EXHIBIT 10.3

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of this 12th day of January, 2007 (the “Effective Date”) between Kreido
Biofuels, Inc. (f/k/a Gemwood Productions, Inc.), a Nevada corporation (the
“Company”), and the parties set forth on the signature page and Exhibit A hereto
(each a “Purchaser” and collectively the “Purchasers”).
 
RECITALS:
 
WHEREAS, the Company and Kreido Laboratories (“Kreido”), currently contemplate
that they will enter into an Agreement and Plan of Merger and Reorganization,
pursuant to which a newly organized, wholly-owned subsidiary of the Company will
merge with and into Kreido, with Kreido being the surviving entity and a
wholly-owned subsidiary of the Company (the “Merger”) (the date such Merger
becomes effective hereinafter referred to as the “Merger Effective Date”);
 
WHEREAS, as a condition to the consummation of the Merger, and to provide the
capital required by Kreido for working capital purposes, the Company is offering
in compliance with Rule 506 of Regulation D of the Securities Act of 1933, as
amended (the “Securities Act”) and available prospectus exemptions in Canada, to
accredited investors in a private placement transaction (the “Offering”),
18,518,519 units of its securities (the “Units”) at the purchase price of $1.35
per Unit (the “Purchase Price”), each Unit consisting of one share of the
Company’s common stock, par value $0.001 per share (“Common Stock”), and a
warrant (the “Investor Warrants”) to purchase one share of Common Stock for five
years at the exercise price of $1.85 per share of Common Stock;
 
WHEREAS, the Offering will terminate upon the receipt of acceptable
subscriptions totaling $25,000,000; provided, that the closing of the Offering
shall be concurrent with the close of the Merger (the “Closing Date”); and
 
WHEREAS, the Purchasers, in connection with their intent to purchase Units in
the Offering, shall execute and deliver Subscription Agreements (the
“Subscription Agreements”) and Investor Questionnaires (the “Investor
Questionnaires”) memorializing the Purchasers’ agreement to purchase and the
Company’s agreement to sell the number of Units set forth therein at the
Purchase Price and this Agreement, pursuant to which the Company will provide
certain registration rights related to the shares of Common Stock underlying the
Units (including the shares of Common Stock issuable upon exercise of the
Investor Warrants) on the terms set forth herein (the Subscription Agreements,
Investor Questionnaires, and Registration Rights Agreements are collectively
referred to as the “Transaction Documents”).

NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth herein, the parties mutually
agree as follows:
 

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1.  Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
 
“Approved Market” means the NASD Over-The-Counter Bulletin Board, the Nasdaq
National Market, the Nasdaq Capital Market, the New York Stock Exchange, Inc. or
the American Stock Exchange, Inc.
 
“Blackout Period” means, with respect to a registration, a period, in each case
commencing on the day immediately after the Company notifies the Purchasers that
they are required, because of the occurrence of an event of the kind described
in Section 4(f) hereof, to suspend offers and sales of Registrable Securities
during which the Company, in the good faith judgment of its board of directors,
determines (because of the existence of, or in anticipation of, any acquisition,
financing activity, or other transaction involving the Company, or the
unavailability for reasons beyond the Company’s control of any required
financial statements, disclosure of information which is in its best interest
not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of the
Registrable Securities to be covered by such Registration Statement, if any,
would be seriously detrimental to the Company and its stockholders and ending on
the earlier of (1) the date upon which the material non-public information
commencing the Blackout Period is disclosed to the public or ceases to be
material and (2) such time as the Company notifies the selling Holders that the
Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided, that (a) the
Company shall limit its use of Blackout Periods, in the aggregate, to 30 Trading
Days in any 12-month period and (b) no Blackout Period may commence sooner than
60 days after the end of a prior Blackout Period.
 
“Business Day” means any day of the year, other than a Saturday, Sunday, or
other day on which the Commission is required or authorized to close.
 
“Closing Date” means the date set forth in the Recitals of this Agreement.
 
“Commission” means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
 
“Common Stock” means the common stock, par value $0.001 per share, of the
Company and any and all shares of capital stock or other equity securities of:
(i) the Company which are added to or exchanged or substituted for the Common
Stock by reason of the declaration of any stock dividend or stock split, the
issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
 
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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
 
“Family Member” means (a) with respect to any individual, such individual’s
spouse, any descendants (whether natural or adopted), any trust all of the
beneficial interests of which are owned by any of such individuals or by any of
such individuals together with any organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended, the estate of any such
individual, and any corporation, association, partnership or limited liability
company all of the equity interests of which are owned by those above described
individuals, trusts or organizations and (b) with respect to any trust, the
owners of the beneficial interests of such trust.
 
“Holder” means each Purchaser or any of such Purchaser’s respective successors
and Permitted Assigns who acquire rights in accordance with this Agreement with
respect to the Registrable Securities directly or indirectly from a Purchaser or
from any Permitted Assignee.
 
“Investor Warrants” mean the warrants issued in relation to the Purchasers’
purchase of Units in the private placement offering.
 
“Majority Holders” means at any time Holders representing a majority of the
Registrable Securities.
 
“Permitted Assignee” means (a) with respect to a partnership, its partners or
former partners in accordance with their partnership interests, (b) with respect
to a corporation, its stockholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its members or
former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, or (f) a party to this Agreement.
 
“Piggyback Registration” means, in any registration of Common Stock as set forth
in Section 3(b), the ability of holders of Common Stock to include Registrable
Securities in such registration.
 
The terms “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
 
“Registrable Securities” means the shares of Common Stock issued or issuable to
each Purchaser in connection with such Purchaser’s purchase of Units pursuant to
the Subscription Agreements, including the shares of Common Stock issuable on
exercise of the Investor Warrants issued to the Purchasers in connection with
their purchase of Units but excluding (i) any Registrable Securities that have
been publicly sold or may be sold immediately without registration under the
Securities Act either pursuant to Rule 144 of the Securities Act or otherwise;
(ii) any Registrable Securities sold by a person in a transaction pursuant to a
registration statement filed under the Securities Act, or (iii) any Registrable
Securities that are at the time subject to an effective registration statement
under the Securities Act.
 
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“Registration Default Date” means the date that is 90 days after the
Registration Filing Date; provided, however, that if the Registration Statement
is subject to review by the Commission, then such date shall be the date that is
120 days following the Registration Filing Date.
 
“Registration Default Period” means the period following the Registration
Default Date during which any Registration Event occurs and is continuing.
 
“Registration Event” means the occurrence of any of the following events:
 
(a)  the Company fails to file with the Commission the Registration Statement on
or before the Registration Filing Date (as defined in Section 3(a));
 
(b)  the Registration Statement is not declared effective by the Commission on
or before the Registration Default Date;
 
(c)  after the SEC Effective Date, sales cannot be made pursuant to the
Registration Statement for any reason (including without limitation by reason of
a stop order, or the Company’s failure to update the Registration Statement)
except as excused pursuant to Section 3(a); or
 
(d)  the Common Stock generally or the Registrable Securities specifically are
not listed or included for quotation on an Approved Market, or trading of the
Common Stock is suspended or halted on the Approved Market, which at the time
constitutes the principal market for the Common Stock, for more than two full,
consecutive Trading Days; provided, however, a Registration Event shall not be
deemed to occur if all or substantially all trading in equity securities
(including the Common Stock) is suspended or halted on the Approved Market for
any length of time.
 
“Registration Filing Date” means the date that is 60 days after the closing of
the Merger.
 
“Registration Statement” means the registration statement that the Company is
required to file pursuant to this Agreement to register the Registrable
Securities.
 
“Rule 144” means Rule 144 promulgated by the Commission under the Securities
Act.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
 
“SEC Effective Date” means the date the Registration Statement is declared
effective by the Commission.
 
“Subscription Agreement” means the Subscription Agreement dated as of the date
hereof between the Company and the Purchaser setting forth the terms and
conditions of the Company’s offer of Units and the Purchaser’s purchase of
Units.
 
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“Trading Day” means any day on which the national securities exchange, the
Nasdaq Stock Market, the NASD Over the Counter Bulletin Board or such other
securities market or quotation system, which at the time constitutes the
principal securities market for the Common Stock, is open for general trading of
securities.
 
“Units” mean the units offered by the Company and purchased by the Purchaser
pursuant to the Subscription Agreement which consist of one share of Common
Stock and an Investor Warrant representing the right of the Purchaser to
purchase one share of Common Stock at the exercise price of $1.85 per share.
 
2.  Term. This Agreement shall continue in full force and effect for a period of
two years from the Effective Date, unless terminated sooner hereunder.
 
3.  Registration.
 
(a)  Registration on Form SB-2. Not later than the Registration Filing Date, the
Company shall file with the Commission a Registration Statement on Form SB-2, or
other applicable form, relating to the resale by the Holders of all of the
Registrable Securities, and the Company shall use its best efforts to cause such
Registration Statement to be declared effective prior to the Registration
Default Date; provided, that the Company shall not be obligated to effect any
such registration, qualification, or compliance pursuant to this Section, or
keep such registration effective pursuant to the terms hereunder in any
particular jurisdiction in which the Company would be required to qualify to do
business as a foreign corporation or as a dealer in securities under the
securities or blue sky laws of such jurisdiction or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, in each case where it has not already done so. Notwithstanding the
foregoing, the Company shall register or qualify such registration under the
applicable securities or blue sky laws in the states of Georgia, Maryland,
Michigan, Massachusetts, New Jersey, New York and Oregon.
 
(b)  Piggyback Registration. If the Company shall determine to register for sale
for cash any of its Common Stock, for its own account or for the account of
others (other than the Holders), other than (i) a registration relating solely
to employee benefit plans or securities issued or issuable to employees,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8) or (ii) a registration relating solely to
a Commission Rule 145 transaction, a registration on Form S-4 in connection with
a merger, acquisition, divestiture, reorganization, or similar event, the
Company shall promptly give to the Holders written notice thereof (and in no
event shall such notice be given less than 20 calendar days prior to the filing
of such registration statement), and shall, subject to Section 3(c), include as
a Piggyback Registration all of the Registrable Securities specified in a
written request delivered by the Holder within 10 calendar days after receipt of
such written notice from the Company. However, the Company may, without the
consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other stockholders have elected to
abandon the proposal to register the securities proposed to be registered
thereby.
 
(c)  Underwriting. If a Piggyback Registration is for a registered public
offering involving an underwriting, the Company shall so advise the Holders. In
such event, the right of any Holder to Piggyback Registration shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to include the Registrable
Securities they hold through such underwriting shall (together with the Company
and any other stockholders of the Company selling their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter selected for such underwriting by the Company or the selling
stockholders, as applicable. Notwithstanding any other provision of this
Section, if the underwriter or the Company determines that marketing factors
require a limitation of the number of shares of Common Stock or the amount of
other securities to be underwritten, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting. The Company
shall so advise all Holders (except those Holders who failed to timely elect to
include their Registrable Securities through such underwriting or have indicated
to the Company their decision not to do so), and indicate to each such Holder
the number of shares of Registrable Securities that may be included in the
registration and underwriting, if any. The number of shares of Registrable
Securities to be included in such registration and underwriting shall be
allocated among such Holders as follows:
 
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(i)  If a Piggyback Registration is initiated by the Company, the number of
shares that may be included in the registration and underwriting shall be
allocated first to the Company and then, subject to obligations and commitments
existing as of the date hereof, to all selling stockholders, including the
Holders, who have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and
 
(ii)  If a Piggyback Registration is initiated by the exercise of demand
registration rights by a stockholder or stockholders of the Company (other than
the Holders), then the number of shares that may be included in the registration
and underwriting shall be allocated first to such selling stockholders who
exercised such demand and then, subject to obligations and commitments existing
as of the date hereof, to all other selling stockholders, including the Holders,
who have requested to sell in the registration, on a pro rata basis according to
the number of shares requested to be included.
 
No Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw their Registrable Securities therefrom by delivery of written
notice to the Company and the underwriter. The Registrable Securities so
withdrawn from such underwriting shall also be withdrawn from such registration;
provided, however, that, if by the withdrawal of such Registrable Securities a
greater number of Registrable Securities held by other Holders may be included
in such registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities pursuant to the terms and limitations set forth herein in
the same proportion used above in determining the underwriter limitation.
 
(d)  Other Registrations. Before the SEC Effective Date, the Company will not,
without the prior written consent of the Majority Holders, file or request the
acceleration of any other registration statement filed with the Commission, and
during any time subsequent to the SEC Effective Date when the Registration
Statement for any reason is not available for use by any Holder for the resale
of any Registrable Securities, the Company shall not, without the prior written
consent of the Majority Holders, file any other registration statement or any
amendment thereto with the Commission under the Securities Act or request the
acceleration of the effectiveness of any other registration statement previously
filed with the Commission, other than (i) any registration statement on Form S-8
or Form S-4 and (ii) any registration statement or amendment which the Company
is required to file or as to which the Company is required to request
acceleration pursuant to any obligation in effect on the date of execution and
delivery of this Agreement.
 
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(e)  Occurrence of Registration Event. If a Registration Event occurs, then the
Company will make payments to each Purchaser (a “Qualified Purchaser”), as
partial liquidated damages for the minimum amount of damages to the Qualified
Purchaser by reason thereof, and not as a penalty, payable in shares of Common
Stock as provided below in this Section 3(e), as follows:
 
(i)  in the case of clause (a) of the definition of Registration Event, (A) if
the Company fails to file the Registration Statement with the Commission by the
Registration Filing Date, 5% of the Registrable Securities then held by a
Qualified Purchaser, (B) if the Company fails to file the Registration Statement
with the Commission within 30 days after the Registration Filing Date (90 days
after the closing of the Merger), an additional 5% of the Registrable Securities
then held by a Qualified Purchaser, and (C) if the Company fails to file the
Registration Statement with the Commission within 60 days after the Registration
Filing Date (120 days after the closing of the Merger), an additional 5% of the
Registrable Securities then held by a Qualified Purchaser;
 
(ii)  in the case of clause (b) of the definition of Registration Event, (A) if
the Registration Statement is not declared effective by the Registration Default
Date, 5% of the Registrable Securities then held by a Qualified Purchaser, (B)
if the Registration Statement is not declared effective 120 days after the
Registration Filing Date, an additional 5% of the Registrable Securities then
held by a Qualified Purchaser; provided, however, that if the Registration
Statement is subject to review by the Commission, such date shall be 150 days
after the Registration Filing Date, and (C) if the Registration Statement is not
declared effective 150 days after the Registration Filing Date, an additional 5%
of the Registrable Securities then held by a Qualified Purchaser; provided,
however, that if the Registration Statement is subject to review by the
Commission, such date shall be 180 days after the Registration Filing Date; or
 
(iii)  in the case of clause (c) or clause (d) of the definition of Registration
Event then the Company will make payments to each Qualified Purchaser, as
partial liquidated damages for the minimum amount of damages to the Qualified
Purchaser by reason thereof, and not as a penalty, at a rate equal to 1.25% of
the Registrable Securities then held by a Qualified Purchaser monthly, for each
calendar month of the Registration Default Period (pro rated for any period less
than 30 days).
 
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Notwithstanding the foregoing, the maximum amount of liquidated damages that may
be paid to any Qualified Purchaser under Section 3(e)(i) and (ii) combined shall
be equal to thirty percent (30%) of the Registrable Securities held by such
Qualified Purchaser and fifteen percent (15%) under Section 3(e)(iii). Each such
payment shall be due and payable within five days after the occurrence of any
such event in Section 3(e)(i)(A) - (C) and Section 3(e)(ii)(A) - (C). Each such
payment under Section 3(e)(iii) shall be due and payable within five days after
the end of each calendar month of the Registration Default Period until the
termination of the Registration Default Period and within five days after such
termination. Except as provided in Section 13(b), such payments shall constitute
the Qualified Purchaser’s exclusive remedy for such events. The Registration
Default Period shall terminate upon (i) the filing of the Registration Statement
in the case of clause (a) of the definition of Registration Event, (ii) the SEC
Effective Date in the case of clause (b) of the definition of Registration
Event, (iii) the ability of the Qualified Purchaser to effect sales pursuant to
the Registration Statement in the case of clause (c) of the definition of
Registration Event, (iv) the listing or inclusion and/or trading of the Common
Stock on an Approved Market, as the case may be, in the case of clause (d) of
the definition of Registration Event, and (v) in the case of the events
described in clauses (b) and (c) of the definition of Registration Event, the
earlier termination of the Registration Default Period. The amounts payable as
partial liquidated damages pursuant to Section 3(f)(i), (ii) or (iii) shall be
payable in shares of Common Stock, which shares shall be Registrable Securities
for all purposes of this Agreement.
 
4.  Registration Procedures. The Company will keep each Holder reasonably
advised as to the filing and effectiveness of the Registration Statement. At its
expense with respect to the Registration Statement, the Company will:
 
(a)  not less than five (5) Trading Days prior to the filing of the Registration
Statement and not less than one (1) Trading Day prior to the filing of any
amendment or supplement thereto (including 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 and
(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 each Holder to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement 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 (5) Trading Days after the Holders have been so
furnished copies of a Registration Statement or one (1) Trading Day after the
Holders have been so furnished copies of any amendment or supplement thereto;
 
(b)  prepare and file with the Commission with respect to the Registrable
Securities, a Registration Statement on Form SB-2, or any other form for which
the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the Registrable
Securities in accordance with the intended methods of distribution thereof, and
use its commercially reasonable efforts to cause such Registration Statement to
become effective and shall use its commercially reasonable efforts to keep such
Registration Statement continuously effective 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 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 Holder
(the “Effectiveness Period”);
 
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(c)  if the Registration Statement is subject to review by the Commission,
promptly respond to all comments and diligently pursue resolution of any
comments to the satisfaction of the Commission;
 
(d)  prepare and file with the Commission such amendments and supplements to
such Registration Statement as may be necessary to keep such Registration
Statement effective during the Effectiveness Period;
 
(e)  furnish, without charge, to each Holder of Registrable Securities covered
by such Registration Statement (i) a reasonable number of copies of such
Registration Statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder
may reasonably request, (ii) such number of copies of the prospectus included in
such Registration Statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the Securities Act,
and (iii) such other documents as such Holder may require to consummate the
disposition of the Registrable Securities owned by such Holder, but only during
the Effectiveness Period;
 
(f)  use its commercially reasonable best efforts to register or qualify such
registration under such other applicable securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by such
Registration Statement reasonably requests and as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable Registration Statement is deemed effective by the Commission) and
do any and all other acts and things necessary to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Holder; provided, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph, (ii) subject itself to
taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction. Notwithstanding the foregoing, the Company
shall register or qualify such registration under the applicable securities or
blue sky laws in the states of Georgia, Maryland, Michigan, Massachusetts, New
Jersey, New York and Oregon.
 
(g)  as promptly as practicable after becoming aware of such event, notify each
Holder of Registrable Securities, the disposition of which requires delivery of
a prospectus relating thereto under the Securities Act, of the happening of any
event, which comes to the Company’s attention, that will after the occurrence of
such event cause the prospectus included in such Registration Statement, if not
amended or supplemented, to contain an untrue statement of a material fact or an
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and the Company shall promptly
thereafter prepare and furnish to such Holder a supplement or amendment to such
prospectus (or prepare and file appropriate reports under the Exchange Act) so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, unless suspension of the use of such
prospectus otherwise is authorized herein or in the event of a Blackout Period,
in which case no supplement or amendment need be furnished (or Exchange Act
filing made) until the termination of such suspension or Blackout Period;
 
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(h)  comply, and continue to comply during the Effectiveness Period, in all
material respects with the Securities Act and the Exchange Act and with all
applicable rules and regulations of the Commission with respect to the
disposition of all securities covered by such Registration Statement;
 
(i)  as promptly as practicable after becoming aware of such event, notify each
Holder of Registrable Securities being offered or sold pursuant to the
Registration Statement of the issuance by the Commission of any stop order or
other suspension of effectiveness of the Registration Statement;
 
(j)  use its best efforts to cause all the Registrable Securities covered by the
Registration Statement to be quoted on the NASD OTC Bulletin Board or such other
principal securities market on which securities of the same class or series
issued by the Company are then listed or traded;
 
(k)  provide a transfer agent and registrar, which may be a single entity, for
the shares of Common Stock at all times;
 
(l)  cooperate with the Holders of Registrable Securities being offered pursuant
to the Registration Statement to issue and deliver, or cause its transfer agent
to issue and deliver, certificates representing Registrable Securities to be
offered pursuant to the Registration Statement within a reasonable time after
the delivery of certificates representing the Registrable Securities to the
transfer agent or the Company, as applicable, and enable such certificates to be
in such denominations or amounts as the Holders may reasonably request and
registered in such names as the Holders may request;
 
(m)  during the Effectiveness Period, refrain from bidding for or purchasing any
Common Stock or any right to purchase Common Stock or attempting to induce any
person to purchase any such security or right if such bid, purchase or attempt
would in any way limit the right of the Holders to sell Registrable Securities
by reason of the limitations set forth in Regulation M under the Exchange Act;
and
 
(n)  take all other reasonable actions necessary to expedite and facilitate the
disposition by the Holders of the Registrable Securities pursuant to the
Registration Statement.
 
5.  Suspension of Offers and Sales. Each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 4(f) hereof or of the commencement of a Blackout Period, such Holder
shall discontinue the disposition of Registrable Securities included in the
Registration Statement until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
 
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6.  Registration Expenses. The Company shall pay all expenses in connection with
any registration obligation provided herein, including, without limitation, all
registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with securities or blue sky laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided that, in any underwritten registration, each party shall pay for its
own underwriting discounts and commissions and transfer taxes. Except as
provided in this Section and Section 9, the Company shall not be responsible for
the expenses of any attorney or other advisor employed by a Holder.
 
7.  Assignment of Rights. No Holder may assign its rights under this Agreement
to any party without the prior written consent of the Company; provided,
however, that a Holder may assign its rights under this Agreement without such
consent to a Permitted Assignee as long as (a) such transfer or assignment is
effected in accordance with applicable securities laws; (b) such transferee or
assignee agrees in writing to become subject to the terms of this Agreement; and
(c) the Company is given written notice by such Holder of such transfer or
assignment, stating the name and address of the transferee or assignee and
identifying the Registrable Securities with respect to which such rights are
being transferred or assigned.
 
8.  Information by Holder. Holders included in any registration shall furnish to
the Company such information as the Company may reasonably request in writing
regarding such Holders and the distribution proposed by such Holders.
 
9.  Indemnification.
 
(a)  In the event of the offer and sale of Registrable Securities under the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, each Holder, its directors, officers,
partners, each other person who participates as an underwriter in the offering
or sale of such securities, and each other person, if any, who controls or is
under common control with such Holder or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement of any material fact contained in any Registration Statement prepared
and filed by the Company under which shares of Registrable Securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement in or omission from such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such Holder specifically stating that it is for use
in the preparation thereof or (ii) if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus (or the
final prospectus as amended or supplemented). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.
 
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(b)  As a condition to including Registrable Securities in any registration
statement filed pursuant to this Agreement, each Holder agrees to be bound by
the terms of this Section 9 and to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) that arises out of or is based upon
an untrue statement in or omission from such Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
by the Holder through an instrument duly executed by or on behalf of the Holder
specifically stating that it is for use in the preparation thereof, and such
Holder shall reimburse the Company, and each such director, officer, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating, defending, or settling any such loss, claim,
damage, liability, action, or proceeding; provided, however, that such indemnity
agreement found in this Section 9 shall in no event exceed the net proceeds from
the Offering received by such Holder. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer by any Holder of such shares.
 
(c)  Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in this
Section (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the indemnifying party of the commencement of such action;
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a claim.
 
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(d)  If an indemnifying party does or is not permitted to assume the defense of
an action pursuant to Sections 9(c) or in the case of the expense reimbursement
obligation set forth in Sections 9(a) and (b), the indemnification required by
Sections 9(a) and (b) hereof shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
received or expenses, losses, damages, or liabilities are incurred.
 
(e)  If the indemnification provided for in this Section is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party as
a result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
 
(f)  Other Indemnification. Indemnification similar to that specified in this
Section (with appropriate modifications) shall be given by the Company and each
Holder of Registrable Securities with respect to any required registration or
other qualification of securities under any federal or state law or regulation
or governmental authority other than the Securities Act.
 
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10.  Rule 144. Until all Registrable Securities are eligible for sale under Rule
144(k), the Company will use its commercially reasonable best efforts to timely
file all reports required to be filed by the Company after the date hereof under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder, and if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell shares of Common Stock under Rule 144.

11.  Reservation of Shares. Upon the occurrence of a Registration Event, the
Company shall reserve and keep available out of its authorized but unissued
shares of Common Stock for issuance if required pursuant to Section 3(f).
 
12.  Independent Nature of Each Purchaser’s Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein and no action taken by
any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers as
a partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
 
13.  Miscellaneous.
 
(a)  Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the United States of
America, both substantive and remedial, without regard to New York conflicts of
law principles. Any judicial proceeding brought against either of the parties to
this Agreement or any dispute arising out of this Agreement or any matter
related hereto shall be brought in the courts of the State of New York, New York
County, or in the United States District Court for the Southern District of New
York and, by its execution and delivery of this Agreement, each party to this
Agreement accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any person other than the
parties to this Agreement.
 
(b)  Remedies. In the event of a breach by the Company or by a Holder of any of
their respective 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, shall 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 not assert
or shall waive the defense that a remedy at law would be adequate.
 
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(c)  Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
Permitted Assigns, executors and administrators of the parties hereto. In the
event the Company merges with, or is otherwise acquired by, a direct or indirect
subsidiary of a publicly traded company, the Company shall condition the merger
or acquisition on the assumption by such parent company of the Company’s
obligations under this Agreement.
 
(d)  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.
 
(e)  Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
 
(f)  Notices, etc. All notices or other communications which are required or
permitted under this Agreement shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, by electronic mail, or by courier or overnight carrier, to the persons
at the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
 
If to the Company before the Closing Date to:

Kreido Biofuels, Inc.
88 West 44th Avenue
Vancouver, British Columbia, V5Y 2V1 Canada
Attn: Stephen B. Jackson, President

If to the Company after the Closing Date to:

Kreido Biofuels, Inc.
1140 Avenida Acaso
Camarillo, California 93012
Attention: Dr. Joel Balbien, Chief Executive Officer
Facsimile: (805) 384-0989
 
If to the Purchasers:  

To each Purchaser at the address set forth on Exhibit A or at such other address
as any party shall have furnished to the other parties in writing.
 
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(g)  Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any Holder, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereunder occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Holder of any
breach or default under this Agreement, or any waiver on the part of any Holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
 
(h)  Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument. In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
 
(i)  Severability. In the case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
 
(j)  Amendments. The provisions of this Agreement may be amended at any time and
from time to time, and particular provisions of this Agreement may be waived,
with and only with an agreement or consent in writing signed by the Company and
the Majority Holders. The Purchasers acknowledge that by the operation of this
Section, the Majority Holders may have the right and power to diminish or
eliminate all rights of the Purchasers under this Agreement.
 
(k)  Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Majority Holders, enter into any agreement with any holder or prospective holder
of any securities of the Company that would
 
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grant such holder registration rights senior to those granted to the Holders
hereunder.
 
[SIGNATURE PAGES FOLLOW]
 
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This Registration Rights Agreement is hereby executed as of the date first above
written.
 

       
COMPANY:
     
KREIDO BIOFUELS, INC.
 
   
   
  By:    

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Name: Dr. Joel Balbien
 
Its: President and Chief Executive Officer

 
 [SIGNATURE PAGE OF PURCHASER FOLLOWS]
 
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This Registration Rights Agreement is hereby executed as of the date first above
written.
 

       
PURCHASER (Individual)
     

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--------------------------------------------------------------------------------

(Print Name)

 

       
PURCHASER (Entity)
 
   
   
  By:    

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Name:
 

--------------------------------------------------------------------------------

(Print Name)
Its:
 

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Exhibit A
 
Purchasers
 
 
Purchaser Name
 
 
Purchaser Address
 
 
Number of Units
                             

 

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