Document:

Exhibit 4.3

    
      

    

     

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (the “Agreement”)
      is
      made and entered into as of this 7th
      day of
      September, 2006 by and between Baywood International, Inc., a Nevada corporation
      (the “Company”),
      and
      the undersigned investor who has executed a Subscription Agreement dated the
      date hereof with the Company.

    

    The
      parties hereby agree as follows:

    

    1.    Certain
      Definitions.

    

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    

    “Affiliate”
means,
      with respect to any person, any other person which directly or indirectly
      controls, is controlled by, or is under common control with, such
      person.

    

    “Bridge
      Investors”
means
      the Investor and those other purchasers of the Senior Convertible Notes and
      the
      Warrants pursuant to the Subscription Agreements. 

    

    “Business
      Day”
means
      a
      day, other than a Saturday or Sunday, on which banks in New York City are open
      for the general transaction of business.

    

    “Common
      Shares”
means
      shares of the Company’s common stock, par value $0.001, and any securities into
      which such shares may hereinafter be reclassified.

    

    “Investor”
means
      the undersigned investor or permitted transferee of such Investor who is a
      subsequent holder of any Registrable Securities.

    

    “Prospectus”
means
      the prospectus included in any Registration Statement, as amended or
      supplemented by any prospectus supplement, with respect to the terms of the
      offering of any portion of the Registrable Securities covered by such
      Registration Statement and by all other amendments and supplements to the
      prospectus, including post-effective amendments and all material incorporated
      by
      reference or deemed to be incorporated by reference in such prospectus which
      is
      permitted to be so incorporated by reference in accordance with the rules and
      regulations of the SEC.

    

    “Qualified
      Placement”
means
      a
      debt or equity financing or series of debt or equity financings in which the
      Company receives at least $7,000,000 of gross proceeds. In the event the Company
      completes a Qualified Placement, each subsequent financing or series of
      financings that would otherwise be considered a Qualified Placement based on
      this definition shall not be considered a Qualified Placement for purposes
      of
      this Agreement.

    

    “Register,”
      “registered”
and
      “registration”
refer
      to a registration made by preparing and filing a Registration Statement or
      similar document in compliance with the 1933 Act (as defined below), and the
      declaration or ordering of effectiveness of such Registration Statement or
      document.

    

    “Registrable
      Securities”
means
      (i) the Common Shares issuable upon any exercise of the Warrants; (ii) any
      other
      securities issued or issuable with respect to or in exchange for Registrable
      Securities; and (iii) any securities issued or issuable with respect to such
      securities by way of a stock dividend or stock split or in connection with
      a
      combination of shares, recapitalization, merger, consolidation or other
      reorganization with respect to any of the securities referenced above; provided,
      that, a security shall cease to be a Registrable Security upon (A) sale pursuant
      to a Registration Statement or Rule 144 under the 1933 Act; or (B) such security
      becoming eligible for sale by the Investor pursuant to Rule
      144(k).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Registration
      Statement”
means
      any registration statement of the Company filed under the 1933 Act that covers
      the resale of any of the Registrable Securities pursuant to the provisions
      of
      this Agreement, including pre- and post-effective amendments and supplements
      to
      such Registration Statement and all exhibits and all material incorporated
      by
      reference or deemed to be incorporated by reference in such Registration
      Statement which is permitted to be so incorporated by reference in accordance
      with the rules and regulations of the SEC. For clarification, a Demand
      Registration Statement (as defined in Section 2(a)(i)) and a Piggy-Back
      Registration Statement (as defined in Section 2(a)(ii)) shall each be considered
      a Registration Statement under this definition. 

    

    “Required
      Investors”
means
      the investors (including the Investor) holding a majority of the Registrable
      Securities.

    

    “SEC”
means
      the U.S. Securities and Exchange Commission.

    

    “Senior
      Convertible Notes”
means
      the Senior Convertible Notes issued pursuant to the Subscription
      Agreements.

    

    “Subscription
      Agreements”
means
      those certain agreements dated as of the date of this Agreement by and between
      Baywood International, Inc. and the Bridge Investors. 

    

    “Warrants”
means
      the Warrants issued pursuant to the Subscription Agreements which are
      exercisable into Common Shares.

    

    “1933
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

    

    “1934
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

     

    2.    Registration.

    

    (a)    Registration
      Statements.

    

    (i)    Demand
      Registration.
      In the
      event that (1) a Qualified Placement in which the Company agrees to register
      with the SEC one or more securities issued in such Qualified Placement does
      not
      occur on or prior to the date that is one-hundred and eighty (180) days after
      the date of this Agreement, (2) the Company does not satisfy in a timely manner
      its obligations to investors in a Qualified Placement to register with the
      SEC
      all securities issued to investors in such Qualified Placement, including
      without limitation its obligations to file a registration statement with the
      SEC
      and to cause it to be declared effective, (3) the Company does not satisfy
      its
      obligations under Section 2(a)(ii) below, or (4) the Investor is not able to
      sell all of its Registrable Securities because of an underwriter cutback
      described in Section 2(a)(iv) below (each such event being a “Demand
      Triggering Event”),
      as
      soon as practicable (but in any case within sixty (60) days of the first
      occurrence of a Demand Triggering Event) (the “Filing
      Deadline”),
      the
      Company shall prepare and file with the SEC a Registration Statement covering
      the resale of the Registrable Securities in an amount at least equal to the
      number of Registrable Securities (the “Demand
      Registration”).
      Such
      Registration Statement (the “Demand Registration Statement”) shall include the
      plan of distribution attached hereto as Exhibit
      A.
      The
      Demand Registration Statement also shall cover, to the extent allowable under
      the 1933 Act, such indeterminate number of additional Common Shares resulting
      from share splits, share dividends or similar transactions with respect to
      the
      Registrable Securities. The Demand Registration Statement (and each amendment
      or
      supplement thereto, and each request for acceleration of effectiveness thereof)
      shall be provided in accordance with Section 3(c) to the Investor and its
      counsel prior to its filing or other submission. Notwithstanding the foregoing,
      the Company shall not be required to (A) file the Demand Registration Statement
      if the Company had completed the registration of securities in connection with
      an underwritten public offering that the Investor could have joined in
      accordance with Section 2(a)(ii) below within the prior one-hundred and eighty
      (180) days or (B) file more than one Registration Statement under this Section
      2(a)(i) unless the Investor is not able to dispose of all of its shares because
      of the provisions set forth in Section 2(a)(iii) below.

    
      
        
        

      

      
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    (ii)    Piggyback
      Registration.
      If the
      Company proposes to register with the SEC any of its stock or other securities
      under the 1933 Act (other than a registration pursuant to a Registration
      Statement on Form S-8) (a “Piggy-Back
      Registration”),
      it
      will give written notice to Investor and each of the other Bridge Investors
      at
      least twenty (20) days before the initial filing with the SEC of the related
      Registration Statement (a “Piggy-Back
      Registration Statement”).
      The
      notice shall offer to include in such filing the aggregate number of shares
      of
      Registrable Securities as the Investor and such other Bridge Investors may
      request. The Investor and each of the other Bridge Investors desiring to have
      Registrable Securities registered under this Section 2(a)(ii) shall advise
      the
      Company in writing within ten (10) days after the date of receipt of such offer
      from the Company, setting forth the amount of such Registrable Securities for
      which registration is requested. The Company shall thereupon include in such
      filing the number or amount of Registrable Securities for which registration
      is
      so requested, and shall use its reasonable best efforts to effect registration
      of such Registrable Securities under the 1933 Act. The Piggy-Back Registration
      Statement shall include the plan of distribution attached hereto as Exhibit
      A.
      The
      Piggy-Back Registration Statement also shall cover, to the extent allowable
      under the 1933 Act, such indeterminate number of additional Common Shares
      resulting from share splits, share dividends or similar transactions with
      respect to the Registrable Securities. The Piggy-Back Registration Statement
      (and each amendment or supplement thereto, and each request for acceleration
      of
      effectiveness thereof) shall be provided in accordance with Section 3(c) to
      the
      Investor and its counsel prior to its filing or other submission. The Company
      will not hereafter enter into any agreement that is inconsistent with the rights
      of Investor under this Agreement, including without limitation any agreement
      that is inconsistent with the provisions of this Section 2(a)(ii).

    

    (iii)    Underwriter
      Cutback—Demand Registration.
      In
      connection with the Demand Registration, if the Required Investors request
      that
      the sale of their Registrable Securities be effected through an underwritten
      public offering with a managing underwriter approved by the Required Investors
      and such managing underwriter advises the Company in writing that, in its
      opinion, the number of securities to be included in such offering is greater
      than the total number of securities which can be sold therein without having
      a
      material adverse effect on the distribution of such securities or otherwise
      having a material adverse effect on the marketability thereof (the “Maximum
      Number of Securities”),
      then
      the Company shall include in such Demand Registration the Registrable Securities
      that those investors participating in such offering (the “Participating Demand
      Holders”) have requested to be registered thereunder only to the extent the
      number of such Registrable Securities does not exceed the Maximum Number of
      Securities. If such amount exceeds the Maximum Number of Securities, the number
      of Registrable Securities included in such Demand Registration shall be
      allocated among all the Participating Demand Holders on a pro
      rata
      basis
      (based on the number of Registrable Securities held by each Participating Demand
      Holder).

    
      
        
        

      

      
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    (iv)    Underwriter
      Cutback—Piggy-Back Registration.
      If a
      Piggy-Back Registration relates to an underwritten public offering and the
      managing underwriter of such proposed public offering advises the Company in
      writing that, in its opinion, the amount of Registrable Securities requested
      to
      be included in the Piggy-Back Registration in addition to the other securities
      being registered by the Company would be greater than the Maximum
      Number of Securities then:
      (A)
      in the event Company initiated the Piggy-Back Registration, the Company shall
      include in such Piggy-Back Registration first,
      the
      securities the Company proposes to register and second,
      the
      securities of all other selling security holders (including the Investor) to
      be
      included in such Piggy-Back Registration in an amount which together with the
      securities the Company proposes to register, shall not exceed the Maximum Number
      of Securities, such amount to be allocated among such selling security holders
      on a pro
      rata
      basis
      (based on the number of securities of the Company proposed to be sold in the
      Piggy-Back Registration by each such selling security holder); and (B) in the
      event any holder of securities of the Company initiated the Piggy-Back
      Registration, the Company shall include in such Piggy-Back Registration
first,
      the
      securities such initiating security holder proposes to register, second,
      the
      securities of any other selling security holders (including the Investor),
      in an
      amount which together with the securities the initiating security holder
      proposes to register, shall not exceed the Maximum Number of Securities, such
      amount to be allocated among such other selling security holders on a
pro
      rata
      basis
      (based on the number of securities of the Company proposed to be sold in the
      Piggy-Back Registration by each such other selling security holder) and
third,
      any
      securities the Company proposes to register, in an amount which together with
      the securities the initiating security holder and the other selling security
      holders propose to register, shall not exceed the Maximum Number of Securities.
      

    

    (b)    Expenses.
      The
      Company will pay all expenses associated with each registration, including
      filing and printing fees, the Company’s counsel and accounting fees and
      expenses, costs associated with clearing the Registrable Securities for sale
      under applicable state securities laws, listing fees, fees and expenses of
      one
      counsel to the Required Investors and the Investor’s reasonable expenses in
      connection with the registration, but excluding discounts, commissions or fees
      of underwriters, selling brokers, dealer managers or similar securities industry
      professionals with respect to the Registrable Securities being sold but only
      to
      the extent that the Required Investors approve any managing underwriter for
      the
      sale of its Registrable Securities.

     

    (c)    Effectiveness.

     

    
      
         

      

      
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    (i)    The
      Company shall use reasonable best efforts to have the Registration Statement
      declared effective as soon as practicable, and in any case no later than sixty
      (60) days following its filing with the SEC. The Company shall notify the
      Investor by facsimile or e-mail as promptly as practicable (with a copy provided
      to the Investor by U.S. mail), and in any event, within twenty-four (24) hours,
      after any Registration Statement is declared effective and shall as soon as
      reasonably practicable provide the Investor with copies of any related
      Prospectus to be used in connection with the sale or other disposition of the
      securities covered thereby. 

    

    (ii)    Notwithstanding
      anything to contrary, for not more than sixty (60) consecutive days or for
      a
      total of not more than ninety (90) days in any twelve (12) month period
      (provided, however, the no such delay, suspension or withdrawal shall be
      permitted for consecutive sixty-day periods arising out of the same set of
      facts, circumstances or transactions), the Company may delay, suspend the use
      of, or withdraw any Registration Statement or qualification of Registrable
      Securities if the Company in good faith determines that any such Registration
      Statement, or the use thereof, would materially and adversely affect any
      material corporate event or would otherwise require disclosure of nonpublic
      information which the Company determines, in its reasonable judgment, is not
      in
      the best interests of the Company at such time (an “Allowed
      Delay”);
      provided, that the Company shall promptly (a) notify the Investor in writing
      of
      the existence of (but in no event, without the prior written consent of the
      Investor, shall the Company disclose to the Investor any of the facts or
      circumstances regarding) the event giving rise to an Allowed Delay, provided
      that the Company shall not be required to disclose material nonpublic
      information to the Investor; (b) advise the Investors in writing to cease all
      sales under the Registration Statement until the end of the Allowed Delay;
      and
      (c) use reasonable best efforts to terminate an Allowed Delay as promptly as
      practicable.

    

    3.    Company
      Obligations.
      The
      Company will use reasonable best efforts to effect the registration of the
      Registrable Securities in accordance with the terms hereof, and pursuant thereto
      the Company will, as expeditiously as possible:

    

    (a)    use
      reasonable best efforts to cause such Registration Statement to become effective
      and to remain continuously effective for a period that will terminate upon
      the
      earlier of (i) the date on which all Registrable Securities covered by such
      Registration Statement as amended from time to time, have been sold, and (ii)
      the date on which all Registrable Securities covered by such Registration
      Statement may be sold pursuant to Rule 144(k) (the “Effectiveness
      Period”);
      

    

    (b)    prepare
      and file with the SEC such amendments, prospectus supplements or post-effective
      amendments to the Registration Statement and the Prospectus as may be necessary
      to keep the Registration Statement effective for the period specified in
Section
      3(a)
      and to
      comply with the provisions of the 1933 Act and the 1934 Act with respect to
      the
      distribution of all of the Registrable Securities covered thereby;

    

    (c)    provide
      copies to and permit counsel designated by the Required Investors to review
      each
      Registration Statement and all amendments and supplements thereto no fewer
      than
      ten (10) days prior to their filing with the SEC and not file any document
      to
      which such counsel reasonably objects based upon such counsel’s belief that such
      Registration Statement is not in compliance with applicable laws, rules or
      regulations or contains a material misstatement or omission;

    
      
        
        

      

      
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    (d)    furnish
      to the Investor and any legal counsel designated by the Required Investors
      (i)
      promptly after the same is prepared and publicly distributed, filed with the
      SEC, or received by the Company (but not later than two (2) Business Days after
      the filing date, receipt date or sending date, as the case may be) one (1)
      copy
      of any Registration Statement and any amendment thereto, each preliminary
      prospectus and Prospectus and each amendment or supplement thereto, and each
      letter written by or on behalf of the Company to the SEC or the staff of the
      SEC, and each item of correspondence from the SEC or the staff of the SEC,
      in
      each case relating to such Registration Statement (other than any portion of
      any
      such Registration Statement which contains information for which the Company
      has
      sought confidential treatment), and (ii) such number of copies of a Prospectus,
      including a preliminary prospectus, and all amendments and supplements thereto
      and such other documents as the Investor may reasonably request in order to
      facilitate the disposition of the Registrable Securities owned by such Investor
      that are covered by the related Registration Statement;

    

    (e)    use
      reasonable best efforts to (i) prevent the issuance of any stop order or other
      suspension of effectiveness and, (ii) if such order is issued, obtain the
      withdrawal of any such order at the earliest possible moment;

    

    (f)    use
      reasonable best efforts to cause all Registrable Securities covered by a
      Registration Statement to be listed on each securities exchange, interdealer
      quotation system or other market on which similar securities issued by the
      Company are then listed;

    

    (g)    immediately
      notify the Investor, at any time when a Prospectus relating to Registrable
      Securities is required to be delivered under the 1933 Act, upon discovery that,
      or upon the happening of any event or the passage of time as a result of which,
      the Prospectus included in a Registration Statement, as then in effect, includes
      an untrue statement of a material fact or omits to state any material fact
      required to be stated therein or necessary to make the statements therein not
      misleading in light of the circumstances then existing, and at the request
      of
      any such holder, promptly prepare and furnish to such holder a reasonable number
      of copies of a supplement to or an amendment of such Prospectus or the
      Registration Statement as may be necessary so that, as thereafter delivered
      to
      the purchasers of such Registrable Securities, such Prospectus shall not include
      an untrue statement of a material fact or omit to state a material fact required
      to be stated therein or necessary to make the statements therein not misleading
      in light of the circumstances then existing; 

    

    (h)    otherwise
      use reasonable best efforts to comply with all applicable rules and regulations
      of the SEC under the 1933 Act and the 1934 Act, take such other actions as
      may
      be reasonably necessary to facilitate the registration of the Registrable
      Securities hereunder;

    

    (i)    with
      a
      view to making available to the Investor the benefits of Rule 144 (or its
      successor rule) and any other rule or regulation of the SEC that may at any
      time
      permit the Investor to sell Common Shares to the public without registration,
      the Company covenants and agrees to: (i) make and keep public information
      available, as those terms are understood and defined in Rule 144, until the
      earlier of (A) six months after such date as all of the Registrable Securities
      may be resold pursuant to Rule 144(k) or any other rule of similar effect or
      (B)
      such date as all of the Registrable Securities shall have been resold; (ii)
      file
      with the SEC in a timely manner all reports and other documents required of
      the
      Company under the 1934 Act; and (iii) furnish to the Investor upon request,
      as
      long as such Investor owns any Registrable Securities, (A) a written statement
      by the Company that it has complied with the reporting requirements of the
      1934
      Act, and (B) such other information as may be reasonably requested in order
      to
      avail such Investor of any rule or regulation of the SEC that permits the
      selling of any such Registrable Securities without registration;

    
      
        
        

      

      
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    (j)    if
      requested by the Required Investors, (i) promptly incorporate in a Prospectus
      supplement or post-effective amendment to the Registration Statement such
      information as the Company reasonably agrees should be included therein and
      (ii)
      make all required filings of such Prospectus supplement or such post-effective
      amendment as soon as practicable after the Company has received notification
      of
      the matters to be incorporated in such Prospectus supplement or post-effective
      amendment; 

    

    (k)    cooperate
      with the Investor to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to a
      Registration Statement, which certificates shall, if required under the terms
      of
      this Agreement, be free of all restrictive legends, and to enable such
      Registrable Securities to be in such denominations and registered in such names
      as the Investor may request; and 

    

    (l)    prior
      to
      any public offering of Registrable Securities, use its best efforts to register
      or qualify or cooperate with the Investor in connection with the registration
      or
      qualification (or exemption from such registration or qualification) of such
      Registrable Securities for offer and sale under the securities or Blue Sky
      laws
      of such jurisdictions within the United States as the Investor requests in
      writing, to keep each such registration or qualification (or exemption
      therefrom) effective during the Effectiveness Period and to do any and all
      other
      acts or things necessary or advisable to enable the disposition in such
      jurisdictions of the Registrable Securities covered by a Registration Statement;
      provided, however, that the Company shall not be required to qualify generally
      to do business in any jurisdiction where it is not then so qualified or to
      take
      any action that would subject it to general service of process in any such
      jurisdiction where it is not then so subject or subject the Company to any
      material tax in any such jurisdiction where it is not then so
      subject.

    

    4.    Due
      Diligence Review; Information.
      The
      Company shall make available, during normal business hours, upon reasonable
      request, for inspection and review by the Investor, advisors to and
      representatives of the Investor (who may or may not be affiliated with the
      Investor and who are reasonably acceptable to the Company), all financial and
      other records, all filings with the SEC, and all other documents respecting
      the
      Company, its assets, its properties or its business (including without
      limitation minute books, corporate records, financial statements, contracts,
      permits, licenses, approvals, technical or engineering reports, and any title
      opinions or valuations which the Company has obtained) as may be reasonably
      necessary for the purpose of such review, and cause the Company’s officers,
      directors and employees, within a reasonable time period, to supply all such
      information reasonably requested by the Investor or any such representative,
      advisor or underwriter in connection with such Registration Statement
      (including, without limitation, in response to all questions and other inquiries
      reasonably made or submitted by any of them) to the extent not publicly
      available on EDGAR or the Company’s website, prior to and from time to time
      after the filing and effectiveness of the Registration Statement for the sole
      purpose of enabling the Investor and such representatives, advisors and
      underwriters and their respective accountants and attorneys to conduct initial
      and ongoing due diligence with respect to the Company and the accuracy of such
      Registration Statement.

    
      
        
        

      

      
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    Notwithstanding
      any of the foregoing, nothing herein shall obligate the Company to provide
      to
      the Investor, or any advisors or representatives or underwriters, any material
      nonpublic information. The Company shall not disclose material nonpublic
      information to the Investor, or to advisors to or representatives of the
      Investor, unless prior to disclosure of such information the Company identifies
      such information as being material nonpublic information and provides the
      Investor, such advisors and representatives with the opportunity to accept
      or
      refuse to accept such material nonpublic information for review and the Investor
      wishing to obtain such information enters into an appropriate confidentiality
      agreement with the Company with respect thereto.

    

    5.    Obligations
      of the Investor.

    

    (a)    The
      Investor shall furnish in writing to the Company such information regarding
      itself, the Registrable Securities held by it and the intended method of
      disposition of the Registrable Securities held by it, as shall be reasonably
      required to effect the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request. At least fifteen (10) Business Days prior to the first
      anticipated filing date of any Registration Statement, the Company shall notify
      the Investor of the information the Company requires from the Investor if the
      Investor elects to have any of the Registrable Securities included in the
      Registration Statement. The Investor shall provide such information to the
      Company at least two (2) Business Days prior to the first anticipated filing
      date of such Registration Statement if such Investor elects to have any of
      the
      Registrable Securities included in the Registration Statement. 

    

    (b)    The
      Investor, by its acceptance of the Registrable Securities, agrees to cooperate
      with the Company as reasonably requested by the Company in connection with
      the
      preparation and filing of a Registration Statement hereunder, unless such
      Investor has notified the Company in writing of its election to exclude all
      of
      its Registrable Securities from such Registration Statement.

    

    (c)    The
      Investor agrees that, upon receipt of any notice (which may be oral as long
      as
      written notice is provided by the next day) from the Company of the commencement
      of an Allowed Delay pursuant to Section 2(c)(ii), the Investor will immediately
      discontinue disposition of Registrable Securities pursuant to the Registration
      Statement covering such Registrable Securities, until otherwise notified in
      writing by the Company or until the Investor’s receipt of the copies of the
      supplemented or amended prospectus filed with the SEC and until any related
      post-effective amendment is declared effective and, if so directed by the
      Company and the Investor shall deliver to the Company (at the expense of the
      Company) or destroy (and deliver to the Company a certificate of destruction)
      all copies in the Investor’s possession of the Prospectus covering the
      Registrable Securities current at the time of receipt of such
      notice.

    
      
        
        

      

      
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    (d)    The
      Investor may not use any confidential information received by it pursuant to
      this Agreement or its Subscription Agreement in violation of the 1934 Act or
      other applicable state or federal securities law or reproduce, disclose, or
      disseminate such information to any other person (other than his or her
      attorneys, agents and representatives having a need to know, and then only
      if
      they expressly agree to be bound hereby), unless such information has been
      made
      available to the public generally (other than by such recipient in violation
      hereof) or such recipient is required to disclose such information by a
      governmental body or regulatory agency or by law in connection with a
      transaction that is not otherwise prohibited hereby, and then only after
      reasonable notice to the Company and it has been provided a reasonable
      opportunity to object to such disclosure, with the reasonable cooperation and
      assistance of such Investor.

    

    6.    Indemnification.

    

    (a)    Indemnification
      by the Company.
      The
      Company will indemnify and hold harmless the Investor, and each of their
      respective officers, directors, members, employees and agents, successors and
      assigns, and each other person, if any, who controls such Investor within the
      meaning of the 1933 Act, against any losses, claims, damages or liabilities,
      joint or several, to which they may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon: (i) any untrue statement or
      alleged untrue statement of any material fact contained in any Registration
      Statement, any preliminary prospectus or final prospectus contained therein,
      or
      any amendment or supplement thereof; (ii) the omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading; (iii) any violation by the Company or
      its
      agents of any rule or regulation promulgated under the 1933 Act applicable
      to
      the Company or its agents and relating to action or inaction required of the
      Company in connection with such registration; or (iv) any failure to register
      or
      qualify the Registrable Securities included in any such Registration Statement
      in any state where the Company or its agents has affirmatively undertaken or
      agreed in writing that the Company will undertake such registration or
      qualification on the Investor’s behalf and will reimburse such Investor, and
      each such officer, director or member and each such controlling person for
      any
      legal or other expenses reasonably incurred by them in connection with
      investigating or defending any such loss, claim, damage, liability or action;
      provided,
      however,
      that
      the Company will not be liable in any such case if and to the extent that any
      such loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished by the Investor in writing specifically
      for use in such Registration Statement or Prospectus, or to the extent that
      such
      information relates to the Investor or the Investor’s proposed method of
      distribution of Registrable Securities and was reviewed and approved by the
      Investor in writing for use in the Registration Statement, such Prospectus
      or
      such form of Prospectus or in any amendment or supplement thereto (it being
      understood that the Investor has approved Exhibit
      A
      hereto
      for this purpose), or in the case of an occurrence of an Allowed Delay or of
      an
      event of the type specified in Section 3(g), the use by the Investor of an
      outdated or defective Prospectus after the Company has notified the Investor
      in
      writing that the Prospectus is outdated or defective and prior to the receipt
      by
      the Investor of an amended or supplemented Prospectus, but only if and to the
      extent that following the receipt of such amended or supplemented Prospectus
      the
      misstatement or omission giving rise to such liability would have been
      corrected. 

    
      
        
        

      

      
        -
          9
          -

        
          

        

      

      
        
        

      

    

    (b)    Indemnification
      by the Investor.
      The
      Investor agrees to indemnify and hold harmless, to the fullest extent permitted
      by law, the Company, its directors, officers, employees, shareholders and each
      person who controls the Company (within the meaning of the 1933 Act) against
      any
      losses, claims, damages, liabilities and expense (including reasonable attorney
      fees) resulting from any untrue statement of a material fact or any omission
      of
      a material fact required to be stated in the Registration Statement or
      Prospectus or preliminary prospectus or amendment or supplement thereto or
      necessary to make the statements therein not misleading, to the extent that
      such
      untrue statement or omission is contained in any information furnished in
      writing by the Investor to the Company specifically for inclusion in such
      Registration Statement or Prospectus or amendment or supplement thereto, or
      to
      the extent that such information relates to such Investor’s proposed method of
      distribution of Registrable Securities and was reviewed and approved by the
      Investor in writing for use in the Registration Statement (it being understood
      that the Investor has approved Exhibit
      A
      hereto
      for this purpose), such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto, or in the case of an occurrence of an Allowed
      Delay or an event of the type specified in Section 3(g), the use by the Investor
      of an outdated or defective Prospectus after the Company has notified the
      Investor in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by the Investor of an amended or supplemented Prospectus, but only
      if and to the extent that following the receipt of the amended or supplemented
      Prospectus the misstatement or omission giving rise to such liability would
      have
      been corrected. In no event shall the liability of the Investor be greater
      in
      amount than the dollar amount of the proceeds received by the Investor upon
      the
      sale of the Registrable Securities included in the Registration Statement giving
      rise to such indemnification obligation.

    

    (c)    Conduct
      of Indemnification Proceedings.
      Any
      person entitled to indemnification hereunder shall (i) give prompt notice to
      the
      indemnifying party of any claim with respect to which it seeks indemnification;
      and (ii) permit such indemnifying party to assume the defense of such claim
      with
      counsel reasonably satisfactory to the indemnified party; provided
      that any
      person entitled to indemnification hereunder shall have the right to employ
      separate counsel and to participate in the defense of such claim, but the fees
      and expenses of such counsel shall be at the expense of such person unless
      (a)
      the indemnifying party has agreed to pay such fees or expenses; or (b) the
      indemnifying party shall have failed to assume the defense of such claim and/or
      employ counsel reasonably satisfactory to such person; or (c) in the reasonable
      judgment of any such person, based upon written advice of its counsel, a
      conflict of interest exists between such person and the indemnifying party
      with
      respect to such claims (in which case, if the person notifies the indemnifying
      party in writing that such person elects to employ separate counsel at the
      expense of the indemnifying party, the indemnifying party shall not have the
      right to assume the defense of such claim on behalf of such person); and
provided,
      further,
      that
      the failure of any indemnified party to give notice as provided herein shall
      not
      relieve the indemnifying party of its obligations hereunder, except to the
      extent that such failure to give notice shall materially adversely affect the
      indemnifying party in the defense of any such claim or litigation. It is
      understood that the indemnifying party shall not, in connection with any
      proceeding in the same jurisdiction, be liable for fees or expenses of more
      than
      one separate firm of attorneys at any time for all such indemnified parties.
      No
      indemnifying party will, except with the consent of the indemnified party,
      consent to entry of any judgment or enter into any settlement that does not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to such indemnified party of a release from all liability in respect of such
      claim or litigation.

    
      
        
        

      

      
        -
          10
          -

        
          

        

      

      
        
        

      

    

    (d)    Contribution.
      If for
      any reason the indemnification provided for in the preceding paragraphs (a)
      and
      (b) is unavailable to an indemnified party or insufficient to hold it harmless,
      other than as expressly specified therein, then the indemnifying party shall
      contribute to the amount paid or payable by the indemnified party as a result
      of
      such loss, claim, damage or liability in such proportion as is appropriate
      to
      reflect the relative fault of the indemnified party and the indemnifying party,
      as well as any other relevant equitable considerations. The relative fault,
      in
      the case of an untrue statement, alleged untrue statement, omission, or alleged
      omission, shall be determined by, among other things, whether such statement,
      alleged statement, omission, or alleged omission relates to information supplied
      by the Company or by the Investor, and the parties' relative intent, knowledge,
      access to information, and opportunity to correct or prevent such statement,
      alleged statement, omission, or alleged omission. The parties agree that it
      would be unjust and inequitable if the respective obligations of the Company
      and
      the Investor for contribution were determined by pro rata or per capita
      allocation of the aggregate losses, liabilities, claims, damages, and expenses
      or by any other method of allocation that does not reflect the equitable
      considerations referred to in this paragraph (d). No person guilty of fraudulent
      misrepresentation within the meaning of Section 11(f) of the 1933 Act shall
      be
      entitled to contribution from any person not guilty of such fraudulent
      misrepresentation. In no event shall the contribution obligation of the Investor
      be greater in amount than the dollar amount of the proceeds received by it
      upon
      the sale of the Registrable Securities giving rise to such contribution
      obligation.

    

    7.    Miscellaneous.

    

    (a)    Other
      Registration Rights.
      The
      Company acknowledges that, in the event that the Investor converts its Senior
      Convertible Notes into other securities of the Company (the “Qualified
      Placement Securities”)
      pursuant to the terms of the Senior Convertible Notes, the Investor will receive
      the benefits of any Registration Rights Agreement or similar agreements entered
      into by the Company in connection with the placement of the Qualified Placement
      Securities. 

    

    (b)    Amendments
      and Waivers.
      This
      Agreement may be amended only by a writing signed by the Company and the
      Required Investors, provided that no amendment to this Agreement that is adverse
      to the Investor shall be made without the Investor’s written consent. The
      Company may take any action herein prohibited, or omit to perform any act herein
      required to be performed by it, only if the Company shall have obtained the
      written waiver or consent to such amendment, action or omission to act, of
      the
      Required Investors, provided that no such action or omission that is adverse
      to
      the Investor shall occur without the Investor’s written
      consent.

    
      
        
        

      

      
        -
          11
          -

        
          

        

      

      
        
        

      

    

    (c)    Notices.
      All
      notices that are required or permitted hereunder shall be in writing and shall
      be sufficient if personally delivered, sent by facsimile in the case of notice
      to the Company only, or sent by registered or certified mail or Federal Express
      or other nationally recognized overnight delivery service. Any notices shall
      be
      deemed given upon the earlier of the date when received at, the day when
      delivered via facsimile or the third day after the date when sent by registered
      or certified mail or the day after the date when sent by Federal Express to,
      the
      address set forth below, unless such address is changed by notice to the other
      party hereto:

    

    To
      the
      Company:

    

    Baywood
      International, Inc.

    14950
      North 83rd
      Place

    Suite
      1

    Scottsdale,
      Arizona 85260

    Attn:
      Chief Executive Officer

    Facsimile:
      (480) 483-2168

    

    To
      the
      Investor: As set forth on the signature page of its Subscription
      Agreement.

    

    (d)    Assignments
      and Transfers by Investor.
      The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the Investor and its successors and assigns. The Investor may transfer or
      assign, in whole or from time to time in part, to one or more persons, which
      shall be an “accredited investor” as defined in Rule 501(a) of Regulation D, as
      amended under the 1933 Act, and which shall agree in writing to be bound by
      the
      terms and conditions of this Agreement, an executed counterpart of which shall
      be furnished to the Company, its rights hereunder in connection with the
      transfer of Registrable Securities by such Investor to such person, provided
      that the Investor complies with all laws applicable thereto and provides written
      notice of assignment to the Company promptly after such assignment is
      effected.

    

    (e)    Assignments
      and Transfers by the Company.
      This
      Agreement may not be assigned by the Company (whether by operation of law or
      otherwise) without the prior written consent of the Required Investors,
      provided, however, that the Company may assign its rights and delegate its
      duties hereunder to any surviving or successor corporation in connection with
      a
      merger or consolidation of the Company with another corporation, or a sale,
      transfer or other disposition of all or substantially all of the Company’s
      assets to another corporation, without the prior written consent of the Required
      Investors, after notice duly given by the Company to the Investor if such
      surviving, successor or other corporation is able to fulfill in a timely manner
      the Company’s obligations under this Agreement.

    

    (f)    Benefits
      of the Agreement.
      The
      terms and conditions of this Agreement shall inure to the benefit of and be
      binding upon the respective permitted successors and assigns of the parties.
      Nothing in this Agreement, express or implied, is intended to confer upon any
      party other than the parties hereto or their respective successors and assigns
      any rights, remedies, obligations, or liabilities under or by reason of this
      Agreement, except as expressly provided in this Agreement.

    
      
        
        

      

      
        -
          12
          -

        
          

        

      

      
        
        

      

    

    (g)    Counterparts;
      Faxes.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. This Agreement may also be executed via facsimile, which shall
      be
      deemed an original.

    

    (h)    Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

    

    (i)    Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. To the extent
      permitted by applicable law, the parties hereby waive any provision of law
      which
      renders any provisions hereof prohibited or unenforceable in any
      respect.

    

    (j)    Further
      Assurances.
      The
      parties shall execute and deliver all such further instruments and documents
      and
      take all such other actions as may reasonably be required to carry out the
      transactions contemplated hereby and to evidence the fulfillment of the
      agreements herein contained.

    

    (k)    Entire
      Agreement.
      This
      Agreement is intended by the parties as a final expression of their agreement
      and intended to be a complete and exclusive statement of the agreement and
      understanding of the parties hereto in respect of the subject matter contained
      herein. This Agreement supersedes all prior agreements and understandings
      between the parties with respect to such subject matter.

    

    (l)    Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof. Each of the parties hereto irrevocably submits to the exclusive
      jurisdiction of the courts of the State of New York and the United States
      District Court for the Southern District of New York, in each case located
      in
      the City of New York, Borough of Manhattan, for the purpose of any suit, action,
      proceeding or judgment relating to or arising out of this Agreement and the
      transactions contemplated hereby. Service of process in connection with any
      such
      suit, action or proceeding may be served on each party hereto anywhere in the
      world by the same methods as are specified for the giving of notices under
      this
      Agreement. Each of the parties hereto irrevocably consents to the jurisdiction
      of any such court in any such suit, action or proceeding and to the laying
      of
      venue in such court. Each party hereto irrevocably waives any objection to
      the
      laying of venue of any such suit, action or proceeding brought in such courts
      and irrevocably waives any claim that any such suit, action or proceeding
      brought in any such court has been brought in an inconvenient forum.
EACH
      OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
      LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
      CONSULTED SPECIFICALLY AS TO THIS WAIVER. 

    
      
        
        

      

      
        -
          13
          -

        
          

        

      

      
        
        

      

    

    [Company
      Signature Page]

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
      authorized officers to execute this Agreement as of the date first above
      written.

    

    
      	 	
              BAYWOOD
                INTERNATIONAL, INC.

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
               
                

            	 
	 	
              Name:

            	 	 
	 	
              Title:

            	 	 

    

    
      
        
        

      

      
        -
          14
          -

        
          

        

      

      
        
        

      

    

    [Investor
      Signature Page]

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
      authorized officers to execute this Agreement as of the date first above
      written.

    

    

    
      	 	
              Name
                of Investor: 

            	
               
                

            	
               
                

            
	 	 	 
	 	 	 
	 	
              Signature
                of Investor (if individual): 

            	 

	 	
               

            	 
	 	 	 
	 	
              Signature
                of Investor (if an entity):

            	 
	 	 	 
	 	
              By:
                

            	
               
                

            	 
	 
	 	
              Name:
                

            	 
	 	
              Title:

            	 

    

    
      
        
        

      

      
        -
          15
          -

        
          

        

      

      
        
        

      

    

     Exhibit
      A

    

    Plan
      of Distribution

    

    The
      selling shareholders, which as used herein includes donees, pledgees,
      transferees or other successors-in-interest selling common shares or interests
      in common shares received after the date of this prospectus from a selling
      shareholder as a gift, pledge, partnership distribution or other transfer,
      may,
      from time to time, sell, transfer or otherwise dispose of any or all of their
      common shares or interests in common shares on any stock exchange, market or
      trading facility on which the common shares are traded or in private
      transactions. These dispositions may be at fixed prices, at prevailing market
      prices at the time of sale, at prices related to the prevailing market price,
      at
      varying prices determined at the time of sale, or at negotiated
      prices.

    

    The
      selling shareholders may use any one or more of the following methods when
      disposing of common shares or interests therein:

    

    -
      ordinary brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

    

    -
      block
      trades in which the broker-dealer will attempt to sell the common shares as
      agent, but may position and resell a portion of the block as principal to
      facilitate the transaction;

    

    -
      purchases by a broker-dealer as principal and resale by the broker-dealer for
      its account;

    

    -
      an
      exchange distribution in accordance with the rules of the applicable
      exchange;

    

    -
      privately negotiated transactions;

    

    -
      short
      sales effected after the date of this prospectus;

    

    -
      through
      the writing or settlement of options or other hedging transactions, whether
      through an options exchange or otherwise;

    

    -
      broker-dealers may agree with the selling shareholders to sell a specified
      number of such common shares at a stipulated price per common
      share;

    

    -
      a
      combination of any such methods of sale; and

    

    -
      any
      other method permitted pursuant to applicable law.

    

    The
      selling shareholders may, from time to time, pledge or grant a security interest
      in some or all of the common shares owned by them and, if they default in the
      performance of their secured obligations, the pledgees or secured parties may
      offer and sell the common shares, from time to time, under this prospectus,
      or
      under an amendment to this prospectus under Rule 424(b)(3) or other applicable
      provision of the 1933 Act amending the list of selling shareholders to include
      the pledgee, transferee or other successors in interest as selling shareholders
      under this prospectus. The selling shareholders also may transfer the common
      shares in other circumstances, in which case the transferees, pledgees or other
      successors in interest will be the selling beneficial owners for purposes of
      this prospectus.

    
      
        
        

      

      
        -
          16
          -

        
          

        

      

      
        
        

      

    

    In
      connection with the sale of our common shares or interests therein, the selling
      shareholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      shares in the course of hedging the positions they assume. The selling
      shareholders may also sell our common shares short and deliver these securities
      to close out their short positions, or loan or pledge the common shares to
      broker-dealers that in turn may sell these securities. The selling shareholders
      may also enter into option or other transactions with broker-dealers or other
      financial institutions or the creation of one or more derivative securities
      which require the delivery to such broker-dealer or other financial institution
      of shares offered by this prospectus, which shares such broker-dealer or other
      financial institution may resell pursuant to this prospectus (as supplemented
      or
      amended to reflect such transaction).

    

    The
      aggregate proceeds to the selling shareholders from the sale of the common
      shares offered by them will be the purchase price of the common shares less
      discounts or commissions, if any. Each of the selling shareholders reserves
      the
      right to accept and, together with their agents from time to time, to reject,
      in
      whole or in part, any proposed purchase of common shares to be made directly
      or
      through agents. We will not receive any of the proceeds from this offering.
      

    

    The
      selling shareholders also may resell all or a portion of the shares in open
      market transactions in reliance upon Rule 144 under the 1933 Act, provided
      that
      they meet the criteria and conform to the requirements of that
      rule.

    

    The
      selling shareholders and any underwriters, broker-dealers or agents that
      participate in the sale of the common shares or interests therein may be
      "underwriters" within the meaning of Section 2(11) of the 1933 Act. Any
      discounts, commissions, concessions or profit they earn on any resale of the
      shares may be underwriting discounts and commissions under the 1933 Act. Selling
      shareholders who are "underwriters" within the meaning of Section 2(11) of
      the
      1933 Act will be subject to the prospectus delivery requirements of the 1933
      Act.

    

    To
      the
      extent required, our common shares to be sold, the names of the selling
      shareholders, the respective purchase prices and public offering prices, the
      names of any agents, dealer or underwriter, any applicable commissions or
      discounts with respect to a particular offer will be set forth in an
      accompanying prospectus supplement or, if appropriate, a post-effective
      amendment to the registration statement that includes this
      prospectus.

    

    In
      order
      to comply with the securities laws of some states, if applicable, the common
      shares may be sold in these jurisdictions only through registered or licensed
      brokers or dealers. In addition, in some states the common shares may not be
      sold unless it has been registered or qualified for sale or an exemption from
      registration or qualification requirements is available and is complied
      with.

    
      
        
        

      

      
        -
          17
          -

        
          

        

      

      
        
        

      

    

    We
      have
      advised the selling shareholders that the anti-manipulation rules of Regulation
      M under the Exchange Act may apply to sales of shares in the market and to
      the
      activities of the selling shareholders and their affiliates. In addition, we
      will make copies of this prospectus (as it may be supplemented or amended from
      time to time) available to the selling shareholders for the purpose of
      satisfying the prospectus delivery requirements of the 1933 Act. The selling
      shareholders may indemnify any broker-dealer that participates in transactions
      involving the sale of the shares against certain liabilities, including
      liabilities arising under the 1933 Act.

    

    We
      have
      agreed to indemnify the selling shareholders against liabilities, including
      liabilities under the 1933 Act and state securities laws, relating to the
      registration of the shares offered by this prospectus.

    

    We
      have
      agreed with the selling shareholders to keep the registration statement of
      which
      this prospectus constitutes a part effective until the earlier of (1) such
      time
      as all of the shares covered by this prospectus have been disposed of pursuant
      to and in accordance with the registration statement and (2) the date on which
      the shares (other than shares held by our Affiliates) may be sold pursuant
      to
      Rule 144(k) of the 1933 Act.

     

    
-
      18
      -Exhibit 10.1

    
      

    

    
      
        EXHIBIT
          NO. 10.1

      

       

      INDEMNIFICATION
        AGREEMENT

       

      THIS
        INDEMNIFICATION AGREEMENT
        (“Agreement”)
        is
        made and entered into this ___ day of September, 2006, by and between
SUNTERRA
        CORPORATION,
        a
        Maryland corporation (the “Company”),
        and
    (“Indemnitee”).

       

      WHEREAS,
        at
        the
        request of the Company, Indemnitee currently serves as a [director/officer]
        of the
        Company, and therefore may be subjected to claims, suits or proceedings arising
        as a result of his service; and

       

      WHEREAS,
        as an inducement to Indemnitee to continue to serve as such [director/officer],
        the
        Company has agreed to indemnify and to advance expenses and costs incurred
        by
        Indemnitee in connection with any such claims, suits or proceedings, to the
        fullest extent permitted by law; and

       

      WHEREAS,
        the parties by this Agreement desire to set forth their agreement regarding
        indemnification and advance of expenses;

       

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

       

      Section
        1.   Definitions.
        For
        purposes of this Agreement:

       

      (a)   “Affiliate”
shall
        have the meaning set forth in Rule 12b-2 promulgated by the SEC under the
        Act.

       

      (b)   “Associate”
shall
        have the meaning set forth in Rule 12b-2 promulgated by the SEC under the
        Act.

       

      (c)   “Change
        in Control”
means
        a
        change in control of the Company occurring after the Effective Date of a
        nature
        that would be required to be reported in response to Item 6(e) of Schedule
        14A
        of Regulation 14A (or in response to any similar item on any similar schedule
        or
        form) promulgated under the Securities Exchange Act of 1934, as amended (the
        “Act”),
        whether or not the Company is then subject to such reporting requirement;
        provided, however, that, without limitation, such a Change in Control shall
        be
        deemed to have occurred if after the Effective Date (i) any “person” (as such
        term is used in Sections 13(d) and 14(d) of the Act) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Act), directly or
        indirectly, of securities of the Company representing more than 50% of the
        combined voting power of the Company’s then outstanding securities without the
        prior approval of at least two-thirds of the members of the Board of Directors
        in office immediately prior to such person attaining such percentage interest;
        (ii) there occurs a proxy contest, or the Company is a party to a merger,
        consolidation, sale of assets, plan of liquidation or other reorganization
        not
        approved by at least two-thirds of the members of the Board of Directors
        then in
        office, as a consequence of which members of the Board of Directors in office
        immediately prior to such transaction or event constitute less than a majority
        of the Board of Directors thereafter; or (iii) during any period of two
        consecutive years, other than as a result of an event described in clause
        (c)(ii) of this Section 1, individuals who at the beginning of such period
        constituted the Board of Directors (including for this purpose any new director
        whose election or nomination for election by the Company’s stockholders was
        approved by a vote of at least two-thirds of the directors then still in
        office
        who were directors at the beginning of such period) cease for any reason
        to
        constitute at least a majority of the Board of Directors.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (d)   "Corporate
        Status"
        means
        the status of a person who is or was a director, trustee, officer, employee
        or
        agent of the Company or of any other corporation, partnership, joint venture,
        trust, employee benefit plan or other enterprise for which such person is
        or was
        serving at the request of the Company.

       

      (e)   "Disinterested
        Director"
        means a
        director of the Company who is not and was not a party to the Proceeding
        in
        respect of which indemnification is sought by Indemnitee.

       

      (f)   "Effective
        Date"
        means
        the date set forth in the first paragraph of this Agreement.

       

      (g)   "Expenses"
        shall
        include all reasonable attorneys' fees, retainers, court costs, transcript
        costs, fees of experts, accountants and other professionals, witness fees,
        travel expenses, duplicating costs, printing and binding costs, telephone
        charges, postage, delivery service fees, and all other disbursements or expenses
        of the types customarily incurred in connection with prosecuting, defending,
        preparing to prosecute or defend, investigating, or being or preparing to
        be a
        witness in a Proceeding. 

       

      (h)   "Independent
        Counsel"
        means a
        law firm, or a member of a law firm, that is experienced in matters of
        corporation law and neither is, nor in the past five years has been, retained
        to
        represent: (i) the Company or Indemnitee in any matter material to either
        such
        party, or (ii) 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, would have a conflict of interest in
        representing either the Company or Indemnitee in an action to determine
        Indemnitee's rights under this Agreement. Independent Counsel shall be selected
        by Indemnitee, with the approval of the Board of Directors, which approval
        will
        not be unreasonably withheld. 

       

      (i)   "Proceeding"
        includes any threatened, pending or completed action, suit, arbitration,
        alternate dispute resolution mechanism, investigation, regulatory inquiry,
        administrative hearing or any other proceeding, whether civil, criminal,
        administrative or investigative (including on appeal), except one initiated
        by
        an Indemnitee pursuant to Section 11 of this Agreement to enforce his rights
        under this Agreement.

       

      (j)   "Representative"
        means
        Indemnitee's appraisers, independent accountants, legal counsel and other
        agents, consultants and advisors.

       

      (k)   "Schedule
        13D Group"
        means
        those parties that are members of a group,
        of
        which group Indemnitee is also a member,
        that
        identifies itself as such a group
        for the
        purposes of filing Schedule 13D with the SEC.

      

      (l)   "SEC"
        means
        the Securities and Exchange Commission.

       

      Section
        2.   Services
        by Indemnitee.
        Indemnitee will serve as a [director/officer]
        of the
        Company. However, this Agreement shall not impose any obligation on Indemnitee
        or the Company to continue Indemnitee's service to the Company beyond any
        period
        otherwise required by law or by other agreements or commitments of the parties,
        if any.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    
      

        
          Section
            3.   Indemnification
            - General.
            The
            Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided
            in
            this Agreement and (b) otherwise to the fullest extent permitted by Maryland
            law
            in effect on the date hereof and as amended from time to time; provided,
            however, that no change in Maryland law shall have the effect of reducing
            the
            benefits available to Indemnitee hereunder based on Maryland law as in
            effect on
            the date hereof. The rights of Indemnitee provided in this Section 3
            shall
            include, without limitation, the rights set forth in the other sections
            of this
            Agreement, including any additional indemnification permitted by Section
            2-418(g) of the Maryland General Corporation Law ("MGCL").

           

          Section
            4.   Proceedings
            Other Than Proceedings by or in the Right of the Company.
            Indemnitee shall be entitled to the rights of indemnification provided
            in this
            Section 4 if, by reason of or related to his Corporate Status, he is,
            or is
            threatened to be, made a party to or a witness in any threatened, pending,
            or
            completed Proceeding, other than a Proceeding by or in the right of the
            Company
            to procure a judgment in its favor against Indemnitee. Pursuant to this
            Section
            4, Indemnitee shall be indemnified against all judgments, penalties,
            fines and
            amounts paid in settlement and all Expenses actually and reasonably incurred
            by
            him or on his behalf in connection with a Proceeding by reason of or
            related to
            his Corporate Status unless it is established that: (i) the act or omission
            of
            Indemnitee was material to the matter giving rise to the Proceeding and
            (a) was
            committed in bad faith, or (b) was the result of active and deliberate
            dishonesty; (ii) Indemnitee actually received an improper personal benefit
            in
            money, property or services; or (iii) in the case of any criminal Proceeding,
            Indemnitee had reasonable cause to believe that his conduct was
            unlawful.

           

          Section
            5.   Proceedings
            by or in the Right of the Company.
            Indemnitee shall be entitled to the rights of indemnification provided
            in this
            Section 5 if, by reason of or related to his Corporate Status, he is,
            or is
            threatened to be, made a party to any threatened, pending or completed
            Proceeding brought by or in the right of the Company to procure a judgment
            in
            its favor against Indemnitee. Pursuant to this Section 5, Indemnitee
            shall be
            indemnified against all judgments, penalties, fines and amounts paid
            in
            settlement and all Expenses actually and reasonably incurred by him or
            on his
            behalf in connection with such Proceeding unless: (i) the Indemnitee
            is adjudged
            liable to the Company; or (ii) it is established that: (a) the act or
            omission
            of Indemnitee was material to the matter giving rise to such a Proceeding
            and
            (1) was committed in bad faith, or (2) was the result of active and deliberate
            dishonesty; or (b) Indemnitee actually received an improper personal
            benefit in
            money, property or services.

           

          Section
            6.   Court-Ordered
            Indemnification.
            Notwithstanding any other provision of this Agreement, a court of appropriate
            jurisdiction, upon application of Indemnitee and such notice as the court
            shall
            require, may order indemnification in the following circumstances:

           

          (a)   if
            it
            determines Indemnitee is entitled to reimbursement under Section 2-418(d)(1)
            of
            the MGCL, the court shall order indemnification, in which case Indemnitee
            shall
            be entitled to recover the expenses of securing such reimbursement;
            or

          
            
              
              

            

            
              3

              
                

              

            

            
              
              

            

          

          (b)   if
            it
            determines that Indemnitee is fairly and reasonably entitled to indemnification
            in view of all the relevant circumstances, whether or not Indemnitee
            (i) has met
            the standards of conduct set forth in Section 2-418(b) of the MGCL or
            (ii) has
            been adjudged liable for receipt of an improper personal benefit under
            Section
            2-418(c) of the MGCL, the court may order such indemnification as the
            court
            shall deem proper. However, indemnification with respect to any Proceeding
            by or
            in the right of the Company or in which liability shall have been adjudged
            in
            the circumstances described in Section 2-418(c) of the MGCL shall be
            limited to
            Expenses.

           

          Section
            7.   Indemnification
            for Expenses of a Party Who is Wholly or Partly Successful.
            Notwithstanding any other provision of this Agreement, to the extent
            that
            Indemnitee is, by reason of or related to his Corporate Status, made
            a party to
            and is successful, on the merits or otherwise, in the defense of any
            Proceeding,
            he shall be indemnified for all Expenses actually and reasonably incurred
            by him
            or on his behalf in connection therewith. If Indemnitee is not wholly
            successful
            in such Proceeding but is successful, on the merits or otherwise, as
            to one or
            more but less than all claims, issues or matters in such Proceeding,
            the Company
            shall indemnify Indemnitee under this Section 7 for all Expenses actually
            and
            reasonably incurred by him or on his behalf in connection with each successfully
            resolved claim, issue or matter, allocated on a reasonable and proportionate
            basis. For purposes of this Section and without limitation, the termination
            of
            any claim, issue or matter in such a Proceeding by dismissal, with or
            without
            prejudice, shall be deemed to be a successful result as to such claim,
            issue or
            matter.

           

          Section
            8.   Advance
            of Expenses.
            The
            Company shall advance all reasonable Expenses incurred by or on behalf
            of
            Indemnitee in connection with any Proceeding to which Indemnitee is,
            or is
            threatened to be, made a party or a witness, within ten days after the
            receipt
            by the Company of a statement or statements from 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 reasonably
            evidence the Expenses incurred by Indemnitee and shall include or be
            preceded or
            accompanied by a written affirmation by Indemnitee of Indemnitee's good
            faith
            belief that the standard of conduct necessary for indemnification by
            the Company
            as authorized by law and by this Agreement has been met and a written
            undertaking by or on behalf of Indemnitee, in substantially the form
            attached
            hereto as Exhibit
            A
            or in
            such form as may be required under applicable law as in effect at the
            time of
            the execution thereof, to reimburse the portion of any Expenses advanced
            to
            Indemnitee relating to claims, issues or matters in the Proceeding as
            to which
            it shall ultimately be established by a final decision of a court of
            competent
            jurisdiction, with no further right of appeal, that the standard of conduct
            has
            not been met and which have not been successfully resolved as described
            in
            Section 7. To the extent that Expenses advanced to Indemnitee do not
            relate to a
            specific claim, issue or matter in the Proceeding, such Expenses shall
            be
            allocated on a reasonable and proportionate basis. The undertaking required
            by
            this Section 8 shall be an unlimited general obligation by or on behalf
            of
            Indemnitee and shall be accepted without reference to Indemnitee's financial
            ability to repay such advanced Expenses and without any requirement to
            post
            security therefor. For the avoidance of doubt, the Company agrees that
            it shall
            not condition any advancement of Expenses upon the Indemnitee posting
            security
            for such advanced Expenses.

          
            
              
              

            

            
              4

              
                

              

            

            
              
              

            

          

          Section
            9.   Procedure
            for Determination of Entitlement to Indemnification.

           

          (a)   To
            obtain
            indemnification under this Agreement, Indemnitee shall submit to the
            Company a
            written request, including therein or therewith such documentation and
            information as is reasonably available to Indemnitee and is reasonably
            necessary
            to determine whether and to what extent Indemnitee is entitled to
            indemnification. The Secretary of the Company shall, promptly upon receipt
            of
            such a request for indemnification, advise the Board of Directors in
            writing
            that Indemnitee has requested indemnification.

           

          (b)   Upon
            written request by Indemnitee for indemnification pursuant to the first
            sentence
            of Section 9(a) hereof, a determination, if required by applicable law,
            with
            respect to Indemnitee's entitlement thereto shall promptly be made in
            the
            specific case: (i) if a Change in Control shall have occurred, by Independent
            Counsel in a written opinion to the Board of Directors, a copy of which
            shall be
            delivered to Indemnitee; or (ii) if a Change of Control shall not have
            occurred,
            (A) by the Board of Directors (or a duly authorized committee thereof)
            by a
            majority vote of a quorum consisting of Disinterested Directors (as herein
            defined), or (B) if a quorum of the Board of Directors consisting of
            Disinterested Directors is not obtainable or, even if obtainable, such
            quorum of
            Disinterested Directors so directs, by Independent Counsel in a written
            opinion
            to the Board of Directors, a copy of which shall be delivered to Indemnitee,
            or
            (C) if so directed by a majority of the members of the Board of Directors,
            by
            the stockholders of the Company, or (D) if requested by Indemnitee, by
            Independent Counsel in a written opinion to the Board of Directors; and,
            if it
            is so determined that Indemnitee is entitled to indemnification, or if
            no such
            determination is required by applicable law, payment to Indemnitee shall
            be made
            within ten days after such determination (or, if no such determination
            is
            required, within ten days after Indemnitee's submission of a written
            request for
            indemnification). Indemnitee shall cooperate with the person, persons
            or entity
            making such determination with respect to Indemnitee's entitlement to
            indemnification, including providing to such person, persons or entity
            upon
            reasonable advance request any documentation or information which is
            not
            privileged or otherwise protected from disclosure and which is reasonably
            available to Indemnitee and reasonably necessary to such determination.
            Any
            costs or Expenses incurred by Indemnitee in so cooperating with the person,
            persons or entity making such determination, and any costs or Expenses
            of the
            Independent Counsel, shall be borne by the Company (irrespective of the
            determination as to Indemnitee's entitlement to indemnification) and
            the Company
            shall indemnify and hold Indemnitee harmless therefrom.

           

          Section
            10.   Presumptions
            and Effect of Certain Proceedings.

           

          (a)   In
            making
            a determination with respect to entitlement to indemnification hereunder,
            the
            person or persons or entity making such determination shall presume that
            Indemnitee is entitled to indemnification under this Agreement if Indemnitee
            has
            submitted a request for indemnification in accordance with Section 9(a)
            of this
            Agreement, and the Company shall have the burden of proof to overcome
            that
            presumption in connection with the making of any determination contrary
            to that
            presumption.

           

          (b)   The
            termination of any Proceeding by judgment, order, settlement, conviction,
            a plea
            of nolo
            contendere
            or its
            equivalent, or an entry of an order of probation prior to judgment, does
            not
            create a presumption that Indemnitee did not meet the requisite standard
            of
            conduct described herein for indemnification.

          
            
              
              

            

            
              5

              
                

              

            

            
              
              

            

          

          Section
            11.   Remedies
            of Indemnitee.

           

          (a)   If
            (i) a
            determination is made pursuant to Section 9 of this Agreement that Indemnitee
            is
            not entitled to indemnification under this Agreement, (ii) advance of
            Expenses
            is not timely made pursuant to Section 8 of this Agreement, (iii) no
            determination of entitlement to indemnification shall have been made
            pursuant to
            Section 9(b) of this Agreement within 30 days
            after receipt by the Company of the request for indemnification, (iv)
            payment of
            indemnification is not made pursuant to Section 7 of this Agreement within
            ten
            days after receipt by the Company of a written request therefor, or (v)
            payment
            of indemnification is not made within ten days after a determination
            has been
            made that Indemnitee is entitled to indemnification, Indemnitee shall
            be
            entitled to an adjudication in an appropriate court of the State of Maryland,
            or
            in any other court of competent jurisdiction, of his entitlement (including
            by reason of having met the applicable standard of conduct to be entitled
            to
            indemnification as set forth in this Agreement) to
            such
            indemnification or advance of Expenses. Alternatively, Indemnitee, at
            his
            option, may seek an award in arbitration to be conducted by a single
            arbitrator
            pursuant to the commercial Arbitration Rules of the American Arbitration
            Association. Indemnitee shall commence such proceeding seeking an adjudication
            or an award in arbitration within 180 days following the date on which
            Indemnitee first has the right to commence such proceeding pursuant to
            this
            Section 11(a); provided, however, that the foregoing clause shall not
            apply to a
            proceeding brought by Indemnitee to enforce his rights under Section
            7 of this
            Agreement.

           

          (b)   In
            any
            judicial proceeding or arbitration commenced pursuant to this Section
            11 the
            Company shall have the burden of proving that Indemnitee is not entitled
            to
            indemnification or advance of Expenses, as the case may be.

           

          (c)   If
            a
            determination shall have been made pursuant to Section 9(b) of this Agreement
            that Indemnitee is entitled to indemnification, the Company shall be
            bound by
            such determination in any judicial proceeding or arbitration commenced
            pursuant
            to this Section 11, absent a misstatement by Indemnitee of a material
            fact, or
            an omission of a material fact necessary to make Indemnitee's statement
            not
            materially misleading, in connection with the request for
            indemnification.

           

          (d)   In
            the
            event that Indemnitee, pursuant to this Section 11, seeks a judicial
            adjudication of or an award in arbitration to enforce his rights under,
            or to
            recover damages for breach of, this Agreement, Indemnitee shall be entitled
            to
            recover from the Company, and shall be indemnified by the Company for,
            any and
            all Expenses actually and reasonably incurred by him in such judicial
            adjudication or arbitration. If it shall be determined in such judicial
            adjudication or arbitration that Indemnitee is entitled to receive part
            but not
            all of the indemnification or advance of Expenses sought, the Expenses
            incurred
            by Indemnitee in connection with such judicial adjudication or arbitration
            shall
            be appropriately prorated.

          
            
              
              

            

            
              6

              
                

              

            

            
              
              

            

          

          Section
            12.   Defense
            of the Underlying Proceeding.

           

          (a)   Indemnitee
            shall notify the Company promptly upon being served with or receiving
            any
            summons, citation, subpoena, complaint, indictment, information, notice,
            request
            or other document relating to any Proceeding which may result in the
            right to
            indemnification or the advance of Expenses hereunder; provided, however,
            that
            the failure to give any such notice shall not disqualify Indemnitee from
            the
            right, or otherwise affect in any manner any right of Indemnitee, to
            indemnification or the advance of Expenses under this Agreement unless
            the
            Company's ability to defend in such Proceeding or to obtain proceeds
            under any
            insurance policy is materially and adversely prejudiced thereby, and
            then only
            to the extent the Company is thereby actually so prejudiced.

           

          (b)   Subject
            to the provisions of the last sentence of this Section 12(b) and of Section
            12(c) below, the Company shall have the right to defend Indemnitee in
            any
            Proceeding which may give rise to indemnification hereunder
            using
            counsel of the Company's choice, subject to the prior approval of Indemnitee,
            which shall not be unreasonably withheld;
            provided, however, that the Company shall notify Indemnitee of any such
            decision
            to defend within 15 calendar days following receipt of notice of any
            such
            Proceeding under Section 12(a) above. The Company may consent to the
            entry of
            any judgment against Indemnitee or enter into any settlement or compromise
            pursuant to which
            Indemnitee would have no obligations or liabilities, but
            the
            Company would be required to pay monetary damages. Notwithstanding the
            foregoing, the Company shall not, without the prior written consent of
            Indemnitee, which shall not be unreasonably withheld or delayed, consent
            to the
            entry of any judgment against Indemnitee or enter into any settlement
            or
            compromise; provided, however, that the Company shall not, without Indemnitee's
            prior written consent, which consent shall be granted or withheld in
            Indemnitee's sole discretion, consent to the entry of any judgment against
            Indemnitee or enter into any settlement or compromise which (i) includes
            an
            admission of fault of Indemnitee, (ii) does not include, as an unconditional
            term thereof, the full release of Indemnitee from all liability in respect
            of
            such Proceeding, which release shall be in form and substance reasonably
            satisfactory to Indemnitee, or (iii) imposes or includes any other terms,
            conditions or provisions which Indemnitee believes, in his good faith
            judgment,
            to be adverse to Indemnitee in any material respect. This Section 12(b)
            shall
            not apply to a Proceeding brought by Indemnitee under Section 11 above
            or
            Section 18 below.

           

          (c)   Notwithstanding
            the provisions of Section 12(b) above, if in a Proceeding to which Indemnitee
            is
            a party by reason of or related to Indemnitee's Corporate Status, (i)
            Indemnitee
            reasonably concludes, based upon an opinion of counsel approved by the
            Company,
            which approval shall not be unreasonably withheld, that he may have separate
            defenses or counterclaims to assert with respect to any issue which may
            not be
            consistent with other defendants in such Proceeding, (ii) Indemnitee
            reasonably
            concludes, based upon an opinion of counsel approved by the Company,
            which
            approval shall not be unreasonably withheld, that an actual or apparent
            conflict
            of interest or potential conflict of interest exists between Indemnitee
            and the
            Company, or (iii) if the Company fails to assume the defense of such
            Proceeding
            in a timely manner, or at any time thereafter fails to reasonably defend
            such
            Proceeding, Indemnitee shall be entitled to be represented by separate
            legal
            counsel of Indemnitee's choice, subject to the prior approval of the
            Company,
            which shall not be unreasonably withheld, at the expense of the Company.
            In
            addition, if the Company fails to comply with any of its obligations
            under this
            Agreement or in the event that the Company or any other person takes
            any action
            to declare this Agreement void or unenforceable, or institutes any Proceeding
            to
            deny or to recover from Indemnitee the benefits intended to be provided
            to
            Indemnitee hereunder, Indemnitee shall have the right to retain counsel
            of
            Indemnitee's choice, subject to the prior approval of the Company, which
            shall
            not be unreasonably withheld, at the expense of the Company (subject
            to Section
            11(d)), to represent Indemnitee in connection with any such
            matter.

          
            
              
              

            

            
              7

              
                

              

            

            
              
              

            

          

          Section
            13.   Non-Exclusivity;
            Survival of Rights; Subrogation; Insurance.

           

          (a)   The
            rights of indemnification and advance of Expenses as provided by this
            Agreement
            shall not be deemed exclusive of any other rights to which Indemnitee
            may at any
            time be entitled under applicable law, the Charter or Bylaws of the Company,
            any
            agreement or a resolution of the stockholders entitled to vote generally
            in the
            election of directors or of the Board of Directors, or otherwise. No
            amendment,
            alteration or repeal of this Agreement or of any provision hereof shall
            limit or
            restrict any right of Indemnitee under this Agreement in respect of any
            action
            taken or omitted by such Indemnitee in his Corporate Status prior to
            such
            amendment, alteration or repeal.

           

          (b)   In
            the
            event of any payment under this Agreement, the Company shall be subrogated
            to
            the extent of such payment to all of the rights of recovery of Indemnitee,
            who
            shall execute all papers required and take all action necessary to secure
            such
            rights, including execution of such documents as are necessary to enable
            the
            Company to bring suit to enforce such rights.

           

          (c)   The
            Company shall not be liable under this Agreement to make any payment
            of amounts
            otherwise indemnifiable or payable or reimbursable as expenses hereunder
            if and
            to the extent that Indemnitee has otherwise actually received such payment
            under
            any insurance policy, contract, agreement or otherwise; provided, however,
            that
            if and to the extent that Indemnitee is at any time thereafter required
            to
            return, refund or repay, or shall otherwise not be entitled to the benefit
            of,
            any such payment, then the Company's liability under this Agreement with
            respect
            to such payment shall be reinstated and the provisions of this Agreement
            shall
            continue to apply with respect thereto, and any applicable time periods
            under
            this Agreement shall automatically be extended for the period during
            which
            Indemnitee was entitled to the benefit of such payment.

           

          Section
            14.   Insurance.
            The
            Company will use its reasonable best efforts to acquire directors and
            officers
            liability insurance, on terms and conditions deemed appropriate by the
            Board of
            Directors of the Company, with the advice of counsel, covering Indemnitee
            or any
            claim made against Indemnitee for service as a director or officer of
            the
            Company and covering the Company for any indemnification or advance of
            Expenses
            made by the Company to Indemnitee for any claims made against Indemnitee
            for
            service as a director or officer of the Company. Without in any way limiting
            any
            other obligation under this Agreement, the Company shall indemnify Indemnitee
            for any payment by Indemnitee arising out of the amount of any deductible
            or
            retention and the amount of any excess of the aggregate of all judgments,
            penalties, fines, settlements and reasonable Expenses incurred by Indemnitee
            in
            connection with a Proceeding over the coverage of any insurance referred
            to in
            the previous sentence.

          
            
              
              

            

            
              8

              
                

              

            

            
              
              

            

          

          Section
            15.   Indemnification
            for Expenses of a Witness.
            Notwithstanding any other provision of this Agreement, to the extent
            that
            Indemnitee is, by reason of or related to his Corporate Status, a witness
            in any
            Proceeding, whether instituted by the Company or any other party, and
            to which
            Indemnitee is not a party, he shall be advanced all reasonable Expenses
            and
            indemnified against all Expenses actually and reasonably incurred by
            him or on
            his behalf in connection therewith.

           

          Section
            16.   Duration
            of Agreement; Binding Effect.

           

          (a)   This
            Agreement shall continue until and terminate upon the expiration of the
            last to
            expire of any applicable statute of limitations for claims against Indemnitee
            which are subject to indemnification pursuant to this Agreement; provided,
            that
            the rights of Indemnitee hereunder shall continue until the final termination
            of
            any Proceeding then pending in respect of which Indemnitee is granted
            rights of
            indemnification or advance of Expenses hereunder and of any proceeding
            commenced
            by Indemnitee pursuant to Section 11 of this Agreement relating
            thereto.

           

          (b)   The
            indemnification and advance of Expenses provided by, or granted pursuant
            to,
            this Agreement shall be binding
            upon
            and be enforceable by the parties hereto and their respective successors
            and
            assigns (including any direct or indirect successor by purchase, merger,
            consolidation or otherwise to all or substantially all of the business
            or assets
            of the Company), shall continue as to an Indemnitee who has ceased to
            be a
            director, trustee, officer, employee or agent of the Company or of any
            other
            corporation, partnership, joint venture, trust, employee benefit plan
            or other
            enterprise which such person is or was serving at the written request
            of the
            Company, and shall inure to the benefit of Indemnitee and his spouse,
            assigns,
            heirs, devisees, executors and administrators and other legal
            representatives.

           

          (c)   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.

           

          Section
            17.   Severability.
            If any
            provision or provisions of this Agreement shall be held to be invalid,
            illegal
            or unenforceable for any reason whatsoever: (a) the validity, legality
            and
            enforceability of the remaining provisions of this Agreement (including,
            without
            limitation, each portion of any section of this Agreement containing
            any such
            provision held to be invalid, illegal or unenforceable that is not itself
            invalid, illegal or unenforceable) shall not in any way be affected or
            impaired
            thereby; and (b) to the fullest extent possible, the provisions of this
            Agreement (including, without limitation, each portion of any section
            of this
            Agreement containing any such provision held to be invalid, illegal or
            unenforceable, that is not itself invalid, illegal or unenforceable)
            shall be
            construed so as to give effect to the intent manifested thereby.

           

          Section
            18.   Exception
            to Right of Indemnification or Advance of Expenses.
            Notwithstanding any other provision of this Agreement, Indemnitee shall
            not be
            entitled to indemnification or advance of Expenses under this Agreement
            with
            respect to any Proceeding brought by Indemnitee or any member of a Schedule
            13D
            Group, Affiliate, Associate or Representative or by a third party at
            the behest
            of any of the aforementioned (provided that the foregoing shall not limit
            or
            otherwise affect Indemnitee's rights to indemnification or advance of
            Expenses
            in connection with any defenses or counterclaims asserted by Indemnitee
            in any
            Proceeding), unless (a) the Proceeding is brought to enforce indemnification
            under this Agreement or otherwise or (b) the Company's Bylaws, as amended,
            the
            Charter, a resolution of the stockholders entitled to vote generally
            in the
            election of directors or of the Board of Directors or an agreement approved
            by
            the Board of Directors to which the Company is a party expressly provide
            otherwise.

          
            
              
              

            

            
              9

              
                

              

            

            
              
              

            

          

          Section
            19.   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. One such counterpart signed by
            the party
            against whom enforceability is sought shall be sufficient to evidence
            the
            existence of this Agreement.

           

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

           

          Section
            21.   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.

           

          Section
            22.   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
            prepaid, on the third business day after the date on which it is so
            mailed:

           

          (a)   If
            to
            Indemnitee, to: The address set forth on the signature page hereto.

           

          (b)   If
            to the
            Company to:

           

          Sunterra
            Corporation

          3865
            West
            Cheyenne Avenue

          North
            Las
            Vegas, Nevada 89032

          Attn:
            General Counsel

          

          or
            to
            such other address as may have been furnished to Indemnitee by the Company
            or to
            the Company by Indemnitee, as the case may be.

          

          Section
            23.   Governing
            Law.
            The
            parties agree that this Agreement shall be governed by, and construed
            and
            enforced in accordance with, the laws of the State of Maryland, without
            regard
            to its conflicts of laws rules.

          
            
              
              

            

            
              10

              
                

              

            

            
              
              

            

          

          Section
            24.   Miscellaneous.
            Use of
            the masculine pronoun shall be deemed to include usage of the feminine
            pronoun
            where appropriate.

           

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

           

          
            
              	
                      ATTEST:

                    	 	
                      COMPANY

                    
	 	 	
                      SUNTERRA
                        CORPORATION

                    
	 	 	 	 	 
	 	 	 	 	 
	
                       

                    	 	
                      By:

                    	
                       

                    
	 	 	 	
                      Name:

                    	 
	 	 	 	
                      Title:

                    	 
	 	 	 	 	 
	 	 	 	 	 
	
                      WITNESS:

                    	 	
                      INDEMNITEE

                    
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                       

                    
	 	 	
                      Name:

                    	 
	 	 	
                      Address:

                    	 	 
	 	 	 	 	 

            

          

           

          
            
              
              

            

            
              11

              
                

              

            

            
              
              

            

          

          

            EXHIBIT
              A

          

          FORM
            OF AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

           

          To
            the Board of Directors of Sunterra Corporation:

          

          Re:
            Undertaking to Repay Expenses Advanced

          

          Ladies
            and Gentlemen:

          

          This
            undertaking is being provided pursuant to that certain Indemnification
            Agreement
            dated the ___ day of September, 2006, by and between Sunterra Corporation
            (the
            "Company")
            and
            the undersigned Indemnitee (the "Indemnification
            Agreement"),
            pursuant to which I am entitled to advance of expenses in connection
            with
[Description
            of Proceeding]
            (the
            "Proceeding").

           

          Terms
            used herein and not otherwise defined shall have the meanings specified
            in the
            Indemnification Agreement.

           

          I
            am
            subject to the Proceeding by reason of or related to my Corporate Status
            or by
            reason of or related to alleged actions or omissions by me in such capacity.
            I
            hereby affirm that at all times, insofar as I was involved as [director/officer]
            of the
            Company, in any of the facts or events giving rise to the Proceeding,
            I (1) did
            not act in bad faith, (2) did not engage in active and deliberate dishonesty,
            (3) did not receive any improper personal benefit in money, property
            or services
            and (4) in the case of any criminal proceeding, had no reasonable cause
            to
            believe that any act or omission by me was unlawful.

           

          In
            consideration of the advance of Expenses by the Company for reasonable
            attorneys' fees and related expenses incurred by me in connection with
            the
            Proceeding (the "Advanced
            Expenses"),
            I
            hereby agree that if, in connection with the Proceeding, it is ultimately
            established by a final decision of a court of competent jurisdiction,
            with no
            further right of appeal, that (1) an act or omission by me was material
            to the
            matter giving rise to the Proceeding and (a) was committed in bad faith
            or (b)
            was the result of active and deliberate dishonesty or (2) I actually
            received an
            improper personal benefit in money, property or services or (3) in the
            case of
            any criminal proceeding, I had reasonable cause to believe that the act
            or
            omission was unlawful, then I shall promptly reimburse the portion of
            the
            Advanced Expenses relating to the claims, issues or matters in the Proceeding
            as
            to which the foregoing findings have been established and which have
            not been
            successfully resolved as described in Section 7 of the Indemnification
            Agreement. To the extent that Advanced Expenses do not relate to a specific
            claim, issue or matter in the Proceeding, I agree that such Expenses
            shall be
            allocated on a reasonable and proportionate basis. 

           

          IN
            WITNESS WHEREOF, I have executed this Affirmation and Undertaking on
            this ___
            day of ____________________, 20___.

          

          WITNESS:

          Name: ____________________________

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