O2Diesel Enters Into $10M Stock Purchase Agreement

O2Diesel Corporation (AMEX: OTD), a company that makes ethanol diesel fuel blends, has entered into a $10 million Common Stock Purchase Agreement with Fusion Capital Fund II, LLC, a Chicago-based institutional investor.

The proceeds will be used to further O2’s efforts in developing additional worldwide markets for the proprietary fuel O2Diesel”, and assist in the testing and launch of a new 28% renewable fuel which the company is currently testing with the military and a bus fleet in upstate Washington.

Alan Rae, O2Diesel’s CEO, commented, “We believe this agreement will help provide the company with the most appropriate source of low cost operating and growth capital, during the development, and closing, of our recently announced acquisition of ProEco Energy and their innovative ethanol project. We considered several financing alternatives and concluded this agreement with Fusion Capital provides O2Diesel with the flexibility to receive on the funds when we determine the share price is most advantageous for the company and its shareholders.”

Under the agreement, O2Diesel has the right to sell shares of its common stock to Fusion Capital from time to time in amounts between $100,000 and $1 million, depending on certain conditions, for an aggregate amount of up to $10 million. The purchase price of the shares will be based upon the market price of the Company’s shares at the time of each sale without any fixed discount. In addition, O2Diesel will control the timing and amount of any sales of shares to Fusion Capital. Fusion Capital will not have the right or the obligation to purchase any shares of the O2Diesel’s common stock on any business day that the price of the company’s common stock is below $0.50. About Fusion Capital

Fusion Capital Fund II, LLC is an institutional investor based in Chicago, Illinois with a fundamental investment approach. Fusion Capital invests in a wide range of companies and industries emphasizing life sciences, energy and technology companies. Its investments range from special situation financing to long-term strategic capital.