Document:

Form of Preferred Stock Offering Warrant

    

      EXECUTION
        COPY

      REGISTRATION
        RIGHTS AGREEMENT

       

      REGISTRATION
        RIGHTS AGREEMENT
        (this
“Agreement”),
        made
        as of the ____ day of _______, 2007 (the “Effective
        Date”),
        by
        and between H2Diesel Holdings, Inc., a Florida corporation (the “Company”),
        and
        each of the persons and entities listed on Exhibit A
        attached
        hereto (the “Holders”).
        

       

      W
        I T N E S S E T H

       

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

       

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

       

      AGREEMENT

       

      1.  Definitions

       

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

       

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

       

      “Common
        Stock”
means
        the Common Stock of the Company, par value $.001 per share.

       

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

       

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

       

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

       

      “Preferred
        Stock”
means
        the Series A Cumulative Convertible Preferred Stock of the Company, par value
        $.001 per share.

       

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

       

      “Registrable
        Securities”
means
        any shares of Common Stock issued or issuable to a Holder (i) upon conversion
        of
        any shares of Preferred Stock, (ii) as dividends on any shares of Preferred
        Stock, (iii) upon the exercise of any Warrants, (iv) any shares of Common
        Stock
        that may be issued or distributed in respect thereof by way of stock dividend
        or
        stock split or other distribution, recapitalization or reclassification and
        any
        shares of Common Stock described in Section
        2(c)
        of this
        Agreement. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

       

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

       

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

       

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

       

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

       

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

       

      “Warrants”
shall
        mean any warrants issued to a Holder by the Company in connection with the
        Holder’s purchase of shares of Preferred Stock from the Company.

       

      2.  Shelf
        Registration.

       

      (a)  The
        Company shall:

       

      (i)  not
        later
        than 60 days after the Effective Date (the “Shelf
        Filing Deadline”),
        cause
        to be filed a registration statement on an appropriate form pursuant to
        Rule 415 (or any successor rule) under the Securities Act (together with
        any amendments thereto, and including any documents incorporated by reference
        therein if permitted by such form, the “Shelf
        Registration Statement”),
        which
        Shelf Registration Statement shall provide for resales of all Registrable
        Securities held by Holders that have provided the information required pursuant
        to the terms of Section 2(b)
        hereof;

       

      
        
          
          

        

        
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      (ii)  use
        its
        commercially reasonable efforts to cause the Shelf Registration Statement
        to be
        declared effective by the SEC as promptly as is practicable after the date
        it is
        first filed with the SEC, but in no event later than 210 days after the
        Effective Date (the “Effectiveness
        Target Date”);
        and

       

      (iii)  use
        its
        commercially reasonable efforts to keep the Shelf Registration Statement
        continuously effective, supplemented and amended as required by the provisions
        of Section 4
        hereof
        to the extent necessary to ensure that: (A) it is available for resales by
        the Holders of Registrable Securities entitled to the benefit of this Agreement
        and (B) conforms with the requirements of this Agreement and the Securities
        Act, in each case, for a period (the “Effectiveness
        Period”)
        that
        will terminate upon the earlier of (x) the 395 days after of the Effective
        Date and (y) when all Registrable Securities cease to be Registrable
        Securities in accordance with this Agreement.

       

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

       

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

       

      (d)  Notwithstanding
        anything contained herein to the contrary, subject to Section
        3,
        the
        Company shall be entitled to exclude from any Shelf Registration Statement
        such
        number of Registrable Securities as the Company determines is necessary to
        obtain the availability of Rule 415 under the Securities Act in response
        to
        comments from the staff of the SEC which would, but for such exclusion; prohibit
        the Company from filing the Shelf Registration Statement under such rule.
        To the
        extent any Registrable Securities are so excluded, the Company agrees to
        register such shares in accordance with this Section
        2
        as
        promptly as practicable.

       

       

      
        
          
          

        

        
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      3.  Additional
        Shares.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      4.  Registration
        Procedures.

       

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

       

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

       

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

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

       

      (vi)  If
        requested by any selling Holders or the underwriter(s), if any, promptly
        incorporate in the Shelf Registration Statement or Prospectus, pursuant to
        a
        supplement or post-effective amendment if necessary, such information as
        such
        selling Holders and underwriter(s), if any, may reasonably request to have
        included therein, including, without limitation: (A) information relating
        to the “Plan of Distribution” of the Registrable Securities,
        (B) information with respect to the number of Registrable Securities being
        sold, (C) the purchase price being paid therefor and (D) any other
        terms of the offering of the Registrable Securities to be sold in such offering;
        provided, however, that with respect to any information requested for inclusion
        by a selling Holder, this clause (vi) shall apply only to such information
        that relates to the Registrable Securities to be sold by such selling Holder;
        and make all required filings of such prospectus supplement or post-effective
        amendment as soon as reasonably practicable after the Company is notified
        of the
        matters to be incorporated in such prospectus supplement or post-effective
        amendment.

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

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

       

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

       

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

       

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

       

      (x)  Before
        any public offering of Registrable Securities, use its best efforts to register
        or qualify the Registrable Securities under the securities or Blue Sky laws
        of
        such jurisdictions in the United States as the selling Holders or
        underwriter(s), if any, may reasonably request and do any and all other acts
        or
        things necessary or advisable to enable the disposition in such jurisdictions
        of
        the Registrable Securities covered by the Shelf Registration Statement;
        provided, however, that the Company shall not be required (A) to register
        or qualify as a foreign corporation or a dealer of securities where it is
        not
        now so qualified or to take any action that would subject it to the service
        of
        process in any jurisdiction where it is not now so subject or (B) to
        subject itself to taxation in any such jurisdiction if it is not now so
        subject.

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

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

       

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

       

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

       

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

       

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

       

      (xx)  If
        reasonably requested by the underwriter(s), make appropriate officers of
        the
        Company reasonably available to the underwriter(s) for meetings with prospective
        purchasers of the Registrable Securities and prepare and present to potential
        investors customary “road show” or marketing material in a manner consistent
        with other new issuances of other securities similar to the Registrable
        Securities.

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

       

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

       

      (e)  Notwithstanding
        anything herein to the contrary, no Holder shall be designated as an
“underwriter” by the Company in the Shelf Registration Statement without the
        consent of such Holder unless otherwise required by law. In connection with
        the
        due diligence efforts of any Identified Holder, the Company shall make available
        for inspection during business hours and upon reasonable advance request
        by (i)
        any Identified Holder, (ii) counsel for the holders of majority of the
        Registrable Securities held by all Identified Holders and (iii) one firm
        of
        accountants or other agents retained by holders of a majority of Registrable
        Securities held by the Identified Holders (collectively, the “Inspectors”),
        all
        pertinent financial and other records, and pertinent corporate documents
        and
        properties of the Company (collectively, the “Records”),
        as
        shall be reasonably deemed necessary by each Inspector, and cause the Company’s
        officers, directors and employees to supply all information which any Inspector
        may reasonably request; provided, however, that each Inspector shall agree
        in
        writing to hold in strict confidence and shall not make any disclosure (except
        to a Identified Holder) or use of any Record or other information which the
        Company determines in good faith to be confidential, and of which determination
        the Inspectors are so notified, unless (a) the disclosure of such Records
        is
        necessary to avoid or correct a misstatement or omission in the Shelf
        Registration Statement or is otherwise required under the Securities Act,
        (b)
        the release of such Records is ordered pursuant to a final, non-appealable
        subpoena or order from a court or government body of competent jurisdiction,
        or
        (c) the information in such Records has been made generally available to
        the
        public other than by disclosure in violation of this or any other agreement
        of
        which the Inspector has knowledge. Each Holder agrees that it shall, upon
        learning that disclosure of such Records is sought in or by a court or
        governmental body of competent jurisdiction or through other means, give
        prompt
        notice to the Company and allow the Company, at its expense, to undertake
        appropriate action to prevent disclosure of, or to obtain a protective order
        for, the Records deemed confidential. Nothing herein (or in any other
        confidentiality agreement between the Company and any Holder) shall be deemed
        to
        limit the Holders’ ability to sell Registrable Securities in a manner that is
        otherwise consistent with applicable laws and regulations.

       

      5.  Registration
        Expenses.

       

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

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

       

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

       

      (c)  Each
        Holder shall bear its Selling Expenses.

       

      6.  Indemnification
        and Contribution.

       

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

       

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

       

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

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

       

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

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

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

       

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

       

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

       

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

       

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

       

      The
        relative benefits received by the Company on the one hand and a Holder on
        the
        other with respect to such offering and such sale shall be deemed to be in
        the
        same proportion as the total net proceeds from the offering of the Registrable
        Securities (before deducting expenses) received by the Company, on the one
        hand,
        bear to the total proceeds received by such Holder (before deducting expenses)
        with respect to its sale of Registrable Securities on the other. The relative
        fault of the parties shall be determined by reference to, among other things,
        whether the untrue or alleged untrue statement of a material fact or the
        omission or alleged omission to state a material fact relates to information
        supplied by the Company on the one hand or the Holders on the other, the
        intent
        of the parties and their relative knowledge, access to information and
        opportunity to correct or prevent such statement or omission. The Company
        and
        each Holder agree that it would not be just and equitable if the amount of
        contribution pursuant to this Section 6(d)
        were
        determined by pro rata
        allocation (even if the selling Holders were treated as one entity for such
        purpose) or by any other method of allocation that does not take into account
        the equitable considerations referred to in the first sentence of this
        paragraph (d). The amount paid or payable by an indemnified party as a
        result of the loss, claim, damage, liability or expense, or action in respect
        thereof, referred to above in this Section 6 shall be deemed to include,
        for purposes of this Section 6 and subject to the limitations set forth
        above, any legal or other expenses reasonably incurred by such indemnified
        party
        in connection with investigating or defending or preparing to defend any
        such
        action or claim. 

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      Notwithstanding
        the provisions of this Section 6, no Holder shall be required to contribute
        any amount in excess of the amount by which net proceeds received by such
        Holder
        from the sale of Registrable Securities covered by the Shelf Registration
        Statement exceeds the amount of any damages which such Holder has otherwise
        been
        required to pay by reason of any untrue or alleged untrue statement or omission
        or alleged omission. No person guilty of fraudulent misrepresentation (within
        the meaning of Section 11(f) of the Securities Act) shall be entitled to
        contribution from any person who was not guilty of such fraudulent
        misrepresentation. The Holders’ obligations to contribute as provided in this
Section 6(d)
        are
        several and not joint.

       

      7.  Participation
        in Underwritten Offerings.

       

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

       

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

       

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

       

      8.  Selection
        of Underwriters.

       

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

       

      9.  Miscellaneous.

       

      (a)  Remedies.
        The
        Company acknowledges and agrees that any failure by the Company to comply
        with
        its obligations under Section 2
        hereof
        may result in material irreparable injury to the Purchasers or the Holders
        for
        which there is no adequate remedy at law, that it will not be possible to
        measure damages for such injuries precisely and that, in the event of any
        such
        failure, the Purchasers or any Holder may obtain such relief as may be required
        to specifically enforce the Company’s obligations under Section 2
        hereof.
        The Company further agrees to waive the defense in any action for specific
        performance that a remedy at law would be adequate. 

       

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

       

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

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

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

       

      
        	
                      (ii) if
                  to the Company:

              	
                H2Diesel
                  Holdings, Inc.

                11111
                  Katy Freeway, Suite 910

                Houston,
                  Texas 77079

                Tel:
                  (713) 973-5720

                Fax:
                  (713) 973-5777

                Attn:
                  Lee S. Rosen

              
	
                with
                  a copy to:

              	
                Greenberg
                  Traurig, P.A.

                1221
                  Brickell Avenue

                Miami,
                  FL 33131

                Tel:
                  (305) 579-0500

                Fax:
                  (305) 5791-0717

                Attn: Ira
                  N. Rosner, Esq.

              

      

      

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

       

      (d)  Successors
        and Assigns.
        This
        Agreement shall inure to the benefit of and be binding upon the successors
        and
        assigns of each of the parties, including without limitation subsequent Holders
        of Registrable Securities; provided, however, that (i) this Agreement shall
        not inure to the benefit of or be binding upon a successor or assign of a
        Holder
        unless and to the extent such successor or assign acquired Registrable
        Securities from such Holder and agreed in writing to be bound by the terms
        of
        this Agreement and (ii) nothing contained herein shall be deemed to permit
        any assignment, transfer or other disposition of Registrable Securities in
        violation of any Subscription Agreement or other agreement with the Company
        which restricts the sale or disposition of Registrable Securities. If any
        transferee of any Holder shall acquire Registrable Securities, in any manner,
        whether by operation of law or otherwise, such Registrable Securities shall
        be
        held subject to all of the terms of this Agreement, and by taking and holding
        such Registrable Securities such person shall be conclusively deemed to have
        agreed to be bound by and to perform all of the terms and provisions of this
        Agreement.

       

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

       

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

       

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

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

       

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

       

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

       

      

       

      [THE
        REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

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

       

      H2Diesel
        Holdings, Inc.

       

      By: ____________________________

      Name: 

      Title: 

      

       

      [Purchaser
        Signature Page Follows]

      

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      

        EXECUTION
          COPY

      Holder
        Signature Page

       

      Registration
        Rights Agreement - H2Diesel Holdings Inc.

       

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

       

      

      ______________________  

      [Name
        of
        Holder]

      

      By:   

      Name:   

      Title:   

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

       

      HOLDERS

       

      

       

      

       

      

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        B

       

      NOTICE
        AND QUESTIONNAIRE

      

      (TIME
        SENSITIVE MATERIAL)

       

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

       

      Capitalized
        terms used but not defined herein shall have the respective meanings set
        forth
        in the Registration Rights Agreement, dated as of _______ ___, 2007 (the
        “Registration
        Rights Agreement”),
        between the Company and Holders named therein. 

       

      Form
        of Selling Securityholder Notice and Questionnaire

       

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

       

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

       

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

       

      NOTICE

       

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

       

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      QUESTIONNAIRE

       

      1. Information
        Regarding Selling Securityholder

       

      (a) Full
        legal name of Selling Securityholder:

       

      
        	 	
                (b)

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

              

      

       

      
        	 	
                (c)

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

              

      

       

      
        	 	
                (d)

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

              

      

       

      
        	 	
                (e)

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

              

      

       

      o Yes.

       

      o No.

       

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

       

      
        	 	
                (f)

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

              

      

      
         

        o Yes.

         

        o No.

         

      

      
        
          
          

        

        
          B-3

          
            

          

        

        
          
          

        

      

      

       

      For
        purposes of this Item 1(f), an “affiliate” of a registered broker-dealer shall
        include any company that directly, or indirectly through one or more
        intermediaries, controls, or is controlled by, or is under common control
        with,
        such broker-dealer, and does not include any individuals employed by such
        broker-dealer or its affiliates.

       

      
        	 	
                (g)

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

              

      

      
         

        o Yes.

         

        o No.

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

       

      
        	 	
                (h)

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

              

      

       

      Name
        of
        broker: ___________________________________

       

      DTC
        No:
        ________________________________________ 

       

      Contact
        person: ___________________________________

       

      Telephone
        No. (including area code):  ___________________

       

      E-mail
        address: ______________________________ 

       

      2.     Address
        for Notices to Selling Securityholder

       

      Telephone:
        _______________________________________ 

       

      Fax:
        _____________________________________________ 

       

      Contact
        Person: ____________________________________ 

       

      Email
        address: _____________________________________ 

       

      3.     Beneficial
        Ownership of Registrable Securities

       

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

       

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

       

       

      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

      
         

         

        4.    Nature
          of Beneficial Ownership

      

       

      
        	 	
                (a)

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

              

      

       

      
        	 	
                (A)

              	
                A
                  reporting company under the Exchange Act. o

              

      

       

      
        	 	
                (B)

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

              

      

       

      
        	 	
                (C)

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

              

      

       

      
        	 	
                (b)

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

              

      

       

       

        
          

        

      

       

      
        
          

        

         

      

       

      
        	 	
                (A)

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

              

      

       

      
        
          

        

         

        
          
            

          

        

      

       

      
        	 	
                (c)

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

              

      

       

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

       

      
        
          

        

         

      

      
        

      

       

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

       

                            Address:  __________________________________

       

                                  
Telephone
        No.:  _______________________

       

                         Fax
        No.:  

       

      
        
          
          

        

        
          B-5

          
            

          

        

        
          
          

        

      

       

      (iii) Name
        of
        shareholders:  

       

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

       

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

       

      Address:
         

       

      Telephone
        No.:  

       

      Fax
        No.:
 

       

      (iii) Name
        of
        shareholders:        

       

      
        	
                5.

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

              

      

       

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

       

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

       

      
         

        
          
            

          

        

      

       

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

      
         

        
          
            

          

        

      

       

      
        	
                6.

              	
                Relationship
                  with the Company

              

      

       

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

       

      State
        any
        exceptions here:

      
         

        
          
            

          

          
             

            
              
                

              

            

          

        

         

      

      
        	
                7.

              	
                Plan
                  of Distribution

              

      

       

      Except
        as
        set forth below, the undersigned (including its donees or pledgees) intends
        to
        distribute the Registrable Securities listed above in Item (3) pursuant to
        the Shelf Registration Statement only as follows (if at all). Such Registrable
        Securities may be sold from time to time directly by the undersigned or,
        alternatively, through underwriters, broker-dealers or agents. If the
        Registrable Securities are sold through underwriters or broker-dealers, the
        Selling Securityholder will be responsible for underwriting discounts or
        commissions or agent’s commissions. Such Registrable Securities may be sold in
        one or more transactions at fixed prices, at prevailing market prices at
        the
        time of sale, at varying prices determined at the time of sale, or at negotiated
        prices. Such sales may be effected in transactions (which may involve crosses
        or
        block transactions):

       

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

       

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

       

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

       

      (d) through
        the writing of options.

       

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

       

      State
        any
        exceptions here:  

         

        
          
            

          

          
             

            
              
                

              

            

          

        

      

       

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

       

      
        	
                8.

              	
                Acknowledgments

              

      

       

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

       

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

       

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

       

      
        
          
          

        

        
          B-6

          
            

          

        

        
          
          

        

      

      

       

      By
        signing below, the undersigned consents to the disclosure of the information
        contained herein in its answers to items (1) through (7) above and the inclusion
        of such information in the Shelf Registration Statement and the related
        Prospectus. The undersigned understands that such information will be relied
        upon by the Company in connection with the preparation or amendment of the
        Shelf
        Registration Statement and the related Prospectus.

       

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

       

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

       

      
        
          
          

        

        
          B-7

          
            

          

        

        
          
          

        

      

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

       

      Beneficial
        Owner

       

                                                    
By:
        _______________________________

      Name:
        ________________________

      Title:
        _________________________

      Dated:_____________

       

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

       

      H2Diesel
        Holdings, Inc.

      11111
        Katy Freeway, Suite 910

      Houston,
        Texas 77079

      Tel:
        (713) 973-5720

      Fax:
        (713) 973-5777

      

      

      

      B-8Stock Grant Agreement Addendum 1

    EXHIBIT
      10.1

    

    STOCK
      GRANT AGREEMENT ADDENDUM 1

    

    Whereas
      Elite
      FX,
      Inc and Jan Norelid entered into a stock grant agreement on January 19, 2007,
      a
      copy of which is attached hereto as Exhibit A (the “Grant
      Agreement”).

     

    Whereas
      Elite
      FX, Inc merged with Celsius, Inc. a wholly owned subsidiary of Celsius Holdings,
      Inc. on January 26, 2007

     

    Whereas
      Celsius
      Holdings, Inc. assumed all obligations of Elite FX, Inc.

     

    Whereas
      the
      50,000 shares of Elite FX of the Grant converted into 1,337,246 shares of
      Celsius Holdings, Inc. (now referred to in the Grant Agreement as the
“Company”).

     

    Now,
      Therefore,
      in
      consideration of good and valuable consideration, the receipt and sufficiency
      of
      which is hereby acknowledged, the parties agree to amend the Grant Agreement
      as
      follows:

    

    Section
      1. Forfeiture, Cancellation Rights. Notwithstanding section 2.1 and 4.1 of
      the
      Grant, the Company reduces its cancellation rights by 160,000 shares to
      1,177,246 shares, and authorizes Jan Norelid to freely transfer up to 160,000
      shares to persons related to him. The transferred shares will remain restricted
      and contain the appropriate legend(s) as set forth in the Grant Agreement until
      the Company’ counsel determines that such legend may be removed.

    

    All
      other
      terms and conditions of the Grant shall remain in full force and
      effect.

    

    

    GRANTEE:

    

    

    /s/:
      Jan A Norelid

    Jan
      A
      Norelid

    

    Date:     5/14/2007

    

    

    

    Celsius
      Holdings, Inc.

    

    

    By:     /s/:
      Stephen C. Haley

    Stephen
      C. Haley

    CEO
      and
      Chairman of the Board

    

    Date:     5/14/2007

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    APPENDIX
      A

    

    

    

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED
      AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS
      OF
      FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION
      OF
      COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER
      FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

    

    
      
        

      

    ELITE
      FX,
      INC.

    

    STOCK
      GRANT AGREEMENT

    

    
      
        

      

    ARTICLE
      1

    Stock
      Grant

    

    You,
      the
      grantee named below (hereafter, “you” or “Grantee”), have been granted the right
      to receive common stock of Elite FX, Inc. (the "Company"), subject to the terms
      and conditions of this Stock Grant Agreement (the “Grant”). 

     

    

     

    By
      signing below, you agree to accept the terms and conditions and hereby accept
      and make the respective representations and covenants contained in this
      Agreement regarding the transfer to you of the shares represented by this Grant
      (the “Shares”). This Section 1 of this Stock Grant Agreement sets forth the
      basic terms of your Grant and your rights with respect to the Shares subject
      to
      the Grant. These basic terms are subject to and are to be interpreted in
      accordance with remaining terms and conditions of this Grant.

     

    

    Date
      Of Grant:
      January
      19, 2007

    

    Grantee’s
      Name:
      Jan A
      Norelid

    

    Grantee’s
      Social Security Number:
      590 40
      3372

    

    Number
      Of Shares Subject To Grant:
      50,000
      (the “Shares”)

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
      2

    Cancellation
      Rights

    

    Section
      2.1. Forfeiture,
      Cancellation Rights.
      This
      Grant is being made as a result of your agreement to become or remain employed
      with the Company. Notwithstanding the foregoing, or any contrary provision,
      the
      Grant shall in no way be considered any form of salary or compensation for
      your
      employment or services you perform and shall not establish a term of your
      employment. The Shares granted hereby are subject to forfeiture and the
      Company's right to cancel the Shares (the “Cancellation Rights”), should your
      employment with the Company be terminated by you or by the Company for Cause
      before November 13, 2007. For purposes of this grant, the term “Cause” shall
      mean (i) an action or omission of the Grantee which constitutes a willful and
      material breach of, or failure or refusal (other than by reason of his
      disability) to perform his duties under, his employment agreement with the
      Company, which is not cured within fifteen (15) days after receipt by the
      Grantee of written notice of same, (ii) fraud, embezzlement, misappropriation
      of
      funds or breach of trust in connection with his services to the Company, (iii)
      conviction of any crime which involves dishonesty or a breach of trust, or
      (iv)
      gross negligence in connection with the performance of the Grantee’s duties to
      the Company, which is not cured within fifteen (15) days after written receipt
      by the Grantee of written notice of same. The Company may also exercise its
      Cancellation Rights in the event you attempt transfer or assign the Shares
      in
      violation of Section 4.1.

     

    *NOTE:
      The
      Company shall have 30 days following the Date of Termination of your employment
      with the Company to determine whether it will exercise its Cancellation
      Rights.

    

    Section
      2.2. Grantee’s
      Right To Terminate Employment.
      Notwithstanding any contrary provision, the Company’s Cancellation Rights shall
      not apply if Grantee terminates employment within twelve (12) months from the
      date of this Grant under the following circumstances:

    

    (a)  There
      is
      a change in control of Company, excluding the planned merger with Vector
      Ventures Corp. For purposes of this Agreement, the term “Change in Control”
shall mean:

    

    (i)
      Approval by the shareholders of the Company of (x) a reorganization, merger,
      consolidation or other form of corporate transaction or series of transactions,
      in each case, with respect to which persons who were the shareholders of the
      Company immediately prior to such reorganization, merger or consolidation or
      other transaction do not, immediately thereafter, own more than 50% of the
      combined voting power entitled to vote generally in the election of directors
      of
      the reorganized, merged or consolidated company’s then outstanding voting
      securities, in substantially the same proportions as their ownership immediately
      prior to such reorganization, merger, consolidation or other transaction, or
      (y)
      a liquidation or dissolution of the Company or (z) the sale of all or
      substantially all of the assets of the Company (unless such reorganization,
      merger, consolidation or other corporate transaction, liquidation, dissolution
      or sale is subsequently abandoned); 

     

    (ii)
      Individuals who, as of the Commencement Date of this Agreement, constitute
      the
      Board (the “Incumbent Board”) cease for any reason to constitute at least a
      majority of the Board, provided that any person becoming a director subsequent
      to the Commencement Date of this Agreement whose election, or nomination for
      election by the Company’s shareholders, was approved by a vote of at least a
      majority of the directors then comprising the Incumbent Board (other than an
      election or nomination of an individual whose initial assumption of office
      is in
      connection with an actual or threatened election contest relating to the
      election of the Directors of the Company, as such terms are used in Rule 14a-11
      of Regulation 14A promulgated under the Securities Exchange Act) shall be,
      for
      purposes of this Agreement, considered as though such person were a member
      of
      the Incumbent Board; or 

     

    (iii)
      the
      acquisition (other than from the Company) by any person, entity or “group”,
      within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
      Act, of more than 20% of either the then outstanding shares of the Company’s
      Common Stock or the combined voting power of the Company’s then outstanding
      voting securities entitled to vote generally in the election of directors
      (hereinafter referred to as the ownership of a “Controlling Interest”)
      excluding, for this purpose, any acquisitions by (1) the Company or its
      Subsidiaries, (2) any person, entity or “group” that as of the Commencement Date
      of this Agreement owns beneficial ownership (within the meaning of Rule 13d-3
      promulgated under the Securities Exchange Act) of a Controlling Interest or
      (3)
      any employee benefit plan of the Company or its Subsidiaries; or 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iv)
      the
      aggregate number of shares of the Company’s Common Stock, of which Stephen C.
      Haley. and his immediate family are the beneficial owners (as such term is
      defined by the rules and regulations of the Securities and Exchange Commission),
      represents less than 20% of the aggregate number of the outstanding shares
      of
      the Company’s Common Stock. 

     

    (b) Grantee
      is assigned duties that are significantly different than those described in
      Grantee’s Employment Agreement, or such duties assigned are eliminated or
      transferred to someone else.

    

    (c) Grantee
      is removed from any of the positions described in Section 2.1 of Grantee’s
      Employment Agreement (other than by Company for cause).

    

    (d) Grantee’s
      fringe benefits or other compensation are materially reduced.

    

    (e) Company
      fails to have a successor assume Grantee’s Employment Agreement.

    

    (f) Company
      becomes insolvent or files a bankruptcy petition.

    

    ARTICLE
      3

    Description
      of Securities

    

    Section
      3.1. Capitalization,
      Planned Merger.
      The
      Company’s authorized capital stock currently consists of 10,000,000 shares of
      common stock par value $0.01. Prior to this Grant, there were 2,601,428 shares
      of the Company’s common stock outstanding (not including the Shares granted
      hereby). The Company plans to merge with Vector Ventures Corp. (or a wholly
      owned subsidiary thereof) (the “Merger”) which will result in material dilution
      of all of the Company’s shareholders. You represent that you are aware of the
      terms of the Merger and the anticipated dilution. 

     

    Section
      3.2. Dilution
      and Adjustments.
      

    

    a)
      Dilution.
      In
      addition to the Merger, the Company plans to adopt certain plans involving
      the
      issuance of its capital stock or stock options in an effort to provide
      additional incentive to attract, retain and motivate highly qualified and
      competent persons who are key to the Company, including key employees,
      consultants, independent contractors, officers and directors. Stock or options
      granted under such plan(s) will dilute the Shares granted pursuant to this
      Agreement.

    

    b)
      Adjustment.
      Except
      as provided below, upon exercise of this Grant, you shall be entitled to receive
      a pro-rata adjustments to your shares in the same manner as other shareholders
      resulting from the declaration of a stock dividend or through any
      recapitalization resulting in a stock split, unless and until the Company
      exercises its Cancellation Rights.

    

    i)
      Except
      as otherwise expressly provided herein, the issuance by the Company of shares
      of
      its capital stock of any class, or securities convertible into or exchangeable
      for shares of its capital stock of any class, either in connection with a direct
      or unwritten sale or upon the exercise of rights or warrants to subscribe
      therefore or purchase such Shares, or upon conversion of shares of obligations
      of the Company convertible into such shares or other securities, shall not
      affect, and no adjustment by reason thereof shall be made with respect to the
      number Shares granted hereby.

     

                    ii)
      Without limiting
      the generality of the foregoing, nothing herein shall affect in any manner
      the
      right or power of the Company to make, authorize or consummate (a) any or
      all adjustments, reclassifications, recapitalizations, reorganizations or other
      changes in the Company’s capital structure or its business; (b) any merger
      or consolidation of the Company or to which the Company is a party; (c) any
      issuance by the Company of debt securities, or preferred or preference stock
      that would rank senior to or above the Shares subject to outstanding Options;
      (d) any purchase or issuance by the Company of Shares or other classes of
      common stock or common equity securities; (e) the dissolution or
      liquidation of the Company; (f) any sale, transfer, encumbrance, pledge or
      assignment of all or any part of the assets or business of the Company; or
      (g) any other corporate act or proceeding, whether of a similar character
      or otherwise.

    

    Section
      3.3. No
      Preemptive Rights.
      The
      holders of the Company’s common stock have no preemptive or subscription rights
      and have no rights to convert their common stock into any other
      security.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      3.3. Voting
      Rights.
      

    

    a)
      Shares
      Still Subject to Cancellation Rights.
      You
      shall have no voting rights on the number of shares that are still subject
      to
      the Company’s Cancellation Rights.

    

    b)
      Shares
      No Longer Subject to Cancellation Rights.
      The
      holders of the Company’s common stock are entitled to one vote per share on all
      matters to be voted on by shareholders. With respect to electing the Company’s
      directors, the holders of Common Stock do not have cumulative voting
      rights.

    

    Section
      3.4. Dividends
      and Distributions.
      

    

    a)
      Dividends.
      Upon
      exercise of this Grant, you shall be entitled to receive a pro-rata portion
      of
      dividends paid by the Company, based on the entire amount of Shares granted
      hereunder, unless and until the Company exercises its Cancellation Rights.
      

    

    b)
      Distributions
      on Liquidation.
      Your
      right to participate in distributions upon liquidation will be limited to a
      pro-rata distribution based on the number of shares that are no longer subject
      to the Company’s Cancellation Rights.

    

    ARTICLE
      4

    Exercise
      of Grant

    

    Section
      4.1. Method
      Of Exercise.
      To
      exercise the Grant made hereunder, you must sign and deliver this Stock Grant
      Agreement to the Company’s president with a copy to the Company’s attorney, Neil
      Baritz, Esq. at: 1075 Broken Sound Parkway, NW, Suite 102, Boca Raton, Florida
      33487.

    

    Section
      4.2. Taxes.
      You are
      solely responsible for all taxes associated with this Grant. You must make
      arrangements to pay any withholding or other taxes that may be due as a result
      of the exercise of this Grant or the sale of Shares acquired upon exercise
      of
      this Grant.

    

    THE
      COMPANY MAKES NO REPRESENTATION AS TO THE TAX IMPLICATIONS OF EXERCISING THIS
      GRANT OR THE SUBSEQUENT SALE OR TRANSFER OF THE SHARES GRANTED HEREBY.

    

    ARTICLE
      5

    Transfer

    

    Section
      5.1. Restrictions
      On Transfer or Assignment Of Shares.

    

    a)
      By
      signing this Stock Grant Agreement, you agree not to sell or transfer any Shares
      acquired hereunder at a time when applicable laws, regulations or Company or
      underwriter trading policies prohibit sale or transfer.

    

    b)
      You
      hereby represent and agree that you are acquiring the Shares granted hereunder
      for investment, and not with a view to the sale or distribution thereof, and
      shall make such other similar representations as are deemed necessary or
      appropriate by the Company and its counsel.

    

    c)
      Until
      the expiration of the Company’s Cancellation Rights, you have no right to
      transfer or assign the Shares still subject to Cancellation Rights. By way
      of
      example and not as a limitation to the restrictions set forth herein, you may
      not sell your Shares or use them as security for a loan until the expiration
      of
      the Company’s Cancellation Rights. If you attempt to do any of these things, the
      Company may immediately exercise its Cancellation Rights and such Shares will
      immediately become invalid. 

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

            Section
      5.2.
Legends.
      All
      certificates representing the Shares issued upon exercise of this Grant shall,
      where applicable, have endorsed thereon the following legends:

    

    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
      ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS
      OF
      A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE INITIAL HOLDER HEREOF. SUCH
      AGREEMENT PROVIDES FOR CERTAIN TRANSFER RESTRICTIONS, INCLUDING RIGHTS OF
      REPURCHASE. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH
      A
      COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."

    

    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
      STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT
      TO
      THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY
      IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
      AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
      REQUIRED."

    

    ARTICLE
      6

    Other
      Terms and Conditions

    

    Section
      6.1. No
      Employment or Retention Rights.
      Nothing
      in this Agreement shall grant you the right to be employed by the Company or
      any
      of its subsidiaries or affiliates. 

    

    Section
      6.2 Governing
      Law, Venue & Attorneys Fees.
      All
      questions regarding the validity and interpretation of this Stock Grant
      Agreement shall be governed by and construed and enforced in all respects in
      accordance with the laws of the State of Florida. Venue for any action arising
      in any manner out of the Grant, Grantee’s exercise, this Stock Grant Agreement,
      or any of the terms contained herein shall be the Federal and or State courts
      located in Palm Beach County, Florida, regardless of where this Stock Grant
      Agreement is to be performed. In the event either party engages legal counsel
      to
      enforce any provision contained in this Stock Grant Agreement, the prevailing
      party shall be entitled to all reasonable attorneys fees, investigative
      expenses, costs, and court costs, whether or not a suit is actually filed,
      but
      including all levels of appeal.

    

    Section
      6.3. Notices.
      Any
      notice given under this Stock Grant Agreement to either party shall be made
      in
      writing. Notices shall be deemed given when delivered by hand or when mailed
      by
      registered or certified mail, return receipt requested, postage prepaid, and
      addressed to the party at the address last provided by said party.

    

    Section
      6.4 Binding
      Agreement/Successors.
      

    

    a)
      Company’s
      Successors and Assigns.
      The
      rights and obligations of the Company under this Agreement shall inure to the
      benefit of and shall be binding in all respects upon the Company’s successors
      and assigns.

    

    b)
      Grantee’s
      Successors.
      Except
      as prohibited hereunder, Shares no longer subject to Cancellation Rights shall
      inure to the benefit of your personal representatives, legatees, and heirs.
      

    

    Section
      6.5. Waivers.
      The
      waiver by either party of a breach of any provision of this Stock Grant
      Agreement shall not operate or be construed as a waiver of any subsequent
      breach.

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      6.6. Entire
      Agreement.

    

    a)
      No
      Other Agreements.
      This
      instrument contains the entire agreement of the parties with respect to the
      subject matter hereof. The parties have not made any agreements or
      representations, oral or otherwise, express or implied, pertaining to the
      subject matter of this Agreement other than those specifically included
      herein.

    

    b)
      Prior
      Agreements.
      This
      Agreement supersedes any prior agreements pertaining to or connected with the
      grant of stock or stock options to Grantee. All such prior agreements are
      terminated and are of no force or effect whatsoever.

    

    Section
      6.7. Amendment
      of Agreement.
      No
      change or modification of this Stock Grant Agreement shall be valid unless
      it is
      in writing and signed by the party against whom the change or modification
      is
      sought to be enforced.

    

    Section
      6.8. Severability
      of Provisions.
      If any
      provision of this Stock Grant Agreement is invalidated or held unenforceable,
      the invalidity or unenforceability of that provision or provisions shall be
      deemed modified or severed only to the minimum extent necessary to make said
      provision(s) valid and enforceable while maintaining the intent of said
      provision(s). No such modification shall affect the validity or enforceability
      of any other provision of this Stock Grant Agreement.

    

    Section
      6.9. Governing
      Law, Venue & Attorneys Fees.
      All
      questions regarding the validity and interpretation of this Employment Agreement
      shall be governed by and construed and enforced in all respects in accordance
      with the laws of the State of Florida. Venue for any action arising in any
      manner out of the Employee’s employment, this Employment Agreement, or any of
      the terms contained herein shall be the Federal and or State courts located
      in
      Palm Beach County, Florida, regardless of where this Employment Agreement is
      to
      be performed. In the event either party engages legal counsel to enforce any
      provision contained in this Employment Agreement, the prevailing party shall
      be
      entitled to all reasonable attorneys fees, investigative expenses, costs, and
      court costs, whether or not a suit is actually filed, but including all levels
      of appeal.

     

    [Signature
      page follows]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Stock Grant
      Agreement.

    

    GRANTEE:

    

    

    s/s/:
      Jan A Norelid 

    Jan
      A
      Norelid

    

    Date:
      January 19, 2007

    

    

    

    Elite
      FX,
      Inc.

    

    By:
       /s/:
      Stephen C. Haley  

    Stephen
      C. Haley

    CEO
      and
      Chairman of the Board

    

    Date:
      January 19, 2007

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