Document:

Penthouse Int'l, Inc., Exhibit 10.3

 

Exhibit 10.3

AMERICAN PULP EXCHANGE, INC.

2002 CONSULTANT COMPENSATION PLAN

	1.	 	Purpose.

     The American Pulp Exchange, Inc. 2002 Consultant Compensation Plan (the
“Plan”) is intended to promote the interests of American Pulp Exchange, Inc.
and its subsidiaries (collectively the “Corporation”) by offering those outside
consultants of the Corporation who assist in the development and success of the
business of the Corporation, the opportunity to participate in a compensation
plan designed to reward them for their services and to encourage them to
continue to provide services to the Corporation.

	2.	 	Definitions.

     For all purposes of this Plan, the following terms shall have the
following meanings:

     “APE” means American Pulp Exchange, Inc., a Florida corporation.

     “Common Stock” means American Pulp Exchange, Inc. common stock, $.0025 par
value per share.

     “Conditional Shares” means shares of Common Stock awarded under this Plan
subject to conditions imposed by the Committee (as defined herein) or the
conditions set forth in Section 6.2 or both.

     “Discounted Purchase Shares” means shares of Common Stock sold under this
Plan at a discount from the Common Stock’s then current market price.

     “Subsidiary” means any company of which APE owns, directly or indirectly,
the majority of the combined voting power of all classes of stock.

     “Unconditional Shares” means shares of Common Stock awarded under this
Plan subject to no conditions.

	3.	 	Administration.

     The Plan shall be administered by a committee (the “Committee”) of not
less than two directors of APE selected by, and serving at the pleasure of,
APE’s Board of Directors (the “APE Board”).

     APE or any Subsidiary will recommend to the Committee persons to whom
shares may be awarded or may be sold at a discount. The Committee shall make
all final decisions with respect to the persons to whom awards shall be granted
or stock shall be sold at a discount (“Participants”), the number of shares
that shall be covered by each award or sale, the time or times at which awards
shall be granted or sales shall be made, the timing of when awards shall

 

 

 vest, the percentage from the then current market price that any shares
sold shall be discounted, the terms and provisions of the instruments by which
awards or sales shall be evidenced, the interpretation of the Plan and all
determinations necessary or advisable for its administration.

	4.	 	Eligibility.

     Only individuals who are outside consultants, or directors, officers,
partners or employees of outside consultants, of APE or any Subsidiary shall be
granted awards or shall be permitted to purchase shares at a discount.

	5.	 	Stock Subject to the Plan.

     The stock, which may be awarded or sold pursuant to this Plan, shall be
shares of Common Stock, including common stock issueable upon conversion of
options, warrants or other convertible securities. When shares of Common Stock
are awarded or sold, APE may award or sell authorized but unissued Common
Stock, or APE may award or sell issued Common Stock held in its treasury. Each
of the respective boards of APE and all Subsidiaries involved in the award or
sale will fund the Plan to the extent so required to provide Common Stock for
the benefit of Participants. The total number of shares of Common Stock which
may be granted or sold under this Plan shall not exceed 3,000,000 shares in the
aggregate. Any shares awarded and later forfeited are again subject to award
or sale under the Plan.

	6.	 	Share Awards and Sales.

     6.1 Grant of Share Awards and Sale of Discounted Purchase Shares.

     The Committee may award to Participants Unconditional Shares and
Conditional Shares. The Committee will determine for each Participant selected
to be awarded Unconditional Shares or Conditional Shares the time or times when
Unconditional Shares or Conditional Shares shall be awarded and the number of
shares of Common Stock to be covered by each Unconditional Shares or
Conditional Share award. Unless expressly specified as Conditional Shares by
the Committee, all shares of Common Stock awarded under this Plan shall be
Unconditional Shares. No Unconditional Shares or Conditional Shares shall be
awarded unless APE (in the judgment of the Committee) has received from the
Participant either (a) a full performance of the services for which the
Unconditional Shares or Conditional Shares are being awarded, or (b) (i) a
partial performance of the services for which the Unconditional Shares or
Conditional Shares are being awarded and the value of such partial performance
(in the judgment of the Committee) equals or exceeds the aggregate par value of
the Unconditional Shares or Conditional Shares to be awarded and (ii) a binding
obligation from the Participant to provide in the future the remainder of the
services for which the Unconditional Shares or Conditional Shares are being
awarded. In addition to awarding Unconditional Shares and Conditional Shares,
the Committee may sell to Participants Discounted Purchase Shares, for purchase
prices at such discounts from the then current market price of the Common
Stock, and upon such terms and conditions, as the Committee shall determine.

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     6.2 Conditions.

     Shares of Common Stock issued to a Participant as a Conditional Shares
award will be subject to the following conditions as well as all other
conditions imposed by the Committee (“Share Conditions”):

     (a)  Except as set forth in Paragraphs 6.4 and 6.5, if Share Conditions are
not satisfied, Conditional Shares will be forfeited and returned to APE or, in
the event such Conditional Shares were provided to the Participant from shares
of Common Stock purchase by the Subsidiary, then the Conditional Shares will be
returned to the Subsidiary. In either case, all rights of the Participant to
such Conditional Shares will terminate without any payment of consideration by
APE or the Subsidiary with which the Participant is associated, unless the
Participant maintains his association with APE or a Subsidiary for the period
of time (if any) determined by the Committee.

     (b)  During the condition period (“Condition Period”) relating to a
Conditional Share award, none of the Conditional Shares subject to such award
may be sold, assigned, bequeathed, transferred, pledged, hypothecated or
otherwise disposed of in any way by the Participant.

     (c)  The Committee may require the Participant to enter into an escrow
agreement providing that the certificates representing Conditional Shares sold
or granted pursuant to the Plan will remain in the physical custody of APE or
the applicable Subsidiary or an escrow holder during the Condition Period.

     (d)  Certificates representing Conditional Shares sold or granted pursuant
to the Plan may bear a legend making an appropriate reference to the conditions
imposed on the Conditional Shares.

     (e)  The Committee may impose other conditions on any Conditional Shares
issued pursuant to the Plan as it may deem advisable, including without
limitations, restrictions under the Securities Act of 1933, as amended, under
the requirements of any stock exchange upon which such share or shares of the
same class are then listed and under any state securities laws or other
securities laws applicable to such shares.

     6.3 Rights of a Stockholder.

     Except as set forth in Paragraph 6.2(b), the recipient of a Conditional
Share award will have all of the rights of a stockholder of APE with respect to
the Conditional Shares, including the right to vote the Conditional Shares and
to receive all dividends or other distributions made with respect to the
Conditional Shares.

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     6.4 Lapse of Conditions.

     In the event of the termination of association of a Participant during the
Condition Period by reason of death, disability, or termination of association,
the Committee may, at its discretion, remove Share Conditions on Conditional
Shares.

     Conditional Shares to which the Share Conditions have not so lapsed will
be forfeited and returned to the Corporation as provided in Paragraph 6.2(a).

     6.5 Lapse of Conditions at Discretion of the Committee.

     The Committee may shorten the Condition Period or remove any or all Share
Conditions if, in the exercise of its absolute discretion, it determines that
such action is in the best interests of the Corporation and equitable to the
Participant.

     6.6 Listing and Registration of Shares.

     APE may, in its reasonable discretion, postpone the issuance and/or
delivery of any shares of Common Stock awarded or sold pursuant to this Plan
until completion of stock exchange listing, or registration, or other
qualification of such shares under any law, rule or regulation.

     6.7 Designation of Beneficiary.

     A Participant may, with the consent of the Committee, designate a person
or persons to receive, in the event of death, any shares of Common Stock to
which such Participant would then be entitled pursuant to this Plan. Such
designation will be made upon forms supplied by and delivered to the Committee
and may be revoked in writing by the Participant. If a Participant fails
effectively to designate a beneficiary, then such Participant’s estate will be
deemed to be the beneficiary.

	7.	 	Capital Adjustments.

     The number and consideration of Common Stock covered by each award granted
or each sale under this Plan and the total number of shares that may be granted
or sold under the Plan shall be proportionally adjusted to reflect, subject to
any required action by stockholders, any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization, combination
or exchange of shares or other similar corporate change.

	8.	 	Change of Control.

     Notwithstanding the provisions of Section 7, in the event of a change of
control, all Share Conditions on all Conditional Shares will lapse. For
purposes of this plan, a “Change of Control” of APE shall be deemed to have
occurred at such time as (a) any “person” (as that term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934), becomes the
“beneficial owner” (as defined in Rule 13d-3 under the foregoing act), directly
or indirectly, of securities of APE representing 30% or more of the combined
voting power of APE’s outstanding

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 securities ordinarily having the right to vote at the election of
directors; or (b) individuals who constitute the APE Board on the date hereof
(the “Incumbent Board”) cease for any reasons to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by at least a majority of the directors
comprising the Incumbent Board, or whose nomination or election was approved by
a majority of the APE Board serving under an Incumbent Board, shall be, for
purposes of this clause (b), considered as if he or she were a member of the
Incumbent Board; or (c) merger, consolidation or sale of all or substantially
all the assets of APE occurs, unless such merger of consolidation shall have
been affirmatively recommended to APE’s stockholders by a majority of the
Incumbent Board; or (d) a proxy statement soliciting proxies from stockholders
of APE, by someone other than the current management of APE seeking stockholder
approval of a plan of reorganization, merger or consolidation of APE with one
or more corporations as a result of which the outstanding shares of APE’s
securities are actually exchanged for or converted into cash or property or
securities not issued by APE unless the reorganization, merger or consolidation
shall have been affirmatively recommended to APE’s stockholders by a majority
of the Incumbent Board.

	9.	 	Approvals.

     The issuance of shares pursuant to this Plan is expressly conditioned upon
obtaining all necessary approvals from all regulatory agencies from which
approval is required.

	10.	 	Effective Date of Plan.

     The effective date of the Plan is November 9, 2002.

	11.	 	Term and Amendment of Plan.

     This Plan shall expire on November 8, 2012 (except to Conditional Shares
outstanding on that date). The APE Board may terminate or amend the Plan in
any respect at any time, except no action of the APE Board, the Committee or
APE’s stockholders, however, may, without the consent of a Participant, alter
or impair such Participant’s rights under any Conditional Shares previously
granted.

	12.	 	No Right of Association.

     Neither the action of APE in establishing this Plan, nor any action taken
by any APE Board or any Subsidiary or the Committee, nor any provision of the
Plan itself, shall be construed to limit in any way the right of APE to
terminate a Participant’s association with the Corporation at any time.

	13.	 	Withholding Taxes.

     APE or any Subsidiary, as applicable, shall have the right to deduct
withholding taxes from any payments made pursuant to the Plan or to make such
other provisions as it deems necessary or appropriate to satisfy its
obligations to withhold federal, state or local income or other taxes incurred
by reason of payment or the issuance of Common Stock under the Plan.

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     Whenever under the Plan, Common Stock is to be delivered upon vesting of
Conditional Shares, the Committee shall be entitled to require as a condition
of delivery that the Participant remit or provide for the withholding of an
amount sufficient to satisfy all federal, state and other government
withholding tax requirements related thereto.

	14.	 	Plan not a Trust.

     Nothing contained in the Plan and no action taken pursuant to the Plan
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Corporation and any Participant, the executor,
administrator or other personal representative, or designated beneficiary of
such Participant, or any other persons. If and to the extent that any
Participant or such Participant’s executor, administrator or other personal
representative, as the case may be, acquires a right to receive any payment
from the Corporation pursuant to the Plan, such right shall be no greater than
the right of an unsecured general creditor of the Corporation.

	15.	 	Notices.

     Each Participant shall be responsible for furnishing the Committee with
the current and proper address for the mailing of notices and delivery of
Common Stock pursuant to the Plan. Any notices required or permitted to be
given shall be deemed given if addressed to the person to be notified at such
address given to the Committee by such person and mailed by regular United
States mail, first-class and prepaid. If any item mailed to such address is
returned as undeliverable to the addressee, mailing will be suspended until the
Participant furnishes the proper address. This provision shall not be
construed as requiring the mailing of any notice or notification if such notice
is not required under the terms of the Plan or any applicable law.

	16.	 	Severability of Provisions.

     If any provisions of this Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions
hereof, and this Plan shall be construed and enforced as if such provisions had
not been included.

	17.	 	Payment to Minors, etc.

     Any benefit payable to or for the benefit of a minor, an incompetent
person or other person incapable of receipting therefore shall be deemed paid
when paid to such person’s guardian or the party providing or reasonably
appearing to provide for the care of such person, and such payment shall fully
discharge the Committee, the APE Board, the Corporation and other parties with
respect thereto.

	18.	 	Headings and Captions.

     The headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan, and shall not be
employed in the construction of the Plan.

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	19.	 	Controlling Law.

     This Plan shall be construed and enforced according to the laws of the
State of Florida to the extent not preempted by federal law, which shall
otherwise control.

	20.	 	Enforcement of Rights.

     In the event the Corporation or a Participant is required to bring any
action to enforce the terms of this Plan, the prevailing party shall be
reimbursed by the non-prevailing party for all costs and fees, including actual
attorney fees, for bringing and pursuing such action.

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     IN WITNESS WHEREOF, this Plan has been adopted by the board of directors
of APE as of the date set forth below.

	 	 	 
	Date: November 9, 2002	 	
American Pulp Exchange, Inc.,

a Florida corporation

By: /s/ R. Guccione

Robert C. Guccione, Chairman and President

[SIGNATURE PAGE TO AMERICAN PULP EXCHANGE, INC.

2002 CONSULTANT COMPENSATION PLAN]Penthouse Int'l, Inc., Exhibit 10.4

 

Exhibit 10.4

INDEMNITY AGREEMENT

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

RECITALS

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

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

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

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

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

     Section 1.     DEFINITIONS.

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

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

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

     C.     Expenses.

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

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

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

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

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

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

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

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

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

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

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

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

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generally in the election of directors.

     Section 2.      AGREEMENT TO INDEMNIFY.

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

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

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

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

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

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

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

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

     Section 3.      REVIEWING PARTY.

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

     Section 4.     INDEMNIFICATION PROCESS AND APPEAL.

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

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Agreement or applicable law.

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

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

     Section 5.     INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING RIGHTS.

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

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

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

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

     Section 6.     ESTABLISHMENT OF TRUST.

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

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

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

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

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

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

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

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

     Section 7.     NON-EXCLUSIVITY.

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

     Section 8.     LIABILITY INSURANCE.

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

     Section 9.     PERIOD OF LIMITATIONS.

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

     Section 10.     AMENDMENT OF THIS AGREEMENT.

     No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.

     Section 11.     SUBROGATION.

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

8

 

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

     Section 12.     NO DUPLICATION OF PAYMENTS.

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

     Section 13.     BINDING EFFECT.

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

     Section 14.     SEVERABILITY.

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

     Section 15.     GOVERNING LAW.

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

     Section 16.     NOTICES.

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

	 	American Pulp Exchange, Inc.

11 Penn Plaza

New York City, New York 10001

	 	and to Indemnitee at:

	 	Charles Samel

16 East 67th Street

New York, New York 10021

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

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

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

this Agreement as of the day specified above.

	 	 	 
	 	 	AMERICAN PULP EXCHANGE, INC.

a Florida corporation

By: /s/ R. Guccione

Robert C. Guccione

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

Charles Samel

[SIGNATURE PAGE TO INDEMNITY AGREEMENT]

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