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Exhibit 10.4
ABRAXAS PETROLEUM CORPORATION
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of December
15,
2006, by and between Abraxas Petroleum Corporation, a Nevada
corporation (the
"Company"), and _____________________________ ("Indemnitee").
RECITALS
WHEREAS, it is essential to the Company to retain and attract as
directors
and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of
litigation and other claims being asserted against directors and
officers of
public companies in today's environment;
WHEREAS, basic protection against undue risk of personal liability
of
directors and officers heretofore has been provided through
insurance coverage
providing reasonable protection at reasonable cost, and Indemnitee
has relied on
the availability of such coverage; but as a result of substantial
changes in the
marketplace for such insurance it has become increasingly more
difficult to
obtain such insurance on terms providing reasonable protection at
reasonable
cost;
WHEREAS, the Amended and Restated Bylaws of the Company require the
Company
to indemnify its directors and officers to the fullest extent
permitted by law
and the Indemnitee has been serving and continues to serve as a
director and/or
officer of the Company in part in reliance on such Amended and
Restated Bylaws;
WHEREAS, the current difficulty in obtaining adequate director and
officer
liability insurance coverage at a reasonable cost and uncertainties
as to the
availability of indemnification created by recent court decisions
have increased
the risk that the Company will be unable to retain and attract as
directors and
officers the most capable persons available;
WHEREAS, the Board of Directors of the Company has determined that
the
inability of the Company to retain and attract as directors and
officers the
most capable persons would be detrimental to the interests of the
Company and
that the Company therefore should seek to assure such persons
that
indemnification and insurance coverage will be available in the
future; and
WHEREAS, in recognition of Indemnitee's need for substantial
protection
against personal liability in order to enhance Indemnitee's
continued service to
the Company in an effective manner, the increasing difficulty in
obtaining
satisfactory director and officer liability insurance coverage, and
Indemnitee's
reliance on the Company's Amended and Restated Bylaws, and in part
to provide
Indemnitee with specific contractual assurance that the protection
promised by
such Amended and Restated Bylaws will be available to Indemnitee
(regardless of,
among other things, any amendment to or revocation of such Amended
and Restated
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Bylaws or any change in the composition of the Company's Board of
Directors or
acquisition transaction relating to the Company), the Company
wishes to provide
in this Agreement for the indemnification of and the advancing of
expenses to
Indemnitee to the fullest extent (whether partial or complete)
permitted by law
and as set forth in this Agreement, and, to the extent insurance is
maintained,
for the continued coverage of Indemnitee under the Company's
directors' and
officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee
continuing to serve the Company directly or, at its request,
another enterprise,
and intending to be legally bound hereby, the parties hereto agree
as follows:
Section 1 Certain Definitions. In addition to terms defined
elsewhere
herein, the following terms have the following meanings when used
in this
Agreement:
(a) "Change in Control" shall be deemed to have occurred if (i)
any
"person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the
Securities Exchange Act of 1934, as amended), is or becomes the
"beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of
securities of the Company representing 20% or more of the total
voting power
represented by the Company's then outstanding Voting Securities,
(ii) any person
or group shall make a tender offer or exchange offer for securities
of the
Company representing 20% or more of the total voting power
represented by the
Company's then outstanding Voting Securities, or (iii) during any
period of two
consecutive years, individuals who at the beginning of such period
constitute
the Board of Directors of the Company and any new director whose
election by the
Board of Directors or nomination for election by the Company's
stockholders was
approved by a vote of at least two-thirds (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,
cease for any
reason to constitute a majority thereof, or (iv) the stockholders
of the Company
approve a merger or consolidation of the Company with any other
corporation,
other than 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) greater than 50% 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 (v) 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 (in one transaction
or a series of
transactions) greater than 50% of the Company's assets.
(b) "Claim" means any threatened, asserted, pending or
completed
action, arbitration, suit, investigation, inquiry, administrative
hearing or
proceeding, or appeal thereof, or any inquiry or investigation,
whether
instituted by the Company or any governmental agency 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, including any arbitration or other
alternative dispute
resolution mechanism.
(c) "Expenses" mean attorneys' fees and all other costs, expenses
and
obligations (including, without limitation, experts' fees, court
costs,
retainers, transcript fees, duplicating, printing and binding
costs, as well as
telecommunications, postage and courier charges) paid or incurred
in connection
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with investigating, defending, being a witness in or participating
in (including
on appeal), or preparing to investigate, defend, be a witness in or
participate
in, any Claim relating to any Indemnifiable Event.
(d) "Indemnifiable Amounts" mean any and all Expenses, damages,
judgments, fines, penalties, ERISA excise taxes and amounts paid in
settlement
(including all interest, assessments and other charges paid or
payable in
connection with or in respect of such Expenses, judgments, fines,
penalties,
excise taxes or amounts paid in settlement) arising out of or
resulting from any
Claim relating to an Indemnifiable Event.
(e) "Indemnifiable Event" means any event or occurrence,
whether
occurring before, on or after the date of this Agreement, related
to the fact
that Indemnitee is or was a director, officer, employee or
fiduciary of the
Company, or is or was serving at the request of the Company as a
director,
officer, employee, trustee, agent or fiduciary of another
corporation, limited
liability company, partnership, joint venture, employee benefit
plan, trust or
other entity or enterprise, or by reason of anything done or not
done by
Indemnitee in any such capacity.
(f) "Independent Legal Counsel" means an attorney or firm of
attorneys,
selected in accordance with the provisions of Section 5 hereof, who
is
experienced in matters of corporate law and who shall not have
otherwise
performed services for the Company or Indemnitee within the last
five (5) years
(other than with respect to matters concerning the rights of
Indemnitee under
this Agreement, or of other indemnitees under similar indemnity
agreements).
(g) "Reviewing Party" means any appropriate person or body
consisting
of a member or members of the Company's Board of Directors or any
other person
or body appointed by the Board of Directors who is not a party to
the particular
Claim for which Indemnitee is seeking indemnification, or
Independent Legal
Counsel.
(h) "Voting Securities" means any securities of the Company which
vote
generally in the election of directors.
Section 2 Basic Indemnification Arrangement; Advancement of
Expenses.
(a) In the event Indemnitee was, is or becomes a party to or
witness or
other participant in, or is threatened to be made a party to or
witness or other
participant in, a Claim by reason of (or arising in part out of)
an
Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest
extent permitted by law as soon as practicable but in any event no
later than
thirty (30) days after written demand is presented to the Company,
against any
and all Indemnifiable Amounts.
(b) If so requested by Indemnitee, the Company shall advance
(within
five (5) business days of such request) any and all Expenses
incurred by
Indemnitee (an "Expense Advance") incurred in defending a Claim.
The Company
shall, in accordance with such request (but without duplication),
either (i) pay
such Expenses on behalf of Indemnitee, or (ii) reimburse Indemnitee
for such
Expenses. Indemnitee's right to an Expense Advance is absolute and
shall not be
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subject to any prior determination by the Reviewing Party that the
Indemnitee
has satisfied any applicable standard of conduct for
indemnification.
(c) Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification or advancement
of Expenses
pursuant to this Agreement in connection with any Claim initiated
by Indemnitee
unless (i) the Company has joined in or Company's Board of
Directors has
authorized or consented to the initiation of such Claim or (ii) the
Claim is one
to enforce Indemnitee's rights under this Agreement.
(d) Notwithstanding the foregoing, (i) the indemnification
obligations
of the Company under Section 2(a) shall be subject to the condition
that the
Reviewing Party shall not have determined (in a written opinion, in
any case in
which the Independent Legal Counsel referred to in Section 5 hereof
is involved)
that Indemnitee would not be permitted to be indemnified under
applicable law,
and (ii) the obligation of the Company to make an Expense Advance
pursuant to
Section 2(b) shall be subject to the condition that, if, when and
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 (who hereby agrees to reimburse the
Company) for all
such amounts theretofore paid (it being understood and agreed that
the foregoing
agreement by Indemnitee shall be deemed to satisfy any requirement
that
Indemnitee provide the Company with an undertaking to repay any
Expense Advance
if it is ultimately determined that the Indemnitee is not entitled
to
indemnification under applicable law); provided, however, that if
Indemnitee has
commenced or thereafter commences legal proceedings in a court of
competent
jurisdiction to secure a determination that Indemnitee should be
indemnified
under applicable law, any determination made by the Reviewing Party
that
Indemnitee would not be permitted to be indemnified under
applicable law shall
not be binding
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