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INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this
"Agreement") is entered into effective as of [effective date], by
and between FX ENERGY, INC., a Nevada corporation (the
"Corporation"), and [name of indemnitee] ("Indemnitee"), based on
the following:
PREMISES
A. The
Restated Articles of Incorporation of the Corporation (the
"Articles") and the Bylaws (the "Bylaws") provide for
indemnification of the Corporation’s directors and officers
to the fullest extent permitted by any applicable and controlling
Nevada law, statute, rule, decision, or finding (collectively,
"Nevada Law") and contemplate that contracts and other arrangements
may be entered into respecting indemnification of officers and
directors.
B. The
parties recognize the continued difficulty in obtaining liability
insurance for the Corporation’s directors, officers,
employees, stockholders, controlling persons, agents, and
fiduciaries, the significant increases in the cost of such
insurance, and the general reductions in the coverage of such
insurance. Furthermore, the parties further recognize the
substantial increase in corporate litigation in general, subjecting
directors, officers, employees, controlling persons, stockholders,
agents, and fiduciaries to expensive litigation risks at the same
time as the availability and coverage of liability insurance have
been severely limited.
C. Indemnitee
does not regard the current protection available under the
Articles, Bylaws, and insurance as adequate under the present
circumstances, and Indemnitee and other directors, officers,
employees, stockholders, controlling persons, agents, and
fiduciaries of the Corporation may not be willing to serve in such
capacities without additional protection. Moreover, the Corporation
(i) desires to attract and retain the involvement of highly
qualified persons, such as Indemnitee, to serve the Corporation
and, in part, in order to induce Indemnitee to be involved with the
Corporation, (ii) wishes to provide for the indemnification
and advancing of expenses to Indemnitee to the maximum extent
permitted by law, and (iii) wishes to assure Indemnitee that
there will be increased certainty of adequate protection in the
future.
D. In
addition to any insurance purchased by the Corporation on behalf of
Indemnitee, it is reasonable, prudent, and necessary for the
Corporation to obligate itself contractually to indemnify
Indemnitee so that he may remain free from undue concern that he
will not be adequately protected both during his service as an
executive officer and a director of the Corporation and following
any termination of such service.
E. This
Agreement is a supplement to and in furtherance of the Articles and
Bylaws and shall not be deemed a substitute therefor or to abrogate
any rights of Indemnitee thereunder.
F. The
directors of the Corporation have duly approved this Agreement and
the indemnification provided herein with the express recognition
that the indemnification arrangements provided herein exceed that
which the Corporation would be required to provide pursuant to
Nevada Law.
AGREEMENT
NOW, THEREFORE, in consideration of the premises
and the covenants contained herein, the Corporation and Indemnitee
do hereby covenant and agree as follows:
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1.
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Definitions . As used
in this Agreement:
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(a) The term
"Indemnifiable Matter" means any event, occurrence, status, or
condition that takes place either prior to or after the execution
of this Agreement, including any threatened, pending, or completed
action, suit, proceeding or alternative dispute resolution
activity, whether brought by or in the right of the Corporation or
otherwise and whether of a civil, criminal, administrative, or
investigative nature, in which Indemnitee was, is, or believes
might be involved as a party, witness, or otherwise (except any of
the foregoing initiated by Indemnitee pursuant to section 17(a) to
enforce Indemnitee’s rights under this Agreement), by reason
of the fact, in whole or in part, that Indemnitee is or was
actually or allegedly a director, officer, agent, or advisor of the
Corporation; by reason of any action actually or allegedly taken by
him or of any inaction or omission on his part while acting as a
director, officer, agent, or advisor of the Corporation; by reason
of the registration, offer, sale, purchase, or ownership of any
securities of the Corporation; by reason of any duty owed to,
respecting, or in connection with the Corporation; or by reason of
the fact, in whole or in part, that he is or was actually or
allegedly serving at the request of the Corporation as a director,
officer, employee, agent, or advisor of another corporation,
partnership, joint venture, trust, limited liability company, or
other entity or enterprise, in each case whether or not he is
acting or serving in any such capacity at the time any loss,
liability, or expense is incurred for which indemnification or
reimbursement can be provided under this Agreement and even though
Indemnitee may have ceased to serve in such capacity.
(b) The term
"Losses" means any and all losses, claims, damages, expenses,
liabilities, judgments, fines, penalties and actions in respect
thereof, as they are incurred, against Indemnitee in connection
with an Indemnifiable Matter; amounts paid by Indemnitee in
settlement of an Indemnifiable Matter; any indirect, consequential,
or incidental damages suffered or incurred by Indemnitee; and all
attorneys’ fees and disbursements, accountants’ fees
and disbursements, private investigation fees and disbursements,
retainers, court costs, payments of attachment, appeal or other
bonds or security, transcript costs, fees of experts, fees and
expenses of witnesses, travel expenses, duplicating costs, printing
and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses reasonably incurred
by or for Indemnitee in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, appealing, or
being or preparing to be a witness in any threatened or pending
Indemnifiable Matter or establishing Indemnitee’s right or
entitlement to indemnification for any of the foregoing.
(c) Reference
to "other enterprise" shall include employee benefit plans;
references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the
request of the Corporation" shall include any service as a
director, officer, employee, agent, or advisor with respect to an
employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he reasonably
believed to be in the interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Agreement.
(d) The term
"Indemnitee" shall include the Indemnitee named in the first
paragraph of this Agreement and such Indemnitee’s actual or
alleged alter egos, spouse, family members, and corporations,
partnerships, limited liability companies, trusts, and other
enterprises or entities of any form whatsoever under the control of
any of the foregoing, and the property of all of the foregoing. The
term "control" (including the terms "controlling," "controlled by,"
and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through the
ownership of voting securities, by contract, or otherwise, as
interpreted under the Securities Act of 1933 or the Securities
Exchange Act of 1934.
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(e) The
term "substantiating documentation" shall mean copies of bills or
invoices for costs incurred by or for Indemnitee, or copies of
court or agency orders, decrees, or settlement agreements, as the
case may be, accompanied by a declaration, which need not be
notarized, from Indemnitee that such bills, invoices, court or
agency orders, decrees, or settlement agreements represent costs or
liabilities meeting the definition of "Losses" herein.
(f) Except
as provided in section 15, the term "Independent Counsel" shall
mean an attorney, law firm, or member of a law firm, who (or which)
is licensed to practice law in the state of Nevada and is
experienced in matters of corporation law and neither presently is,
nor in the past five years has been, retained to represent
(i) the Corporation or Indemnitee in any other matter material
to either such party; or (ii) any other party to the
Indemnifiable Matter giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Corporation or
Indemnitee in an action to determine Indemnitee’s rights
under this Agreement. From time to time, the Corporation may select
and preapprove the names of persons or law firms that it deems
qualified as Independent Counsel under the foregoing criteria.
Further, at the request of Indemnitee, the Corporation shall review
the qualifications and suitability under the foregoing criteria of
persons or law firms selected by Indemnitee and preapprove them as
Independent Counsel if they meet the foregoing criteria. An
Independent Counsel that has already been preapproved by the board
of directors may be appointed as Independent Counsel without any
further evaluation, so long as such prospective Independent Counsel
continues, as determined by the board of directors, to remain
independent.
(g) A "Change
in Control" shall be deemed to have occurred if (i) any
"person" (as such term is used in Section 13(d)(3) and 14(d)(2) of
the Securities Exchange Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation or a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation,
(1) that is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing 20% or
more of the combined voting power of the Corporation’s
then-outstanding voting securities, increases its beneficial
ownership of such securities by 5% or more over the percentage so
owned by such person, or (2) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act),
directly or indirectly, of securities of the Corporation
representing more than 30% of the total voting power represented by
the Corporation’s then-outstanding voting securities,
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the board of
directors of the Corporation and any new director whose election by
the board of directors or combination for election by the
Corporation’s stockholders was approved by a vote of at least
two-thirds 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 (iii) the
stockholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation other than a merger
or consolidation that would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least two-thirds
of the total voting power represented by the voting securities of
the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the
Corporation approve a plan of complete liquidation of the
Corporation or an agreement for the sale or disposition by the
Corporation of (in one transaction or a series of transactions) all
or substantially all of the Corporation’s assets.
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2.
Indemnity of Indemnitee . The Corporation hereby agrees to
indemnify, protect, defend and hold harmless Indemnitee against any
and all Losses incurred by reason of the fact that Indemnitee is or
was a director, officer, agent, or advisor of the Corporation, or
is or was serving at the request of the Corporation as a director,
officer, employee, agent or advisor of another corporation,
partnership, joint venture, trust, limited liability company, or
other entity or enterprise, to the fullest extent permitted by
Nevada Law. The termination of any Indemnifiable Matter by
judgment, order of the court, settlement, conviction, or upon a
plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that Indemnitee is not entitled to
indemnification, and with respect to any criminal proceeding, shall
not create a presumption that such person believed that his conduct
was unlawful. The indemnification provided herein shall be
applicable whether or not the breach of any standard of care or
duty, including a breach of a fiduciary duty, of the Indemnitee is
alleged or proven, except as limited by section 3 herein.
Notwithstanding the foregoing, in the case of any Indemnifiable
Matter brought by or in the right of the Corporation, Indemnitee
shall not be entitled to indemnification for any claim, issue, or
matter as to which Indemnitee has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom,
to be liable to the Corporation or for amounts paid in settlement
to the Corporation unless, and only to the extent that, the court
in which the Indemnifiable Matter was brought or another court of
competent jurisdiction determines, on application, that in view of
all the circumstances, the person is fairly and re
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