**Exhibit 4.1**

 

**REGISTRATION RIGHTS AGREEMENT**

 

ThisRegistration Rights Agreement (this “Agreement”) is made and entered into as ofSeptember 7, 2007, by and among Chase Packaging Corporation, a Texascorporation (the “Company”), and the persons and entities listed on Exhibit Ahereto (each, a “Purchaser” and, collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS,upon the terms and subject to the conditions of the Securities Purchase andSubscription Agreement dated as of September 7, 2007 (the “Purchase Agreement”),the Company has agreed to issue and sell to the Purchasers up to 13,334 Units(the “Units”), each Unit consisting of one share of Series A 10%convertible preferred stock (the “Preferred Stock”), five hundred (500) shares(the “Shares”)  of the Company’s ten cent($0.10) par value common stock (the “Common Stock”); and five hundred (500)warrants (the “Warrants”), with each Warrant exercisable into one share ofCommon Stock at fifteen cents ($0.15) per share; and

 

WHEREAS,to induce the Purchasers to execute and deliver the Agreement and to purchasethe Preferred Stock, the Shares, and the Warrants, the Company has agreed toexercise its best efforts to provide certain registration rights under theSecurities Act of 1933, as amended, with respect to the Preferred Stock, theShares, and the Warrants.

 

NOW,THEREFORE, in consideration of the representations, warranties, and agreementscontained herein and other good and valuable consideration, the receipt andlegal adequacy of which are hereby acknowledged by the parties, the Company andeach Purchaser hereby agrees as follows:

 

1.             Definitions.

 

Capitalizedterms used but not otherwise defined herein shall have the meanings given suchterms in the Purchase Agreement. As used in this Agreement, the following termsshall have the following meanings:

 

“Affiliate” means any Person that,directly or indirectly through one or more intermediaries, controls or iscontrolled by or is under common control with a Person, as such terms are usedin and construed under Rule 144 under the Securities Act.  With respect to a Purchaser, any investmentfund or managed account that is managed on a discretionary basis by the sameinvestment manager as such Purchaser will be deemed to be an Affiliate of suchPurchaser.

 

“BlackoutPeriod” shall have the meaning set forth in Section 2.(g).

 

“Board”shall have the meaning set forth in Section 2.(g).

 

“Business Day” means any day other thanSaturday, Sunday, or other day on which the Federal Reserve Bank of New York isclosed.

 

“Closing Date” means the date of thepurchase and sale of the Registrable Securities.

 

“Commission”means the Securities and Exchange Commission.

 

“CommonStock” means the common stock of the Company, par value $0.10 per share.

 

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“EffectivenessDate” means, with respect to the Registration Statement, the 5thBusiness Day after the date on which the Commission informs the Company: (a) thatthe Commission will not review the Registration Statement; or (b) that theCompany may request acceleration of the effectiveness of the RegistrationStatement.

 

“EffectivenessPeriod” shall have the meaning set forth in Section 2(a).

 

“ExchangeAct” means the Securities Exchange Act of 1934, as amended.

 

“Holder”means, collectively, each holder from time to time of Registrable Securitiesincluding, without limitation, each Purchaser and its assignees. To the extentthis Agreement refers to an election, consent, waiver, request, or approval ofor by the Holder, such reference shall mean an election, consent, waiver,request, or approval by the holders of a majority in interest of thethen-outstanding Registrable Securities (on an as exercised basis).

 

“IndemnifiedParty” shall have the meaning set forth in Section 5(c).

 

“IndemnifyingParty” shall have the meaning set forth in Section 5(c).

 

“Losses”shall have the meaning set forth in Section 5(a).

 

“Person” means any individual orcorporation, partnership, trust, incorporated or unincorporated association,joint venture, limited liability company, joint stock company, government (oran agency or subdivision thereof) or any court or other federal, state, local,or other governmental authority or other entity of any kind.

 

“Proceeding”means an action, claim, suit, investigation, or proceeding (including, withoutlimitation, an investigation or partial proceeding, such as a deposition),whether commenced or threatened.

 

“Prospectus”means the prospectus included in the Registration Statement (including, withoutlimitation, a prospectus that includes any information previously omitted froma prospectus filed as part of an effective registration statement in relianceupon Rule 430A promulgated under the Securities Act), as amended orsupplemented by any prospectus supplement, with respect to the terms of theoffering of any portion of the Registrable Securities covered by theRegistration Statement, and all other amendments and supplements to theProspectus, including post-effective amendments, and all material incorporatedby reference or deemed to be incorporated by reference in such Prospectus.

 

“RegistrableSecurities” means all of: (1) the Preferred Stock; (2) the Shares;and (3) the Warrants.

 

“RegistrationStatement” means the registration statement required to be filed hereunder,including the Prospectus, amendments, and supplements to such registrationstatement or Prospectus, including pre- and post-effective amendments, allexhibits thereto, and all material incorporated by reference or deemed to beincorporated by reference in such registration statement.

 

“RequiredFiling Date” means the 270th day immediately following the ClosingDate.

 

“Rule 144”means Rule 144 promulgated by the Commission pursuant to the SecuritiesAct, as such Rule may be amended from time to time, or any similar rule orregulation hereafter adopted by the Commission having substantially the sameeffect as such Rule.

 

“Rule 415”means Rule 415 promulgated by the Commission pursuant to the SecuritiesAct, as such

 

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Rule maybe amended from time to time, or any similar rule or regulation hereafteradopted by the Commission having substantially the same effect as such Rule.

 

“SecuritiesAct” means the Securities Act of 1933, as amended.

 

2.             Registration Procedures; Company’sObligations.

 

Inconnection with the registration of the Registrable Securities, the Companyshall:

 

(a)           Registration.  On orprior to the Required Filing Date, prepare and file with the Commission aRegistration Statement covering, among such other securities as may be offeredfrom time to time by the Company, the resale of the Registrable Securities foran offering to be made on a continuous basis pursuant to Rule 415. TheRegistration Statement shall be on Form SB-2 or Form S-1 (except ifthe Company is then eligible to register for resale the Registrable Securitieson Form S-3, in which case such registration shall be on Form S-3).  Subject to the terms of this Agreement, theCompany shall use commercially reasonable efforts to cause the RegistrationStatement to be declared effective under the Securities Act (including filingwith the Commission a request for acceleration of effectiveness in accordancewith Rule 12dl-2 promulgated under the Exchange Act within five (5) BusinessDays after the date that the Company is notified (orally or in writing,whichever is earlier) by the Commission that the Registration Statement willnot be “reviewed,” or not be subject to further review) as soon as possibleafter the filing thereof, but in any event prior to the Effectiveness Date, andshall use commercially reasonable efforts to keep such Registration Statementcontinuously effective under the Securities Act until the earlier of: (A) thesecond anniversary of the Closing Date; (B) the date on which thePurchasers may sell the Registrable Securities then held by the Purchaserswithout restriction by the volume limitations of Rule 144(e) of theSecurities Act; or (C) such time as all Registrable Securities held by thePurchasers and registered under a Registration Statement have been sold (i) pursuantto a Registration Statement, (ii) to or through a broker, dealer, orunderwriter in a public distribution or a public securities transaction, or (iii) ina transaction exempt from the registration and prospectus delivery requirementsof the Securities Act under Section 4(1) thereof so that all transferrestrictions and restrictive legends with respect thereto, if any, are removedupon the consummation of such sale (the “Effectiveness Period”).  No assurance can be given that suchregistration will be declared effective by the SEC.  In the event such registration is notdeclared effective by the SEC, each Holder of Registrable Securitiesacknowledges his, her, or its understanding (and acceptance of the risk) thathis, her, or its ability to sell such Securities will be limited to sales underRule 144 and/or transactions exempt under Section 4(1) of theSecurities Act.

 

(b)           Furnish to each Holder of RegistrableSecurities, without charge, at least one conformed copy of each RegistrationStatement and each amendment thereto, including financial statements andschedules, all documents incorporated or deemed to be incorporated therein byreference, and all exhibits to the extent requested by such Holder (includingthose previously furnished or incorporated by reference) promptly after thefiling of such documents with the Commission.

 

(c)           Promptly deliver to the Holder,without charge, as many copies of the Registration Statement, Prospectus, orProspectuses (including each form of prospectus) and each amendment orsupplement thereto as such Holder may reasonably request; and the Companyhereby consents to the use of such Prospectus and each amendment or supplementthereto by the selling Holder in connection with the offering and sale of theRegistrable Securities covered by such Prospectus and any amendment or supplementthereto. Should a Holder offer or sell the Registrable Securities, such Holderagrees to comply with all applicable securities laws.

 

(d)           Prior to any public offering ofRegistrable Securities, use its commercially reasonable

 

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effortsto register or qualify or cooperate with each selling Holder in connection withthe registration or qualification (or exemption from such registration orqualification) of such Registrable Securities for offer and sale under thesecurities or Blue Sky laws of such jurisdictions within the United States assuch Holder reasonably requests in writing, to keep each such registration orqualification (or exemption therefrom) effective during the EffectivenessPeriod and to do any and all other acts or things reasonably necessary oradvisable to enable the disposition in such jurisdictions of the RegistrableSecurities covered by a Registration Statement; provided, however,that the Company shall not be required to qualify generally to do business inany jurisdiction where it is not then so qualified or to take any action thatwould subject it to general service of process in any such jurisdiction whereit is not then so subject or subject the Company to any tax in any suchjurisdiction where it is not then so subject.

 

(e)           Cooperate with each Holder tofacilitate the timely preparation and delivery of certificates representingRegistrable Securities to be sold pursuant to a Registration Statement and toenable such Registrable Securities to be in such denominations and registeredin such names as such Holder may request at least two (2) Business Daysprior to any sale of Registrable Securities.

 

(f)            Comply in all material respects withall applicable rules and regulations of the Commission.

 

(g)           If: (i) there is material non-publicinformation regarding the Company which the Company’s Board of Directors (the “Board”)reasonably determines not to be in the Company’s best interest to disclose andwhich the Company is not otherwise required to disclose; or (ii) there isa significant business opportunity (including, but not limited to, theacquisition or disposition of assets (other than in the ordinary course ofbusiness) or any merger, consolidation, tender offer, or other similartransaction) available to the Company which the Board reasonably determines notto be in the Company’s best interest to disclose and which the Company would berequired to disclose under the Registration Statement, then the Company maysuspend effectiveness of a Registration Statement and suspend the sale ofRegistrable Securities under a Registration Statement two (2) times in anytwelve month period, each of which may not exceed sixty (60) days (each, a “BlackoutPeriod”).

 

(h)           Within two (2) Business Daysafter the Registration Statement which includes the Registrable Securities isordered effective by the Commission, the Company shall deliver, and shall causelegal counsel for the Company to deliver (with copies to each Holder whoseRegistrable Securities are included in such Registration Statement)confirmation that the Registration Statement has been declared effective by theCommission.

 

3.             Registration Procedures; Holder’sObligations

 

Inconnection with the registration of the Registrable Securities, each Holdershall:

 

(a)           If the Registration Statement refersto the Holder by name or otherwise as the holder of any securities of theCompany, have the right to require (if such reference to the Holder by name orotherwise is not required by the Securities Act or any similar federal statutethen in force) the deletion of the reference to the Holder in any amendment orsupplement to the Registration Statement that will be filed or preparedsubsequent to the time that such reference ceases to be required.

 

(b)           Not sell any Registrable Securitiesunder the Registration Statement until he, she, or it has received copies ofthe Prospectus (as then amended or supplemented) and notice that suchRegistration Statement and any post-effective amendments thereto have becomeeffective; comply with the prospectus delivery requirements of the SecuritiesAct as applicable to him, her, or it in connection with sales of 

 

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RegistrableSecurities pursuant to the Registration Statement; and furnish to the Companyinformation regarding such Holder and the distribution of such RegistrableSecurities as is required by law to be disclosed in the Registration Statement,and the Company may exclude from such registration the Registrable Securitiesof the Holder if he, she, or it fails to furnish such information within a reasonabletime prior to the filing of each Registration Statement, supplementedProspectus, and/or amended Registration Statement.

 

(c)           Upon receipt of a notice from theCompany of the occurrence of any event of the kind described in Section 2(g),forthwith discontinue disposition of such Registrable Securities under theRegistration Statement until he, she, or it is advised in writing by theCompany that the use of the applicable Prospectus may be resumed.

 

EachHolder hereby: (i) acknowledges to the Company that the Commissioncurrently takes the position that coverage of short sales of shares of CommonStock “against the box” made prior to the Effectiveness Date with any securitycovered by any Prospectus is a violation of Section 5 of the SecuritiesAct, as set forth in Item 65, Section 5 under Section A, of theManual of Publicly Available Telephone Interpretations, dated June 1997,compiled by the Office of Chief Counsel, Division of Corporation Finance; (ii) agrees(on behalf of himself, herself, or itself or any Person over which he, she, orit has direct control) not to use any of the securities covered by anyProspectus to cover any short sales, hedging, or similar transactions with thesame economic effect as a short sale, made prior to the Effectiveness Date; and(iii) agrees to comply with Regulation M under the federal securitieslaws.

 

4.             Registration Expenses

 

Allreasonable fees and expenses incident to the performance of or compliance withthis Agreement by the Company (other than the costs incurred by a Holder inconnection with his, her, or its own sale of Registrable Securities) shall beborne by the Company whether or not the Registration Statement is filed orbecomes effective and whether or not any Registrable Securities are soldpursuant to the Registration Statement. The fees and expenses referred to inthe foregoing sentence shall include, without limitation, the following: (i) allregistration and filing fees (including, without limitation, fees, and expenses(A) with respect to filings required to be made with each securitiesexchange or other market on which Registrable Securities are listed, (B) withrespect to filings required to be made with the Commission, and (C) incompliance with state securities or Blue Sky laws); (ii) printing expenses(including, without limitation, expenses of printing certificates forRegistrable Securities and of printing prospectuses if the printing ofprospectuses is requested by the holders of a majority of the RegistrableSecurities included in the Registration Statement); (iii) messenger,telephone, and delivery expenses of the Company; (iv) fees anddisbursements of counsel for the Company; and (v) fees and expenses of allother Persons retained by the Company in connection with the consummation ofthe transactions contemplated by this Agreement, including, without limitation,the Company’s independent public accountants (including the expenses of anycomfort letters or costs associated with the delivery by independent publicaccountants of a comfort letter or comfort letters). In addition, the Companyshall be responsible for all of its internal expenses incurred in connectionwith the consummation of the transactions contemplated by this Agreement(including, without limitation, all salaries and expenses of its officers andemployees performing legal or accounting duties), the expense of any annualaudit, and the fees and expenses incurred in connection with the listing of theRegistrable Securities on any securities exchange.

 

5.             Indemnification

 

(a)           Indemnification by the Company.The Company shall, notwithstanding any termination of this Agreement, indemnifyand hold harmless each Purchaser, his, her, or its permitted assignees,officers, directors, agents, brokers (including brokers who offer and sellRegistrable Securities as principal as a result of a pledge or any failure toperform under a margin call of Common Stock), investment 

 

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advisorsand employees, each Person who controls any such Purchaser or permittedassignee (within the meaning of Section 15 of the Securities Act or Section 20of the Exchange Act) and the officers, directors, agents, and employees of eachsuch controlling Person, and the respective successors, assigns, estate andpersonal representatives of each of the foregoing, to the fullest extentpermitted by applicable law, from and against any and all claims, losses,damages, liabilities, penalties, judgments, costs (including, withoutlimitation, costs of investigation) and expenses (including, withoutlimitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”),as incurred, arising out of or relating to any untrue or alleged untruestatement of a material fact contained in the Registration Statement, anyProspectus, as supplemented or amended, if applicable, or arising out of orrelating to any omission or alleged omission of a material fact required to bestated therein or necessary to make the statements therein (in the case of anyProspectus or supplement thereto, in the light of the circumstances under whichthey were made) not misleading, except: (i) to the extent, but only to theextent, that such untrue statements or omissions are based solely uponinformation regarding the Holder furnished in writing to the Company by theHolder expressly for use therein, which information was reviewed and expresslyapproved by the Holder expressly for use in the Registration Statement, suchProspectus, or in any amendment or supplement thereto; or (ii) as a resultof the failure of the Holder to deliver a Prospectus, as amended orsupplemented, to a purchaser in connection with an offer or sale. The Companyshall notify the Holder promptly of the institution, threat, or assertion ofany Proceeding of which the Company is aware in connection with thetransactions contemplated by this Agreement. Such indemnity shall remain infull force and effect regardless of any investigation made by or on behalf ofan Indemnified Party (as defined in Section 5(c) hereof) and shallsurvive the transfer of the Registrable Securities by the Holder.

 

(b)           Indemnification by Purchaser.Each Purchaser and his, her, or its permitted assignees shall, severally andnot jointly, indemnify and hold harmless the Company, its directors, officers,agents, and employees, each Person who controls the Company (within the meaningof Section 15 of the Securities Act and Section 20 of the ExchangeAct), and the directors, officers, agents, or employees of such controllingPersons, and the respective successors, assigns, estate and personalrepresentatives of each of the foregoing, to the fullest extent permitted byapplicable law, from and against any and all Losses, as incurred, arising outof or relating to: (i) the failure of the Holder to deliver a Prospectus,as amended or supplemented, to a purchaser in connection with a purchase orsale; (ii) the Holder’s use of a representation or prospectus other thanthe Prospectus, as amended or supplemented, in connection with a purchase orsale; or (iii) any untrue or alleged untrue statement of a material factcontained in the Registration Statement, any Prospectus, as supplemented oramended, if applicable, or arising out of or relating to any omission oralleged omission of a material fact required to be stated therein or necessaryto make the statements therein (in the case of any Prospectus or supplementthereto, in the light of the circumstances under which they were made) notmisleading, to the extent, but only to the extent, that: (A) such untruestatement or omission is contained in or omitted from any information sofurnished in writing by the Holder to the Company specifically for inclusion inthe Registration Statement or such Prospectus; and (B) such informationwas reasonably relied upon by the Company for use in the RegistrationStatement, such Prospectus or, to the extent that such information relates tothe Holder or the Holder’s proposed method of distribution of RegistrableSecurities, was reviewed and expressly approved in writing by the Holderexpressly for use in the Registration Statement, such Prospectus or such formof Prospectus Supplement. Notwithstanding anything to the contrary containedherein, the Holder shall be liable under this Section 5(b) for onlythat amount as does not exceed the net proceeds to the Holder as a result ofthe sale of Registrable Securities pursuant to such Registration Statement.

 

(c)           Conduct of IndemnificationProceedings. If any Proceeding shall be brought or asserted against anyPerson entitled to indemnity pursuant to Section 5(a) or 5(b) hereunder(an “Indemnified Party”), such Indemnified Party promptly shall notify thePerson from whom indemnity is sought (the “Indemnifying Party”) in writing, andthe Indemnifying Party shall assume the defense thereof, including theemployment of counsel reasonably satisfactory to the Indemnified Party and thepayment of all fees and 

 

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expensesincurred in connection with defense thereof; provided, that the failureof any Indemnified Party to give such notice shall not relieve the IndemnifyingParty of his, her, or its obligations or liabilities pursuant to thisAgreement, except (and only) to the extent that it shall be finally determinedby a court of competent jurisdiction (which determination is not subject toappeal or further review) that such failure shall have materially and adverselyprejudiced the Indemnifying Party.

 

AnIndemnified Party shall have the right to employ separate counsel in any suchProceeding and to participate in the defense thereof, but the fees and expensesof such counsel shall be at the expense of such Indemnified Party or Partiesunless: (i) the Indemnifying Party has agreed in writing to pay such feesand expenses; or (ii) the Indemnifying Party shall have failed promptly toassume the defense of such Proceeding and to employ counsel reasonablysatisfactory to such Indemnified Party in any such Proceeding; or (iii) thenamed parties to any such Proceeding (including any impleaded parties) includeboth such Indemnified Party and the Indemnifying Party, and such IndemnifiedParty shall have been advised by counsel that a conflict of interest is likelyto exist if the same counsel were to represent such Indemnified Party and theIndemnifying Party (in which case, if such Indemnified Party notifies theIndemnifying Party in writing that it elects to employ separate counsel at theexpense of the Indemnifying Party, the Indemnifying Party shall not have theright to assume the defense thereof, and such counsel shall be at the expenseof the Indemnifying Party). The Indemnifying Party shall not be liable for anysettlement of any such Proceeding effected without his, her, or its writtenconsent, which consent shall not be unreasonably withheld, conditioned, ordelayed. No Indemnifying Party shall, without the prior written consent of theIndemnified Party, which consent shall not unreasonably be withheld, conditioned,or delayed, effect any settlement of any pending Proceeding in respect of whichany Indemnified Party is a party, unless such settlement includes anunconditional release of such Indemnified Party from all liability on claimsthat are the subject matter of such Proceeding.

 

Allreasonable fees and expenses of the Indemnified Party (including reasonablefees and expenses to the extent incurred in connection with investigating orpreparing to defend such Proceeding in a manner not inconsistent with this Section)shall be paid to the Indemnified Party, as incurred, within ten (10) BusinessDays of written notice thereof to the Indemnifying Party (regardless of whetherit is ultimately determined that an Indemnified Party is not entitled toindemnification hereunder; provided, that the Indemnifying Party mayrequire such Indemnified Party to undertake to reimburse all such fees andexpenses to the extent it is finally judicially determined that suchIndemnified Party is not entitled to indemnification hereunder or pursuant toapplicable law).

 

(d)           Contribution.  If a claim for indemnification under Section 5(a) or5(b) is unavailable to an Indemnified Party because of a failure orrefusal of a governmental authority to enforce such indemnification inaccordance with its terms (by reason of public policy or otherwise), then eachIndemnifying Party, in lieu of indemnifying such Indemnified Party, shallcontribute to the amount paid or payable by such Indemnified Party as a resultof such Losses, in such proportion as is appropriate to reflect the relativefault of the Indemnifying Party and Indemnified Party in connection with theactions, statements, or omissions that resulted in such Losses as well as anyother relevant equitable considerations. The relative fault of suchIndemnifying Party and Indemnified Party shall be determined by reference to,among other things, whether any action in question, including any untrue oralleged untrue statement of a material fact or omission or alleged omission ofa material fact, has been taken or made by, or relates to information suppliedby, such Indemnifying Party or Indemnified Party, and the parties’ relative intent,knowledge, access to information, and opportunity to correct or prevent suchaction, statement, or omission. The amount paid or payable by a party as aresult of any Losses shall be deemed to include, subject to the limitations setforth in Section 5(c), any reasonable attorneys’ or other reasonable feesor expenses incurred by such party in connection with any Proceeding to theextent such party would have been indemnified for such fees or expenses if theindemnification provided for under Section 5(a) or 5(b) wasavailable to such party in accordance with its terms. Notwithstanding anythingto the contrary contained herein, the Holder shall be liable or required to 

 

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contributeunder this Section 5(d) for only that amount as does not exceed thenet proceeds to the Holder as a result of the sale of Registrable Securitiespursuant to the Registration Statement.

 

Theparties hereto agree that it would not be just and equitable if contributionpursuant to this Section 5(d) were determined by pro rata allocationor by any other method of allocation that does not take into account theequitable considerations referred to in the immediately preceding paragraph. NoPerson guilty of fraudulent misrepresentation (within the meaning of Section 11(f) ofthe Securities Act) shall be entitled to contribution from any Person who wasnot guilty of such fraudulent misrepresentation.

 

Theindemnity and contribution agreements contained in this Section are inaddition to any liability that the Indemnifying Parties may have to theIndemnified Parties.

 

6.             Rule 144.

 

Aslong as a Holder owns Registrable Securities, the Company covenants to timelyfile (or obtain extensions in respect thereof and file within the applicablegrace period) all reports required to be filed by the Company after the datehereof pursuant to Section 13(a) or 15(d) of the Exchange Act.As long as a Holder owns Registrable Securities, if the Company is not requiredto file reports pursuant to Section 13(a) or 15(d) of theExchange Act, it will prepare and furnish to the Holder and make publiclyavailable in accordance with Rule 144(c) promulgated under the SecuritiesAct annual and quarterly financial statements, together with a discussion andanalysis of such financial statements in form and substance substantiallysimilar to those that would otherwise be required to be included in reportsrequired by Section 13(a) or 15(d) of the Exchange Act, as wellas any other information required thereby, in the time period that such filingswould have been required to have been made under the Exchange Act. The Companyfurther covenants that it will take such further action as the Holder mayreasonably request, all to the extent required from time to time to enable theHolder to sell Registrable Securities without registration under the SecuritiesAct within the limitation of the exemptions provided by Rule 144promulgated under the Securities Act. Upon the request of any Holder, theCompany shall deliver to such Holder a written certification of a dulyauthorized officer as to whether it has complied with such requirements.

 

7.             Miscellaneous.

 

(a)           Remedies.  Theremedies provided in this Agreement are cumulative and not exclusive of anyremedies provided by law. In the event of a breach by the Company or by theHolder of any of their obligations under this Agreement, the Holder or theCompany, as the case may be, in addition to being entitled to exercise allrights granted by law and under this Agreement, including recovery of damages,will be entitled to specific performance of his, her, or its rights under thisAgreement. The Company and the Holder agree that monetary damages would notprovide adequate compensation for any losses incurred by reason of a breach byhim, her, or it of any of the provisions of this Agreement and hereby furtheragrees that, in the event of any action for specific performance in respect ofsuch breach, he, she, or it shall waive the defense that a remedy at law wouldbe adequate.

 

(b)           No Inconsistent Agreements.  Neitherthe Company nor any of its Affiliates has as of the date hereof entered into,nor shall the Company or any of its Affiliates, on or after the date of thisAgreement, enter into, any agreement with respect to its securities that isinconsistent with the rights granted to the Holder in this Agreement orotherwise conflicts with the provisions hereof. Without limiting the generalityof the foregoing, without the written consent of the Holder, the Company shallnot grant to any Person the right to request the Company to register anysecurities of the Company under the Securities Act if the rights so granted areinconsistent with the rights granted to the Holder set forth herein, orotherwise prevent the Company with complying with all of its obligationshereunder.

 

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(c)           Consent to Jurisdiction.  The Company and each Purchaser: (i) herebyirrevocably submit to the exclusive jurisdiction of the United States DistrictCourt for the City of New York, Borough of Manhattan, and the courts of theState of New York located in City of New York, Borough of Manhattan for thepurposes of any suit, action, or proceeding arising out of or relating to thisAgreement; and (ii) hereby waive, and agree not to assert in any suchsuit, action, or proceeding, any claim that it is not personally subject to thejurisdiction of such court, that the suit, action or proceeding is brought inan inconvenient forum or that the venue of the suit, action, or proceeding isimproper. The Company and each Purchaser consent to process being served in anysuch suit, action, or proceeding by mailing a copy thereof to such party at theaddress in effect for notices to it under this Agreement and agrees that suchservice shall constitute good and sufficient service of process and noticethereof. Nothing in this Section 8(c) shall affect or limit any rightto serve process in any other manner permitted by law.

 

(d)           Amendments and Waivers.  The provisions of this Agreement, includingthe provisions of this sentence, may not be amended, modified, or supplemented,and waivers or consents to departures from the provisions hereof may not begiven, unless the same shall be in writing and signed by the Company and thePurchasers.

 

(e)           Notices.  Any and all notices or other communicationsor deliveries required or permitted to be provided hereunder shall be inwriting and shall be deemed given and effective on the earlier of: (i) thedate of transmission, if such notice or communication is delivered viafacsimile at the facsimile telephone number specified for notice prior to 5:00 p.m.,Central Time, on a Business Day; (ii) the first Business Day after thedate of transmission, if such notice or communication is delivered viafacsimile at the facsimile telephone number specified for notice later than5:00 p.m., Eastern Time, on any date and earlier than 11:59 p.m.,Central Time, on such date; (iii) the Business Day following the date ofmailing, if sent by nationally recognized overnight courier service; or (iv) actualreceipt by the party to whom such notice is required to be given.

 

(x)            If to the Company:

Chase Packaging Corporation

636 River Road

Fair Haven, New Jersey 07704

Facsimile No.:  (732) 741-1500

Telephone No.:  (732) 741-1925

Attn: Mr. Allen T. McInnes

 

 

With a copy to:

Haynes and Boone, LLP

201 Main Street, Suite 2200

Fort Worth, TX  76102

Facsimile No.:  817.348.2384

Telephone No.:  817.347.6611

Attn:  Rice M. Tilley, Jr., Esq.

 

(y)           If to any Purchaser:

At the address of such Purchaser set forth on Exhibit A tothis Agreement.

 

orto such other address or addresses or facsimile number or numbers as any suchparty may most recently have designated in writing to the other parties heretoby such notice.

 

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(f)            Successors and Assigns.  This Agreement shall be binding upon andinure to the benefit of the parties and their successors and permitted assignsand shall inure to the benefit of the Holder and its successors and assigns.The Company may not assign this Agreement or any of its respective rights orobligations hereunder without the prior written consent of the Purchasers,except in connection with an acquisition of the Company. Each Purchaser mayassign his, her, or its rights hereunder in the manner and to the Persons aspermitted under the Purchase Agreement.

 

(g)           Assignment of RegistrationRights. The rights of each Holder hereunder, including the right to have theCompany register for resale Registrable Securities in accordance with the termsof this Agreement, shall be assignable by each Holder to any transferee of theHolder of all or a portion ofthe shares of Registrable Securities if: (i) the Holder agrees in writingwith the transferee or assignee to assign such rights, and a copy of suchagreement is furnished to the Company within a reasonable time after suchassignment; (ii) the Company is, within a reasonable time after suchtransfer or assignment, furnished with written notice of (A) the name andaddress of such transferee or assignee, and (B) the securities withrespect to which such registration rights are being transferred or assigned; (iii) followingsuch transfer or assignment the further disposition of such securities by thetransferee or assignees is restricted under the Securities Act and applicablestate securities laws; (iv) at or before the time the Company receives thewritten notice contemplated by clause (ii) of this Section, the transfereeor assignee agrees in writing with the Company to be bound by all of theprovisions of this Agreement; and (v) such transfer shall have been madein accordance with the applicable requirements of the Purchase Agreement andshall be for no less than $50,000 in value of the Registrable Securities.  In addition, the Holder shall have the rightto assign his, her, or its rights hereunder to any other Person with the priorwritten consent of the Company, which consent shall not be unreasonablywithheld, conditioned, or delayed. The rights to assignment shall apply to theHolder (and to subsequent) successors and assigns. In the event of anassignment pursuant to this Section 7(g), the Purchaser shall pay allincremental costs and expenses incurred by the Company in connection withfiling a Registration Statement (or an amendment to the Registration Statement)to register the shares of Registrable Securities assigned to any assignee ortransferee of the Purchaser.

 

(h)           Counterparts.  This Agreement may be executed in any numberof counterparts, each of which when so executed shall be deemed to be anoriginal, and all of which taken together shall constitute one and the sameAgreement. In the event that any signature is delivered by facsimiletransmission, such signature shall create a valid binding obligation of theparty executing (or on whose behalf such signature is executed) the same withthe same force and effect as if such facsimile signature were the originalthereof.

 

(i)            Governing Law.  This Agreement shall be governed by andconstrued in accordance with the laws of the State of New York, without regardto principles of conflicts of law thereof. This Agreement shall not beinterpreted or construed with any presumption against the party causing thisAgreement to be drafted.

 

(j)            Cumulative Remedies.  The remedies provided herein are cumulativeand not exclusive of any remedies provided by law.

 

(k)           Termination.  This Agreement shall terminate on the date onwhich all remaining Registrable Securities may be sold without restrictionpursuant to Rule 144(k) of the Securities Act, or any successor rule orregulation.

 

(l)            Severability.  If any term, provision, covenant, orrestriction of this Agreement is held to be invalid, illegal, void, orunenforceable in any respect, the remainder of the terms, provisions,covenants, and restrictions set forth herein shall remain in full force andeffect and shall in no way be affected, impaired, 

 

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orinvalidated, and the parties hereto shall use their reasonable efforts to findand employ an alternative means to achieve the same or substantially the sameresult as that contemplated by such term, provision, covenant, or restriction.It is hereby stipulated and declared to be the intention of the parties thatthey would have executed the remaining terms, provisions, covenants, andrestrictions without including any of such that may be hereafter declaredinvalid, illegal, void, or unenforceable.

 

(m)          Headings. The headingsherein are for convenience only, do not constitute a part of this Agreement andshall not be deemed to limit or affect any of the provisions hereof.

 

INWITNESS WHEREOF, the parties hereto have caused this Agreement to be dulyexecuted by their respective authorized persons as of the date first indicatedabove.

 

 
|   | CHASE PACKAGING CORPORATION |
|--------|-----------------------------|
|   |                        |   |
|   |                        |   |
|   | By:                         | /s/  Herbert M. Gardner |
|   |                        |      Herbert  M. Gardner |
|   |                        |      Vice  President |

 

 

[Signatures of Purchasers to follow on nextpages.]

 

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[Signature Page of Purchaser]

 

Name of Holder:

 

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory: 

 

Title of Authorized Signatory: 

 
| Tax  ID#:      |   |
|----------------|--------|
|           |   |
| Full  Address: |   |
|           |   |
|           |   |
|           |   |
|           |   |
|           |   |
| Facsimile#:    |   |
|           |   |
| Telephone#:    |   |
|           |   |
| Attn:          |   |
|                |        |  |

 

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Exhibit A

 

PURCHASERS

 

NicholasA Baker III

WilliamJ Barrett Jr. IRA Rollover

SaraBarrett

WilliamJ. Barrett

WilliamR. Cast IRA

DonaldE Cutler IRA Rollover

RobertDeputy

EdwardL. Flynn

LeonaT. Flynn

ArthurJ Gajarsa

ArthurJ Gajarsa IRA

DavidS. Gardner

ElizabethR. Gardner

HerbertM. Gardner

HerbertM. Gardner Keogh

MaryGardner

PeterH. Gardner and Linda Gardner

StuartM. Gerson & Pamela E. Somers, JTWROS

AnnC W Green IRA

TammyKlein

RichardLeibner

WilliamD. Marohn

AllenT. McInnes

CRichard Stafford IRA

WilliamSutherland IRA Rollover

SidneyTodres IRA

EstherK. Zyskind

 

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