Exhibit 10.1


 


INDEMNIFICATION AGREEMENT


 


(Chase Packaging Corporation)


 


THIS AGREEMENT is made this 21st day of
October, 2008, between Chase Packaging
Corporation, a Texas
corporation (the “Company”), and                               (“Indemnitee”).  This
Agreement completely replaces and supersedes the Indemnification Agreement
dated August 23, 2007, between Indemnitee and the Company.


 


Competent and experienced persons are becoming more reluctant to serve
as directors and/or officers of corporations unless they are provided with
adequate protection against claims and actions against them for their
activities on behalf or at the request of such corporations, generally through
insurance and/or indemnification.


 


Uncertainties in the interpretations of the statutes and regulations,
laws, and public policies relating to indemnification of corporate directors
and officers are such as to make adequate, reliable assessment of the risks to
which directors and officers of such corporations may be exposed difficult, particularly
in light of the proliferation of lawsuits against directors and officers
generally.


 


The Board of Directors of the Company, based upon its business
experience, has concluded that the continuation of present trends in litigation
against corporate directors and officers will inevitably make it more difficult
for the Company to attract and retain directors and officers of the highest
degree of competence committed to the active and effective direction and
supervision of the business and affairs of the Company and its subsidiaries and
affiliates and the operation of its and their facilities. In fact, the Board
deems such consequence to be so detrimental to the best interests of the
Company that it has concluded that the Company should act to provide its
directors and officers with enhanced protection against inordinate risks
attendant on their positions in order to assure that the most capable persons
otherwise available will be attracted to, or will remain in, such positions. In
such connection, such directors have further concluded that it is not only
reasonable and prudent but necessary for the Company to obligate itself
contractually to indemnify, to the fullest extent permitted by applicable law,
financial responsibility for expenses and liabilities which might be incurred
by such individuals in connection with claims lodged against them for their
decisions and actions in such capacities.


 


Article 2.02-1 of the Texas Business Corporation Act of the State
of Texas, under which law the Company is organized, empowers a corporation
organized in Texas to indemnify persons who serve as directors and/or officers
of the corporation, or persons who serve at the request of the corporation as
directors and/or officers of an affiliated corporation,  and further empowers a corporation to “purchase and maintain insurance” on
behalf of such persons “against any
liability asserted against him and incurred by him in such a capacity or
arising out of his status as such a person, whether or not the corporation
would have the power to indemnify him against that liability under this
[Article].”


 

















 


The Articles of Incorporation and Bylaws of the Company permit
indemnification to the fullest extent permitted by applicable law.


 


The Company desires to have the Indemnitee serve or continue to serve
as a director and/or officer of the Company, and/or as a director, officer,
employee, partner, trustee, agent, and/or fiduciary of such other corporations
partnerships, joint ventures, employee benefit plans, trusts, and/or other enterprises
(herein referred to as “Company Affiliate”)
of which he or she has been or is serving, or will serve on behalf of or at the
request of or for the convenience of, or to represent the interests of the
Company, free from undue concern for unpredictable, inappropriate, or
unreasonable claims for damages by reason of his or her being, or having been,
a director and/or officer of the Company, and/or a director, officer, employee,
partner, trustee, agent, and/or fiduciary of a Company Affiliate, or by reason
of his or her decisions or actions on their behalf.


 


The Indemnitee is willing to serve, or to continue to serve, or to take
on additional service for, the Company and/or the Company Affiliate in such
aforesaid capacities on the condition that he or she be indemnified as provided
for herein.


 


Accordingly, in consideration of the premises and the covenants
contained herein, the Company and the Indemnitee do hereby covenant and agree
as follows:


 


1                                          Services to the Company: The
Indemnitee shall serve or continue to serve as a director and/or officer of the
Company (in the case of a Company officer at the will of the Company or under
separate contract, if any such contract exists or shall hereafter exist),
and/or as a director, and/or officer, or fiduciary of a Company Affiliate,
faithfully and to the best of his or her ability so long as he or she is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable constitutive documents thereof; provided. however that: (a) the
Indemnitee may at any time and for any reason resign from such position
(subject to any contractual obligations which the Indemnitee has assumed apart
from this Agreement); and (b) neither the Company nor the Company
Affiliate will have any obligation under this Agreement to continue the
Indemnitee in any such position.


 


2                                          Right to Indemnification:


 


2.1                                 The Company shall,
except to the extent prohibited by applicable law as then in effect, indemnify
any Indemnitee who is or was involved in any manner (including, without
limitation, as a party or witness), or is threatened to be made so involved, in
any threatened, pending, or completed investigation, claim, action, suit, or
proceeding whether civil, criminal, administrative, or investigative
(including, without limitation, any action, suit, or proceeding by or in the
right of the Company to procure a judgment in its favor) (herein referred to as
a “Proceeding”) by reason of the fact that
such person is or was a director or officer of the Company, and/or is or was
serving at the request of the Company as a 


 


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director or officer, of any Company affiliate, against all expenses
(including attorneys’ fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
Proceeding; provided. however, that, except as provided in Paragraph
3.4, the foregoing shall not apply to a director or officer of the Company with
respect to a Proceeding that was commenced by such director or officer. Such
indemnification shall include the right to receive payment in advance of any
expenses incurred by the Indemnitee in connection with such Proceeding,
consistent with the provisions of applicable law as then in effect.


 


2.2                                 Notwithstanding the
obligation of the Company to indemnify attorneys’ fees as above provided in
Paragraph 2.1, as a condition to being so indemnified the following shall
apply. With regard to any “Proceeding” (as
above defined), there will be groups the members of which have totally common
interests  —  i.e., their goals are identical and there are
no conflicts-of-interest among them. At such time as the determination of these
groups has been completed (such determination to be made by “Independent Counsel” [as hereafter defined] if the parties
involved cannot make such determination among themselves), each group shall, by
majority vote of those comprising such group, select a single attorney or law
firm to serve as (exclusive) legal counsel for all of the members of such
group. In the event that any member of any such group acts independently by
retaining the legal services of any other attorney or law firm to additionally
or separately represent him, her, or it, all legal fees and expenses of such
independently retained attorney or law firm shall be the (sole) responsibility
of such independently acting member of the group.


 


3                                          Advancement of Expenses; Procedures; Presumptions
and Effect of Certain Proceedings: Remedies: In furtherance, but
not in limitation, of the foregoing provisions, the following procedures,
presumptions, and remedies shall apply with respect to advancement of expenses
and the right to indemnification hereunder:


 


3.1                                 Advancement
of Expenses: All reasonable expenses incurred by or on behalf of
the Indemnitee in connection with any Proceeding shall, after initial approval
in accordance with Paragraph 3.2, be advanced to the Indemnitee by the Company
within twenty (20) calendar days after the receipt by the Company of a
statement or statements from the Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall: 
(a) be delivered to the Company within ninety (90) days after the
incurrence of the expenses being reported on such statement or statements; and (b) reasonably
evidence the expenses incurred by the Indemnitee (and, if required by law at
the time of such advance, shall include or be accompanied by an undertaking by
or on behalf of the Indemnitee to repay the amounts advanced if it should
ultimately be determined that the 


 


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Indemnitee is not entitled to be indemnified against such expenses
hereunder).


 


3.2                                 Procurement
for Determination of Entitlement to Indemnification:


 


3.2.1                        To obtain indemnification as
herein provided, an Indemnitee shall submit to the President or Secretary of
the Company a written request, including such documentation and information as
is reasonably available to the Indemnitee and reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to indemnification
(herein referred to as the “Supporting Documentation”). The determination of
the Indemnitee’s entitlement to indemnification shall be made not later than 60
calendar days after receipt by the Company of the written request for
Indemnification together with the Supporting Documentation. The Secretary or
President of the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that the Indemnitee has requested
indemnification.


 


3.2.2                        The Indemnitee’s entitlement to
indemnification hereunder shall (except as provided in Subparagraph 3.2.3
below) be determined in one of the following ways (each of which shall give
effect to the presumptions set forth in Paragraph 3.3): (a) by a majority
vote of the Disinterested Directors (as hereinafter defined) if they constitute
a quorum of the Board of Directors; (b) by a written opinion of Independent
Counsel (as hereinafter defined) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
a majority of such Disinterested Directors so directs: (c) by the
stockholders of the Company (but only if a majority of the Disinterested
Directors, if they constitute a quorum of the Board of Directors, presents the
issue of entitlement to indemnification to the stockholders for their
determination); or (d) as provided in Paragraph 3.3. In the event that
this Subparagraph 3.2.2 applies, stockholder approval will be deemed to have
been received if the holders of a majority of the Company’s total common stock
outstanding vote in favor of such approval.


 


3.2.3                        Notwithstanding what is stated
above, in the event of a Change in Control (see definition contained in Exhibit “A” hereto) of the Company, the Indemnitee’s
entitlement to indemnification shall be determined by a written opinion of
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to the Indemnitee. The Independent Counsel shall be
selected by the Indemnitee. In the event the Company objects to the Independent
Counsel so selected, within seven days after 


 


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written notice of the selection has been given by the Indemnitee to the
Company, the Company may object to such selection by written notification given
to the Indemnitee. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirement of “Independent Counsel” as hereafter
defined, and the objection shall set forth with particularity the factual basis
of such assertion. If such written objection is made, the Independent Counsel
so selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. The Company shall pay any and
all reasonable fees and expenses of Independent Counsel incurred by such
Independent Counsel in connection with the performance of his or her
responsibilities hereunder, and the Company shall pay all reasonable fees and
expenses instant to the implementation of the procedures referred to above.
Upon the due commencement of any judicial proceeding or arbitration pursuant to
Subparagraph 3.4.1 hereof, the Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).


 


3.2.4                        In the event of a Potential Change
in Control (as hereinafter defined) of the Company, the Company, upon written
request by the Indemnitee, shall create a trust (which shall be a “grantor
trust” for federal income tax purposes) for the benefit of the Indemnitee and
from time to time upon written request of the Indemnitee shall fund such trust
in an amount sufficient to satisfy any and all expenses which at the time of
each such request it is reasonably anticipated will be incurred in connection
with a Proceeding for which the Indemnitee is entitled to rights of
indemnification under Paragraph 2 hereof, and any and all judgments, fines,
penalties, and settlement amounts of any and all proceedings for which the
Indemnitee is entitled to rights of indemnification under Paragraph 2 from time
to time actually paid or claimed, reasonably anticipated, or proposed to be
paid. The amount or amounts to be deposited in the trust pursuant to the
foregoing funding obligation shall be determined by the Independent Counsel
referred to in Subparagraph 3.2.2 above. The terms of the trust shall provide
that upon a Change in Control:  (i) the
trust shall ‘not be revoked or the principal thereof invaded, without the
written consent of the Indemnitee; (ii) the trustee shall advance, within
two (2) business days of a request by the Indemnitee, any and all expenses
to the Indemnitee; (iii) the trust shall continue to be funded by the
Company in accordance with the funding obligations set forth above; (iv) the
trustee shall promptly pay to the Indemnitee all amounts for which the
Indemnitee is entitled to indemnification pursuant to this Agreement or
otherwise; and (v) all unexpended 


 


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funds in such trust shall revert to the Company upon a final
determination by such Independent Counsel that the Indemnitee has been fully
indemnified under the terms of this Agreement. The trustee shall be an
institutional trustee with a highly regarded reputation chosen by the
Indemnitee. Nothing in this Subparagraph 3.2.4 shall relieve the Company of any
of its obligations under this Agreement. Nothing contained in this Subparagraph
3.2.4. shall prevent the Board of Directors of the Company in its discretion at
any time and from time to time, upon request of the Indemnitee, from providing
security to the Indemnitee for the Company’s obligations hereunder through an
irrevocable line of credit, funded trust as described above, or other
collateral. Any such security, once provided to the Indemnitee, may not be
revoked or released without the Indemnitee’s prior written consent.


 


3.3                                 Presumptions
and Effect of Certain Proceedings: Except as otherwise expressly
provided herein, the Indemnitee shall be presumed to be entitled to
indemnification hereunder upon submission of a request for indemnification
together with the Supporting Documentation in accordance with Subparagraph
3.2.1, and thereafter the Company shall have the burden of proof to overcome
that presumption in reaching a contrary determination. In any event, if the
person or persons empowered under Paragraph 3.2 to determine entitlement to
indemnification have not been appointed or have not made a determination within
60 calendar days after receipt by the Company of the request therefor together
with the Supporting Documentation, the Indemnitee shall be deemed to be
entitled to indemnification, and the Indemnitee shall be entitled to such
indemnification unless the Company establishes as provided in the final
sentence of Paragraph 3.4.2 or by written opinion of Independent Counsel that: (a) the
Indemnitee misrepresented or failed to disclose a material fact in making the
request for indemnification or in the Supporting Documentation; or (b) such
indemnification is prohibited by law. The termination of any Proceeding
described in Paragraph 2, or of any claim, issue, or matter therein, by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere  or its equivalent,
shall not, of itself, adversely affect the right of the Indemnitee to
indemnification or create a presumption that the Indemnitee did not act in good
faith and in a manner which the Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Company or, with respect to any criminal
Proceeding, that the Indemnitee had reasonable cause to believe that his or her
conduct was unlawful.


 


3.4                                 Remedies
of Indemnitee:


 


3.4.1                        In the event that a
determination is made pursuant to Paragraph 3.2 that the Indemnitee is not
entitled to indemnification hereunder: (a) the Indemnitee shall be
entitled to seek an adjudication of his or 


 


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her entitlement to such indemnification either, at the Indemnitee’s
option, in (x) an appropriate court of the State of Texas or any other
court of competent jurisdiction, or (y) an arbitration to be conducted by
a single arbitrator, selected by mutual agreement of the Company and the
Indemnitee (or, failing such agreement by the then sitting Chief Judge of the
United States District Court for the appropriate jurisdiction), pursuant to the
commercial arbitration rules of the American Arbitration Association; (b) any
such judicial proceeding or arbitration shall be de novo, and the Indemnitee shall not be prejudiced by reason
of such adverse determination; and (c) in any such judicial proceeding or
arbitration, the Company shall have the burden of proving that indemnification
is prohibited by applicable law. If any such determination is made, the
Indemnitee shall be entitled, on five days’ written notice to the Secretary of
the Company, to receive the written report of the persons making such
determination, which report shall include the reasons and factual findings, if
any, upon which such determination was based.


 


3.4.2                        If a determination has been
made, or is deemed to have been made, pursuant to Paragraph 3.2 or 3.3, that
the Indemnitee is entitled to indemnification, the Company shall be obligated
to pay the amounts constituting such indemnification within five days after
such determination has been made or deemed to have been made and shall be
conclusively bound by such determination unless the Company establishes as
provided in the final sentence of this paragraph that: (a) the Indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation; or (b) such
indemnification is prohibited by law. If either (x) advancement of
expenses is not timely made pursuant to Paragraph 3.1, or (y) payment of
indemnification is not made within five calendar days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Paragraph 3.2 or 3.3, the Indemnitee shall be entitled to seek
judicial enforcement of the Company’s obligation to pay to the Indemnitee such
advancement of expenses or indemnification. Notwithstanding the foregoing, the
Company may bring an action, in an appropriate court in the State of Texas or
any other court of competent jurisdiction, contesting the right of the
Indemnitee to receive indemnification hereunder due to the occurrence of an
event described in subclause (a) or (b) of this Subparagraph 3.4.2
(herein referred to as a “Disqualifying Event”); provided, however, that
in any such action the Company will have the burden of proving the occurrence
of such Disqualifying Event.


 


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3.4.3                        The Company shall be precluded
from asserting in any judicial proceeding or arbitration commenced pursuant to
this Paragraph 3.4 that the procedures and presumptions of this Paragraph 3 are
not valid, binding, and enforceable, and shall stipulate in any such court
or before any such arbitrator that the Company is bound by all of the
provisions of this Agreement.


 


3.4.4                        If the Indemnitee, pursuant to
this Paragraph 3.4, seeks a judicial adjudication of, or an award in
arbitration to enforce, his or her rights under, or to recover damages for
breach of, this Agreement, the Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, those expenses (see
definition contained in Paragraph 2 above) actually and reasonably incurred by
the Indemnitee if the Indemnitee prevails in such judicial adjudication or
arbitration. If it shall be determined in such judicial adjudication or
arbitration that the Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred by the
Indemnitee in connection with such judicial adjudication or arbitration shall
be prorated accordingly.  Provided,
however, notwithstanding what has just been stated:  (1) the amount of expenses for
reimbursement during the Indemnitee’s taxable year may not affect the expenses
eligible for reimbursement in any other taxable year; (2) the
reimbursement of an eligible expense must be made on or before ninety (90) days
after the date the Indemnitee prevailed in such adjudication or arbitration; (3) the
right to reimbursement may not be subject to liquidation or exchange for
another benefit.  Further, the Indemnitee’s
recovery from the Company of any such expenses must take place during the duration
of this Agreement (see Paragraph 5.1 which follows).


 


3.5                                 Definitions:
For purposes of this Paragraph 3:


 


“Disinterested Director” means a director
of the Company who is not or was not a party to the Proceeding in respect of
which indemnification is sought by the Indemnitee.


 


“Independent Counsel” means
a law firm or a member of a law firm that neither presently is, nor in the past
five years has been, retained to represent: (a) the Company or the
Indemnitee in any matter material to either such party; or (b) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable
standards of professional conduct then prevailing under the laws of the State
of Texas would have a conflict of interest in representing either the company
or the Indemnitee in an action to determine the Indemnitee’s rights hereunder.


 


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“Potential Change in Control” shall
be deemed to have occurred if: (i) the Company enters into an agreement,
the consummation of which would result in the occurrence of a Change in
Control; (ii) a person (including the Company) publicly announces a
legitimate intention to take or to consider taking actions which if consummated
would constitute a Change in Control; (iii) any person, other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of
stock  of the Company, who is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 9.5 % 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 five percentage points or
more over the percentage so owned by such person; or (iv) the Board of
Directors adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.


 


4                                          Other Rights to Indemnification:
The indemnification and advancement of costs and expenses (including attorneys’
fees and disbursements) provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee may now or in the future
be entitled under any provision of applicable law, the Articles of
Incorporation, or any Bylaw of the Company or any other agreement, or any vote
of directors or stockholders or otherwise, whether as to action in his or her
official capacity or in another capacity while occupying any of the positions
or having any of the relationships referred to in Paragraph 1 of this
Agreement.


 


5                                          Duration of Agreement:


 


5.1                                 This Agreement shall
be effective from and after the date hereof, and shall continue until and
terminate upon the later of: (i) the tenth (10th) anniversary
after the Indemnitee has ceased to occupy any of the positions or have any of
the relationships described in Paragraph 1 of this Agreement; or (ii) (a) the
final termination or resolution of all proceedings with respect to the
Indemnitee commenced during such ten (10) year period, and (b) either
(x) receipt by the Indemnitee of the Indemnification to which he or she is
entitled hereunder with respect thereto, or (y) a final adjudication or
binding arbitration that the Indemnitee is not entitled to any further
indemnification with respect thereto, as the case may be.


 


5.2                                 This Agreement shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of the Indemnitee and his or her heirs, devisees, executors,
administrators, or other legal representatives.


 


6.                                       Severability: If any provision or
provisions of this Agreement are held to be invalid, illegal, or unenforceable
under any particular circumstances or for any 


 


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reason whatsoever: (a) the validity, legality, and enforceability
of the remaining provisions of this Agreement (including, without limitation,
all other portions of any paragraph or clause of this Agreement that contains
any provision that has been found to be invalid, illegal, or unenforceable,
that are not themselves invalid, illegal, or unenforceable) or the validity,
legality, or enforceability under any other circumstances shall not in any way
be affected or impaired thereby; and (b) to the fullest extent possible
consistent with applicable law, the provisions of this Agreement (including,
without limitation, all other portions of any paragraph or clause of this
Agreement that contains any such provision that has been found to be invalid,
illegal, or unenforceable, that are not themselves invalid, illegal, or
unenforceable) shall be deemed revised and shall be construed so as to give
effect to the intent manifested by this Agreement (including the provision held
invalid, illegal, or unenforceable).


 


7.                                       Identical Counterparts: This
Agreement may be executed in one or more counterparts, each of which shall for
all purposes be deemed to be an original, but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence
the existence of this Agreement.


 


8.                                       Headings: The headings of the
paragraphs of this Agreement are inserted for convenience and shall not be
deemed to constitute part of this Agreement or to affect the construction
thereof.


 


9.                                       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 provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.


 


10.                                 Notification
and Defense of Claim: The Indemnitee agrees to notify the
Company promptly in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information, or other document relating to any
matter which may be subject to indemnification hereunder, whether civil,
criminal, or investigative; provided. however, that the failure of the
Indemnitee to give such notice to the Company shall not adversely affect the
Indemnitee’s rights under this Agreement except to the extent the Company has
been materially prejudiced as a direct result of such failure. Nothing in this
Agreement shall constitute a waiver of the Company’s right to seek participation
at its own expense in any Proceeding which may give rise to indemnification
hereunder.


 


11.                                 Notices:
All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if: (i) delivered by
hand and receipted for by the party to whom said notice or other communication
shall have been directed; or (ii) mailed by certified or registered mail
with postage 


 


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prepaid, on the third business day after the date on which it is so
mailed, in either case:


 


(a)                                  if
to the Indemnitee, at the address indicated on the signature page hereof;


 


(b)                                 if to the Company:


 


Chase Packaging Corporation


636 River Road


Fair Haven, NJ  07704


 


or to such address as may have been furnished to either party by the
other Party.


 


12                                    Governing Law: The parties hereto
agree that this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.


 


IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first above written.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CHASE PACKAGING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Allen T. McInnes,

  
	
   

  	
   

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Printed Name of Indemnitee)

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  



 


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Exhibit “A”


to


Indemnification Agreement


 


I.                                         Change
in the ownership of a corporation


 


(A)  In general.  A change
in the ownership of a corporation occurs on the date that any one person, or
more than one person acting as a group, acquires ownership of stock of the
corporation that, together with stock held by such person or group, constitutes
more than 50 percent of the total fair market value or total voting power of
the stock of such corporation.  However,
if any one person, or more than one person acting as a group, is considered to
own more than 50 percent of the total fair market value or total voting power
of the stock of a corporation, the acquisition of additional stock by the same
person or persons is not considered to cause a change in the ownership of the
corporation (or to cause a change in the effective control of the
corporation).    An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock.  This applies only when there is a transfer of
stock of a corporation (or issuance of stock of a corporation) and stock in
such corporation remains outstanding after the transaction.


 


(B)                                Persons
acting as a group.  Persons will not be
considered to be acting as a group solely because they purchase or own stock of
the same corporation at the same time, or as a result of the same public
offering.  However, persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase, or acquisition of stock, or
similar business transaction with the corporation.  If a person, including an entity, owns stock
in both corporations that enter into a merger, consolidation, purchase, or
acquisition of stock, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders in a corporation prior to the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.


 


II.                                     Change
in the effective control of a corporation.


 


(A)                              In
general.  Notwithstanding that a
corporation has not undergone a change in ownership, (see above), a change in
the effective control of a corporation occurs only on the date that either –


 


(1)                                  Any
one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the corporation
possessing 35 percent or more of the total voting power of the stock of such
corporation; or


 


(2)                                  A
majority of members of the corporation’s board of directors is replaced during
any 12-month period by directors whose appointment or election is not endorsed
by a majority of the members of the corporation’s board of directors prior to
the election, provided that for purposes of this paragraph  the term corporation refers solely to the
relevant corporation 


 


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for which no other corporation is a majority shareholder for purposes
of that paragraph (for example, if Corporation A is a publicly held corporation
with no majority shareholder, and Corporation A is the majority shareholder of
Corporation B, which is the majority shareholder of Corporation C, the term
corporation for purposes of this paragraph would refer solely to Corporation
A).


 


(B)                                Multiple
change in control events.  A change in
effective control also may occur in any transaction in which either of the two
corporations involved in the transaction has a change in control event.  Thus, for example, assume Corporation P
transfers more than 40 percent of the total gross fair market value of its
assets to Corporation O in exchange for 35 percent of O’s stock.  P has undergone a change in ownership of a
substantial portion of its asset, and O has a change in effective control.


 


(C)                                Acquisition
of additional control.  If any one
person, or more than one person acting as a group, is considered to effectively
control a corporation, the acquisition of additional control of the corporation
by the same person or persons is not considered to cause a change in the
effective control of the corporation (or to cause a change in the ownership of
the corporation).


 


(D)                               Persons
acting as a group.  Persons will not be
considered to be acting as a group solely because they purchase or own stock of
the same corporation at the same time, or as a result of the same public
offering.  However, persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase, or acquisition of stock, or
similar business transaction with the corporation.  If a person, including an entity, owns stock
in both corporations that enter into a merger, consolidation, purchase, or
acquisition of stock, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders in a corporation only with respect
to the ownership in that corporation prior to the transaction giving rise to
the change and not with respect to the ownership interest in the other
corporation.


 


III.                                 Change
in the ownership of a substantial portion of a corporation’s assets.


 


(A)                              In
general.  Change in the ownership of a
substantial portion of a corporation’s assets. 
A change in the ownership of a substantial portion of a corporation’s
assets occurs on the date that any one person, or more than one person acting
as a group, acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or person) assets from the
corporation that have a total gross fair market value equal to or more than 40
percent of the total gross fair market value of all of the assets of the
corporation immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value
means the value of the assets of the corporation, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.


 


(B)                                Transfers
to a related person.


 


(1)                                  There
is no change in control event when there is a transfer to an entity that is
controlled by the shareholders of the transferring corporation immediately
after the 


 


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transfer.  A transfer of assets
by a corporation is not treated as a change in the ownership of such assets if
the assets are transferred to –


 


(i)  A shareholder of the corporation (immediately before the
asset transfer) in exchange for or with respect to its stock;


 


(ii)  An entity, 50 percent or more of the total value or voting
power of which is owned, directly or indirectly, by the corporation;


 


(iii)  A person, or more than one person acting as a group, that
owns, directly or indirectly, 50 percent or more of the total value or voting
power of all the outstanding stock of the corporation; or


 


(iv)  An entity, at least 50 percent of the total value or voting
power of which is owned, directly or indirectly, by a person described in “(iii)”
immediately preceding.


 


(2)                                  A
person’s status is determined immediately after the transfer of the
assets.  For example, a transfer to a
corporation in which the transferor corporation has no ownership interest
before the transaction, but which is a majority-owned subsidiary of the
transferor corporation after the transaction is not treated as a change in the
ownership of the assets of the transferor corporation.


 


(C)                                Persons
acting as a group.  Persons will not be
considered to be acting as a group solely because they purchase assets of the
same corporation at the same time. 
However, persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation, purchase, or
acquisition of assets, or similar business transaction with the
corporation.  If a person, including an
entity shareholder, owns stock in both corporations that enter into a merger,
consolidation, purchase, or acquisition of assets, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation prior to
the transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.


 


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