Purchaser’s
obligation to purchase the Shares and the Warrants is, unless waived in writing
by the Purchaser, subject to the fulfillment as of the date of Closing of the
following conditions:

 

7.1          Representations and
Warranties Correct.  The
representations and warranties made by the Company in Section 3 hereof
shall be true and correct in all material respects as of the date of the
Closing.

 

7.2          Covenants.  All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Closing Date shall have been performed or complied with.

 

7.3          Listing.  The Shares and shares of Common Stock
issuable upon exercise of the Warrants shall have been authorized for listing
on the AMEX, subject to official notice of issuance.

 

7.4          Compliance and Incumbency
Certificates.  The Company
shall have delivered to the Purchaser a certificate of the Company, executed by
the Chief Executive Officer of the Company, dated as of the date of the Closing
and certifying to the fulfillment of the conditions specified in Sections 7.1
and 7.2 of this Agreement.

 

7.5          Execution of Joint Venture
Shareholders Agreement.  Each
of the Company, O2Diesel Europe Limited and O2Diesel Asia Limited shall have
executed and delivered to the Purchaser a mutually agreeable Shareholders
Agreement between O2Diesel Europe Limited, the Company, the Purchaser and O2Diesel
Asia Limited establishing, among other things, the rights and duties among the
shareholders of O2Diesel Asia Limited.

 

7.6          Execution of Joint Venture
License Agreement.  Each
of O2Diesel Europe Limited, O2Diesel Asia Limited shall have executed and
delivered to O2Diesel Asia Limited a mutually agreeable License Agreement
licensing certain of O2Diesel Europe Limited’s intellectual property with
respect to O2DO5.

 

7.7          Transfer of Shares of
O2Diesel Asia Limited.  O2Diesel
Europe Limited and the Company shall together have tendered for transfer to the
Purchaser 50 Ordinary Shares of O2Diesel Asia Limited.

 

8.             CONDITIONS TO CLOSING OF
THE COMPANY

 

The Company’s
obligation to sell and issue the Shares and the Warrants is, unless waived in
writing by the Company, subject to the fulfillment as of the date of Closing of
the following conditions:

 

8.1          Representations and
Warranties Correct.  The
representations made in Section 4 hereof by the Purchasers shall be true
and correct in all material respects as of the date of Closing.

 

9

 

8.2          Covenants.  All covenants, agreements, and conditions
contained in this Agreement to be performed or complied with by the Purchaser
on or prior to the date of Closing shall have been performed or complied with
in all material respects.

 

8.3          Listing.  The Shares and shares of Common Stock
issuable upon exercise of the Warrants shall have been authorized for listing
on the American Stock Exchange, subject to official notice of issuance.

 

8.4          Execution of Joint Venture
Shareholders Agreement.  The
Purchaser shall have executed and delivered to the Company a mutually agreeable
Shareholders Agreement between O2Diesel Europe Limited, the Company, the
Purchaser and O2Diesel Asia Limited establishing, among other things, the rights
and duties among the shareholders of O2Diesel Asia Limited.

 

8.5          Execution of Other License
Agreement.  O2Diesel Asia
Limited shall have executed and delivered to the Company a mutually agreeable
License Agreement between O2Diesel Asia Limited and the Company sublicensing
certain of O2Diesel Europe Limited’s intellectual property with respect to
O2DO5.

 

8.6          Payment for Transfer of
Shares of O2Diesel Asia Limited. 
The Purchaser shall have tendered US$750,000 as payment for the
transfer of 50 Ordinary Shares of O2Diesel Asia Limited from O2Diesel Europe
Limited and the Company.

 

9.             MISCELLANEOUS

 

9.1          Termination.  This Agreement may be terminated (a) by
mutual agreement of the Company and the Purchaser at any time or (b) by
either the Company or the Purchaser if the Closing shall not have occurred by
the thirtieth (30th) day following the date of this Agreement.  If this Agreement is terminated in accordance
with this Section 9.1 and the transactions contemplated hereby are not
consummated, (i) this Agreement shall become null and void and of no
further force and effect except that the terms and provisions of this Section 9
shall survive the termination of this Agreement and (ii) any termination
of this Agreement shall not relieve any party hereto from any liability for any
willful breach of its obligations hereunder.

 

9.2          Governing Law.  This Agreement shall be governed in all
respects by the internal laws of the State of Delaware without regard to
conflict of laws provisions.

 

9.3          Survival.  The warranties, representations, and
covenants of the Company and the Purchasers contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
Closing.

 

9.4          Successors and Assigns.  Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

10

 

9.5          Entire Agreement; Amendment.  This Agreement, including the exhibits
hereto, constitutes the full and entire understanding and agreement among the
parties with regard to the subjects hereof and thereof, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and Purchaser.

 

9.6          Notices, etc.  All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered by
facsimile transmission, by hand or by messenger, addressed:

 

(a)           if to the Purchaser, to:

 

Energenics Holdings Pte Limited

7 Temasek Boulevard

Suntec City Tower 1 #04-01A

Singapore 038987

Attn:       Ronen Hazarika

Fax:         +65
6415 1656

 

(b)           if to the Company, to:

 

O2Diesel Corporation

100 Commerce Drive

Suite 300

Newark, Delaware 19713

Attn:  Alan Rae

Fax:         302-266-7076

 

or at such other
address as the Company shall have furnished to the Purchasers, with a copy to:

 

Arnold & Porter,
LLP

1600 Tysons Blvd.

Suite 900

McLean, Virginia 22102

Attn:  Kevin J. Lavin

Fax:    703-720-7399

 

Each such notice or other communication shall for all
purposes of this Agreement be treated as effective or having been given when
received if delivered personally, if sent by facsimile, the first business day
after the date of confirmation that the facsimile has been successfully
transmitted to the facsimile number for the party notified, or, if sent by
mail, at the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and mailed as aforesaid.

 

9.7          Delays or Omissions.  Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach or default of 

 

11

 

another party under this Agreement, shall impair any
such right, power or remedy of such party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.  Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing.  All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.

 

9.8          Expenses.  The Company and the Purchasers shall bear
their own expenses incurred on their own behalf with respect to this Agreement
and the transactions contemplated hereby.

 

9.9          Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all of which
together shall constitute one instrument.

 

9.10        Severability.  In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision, which shall be replaced with an enforceable
provision closest in intent and economic effect as the severed provision;
provided that no such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.

 

9.11        Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

 

9.12        Designation of Forum and
Consent to Jurisdiction.  The
parties hereto (i) designate the courts of the State of Delaware as the
forum where all matters pertaining to this Agreement may be adjudicated, and (ii) by
the foregoing designation, consent to the exclusive jurisdiction and venue of
such courts for the purpose of adjudicating all matters pertaining to this
Agreement.

 

9.13        Waiver of Jury Trial.  Each of the parties hereto waives any
right it may have to have a jury participate in resolving any dispute arising
out of or related to this Agreement. 
Instead, any such disputes resolved in court shall be resolved in a
bench trial without a jury.

 

[Remainder of Page Intentionally
Left Blank]

 

12

 

The foregoing
agreement is hereby executed effective as of the date first set forth above.

 

 

	
   

  	
  O2DIESEL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Alan R. Rae

  
	
   

  	
  Name:

  	
  Alan
  R. Rae

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENERGENICS HOLDINGS PTE LTD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronen Hazarika

  
	
   

  	
  Name:

  	
  Ronen
  Hazarika

  
	
   

  	
  Title:

  	
  Director

  

 

[Signature Page to
Common Stock and Warrant Purchase Agreement]Exhibit 10.26

 

Dated the 9th day of November 2007

 

 

O2DIESEL EUROPE LIMITED

(FORMERLY AAE TECHNOLOGIES INTERNATIONAL PLC)

as Licensor

 

and

 

O2DIESEL ASIA LIMITED

as Licensee

 

 

LICENCE
AGREEMENT

 

 

WATSON, FARLEY & WILLIAMS

Singapore

 

 

INDEX

 

	
  Clause

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  GRANT

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  SUB-LICENSING

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  FURTHER
  ASSURANCES

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  LICENSEE’S
  OBLIGATIONS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  PATENT
  PROSECUTION AND RENEWAL

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  PROVISION
  OF LICENSED KNOW-HOW

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  IMPROVEMENTS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  CONFIDENTIALITY

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  PROTECTION
  OF LICENSED PATENTS & THIRD PARTY CLAIMS

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  WARRANTIES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  DURATION
  AND TERMINATION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  GENERAL

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTION
  PAGE

  	
   

  	
  12

  

 

i

 

THIS LICENCE is made the 9th day of November 2007

 

BETWEEN

 

(1)           O2 DIESEL EUROPE LIMITED (formerly AAE Technologies
International Plc), a company registered in the Republic of Ireland (Company No. 327106)
whose registered office is at 5 Lapps Quay, Cork, Republic of Ireland (the “Licensor”); and

 

(2)           O2DIESEL
ASIA LIMITED, a company registered in the Republic of Ireland
(Company No. 444569) whose registered office is 3 Burlington Road, Dublin
4, Republic of Ireland (the “Licensee”)

 

(each
a “Party” and together the “Parties”).

 

WHEREAS:

 

(A)          The Licensor is the sole proprietor of the
Licensed Patents used in the manufacture of the Licensed Products.

 

(B)          The Licensor has agreed to grant and the
Licensee has agreed to take an exclusive licence under the Licensed Patents and
the Licensed Know-how in the Territory on the terms set out in this Licence.

 

IT IS AGREED as follows:

 

1             INTERPRETATION

 

1.1                               In this Licence except where the
context otherwise requires the following terms shall have the following
meanings:

 

	
  “Associated Company”

  	
   

  	
  means,
  in relation to a company, its parent undertaking or its subsidiary
  undertaking, or a subsidiary undertaking of its parent undertaking or any
  other person controlled by or under the same control either directly or
  indirectly (as defined in sections 258 and 259 of the Companies Act 1985);

  
	
   

  	
   

  	
   

  
	
  “Business of the Licensor”

  	
   

  	
  means
  the technical and commercial development of oxygenated diesel fuels using
  ethanol and the development and production of co-solvent technologies that
  enable the stable blending and storage of diesel fuels containing ethanol;

  
	
   

  	
   

  	
   

  
	
  “Competitor”

  	
   

  	
  means a person, firm or
  company, not being the Licensor or the licensee’s sub-licencees, engaged in
  the Business of the Licensor:- 

  (i)     in
  the Territory; or 

  (ii)    outside
  the Territory into the Territory;

  

 

 

	
  “Confidential Information”

  	
   

  	
  means all information
  disclosed by one Party to the other in material  form (including without limitation in a written document)
  provided that each such item of information would appear to a reasonable
  person to be confidential;

  
	
   

  	
   

  	
   

  
	
  “Improvement”

  	
   

  	
  means
  any improvement, enhancement or modification to the Licensed Products or
  their method of manufacture;

  
	
   

  	
   

  	
   

  
	
  “Licensed Know-How”

  	
   

  	
  means
  any methods, techniques, processes, discoveries or inventions (whether
  patentable or not), specifications, formulae, data and any other substantial
  and identifiable know-how which relates to the Licensed Products;

  
	
   

  	
   

  	
   

  
	
  “Licensed Patents”

  	
   

  	
  means

   

  1.    the
  patents and patent applications listed in Schedule 1 to which the
  Licensor is the sole registered proprietor;

   

  2.     all
  granted patents and patent applications in the Territory which are equivalent
  to and/or claim priority from the applications listed at Schedule 1 from time
  to time and granted patents issuing from such applications together with all
  re-issues and extensions of such granted patents; and

   

  3.    all
  patent applications and/or granted patents in the Territory for inventions
  developed by the Licensor or its Associated Companies which relate to the
  mixing of diesel fuel and ethanol;

  
	
   

  	
   

  	
   

  
	
  “Licensed Products”

  	
   

  	
  means the O2 Diesel
  Additive and the O2 Diesel Product and any other product manufactured using,
  or embodying, (i) the Licensed Patents and/or (ii) Licensed
  Know-How and/or (iii) any Improvement developed by the Head Licensor;

  
	
   

  	
   

  	
   

  
	
  “O2 Diesel Additive”

  	
   

  	
  means
  the O2 Diesel proprietary compound that allows the mixing of diesel fuel and
  ethanol;

  
	
   

  	
   

  	
   

  
	
  “O2 Diesel Product”

  	
   

  	
  means oxygenated diesel
  fuel comprising base diesel fuel, the O2 Diesel Additive, ethanol and acetane
  improver;

  
	
   

  	
   

  	
   

  
	
  “Person(s)”

  	
   

  	
  includes
  any person, firm or company or group of persons or unincorporated body;

  
	
   

  	
   

  	
   

  
	
  “Territory”

  	
   

  	
  means India, Singapore,
  Thailand, Malaysia, Hong Kong, Australia, New Zealand, and South Africa,
  including all other countries in Asia in which the Licensor may choose to
  file further patent applications and any further territories agreed between
  the parties from time to time in writing.

  

 

2

 

1.2          The singular includes the plural and vice versa.

 

1.3          Headings in this Licence are included for the purpose of
ease of reference only and shall not have any effect on its construction.

 

2              GRANT

 

2.1          In consideration of the payment
of € 1.00 (1 Euro) by the Licensee to the Licensor, receipt of which is hereby
acknowledged, the Licensor hereby grants to the Licensee an exclusive licence
under the Licensed Patents and the Licensed Know-How, with the right to
sub-license subject to clause 3 below, to import, develop, improve,
manufacture, have manufactured, use and sell or supply or otherwise deal with
and in the Licensed Products in the Territory.

 

3             SUB-LICENSING

 

3.1          Subject to clause 3.1(b), the
Licensee may grant a sub-licence of its rights under this Licence to any third
party provided that such sub-licences include termination provisions equivalent
to those provided for in clause 12 of this Licence.

 

(a)           The Licensee shall promptly inform the Licensor of any
sub-licence granted to a third party.

 

(b)           The Licensee shall not be entitled to grant sub-licences of
its rights under this Licence to a Competitor unless such a restriction on the
Licensee’s entitlement to sub-licence risks breaching any applicable
competition or anti-trust laws and regulations.

 

3.2          The Licensee shall be
responsible for any breach of the sub-licence by any of its sub-licensees as if
the breach had been that of the Licensee under this Licence and the Licensee
shall indemnify the Licensor against any loss, damages, costs, claims or
expenses which are awarded against or suffered by the Licensor as a result of
any such breach by the sub-licensee save that this clause 3.2 shall not apply
to any breach of any sub-licence by a sub-licensee who is an Associated Company
of the Licensor and in respect of which the Licensor shall be deemed to be
ultimately responsible.

 

3.3          No further right or licence is
granted by the Licensor to the Licensee by this Licence save as expressly set
out in this clause 3.

 

4             FURTHER ASSURANCES

 

4.1          The Parties shall execute such
formal documents and take any such actions as the Licensor’s advisers consider
may be necessary or desirable for:

 

(a)           registration of this Licence or any sub-licences granted
under it with patent offices and other relevant authorities in any particular
territory covered by this Licence; and

 

(b)           enjoyment in full by the Licensee of the rights granted to
it pursuant to this Licence.

 

3

 

5            LICENSEE’S
OBLIGATIONS

 

5.1                             The Licensee shall use
reasonable endeavours to ensure that all of the Licensed Products marketed by
it and its sub-licensees are of satisfactory quality and comply with all
applicable laws and regulations in those parts of the Territory in which they
are sold by the Licensee save that, the Licensee shall have no responsibility
or liability under this clause in respect of any Licensed Products manufactured
by an Associated Company of the Licensor as long as the responsibility or liability
does not arise as a direct result of the acts or omissions of the Licensee.

 

5.2                             The Licensee shall:

 

(a)                                mark or cause to be marked in a
legible manner on some conspicuous part of the packaging of the Licensed
Products words indicating, as applicable, either that patents have been applied
for or patents have been granted in respect of the Licensed Product and giving
the relevant patent application number(s) or patent number(s) and
that the Licensed Products are manufactured and supplied by the Licensee under
licence comply with all reasonable directions given by the Licensor or its duly
authorised representatives;

 

(b)                               save for where Licensed Products
are manufactured by an Associated Company of the Licensor, on request from the
Licensor and at the Licensor’s own expense, send samples of the Licensed
Products to the Licensor;

 

(c)                                permit and shall use its best
endeavours to obtain permission for the Licensor or its duly authorised
representatives at all reasonable times to enter any place where the manufacture
of the Licensed Products is carried on for the purpose of inspection of methods
of manufacture of the Licensed Products

 

5.3                             The Licensee shall at all times
indemnify and keep indemnified the Licensor against all or any costs, claims,
damages, or expenses incurred by the Licensor or for which the Licensor may
become liable with respect to any product liability claim arising in the
Territory relating to the Licensed Products except where such costs, claims,
damages or expenses arise in respect of Licensed Products manufactured by an
Associated Company of the Licensor and do not arise as a direct result of the
acts or omissions of the Licensee. The Licensee shall maintain adequate product
liability insurance and shall ensure that the Licensor’s interest is noted on
the policy, which policy the Licensee shall supply to the Licensor on request
without unreasonable delay.

 

5.4                             The Licensee shall use its
reasonable endeavours to promote and expand the supply of the Licensed Products
throughout the Territory.

 

6            PATENT
PROSECUTION AND RENEWAL

 

6.1                             The Licensor shall take all such
steps or shall procure that all such steps are taken to ensure that:

 

(a)                                the Licensed Patents are
recorded and registered in the name of the Licensee in the Territory;

 

(b)                               all such acts as it may consider
necessary or desirable to obtain the grant of the Licensed Patents in the
Territory are performed;

 

4

 

(c)           all such acts as are necessary to renew and maintain the
Licensed Patents in the Territory are performed; and

 

(d)           the Licensee is kept duly, fully and punctually informed of
the status of all Licensed Patents and any requirements from the relevant
patent authorities affecting the validity of the Licensed Patents.

 

6.2          In the event that the Licensor
fails or is unable to satisfactorily perform its obligations contained in
clause 6.1 for any reason whatsoever, the Licensee shall have the right, but
not the obligation, to take such steps as it deems necessary to perform such
acts.  This clause shall be without
prejudice to the Licensor’s obligations under clause 6.1.

 

6.3          All reasonable costs and fees
payable to patent attorneys and the relevant authorities in respect of clause
6.1 above shall be met by the Licensor.

 

6.4          The Licensor shall not abandon
or allow to lapse any of the Licensed Patents in the Territory.

 

7              PROVISION OF LICENSED KNOW-HOW

 

7.1          As soon as possible after the
date of this Licence, the Licensor shall provide and continue to provide the
Licensee with access to the Licensed Know-How in a format reasonably accessible
to the Licensee, save for any Licensed Know-How which the Licensor may not
disclose pursuant to an obligation of confidentiality owed to a third party.

 

7.2          Any Licensed Know-How provided
to the Licensee under clause 7.1 shall be used by the Licensee only for the
purposes permitted by clause 2.1 above and shall be subject to the provisions
of clause 9.

 

8              IMPROVEMENTS

 

8.1          If either Party shall at any
time devise, discover or acquire rights in any Improvement it shall to the
extent that it is not prohibited by law or by any undertaking given to any
other person (other than to an Associated Company) or by considerations
relating to the securing of a patent:

 

(a)           promptly notify the other in writing, giving details of it
and provide to the other such information or explanations as the other may
reasonably require to be able effectively to utilise the same; and

 

(b)           the Party devising, discovering or acquiring any such
Improvement shall grant to the other Party, an irrevocable non-exclusive
royalty-free licence with appropriate territorial restrictions, under such
application and any patent granted pursuant to it to the other.

 

8.2          Any information provided by one
Party to another under clause 8.1 shall be subject to the

provisions of clause 9.

 

9             CONFIDENTIALITY

 

9.1          Each Party will take all proper
steps to keep confidential all Confidential Information of the other which is
disclosed to or obtained by it pursuant to or as a result of this Licence, 

 

5

 

and will not divulge the same to any third
party provided that each Party is permitted to allow access to such
Confidential Information by members of its own staff directly or indirectly
concerned with the manufacture, use or sale of the Licensed Products.  Upon termination of this Licence, each Party
will return to the other any equipment and written data (without retaining
copies thereof) provided for the purposes of this Licence.

 

9.2                               The obligations of confidentiality
under this clause 9 shall not apply to any information or material which the
recipient Party can prove:

 

(a)                                  was already known to it prior to
its receipt thereof from the disclosing Party;

 

(b)                                 was subsequently disclosed to it
lawfully by a third party who did not obtain the same (whether directly or
indirectly) from the disclosing Party; or

 

(c)                                  was in the public domain at the
time of receipt by the recipient Party or has subsequently entered into the
public domain other than by reason of the breach of the provisions of this
clause or of any obligation of confidence owed by the recipient Party or by any
of its subcontractors or sub-licensees to the disclosing Party.

 

9.3                               The Licensee agrees that it will
upon the request of the Licensor but at its own expense take such steps as the
Licensor may require to enforce any confidentiality undertaking given by a
director or employee or adviser of the Licensee including in particular but
without limitation the initiation and prosecution of any legal proceedings and
the enforcement of any judgment obtained. 
All such steps to be taken by the Licensee shall be taken as
expeditiously as possible and the Licensee agrees that in respect of its
obligation to enforce confidentiality undertakings time shall be of the essence
in complying with the requirements of the Licensor.

 

9.4                               The Licensor agrees that it will
upon the request of Licensee but at its own expense take such steps as the
Licensee may require to enforce any confidentiality undertaking given by a
director or employee or adviser of the Licensor including in particular but
without limitation the initiation and prosecution of any legal proceedings and
the enforcement of any judgment obtained. 
All such steps to be taken by the Licensor shall be taken as expeditiously
as possible and the Licensor agrees that in respect of its obligation to
enforce confidentiality undertakings time shall be of the essence in complying
with the requirements of the Licensee.

 

9.5                               The provisions of this clause 9
shall remain in force notwithstanding earlier termination of this Licence.

 

10           PROTECTION
OF LICENSED PATENTS & THIRD PARTY CLAIMS

 

10.1                        In the event that:

 

(a)                                  any Licensed Patent is attacked
or being a patent application is opposed; or

 

(b)                                 any application for a patent is
made by or any patent is granted to a third party by reason of which the third
party may be granted or may have been granted rights which conflict with any of
the rights granted to the Licensee under any Licensed Patent; or

 

6

 

(c)           any unlicensed activities are carried on by any third party
which could constitute an infringement of any Licensed Patent; or

 

(d)           any application is made for a compulsory licence under any
Licensed Patent; or

 

(e)           legal action is commenced or threatened against any Party
under the Licensed Patents or in relation to the manufacture, use or sale of
any Licensed Product the Party becoming aware of such matter shall forthwith
notify the other of any such matters and the parties, including any sub-licensor,
shall agree on a course of action.

 

10.2        If, within 14 days, the parties
are unable to agree under clause 10.1, the Licensee shall have the option to
take such action, at its own cost, as it considers necessary.

 

10.3        Where the Licensee elects to
take such action :

 

(a)           The Licensor shall provide all reasonable assistance as the
Licensee may require subject to reimbursement of any reasonable expenses so
incurred by the Licensor;

 

(b)           the Licensee shall have in its sole discretion the right to
settle with such third party. The Licensor has the right to be consulted in
this regard.

 

10.4        If the Licensee elects not to
take any action,

 

(a)           the Licensor may do so in its place and the Licensee shall
provide the Licensor with all reasonable assistance (subject to reimbursement
of reasonable costs incurred by the Licensee) and the Licensor shall have in
its sole discretion the right to settle with such third party but the Licensee
shall have the right to be consulted in this regard.

 

10.5        Nothing in this Licence shall
constitute any representation that:

 

(a)           any Licensed Patent (if a patent application) shall proceed
to grant or if granted shall be valid or

 

(b)           the Licensed Products do not fall within the scope of any
intellectual property rights (including patents) other than the Licensed
Patents.

 

11           WARRANTIES

 

11.1        The Licensor warrants,
represents and undertakes to the Licensee as follows:

 

(a)           it is the exclusive legal and beneficial owner of all
rights, title and interest in the Licensed Patents and so far as it is aware
the Licensed Know-How and there are no liens, encumbrances or other charges
over any of them;

 

(b)           Schedule 1 contains a complete and accurate listing of the
details of all patents and patent applications and other intellectual property
in the Territory relating to the O2 Diesel Additive and the O2 Diesel Product;

 

(c)           the Licensor is entitled to grant an exclusive license of
the rights in the Licensed Patents to the Licensee and has not previously
licensed or assigned them;

 

7

 

(d)           it is registered as the sole proprietor of the Licensed
Patents (or, in the case of patent applications, as the applicant ) and all
registrations and filings necessary to preserve the rights of the Licensor have
been made and are in good standing;

 

(e)           it is not aware of any allegation or claim that it is not
entitled to the Licensed Patents or to be registered as the exclusive owner of
them;

 

(f)            the Licensed Patents are (or
will be, if granted) valid and as far as the Licensor is aware enforceable;

 

(g)           to the best of its knowledge, there are no allegations or
proceedings, pending or threatened, which assert that development, manufacture,
use or sale of any Licensed Product infringes or will infringe third party rights
or which challenge the validity or enforceability of the Licensed Patents;

 

(h)           in the event of the Licensor becoming aware of any
information which might affect its ability to give the warranties and
representations set out above it shall promptly notify the Licensee; and

 

(i)            the Licensor shall indemnify the
Licensee and keep it indemnified against any and all claims, liability and
costs, including legal costs, arising from breach or non-performance or the
foregoing warranties, representations and undertakings.

 

11.2        Notwithstanding any other
provision of this Licence, no Party shall be liable to the other Party in
contract, tort, negligence, breach of statutory duty or otherwise for any loss,
damage, costs or expenses of any nature whatsoever incurred or suffered by that
other Party or its affiliates of an indirect or consequential nature including,
without limitation, any economic loss or other loss of turnover, profits,
business or goodwill.

 

12           DURATION AND TERMINATION

 

12.1        This Licence shall come into
force on the date on which it is signed by both parties and shall, unless
determined in accordance with clause 12, remain in force until the expiry of
the last to expire of the Licensed Patents or, if being patent applications,
until there is no further possibility of any of patent applications proceeding
to grant.

 

12.2        The Licensor shall have the
right to terminate this Licence forthwith by notice in writing to the Licensee
in the event that:

 

(a)           The Licensee shall fail to perform or observe any of the
obligations on its part to be performed or observed under this Licence provided
that in a case where the breach is remediable such notice from the Licensor
shall also require the Licensee to remedy such breach and if the Licensee so
remedies within 60 days of such notice being served such notice to terminate
this Licence shall be deemed to be void and of no effect; or

 

(b)           an interim order is applied for or made, or a petition for a
bankruptcy order is presented or a bankruptcy order is made against the
Licensee or a receiver or trustee in bankruptcy is appointed of the Licensee’s
estate or an administration order is made, or a receiver or administrative
receiver is appointed of any of the Licensee’s assets or undertaking or a
winding-up resolution or petition is passed or presented (otherwise than for
the purposes of reconstruction or amalgamation) or any circumstances arise
which entitle the Court or 

 

8

 

a creditor to appoint a receiver,
administrative receiver or administrator or to present a winding-up petition or
make a winding-up order or other similar or equivalent action is taken against
or by the Licensee by reason of its insolvency or in consequence of debt, the
Licensor shall have no right to terminate pursuant to this clause if any of the
above insolvency situations are remedied within 90 days.

 

12.3        In case of termination of this
Licence howsoever arising, and subject to any express provisions set out
elsewhere in this Licence or otherwise agreed by the parties in writing:

 

(a)           all rights and licences shall cease; and

 

(b)           the Licensee and its sub-licensees shall cease all and any
exploitation of the Licensed Patents save that they may continue to deal in any
unsold or unused stocks of Licensed Products for a period of 6 months following
the date of termination.

 

12.4        The termination of this Licence
howsoever arising shall be without prejudice to the provisions of this clause
12 and to any rights of either Party which may have accrued by or up to the
date of such termination.

 

13           GENERAL

 

13.1        Without prejudice to the
Licensee’s right to sub-licence, save with the prior written agreement of
Licensor in its sole discretion, the Licensee shall not assign, transfer,
charge, encumber or otherwise deal with the whole or any part of this Licence
or its obligations under it.

 

13.2        In the event that any clause or
any part of any clause in this Licence is declared invalid or unenforceable by
the judgment or decree by consent or otherwise of a court of competent
jurisdiction from whose decision no appeal is or can be taken all other clauses
or parts of clauses contained in this Licence shall remain in full force and
effect and shall not be affected by such finding for the term of this Licence.

 

13.3        No relaxation, forbearance delay
or indulgence by either Party in enforcing any of the terms and conditions of
this Licence or the granting of time by either Party to the other shall
prejudice affect or restrict the rights and powers of the said Party nor shall
any waiver by either Party of any breach of this Licence operate as a waiver of
or in relation to any subsequent or any continuing breach of it.

 

13.4        This Licence may only be amended
by a document in writing signed by a duly authorised officer of each Party whose
agreement is required.

 

13.5        The parties shall execute all
further documents as may be necessary or desirable to give full effect to the
terms of this Licence and to protect the rights of the parties under it.

 

13.6        This Licence constitutes the
entire agreement and understanding of the parties relating to its subject
matter. Each of the parties acknowledges and agrees that in entering into this
Licence it does not rely on, and shall have no remedy in respect of, any
statement, representation, warranty or understanding (whether negligently or
innocently made) of any person (whether party to this Licence or not) other
than as expressly set out in this Licence as a warranty or representation. The
only remedy available to it for breach of such warranties or representations
shall be for breach of contract under the terms of this 

 

9

 

Licence. Nothing in this clause shall,
however, operate to limit or exclude any liability for fraud.

 

13.7        No term of this Licence shall be
enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person
who is not a Party, but this does not affect any right or remedy of a third
party which exists or is available apart from under that Act.

 

13.8        Notices or other communications
given pursuant to this Licence by any Party to this Licence to any other Party
to this Licence shall be in writing and shall be sufficiently given (a) if
delivered by hand or sent by post to the address set forth herein of the Party
to which the notice or communication is being given or to such other address as
such Party shall communicate to the Party giving the notice or communication;
or (b) if sent by facsimile or other electronic means of visible
reproduction to the correct facsimile or electronic mail number of the Party to
which it is being sent. Any notice, or communication, given or sent by post
hereunder, shall be sent by registered post. Any Party serving a notice or
making a communication by facsimile or other means of visible electronic reproduction
shall promptly confirm such notice or communication by telephoning the Party to
whom it is addressed but the absence of such confirmation shall not affect the
validity of any such notice or communication. Every notice or communication
given in accordance with this Section shall be deemed to have been
received as follows:-

 

	
  Means of Dispatch

  	
   

  	
  Deemed
  Received

  
	
   

  	
   

  	
   

  
	
  Delivery by hand or
  courier

  	
   

  	
  The day of delivery;

  
	
   

  	
   

  	
   

  
	
  Facsimile or other
  means of delivery

  	
   

  	
  At
  the visible electronic reproduction provided that no delivery error message
  was subsequently received by the Party making the notice,

  

 

provided
that if, in accordance with the above provisions, any such
notice or other communication would otherwise be deemed to have been given or
made outside working hours (being 9.00 a.m. to 5.00 p.m. on a
Business Day) such notice or other communication shall be deemed to be given or
made at the start of working hours on the next Business Day.  The relevant addressee, address and facsimile
number of each Party for the purposes of this Agreement, subject to
notification of change under this Clause are:

 

	
  NAME OF
  PARTY

  	
   

  	
  ADDRESS/FAX
  NUMBER

  
	
   

  	
   

  	
   

  
	
  O2Diesel Europe

  	
   

  	
  Attn:
  Mr. Alan Rae

  c/o O2Diesel Corp.

  100 Commerce Drive  
 Suite 301, Newark,
  DE 19713  
 Fax: +1 (302) 266-7076

  
	
   

  	
   

  	
   

  
	
  O2Diesel Asia Limited

  	
   

  	
  Attn:
  Mr. Alan Rae  
 100 Commerce Drive  
 Suite 301, Newark, DE
  19713 

  

 

10

 

	
   

  	
   

  	
  Fax: +1 (302) 266-7076

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  And

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mr. Ronen Hazarika  
 c/o Energenics Holdings Pte Limited  
 7 Temasek Boulevard  
 #04-01A Suntec Tower One  
 Singapore 038987  

  
 Fax: +65 6415 1656

  

 

A Party shall notify the
other of a change in its name, relevant address, address, telephone number or
facsimile number for the purposes of this Clause. Such notification shall only
be effective on the date specified in the notification as the date on which the
change is to take place; or if no date is specified or the date specified is
less than five clear Business Days after the date on which notice is given, the
date falling five clear Business Days after notice of any such change has been
given.

 

13.9        This Licence shall be governed
by and interpreted in accordance with the laws of England and the parties
hereby submit to the non-exclusive jurisdiction of the English courts.

 

13.10      This Licence may be executed in
any number of counterparts each of which when executed and delivered shall be
an original and all the counterparts together shall constitute one and the same
instrument.

 

11

 

EXECUTION
PAGE

 

AS WITNESS the
hands of the duly authorised representatives of the parties the day and year
first above written.

 

 

	
  SIGNED BY

  	
  /s/ Alan Rae

  	
   

  
	
   

  
	
  Name: ALAN RAE

  	
   

  
	
   

  	
   

  
	
  Title: CEO

  	
   

  
	
   

  	
   

  
	
  For and on behalf of O2DIESEL EUROPE LMITED

  	
   

  
	
   

  
	
   

  
	
  SIGNED BY 

  	
  /s/ Ronen Hazarika

  	
   

  
	
   

  
	
  Name: RONEN HAZARIKA

  	
   

  
	
   

  	
   

  
	
  Title: Director

  	
   

  
	
   

  	
   

  
	
  For and on behalf of O2DIESEL ASIA LIMITED

  	
   

  
					

 

12

 

Schedule 1

 

The Licensed Patents

 

	
  Invention

  	
   

  	
  Country

  	
   

  	
  Application
  No

  	
   

  	
  Grant
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fatty acid alkoxylate/alkananolamide fuel
  additives (Invention 2)

  	
   

  	
  Australia

  	
   

  	
  2002308016

  	
   

  	
  Pending.
  Acceptance advertised 27 Sept. 2007.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alkanolamide-free selected fuel additives
  (Invention 3)

  	
   

  	
  Australia

  	
   

  	
  2002223789

  	
   

  	
  2002223789.
  Granted 14 June 2007.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alkoxylate and Alcohol free fuel additives
  (Invention 4)

  	
   

  	
  Australia

  	
   

  	
  2002223787

  	
   

  	
  200223787 Granted
  16 Nov. 2006.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Emission reduction using additised E-diesel with
  diesel oxidation catalysts (Invention 5)

  	
   

  	
  Australia

  	
   

  	
  2005212304

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols). (Invention 6)

  	
   

  	
  Australia

  	
   

  	
  P118550AU

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel composition – priority patent (AAE07)
  (Invention 1)

  	
   

  	
  Hong Kong

  	
   

  	
  00103597.1

  	
   

  	
  HK
  1024259 Granted 12 Nov 2004.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alkanolamide-free selected fuel additives
  (Invention 3)

  	
   

  	
  Hong Kong

  	
   

  	
  04101060.9

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alkoxylate and Alcohol free fuel additives
  (Invention 4)

  	
   

  	
  Hong Kong

  	
   

  	
  04101059.2

  	
   

  	
  HK1059797
  Granted 4 May 2007.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Emission reduction using additised E-diesel with
  diesel oxidation catalysts (Invention 5)

  	
   

  	
  Hong Kong

  	
   

  	
  07100559.6

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols. (Invention 6)

  	
   

  	
  Hong Kong

  	
   

  	
  P118550HK

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Emission reduction using additised E-diesel with
  diesel oxidation catalysts (Invention 5)

  	
   

  	
  India

  	
   

  	
  4448/DELNP/2006

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel additive alkoxylates & alkanolamides
  with higher alcohols. 

  	
   

  	
  India

  	
   

  	
  16571DEL/2007

  	
   

  	
  Pending

  

 

1

 

	
  Invention

  	
   

  	
  Country

  	
   

  	
  Application
  No

  	
   

  	
  Grant
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Invention 6)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel additive alkanolamides & alkoxylates
  with higher alcohols. (Invention 6)

  	
   

  	
  Indonesia

  	
   

  	
  P118550 ID

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols. (Invention 6)

  	
   

  	
  Malaysia

  	
   

  	
  P118550 MY

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols (Invention 6)

  	
   

  	
  New Zealand

  	
   

  	
  P 118550 NZ

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols. (Invention 6)

  	
   

  	
  Singapore

  	
   

  	
  P118550 SG

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols. (Invention 6)

  	
   

  	
  South Africa

  	
   

  	
  P118550 ZA

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Additive alkoxylates & alkanolamides
  with higher alcohols. (Invention 6)

  	
   

  	
  Thailand

  	
   

  	
  P118550TH

  	
   

  	
  Pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alkoxylated fatty acid/ester additive in fuel
  compositions. (Invention 7)

  	
   

  	
  Thailand

  	
   

  	
  0638413

  	
   

  	
  Pending

  

 

2

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