SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT (this “Agreement”) is entered into as of the date of its acceptance by H2Diesel Holdings, Inc., a Florida corporation (the “Company”), set forth below (the “Effective Date”), by and between the Company and the subscriber set forth on the signature page hereto (the “Subscriber”).

 

 

WHEREAS, in connection with the transactions contemplated by this Agreement, the Company desires to create a new series of preferred stock designated as Series B Cumulative Convertible Preferred Stock, par value $.001 per share (the “Preferred Stock”), by filing Articles of Amendment in the form attached hereto as Exhibit A (the “Articles of Amendment”) with the Secretary of State of the State of Florida;

 

WHEREAS, the Company desires to offer (the “Offering”) up to $10,000,000 in shares of Preferred Stock at a purchase price of $100 per share and an initial conversion price of $4.25 per share (the “Shares”), together with warrants in the form attached hereto as Exhibit B, exercisable for a number of shares of common stock of the Company, $.001 par value per share (the “Common Stock’) equal to 25% of the number of shares of Common Stock that would be issuable upon initial conversion of the Preferred Stock, (the “Warrants”, and together with the Shares, the “Securities”) at an exercise price of $6.25 per share;

 

WHEREAS, the Company desires to issue and sell to the Subscriber the Securities set forth on the signature page hereof;

 

WHEREAS, in connection with the Offering the Company or its agents have provided to Subscriber a copy of the Company’s Confidential Private Offering Memorandum dated March 26, 2008 (together with the annexes, exhibits and attachments thereto, the “Memorandum”), which provides certain material disclosures in connection with the Offering; and

 

WHEREAS, as part of the Offering the Company will agree to register shares of Common Stock issuable (i) upon the conversion of the Preferred Stock, (ii) upon the payment of dividends on the Preferred Stock, and (iii) upon the exercise of the Warrants, under the registration rights agreement in the form attached as Exhibit C (the “Registration Rights Agreement”).

 

 

NOW THEREFORE, based upon the premises and mutual promises set forth below, the parties agree as follows:

 

1. Subscription for Preferred Stock; Terms of the Offering.

 

1.1. Subscription and Issuance of the Securities. Subject to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase the Securities set forth on the signature page hereof, for an aggregate purchase price equal to $____________ (the “Purchase Price”). The Company reserves the right in its sole discretion to increase the number of Shares in the Offering if sufficient demand exists. The Purchase Price is payable by wire transfer (in accordance with the wire transfer instructions set forth in the Memorandum) of immediately available funds delivered at the Closing (as defined below).

 

 

1.2. Subscription Period. The Company may, in its sole discretion, continue to accept subscriptions on or before the third calendar day following the initial Closing Date (as defined below).

 

1.3. Right to Reject. The Company reserves the right to reject this subscription in whole or in part or terminate the Offering in its sole and absolute discretion. If Subscriber’s subscription is rejected in whole, or the Offering is terminated without a Closing occurring, all funds received from the Subscriber will be promptly returned without interest, penalty, expense or deduction, and this Agreement shall thereafter be of no further force or effect. If Subscriber’s subscription is rejected in part, the funds for the rejected portion of such subscription will be promptly returned without interest, penalty, expense or deduction and this Agreement will continue in full force and effect to the extent such subscription was accepted.

 

2. Closing.

 

2.1. Closing. The Closing of the transactions contemplated hereby (the “Closing”) shall take place on the date the Company declares the Closing effective (the “Closing Date”). The Closing shall occur at such place as determined by the Company.

 

2.2. Termination of Offering. All payments will be held by the Company until the Company declares the Closing effective or terminates the Offering. The Offering will be terminated if either (i) the Closing does not become effective on or prior to April 15, 2008, which date the Company may extend, in its sole discretion, but not beyond May 15, 2008, or (ii) the Company elects to terminate the Offering. If the Offering is terminated, the Company will return any payments received, without interest, to the Subscribers.

 

3. Representations and Warranties of the Company. The Company hereby represents and warrants to the Subscriber that the following representations and warranties shall be true immediately prior to the Closing:

 

3.1. Organization; Good Standing; Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Florida and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the consolidated financial condition or results of operations of the Company.

 

3.2. Capitalization. Capitalization. The authorized capital stock of the Company immediately prior to the Closing consists of 100,000,000 shares of Common Stock of which 18,285,964 shares are outstanding as of March 10, 2008 and 10,000,000 shares of preferred stock, par value $.001 per share, of which 40,050 shares are outstanding as of March 1, 2008. The options to purchase 7,136,000 shares of Common Stock are outstanding as of March 1, 2008 and warrants to purchase 3,196,565 shares of Common Stock are outstanding as of March 1, 2008. All of the issued and outstanding capital stock of H2Diesel, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Subsidiary”) is owned by the Company. The Company owns 100% of Subsidiary, and has no direct or indirect ownership interest in any entity other than Subsidiary.

 

 

3.3. Authorization. All corporate action required to be taken by the Company’s Board of Directors and shareholders in order to authorize the Company, as the case may be, to enter into this Agreement, the Registration Rights Agreement and to issue the Securities has been taken. Each of this Agreement and the Registration Rights Agreement when executed and delivered by the Company, shall constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and public policy limitations on the enforcement of indemnification for violations of securities laws.

 

3.4. Valid Issuance of Securities. The Securities, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, and the shares of Common Stock issuable (i) upon conversion of the Shares, (ii) upon payment as dividends on the Shares and (iii) upon exercise of the Warrants (collectively, the “Additional Shares”), will be duly authorized, validly issued, fully paid and non-assessable and free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable state and federal securities laws.

 

3.5. SEC Documents, Financial Statements.

 

(a) True and complete copies of the Incorporated SEC Reports (as defined in the Memorandum) are publicly available on the Securities and Exchange Commission (“SEC”) EDGAR database (www.sec.gov). As of their respective filing dates, the Incorporated SEC Reports complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act of 1933, as amended, and each of the Incorporated SEC Reports was timely filed. To the Company’s knowledge, as of the date hereof, none of the Incorporated SEC Reports is subject to ongoing SEC review or outstanding SEC comment. Each of the Incorporated SEC Reports, as of the date it was filed with the SEC, did not contain any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected, supplemented or superseded by a subsequently filed Incorporated SEC Report.

 

(b) The financial statements of the Company, including the notes thereto, included in the Incorporated SEC Reports (the “Company Financial Statements”) (i) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates; (ii) have been prepared in accordance with GAAP applied on a basis consistent throughout the periods indicated and consistent with each other (except as may be indicated in the notes thereto or, in the case of unaudited statements, included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC); and (iii) present fairly in all material respects the consolidated financial condition and results of operations of the Company as of the respective dates and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal, recurring year-end adjustments).

 

 

3.6. Absence of Undisclosed Liabilities. The Company has no material liabilities except (i) liabilities provided for or reserved against in the Company Financial Statements, (ii) liabilities disclosed in the Memorandum, and (iii) liabilities arising in the ordinary course of business consistent with past practice since January 31, 2007.

 

4. Representations and Warranties of the Subscriber. The Subscriber hereby acknowledges, agrees with and represents and warrants to the Company as follows:

 

4.1. Authorization. The Subscriber has full power and authority to enter into this Agreement and the Registration Rights Agreement, the execution and delivery of which has been duly authorized, if applicable, and this Agreement and the Registration Rights Agreement constitute a valid and legally binding obligation of the Subscriber.

 

4.2. Securities Exemption. The Subscriber acknowledges his, her or its understanding that the offering and sale of the Securities is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D promulgated thereunder (“Regulation D”). In furtherance thereof, the Subscriber represents and warrants to the Company as follows:

 

(a) The Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s representations contained herein, the Subscriber is merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.

 

(b) The Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not with view to, or resale in connection with, any distribution of the Securities.

 

(c) The Subscriber has the financial ability to bear the economic risk of his, her or its investment, has adequate means for providing for their current needs and contingencies, and has no need for liquidity with respect to the investment in the Company.

 

(d) The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, “Advisors”), have received this Agreement, together with the Memorandum, and all other documents provided by the Company pursuant to the requests of the Subscriber or its Advisors, if any, and have carefully reviewed them and they understand the information contained therein, prior to the execution of this Agreement.

 

(e) The Subscriber (together with his, her or its Advisors, if any) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment in the Securities. If other than an individual, the Subscriber also represents it has not been organized solely for the purpose of acquiring the Securities.

 

 

4.3. Investor Questionnaire. The information in the Investor Questionnaire completed and executed by the Subscriber in the form attached as Exhibit C hereto (the “Investor Questionnaire”) is true and accurate in all respects, and the Subscriber is an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D.

 

4.4. Restricted Securities. The Subscriber represents, warrants and agrees that he, she or it will not sell or otherwise transfer the Shares or any Additional Shares without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of his, her or its purchase because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available. In particular, the Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The Subscriber also understands that, except as otherwise provided in the Registration Rights Agreement, the Company is under no obligation to register the Securities on his, her or its behalf or to assist them in complying with any exemption from registration under the Securities Act or applicable state securities laws. The Subscriber understands that any sales or transfers of the Securities are further restricted by state securities laws and the provisions of this Agreement.

 

4.5. Reliance on Representations. No representations or warranties have been made to the Subscriber by the Company, or any of their respective officers, employees, agents, sub-agents, affiliates or subsidiaries, other than any representations of the Company contained herein, and in subscribing for the Securities the Subscriber is not relying upon any representations other than those contained herein.

 

4.6. Investment Risk. The Subscriber understands and acknowledges that his, her or its purchase of the Securities is a speculative investment that involves a high degree of risk and the potential loss of their entire investment and has carefully read and considered the matters set forth in the Memorandum and in the Incorporated SEC Reports and in particular the matters under the caption “Risk Factors” therein, and, in particular, acknowledges that the Company has a limited operating history and is engaged in a highly competitive business.

 

4.7. Commitment to Investments. The Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s net worth, and an investment in the Securities will not cause such overall commitment to become excessive.

 

4.8. Legend. The Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend until (i) such shares shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel for the Company such Securities may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

 

 

 

4.10. Status of Securities. Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Offering or confirmed the accuracy or determined the adequacy of any information provided by the Company to the Subscriber or its Advisors. Neither this Agreement nor any of such information has been reviewed by any federal, state or other regulatory authority.

 

4.11. Disclosure of Information. The Subscriber and his, her or its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the offering of the Securities and the business, financial condition, results of operations and prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and his, her or its Advisors, if any. The Subscriber is unaware of, is in no way relying on, and did not become aware of the offering of the Securities through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or electronic mail over the internet, in connection with the offering and sale of the Securities and is not subscribing for Securities and did not become aware of the offering of the Securities through or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person not previously known to the Subscriber in connection with investments in securities generally. The Subscriber further acknowledges that the Subscriber has had the opportunity to request and receive drafts of the Company’s financial statements for the year ended December 31, 2007 and its annual report on Form 10-K for the fiscal year ended December 31, 2007 and that such information is not yet publicly available and accordingly has not been provided to investors. To the extent that the Subscriber has requested and received this material in its current draft form, or any other non-public information which the Company identifies as likely to be material, the Subscriber acknowledges that they must keep such information confidential and may not trade in the Company’s securities until the Company has filed its annual report on Form 10-K for the fiscal year ended December 31, 2007, expected to be filed by March 31, 2008.

 

 

4.12. No Claim. The Subscriber has taken no action which would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.

 

4.13. Forward-Looking Statements. The Subscriber acknowledges that any estimates or forward-looking statements or projections included in the information provided by the Company, were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company or such management and should not be relied upon.

 

4.14. No Inconsistent Information. No oral or written representations have been made, or oral or written information furnished, to the Subscriber or his, her or its Advisors, if any, in connection with the offering of the Shares which are in any way inconsistent with the information contained herein or in the Memorandum.

 

4.15. ERISA. (For ERISA plans only) The fiduciary of the Employee Retirement Income Security Act of 1974 (“ERISA”) plan (the “Plan”) represents that such fiduciary has been informed of an understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (a) is responsible for the decision to invest in the Company; (b) is independent of the Company and any of their respective affiliates; (c) is qualified to make such investment decision; and (d) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation of the Company or any of its affiliates.

 

5. Insider Trading Prohibition; Indemnity.

 

5.1. Insider Trading. Until the filing by the Company of a current report on Form 8-K with the SEC describing the Offering, the Subscriber hereby agrees to (i) refrain from (A) engaging in any transactions with respect to the capital stock of the Company or securities exercisable or convertible into or exchangeable for any shares of capital stock of the Company, and (B) entering into any transaction which would have the same effect, or entering into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the capital stock of the Company and (ii) indemnify and hold harmless the Company, and their respective officers and directors, employees, agents, sub-agents and affiliates and each other person, if any, who controls any of the foregoing, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any violation of this Section 6 by the Subscriber.

 

 

5.2. Indemnity. The Subscriber agrees to indemnify and hold harmless the Company and their respective officers and directors, employees, agents, sub-agents and affiliates and each other person, if any, who controls any of the foregoing, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty by the Subscriber, or the Subscriber’s breach of, or failure to comply with, any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to the Company, the Finder and their respective officers and directors, employees, agents, sub-agents and affiliates and each other person, if any, who controls any of the foregoing in connection with the Offering.

 

6. Notices to Subscribers.

 

(a) THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS AGREEMENT OR ANY INFORMATION PROVIDED IN CONNECTION HEREWITH. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

(b) THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

8. Miscellaneous Provisions.

 

8.1. Modification. Neither this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, modification, discharge or termination is sought.

 

8.2. Survival. The Subscriber’s representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement, the delivery of the Securities and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of any of the Subscribers, their Advisors or the Company, as the case may be.

 

8.3. Notices. Any party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on the signature page of this Agreement or to the Company at H2Diesel Holdings, Inc., 11111 Katy Freeway, Suite 910, Houston, Texas 77079 (fax: (713) 973-5777), Attention: Chief Executive Officer, or such other address or facsimile number as shall have been furnished to the party giving or making such notice, demand or delivery using any means (including personal delivery, expedited courier, messenger service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written notice in the manner herein set forth.

 

 

8.4. Binding Effect. Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement and their heirs, executors, administrators, successors, legal representatives and assigns. If the Subscriber is more than one person or entity, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and his or its heirs, executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

 

8.5. Assignability. This Agreement is not transferable or assignable by the Subscriber.

 

8.6. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

8.7. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

8.8. Interpretation. The headings and captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no caption or heading had been used herein or therein. Each defined term used in this Agreement shall have a comparable meaning when used in its plural or singular form. The use of the word “including” herein shall mean “including without limitation.” The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

8.9. No Third-Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their respective permitted successors and assigns any rights or remedies under or by reason of this Agreement.

 

 

8.10. Entire Agreement. This Agreement, the Registration Rights Agreement and the documents referred to herein, together with all the Exhibits hereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

 

8.11. Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

8.12. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdictions other than the State of Florida.

 

 

The USA PATRIOT Act		What is money laundering?			How big is the problem and why is it important?
The USA PATRIOT Act is designed to detect, deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage firms and financial institutions. Since April 24, 2002, all brokerage firms have been required to have new, comprehensive anti-money laundering programs.   To help you understand these efforts, we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.		Money laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities.   Money laundering occurs in connection with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.			The use of the U.S. financial system by criminals to facilitate terrorism or other crimes could taint our financial markets. According to the U.S. State Department, one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.

 

What are we required to do to eliminate money laundering?

 

Under new rules required by the USA PATRIOT Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent audits, and establish policies and procedures to detect and report suspicious transactions and ensure compliance with the new laws.

As part of our required program, we may ask you to provide various identification documents or other information. Until you provide the information or documents we need, we may not be able to effect any transactions for you.

 

It is the policy of the Finder to respect the privacy of customers who subscribe to transactions underwritten by the Finder.

 

Whether its own brokers introduce a Subscriber to the Finder or the introduction is made through selling agents, non-public personal information is protected by the Finder.

 

 

The Finder will not disclose any nonpublic personal information about a Subscriber to anyone, except as required or permitted by law and to effect, administer, or enforce transactions requested by a Subscriber in the ordinary processing, servicing or maintaining their accounts. Furthermore, the Finder does not reserve the right to disclose a Subscriber’s nonpublic personal information in the future without first notifying the Subscriber of a change in privacy policy and providing a convenient opportunity for the Subscriber to opt out of information sharing with nonaffiliated third parties.

 

Under the USA PATRIOT Act of 2001 (Public Law 107-56) (together with all rules and regulations promulgated hereunder, the “Patriot Act”), the Finder and/or the Subscriber’s broker may be required or requested to disclose to one or more regulatory and/or law enforcement bodies certain information regarding transactions relating to the Subscriber’s account involving transactions with foreign entities and individuals, other transactions in your account as required in the Patriot Act and other activities described in the Patriot Act as “suspicious activities.” Neither the Finder nor the Subscriber’s broker shall have any obligation to advise the Subscriber of any such disclosures or reports made in compliance with the Patriot Act.

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Agreement on the ______ day of ______________ 2008.

 

_______________________________              x $100 for each Share                         =$______________________.

Shares subscribed for

Aggregate Purchase Price

 

Each Subscriber shall also receive a number of Warrants initially exercisable for a number of shares of Common Stock equal to 25% of the number of Shares of Common Stock into which the Shares subscribed for under this Agreement are initially convertible.

 

Manner in which Title is to be held (Please Check One):

 

 

 

IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.

INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 15.

SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 17.

 

 

 

Exact Name in Which Title is to be Held
Name (Please Print)		Name of Additional Purchaser
Address: Number and Street		Address: Number and Street
City, State and Zip Code		City, State and Zip Code
Social Security Number		Social Security Number
Telephone Number		Telephone Number
Fax Number (if available)		Fax Number (if available)
E-Mail (if available)		E-Mail (if available)
(Signature)		(Signature of Additional Purchaser)

 

 

(Corporation, Partnership, LLC, Trust, Etc.)

 

Name of Entity (Please Print)

Date of Incorporation or Organization:__________________________________________________

Federal Taxpayer Identification Number:________________________________________________

Office Address
City, State and Zip Code
Telephone Number
Fax Number (if available)
E-Mail (if available)

 

Type of entity (e.g., corporation, trust, limited partnership, general partnership IRA Trust, Pension or Profit Sharing Plan or Trust):_____________________________________________________

 

Date of formation or incorporation:                ___________________________

 

Whether the Subscriber was organized for the specific purpose of acquiring securities of H2Diesel Holdings, Inc.:

 

Yes ______     No______

 

Each individual authorized to execute documents on behalf of the Subscriber in connection with this investment:

 

Name:			Name:
Title:			Title:

The Subscribers state of formation or incorporation: ________

 

The business of the entity: _____________________________

 

Certain Subscribers must provide the following information:

 

(A)

Corporations MUST provide the articles of incorporation, by-laws, good standing certificate and corporate resolution authorizing the purchase of shares and authorizing the person(s) signing the subscription documents to do so. All the documents must be certified by the Secretary or Assistant Secretary of the corporation as being true and correct copies thereof and in full force and effect.

 

 

(B)

Partnerships MUST provide a copy of the partnership agreement showing the date of formation and giving evidence of the authority of the person(s) signing the subscription documents to do so.

 

(C)

Trusts MUST provide a copy of the trust agreement showing the date of formation and giving evidence of the authority of the person(s) signing the subscription documents to do so.

 

(D)

Limited Liability Companies and similar organizations MUST provide their organizational document, operating agreement, good standing certificate and evidence of authorization for the purchase of shares the person(s) signing the subscription documents to do so. All the documents must be certified by an appropriate officer of the organization as being true and correct copies thereof in full force and effect.

 

By:
	Name:
	Title:

 

 

ACCEPTED this _____ day of ________________ 2008 on behalf of the Company.

By:
	Name:
	Title:

 

 

 

 

 

 

 

 

 

o

You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1) the decision that you shall subscribe for and purchase Securities, is made by a plan fiduciary, as defined in Section 3(2 1) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Securities is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for and purchase the Securities is made solely by persons or entities that are accredited investors.

 

o	You are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended.

 

o

You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose of making an investment in the Securities and with total assets in excess of $5,000,000.

 

o	You are a director or executive officer of H2Diesel Holdings Inc.

 

o	You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time of your subscription for and purchase of the Securities.

 

 

o	You are a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching the same income level in the current year.

 

o	You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose subscription for and purchase of the Shares is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

 

o	You are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs.

 

The undersigned hereby represents and warrants that all of its answers to this Investor Questionnaire are true as of the date of its execution of the Subscription Agreement pursuant to which it purchased Shares of the Company.

 

Name of Purchaser [please print]		Name of Co-Purchaser [please print]
Signature of Purchaser (Entities please		Signature of Co-Purchaser
provide signature of Purchaser’s duly
authorized signatory.)
Name of Signatory (Entities only)
Title of Signatory (Entities only)