Document:

EX 10.1 Q2 2014

NRG ENERGY, INC.
AMENDED AND RESTATED
EMPLOYEE STOcK PURCHASE PLAN
ARTICLE I.
PURPOSE AND SCOPE OF THE PLAN
1.1 Purpose
The NRG Energy, Inc. Employee Stock Purchase Plan is intended to encourage employee participation in the ownership of the Company.
1.2 Definitions
Unless the context clearly indicates otherwise, the following terms have the meaning set forth below:
Board of Directors or Board means the Board of Directors of the Company.
Code means the Internal Revenue Code of 1986, as amended from time to time, together with any applicable regulations issued thereunder.
Committee means the committee of one or more officers established by the Board to administer the Plan, which Committee shall administer the Plan as provided in Section 1.3 hereof.
Common Stock means shares of the common stock, par value $0.01 per share, of the Company.
Company means NRG Energy, Inc., a corporation organized under the laws of the State of Delaware, or any successor corporation. 
Compensation means (a) the fixed salary or base wage paid by the Employer to an Employee as reported by the Employer to the United States government (or other applicable government) for income tax purposes, including an Employee’s portion of salary deferral contributions pursuant to Section 401(k) of the Code and any amount excludable pursuant to Section 125 of the Code, and (b) to the extent authorized by the Committee for any Plan Year or Plan Years, any cash bonus payment received under a cash bonus plan or program established by the Employer, but excluding from both (a) and (b) any fee, overtime pay, severance pay, expenses, stock option or other equity-based incentive income, or other special emolument or any credit or benefit under any employee plan maintained by the Company.  
Continuous Service means the period of time, uninterrupted by a termination of employment (other than a termination as a result of a transfer of employment among the Parent, the Company or a Designated Subsidiary), that an Employee has been employed by the Company, a Designated Subsidiary or the Parent (or any combination of the foregoing) immediately preceding an Offering Date.  Such period of time shall include any approved leave of absence.
Designated Subsidiary means any Subsidiary that has been designated by the Committee to participate in the Plan.
Employee means any full-time or part-time employee of the Company, any Parent or a Designated Subsidiary who customarily works for the Company, any Parent or Designated Subsidiary, as the case may be, for a minimum of seventeen and one-half hours per week.
Employer means the Company, any Parent or a Designated Subsidiary employing an Employee.
Exercise Date means June 30 and December 31 of each Plan Year, or such other date(s) as determined by the Committee.
Fair Market Value of a share of Common Stock means the last price of the Common Stock on the applicable date as reported by the exchange on which the Common Stock is then listed, or, if not so reported for that day, on the last preceding day for which such price is reported, or such other reasonable method of determining fair market value as the Committee shall adopt.
Offering Date means January 1 and July 1 of each Plan Year, or such other date(s) as determined by the Committee.
Option Period or Period means the period beginning on an Offering Date and ending on the next succeeding Exercise Date, or such other period as determined by the Committee.
Option Price means the purchase price of a share of Common Stock hereunder as provided in Section 3.1 hereof.

Parent means any corporation or other entity in an unbroken chain of entities ending with the Company, if each of the entities other than the Company owns equity interests possessing 50% or more of the total combined voting power of all classes of equity of one of the other entities in such chain, as determined pursuant to the requirements of Section 424(e) of the Code, and shall include entities that may become a parent after adoption of this Plan, as determined by the Committee.
Participant means any Employee who (i) is eligible to participate in the Plan under Section 2.1 hereof and (ii) elects to participate.
Participant Election means the form prescribed by the Committee which must be completed and executed by an Employee who elects to participate in the Plan for any Offering Period(s).
Plan means this NRG Energy, Inc. Amended and Restated Employee Stock Purchase Plan, as amended from time to time.
Plan Account or Account means an account established and maintained in the name of each participant.
Plan Manager means any Employee appointed pursuant to Section 1.3 hereof.
Plan Year means the twelve (12) month period beginning January 1 and ending on the following December 31 during any calendar year in which the Plan is effective.
Subsidiary means any corporation or other entity in an unbroken chain of entities beginning with the Company if, each of the entities (other than the last entity in the unbroken chain) owns equity interests possessing 50% or more of the total combined voting power of all classes of equity in one of the other entities in the chain, as determined pursuant to the requirement of Section 424(f) of the Code, and may include entities that become subsidiaries after adoption of this Plan, as determined by the Committee.
1.3 Administration of Plan
Subject to oversight by the Board of Directors or the Board’s Compensation Committee, the Committee shall have the authority to administer the Plan and to make and adopt rules and regulations not inconsistent with the provisions of the Plan or the Code.  The Committee shall adopt the form of Participant Election and all notices required hereunder.  Its interpretations and decisions in respect to the Plan shall, subject as aforesaid, be final and conclusive.  The Committee shall have the authority to appoint an Employee as Plan Manager and to delegate to the Plan Manager such authority with respect to the administration of the Plan as the Committee, in its sole discretion, deems advisable from time to time.
1.4 Effective Date of Plan
The Plan was originally effective July 1, 2008 and was restated effective January 1, 2012.  This amended and restated Plan shall become effective July 1, 2014, if prior to that date, the Plan (i) has been adopted by the Board of Directors of the Company and (ii) has been approved by an affirmative vote of a majority of votes cast by the holders of the Company’s common stock in person or by proxy, at a meeting at which a quorum is present.  
1.5 Extension or Termination of Plan
The Plan shall continue in effect through, and including December 31, 2023 unless terminated prior thereto pursuant to Section 4.3 hereof, or by the Board of Directors or the Compensation Committee of the Board, each of which shall have the right to extend the term of or terminate the Plan at any time under Section 6.4.  Upon any such termination, the balance, if any, in each Participant’s Account shall be refunded to him or her, or otherwise distributed in accordance with policies and procedures prescribed by the Committee in cases where such a refund may not be possible.
ARTICLE II.
PARTICIPATION
2.1 Eligibility
Each Employee who on an Offering Date has at least sixty days of Continuous Service may become a Participant by executing and filing a Participant Election with the Company prior to said Offering Date.  No Employee may participate in the Plan if said Employee, immediately after an Offering Date, would be deemed for purposes of Section 423(b)(3) of the Code to possess 5% or more of the total combined voting power or value of all classes of stock of the Company, its Parent or any Subsidiary, as determined pursuant to the requirements of Section 423(b)(3) of the Code.

2.2 Payroll Deductions
Payment for shares of Common Stock purchased hereunder shall be made by authorized payroll deductions from each payment of Compensation in accordance with instructions received from a Participant.  For base Compensation, said deductions shall be expressed as a whole number percentage of such Compensation which shall be at least 1% but not more than 10%, subject to the aggregate maximum described in Section 3.3.  A Participant may not increase or decrease the deduction during an Option Period.  However, a Participant may change the percentage deduction for any subsequent Option Period by filing notice thereof with the Company prior to the Offering Date on which such Period commences.  During an Option Period, a Participant may discontinue payroll deductions but have the payroll deductions previously made during that Option Period remain in the Participant’s Account to purchase Common Stock on the next Exercise Date, provided that he or she is an Employee as of that Exercise Date.  Any Participant who discontinues payroll deductions during an Option Period may again become a Participant for a subsequent Option Period by executing and filing another Participant Election in accordance with Section 2.1.  Any amount remaining in the Participant’s Account after the purchase of Common Stock on an Exercise Date shall be carried forward to the next succeeding Option Period, as provided in Section 3.2, unless the Participant requests, in writing, that any excess be refunded to the Participant. 
If authorized by the Committee, bonus compensation will be included in Compensation subject to payroll deductions in a given Plan Year.  The Committee will provide a written notice to Participants if bonus compensation is to be included in Compensation for a given Plan Year.  A Participant may select a different percentage for base salary or fixed wage compensation than such percentage selected for cash bonus Compensation; provided, however any such deductions shall be subject to the aggregate maximum described in Section 3.3.   
ARTICLE III.
PURCHASE OF SHARES
3.1 Option Price
The Option Price per share of the Common Stock sold to Participants hereunder shall be equal to the lesser of: (a) 85% of the Fair Market Value of such share on the Exercise Date of an Option Period, and (b) 85% of the Fair Market Value of such share on the Offering Date of an Option Period.  Notwithstanding the foregoing, in no event shall the Option Price per share be less than the par value of the Common Stock.
3.2 Purchase of Shares
On each Exercise Date, the amount in a Participant’s Account shall be charged with the aggregate Option Price of the largest number of whole shares of Common Stock which can be purchased with said amount.  The balance, if any, in such account shall be carried forward to the next succeeding Option Period, subject to Section 2.2.  
3.3 Limitations on Purchase
Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option under the Plan if, immediately after the grant, such Employee’s right to purchase shares under all employee stock purchase plans (as described in Section 423 of the Code) of the Company and any Subsidiary or Parent of the Company would accrue at a rate per Offering Period which exceeds the lesser of: (a) twenty-five thousand dollars ($25,000) or (b) an amount equal to ten percent (10%) of the Employee’s annualized base salary in effect at the start of such Offering Period, in each case of Fair Market Value of such shares (determined at the time such option is granted); provided, however, that for any calendar year Employee’s right to purchase shares under all employee stock purchase plans (as described in Section 423 of the Code) of the Company and any Subsidiary or Parent of the Company may not accrue at a rate which exceeds twenty-five thousand dollars ($25,000) in the aggregate (as determined at the time such option is granted).
To the extent necessary to comply with Section 423(b)(8) of the Code and the limitations on purchase in this Section 3.3, a Participant’s payroll deductions may be decreased to 0% during any Option Period which is scheduled to end during any calendar year, such that the aggregate of all payroll deductions accumulated with respect to such Option Period and any other Option Period ending within the same calendar year is no greater than twenty-five thousand dollars ($25,000).  A Participant’s payroll deductions shall re-commence at the rate provided in his or her Participant Election at the beginning of the first Option Period which is scheduled to end in the following calendar year, unless suspended by the Participant pursuant to Section 2.2 of the Plan.  
The maximum number of shares of Common Stock that each Employee may purchase during an Offering Period is 20,000.  
3.4 Transferability of Rights
Rights to purchase shares hereunder shall be exercisable only by the Participant.  Such rights shall not be transferable.

ARTICLE IV.
PROVISIONS RELATING TO COMMON STOCK
4.1 Common Stock Reserved
There shall be 2,300,000 shares of Common Stock reserved for the Plan, subject to adjustment in accordance with Section 4.2 hereof.  Such shares can be authorized and unissued shares or treasury shares.  The aggregate number of shares which may be purchased under the Plan shall not exceed the number of shares reserved for the Plan.  
4.2 Adjustment for Changes in Common Stock
In the event that adjustments are made in the number of outstanding shares of Common Stock or said shares are exchanged for a different class of stock of the Company or for shares of stock of any other entity by reason of merger, consolidation, stock dividend, stock split or otherwise, the Board shall make appropriate adjustments in (i) the number and class of shares or other securities that may be reserved for purchase, or purchased, hereunder, and (ii) the Option Price.  All such adjustments shall be made approved by the Board, and its decision shall be binding and conclusive.
4.3 Insufficient Reserved Shares
If the aggregate funds available for purchase of Common Stock on any Exercise Date would cause an issuance of shares in excess of the number provided for in Section 4.1 hereof, (i) the Committee shall proportionately reduce the number of shares which would otherwise be purchased by each Participant in order to eliminate such excess and (ii) the Plan shall automatically terminate immediately after such Exercise Date.
4.4 Confirmation
Confirmation of each purchase of Common Stock hereunder shall be made available to the Participant in either written or electronic format.  A record of purchases shall be maintained by appropriate entries on the books of the Company.  Participants may obtain a certificate or certificates for all or part of the shares of Common Stock purchased hereunder upon making a written request.  Unless otherwise determined by the Committee, shares of Common Stock delivered to a Participant hereunder may not be assigned, transferred, pledged or otherwise disposed of in any way by the Participant during the one year period following such delivery to the Participant (other than by will, the laws of descent and distribution) and the shares of Common Stock shall bear a legend denoting such restrictions as may be determined by the Committee to be appropriate.
4.5 Rights as Shareholders
The shares of Common Stock purchased by a Participant on an Exercise Date shall, for all purposes, be deemed to have been issued and sold as of the close of business on such Exercise Date.  Prior to that time, none of the rights or privileges of a shareholder of the Company shall exist with respect to such shares.
ARTICLE V.
TERMINATION OF PARTICIPATION
5.1 Voluntary Withdrawal
A Participant may withdraw from the Plan at any time by filing notice of withdrawal prior to the close of business on an Exercise Date.  Upon withdrawal, the entire amount, if any, in a Participant’s Account shall be refunded to him or her without interest.  Any Participant who withdraws from the Plan may again become a Participant in accordance with Section 2.1 hereof.
5.2 Termination of Eligibility
If a Participant ceases to be eligible under Section 2.1 hereof for any reason, the dollar amount in such Participant’s Account will be refunded to the Participant, or in the case of death, the Participant’s designated beneficiary or estate, or otherwise distributed in accordance with policies and procedures prescribed by the Committee in cases where such a refund may not be possible.  

ARTICLE VI.
GENERAL PROVISIONS
6.1 Notices
Any notice which a Participant files pursuant to the Plan shall be made on forms prescribed by the Committee and shall be effective only when received by the Company.
6.2 Condition of Employment
Neither the creation of the Plan nor participation therein shall be deemed to alter the at-will nature of a Participant’s employment, create any right of continued employment or in any way affect the right of the Employer to terminate an Employee.
6.3 Withholding of Taxes
Each Participant shall, no later than the date as of which the value of an option under the Plan and/or shares of Common Stock first becomes includible in the income of the Participant for income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any taxes of any kind required by law to be withheld with respect to such option or shares of Common Stock.  The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. 
In particular, to the extent a Participant is subject to taxation under U.S. Federal income tax law, if the Participant makes a disposition, within the meaning of Section 424(c) of the Code of any share or shares of Common Stock issued to Participant pursuant to Participant’s exercise of an option, and such disposition occurs within the two-year period commencing on the day after the Offering Date or within the one-year period commencing on the day after the Exercise Date, Participant shall, within ten (10) days of such disposition, notify the Company thereof and thereafter immediately deliver to the Company any amount of federal, state or local income taxes and other amounts which the Company informs the Participant the Company may be required to withhold.
6.4 Amendment of the Plan
The Board of Directors or the Board’s Compensation Committee may at any time, or from time to time, amend, modify, or terminate the Plan in any respect, except that, without approval of the shareholders, no amendment may increase the aggregate number of shares reserved under the Plan other than as provided in Section 4.2 hereof, materially increase the benefits accruing to Participants or materially modify the requirements as to eligibility for participation in the Plan.  Any amendment of the Plan must be made in accordance with applicable provisions of the Code and/or any regulations issued thereunder, any other applicable law or regulations, and the requirements of the principal exchange upon which the Common Stock is listed.
6.5 Application of Funds
All funds received by the Company by reason of purchases of Common Stock hereunder shall constitute general funds of the Company and may be used for any corporate purpose.
6.6 Legal Restrictions
The Company shall not be obligated to sell shares of Common Stock hereunder if counsel to the Company determines that such sale would violate any applicable law or regulation.
6.7 Gender
Whenever used herein, use of any gender shall be applicable to both genders.
6.8 Governing Law
The Plan and all rights and obligations thereunder shall be constructed and enforced in accordance with the laws of the State of Delaware and any applicable provisions of the Code and the related regulations.

6.9 Indemnification
To the extent allowable under applicable law, the Committee and the Plan Manager and any delegate thereof shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her, provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s articles of incorporation or bylaws, as a matter of law, under any indemnification agreement or otherwise, or any power that the Company may have to indemnify them or hold them harmless.  
6.10 Expenses
The expenses of administering the Plan shall be borne by the Company.
6.11 Titles and Headings
The titles and headings of the sections in this Plan are for convenience of reference only, and in the event of any conflict, the text of this Plan, rather than such titles or headings, shall control.
6.12 Arbitration
In the event of any dispute between the Employer and a Participant with respect to this Plan, either may require that the dispute be determined by binding arbitration by written notice to the other.  In such case, the arbitration shall be conducted in accordance with the rules of the American Arbitration Association then in effect before a panel of three arbitrators, and the decision of the arbitrators shall be final and binding on the parties.  In any such arbitration, the non-prevailing party shall pay all expenses, including the costs of the arbitrators and the costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in the arbitration.NOVC 2014Q2 EX-10.2

INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into this 24th day of July, 2014 (this “Agreement”), by and between Novation Companies, Inc., a Maryland corporation (the “Company”), and Howard M. Amster (“Indemnitee”).
RECITALS
A.The Company and Indemnitee recognize the increasing difficulty in obtaining directors’ and officers’ liability insurance, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance.
B.    The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting officers and directors to expensive litigation risk at the same time that the availability and coverage of liability insurance has been severely limited.
C.    Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee and other officers and directors of the Company may not be willing to continue to serve as officers and directors without the protection provided by this Agreement.
D.    The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law.
AGREEMENT
The Company and Indemnitee hereby agree as follows:
1.    Definitions.  For purposes of this Agreement:
(a)    “Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied:
(i)    any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company; any trustee or other fiduciary holding securities under an executive benefit plan of the Company; or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company), is or becomes the “beneficial owner” (as defined by Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities of the Company (not including any securities acquired directly from the Company or from a transferor in a transaction expressly approved or consented to by the Board of Directors) representing more than twenty-five percent (25%) of the combined voting power of the Company’s then outstanding securities; or

(ii)    during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (ii) or (iv) of this section), (A) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved or (B) whose election is to replace a person who ceases to be a director due to death, disability or age, cease for any reason to constitute a majority thereof; or
(iii)    the stockholders of the Company approve a merger or consolidation of the Company with another corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an executive benefit plan of the Company, at least seventy-five percent (75%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than fifty-percent (50%) of the combined voting power of the Company’s then outstanding securities; or
(iv)    the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets.
(b)    “Corporate Status” means with respect to the Indemnitee the status of such person as a director, trustee, officer, manager, employee or agent of the Company or of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving at the request of the Company.
(c)    “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding for which indemnification is sought by Indemnitee
(d)    “Effective Date” means the date of this Agreement.
(e)    “Expenses” includes all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, 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, and actually incurred, in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

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(f)    “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and has not, nor in the past five (5) years has been, retained to represent the Company or Indemnitee in any matter material to either such party, or any other party to or witness in the Proceeding giving rise to a claim for indemnification under this Agreement. “Independent Counsel” does 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. If a Change of Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of Indemnitee, which approval will not be unreasonably withheld. If a Change of Control has occurred, Independent Counsel shall be selected by Indemnitee, with the approval of the Board of Directors, which approval will not be unreasonably withheld.
(g)    “Liabilities” means liabilities of any type whatsoever incurred by reason of (i) Indemnitee’s Corporate Status, or (ii) any action taken (or failure to act) by him or on his behalf in his Corporate Status, including, but not limited to, any judgments, fines (including any excise taxes assessed on Indemnitee with respect to an employee benefit plan), ERISA excise taxes and penalties, and penalties and amounts paid in settlement of any Proceeding (including all interest, assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement).
(h)    “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), including any such proceeding (i) pending or completed on or before the Effective Date, or (ii) with respect to any act or omission of the Company or any members of the Company’s board of directors committed prior to the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee.
2.    Services by Indemnitee.  Indemnitee will serve as a director and/or officer of the Company. However, this Agreement does 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.
3.    Indemnification - General.  The Company will indemnify, and advance Expenses to, Indemnitee as provided in this Agreement and otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time. However, no change in Maryland law will have the effect of reducing the benefits available to Indemnitee based on Maryland law as in effect on the Effective Date. The rights of Indemnitee provided in this Section 3 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 (the “MGCL”).
4.    Third Party Proceedings.  Indemnitee is entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to or a witness in any Proceeding, other than a Proceeding by or in the right of the Company. Under this Section 4, Indemnitee will be indemnified against all Liabilities and Expenses actually 

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and reasonably incurred by him or on his behalf in connection with a Proceeding by reason of his Corporate Status unless one of the following is established:
(a)    The act or omission of Indemnitee was material to the matter giving rise to the Proceeding, and
(i)    was committed in bad faith, or
(ii)    was the result of active and deliberate dishonesty;
(b)    Indemnitee actually received an improper personal benefit in money, property or services; or
(c)    In the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his conduct was unlawful.
5.    Proceedings by or in the Right of the Company.  Indemnitee is entitled to the rights of indemnification provided in this Section 5 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to or a witness in any Proceeding brought by or in the right of the Company to procure a judgment in its favor. Under this Section 5, Indemnitee will be indemnified against all Liabilities and Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding, unless one of the following is established:
(a)    The act or omission of Indemnitee was material to the matter giving rise to such a Proceeding, and
(i)    was committed in bad faith, or
(ii)    was the result of active and deliberate dishonesty; or
(b)    Indemnitee actually received an improper personal benefit in money, property or services.
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 requires, may order indemnification in certain circumstances. However, indemnification for any Proceeding by or in the right of the Company, or in which liability has been adjudged in the circumstances described in Section 2-418(c) of the MGCL, will be limited to Expenses actually and reasonably incurred by Indemnitee or on his behalf in connection with a Proceeding. The circumstances under which a court may order such indemnification as it deems proper are:
(a)    If it determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court will order indemnification, in which case Indemnitee will be entitled to recover the expenses of securing such reimbursement; or
(b)    If it determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee has:

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(i)    met the standards of conduct set forth in Section 2-418(b) of the MGCL; or
(ii)    been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL.
7.    Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of his Corporate Status, made a party to and is successful, on the merits or otherwise, in the defense of any Proceeding, he will 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 will 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 7 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue or matter.
8.    Advance of Expenses.  The Company will advance all reasonable Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding (other than a Proceeding brought to enforce indemnification under this Agreement, applicable law, the Charter or Bylaws of the Company, any agreement, a resolution of the stockholders entitled to vote generally in the election of directors or a resolution of the Board of Directors), to which Indemnitee is, or is threatened to be, made a party or a witness, within ten (10) days after the receipt by the Company of a written 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 must reasonably evidence the Expenses incurred by Indemnitee. The statement or statements must include 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. The statement or statements must also include 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 the undertaking is signed. The undertaking requires Indemnitee to reimburse the portion of any Expenses advanced to him relating to claims, issues or matters in the Proceeding for which it is ultimately determined pursuant to Section 9 of this Agreement that the standard of conduct was not met and which have not been successfully resolved as described in Section 7 of this Agreement. Such reimbursement will be made within thirty (30) days of such determination; provided, however, that if Indemnitee has commenced, or commences within such thirty (30)-day period, legal proceedings in a court of competent jurisdiction to secure a determination that he should be indemnified under applicable law, any determination made by the Company that Indemnitee is not entitled to indemnification will not be binding, and Indemnitee will not be required to reimburse the Company for any Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed). To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses will be allocated 

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on a reasonable and proportionate basis. The undertaking required by this Section 8 will be an unlimited general obligation by or on behalf of Indemnitee and will be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
9.    Procedure for Determination of Entitlement to Indemnification.
(a)    To obtain indemnification under this Agreement, Indemnitee must submit to the Company a written request, including 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 will, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
(b)    Upon proper written request for indemnification by Indemnitee, a determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification will promptly be made in the following manner:
(i)    if a Change in Control has occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which will be delivered to Indemnitee; or
(ii)    if a Change of Control has not occurred,
(A)    by the Board of Directors (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Directors, 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 will 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.
(c)    If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee will be made within ten (10) days after such determination. Indemnitee will 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 that is not privileged or otherwise protected from disclosure, and that is reasonably available to Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to Section 9(b). Any Expenses actually and reasonably incurred by Indemnitee in cooperating with the person, persons or entity making such determination will be borne by the 

6

Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company will indemnify and hold Indemnitee harmless therefrom.
(d)    If the person or persons empowered or selected under Section 9(b) to determine whether Indemnitee is entitled to indemnification has/have not made a determination within thirty (30) days after receipt by the Company of a written request from Indemnitee for indemnification, the requisite determination of entitlement to indemnification will be deemed to have been made in favor of the Indemnitee, and he will be entitled to such indemnification, absent (i) an intentional misstatement by Indemnitee of a material fact, or an intentional omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification; or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person or persons making such determination reasonably and in good faith requires such additional time to complete the obtaining or evaluation of documentation and/or information relating thereto. In the event that the determination as to entitlement to indemnification is made by Independent Counsel or the stockholders of the Company, the thirty (30)-day period shall not begin until the Independent Counsel is selected or until a meeting of the stockholders has been held, provided, however, the notice of any such meeting and any necessary proxy statement must have been filed with the Securities and Exchange Commission within thirty (30) days of the submission by the Indemnitee of a written request for indemnification.
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 must presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a). Anyone seeking to overcome this presumption will have the burden of proof and the burden of persuasion, by clear and convincing evidence. In addition, if the person or persons making a determination pursuant to Section 9(b) determine(s) that Indemnitee is not entitled to indemnification hereunder, such determination will not create a presumption against Indemnitee’s entitlement to indemnification in any later action, suit or proceeding initiated by Indemnitee to enforce his rights under this Agreement.
(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.
11.    Remedies of Indemnitee.
(a)    Indemnitee will be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advance of Expenses if any of the following occur:
(i)    a determination is made pursuant to Section 9 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement;

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(ii)    advance of Expenses is not timely made pursuant to Section 8 of this Agreement;
(iii)    payment of indemnification is not made pursuant to Section 7 of this Agreement within ten (10) days after receipt by the Company of a written request therefor; or
(b)    payment of indemnification is not made within ten (10) days after (A) a determination has been made that Indemnitee is entitled to indemnification, or (B) the end of the thirty (30)-day period after which Indemnitee is deemed to be entitled to indemnification pursuant to Section 9(e).
(c)    As an alternative to the remedy described in Section 11(a), 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 must commence such proceeding for adjudication or an award in arbitration within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding under Section 11(a).
(d)    In any judicial proceeding or arbitration commenced pursuant to this Section 11 the Company has the burden of proof and the burden of persuasion, by clear and continuing evidence, that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.
(e)    If a determination has been made under Section 9(b) of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 11, unless Indemnitee makes a misstatement of a material fact, or omits a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification.
(f)    If Indemnitee seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, under this Section 11, then Indemnitee will be entitled to recover from the Company, and will be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration. If it is 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 will be appropriately prorated.
12.    Defense of the Underlying Proceeding.
(a)    Indemnitee must 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 that may result in the right to indemnification or the advance of Expenses hereunder. However, the failure to give any such notice will not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to 

8

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 actually so prejudiced.
(b)    Subject to the provisions of the last sentence of this Section 12(b) and of Sections 12(c) and 12(d), the Company will have the right to defend Indemnitee in any Proceeding that may give rise to indemnification hereunder, subject to Indemnitee’s approval of counsel, which approval may not be unreasonably withheld. However, the Company must notify Indemnitee of any such decision to defend within fifteen (15) calendar days following receipt of notice of any such Proceeding under Section 12(a). The Company may not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee, or enter into any settlement or compromise that (A) includes an admission of Indemnitee’s fault or (B) does not include, as an unconditional term, the full release of Indemnitee from all liability in respect of such Proceeding. Such release must be in form and substance reasonably satisfactory to Indemnitee. This Section 12(b) does not apply to a Proceeding brought by Indemnitee under Section 11 or Section 19.
(c)    Indemnitee will be entitled to representation by separate legal counsel of Indemnitee’s choice, subject to the Company’s prior approval, which approval may not be unreasonably withheld, at the expense of the Company, in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, in the following circumstances:
(i)    Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval may not be unreasonably withheld, that he may have separate defenses or counterclaims to assert with respect to any issue that 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 may 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.
(d)    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(e)), to represent Indemnitee in connection with any such matter.
13.    Non-Exclusivity; Survival of Rights; Subrogation; Insurance.
(a)    The rights of indemnification and advance of Expenses provided by this Agreement will not be deemed exclusive of any other rights to which Indemnitee may at any time 

9

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 may 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)    If any payment is made under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who will 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 will 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.
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 limiting any other obligation under this Agreement, the Company will indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of Liabilities and Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.
15.    Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, if Indemnitee is or may be, by reason of 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 but in which the Indemnitee receives a subpoena to testify, he will be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
16.    Duration of Agreement; Binding Effect.
(a)    All agreements and obligations of the Company contained herein will continue during the period Indemnitee is a director, trustee, officer, manager, employee or agent of the Company or of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving at the request of the Company and will continue thereafter so long as Indemnitee is, or may be, subject to any possible Proceeding by reason of the fact that Indemnitee was a director, trustee, officer, manager, employee or agent of the Company or was serving in any other capacity referred to herein.

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(b)    The indemnification and advance of Expenses provided by, or granted under, this Agreement will be binding upon and 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). The indemnification and advance of Expenses will inure to the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
(c)    The Company will require and cause any successor to all, substantially all or a substantial part, of the business and/or assets of the Company - whether direct or indirect by purchase, merger, consolidation or otherwise - to expressly 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. Such assumption by any successor must be in writing in form and substance satisfactory to Indemnitee.
17.    Severability.  If any provision or provisions of this Agreement are held to be invalid, illegal or unenforceable for any reason whatsoever, 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) will not in any way be affected or impaired thereby. 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) will be construed so as to give effect to the intent manifested thereby.
18.    Exception to Right of Indemnification or Advance of Expenses.  Notwithstanding any other provision of this Agreement, Indemnitee will not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless:
(a)    The Proceeding is brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Sections 8 and 11 of this Agreement; or
(b)    The Company’s Bylaws, 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 provides otherwise.
19.    Specific Performance.  The Company and Indemnitee recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee will be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect it to pursue.
20.    Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute 

11

one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought will be sufficient to evidence the existence of this Agreement.
21.    Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and will not be deemed to constitute part of this Agreement or to affect the construction thereof.
22.    Modification and Waiver.  No supplement, modification or amendment of this Agreement will be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitute a waiver of any other provisions hereof (whether or not similar), nor will such waiver constitute a continuing waiver.
23.    Notices.  Addresses for notice to either party are as shown on the signature pages of this Agreement, or as later modified by written notice. All notices, requests, demands and other communications hereunder must be in writing and will be deemed to have been duly given if:
(a)    Delivered by hand and receipted for by the party to whom said notice or other communication has been directed; or
(b)    Mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed.
24.    Governing Law.  The parties agree that this Agreement will 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.
25.    Miscellaneous.  Use of the masculine pronoun will be deemed to include usage of the feminine pronoun where appropriate.

[SIGNATURE PAGE FOLLOWS]

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

	
		
	 
	COMPANY:

	 
	 

	 
	NOVATION COMPANIES, INC.

	 
	 

	By:
	/s/ Rodney E. Schwatken

	Name:
	Rodney Schwatken

	Title:
	Chief Financial Officer

	 
	 

	 
	 

	 
	 

	 
	 

	 
	INDEMNITEE:

	 
	 

	 
	/s/ Howard M. Amster

	 
	Howard M. Amster

	 
	 

EXHIBIT A
FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED
The Board of Directors of Novation Companies, Inc.
Re:    Undertaking to Repay Expenses Advanced
Ladies and Gentlemen:
This undertaking is being provided pursuant to that certain Indemnification Agreement dated the day of    , 2014 , by and between Novation Companies, Inc. (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 have the meanings specified in the Indemnification Agreement.
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm that at all times, insofar as I was involved as [a director] [an officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal benefit in money, property or services and (3) 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 determined 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 my conduct was unlawful, then I must reimburse the portion of the 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 within the time periods set forth in and otherwise in accordance with Section 8 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 will be allocated on a reasonable and proportionate basis.
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this day of     , 2014.
WITNESS:

    
(SEAL)

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