Continental Fuels 8-K Entry into a Material Definitive Agreement

Exhibit 10.7

REGISTRATION RIGHTS AGREEMENT

       This Registration Rights Agreement (this “Agreement”) is made and entered into as of December 11, 2007,
between Continental Fuels, Inc., a Nevada corporation (the “Company”), and Sheridan Asset Management, LLC (the
“Purchaser”).

       This Agreement is made pursuant to the Loan Agreement, dated as of the date hereof among the Company
and the Purchaser and certain other parties named therein (the “Loan Agreement”).

       The Company and the Purchaser hereby agree as follows:

       1. Definitions

       Capitalized terms used and not otherwise defined herein that are defined in the Loan Agreement shall
have the meanings given such terms in the Loan Agreement and the Transaction Documents (as such term is
defined in the Loan Agreement). As used in this Agreement, the following terms shall have the following meanings:

         “Advice” shall have the meaning set forth in Section 6(d).

         “Commission” means the Securities and Exchange Commission.

         “Effectiveness Date” means, with respect to the initial Registration Statement required to be filed
hereunder, the calendar day six (6) months after the Filing Date; provided, however, in the event the Company is
notified by the Commission that the above Registration Statement will not be reviewed or is no longer subject to
further review and comments, the Effectiveness Date as to such Registration Statement shall be the tenth Trading Day
following the date on which the Company is so notified if such date precedes the dates required above.

         “Effectiveness Period” shall have the meaning set forth in Section 2(a).

         “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder

         “Event” shall have the meaning set forth in Section 2(b).

         “Event Date” shall have the meaning set forth in Section 2(b).

         “Filing Date” means the date upon which the Registration Statement shall be filed by the Company.

         “Holder” or “Holders” means the holder or holders, as the case may be, from time to time of
Registrable Securities.

         “Indemnified PartyR 21; shall have the meaning set forth in Section 5(c).

         “Indemnifying Party” shall have the meaning set forth in Section 5(c).

         “Losses” shall have the meaning set forth in Section 5(a).

         “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

         “Prospectus” means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the Securities Act), 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 a Registration Statement, and all other amendments and supplements to the Prospectus, including post-
effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.

         “Registrable Securities” means (i) all shares of the Company’s Common Stock issuable under the
Warrants, (ii) any securities issued or issuable upon any stock split, dividend or other distribution recapitalization or
similar event with respect to the foregoing and (iii) any additional shares issuable in connection with any anti-dilution
provisions in the Warrants.

     &nb sp;   “Registration Statement” means the registration statements required to be filed hereunder including
(in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

         “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such Rule.

         “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such Rule.

         “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such Rule.

         “Rule 461” means Rule 461 p romulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such Rule.

         “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

         “Trading Day” shall mean any day on which official trading of Over the Counter Bulletin Board
securities transpires.

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       2. Registration

       (a) On or after January 1, 2009 the Holder may demand that the Company prepare and file with the
Commission, within thirty (30) days of such demand (“30-Day Period”), a Registration Statement covering the resale of
all the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415; provided, however,
if before the Filing Date, the Holder shall be permitted to liquidate all of its interest in the Company without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the C ompany’s transfer agent and the affected Holders, then the Company’s
obligation to file a Registration Statement under this Section 2(a) shall be suspended. The Registration Statement shall
be on Form SB-2 (except if the Company is not then eligible to register for resale the Registrable Securities on Form
SB-2, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain
(unless otherwise directed by the Holders) substantially the “Plan of Distribution” attached hereto as Annex A. Subject
to the terms of this Agreement, the Company shall use reasonable best efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as practicable after the filing the reof, but in any event prior to
the applicable Effectiveness Date, and shall use reasonable best efforts to keep such Registration Statement
continuously effective (subject to the terms of this Agreement) under the Securities Act until all Registrable Securities
covered by such Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule
144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders, (the “Effectiveness Period”). The Company shall
telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The
Company shall immediately notify the Holders via facsimile of the effectiveness of a Registration Statement on the
same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the
date requested for effectiveness of a Registration Statement (the “Effective Date”). The Company shall, by 9:30 a.m.
Eastern Time on the third Trading Day after the Effective Date, file a final Prospectus with the Commission as required
by Rule 424. Failure to so notify the Holder within three Trading Days of such notification of effectiveness or failure
to file a final Prospectus as a foresaid shall be deemed an Event under Section 2(b).

       (b) Subject to the terms and conditions of thi s Agreement, if (i) a Registration Statement is not filed on or
prior to the end of the 30-Day Period (if the Company files a Registration Statement without affording the Holder the
opportunity to review and comment on the same as required by Section 3(a), the Company shall not be deemed to have
satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration in accordance
with Rule 461 promulgated under the Securities Act, within five Trading Days after the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be
“reviewed,” or is not subject to further review; or (iii) on or prior to its Effectiveness Date, the Company fails to file a
pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such
Registration Statement within 30 calendar days after the receipt of comments by or notice from the Commission that
such amendment is required in order for a Registration Statement to be declared effective; or (iv) a Registration
Statement filed or required to be filed hereunder does not become effective by its Effectiveness Date; or (v) except as
otherwise permitted in this Agreement, after the Effectiveness Date, a Registration Statement ceases for any reason to
remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holder is
not permitted to utilize the Prospectus th erein to resell such Registrable Securities for 10 consecutive business days but
no more than an aggregate of 15 business days during any 12-month period (which need not be consecutive Trading
Days) (any such failure or breach being referred to as an “Event”, and for purposes of clause (ii) or (iv) the date on
which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or
for purposes of clause (iii) the date which such 30 calendar day period is exceeded, or for purposes of clause (v) the
date on which such 10 or 15 business day period, as applicable, is exceeded being referred to as “Event Date”), then,
following written notice by the Holder to the Company of such Event, the Comp any (A) shall pay the Holder an
amount in cash, as liquidated damages and not as a penalty of $25,000, and (B) in the event any Event is not cured
within sixty (60) days after an Event Date, the Company shall pay an additional $25,000 and such Event shall
constitute an Event of Default under the Notes. The dates provided in this Section 2(b) shall be extended on a day-for-
day basis during any period during which any Holder fails to provide any information or take any other action
reasonably required in order to permit registration of the Registrable Securities. If the Company fails to pay any
partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will
pay interest thereon a t a rate of 20% per annum (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply
on a daily pro-rata basis for any portion of a month prior to the cure of an Event.

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       3. Registration Procedures

       In connection with the Company’s registration obligations hereunder, the Company shall:

         (a) Not less than five Trading Days prior to the filing of each Registration Statement or any
related Prospectus or any amendment or supplement thereto (excluding any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall, (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders, a nd (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall
not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the
Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five Trading Days after the Holders have been so furnished copies of
such documents. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this
Agreement as Annex B (a “Selling Holder Questionnaire”) not less than two Trading Days following written request
therefor.

         (b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep
a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period;
(ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond in a
commercially reasonable manner to any comments received from the Commission with respect to a Registration
Statement or any amendment thereto and in a commercially reasonable manner provide the Holders true and complete
copies of all correspondence from and to the Commission relating to a Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act with respect to the registration of all
Registrable Securities covered by a Registration Statement during the applicable period in accordance with (subject to
the terms of this Agreement) the intended methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.

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         (c) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to
clauses (ii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) in a commercially reasonable manner (and, in the case of (i)(A) below, not less
than five Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no
later than five Trading Days following the day: (i)(A) when a Prospectus or any Prospectus supplement or post-
effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the
Company whether there will be a “r eview” of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written
responses thereto to each of the Holders); and (C) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event that
makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement
made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the cas e of a Registration Statement or the Prospectus, as the case may be, it will not contain any
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 under which they were made, not misleading; and (vi) the
occurrence or existence of any pending corporate development with respect to the Company that the Company
believes may be material and that, in the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of the Registration Statement or Prospectus; provided that any and all of such
information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law; provided, further, notwithstanding each Holder’s agreement to keep such
information confidential, the Holders make no acknowledgement that any such information is material, non-public
information; provided that such Holders will not trade or take any action on any such information provided by the
Company until such information has been disclosed to the public by the Company.

         (d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment.

         (e) Upon request therefore, furnish to each Holder, without charge, at least one conformed
electronic copy in .pdf format of each such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished
or incorporated by reference) promptly after the filing of such documents with the Commission.

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         (f) Promptly deliver to each Holder, without charge, as many copies in .pdf format of the
Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request in connection with resales by the Holder of Registrable Securities. Subject to the
terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after the giving on any notice pursuant
to Section 3(c).

         (g) Prior to any resale of Registrable Securities by a Holder, use its reasonable best efforts to
register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing,
to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent to service of process in any such
jurisdiction.

         (h) If requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent permitted by the Loan Agreement and applicable
securities laws and laws o f the jurisdiction of the Company’s incorporation, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

         (i) Upon the occurrence of any event contemplated by this Section 3, as promptly as
reasonably practicable under the circumstances taking into account the Company’s good faith assessment of any
adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a
supplement or amendment, including a post- effective amendment, to a Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated therein by ref erence, and file any other
required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will 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, in light of the circumstances under which they were made, not misleading. If the Company notifies
the Holders to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then
the Holders shall immediately suspend use of such Prospectus. The Company will use its reasonable best efforts to
allow for the use of the Prospectus to be resumed as promptly as is practicable. Notwithstanding anything herein to the
contrary, (i) the Company shall have the right to require any Holder not to sell under any Prospectus or to suspend the
effectiveness thereof (but not more than three times and not for a period exceeding 45 days, in the aggregate, in any
calendar year) if the Company determines, in its good faith judgment, that such offering or continued effectiveness
would interfere with any material financing, acquisition, disposition, corporate reorganization or other material
transaction involving the Company or any of its subsidiaries or public disclosure thereof would be required prior to the
time such disclosure might otherwise be required, or when the Company is in possession of material information that it
deems advisable not to disclose in a registration statement.

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         (j) Comply with all applicable rules and regulations of the Commission.

         (k) The Company may require each selling Holder to furnish to the Company a certified
statement as to the number of Registrable Securities beneficially owned by such Holder and, if required by the
Commission, the person thereof that has voting and dispositive control over such Registrable Securities. If the
Company is unable to meet any obligation, deadline or condition hereunder with respect to the registration of the
Registrable Securities due to a Holder failing to furnish such information within three Trading Days of the Company’s
request, such obligation, dea dline or condition shall be extended on a day-for-day basis until the Holder provides the
Company with the requisite information or takes any other action reasonably required in order for the Company to
satisfy such obligation, deadline or condition set forth herein.

         (l) Subject to its obligation under Section 2(b), the Company may withdraw a Registration
Statement after filing and after such notice, but prior to the effectiveness thereof, provided that the Company shall
promptly notify each Holder in writing of any such action and provided further that the Company shall bear all
expenses incurred by such Holder or otherwise in connection with such withdrawn Registration Statement.

       4. Registration Expenses. All fees and expenses of the Company incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable
Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A)
with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company
in writing (including, without limitation, fees and d isbursements of counsel for the Company in connection with Blue
Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as requested by the Holders), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included
in a Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel
for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred
in connection with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be responsible for any broker or underwriter
fees, discounts or similar commissions or, ex cept to the extent provided for in the Transaction Documents, any legal
fees or other costs of the Holders.

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       5. Indemnification

       (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors, member, partners, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees (and any other Person with a
functionally equivalent role of a Person holding such titles) of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 o f the Exchange Act) and the officers,
directors, agents, members, partners and employees (and any other Person with a functionally equivalent role of a
Person holding such titles) of each such controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees)
and expenses (collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case
of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions are
based solely upon information furnished in writing to the Company by such Holder or its representatives for use
therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it
being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated
by this Agreement of which the Company is aware.

        ;(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents
or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all
Losses, as incurred, to the extent arising out of or based upon: (x) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder
to the Company specifically for inclusion in such Registration Statement or such Prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based upon information regarding such Holder furnished in writing to the
Company by such Holder for use therein, or to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed and approved in writing by such Holder
for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of
an occurrence of an event of the type specified in Section 3(c)(ii)-(vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount o f the net proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification obligation except in the case of fraud by
such Holder.

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       (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have
the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except to the extent that such failure shall have prejudiced the Indemnifying
Party.

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

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

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       (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such
Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified
Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, amo ng other things, whether any action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any
reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to
the extent such party would have been indemnified for such fees or expenses i f the indemnification provided for in this
Section was available to such party in accordance with its terms. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such contribution obligation.

       The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d)
were determined by pro rata allocation or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this
Section 5(d) , no Holder shall be required to contribute, in the aggregate, any amount in excess of the proceeds actually
received by such Holder from the sale of the Registrable Securities except in the case of fraud by such Holder.

       The indemnity and contribution agreements contained in this Section are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties.

       6. Miscellaneous

       (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.

       (b) No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other
than the Registrable Securities. Each Holder acknowledges and agrees that the Company may, in its sole discretion,
file one registration statement to fulfill its obligations to the Holder hereunder. The Company shall not file any other
registration statements until the initial Registration Statement required hereunder is declared effective by the
Commission, (other than registrations on Form S-4 or Form S-8 or any successor or replacement forms), provided that
this Section 6(b) shall not prohibit the Company from filing amendments to registration statements already filed.

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       (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the
Registration Statement.

       (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such
Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until such
Holder’s receipt of the copies of the supplemented Prospec tus and/or amended Registration Statement, or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The Company will use its reasonable best
efforts to ensure that the use of the Prospectus may be resumed as promptly as it practicable. The Company agrees and
acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section 2(b).

  &nb sp;    (e) Piggy-Back Registrations.

  (i) If at any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with stock option or other employee
be nefit plans, then the Company shall send to each Holder a written notice of such determination and, if within fifteen
days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such holder requests to be registered; provided,
that, the Company, shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are
eligible for resale without volume restrictions pursuant to Rule 144 promulgated under the Securities Act or that are
the subject of a then effective Registration Statement.

         (ii) If the registration of the Registrable Securities under clause (i) immediately ab ove is to be
underwritten, then the right of any Holder to registration pursuant to this Section 6(e) shall be conditioned upon such
Holder’s participation in the underwriting to the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company. Such Holders shall not be required to
make any representations or warranties to or agreements with the Company or the underwriter other than those relating to
such Holders, their Registrable Securities and their intended methods of distribution and information about such Holders. If
requested by the underwriter, the Holders will agree, for themselves and their affiliates, not to sell or offer to sell any shares
of their Common Stock for a reasonable period of time (not to exceed sixty (60) days) after the Effective Date of the
registration statement. Notwithstanding any other provision of this Section 6(e), if the underwriter determines that
marketing factors require a limitation of the number of shares to be underwritten, the Company shall so advise all Holders of
Registrable Securities, and the Company shall include in such registration, prior to the inclusion of any Registrable
Securities, the number of shares of Common Stock or other capital stock of the Company elected by the Company to be
included in the registration, which in the opin ion of such underwriter can be sold. If any space remains for additional shares
in such registration, such shares shall be allocated pro rata among Holders of Registrable Securities and all other
shareholders of the Company that have contractual rights with respect to the registration of shares of capital stock held by
such shareholders (the “Other Holders”) in proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders and registrable securities held by the Other Holders at the time of filing the registration
statement, with further proportional allocations among the Holders and Other Holders if any such Holder or Other Holder
has requested less than all such Registrable Securities it is entitled to reg ister.

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         (iii) Upon the written request of the managing underwriter of any underwritten offering of the
Company’s Registrable Securities, a Holder of Registrable Securities shall not sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in such
registration) without the prior written consent of Company for a period (not to exceed 30 days before the effective date
and 75 days thereafter) that Company reasonably determines is necessary in order to effect the underwritten public
offering; provided that each of the officers and directors of the Company shall have entered into substantially similar
holdback agreements with such managing underwriter covering at least the same period.

       (f) Termination. This Agreement shall terminate with respect to any Holder on the date on which the
Holder may sell its Registrable Securities pursuant to Rule 144 under the Securities Act.

       (g) Amendments and Waivers. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by the Company and Holders of a majority of
the then outstanding Registrable Securities.

       (h) Notices. Any and all notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Loan Agreement.

       (i) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company
may not assign its rights or obligations hereunder without the prior written consent of a majority of the Holders of the
then-outstanding Registrable Securities, except if such assignment was in connection with a merger, combination,
consolidation or a sale and transfer of substantially a ll of the Company’s assets. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under the Loan Agreement provided that
such Holder shall give prompt written notice of any assignment to the Company.

       (j) No Inconsistent Agreements. Neither the Company nor any of its subsidiaries has entered, as of the
date hereof, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor any of its subsidiaries has
previously entered into any agreement granting any registration rights with respect to any of its securities to any
Person that have not been satisfied in full.

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       (k) Execution and Counterparts. This Agreement may be executed in any number of 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. In the event that any signature is delivered by facsimile transmission, such signature shall create
a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the
same force and effect as if such facsimile signature were the original thereof.

       (l) Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agre ement shall be determined with the provisions of the Loan Agreement.

       (m) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.

       (n) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.

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

       (p) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder
a re several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any
way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be ne cessary for any other Holder to be joined as an
additional party in any proceeding for such purpose.

********************

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

CONTINENTAL FUELS, INC.

__________________________________________
Name:
Title:

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

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[SIGNATURE PAGE OF HOLDERS TO RRA]

Name of Investing Entity: __________________________
Signature of Authorized Signatory of Investing Entity: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

[SIGNATURE PAGES CONTINUE]

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Annex A

Plan of Distribution

       Each Selling Stockholder (the “Selling Stockholders”) of the common stock (“Common Stock”) of
CONTINENTAL FUELS, INC. (the “Company”) and any of their pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on the Trading Market or any other stock exchange,
market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares:

• ordinary brokerage transactions and transactions in which the broker-dealer solicits any purchaser;
• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
• an exchange distribution in accordance with the rules of the applicable exchange;
• privately negotiated transactions;
• settlement of short sales entered into after the date of this prospectus;
• broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
• a combination of any such methods of sale;
• through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or
• any other method permitted pursuant to applicable law.

       The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended
(the “Securities Act”), if available, rather than under this prospectus.

       Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in
sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each Selling Stockholder
does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types
of transactions involved.

       In connection with the sale of our Common Stock or interests therein, the Selling Stockholders may enter into
hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of
our Common Stock short and deliver these securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or more derivative s ecurities
which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus,
which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented
or amended to reflect such transaction).

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       The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be
deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by
them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder
has informed the Company that it does not have any agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock.

       The Company is required to pay certain fees and e xpenses incurred by the Company incident to the
registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities Act.

       Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act,
they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than under this prospectus. Each Selling Stockholder has advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale
shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares
by the Selling Stockholders.

       We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold
by the Selling Stockholders without registration and without regard to any volume limitations by reason of Rule 144(e)
under the Securities Act or any other rule of similar effect, (ii) all of the shares have been sold pursuant to the
prospectus or Rule 144 under the Securities Act or any other rule of similar effect or (iii) one year after the effecti ve
date of this prospectus. The resale shares will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

       Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the
resale shares may not simultaneously engage in market making activities with respect to our Common Stock for a
period of two business days prior to the commencement of the distr ibution. In addition, the Selling Stockholders will
be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation
M, which may limit the timing of purchases and sales of shares of our Common Stock by the Selling Stockholders or
any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed
them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.

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Annex B

CONTINENTAL FUELS, INC.

Selling Securityholder Notice and Questionnaire

       The undersigned beneficial owner of shares (the “Registrable Securities”) of common stock, par value $0.001
(the “Common Stock”), of CONTINENTAL FUELS, INC. (the “Company”), understands that the Company has filed
or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement on Form
SB- 2 (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights
Agreement, dated as of December ___, 2007 (the “Registration Rights Agreement”), among the Company and the
Purchaser named therein. A copy of the Registration Rights Agreement is available from the Company upon request at
the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto
in the Registration Rights Agreement.

       Certain legal consequences arise from being named as a selling securityholder in the 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 Registratio n Statement and the related prospectus.

NOTICE

       The undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby elects to
include the Registrable Securities owned by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.

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

QUESTIONNAIRE

1. Name.

(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:

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(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):

2. Address for Notices to Selling Securityholder:

Telephone:

Fax:

Contact Person:

3. Beneficial Ownership of Registrable Securities:

(a) Type and Principal Amount of Registrable Securities beneficially owned:

4. Broker-Dealer Status:

(a) Are you a broker-dealer?

Yes  No 

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

(b) Are you an affiliate of a broker-dealer?

Yes  No 

(c) If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, 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?

Yes  No 

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

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5. Beneficial Ownership of Other Securities of the Company 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.

(a) Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

6. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) 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:

       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 Registration Statement remains
effective.

       By signing below, the undersigned consents to the disclosure of the information contained herein in its
answers to Items 1 through 6 and the inclusion of such information in the Registration Statement and the related
prospectus and any supplement or amendment thereof. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the
related prospectus and any supplement or amendment thereof.

       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.

Dated:	Beneficial Owner:
	By:
		Name:
		Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

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