This Indemnity Agreement, dated as of ___, 2007,
is made by and between Kreido Biofuels, Inc., a Nevada corporation
(the “ Company ”), and _____________________(the
“ Indemnitee ”).
A. The Company is aware that competent and
experienced persons are increasingly reluctant to serve as
directors, officers or agents of corporations unless they are
protected by comprehensive liability insurance or indemnification,
due to increased exposure to litigation costs and risks resulting
from their service to such corporations, and due to the fact that
the exposure frequently bears no reasonable relationship to the
compensation of such directors, officers and other
agents.
B. The statutes and judicial decisions
regarding the duties of directors and officers are often difficult
to apply, ambiguous, or conflicting, and therefore fail to provide
such directors, officers and agents with adequate, reliable
knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.
C. Plaintiffs often seek damages in such
large amounts and the costs of litigation may be so enormous
(whether or not the case is meritorious), that the defense and/or
resolution of such litigation is often beyond the personal
resources of directors, officers and other agents.
D. The Company believes that it is unfair
for its directors, officers and agents, and the directors, officers
and agents of its subsidiaries, to assume the risk of huge
judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases
where the director, officer or agent was not culpable.
E. The Company recognizes that the issues
in controversy in litigation against a director, officer or agent
of a corporation, such as the Company or its subsidiaries, are
often related to the knowledge, motives and intent of such
director, officer or agent, that he or she is usually the only
witness with knowledge of the essential facts and exculpating
circumstances regarding such matters, and that the long period of
time which usually elapses before the trial or other disposition of
such litigation often extends beyond the time that the director,
officer or agent can reasonably recall such matters and may extend
beyond the normal time for retirement for such director, officer or
agent with the result that he or she, after retirement or in the
event of his or her death, his or her spouse, heirs, executors or
administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage
such a director, officer or agent from serving in that
position.
F. Based upon their experience as business
managers, the Board of Directors of the Company (the “
Board ”) has concluded that, to retain and attract
talented and experienced individuals to serve as directors,
officers and agents of the Company and its subsidiaries and to
encourage such individuals to take the business risks necessary for
the success of the Company and its subsidiaries, it is necessary
for the Company to contractually indemnify its directors, officers
and agents and the directors, officers and agents of its
subsidiaries, and to assume for itself maximum liability for
expenses and damages in connection with claims against such
directors, officers and agents in connection with their service to
the Company and its subsidiaries, and has further concluded that
the failure to provide such contractual indemnification could
result in great harm to the Company and its subsidiaries and the
Company’s stockholders.
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G. Section 78.7502, 78.751, and 78.752
of the Nevada Revised Statutes (the “ Indemnification
Sections ”) empowers the Company to indemnify its
directors, officers, employees and agents by agreement and to
indemnify persons who serve, at the request of the Company, as the
directors, officers, employees or agents of other corporations,
partnerships, joint ventures or trusts, and expressly provides that
the indemnification provided by the Indemnification Sections is not
exclusive.
H. The Company desires and has requested
the Indemnitee to serve or continue to serve as a director, officer
or agent of the Company and/or one or more subsidiaries of the
Company free from undue concern for claims for damages arising out
of or related to such services to the Company and/or one or more
subsidiaries of the Company.
I. Indemnitee is willing to serve, or to
continue to serve, the Company and/or one or more subsidiaries of
the Company, provided that he or she is furnished the indemnity
provided for herein.
NOW, THEREFORE,
the parties hereto, intending to be legally bound, hereby agree as
follows:
(a) Agent . For the purposes of
this Agreement, “agent” means any person who is or was
a director, officer, employee or other agent of the Company or of a
subsidiary of the Company; or is or was serving at the request of,
for the convenience of, or to represent the interests of the
Company or a subsidiary of the Company as a director, officer,
manager, employee or agent of another foreign or domestic
corporation, partnership, joint venture, limited liability company,
trust or other enterprise.
(b) Expenses and Liabilities . For
purposes of this Agreement, “expenses” shall include
all out-of-pocket costs of any type or nature whatsoever
(including, without limitation, all attorneys’ fees and
related disbursements), actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense,
resolution or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or the
Indemnification Sections or otherwise; and
“liabilities” shall include any judgments, fines, ERISA
excise taxes or penalties, or amounts paid in settlement of a
proceeding. “Expenses” and “liabilities”
shall not include any expenses or liabilities in connection with
any claim made against the Indemnitee:
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(i) if the claim is proved by final
judgment in a court of law or other final adjudication to have been
based upon or attributable to the Indemnitee’s in fact having
gained any personal profit or advantage to which he or she was not
legally entitled;
(ii) if it is proved by final judgment in a
court of law or other final adjudication that such indemnification
is unlawful;
(iii) if it is proved by final judgment in
a court of law or other final adjudication that the Indemnitee is
liable pursuant to Nevada Revised Statute 78.138;
(iv) for a disgorgement of profits made
from the purchase and sale by the Indemnitee of securities pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”), or similar provisions of
any state statutory law or common law;
(v) on account of any liability derived
from a failure of the Indemnitee to timely file with the U.S.
Securities and Exchange Commission any reports and notices under
Sections 13 or 16(a) of the Exchange Act;
(vi) brought about or contributed to by the
dishonesty of the Indemnitee seeking payment hereunder; however,
notwithstanding the foregoing, the Indemnitee shall be protected
under this Agreement as to any claims upon which suit may be
brought against him or her by reason of any alleged dishonesty on
his or her part, unless a judgment or other final adjudication
thereof adverse to the Indemnitee shall establish that he or she
committed (i) acts of active and deliberate dishonesty,
(ii) with actual dishonest purpose and intent,
(iii) which acts were material to the cause of action so
adjudicated; or
(vii) for any judgment, fine or penalty
which the Corporation is prohibited by applicable law from paying
as indemnity or for any other reason.
(c) Proceeding . For the purposes
of this Agreement, “proceeding” means any threatened,
pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, or investigative.
(d) Subsidiary . For purposes of
this Agreement, “subsidiary” means any corporation of
which more than 50% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or
more other subsidiaries, or by one or more other
subsidiaries.
2. Agreement to Serve . The
Indemnitee agrees to serve and/or continue to serve as agent of the
Company, at its will (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as
an agent of the Company, so long as he or she is duly appointed or
elected and qualified in accordance with the applicable provisions
of the Bylaws of the Company or any subsidiary of the Company or
until such time as he or she tenders his or her resignation in
writing; provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment
by Indemnitee.
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(a) Maintenance of D&O
Insurance . The Company hereby covenants and agrees that, so
long as the Indemnitee shall continue to serve as an agent of the
Company and thereafter so long as the Indemnitee shall be subject
to any possible proceeding by reason of the fact that the
Indemnitee was an agent of the Company, the Company, subject to
Section 3(c), shall promptly obtain and maintain in full force
and effect directors’ and officers’ liability insurance
(“ D&O Insurance ”) in reasonable amounts
from established and reputable insurers.
(b) Rights and Benefits . In all
policies of D&O Insurance, the Indemnitee shall be named as an
insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured
of the Company’s directors, if the Indemnitee is a director;
or of the Company’s officers, if the Indemnitee is not a
director of the Company but is an officer; or of the
Company’s key employees, if the Indemnitee is not a director
or officer but is a key employee. Notwithstanding the preceding
sentence, D&O Insurance may not provide protection for an
Indemnitee adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with
respect to the advancement of expenses or indemnification ordered
by a court.
(c) Limitation on Required Maintenance
of D&O Insurance . Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain D&O
Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such
insurance are disproportionate to the amount of coverage provided,
the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or the Indemnitee is covered
by similar insurance maintained by a subsidiary of the
Company.
4. Mandatory Indemnification .
Subject to Section 9 below, the Company shall indemnify the
Indemnitee as follows:
(a) Third Party Actions . If the
Indemnitee is a person who was or is a party or is threatened to be
made a party to any proceeding (other than an action by or in the
right of the Company) by reason of the fact that he or she is or
was an agent of the Company, or by reason of anything done or not
done by him or her in any such capacity, the Company shall
indemnify the Indemnitee against any and all expenses and
liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts
paid in settlement) actually and reasonably incurred by him or her
in connection with the investigation, defense, resolution or appeal
of such proceeding, provided the Indemnitee acted
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