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 and Indemnitee shall not be required to reimburse the Company for
any Expense Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). Indemnitee's undertaking to repay such Expense Advances shall be
unsecured and interest-free. If there has not been a Change in Control, the
Reviewing Party shall be selected by the Company's Board of Directors, and if
there has been such a Change in Control, the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 5 hereof. If there has been no
determination by the Reviewing Party within thirty (30) days after written
demand is presented to the Company or if the Reviewing Party determines that
Indemnitee would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence litigation in any
court in the State of Texas or the State of Nevada having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
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Section 3 Exclusions. Notwithstanding any provision in this Agreement to
the contrary, the Company shall not be obligated under this Agreement to make
any indemnity payment with respect to any Claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount paid under any insurance policy or other
indemnity provision.
(b) for an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Exchange Act, as amended, or similar provisions of state
statutory law or common law; or
(c) for which payment is prohibited by applicable law.
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Section 4 Indemnification for Additional Expenses. The Company shall
indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall advance such Expenses to Indemnitee subject to and in
accordance with Section 2(b), which are incurred by Indemnitee in connection
with any action brought by Indemnitee for (i) indemnification or an Expense
Advance by the Company under this Agreement or any provision of the Company's
Amended and Restated Bylaws or provision of the Company's Articles of
Incorporation now or hereafter in effect and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, Expense Advance or insurance recovery, as the case may be.
Section 5 Change in Control. The Company agrees that if there is a Change
in Control of the Company then with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and Expense Advances
under this Agreement or any provision of the Company's Amended and Restated
Bylaws or provision of the Company's Articles of Incorporation now or hereafter
in effect, the Company shall seek legal advice only from Independent Legal
Counsel selected by Indemnitee and approved by the Company (which approval shall
not be unreasonably delayed, conditioned or withheld). Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel and to indemnify fully such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
Section 6 Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses or other Indemnifiable Amounts in respect of a Claim but
not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.
Section 7 Burden of Proof. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the Reviewing Party or court shall presume that the
Indemnitee has satisfied the applicable standard of conduct and is entitled to
indemnification, and the burden of proof shall be on the Company to establish,
by clear and convincing evidence, that Indemnitee is not so entitled.
Section 8 Reliance as Safe Harbor. For purposes of this Agreement,
Indemnitee shall be deemed to have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the Company
and, with respect to a criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. In addition, the knowledge and/or
actions, or failures to act, of any director, officer, agent or employee of the
Company shall not be imputed to Indemnitee for purposes of determining the right
to indemnity hereunder.
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Section 9 No Other Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon 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. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
Section 10 Nonexclusivity. The rights of the Indemnitee hereunder shall be
in addition to any other rights Indemnitee may have under the Company's Amended
and Restated Bylaws or Articles of Incorporation or the Nevada Revised Statutes
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 Amended and Restated Bylaws or Articles
of Incorporation or this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change.
Section 11 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 12 Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two (2) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall
be extinguished and deemed released unless asserted by the timely filing of a
legal action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action such
shorter period shall govern.
Section 13 Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as an officer or director of the Company, or (b) one
(1) year after the final termination of any proceeding related to an
Indemnifiable Event then pending in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder.
Section 14 Amendments, Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
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Section 15 Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers reasonably required and
shall do everything that may be reasonably 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 16 Defense of Claims. The Company shall be entitled to participate
in the defense of any Claim relating to an Indemnifiable Event or to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnitee;
provided that if Indemnitee believes, after consultation with counsel selected
by Indemnitee, that (i) the use of counsel chosen by the Company to represent
Indemnitee would present such counsel with an actual or potential conflict of
interest, (ii) the named parties in any such Claim (including any impleaded
parties) include both the Company and Indemnitee and Indemnitee concludes that
there may be one or more legal defenses available to him or her that are
different from or in addition to those available to the Company, or (iii) any
such representation by such counsel would be precluded under the applicable
standards of professional conduct then prevailing, then Indemnitee shall be
entitled to retain separate counsel (but not more than one law firm plus, if
applicable, local counsel in respect of any particular Claim) at the Company's
expense. The Company shall not be liable to Indemnitee under this Agreement for
any amounts paid in settlement of any Claim relating to an Indemnifiable Event
effected without the Company's prior written consent. The Company shall not,
without the prior written consent of the Indemnitee, effect any settlement of
any Claim relating to an Indemnifiable Event which the Indemnitee is or could
have been a party unless such settlement solely involves the payment of money
and includes a complete and unconditional release of Indemnitee from all
liability on all claims that are the subject matter of such Claim. Neither the
Company nor Indemnitee shall unreasonably withhold its or his or her consent to
any proposed settlement; provided that Indemnitee may withhold consent to any
settlement that does not provide a complete and unconditional release of
Indemnitee.
Section 17 Binding Effect, Etc. This Agreement shall be binding upon 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, executors and personal
and legal representatives. This Agreement shall continue in effect regardless of
whether Indemnitee continues to serve as an officer and/or director of the
Company or of any other entity or enterprise at the Company's request.
Section 18 Security. To the extent requested by Indemnitee and approved by
the Company's Board of Directors, the Company may at any time and from time to
time provide security to Indemnitee for the obligations of the Company hereunder
through an irrevocable bank line of credit, funded trust or other collateral or
by other means. Any such security, once provided to Indemnitee, may not be
revoked or released without the prior written consent of such Indemnitee.
Section 19 Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
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other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
Section 20 Specific Performance. The parties 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 shall 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 to pursue.
Section 21 Counterparts. This Agreement may be executed in counterparts,
each of which shall for all purposes be deemed to be an original but all of
which together shall constitute one and the same agreement. In the event that
any signature is delivered by facsimile transmission or by e-mail delivery of a
".pdf" format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or ".pdf"
signature page were an original thereof. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.
Section 22 Headings. The headings of the sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction or
interpretation thereof.
Section 23 Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement or otherwise unless and to the extent that such failure to so
notify results in the indemnifying party being prejudiced in the defense of such
action. Such notice shall include (i) reasonably detailed specific facts and
circumstances pertaining to such action, and (ii) true and complete copies of
all documents served on or delivered to the Indemnitee in connection with such
third party action.
Section 24 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall 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 shall have been directed, (b) mailed by certified
or registered mail with postage prepaid, on the third business day after the
date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have
been directed or (d) sent by facsimile transmission, with receipt of oral
confirmation that such transmission has been received:
(a) If to Indemnitee, at such address as Indemnitee shall provide to
the Company.
(b) If to the Company to:
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Abraxas Petroleum Corporation
000 X. Xxxx 0000 Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
or to any other address as may have been furnished to Indemnitee by the
Company.
Section 25 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ABRAXAS PETROLEUM CORPORATION
By: _____________________________________________________
Name:____________________________________________________
Title: __________________________________________________
INDEMNITEE:
By: _____________________________________________________
Printed Name: ___________________________________________
