INDEMNITY AGREEMENT
EXHIBIT
10.6
This
INDEMNITY AGREEMENT (the “Agreement”) is dated as of January 12, 2007 and is
made by and between Kreido Biofuels, Inc. (f/k/a Gemwood Productions, Inc.),
a
Nevada corporation (the “Company”), and [ ], an officer or director of the
Company (the “Indemnitee”).
RECITALS
A. The
Company is aware that competent and experienced persons are increasingly
reluctant to serve as directors or officers of corporations unless they are
protected by comprehensive liability insurance and/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 and
officers;
B. Based
on
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 officers and directors of the Company, and to encourage
such individuals to take the business risks necessary for the success of the
Company, it is necessary for the Company contractually to indemnify officers
and
directors and to assume for itself maximum liability for expenses and damages
in
connection with claims against such officers and directors in connection with
their service to the Company;
C. The
Nevada Revised Statutes under which the Company is organized (the “Law”),
empowers the Company to indemnify by agreement its officers, directors,
employees and agents, and persons who serve, at the request of the Company,
as
directors, officers, employees or agents of other corporations or enterprises,
and expressly provides that the indemnification provided by the Law is not
exclusive; and
D. The
Company desires and has requested the Indemnitee to serve or continue to serve
as a director or officer of the Company. As an inducement to serve and in
consideration for such service, the Company has agreed to indemnify the
Indemnitee for claims for damages arising out of or related to the performance
of such services to the Company in accordance with the terms and conditions
set
forth in this Agreement.
NOW,
THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. Definitions.
1.1 Agent.
For the
purposes of this Agreement, “agent” of the Company means any person who is or at
any time was a director or officer of the Company or a subsidiary of the
Company; or is or at any time was serving at the request of, for the convenience
of, or to represent the interest of the Company or a subsidiary of the Company
as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the
Company; or was a director or officer of another enterprise or affiliate of
the
Company at the request of, for the convenience of, or to represent the interests
of such predecessor corporation. The term “enterprise” includes any employee
benefit plan of the Company, its subsidiaries, affiliates and predecessor
corporations.
1.2 Expenses.
For
purposes of this Agreement, “expenses” includes all direct and indirect costs of
any type or nature whatsoever (including, without limitation, all attorneys’
fees and related disbursements and other out-of-pocket costs) actually and
reasonably incurred by the Indemnitee in connection with the investigation,
defense or appeal of a proceeding or establishing or enforcing a right to
indemnification or advancement of expenses under this Agreement, Section 78.7502
of the Law or otherwise.
1.3 Proceeding.
For the
purposes of this Agreement, “proceeding” means any threatened, pending or
completed action, suit, inquiry or other proceeding, whether civil, criminal,
administrative, investigative or any other type whatsoever.
1.4 Subsidiary.
For
purposes of this Agreement, “subsidiary” means any corporation of which more
than fifty percent (50%) of the outstanding voting securities is owned directly
or indirectly by the Company, by the Company and one or more of its subsidiaries
or by one or more of the Company’s subsidiaries.
2. Agreement
to Serve.
The
Indemnitee agrees to serve and/or continue to serve as an agent of the Company,
at the will of the Company (or under separate agreement, if such agreement
exists), in the capacity the Indemnitee currently serves as an agent of the
Company, faithfully and to the best of his ability, so long as he is duly
appointed or elected and qualified in accordance with the applicable provisions
of the charter documents of the Company or any subsidiary of the Company;
provided, however, that the Indemnitee may at any time and for any
reason resign from such position (subject to any contractual obligation that
the
Indemnitee may have assumed apart from this Agreement), and the Company or
any
subsidiary shall have no obligation under this Agreement to continue the
Indemnitee in any such position. For the avoidance of doubt, the Company and
Indemnitee each acknowledge and agree that the resignation or other termination
of Indemnitee as an agent of the Company under this paragraph 2 shall not impair
any right that Indemnitee may otherwise have to be indemnified under the terms
of this Agreement.
3. Directors’
and Officers’ Insurance.
The
Company shall, to the extent that the Board determines it to be economically
reasonable, maintain a policy of directors’ and officers’ liability insurance
(“D&O Insurance”), on such terms and conditions as may be approved by the
Board.
4. Mandatory
Indemnification.
Subject
to Section 9 below, the Company shall indemnify and hold the Indemnitee harmless
to the fullest extent permitted by the Law. Without limiting the generality
of
the foregoing, the Company shall indemnify and hold harmless the
Indemnitee:
4.1 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 is or at any time was an agent of the Company, or
by
reason of anything done or not done by him in any such capacity, against any
and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted
in
good faith and in a manner he reasonably believed to be in, or not opposed
to,
the best interests of the Company and, with respect to any criminal action
or
proceeding, had no reasonable cause to believe his conduct was unlawful;
4.2 Derivative
Actions.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding by or in the right of the Company to procure a judgment in
its
favor by reason of the fact that he is or at any time was an agent of the
Company, or by reason of anything done or not done by him in any such capacity,
against any amounts paid in settlement of any such proceeding and all expenses
actually and reasonably incurred by him in connection with the investigation,
defense, settlement or appeal of such proceeding if he acted in good faith
and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company; except that no indemnification under this subsection
shall be made in respect of any claim, issue or matter as to which such person
shall have been finally adjudged, in a judgment not subject to appeal, to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the court in which such proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such amounts which the court
shall deem proper; and
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4.3 Exception
for Amounts Covered by Insurance.
Notwithstanding the foregoing, the Company shall not be obligated to indemnify
the Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) to the extent such have been paid directly to the
Indemnitee by D&O Insurance.
5. Partial
Indemnification and Contribution.
5.1 Partial
Indemnification.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of any expenses or liabilities of any
type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties and amounts paid in settlement) incurred by him in the
investigation, defense, settlement or appeal of a proceeding but is not
entitled, however, to indemnification for all of the total amount thereof,
then
the Company shall nevertheless indemnify the Indemnitee for such total amount
except as to the portion thereof to which the Indemnitee is not entitled to
indemnification.
5.2 Contribution.
If the
Indemnitee is not entitled to the indemnification provided in Section 4 for
any
reason other than the statutory limitations set forth in the Law, then in
respect of any threatened, pending or completed proceeding in which the Company
is jointly liable with the Indemnitee (or would be if joined in such
proceeding), the Company shall contribute to the amount of expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by the Indemnitee in such proportion
as
is appropriate to reflect (i) the relative benefits received by the Company
on
the one hand and the Indemnitee on the other hand from the transaction from
which such proceeding arose and (ii) the relative fault of the Company on the
one hand and of the Indemnitee on the other hand in connection with the events
which resulted in such expenses, judgments, fines or settlement amounts, as
well
as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the Indemnitee on the other hand shall be
determined by reference to, among other things, the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. The Company agrees that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
or any other method of allocation, which does not take account of the foregoing
equitable considerations.
6. Mandatory
Advancement of Expenses.
6.1 Advancement.
Subject
to Section 9 below, the Company shall advance all expenses incurred by the
Indemnitee in connection with the investigation, participation, defense,
settlement or appeal of any proceeding to which the Indemnitee is a party or
is
threatened to be made a party by reason of the fact that the Indemnitee is
or at
any time was an agent of the Company or by reason of anything done or not done
by him in any such capacity. The Indemnitee hereby undertakes to promptly repay
such amounts advanced only if, and to the extent that, it shall ultimately
be
determined that the Indemnitee is not entitled to be indemnified by the Company
under the provisions of this Agreement, the Certificate of Incorporation or
Bylaws of the Company, the Law or otherwise. The advances to be made hereunder
shall be paid by the Company to the Indemnitee within thirty (30) days following
delivery of a written request therefor by the Indemnitee to the
Company.
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6.2 Exception.
Notwithstanding the foregoing provisions of this Section 6, the Company shall
not be obligated to advance any expenses to the Indemnitee arising from a
lawsuit filed directly by the Company against the Indemnitee if an absolute
majority of the members of the Board reasonably determines in good faith, within
thirty (30) days of the Indemnitee’s request to be advanced expenses, that the
facts known to them at the time such determination is made demonstrate clearly
and convincingly that the Indemnitee acted in bad faith. If such a determination
is made, the Indemnitee may have such decision reviewed by another forum, in
the
manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all references
therein to “indemnification” being deemed to refer to “advancement of expenses,”
and the burden of proof shall be on the Company to demonstrate clearly and
convincingly that, based on the facts known at the time, the Indemnitee acted
in
bad faith. The Company may not avail itself of this Section 6.2 as to a given
lawsuit if, at any time after the occurrence of the activities or omissions
that
are the primary focus of the lawsuit, the Company has undergone a change in
control. For this purpose, a change in control shall mean a given person or
group of affiliated persons or groups increasing their beneficial ownership
interest in the Company by at least twenty (20) percentage points without
advance Board approval.
7. Notice
and Other Indemnification Procedures.
7.1 Promptly
after receipt by the Indemnitee of notice of the commencement of or the threat
of commencement of any proceeding, the Indemnitee shall, if the Indemnitee
believes that indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement or threat
of commencement thereof.
7.2 If,
at
the time of the receipt of a notice of the commencement of a proceeding pursuant
to Section 7.1 hereof, the Company has D&O Insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of
such proceeding in accordance with the terms of such D&O Insurance
policies.
7.3 In
the
event the Company shall be obligated to advance the expenses for any proceeding
against the Indemnitee, the Company, if appropriate, shall be entitled to assume
the defense of such proceeding, with counsel approved by the Indemnitee (which
approval shall not be unreasonably withheld), upon the delivery to the
Indemnitee of written notice of its election to do so. After delivery of such
notice, approval of such counsel by the Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to the Indemnitee under
this Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to the same proceeding, provided that: (a) the Indemnitee shall
have the right to employ his own counsel in any such proceeding at the
Indemnitee’s expense; (b) the Indemnitee shall have the right to employ his own
counsel in connection with any such proceeding, at the expense of the Company,
if such counsel serves in a review, observer, advice and counseling capacity
and
does not otherwise materially control or participate in the defense of such
proceeding; and (c) if (i) the employment of counsel by the Indemnitee has
been
previously authorized by the Company, (ii) the Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
the
Indemnitee in the conduct of any such defense or (iii) the Company shall not,
in
fact, have employed counsel to assume the defense of such proceeding, then
the
fees and expenses of the Indemnitee’s counsel shall be at the expense of the
Company.
8. Determination
of Right to Indemnification.
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8.1 To
the
extent the Indemnitee has been successful on the merits or otherwise in defense
of any proceeding referred to in Section 4.1 or 4.2 of this Agreement or in
the
defense of any claim, issue or matter described therein, the Company shall
indemnify the Indemnitee against expenses actually and reasonably incurred
by
him in connection with the investigation, defense or appeal of such proceeding,
or such claim, issue or matter, as the case may be.
8.2 In
the
event that Section 8.1 is inapplicable, or does not apply to the entire
proceeding, the Company shall nonetheless indemnify the Indemnitee unless the
Company shall prove by clear and convincing evidence to a forum listed in
Section 8.3 below that the Indemnitee has not met the applicable standard of
conduct required to entitle the Indemnitee to such indemnification.
8.3 The
Indemnitee shall be entitled to select the forum in which the validity of the
Company’s claim under Section 8.2 hereof that the Indemnitee is not entitled to
indemnification will be heard from among the following:
(a) a
quorum
of the Board consisting of directors who are not parties to the proceeding
for
which indemnification is being sought;
(b) the
stockholders of the Company, provided, however, that the
Indemnitee can select a forum consisting of the stockholders of the Company
only
with the approval of the Company;
(c) legal
counsel mutually agreed upon by the Indemnitee and the Board, which counsel
shall make such determination in a written opinion;
(d) a
panel
of three arbitrators, one of whom is selected by the Company, another of whom
is
selected by the Indemnitee and the last of whom is selected by the first two
arbitrators so selected; or
(e) the
courts of the State of New York or other court having jurisdiction of subject
matter and the parties.
8.4 As
soon
as practicable, and in no event later than thirty (30) days after the forum
has
been selected pursuant to Section 8.3 above, the Company shall, at its own
expense, submit to the selected forum its claim that the Indemnitee is not
entitled to indemnification, and the Company shall act in the utmost good faith
to assure the Indemnitee a complete opportunity to defend against such
claim.
8.5 If
the forum selected in accordance with Section 8.3 hereof is not a court, then
after the final decision of such forum is rendered, the Company or the
Indemnitee shall have the right to apply to the courts of the State of New
York,
the court in which the proceeding giving rise to the Indemnitee’s claim for
indemnification is or was pending or any other court having jurisdiction of
subject matter and the parties, for the purpose of appealing the decision of
such forum, provided that such right is executed within sixty (60) days after
the final decision of such forum is rendered. If the forum selected in
accordance with Section 8.3 hereof is a court, then the rights of the Company
or
the Indemnitee to appeal any decision of such court shall be governed by the
applicable laws and rules governing appeals of the decision of such
court.
8.6 Notwithstanding
any other provision in this Agreement to the contrary, the Company shall
indemnify the Indemnitee against all expenses incurred by the Indemnitee in
connection with any hearing or proceeding under this Section 8 involving the
Indemnitee and against all expenses incurred by the Indemnitee in connection
with any other proceeding between the Company and the Indemnitee involving
the
interpretation or enforcement of the rights of the Indemnitee under this
Agreement unless a court of competent jurisdiction finds that each of the
material claims and/or defenses of the Indemnitee in any such proceeding was
frivolous or not made in good faith.
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9. Exceptions.
Any
other provision herein to the contrary notwithstanding, the Company shall not
be
obligated pursuant to the terms of this Agreement:
9.1 Claims
Initiated by Indemnitee.
To
indemnify or advance expenses to the Indemnitee with respect to proceedings
or
claims initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to proceedings specifically authorized by the
Board
or brought to establish or enforce a right to indemnification and/or advancement
of expenses arising under this Agreement, the charter documents of the Company
or any subsidiary or any statute or law or otherwise, but such indemnification
or advancement of expenses may be provided by the Company in specific cases
if
the Board finds it to be appropriate; or
9.2 Unauthorized
Settlements.
To
indemnify the Indemnitee hereunder for any amounts paid in settlement of a
proceeding unless the Company consents in advance in writing to such settlement,
which consent shall not be unreasonably withheld; or
9.3 Securities
Law Actions.
To
indemnify the Indemnitee on account of any suit in which judgment is rendered
against the Indemnitee for an accounting of profits made from the purchase
or
sale by the Indemnitee of securities of the Company pursuant to the provisions
of Section l6(b) of the Securities Exchange Act of 1934 and amendments thereto
or similar provisions of any federal, state or local statutory law;
or
9.4 Unlawful
Indemnification.
To
indemnify the Indemnitee if a final decision by a court having jurisdiction
in
the matter, in a judgment not subject to appeal, shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for
adjudication.
10. Non-Exclusivity.
The
provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation
or Bylaws, the vote of the Company’s stockholders or disinterested directors,
other agreements or otherwise, both as to action in the Indemnitee’s official
capacity and to action in another capacity while occupying his position as
an
agent of the Company, and the Indemnitee’s rights hereunder shall continue after
the Indemnitee has ceased acting as an agent of the Company and shall inure
to
the benefit of the heirs, executors and administrators of the
Indemnitee.
11. General
Provisions.
11.1 Interpretation
of Agreement.
It is
understood that the parties hereto intend this Agreement to be interpreted
and
enforced so as to provide indemnification and advancement of expenses to the
Indemnitee to the fullest extent now or hereafter permitted by law, except
as
expressly limited herein.
11.2 Severability.
If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever, then:
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(a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraphs of
this
Agreement containing any such provision held to be invalid, illegal or
unenforceable that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and
(b) to
the
fullest extent possible, the provisions of this Agreement (including, without
limitation, all portions of any paragraphs of this Agreement containing any
such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect
to
the intent manifested by the provision held invalid, illegal or unenforceable
and to give effect to Section 11.1 hereof.
11.3 Modification
and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver.
11.4 Subrogation.
In the
event of full payment under this Agreement, the Company shall be subrogated
to
the extent of such payment to all of the rights of recovery of the Indemnitee,
who shall execute all documents required and shall do all acts that may be
necessary or desirable to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
11.5 Counterparts.
This
Agreement may be executed in one or more counterparts, which shall together
constitute one agreement.
11.6 Successors
and Assigns.
The
terms of this Agreement shall bind, and shall inure to the benefit of, the
successors and assigns of the parties hereto.
11.7 Notice.
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given: (a) if delivered by hand and
signed for by the party addressee; or (b) if mailed by certified or registered
mail, with postage prepaid, on the third business day after the mailing date.
Addresses for notices to either party are as shown on the signature page of
this
Agreement or as subsequently modified by written notice.
11.8 Governing
Law. This Agreement shall be governed exclusively by and construed according
to the laws of the State of New York, without regard to any choice or conflict
of laws principles, as applied to contracts between New York residents entered
into and to be performed entirely within New York.
11.9 Consent
to Jurisdiction. The Company and the Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of New York for all
purposes in connection with any action or proceeding, which arises out of or
relates to this Agreement.
11.10 Attorneys’
Fees.
In the
event Indemnitee is required to bring any action to enforce rights under this
Agreement (including, without limitation, the payment or reimbursement of
expenses of any proceeding described in Section 4), the Indemnitee shall be
entitled to all reasonable fees and expenses in bringing and pursuing such
action, unless a court of competent jurisdiction finds each of the material
claims of the Indemnitee in any such action was frivolous and not made in good
faith.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have entered into this Agreement effective
as of the date first written above.
| KREIDO BIOFUELS, INC. | INDEMNITEE | ||
| f/k/a Gemwood Productions, Inc. | |||
|
By:
Title:
|
|
||
| Address: _________________________________ | |||
| _________________________________ |
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