FORM OF SUBSCRIPTION AGREEMENT O2DIESEL CORPORATION

Exhibit 10.1

FORM OF SUBSCRIPTION AGREEMENT

     THIS AGREEMENT (the “ Agreement ”) is made effective as of the ___day of ___, 2005 (the " Effective Date ”), by and between O2DIESEL CORPORATION , a Delaware corporation, with its principal office at 100 Commerce Dr., Suite 301, Newark, Delaware 19713 (the “ Company ”) and [                                                         ] of [                                                                                                                                                                                                                                                                                                                                                                                                    ] (the “ Subscriber ”).

WHEREAS:

      NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual covenants and agreements herein contained, the receipt of which is acknowledged, the parties covenant and agree with each other as follows:

          1.1.      On the terms and subject to the conditions of this Agreement, the Subscriber tenders this subscription and irrevocably subscribes for the purchase of [              ] Common Shares at the price of US $0.70 per share (“ Common Shares ”) to be purchased at the Closing (as herein defined), pursuant to an exception from registration under Section 4(2) of the Securities Act and Regulation D thereunder. By signing this Agreement, the Subscriber acknowledges that the Company is relying on the accuracy and completeness of the representations contained in this Agreement in complying with its obligations under applicable securities laws.

          1.2.      At the Closing, the Company shall issue to the Subscriber a warrant to purchase one additional Common Share for each two Common Shares purchased (the “ Warrant ”) expiring twenty four (24) months following the Closing (“ Warrant Expiration Date ”). The Warrant shall be exercisable at an exercise price of $0.70 per share during the twelve (12) months following the Closing or at an exercise price of $1.05 per share during the period twelve (12) months after the Closing to the Warrant Expiration Date.

          2.1.      Subject to satisfaction or waiver of the conditions set forth in Section 3 below, the closing of the sale and purchase of the Common Shares shall take place on the 120 ^th day after the Effective Date, or such earlier day that is agreed between the Company and the Subscriber, at the offices of Arnold & Porter LLP, 1600 Tysons Boulevard, McLean, Virginia 22102, or such other place as the Company may designate (“ Closing ”).

          2.2.      Concurrent with the execution of this Agreement, the Subscriber will tender to the Company the subscription funds for the Common Shares (a) in the form of a check payable to “O2Diesel Corporation” to be delivered to Arnold & Porter LLP, 1600 Tysons Boulevard, McLean, Virginia 22102, Attn.: Kevin J. Lavin, Esq. or (b) by wire transfer to the following account:

     This Subscription Agreement shall not be binding upon the Company until the subscription funds have been received in accordance with this Section 2.2. In the even that less than the full subscription funds are received, this Subscription Agreement will be binding only in respect of the number of Common Shares that may be purchased based on the subscription funds received.

          2.3.      In the event that the Closing has not occurred by the latest time specified in Sections 2.1, the obligations of the parties in respect of the Closing shall terminate and any subscription funds tendered in respect of the Closing shall be returned to the Subscriber. In such event, the Company shall have no liability to the Subscriber other than to return any funds tendered, without interest.

          2.4.      No later than five days after the Closing, the Company shall deliver a treasury order to its transfer agent sufficient to cause the transfer agent to issue to the Subscriber a share certificate or certificates representing the Common Shares, registered in the name of the Subscriber, as provided for below.

          2.5.      The Company and the Subscriber also hereby agree to execute and deliver at the Closing such other documents as may be necessary or appropriate.

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          As a condition to the Closing, the Company shall have:

          (a)      Expanded existing management by appointing a Chief Operating Officer or new Chief Executive Officer; and

          (b)      Received shareholder approval for the sale or issuance of common stock equal to twenty (20%) or more of the Company’s presently outstanding stock as required by The American Stock Exchange.

          The Company agrees it shall within sixty (60) days following the Closing, prepare and file, at its own expense, a registration statement or registration statements for all the Common Shares issued (the “ Registration Statements ”) under the Securities Act with the Securities and Exchange Commission (“ SEC ”). The Company will use its reasonable best efforts to cause such Registration Statements to become effective within six (6) months from the initial filing thereof.

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

          Subscriber represents and warrants as follows:

          (a)      Subscriber is acquiring the Common Shares for his, her or its own account for investment and not with a view to, or for sale in connection with, any