Document:

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:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (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 

    
       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

    

     

    grant
      such holder registration rights senior to those granted to the Holders
      hereunder.

     

    [SIGNATURE
      PAGES FOLLOW]

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    This
      Registration Rights Agreement is hereby executed as of the date first above
      written.

     

    
      	 	 	 
	 	
              COMPANY:

            
	 	 
	 	
              KREIDO
                BIOFUELS,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                Dr. Joel Balbien

            
	 	
              Its: President
                and Chief Executive Officer

            

    

     

     [SIGNATURE
      PAGE OF PURCHASER FOLLOWS]

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    This
      Registration Rights Agreement is hereby executed as of the date first above
      written.

     

    
      	 	 	 
	 	
              PURCHASER
                (Individual)

            
	 	 
	 	
              
                

              

               

              
                

              

              (Print
                Name)

            

    

     

    
      	 	 	 
	 	
              PURCHASER
                (Entity)

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
                

              

              Name:

            
	 	
              
                

              

              
                (Print
                  Name)

              

              Its:

            
	 	
              
                

              

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

     

    Purchasers

     

    
      	
               

              Purchaser
                Name

            	 	
               

              Purchaser
                Address

            	 	
               

              Number
                of UnitsEXHIBIT
        10.4

      

      SPLIT-OFF
        AGREEMENT

      

      SPLIT-OFF
        AGREEMENT,
        dated
        as of this 12th day of January, 2007 (this “Agreement”), by and among Kreido
        Biofuels, Inc. (f/k/a Gemwood Productions, Inc.), a Nevada corporation
        (“Seller”), Victor
        Manuel Savceda
        (“Buyer”), Gemwood Leaseco, Inc., a Nevada corporation (“Leaseco”), and Kreido
        Laboratories, a California corporation (“Kreido”).

       

      RECITALS:

      

      WHEREAS, Seller
        is
        the owner of all of the issued and outstanding capital stock of Leaseco.
        Leaseco
        is a newly-formed wholly-owned subsidiary of Seller which was organized to
        acquire, and has so acquired, the business assets and liabilities previously
        held by Seller. Seller has no other businesses or operations;

      

      WHEREAS,
        prior
        to the execution of this Agreement, Seller, Kreido, and a newly-formed
        wholly-owned California subsidiary of Seller, Kreido Acquisition Corp.
        (“Acquisition Corp.”), have entered into an Agreement and Plan of Merger and
        Reorganization (the “Merger Agreement”) pursuant to which Acquisition Corp.
        merged with and into Kreido with Kreido being the surviving entity (the
“Merger”), and the equity holders of Kreido received shares of common stock in
        Seller in exchange for their equity interests in Kreido;

      

      WHEREAS,
        the
        execution and delivery of this Agreement was required by Kreido as a condition
        subsequent to its execution of the Merger Agreement. The consummation of
        the
        purchase and sale transaction contemplated by this Agreement was also a
        condition subsequent to the completion of the Merger pursuant to the Merger
        Agreement. Seller has represented to Kreido in the Merger Agreement that
        the
        purchase and sale transaction contemplated by this Agreement would be
        consummated as soon as practicable following the consummation of the Merger,
        and
        Kreido relied on such representation in entering into the Merger
        Agreement;

      

      WHEREAS,
        Buyer
        desires to purchase the Shares (as defined in Section
        1.1)
        from
        Seller, and to assume, as between Seller and Buyer, all responsibilities
        for any
        debts, obligations and liabilities of Leaseco, on the terms and subject to
        the
        conditions specified in this Agreement; and

      

      WHEREAS,
        Seller
        desires to sell and transfer the Shares to the Buyer, on the terms and subject
        to the conditions specified in this Agreement.

      

      NOW,
        THEREFORE,
        in
        consideration of the premises and the covenants, promises, and agreements
        herein
        set forth and for other good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, the parties hereto, intending
        legally to be bound, agree as follows.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      I. PURCHASE
        AND SALE OF STOCK.

       

      1.1 Purchased
        Shares.
        Subject
        to the terms and conditions provided below, Seller shall sell and transfer
        to
        Buyer and Buyer shall purchase from Seller, on the Closing Date (as defined
        in
Section
        1.3),
        all
        the issued and outstanding shares of capital stock of Leaseco (the
“Shares”).

       

      1.2 Purchase
        Price.
        The
        purchase price for the Shares shall be the transfer and delivery by Buyer
        to
        Seller of 19,444,444 shares of common stock of Seller that Buyer owns (the
        “Purchase Price Shares”), deliverable as provided in Section
        2.2.

       

      1.3 Closing.
        The
        closing of the transactions contemplated in this Agreement (the “Closing”) shall
        take place as soon as practicable following the execution of this Agreement.
        The
        date on which the Closing occurs shall be referred to herein as the Closing
        Date
        (the “Closing Date”).

       

      II. CLOSING.

       

      2.1 Transfer
        of Shares.
        At the
        Closing, Seller shall deliver to Buyer certificates representing the Shares,
        duly endorsed to Buyer or as directed by Buyer, which delivery shall vest
        Buyer
        with good and marketable title to all of the issued and outstanding shares
        of
        capital stock of Leaseco, free and clear of all liens and
        encumbrances.

       

      2.2 Payment
        of Purchase Price.
        At the
        Closing, Buyer shall deliver to Seller a certificate or certificates
        representing the Purchase Price Shares duly endorsed to Seller, which delivery
        shall vest Seller with good and marketable title to the Purchase Price Shares,
        free and clear of all liens and encumbrances.

       

      2.3 Transfer
        of Records.
        On or
        before the Closing, Seller shall arrange for transfer to Leaseco all existing
        corporate books and records in Seller’s possession relating to Leaseco and its
        business, including but not limited to all agreements, litigation files,
        real
        estate files, personnel files and filings with governmental agencies;
provided,
        however,
        when
        any such documents relate to both Seller and Leaseco, only copies of such
        documents need be furnished. On or before the Closing, Buyer and Leaseco
        shall
        transfer to Seller all existing corporate books and records in the possession
        of
        Buyer or Leaseco relating to Seller, including but not limited to all corporate
        minute books, stock ledgers, certificates and corporate seals of Seller and
        all
        agreements, litigation files, real property files, personnel files and filings
        with governmental agencies; provided,
        however,
        when
        any such documents relate to both Seller and Leaseco or its business, only
        copies of such documents need be furnished.

       

      III. BUYER’S
        REPRESENTATIONS AND WARRANTIES.
        Buyer
        represents and warrants to Seller and Kreido that:

       

      3.1 Capacity
        and Enforceability.
        Buyer
        has the legal capacity to execute and deliver this Agreement and the documents
        to be executed and delivered by Buyer at the Closing pursuant to the
        transactions contemplated hereby. This Agreement and all such documents
        constitute valid and binding agreements of Buyer, enforceable in accordance
        with
        their terms.

       

      
        
          
          

        

        
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      3.2 Compliance.
        Neither
        the execution and delivery of this Agreement nor the consummation of the
        transactions contemplated hereby by Buyer will result in the breach of any
        term
        or provision of, or constitute a default under, or violate any agreement,
        indenture, instrument, order, law or regulation to which Buyer is a party
        or by
        which Buyer is bound.

       

      3.3 Purchase
        for Investment.
        Buyer
        is financially able to bear the economic risks of acquiring an interest in
        Leaseco and the other transactions contemplated hereby, and has no need for
        liquidity in this investment. Buyer has such knowledge and experience in
        financial and business matters in general and with respect to businesses
        of a
        nature similar to the business of Leaseco so as to be capable of evaluating
        the
        merits and risks of, and making an informed business decision with regard
        to,
        the acquisition of the Shares. Buyer is acquiring the Shares solely for his
        own
        account and not with a view to or for resale in connection with any distribution
        or public offering thereof, within the meaning of any applicable securities
        laws
        and regulations, unless such distribution or offering is registered under
        the
        Securities Act of 1933, as amended (the “Securities Act”), or an exemption from
        such registration is available. Buyer has (i) received all the information
        he has deemed necessary to make an informed investment decision with respect
        to
        the acquisition of the Shares; (ii) had an opportunity to make such
        investigation as he has desired pertaining to Leaseco and the acquisition
        of an
        interest therein and to verify the information which is, and has been, made
        available to him; and (iii) had the opportunity to ask questions of Seller
        concerning Leaseco. Buyer acknowledges that Buyer is an officer and director
        of
        Seller and Leaseco and, as such, has actual knowledge of the business,
        operations and financial affairs of Leaseco. Buyer has received no public
        solicitation or advertisement with respect to the offer or sale of the Shares.
        Buyer realizes that the Shares are “restricted securities” as that term is
        defined in Rule 144 promulgated by the Securities and Exchange Commission
        under
        the Securities Act, the resale of the Shares is restricted by federal and
        state
        securities laws and, accordingly, the Shares must be held indefinitely unless
        their resale is subsequently registered under the Securities Act or an exemption
        from such registration is available for their resale. Buyer understands that
        any
        resale of the Shares by him must be registered under the Securities Act (and
        any
        applicable state securities law) or be effected in circumstances that, in
        the
        opinion of counsel for Leaseco at the time, create an exemption or otherwise
        do
        not require registration under the Securities Act (or applicable state
        securities laws). Buyer acknowledges and consents that certificates now or
        hereafter issued for the Shares will bear a legend substantially as
        follows:

       

      THE
        SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER
        ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR
        INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
        EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
        QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
        QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT,
        THE
        EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT AND RULE 144
        THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE
        SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
        AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR
        SUCH
        OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL
        NOT
        VIOLATE THE SECURITIES LAWS.

       

      
        
          
          

        

        
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      Buyer
        understands that the Shares are being sold to him pursuant to the exemption
        from
        registration contained in Section 4(1) of the Securities Act and that the
        Seller
        is relying upon the representations made herein as one of the bases for claiming
        the Section 4(1) exemption. 

       

      3.4 Liabilities.
        Following the Closing, Seller will have no liability for any debts, liabilities
        or obligations of Leaseco or its business or activities, and there are no
        outstanding guaranties, performance or payment bonds, letters of credit or
        other
        contingent contractual obligations that have been undertaken by Seller directly
        or indirectly in relation to Leaseco or its business and that may survive
        the
        Closing. 

       

      3.5 Title
        to Purchase Price Shares.
        Buyer
        is the sole record and beneficial owner of the Purchase Price Shares. At
        Closing, Buyer will have good and marketable title to the Purchase Price
        Shares,
        which Purchase Price Shares are, and at the Closing will be, free and clear
        of
        all options, warrants, pledges, claims, liens, and encumbrances and any
        restrictions or limitations prohibiting or restricting transfer to Seller,
        except for restrictions on transfer as contemplated by applicable securities
        laws. 

       

      IV. SELLER’S
        AND LEASECO’S REPRESENTATIONS AND WARRANTIES.
        Seller
        and Leaseco, jointly and severally, represent and warrant to Buyer
        that:

       

      4.1 Organization
        and Good Standing.
        Seller
        is a corporation duly incorporated, validly existing, and in good standing
        under
        the laws of the State of Nevada. Leaseco is a corporation duly incorporated,
        validly existing and in good standing under the laws of the State of
        Nevada.

       

      4.2 Authority
        and Enforceability.
        The
        execution and delivery of this Agreement and the documents to be executed
        and
        delivered at the Closing pursuant to the transactions contemplated hereby,
        and
        performance in accordance with the terms hereof and thereof, have been duly
        authorized by Seller and all such documents constitute the valid and binding
        agreements of Seller enforceable in accordance with their terms.

       

      4.3 Title
        to Shares.
        Seller
        is the sole record and beneficial owner of the Shares. At Closing, Seller
        will
        have good and marketable title to the Shares, which Shares are, and at the
        Closing will be, free and clear of all options, warrants, pledges, claims,
        liens
        and encumbrances, and any restrictions or limitations prohibiting or restricting
        transfer to Buyer, except for restrictions on transfer as contemplated by
        Section
        3.3
        above.
        The Shares constitute all of the issued and outstanding shares of capital
        stock
        of Leaseco.

       

      4.4 WARN
        Act.
        Leaseco
        does not have a sufficient number of employees to make it subject to the
        Worker
        Adjustment and Retraining Notification Act (“WARN Act”).

       

      
        
          
          

        

        
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      4.5 Representations
        in Merger Agreement.
        Leaseco
        represents and warrants that all of the representations and warranties by
        Seller, insofar as they relate to Leaseco, contained in the Merger Agreement
        are
        true and correct.

       

      V. OBLIGATIONS
        OF BUYER PENDING CLOSING.
        Buyer
        covenants and agrees that between the date hereof and the Closing:

       

      5.1 Not
        Impair Performance.
        Buyer
        shall not take any intentional action that would cause the conditions upon
        the
        obligations of the parties hereto to effect the transactions contemplated
        hereby
        not to be fulfilled, including, without limitation, taking or causing to
        be
        taken any action that would cause the representations and warranties made
        by any
        party herein not to be true, correct and accurate as of the Closing, or in
        any
        way impairing the ability of Seller to satisfy its obligations as provided
        in
Article
        VI.

       

      5.2 Assist
        Performance.
        Buyer
        shall exercise its reasonable best efforts to cause to be fulfilled those
        conditions precedent to Seller’s obligations to consummate the transactions
        contemplated hereby which are dependent upon actions of Buyer and to make
        and/or
        obtain any necessary filings and consents in order to consummate the sale
        transaction contemplated by this Agreement.

       

      VI. OBLIGATIONS
        OF SELLER PENDING CLOSING.
        Seller
        covenants and agrees that between the date hereof and the Closing:

       

      6.1 
        Business as Usual.
        Leaseco
        shall operate and Seller shall cause Leaseco to operate in accordance with
        past
        practices and shall use best efforts to preserve its goodwill and the goodwill
        of its employees, customers and others having business dealings with Leaseco.
        Without limiting the generality of the foregoing, from the date of this
        Agreement until the Closing Date, Leaseco shall (a) make all normal and
        customary repairs to its equipment, assets and facilities, (b) keep in
        force all insurance, (c) preserve in full force and effect all material
        franchises, licenses, contracts and real property interests and comply in
        all
        material respects with all laws and regulations, (d) collect all accounts
        receivable and pay all trade creditors in the ordinary course of business
        at
        intervals historically experienced, and (e) preserve and maintain Leaseco’s
        assets in their current operating condition and repair, ordinary wear and
        tear
        excepted. Leaseco shall not (i) amend, terminate or surrender any material
        franchise, license, contract or real property interest, or (ii) sell or
        dispose of any of its assets except in the ordinary course of business. Neither
        Leaseco nor Buyer shall take or omit to take any action that results in Seller
        incurring any liability or obligation prior to or in connection with the
        Closing.

       

      6.2 Not
        Impair Performance.
        Seller
        shall not take any intentional action that would cause the conditions upon
        the
        obligations of the parties hereto to effect the transactions contemplated
        hereby
        not to be fulfilled, including, without limitation, taking or causing to
        be
        taken any action which would cause the representations and warranties made
        by
        any party herein not to be materially true, correct and accurate as of the
        Closing, or in any way impairing the ability of Buyer to satisfy his obligations
        as provided in Article
        V.

       

      
        
          
          

        

        
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      6.3 Assist
        Performance.
        Seller
        shall exercise its reasonable best efforts to cause to be fulfilled those
        conditions precedent to Buyer’s obligations to consummate the transactions
        contemplated hereby which are dependent upon the actions of Seller and to
        work
        with Buyer to make and/or obtain any necessary filings and consents. Seller
        shall cause Leaseco to comply with its obligations under this
        Agreement.

       

      VII. SELLER’S
        AND LEASECO’S CONDITIONS PRECEDENT TO CLOSING.
        The
        obligations of Seller and Leaseco to close the transactions contemplated
        by this
        Agreement are subject to the satisfaction at or prior to the Closing of each
        of
        the following conditions precedent (any or all of which may be waived by
        Seller
        and Kreido in writing):

       

      7.1 Representations
        and Warranties; Performance.
        All
        representations and warranties of Buyer contained in this Agreement shall
        have
        been true and correct, in all material respects, when made and shall be true
        and
        correct, in all material respects, at and as of the Closing, with the same
        effect as though such representations and warranties were made at and as
        of the
        Closing. Buyer shall have performed and complied with all covenants and
        agreements and satisfied all conditions, in all material respects, required
        by
        this Agreement to be performed or complied with or satisfied by Buyer at
        or
        prior to the Closing.

       

      7.2 Additional
        Documents.
        Buyer
        shall deliver or cause to be delivered such additional documents as may be
        necessary in connection with the consummation of the transactions contemplated
        by this Agreement and the performance of their obligations
        hereunder.

       

      7.3 Release
        by Leaseco.
        At the
        Closing, Leaseco shall execute and deliver to Seller and Kreido a general
        release which in substance and effect releases Seller and Kreido from any
        and
        all liabilities and obligations that Seller and Kreido may owe to Leaseco
        in any
        capacity and from any and all claims that Leaseco may have against Seller,
        Kreido, or their respective managers, members, officers, directors,
        stockholders, employees and agents (other than those arising pursuant to
        this
        Agreement or any document delivered in connection with this
        Agreement).

       

      VIII. BUYER’S
        CONDITIONS PRECEDENT TO CLOSING.
        The
        obligation of Buyer to close the transactions contemplated by this Agreement
        is
        subject to the satisfaction at or prior to the Closing of the following
        condition precedent (which may be waived by Buyer in writing):

       

      8.1 Representations
        and Warranties; Performance.
        All
        representations and warranties of Seller and Leaseco contained in this Agreement
        shall have been true and correct, in all material respects, when made and
        shall
        be true and correct, in all material respects, at and as of the Closing with
        the
        same effect as though such representations and warranties were made at and
        as of
        the Closing. Seller and Leaseco shall have performed and complied with all
        covenants and agreements and satisfied all conditions, in all material respects,
        required by this Agreement to be performed or complied with or satisfied
        by them
        at or prior to the Closing.

       

      
        
          
          

        

        
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      IX. OTHER
        AGREEMENTS.

       

      9.1 Expenses.
        Each
        party hereto shall bear its expenses separately incurred in connection with
        this
        Agreement and with the performance of its obligations hereunder.

       

      9.2 Confidentiality.
        The
        parties hereto shall not make any public announcements concerning this
        transaction other than in accordance with mutual agreement reached prior
        to any
        such announcement(s) and other than as may be required by applicable law
        or
        judicial process. If for any reason the transactions contemplated hereby
        are not
        consummated, then Buyer shall return any information received by Buyer from
        Seller or Leaseco, and Buyer shall cause all confidential information obtained
        by Buyer concerning Leaseco and its business to be treated as such.

       

      9.3 Brokers’
        Fees.
        No
        party to this Agreement has employed the services of a broker and each agrees
        to
        indemnify the other against all claims of any third parties for fees and
        commissions of any brokers claiming a fee or commission related to the
        transactions contemplated hereby.

       

      9.4 Access
        to Information Post-Closing; Cooperation.
        

       

      (a) Following
        the Closing, Buyer and Leaseco shall afford to Seller and its authorized
        accountants, counsel, and other designated representatives reasonable access
        (and including using reasonable efforts to give access to persons or firms
        possessing information) and duplicating rights during normal business hours
        to
        allow records, books, contracts, instruments, computer data and other data
        and
        information (collectively, “Information”) within the possession or control of
        Buyer or Leaseco insofar as such access is reasonably required by Seller.
        Information may be requested under this Section
        9.4(a)
        for,
        without limitation, audit, accounting, claims, litigation and tax purposes,
        as
        well as for purposes of fulfilling disclosure and reporting obligations and
        performing this Agreement and the transactions contemplated hereby. No files,
        books or records of Leaseco existing at the Closing Date shall be destroyed
        by
        Buyer or Leaseco after Closing but prior to the expiration of any period
        during
        which such files, books or records are required to be maintained and preserved
        by applicable law without giving the Seller at least 30 days’ prior written
        notice, during which time Seller shall have the right to examine and to remove
        any such files, books and records prior to their destruction.

       

      (b) Following
        the Closing, Seller shall afford to Leaseco and its authorized accountants,
        counsel and other designated representatives reasonable access (including
        using
        reasonable efforts to give access to persons or firms possessing information)
        and duplicating rights during normal business hours to Information within
        Seller’s possession or control relating to the business of Leaseco. Information
        may be requested under this Section
        9.4(b)
        for,
        without limitation, audit, accounting, claims, litigation and tax purposes
        as
        well as for purposes of fulfilling disclosure and reporting obligations and
        for
        performing this Agreement and the transactions contemplated hereby. No files,
        books or records of Leaseco existing at the Closing Date shall be destroyed
        by
        Seller after Closing but prior to the expiration of any period during which
        such
        files, books or records are required to be maintained and preserved by
        applicable law without giving the Buyer at least 30 days’ prior written notice,
        during which time Buyer shall have the right to examine and to remove any
        such
        files, books and records prior to their destruction.

       

      
        
          
          

        

        
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      (c) At
        all
        times following the Closing, Seller, Buyer and Leaseco shall use reasonable
        efforts to make available to the other party on written request, the current
        and
        former officers, directors, employees and agents of Seller or Leaseco for
        any of
        the purposes set forth in Section
        9.4(a) or (b)
        above or
        as witnesses to the extent that such persons may reasonably be required in
        connection with any legal, administrative or other proceedings in which Seller
        or Leaseco may from time to be involved.

       

      (d) The
        party
        to whom any Information or witnesses are provided under this Section
        9.4
        shall
        reimburse the provider thereof for all out-of-pocket expenses actually and
        reasonably incurred in providing such Information or witnesses.

       

      (e) Seller,
        Buyer, Leaseco and their respective employees and agents shall each hold
        in
        strict confidence all Information concerning the other party in their possession
        or furnished by the other or the other’s representative pursuant to this
        Agreement with the same degree of care as such party utilizes as to such
        party’s
        own confidential information (except to the extent that such Information
        is
        (i) in the public domain through no fault of such party or (ii) later
        lawfully acquired from any other source by such party), and each party shall
        not
        release or disclose such Information to any other person, except such party’s
        auditors, attorneys, financial advisors, bankers, other consultants and advisors
        or persons with whom such party has a valid obligation to disclose such
        Information, unless compelled to disclose such Information by judicial or
        administrative process or, as advised by its counsel, by other requirements
        of
        law.

       

      (f) Seller,
        Buyer and Leaseco shall each use their best efforts to forward promptly to
        the
        other party all notices, claims, correspondence and other materials which
        are
        received and determined to pertain to the other party.

       

      9.5 Guarantees,
        Surety Bonds and Letter of Credit Obligations.
        In the
        event that Seller is obligated for any debts, obligations or liabilities
        of
        Leaseco by virtue of any outstanding guarantee, performance or surety bond
        or
        letter of credit provided or arranged by Seller on or prior to the Closing
        Date,
        Buyer and Leaseco shall use best efforts to cause to be issued replacements
        of
        such bonds, letters of credit and guarantees and to obtain any amendments,
        novations, releases and approvals necessary to release and discharge fully
        Seller from any liability thereunder following the Closing. Buyer and Leaseco,
        jointly and severally, shall be responsible for, and shall indemnify, hold
        harmless and defend Seller from and against, any costs or losses incurred
        by
        Seller arising from such bonds, letters of credits and guarantees and any
        liabilities arising therefrom and shall reimburse Seller for any payments
        that
        Seller may be required to pay pursuant to enforcement of its obligations
        relating to such bonds, letters of credit and guarantees.

       

      9.6 Filings
        and Consents.
        Buyer,
        at its risk, shall determine what, if any, filings and consents must be made
        and/or obtained prior to Closing to consummate the purchase and sale of the
        Shares. Buyer shall indemnify the Seller Indemnified Parties (as defined
        in
Section
        11.1
        below)
        against any Losses (as defined in Section
        11.1
        below)
        incurred by any Seller Indemnified Parties by virtue of the failure to make
        and/or obtain any such filings or consents. Recognizing that the failure
        to make
        and/or obtain any filings or consents may cause Seller to incur Losses or
        otherwise adversely affect Seller, Buyer and Leaseco confirm that the provisions
        of this Section
        9.6
        will not
        limit Seller’s right to treat such failure as the failure of a condition
        precedent to Seller’s obligation to close pursuant to Article
        VII
        above.

       

      
        
          
          

        

        
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      9.7 Insurance.
        Buyer
        acknowledges that on the Closing Date, effective as of the Closing, all
        insurance coverage and bonds provided by Seller for Leaseco, and all
        certificates of insurance evidencing that Leaseco maintains any required
        insurance by virtue of insurance provided by Seller, will terminate with
        respect
        to any insured damages resulting from matters occurring subsequent to Closing.
        

       

      9.8 Agreements
        Regarding Taxes.
        

       

      (a)
        Tax
        Sharing Agreements.
        Any tax
        sharing agreement between Seller and Leaseco is terminated as of the Closing
        Date and will have no further effect for any taxable year (whether the current
        year, a future year, or a past year).

       

      (b)
        Returns
        for Periods Through the Closing Date.
        Seller
        will include the income and loss of Leaseco (including any deferred income
        triggered into income by Reg. §1.1502-13 and any excess loss accounts taken into
        income under Reg. §1.1502-19) on Seller’s consolidated federal income tax
        returns for all periods through the Closing Date and pay any federal income
        taxes attributable to such income. Seller and Leaseco agree to allocate income,
        gain, loss, deductions and credits between the period up to Closing (the
        “Pre-Closing Period”) and the period after Closing (the “Post-Closing Period”)
        based on a closing of the books of Leaseco and both Seller and Leaseco agree
        not
        to make an election under Reg. §1.1502-76(b)(2)(ii) to ratably allocate the
        year’s items of income, gain, loss, deduction and credit. Seller, Leaseco and
        Buyer agree to report all transactions not in the ordinary course of business
        occurring on the Closing Date after Buyer’s purchase of the Shares on Leaseco’s
        tax returns to the extent permitted by Reg. §1.1502-76(b)(1)(ii)(B). Buyer
        agrees to indemnify Seller for any additional tax owed by Seller (including
        tax
        owned by Seller due to this indemnification payment) resulting from any
        transaction engaged in by Leaseco during the Pre-Closing Period or on the
        Closing Date after Buyer’s purchase of the Shares. Leaseco will furnish tax
        information to Seller for inclusion in Seller’s consolidated federal income tax
        return for the period which includes the Closing Date in accordance with
        Leaseco’s past custom and practice.

       

      (c)
        Audits.
        Seller
        will allow Leaseco and its counsel to participate at Leaseco’s expense in any
        audits of Seller’s consolidated federal income tax returns to the extent that
        such audit raises issues that relate to and increase the tax liability of
        Leaseco. Seller shall have the absolute right, in its sole discretion, to
        engage
        professionals and direct the representation of Seller in connection with
        any
        such audit and the resolution thereof, without receiving the consent of Buyer
        or
        Leaseco or any other party acting on behalf of Buyer or Leaseco, provided
        that
        Seller will not settle any such audit in a manner which would materially
        adversely affect Leaseco after the Closing Date unless such settlement would
        be
        reasonable in the case of a person that owned Leaseco both before and after
        the
        Closing Date. In the event that after Closing any tax authority informs the
        Buyer or Leaseco of any notice of proposed audit, claim, assessment, or other
        dispute concerning an amount of taxes which pertain to the Seller, or to
        Leaseco
        during the period prior to Closing, Buyer or Leaseco must promptly notify
        the
        Seller of the same within 15 calendar days of the date of the notice from
        the
        tax authority. In the event Buyer or Leaseco does not notify the Seller within
        such 15 day period, Buyer and Leaseco, jointly and severally, will indemnify
        the
        Seller for any incremental interest, penalty or other assessments resulting
        from
        the delay in giving notice. To the extent of any conflict or inconsistency,
        the
        provisions of this Section 9.8 shall control over the provisions of
Section 11.2 below.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      (d)
        Cooperation
        on Tax Matters.
        Buyer,
        Seller and Leaseco shall cooperate fully, as and to the extent reasonably
        requested by the other party, in connection with the filing of tax returns
        pursuant to this Section and any audit, litigation or other proceeding with
        respect to taxes. Such cooperation shall include the retention and (upon
        the
        other party’s request) the provision of records and information which are
        reasonably relevant to any such audit, litigation or other proceeding and
        making
        employees available on a mutually convenient basis to provide additional
        information and explanation of any material provided hereunder. Leaseco shall
        (i) retain all books and records with respect to tax matters pertinent to
        Leaseco relating to any taxable period beginning before the Closing Date
        until
        the expiration of the statute of limitations (and, to the extent notified
        by
        Seller, any extensions thereof) of the respective taxable periods, and to
        abide
        by all record retention agreements entered into with any taxing authority,
        and
        (ii) give Seller reasonable written notice prior to transferring,
        destroying or discarding any such books and records and, if the Seller so
        requests, Buyer agrees to cause Leaseco to allow Seller to take possession
        of
        such books and records.

       

      9.9 ERISA.
        Effective as of the Closing Date, Leaseco shall terminate its participation
        in,
        and withdraw from, all employee benefit plans sponsored by Seller, and Seller
        and Buyer shall cooperate fully in such termination and withdrawal. Without
        limitation, Leaseco shall be solely responsible for (i) all liabilities
        under those employee benefit plans notwithstanding any status as an employee
        benefit plan sponsored by Seller, and (ii) all liabilities for the payment
        of vacation pay, severance benefits, and similar obligations, including,
        without
        limitation, amounts which are accrued but unpaid as of the Closing Date with
        respect thereto. Buyer and Leaseco acknowledge that Leaseco is solely
        responsible for providing continuing health coverage, as required under the
        Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”), to each
        person, if any, participating in an employee benefit plan subject to COBRA
        with
        respect to such employee benefit plan as of the Closing Date, including,
        without
        limitation, any person whose employment with Leaseco is terminated after
        the
        Closing Date.

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      X. TERMINATION.
        This
        Agreement may be terminated at, or at any time prior to, the Closing by mutual
        written consent of Seller, Buyer and Kreido.

       

      If
        this
        Agreement is terminated as provided herein, it shall become wholly void and
        of
        no further force and effect and there shall be no further liability or
        obligation on the part of any party except to pay such expenses as are required
        of such party.

       

      XI. INDEMNIFICATION.

       

      11.1 Indemnification
        by Buyer.
        Buyer
        covenants and agrees to indemnify, defend, protect and hold harmless Seller,
        and
        its officers, directors, employees, stockholders, agents, representatives
        and
        affiliates (collectively, together with Seller, the “Seller Indemnified
        Parties”) at all times from and after the date of this Agreement from and
        against all losses, liabilities, damages, claims, actions, suits, proceedings,
        demands, assessments, adjustments, costs and expenses (including specifically,
        but without limitation, reasonable attorneys’ fees and expenses of
        investigation), whether or not involving a third party claim and regardless
        of
        any negligence of any Seller Indemnified Party (collectively, “Losses”),
        incurred by any Seller Indemnified Party as a result of or arising from
        (i) any breach of the representations and warranties of Buyer set forth
        herein or in certificates delivered in connection herewith, (ii) any breach
        or nonfulfillment of any covenant or agreement (including any other agreement
        of
        Buyer to indemnify Seller set forth in this Agreement) on the part of Buyer
        under this Agreement, (iii) any debt, liability or obligation of Leaseco,
        (iv) the conduct and operations of the business of Leaseco whether before
        or after Closing, (v) claims asserted against Leaseco whether before or
        after Closing, or (vi) any federal or state income tax payable by Seller
        and attributable to the transaction contemplated by this Agreement.

       

      11.2 Third
        Party Claims.

       

      (a) Defense.
        If any
        claim or liability (a “Third-Party Claim”) should be asserted against any of the
        Seller Indemnified Parties (the “Indemnitee”) by a third party after the Closing
        for which Buyer has an indemnification obligation under the terms of
Section
        11.1,
        then
        the Indemnitee shall notify Buyer and Leaseco (the “Indemnitor”) within 20 days
        after the Third-Party Claim is asserted by a third party (said notification
        being referred to as a “Claim Notice”) and give the Indemnitor a reasonable
        opportunity to take part in any examination of the books and records of the
        Indemnitee relating to such Third-Party Claim and to assume the defense of
        such
        Third-Party Claim and in connection therewith and to conduct any proceedings
        or
        negotiations relating thereto and necessary or appropriate to defend the
        Indemnitee and/or settle the Claim. The expenses (including reasonable
        attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or
        settlements with respect to any Third-Party Claim shall be borne by the
        Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party
        Claim in writing within 20 days after the Claim Notice of such Third-Party
        Claim
        has been delivered, through counsel reasonably satisfactory to Indemnitee,
        then
        the Indemnitor shall be entitled to control the conduct of such defense,
        and any
        decision to settle such Third-Party Claim, and shall be responsible for any
        expenses of the Indemnitee in connection with the defense of such Third-Party
        Claim so long as the Indemnitor continues such defense until the final
        resolution of such Third-Party Claim. The Indemnitor shall be responsible
        for
        paying all settlements made or judgments entered with respect to any Third-Party
        Claim the defense of which has been assumed by the Indemnitor. Except as
        provided on subsection (b) below, both the Indemnitor and the Indemnitee
        must
        approve any settlement of a Third-Party Claim. A failure by the Indemnitee
        to
        timely give the Claim Notice shall not excuse Indemnitor from any
        indemnification liability except only to the extent that the Indemnitor is
        materially and adversely prejudiced by such failure.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      (b) Failure
        to Defend.
        If the
        Indemnitor shall not agree to assume the defense of any Third-Party Claim
        in
        writing within 20 days after the Claim Notice of such Third-Party Claim has
        been
        delivered, or shall fail to continue such defense until the final resolution
        of
        such Third-Party Claim, then the Indemnitee may defend against such Third-Party
        Claim in such manner as it may deem appropriate and the Indemnitee may settle
        such Third-Party Claim on such terms as it may deem appropriate. The Indemnitor
        shall promptly reimburse the Indemnitee for the amount of all settlement
        payments and expenses, legal and otherwise, incurred by the Indemnitee in
        connection with the defense or settlement of such Third-Party Claim. If no
        settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy
        any judgment rendered with respect to such Third-Party Claim before the
        Indemnitee is required to do so, and pay all expenses, legal or otherwise,
        incurred by the Indemnitee in the defense against such Third-Party
        Claim.

       

      11.3 Non-Third-Party
        Claims.
        Upon
        discovery of any claim for which Buyer has an indemnification obligation
        under
        the terms of this Section
        11.3
        which
        does not involve a claim by a third party against the Indemnitee, the Indemnitee
        shall give prompt notice to Buyer of such claim and, in any case, shall give
        Buyer such notice within 30 days of such discovery. A failure by Indemnitee
        to
        timely give the foregoing notice to Buyer shall not excuse Buyer from any
        indemnification liability except to the extent that Buyer is materially and
        adversely prejudiced by such failure.

       

      11.4 Survival.
        Except
        as otherwise provided in this Section
        11.4,
        all
        representations and warranties made by Buyer, Leaseco and Seller in connection
        with this Agreement shall survive the Closing. Anything in this Agreement
        to the
        contrary notwithstanding, the liability of all Indemnitors under this
Article
        XI
        shall
        terminate on the third (3rd)
        anniversary of the Closing Date, except with respect to (a) liability for
        any item as to which, prior to the third (3rd)
        anniversary of the Closing Date, any Indemnitee shall have asserted a Claim
        in
        writing, which Claim shall identify its basis with reasonable specificity,
        in
        which case the liability for such Claim shall continue until it shall have
        been
        finally settled, decided or adjudicated, (b) liability of any party for
        Losses for which such party has an indemnification obligation, incurred as
        a
        result of such party’s breach of any covenant or agreement to be performed by
        such party after the Closing, (c) liability of Buyer for Losses incurred by
        a Seller Indemnified Party due to breaches of their representations and
        warranties in Article
        III
        of this
        Agreement, and (d) liability of Buyer for Losses arising out of Third-Party
        Claims for which Buyer has an indemnification obligation, which liability
        shall
        survive until the statute of limitation applicable to any third party’s right to
        assert a Third-Party Claim bars assertion of such claim.

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

      XII. MISCELLANEOUS.

       

      12.1 Notices.
        All
        notices and communications required or permitted hereunder shall be in writing
        and deemed given when received by means of the United States mail, addressed
        to
        the party to be notified, postage prepaid and registered or certified with
        return receipt requested, or personal delivery, or overnight courier, as
        follows:

       

      (a) If
        to
        Seller, addressed to:

       

      Kreido
        Biofuels, Inc.

      1140
        Avenida Acaso

      Camarrillo,
        CA 93012

      Attn:
        Joel A. Balbien, Chief Executive Officer

      Facsimile:
        (805) 384-0989

      

      With
        a
        copy to (which shall not constitute notice hereunder):

       

      McGuireWoods
        LLP

      1345
        Avenue of the Americas

      New
        York,
        NY 10105

      Attn:
        Louis W. Zehil, Esq.

      Facsimile:
        (212) 548-2175

      

      Additional
        copy to (which shall not constitute notice hereunder):

       

      DLA
        Piper
        LLP

      203
        North
        LaSalle Street, Suite 1900

      Chicago,
        Illinois 60601

      Attn:
        John H. Heuberger, Esq.

      Facsimile:
        (312) 236-7516

      

      (b) If
        to
        Buyer or Leaseco, addressed to:

       

      Victor
        Manuel Savceda

      C
        Alta
        Mar 157 Fracc Baja Del Mar

      Playas
        de
        Rosarito BC 22710 Mexico

      

      With
        a
        copy to (which shall not constitute notice hereunder):

       

      Gottbetter
        & Partners, LLP

      488
        Madison Avenue, 12th
        Floor

      New
        York,
        New York 10022

      Attn:
        Adam S. Gottbetter, Esq.

      Facsimile:
        (212) 400-6901

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      

      (c) If
        to
        Kreido, addressed to:

       

      Kreido
        Laboratories

      1140
        Avenida Acaso

      Camarrillo,
        CA 93012

      Attn:
        Joel A. Balbien, Chief Executive Officer

      Facsimile:
        (805) 384-0989

      
With
        a
        copy to (which shall not constitute notice hereunder):

       

      McGuireWoods
        LLP

      1345
        Avenue of the Americas

      New
        York,
        NY 10105

      Attn:
        Louis W. Zehil, Esq.

      Facsimile:
        (212) 548-2175

      

      Additional
        copy to (which shall not constitute notice hereunder):

       

      DLA
        Piper
        LLP

      203
        North
        LaSalle Street, Suite 1900

      Chicago,
        Illinois 60601

      Attn:
        John H. Heuberger, Esq.

      (312)
        236-7516

      

      or
        to
        such other address as any party hereto shall specify pursuant to this
Section
        12.1
        from
        time to time.

       

      12.2 Exercise
        of Rights and Remedies.
        Except
        as otherwise provided herein, no delay of or omission in the exercise of
        any
        right, power or remedy accruing to any party as a result of any breach or
        default by any other party under this Agreement shall impair any such right,
        power or remedy, nor shall it be construed as a waiver of or acquiescence
        in any
        such breach or default, or of any similar breach or default occurring later;
        nor
        shall any waiver of any single breach or default be deemed a waiver of any
        other
        breach or default occurring before or after that waiver.

       

      12.3 Time.
        Time is
        of the essence with respect to this Agreement.

       

      12.4 Reformation
        and Severability.
        In case
        any provision of this Agreement shall be invalid, illegal or unenforceable,
        it
        shall, to the extent possible, be modified in such manner as to be valid,
        legal
        and enforceable but so as to most nearly retain the intent of the parties,
        and
        if such modification is not possible, such provision shall be severed from
        this
        Agreement, and in either case the validity, legality and enforceability of
        the
        remaining provisions of this Agreement shall not in any way be affected or
        impaired thereby.

       

      12.5 Further
        Acts.
        Seller,
        Buyer and Leaseco shall execute any and all documents and perform such other
        acts which may be reasonably necessary to effectuate the purposes of this
        Agreement.

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      12.6 Entire
        Agreement; Amendments.
        This
        Agreement contains the entire understanding of the parties relating to the
        subject matter contained herein. This Agreement cannot be amended or changed
        except through a written instrument signed by all of the parties hereto,
        including Kreido. No provisions of this Agreement or any rights hereunder
        may be
        waived by any party without the prior written consent of Kreido.

       

      12.7 Assignment.
        No
        party may assign his or its rights or obligations hereunder, in whole or
        in
        part, without the prior written consent of the other parties.

       

      12.8 Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New York, without giving effect to principles of conflicts or choice
        of
        laws thereof.

       

      12.9 Counterparts.
        This
        Agreement may be executed in one or more counterparts, with the same effect
        as
        if all parties had signed the same document. Each such counterpart shall
        be an
        original, but all such counterparts taken together shall constitute a single
        agreement. 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) the same
        with
        the same force and effect as if such facsimile signature page was an original
        thereof.

       

      12.10 Section
        Headings and Gender.
        The
        Section headings used herein are inserted for reference purposes only and
        shall
        not in any way affect the meaning or interpretation of this Agreement. All
        personal pronouns used in this Agreement shall include the other genders,
        whether used in the masculine, feminine or neuter, and the singular shall
        include the plural, and vice
        versa,
        whenever and as often as may be appropriate.

       

      12.11 Specific
        Performance; Remedies.
        Each of
        Seller, Buyer and Leaseco acknowledges and agrees that Kreido would be damaged
        irreparably if any provision of this Agreement is not performed in accordance
        with its specific terms or is otherwise breached. Accordingly, each of Seller,
        Buyer and Leaseco agrees that Kreido will be entitled to seek an injunction
        or
        injunctions to prevent breaches of the provisions of this Agreement and to
        enforce specifically this Agreement and its terms and provisions in any action
        instituted in any court of the United States or any state thereof having
        jurisdiction over the parties and the matter, subject to Section
        12.8,
        in
        addition to any other remedy to which they may be entitled, at law or in
        equity.
        Except as expressly provided herein, the rights, obligations and remedies
        created by this Agreement are cumulative and in addition to any other rights,
        obligations or remedies otherwise available at law or in equity, and nothing
        herein will be considered an election of remedies.
        

       

      12.12 Submission
        to Jurisdiction; Process Agent; No Jury Trial.

       

      (a) Each
        party to the Agreement hereby submits to the jurisdiction of any state or
        federal court sitting in the State of New York, in any action arising out
        of or
        relating to this Agreement and agrees that all claims in respect of the action
        may be heard and determined in any such court. Each party to the Agreement
        also
        agrees not to bring any action arising out of or relating to this Agreement
        in
        any other court. Each party to the Agreement agrees that a final judgment
        in any
        action so brought will be conclusive and may be enforced by action on the
        judgment or in any other manner provided at law or in equity. Each party
        to the
        Agreement waives any defense of inconvenient forum to the maintenance of
        any
        action so brought and waives any bond, surety, or other security that might
        be
        required of any other Party with respect thereto.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

      (b) EACH
        PARTY TO THE AGREEMENT HEREBY AGREES TO WAIVE HIS OR HER RIGHTS TO JURY TRIAL
        OF
        ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS
        RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM
        RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope of this waiver
        is
        intended to be all encompassing of any and all actions that may be filed
        in any
        court and that relate to the subject matter of the transactions, including,
        contract claims, tort claims, breach of duty claims, and all other common
        law
        and statutory claims. Each party to the Agreement hereby acknowledges that
        this
        waiver is a material inducement to enter into a business relationship and
        that
        they will continue to rely on the waiver in their related future dealings.
        Each
        party to the Agreement further represents and warrants that it has reviewed
        this
        waiver with its legal counsel, and that each knowingly and voluntarily waives
        its jury trial rights following consultation with legal counsel. NOTWITHSTANDING
        ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT
        IT MAY
        NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY
        AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO
        ANY
        OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of commencement
        of
        any action, this Agreement may be filed as a written consent to trial by
        a
        court.

       

      12.13 Construction.
        The
        parties hereto have participated jointly in the negotiation and drafting
        of this
        Agreement. If an ambiguity or question of intent or interpretation arises,
        this
        Agreement will be construed as if drafted jointly by the parties hereto and
        no
        presumption or burden of proof will arise favoring or disfavoring any party
        because of the authorship of any provision of this Agreement. Any reference
        to
        any federal, state, local, or foreign law will be deemed also to refer to
        law as
        amended and all rules and regulations promulgated thereunder, unless the
        context
        requires otherwise. The words “include,” “includes,” and “including” will be
        deemed to be followed by “without limitation.” The words “this Agreement,”
“herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to
        this Agreement as a whole and not to any particular subdivision unless expressly
        so limited. The parties hereto intend that each representation, warranty,
        and
        covenant contained herein will have independent significance. If any party
        hereto has breached any representation, warranty, or covenant contained herein
        in any respect, the fact that there exists another representation, warranty
        or
        covenant relating to the same subject matter (regardless of the relative
        levels
        of specificity) which that party has not breached will not detract from or
        mitigate the fact that such party is in breach of the first representation,
        warranty, or covenant.

       

      [Signature
        page follows this page]

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        the
        parties hereto have hereunto set their hands as of the day and year first
        above
        written.

      
        	 	 	 
	 	
                KREIDO
                  BIOFUELS, INC.

              
	 
 	 
 	 
 
	
              	By:  	/s/ Stephen B. Jackson 
	 	
                
Name: Stephen
                B. Jackson
	 	Title:  President

      

       

      
        	 	 	 
	 	GEMWOOD LEASECO,
                INC.
	 
 	 
 	 
 
	
              	By:  	/s/ Stephen B. Jackson 
	 	
                
Name: Stephen
                B. Jackson
	 	Title  President

      

       

      
        	 	 	 
	 	BUYER
	 
 	 
 	 
 
	 	By:  	/s/
                Victor Manuel Savceda 
	 	
                
Victor
                Manuel Savceda

      

       

      
        	 	 	 
	 	KREIDO
                LABORATORIES
	 
 	 
 	 
 
	
              	By:  	/s/ Joel A. Balbien
	 	
                
Name: Joel
                A. Balbien
	 	Title:  Chief
                Executive Officer

      
        
          
          

        

        
          -17-

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