Penthouse Int'l, Inc., Exhibit 10.4



 



Exhibit 10.4



INDEMNITY AGREEMENT


     THIS AGREEMENT is entered into as of November 9, 2002, between American
Pulp Exchange, Inc. , a Florida corporation (the “Company”), and Charles Samel,
an individual resident of California (“Indemnitee”).


RECITALS


     A.     The Company believes that it is essential to its best interests to
attract and retain highly capable individuals to serve as directors, officers,
and agents of the Company.


     B.     Indemnitee is or has been selected to be a director, officer, and/or
agent of the Company.


     C.     The Company and Indemnitee recognize the increased risk of litigation
and other claims being asserted against directors, officers, and other agents
of corporations.


     D.     In recognition of Indemnitee’s need for substantial protection against
personal liability, in order to enhance Indemnitee’s service to the Company,
and in order to induce Indemnitee provide services to the Company as a
director, officer, and/or agent, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of Expenses to
Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement and, to the extent applicable insurance is maintained, for the
coverage of Indemnitee under the Company’s policies of directors’ and officers’
liability insurance.


     IN CONSIDERATION of the foregoing and of Indemnitee’s providing services
to the Company directly or, at its request, with another enterprise, the
parties agree as follows:


     Section 1.     DEFINITIONS.



	 	 	A.      Board. The board of directors of the Company.
	 
	 	 	B.      Change in Control. A state of affairs that shall be deemed to have
occurred if:




	 	          (i)	 	any Person is or becomes the “beneficial owner”
(as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)),
directly or indirectly, of securities representing 20 percent
or more of the total voting power of the Company’s
then–outstanding Voting Securities; or
	 
	 	          (ii)	 	during any period of two consecutive years,
individuals who, at the beginning of such period, constitute
the Board, together with any new director whose election by
the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two–thirds of the directors then in office who either were directors at the
beginning of



1






 





	 	 	 	the two–year period, or whose election or
nomination was previously so approved, cease for any reason
to constitute a majority of the Board;
	 
	 	          (iii)	 	the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation,
other than a merger or a consolidation that would result in
the Voting Securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
Voting Securities of the surviving entity) at least 80 percent
of the total voting power represented by the Voting Securities
of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
	 
	 	          (iv)	 	the shareholders of the Company approve a plan of
complete liquidation of the Company, or an agreement for the
sale or disposition by the Company (whether in one transaction
or a series of transactions), of all or substantially all of
the Company’s assets.



     C.     Expenses.



	 	          (i)	 	any expense, liability, or loss, including
attorney fees, judgments, fines, ERISA excise taxes and
penalties, and amounts paid or to be paid in settlement;
	 
	 	          (ii)	 	any interest, assessments, or other charges
imposed on any of the items in part (i) of this subsection
(c); and
	 
	 	          (iii)	 	any federal, state, local, or foreign taxes
imposed as a result of the actual or deemed receipt of any
payments under this Agreement paid or incurred in connection
with investigating, defending, being a witness in,
participating in (including on appeal), or preparing for any
of the foregoing in any proceeding relating to any
Indemnifiable Event.



     D.     Indemnifiable Event. Any event or occurrence that takes place either
before or after the execution of this Agreement and that is related to:



	 	          (i)	 	the fact that Indemnitee is or was a director or
an officer of the Company, or while a director or officer is
or was serving at the request of the Company as a director,
officer, employee, trustee, agent, or fiduciary of another
foreign or domestic corporation, partnership, joint venture,
employee benefit plan, trust, or other enterprise, or was a
director, officer, employee, or agent, of a foreign or
domestic corporation that was a predecessor corporation of the
Company or another enterprise at the request of such
predecessor corporation; or



2






 







	 	          (ii)	 	anything done or not done by Indemnitee in any
such capacity, whether or not the basis of the proceeding is
an alleged action in an official capacity as a director,
officer, employee, or agent, or in any other capacity while
serving as a director, officer, employee, or agent of the
Company, as described in this subsection (d).



     E.     Independent Counsel. The Person or body appointed in connection with
Section 3.


     F.     Person. “Person” (as that term is used in §§13(d) and 14(d) of the
Exchange Act) other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company acting in such capacity, or a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of shares of the Company
at the date of this Agreement.


     G.     Participant. A Person who is a party to, or a witness a or participant
(including on appeal) in, a proceeding.


     H.     Potential Change in Control. A state of affairs that shall be deemed
to exist if:



	 	          (i)	 	the Company enters into an agreement or
arrangement, the consummation of which would result in the
occurrence of a Change in Control;
	 
	 	          (ii)	 	any Person (including the Company) announces
publicly an intention to take or to consider taking actions
that, if consummated, would constitute a Change in Control;
	 
	 	          (iii)	 	any Person who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 10 percent or more of the combined voting power
of the Company’s then–outstanding Voting Securities, increases
his or her beneficial ownership of such securities by 5
percent or more over the percentage owned by such Person on
the date of this Agreement; or
	 
	 	          (iv)	 	the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential Change in Control
has occurred.



     I.     Proceeding. Any threatened, pending, or completed action, suit, or
proceeding, or any inquiry, hearing, or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead
to the institution of any such action, suit, or proceeding, whether civil,
criminal, administrative, investigative, or other.


     J.     Reviewing Party. The Person or body appointed in accordance with
Section 3.


     K.     Voting Securities. Any securities of the Company that have the right
to vote



3






 


generally in the election of directors.


     Section 2.      AGREEMENT TO INDEMNIFY.


     A.     General Agreement. In the event Indemnitee was, is, or becomes a
Participant in, or is threatened to be made a Participant in, a proceeding by
reason of (or arising in part out of) an Indemnifiable Event, the Company shall
indemnify Indemnitee from and against any and all Expenses to the fullest
extent permitted by law, as the same exists or may hereafter be amended or
interpreted (but in the case of any such amendment or interpretation, only to
the extent that such amendment or interpretation permits the Company to provide
broader indemnification rights than were permitted prior thereto). The parties
hereto intend that this Agreement shall provide for indemnification in excess
of that expressly permitted by statute, including, without limitation, any
indemnification provided by the Company’s articles of incorporation, its
bylaws, a vote of its shareholders or disinterested directors, or applicable
law.


     B.     Initiation of Proceeding. Notwithstanding anything in this Agreement
to the contrary, Indemnitee shall not be entitled to indemnification under this
Agreement in connection with any proceeding initiated by Indemnitee against the
Company or any director or officer of the Company unless:



	 	          (i)	 	the Company has joined in or the Board has
consented to the initiation of such proceeding;
	 
	 	          (ii)	 	the proceeding is one to enforce indemnification
rights under Section 5; or
	 
	 	          (iii)	 	the proceeding is instituted after a Change in
Control and Independent Counsel has approved its initiation.



     C.     Expense Advances. If so requested by Indemnitee, the Company shall,
within 10 business days after such request, advance all Expenses to Indemnitee
(an “Expense Advance”). Notwithstanding the foregoing, to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee for all such amounts, and Indemnitee hereby agrees to
reimburse the Company promptly for the same. If Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, as provided in Section
4, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding, and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto and
all rights of appeal therefrom have been exhausted or have lapsed.
Indemnitee’s obligation to reimburse the Company for Expense Advances shall be
unsecured, and no interest shall be charged thereon.


     D.     Mandatory Indemnification. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits in
defense of any
proceeding relating in whole or in part to an Indemnifiable Event or in
defense of any issue or


4






 




matter in such proceeding, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.


     E.     Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for a portion of Expenses,
but not for the total amount of Expenses, the Company shall indemnify
Indemnitee for the portion to which Indemnitee is entitled.


     F.     Prohibited Indemnification. No indemnification under this Agreement
shall be paid by the Company on account of any proceeding in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Company under section 16(b) of the
Exchange Act, or similar provisions of any federal, state, or local laws.


     Section 3.      REVIEWING PARTY.


     Before any Change in Control occurs the Reviewing Party shall be any
appropriate Person or body consisting of a member or members of the Board or
any other Person or body appointed by the Board who is not a party to the
proceeding for which Indemnitee is seeking indemnification; after a Change in
Control, the Reviewing Party shall be the Independent Counsel. On all matters
arising after a Change in Control (other than a Change in Control approved by a
majority of the directors of the Board who were directors immediately before
such Change in Control) concerning the rights of Indemnitee to indemnity
payments and Expense Advances under this Agreement, any other agreement,
applicable law, or the Company’s articles of incorporation or bylaws now or
hereafter in effect relating to indemnification for Indemnifiable Events, the
Company shall seek legal advice only from Independent Counsel selected by
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the
Company or the Indemnitee (other than in connection with indemnification
matters) within the last five years. The Independent Counsel shall not include
any Person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement. Such counsel, among other things, shall render a written opinion to
the Company and Indemnitee on whether and to what extent Indemnitee should be
permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the Independent Counsel and to indemnify fully such
counsel against any and all Expenses, including attorney fees, claims,
liabilities, loss, and damages arising out of or relating to this Agreement or
the engagement of Independent Counsel under this Agreement.


     Section 4.     INDEMNIFICATION PROCESS AND APPEAL.


     A.     Indemnification Payment. Indemnitee shall receive indemnification of
Expenses from the Company in accordance with this Agreement as soon as
practicable after Indemnitee has made written demand on the Company for
indemnification, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to
indemnification under this


5






 




Agreement or applicable law.


     B.     Suit To Enforce Rights. Regardless of any action by the Reviewing
Party, if Indemnitee has not received full indemnification within 30 days after
making a demand in accordance with Section 4(a), Indemnitee shall have the
right to enforce its indemnification rights under this Agreement by commencing
litigation in any court in the State of Florida seeking an initial
determination by the court or challenging any determination by the Reviewing
Party or any aspect thereof. The Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
not challenged by Indemnitee shall be binding on the Company and Indemnitee.
The remedy provided for in this Section 4 shall be in addition to any other
remedies available to Indemnitee in law or equity.


     C.     Defense to Indemnification, Burden of Proof, and Presumptions. It
shall be a defense to any action brought by Indemnitee against the Company to
enforce this Agreement (other than an action brought to enforce a claim for
Expenses incurred in defending a proceeding in advance of its final disposition
when the required undertaking has been tendered to the Company) that it is not
permissible, under this Agreement or applicable law, for the Company to
indemnify Indemnitee for the amount claimed. In connection with any such
action or any determination by the Reviewing Party or otherwise on whether
Indemnitee is entitled to be indemnified under this Agreement, the burden of
proving such a defense or determination shall be on the Company. Neither the
failure of the Reviewing Party or the Company (including its Board, independent
legal counsel, or its shareholders) to have made a determination before the
commencement of such action by Indemnitee that indemnification is proper under
the circumstances because the Indemnitee has met the standard of conduct set
forth in applicable law, nor an actual determination by the Reviewing Party or
the Company (including its Board, independent legal counsel, or its
shareholders) that Indemnitee had not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the Indemnitee
has not met the applicable standard of conduct. For purposes of this
Agreement, the termination of any claim, action, suit, or proceeding, by
judgment, order, settlement (whether with or without court approval),
conviction, or on a plea of nolo contendere, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.


     Section 5.     INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING RIGHTS.


     The Company shall indemnify Indemnitee against any and all Expenses. If
requested by Indemnitee, the Company shall, within 10 business days after such
request, advance to Indemnitee such Expenses as are incurred by Indemnitee in
connection with any claim asserted against or action brought by Indemnitee for:


     A.     Indemnification of Expenses or advances of Expenses by the Company
under this Agreement, or any other agreement, or under applicable law, or the
Company’s articles of incorporation or bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, and/or


6






 



     B.     Recovery under directors’ and officers’ liability insurance policies
maintained by the Company, for amounts paid in settlement if the Independent
Counsel has approved the settlement.


     The Company shall not settle any proceeding in any manner that would
impose any penalty or limitation on Indemnitee without Indemnitee’s written
consent. Neither the Company nor Indemnitee will unreasonably withhold its
consent to any proposed settlement. The Company shall not be liable to
indemnify Indemnitee under this Agreement with regard to any judicial award if
the Company was not given a reasonable and timely opportunity, at its Expense,
to participate in the defense of such action; however, the Company’s liability
under this Agreement shall not be excused if participation in the proceeding by
the Company was barred by this Agreement.


     Section 6.     ESTABLISHMENT OF TRUST.


     In the event of a Change in Control or a potential Change in Control, the
Company shall, on written request by Indemnitee, create a trust for the benefit
of Indemnitee (“the Trust”) and from time to time on written request of
Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for, participating in, and/or
defending any proceeding relating to an Indemnifiable Event. The amount or
amounts to be deposited in the Trust under the foregoing funding obligation
shall be determined by the Reviewing Party. The terms of the Trust shall
provide that on a Change in Control:


     (a)  The Trust shall not be revoked or the principal invaded without the
written consent of Indemnitee.


     (b)  The Trustee shall be chosen by Indemnitee subject to approval by the
Company. The Trustee shall advance, within 10 business days after a request by
Indemnitee, all Expenses to the Indemnitee (provided that Indemnitee hereby
agrees to reimburse the Trust under the same circumstances for which Indemnitee
would be required to reimburse the Company under Section 2(c) of this
Agreement).


     (c)  The Trust shall continue to be funded by the Company in accordance
with the funding obligation set forth in this Section 6.


     (d)  The Trustee shall promptly pay to Indemnitee all amounts for which
Indemnitee shall be entitled to indemnification under this Agreement or
otherwise.


     (e)  All unexpended funds in the Trust shall revert to the Company on a
final determination by the Reviewing Party or a court of competent jurisdiction
that Indemnitee has been fully indemnified under the terms of this Agreement.



     Nothing in this Section 6 shall relieve the Company of any of its
obligations under this



7






 


Agreement. All income earned on the assets held in the
Trust shall be reported as income by the Company for federal, state, local, and
foreign tax purposes. The Company shall pay all costs of establishing and
maintaining the Trust and shall indemnify the Trustee against any and all
Expenses, including attorney fees, claims, liabilities, losses, and damages
arising out of or relating to this Agreement or the establishment and
maintenance of the Trust.


     Section 7.     NON-EXCLUSIVITY.


     The rights of Indemnitee under this Agreement shall be in addition to any
other rights Indemnitee may have under the Company’s articles of incorporation,
bylaws, applicable law, or otherwise. To the extent that a change in
applicable law (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the
Company’s articles of incorporation, bylaws, applicable law, or this Agreement,
it is the intent of the parties that Indemnitee enjoy by this Agreement the
greater benefits afforded by such change.


     Section 8.     LIABILITY INSURANCE.


     To the extent the Company maintains an insurance policy or policies
providing directors’ and officers’ liability insurance, Indemnitee shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company director or
officer.


     Section 9.     PERIOD OF LIMITATIONS.


     No legal action shall be brought, and no cause of action shall be
asserted, by or on behalf of the Company or any affiliate of the Company
against Indemnitee, Indemnitee’s spouse, heirs, executors, or Personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, or such longer period as may be required by state law
under the circumstances. Any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such period; provided, however, that if
any shorter period of limitations is otherwise applicable to any such cause of
action, the shorter period shall govern.


     Section 10.     AMENDMENT OF THIS AGREEMENT.


     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 operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.


     Section 11.     SUBROGATION.


     In the event of payment under this Agreement, the Company shall be
subrogated to the


8






 




extent of such payment to all rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.


     Section 12.     NO DUPLICATION OF PAYMENTS.


     The Company shall not be liable under this Agreement to make any payment
in connection with any claim made against Indemnitee to the extent Indemnitee
has otherwise received payment (under any insurance policy, bylaw, or
otherwise) of the amounts otherwise indemnifiable under this Agreement.


     Section 13.     BINDING EFFECT.


     This Agreement shall be binding on and inure to the benefit of and be
enforceable by the parties hereto and their respective successors (including
any direct or indirect successor by purchase, merger, consolidation, or
otherwise to all or substantially all of the business and/or assets of the
Company), assigns, spouses, heirs, and personal and legal representatives. The
Company shall require and cause any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all, substantially all, or a
substantial part of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to Indemnitee, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place. The indemnification provided under this Agreement shall continue for
Indemnitee for any action taken or not taken while serving in an indemnified
capacity pertaining to an Indemnifiable Event even though Indemnitee may have
ceased to serve in such capacity at the time of any proceeding.


     Section 14.     SEVERABILITY.


     If any portion of this Agreement shall be held by a court of competent
jurisdiction to be invalid, void, or otherwise unenforceable, the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void, or otherwise unenforceable, that is not
itself invalid, void, or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, void, or unenforceable.


     Section 15.     GOVERNING LAW.


     This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida applicable to contracts made
and to be performed in such State without giving effect to the principles of
conflicts of laws.


     Section 16.     NOTICES.


9






 





     All notices, demands, and other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
if delivered by hand, against receipt, or mailed, postage prepaid, certified or
registered mail, return receipt requested, and addressed to the Company at:



	 	American Pulp Exchange, Inc.

11 Penn Plaza

New York City, New York 10001




	 	and to Indemnitee at:




	 	Charles Samel

16 East 67th Street

New York, New York 10021



     Notice of change of address shall be effective only when given in
accordance with this section. All notices complying with this section shall be
deemed to have been received on the date of delivery or on the third business
day after mailing.


[REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]


10






 





IN WITNESS WHEREOF, the parties hereto have duly executed and delivered

this Agreement as of the day specified above.







	 	 	 
	 	 	AMERICAN PULP EXCHANGE, INC.

a Florida corporation


By: /s/ R. Guccione



Robert C. Guccione

Chairman and President
	 
	 	 	 
	 
	 	 	
“INDEMNITEE”:
	 
	 	 	 
	 
	 	 	
/s/ Charles Samel



Charles Samel



[SIGNATURE PAGE TO INDEMNITY AGREEMENT]