Exhibit 10.1
 
INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “Agreement”) is made as of this ____ day of
________, 2014, by and between Yuma Energy, Inc., a California corporation (the
“Company”), and _____________ (“Indemnitee”).

WHEREAS, the Company and Indemnitee recognize the difficulty in obtaining
directors and officers liability insurance that fully and adequately covers
directors and officers for their acts and omissions on behalf of the Company and
its subsidiaries;

WHEREAS, the Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting officers and directors to
expensive litigation risks that may not be fully covered by liability insurance;

WHEREAS, Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee and other officers and directors
of the Company may not be willing to continue to serve as officers and directors
without additional protection; and

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

Section 1. Services By Indemnitee. Indemnitee hereby agrees to serve or continue
to serve, at the will of the Company, as a director, officer or key employee of
the Company, for as long as Indemnitee is duly elected or appointed, as the case
may be, or until Indemnitee tenders his or her resignation or is removed. For
avoidance of doubt, the Company’s obligations under this Agreement shall
continue to the extent provided for in this Agreement, notwithstanding that
Indemnitee may have ceased to be a director, officer or key employee of the
Company.

Section 2. Indemnification.

(a) Third Party Proceedings. In connection with any Proceeding other than those
instituted by or in the right of the Company, the Company shall indemnify
Indemnitee against any and all Expenses and Liabilities, in either case,
actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf by
reason of Indemnitee’s Corporate Status unless the Company shall establish, in
accordance with the procedures described in Section 3 of this Agreement, that
Indemnitee did not act in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the Company, and, with respect to any
criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was
unlawful.

(b) Proceedings by or in the Right of the Company. In connection with any
Proceeding instituted by or in the right of the Company, the Company shall
indemnify Indemnitee against any and all Expenses and, to the fullest extent
permitted by law, amounts paid in settlement, in each case to the extent
actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf by
reason of Indemnitee’s Corporate Status unless the Company shall establish, in
accordance with the procedures described in Section 3 of this Agreement, that
Indemnitee did not act in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the Company and its shareholders, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which Indemnitee shall have been adjudged to be liable to the Company in
the performance of Indemnitee’s duty to the Company or any Subsidiary of the
Company unless and only to the extent that the court in which such Proceeding is
or was pending shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for Expenses or amounts paid in settlement and then only to the extent
that the court shall determine.

(c) Witness Expenses. Notwithstanding any other provision of this Agreement, to
the extent that Indemnitee is, by reason of his or her Corporate Status, a
witness in any Proceeding to which Indemnitee is not a party, he or she shall be
indemnified against all Expenses incurred by Indemnitee or on his or her behalf
in connection therewith.

Section 3. Advancement of Expenses; Indemnification Procedure.

(a) Advancement of Expenses. The Company shall advance all Expenses incurred by
Indemnitee in connection with any Proceeding referenced in Section 2(a) or
Section 2(b) of this Agreement (but not amounts actually paid in settlement of
any such Proceeding). Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the Company to
Indemnitee within 20 days following delivery of a written request therefor by
Indemnitee to the Company. Advances shall be unsecured and interest free.
Advances shall be made without regard to Indemnitee’s ability to repay such
amounts and without regard to Indemnitee’s ultimate entitlement to
indemnification under the other provisions of this Agreement. Advances shall
include any and all Expenses incurred pursuing an action to enforce this right
of advancement, including Expenses incurred preparing and forwarding statements
to the Company to support the advances claimed.

 
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(b) Notice by Indemnitee. Indemnitee shall give the Company notice in writing as
soon as practicable of any Proceeding in respect of which Indemnitee intends to
seek indemnification or advancement of Expenses hereunder. Notice to the Company
shall be directed to the Chief Financial Officer of the Company at the address
shown in Section 16(a) of this Agreement (or such other address as the Company
shall designate in writing to Indemnitee). The omission by Indemnitee to so
notify the Company will not relieve the Company from any liability that it may
have to Indemnitee hereunder or otherwise.

(c) Determination of Entitlement.

(i) Where there has been a written notice by Indemnitee for indemnification
pursuant to Section 3(b), then as soon as is reasonably practicable (but in any
event not later than 60 days) after final disposition of the relevant
Proceeding, the Company shall make a determination, if and in the manner
required by applicable law, with respect to Indemnitee’s entitlement thereto;
provided, however, that, if a Change in Control shall have occurred, the
determination shall be made by an Independent Counsel (selected pursuant to
Section 3(c)(ii)) in a written opinion to the Company’s Board of Directors, a
copy of which shall be delivered to Indemnitee. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within 10 days after such determination. Indemnitee shall reasonably cooperate
with the person, persons or entity making such determination with respect to
Indemnitee’s entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information that is not privileged or otherwise protected from disclosure and
that is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’ fees and
disbursements) actually and reasonably incurred by Indemnitee in so cooperating
with the person, persons or entity making such determination shall be borne by
the Company (irrespective of the determination as to Indemnitee’s entitlement to
indemnification).

(ii) If entitlement to indemnification is to be determined by an Independent
Counsel after a Change in Control pursuant to Section 3(c)(i), such Independent
Counsel shall be selected by Indemnitee, and Indemnitee shall give written
notice to the Company advising it of the identity of the Independent Counsel so
selected. Within 10 days after such written notice of selection shall have been
received, the Company may deliver to Indemnitee a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of “Independent Counsel” as defined in Section 13(a) of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as the Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as the
Independent Counsel unless and until such objection is withdrawn or a court of
competent jurisdiction has determined that such objection is without merit. If,
within 20 days after the final disposition of the Proceeding, no Independent
Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition a court of competent jurisdiction for resolution of any
objection which shall have been made by the Company to Indemnitee’s selection of
the Independent Counsel and/or for the appointment as the Independent Counsel of
a person selected by the court or by such other person as the court shall
designate, and the person with respect to whom all objections are so resolved or
the person so appointed shall act as the Independent Counsel under Section
3(c)(i) hereof. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 4(a) of this Agreement, the Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).

(iii) The Company agrees to pay the reasonable fees and expenses of any
Independent Counsel serving under this Agreement.

(d) Presumptions and Burdens of Proof.

(i) In making any determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such determination shall, to the
fullest extent not prohibited by law, presume that Indemnitee is entitled to
indemnification under this Agreement, and the Company shall have, to the fullest
extent not prohibited by law, the burden of proof to overcome that presumption
in connection with the making of any determination contrary to that presumption.
Neither the failure of the person, persons or entity to have made a
determination prior to the commencement of any action pursuant to this Agreement
that indemnification is proper in the circumstances because Indemnitee has met
the applicable standard of conduct, nor an actual determination by the person,
persons or entity that Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct. (ii) The termination
of any Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner that he or
she reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that Indemnitee’s conduct was unlawful.

(iii) For purposes of any determination of good faith, Indemnitee shall be
deemed to have acted in good faith if Indemnitee’s action is in good faith
reliance on the records or books of account of any Enterprise, including
financial statements, or on information supplied to Indemnitee by the officers
of such Enterprise in the course of their duties, or on the advice of legal
counsel for such Enterprise or on information or records given or reports made
to such Enterprise by an independent certified public accountant or by an
appraiser or other expert selected by such Enterprise. The provisions of this
Section 3(d)(iii) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which Indemnitee may be deemed or found to have met the
applicable standard of conduct set forth in this Agreement.

(e) Notice to Insurers. If, at the time of the receipt of a notice of a
Proceeding pursuant to Section 3(b) of this Agreement, the Company has director
and officer liability insurance in effect, the Company shall give prompt notice
of the commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies. Thereafter, the Company shall
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such Proceeding in
accordance with the terms of such policies.

 
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(f) Relationship to Other Sources. Indemnitee shall not be required to exercise
any rights against any other parties (for example, under any insurance policy
purchased by the Company, Indemnitee or any other person or entity) before
Indemnitee enforces this Agreement. However, to the extent the Company actually
indemnifies Indemnitee or advances Expenses, the Company shall be entitled to
enforce any such rights that Indemnitee may have against third parties.
Indemnitee shall assist the Company in enforcing those rights if the Company
pays Indemnitee’s reasonable costs and expenses of doing so.

(g) Defense of Claims; Selection of Counsel.

(i) The Company shall not settle any action, claim, or Proceeding (in whole or
in part) that would impose any Expense, judgment, fine, penalty or limitation on
Indemnitee, without Indemnitee’s prior written consent; provided, however, that,
with respect to settlements requiring solely the payment of money either by the
Company or by Indemnitee for which the Company is obligated to reimburse
Indemnitee promptly and completely, in either case without recourse to
Indemnitee, no such consent of Indemnitee shall be required. Indemnitee shall
not settle any action, claim or Proceeding (in whole or in part) that
would  impose any Expense, judgment, fine, penalty or limitation on the Company
without the Company’s prior written consent, such consent not to be unreasonably
withheld.

(ii) In the event the Company shall be obligated under Section 3(a) of this
Agreement to pay the Expenses of any Proceeding against Indemnitee, the Company,
if appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by Indemnitee, which approval shall not be unreasonably
withheld, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee
shall have the right to employ Indemnitee’s own counsel in any such Proceeding
at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
concluded in good faith that there may be a conflict of interest between the
Company and Indemnitee or between Indemnitee and any other persons represented
by the same counsel, in the conduct of any such defense, or (C) the Company, in
fact, shall not have employed counsel to assume the defense of such Proceeding,
then the reasonable fees and expenses of Indemnitee’s counsel shall be at the
expense of the Company.

Section 4. Remedies of Indemnitee.

(a) In the event of any dispute between Indemnitee and the Company hereunder as
to entitlement to indemnification, contribution or advancement of Expenses
(including where (i) a determination is made pursuant to Section 3(c) of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section
3(a) of this Agreement, (iii) payment of indemnification pursuant to Section
3(c) of this Agreement is not made within 10 days after a determination has been
made that Indemnitee is entitled to indemnification, (iv) no determination as to
entitlement to indemnification is timely made pursuant to Section 3(c) of this
Agreement, or (v) a contribution payment is not made in a timely manner pursuant
to Section 9 of this Agreement), then Indemnitee shall be entitled to an
adjudication by a court of Indemnitee’s entitlement to such indemnification,
contribution or advancement. Alternatively, in such case, Indemnitee, at
Indemnitee’s option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. The Company shall not oppose Indemnitee’s right to seek
any such adjudication or award in arbitration.

(b) In the event that a determination shall have been made pursuant to Section
3(c) of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 4 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits, and
Indemnitee shall not be prejudiced by reason of that adverse determination. In
any judicial proceeding or arbitration commenced pursuant to this Section 4, the
Company shall have the burden of proving Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be, and the Company
may not refer to or introduce into evidence any determination pursuant to
Section 3(c) of this Agreement adverse to Indemnitee for any purpose. If
Indemnitee commences a judicial proceeding or arbitration pursuant to this
Section 4, Indemnitee shall not be required to reimburse the Company for any
advances pursuant to Section 3(a) until a final determination is made with
respect to Indemnitee’s entitlement to indemnification (as to which all rights
of appeal have been exhausted or lapsed).

(c) If a determination shall have been made pursuant to Section 3(c) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 4, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with such determination of
Indemnitee’s entitlement to indemnification, or (ii) a prohibition of such
indemnification under applicable law.

(d) The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 4 that the procedures and
presumptions of this Agreement are not valid, binding or enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement.

(e) The Company shall indemnify Indemnitee to the fullest extent permitted by
law against all Expenses incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee for (i) indemnification or
advances of Expenses by the Company (or otherwise for the enforcement,
interpretation or defense of his or her rights) under this Agreement or any
other agreement, including any other indemnification, contribution or
advancement agreement, or any provision of the Company’s Articles of
Incorporation or Bylaws now or hereafter in effect or (ii) recovery or advances
under any directors and officers liability insurance policy maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, contribution, advancement or insurance
recovery, as the case may be; provided, however, that this Section 4(e) shall
not apply if, as part of such judicial proceeding or arbitration, the court of
competent jurisdiction or the arbitrator, as the case may be, determines that
the material assertions made by Indemnitee as a basis for such judicial
proceeding or arbitration were not made in good faith or were frivolous.

 
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Section 5. Additional Indemnification Rights; Nonexclusivity.

(a) Scope. Notwithstanding any other provision of this Agreement, the Company
hereby agrees to indemnify the Indemnitee to the fullest extent permitted by
law, notwithstanding that such indemnification is not specifically authorized by
the other provisions of this Agreement, the Company’s Articles of Incorporation,
as amended, the Company’s Bylaws, as amended, or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute or rule
that expands the right of a California corporation to indemnify a member of its
or a Subsidiary’s Board of Directors or an officer, such changes shall be, ipso
facto, within the purview of Indemnitee’s rights and the Company’s obligations,
under this Agreement. In the event of any change in any applicable law, statute
or rule that narrows the right of a California corporation to indemnify a member
of the Board of Directors or an officer of the Company or a Subsidiary, such
changes, to the extent not otherwise required by such law, statute or rule to be
applied to this Agreement, shall have no effect on this Agreement or the
parties’ rights and obligations hereunder.

(b) Nonexclusivity. The rights of indemnification, contribution and advancement
of Expenses as provided by this Agreement shall not be deemed exclusive of any
rights to which Indemnitee may be entitled under the Company’s Articles of
Incorporation, as amended, its Bylaws, as amended, any agreement, any vote of
shareholders or disinterested directors, the  General Corporation Law of the
State of California, or otherwise, both as to action in Indemnitee’s official
capacity and as to action or inaction in another capacity while holding such
office. The indemnification provided under this Agreement shall continue as to
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though Indemnitee may have ceased to serve in such capacity at the
time of any covered Proceeding is commenced.

Section 6. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Liabilities actually or reasonably incurred by
Indemnitee in any Proceeding, but not, however, for the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion of such
Expenses and Liabilities to which Indemnitee is entitled.

Section 7. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that, in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future in certain circumstances to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court for a determination of the Company’s right under
public policy to indemnify Indemnitee.

Section 8. Directors and Officers Liability Insurance. The Company, from time to
time, shall make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts or to ensure the Company’s
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
directors and officers liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company’s directors, if
Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a
director of the Company but is an officer. Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a Subsidiary or parent of the
Company.

Section 9. Contribution. To the fullest extent permissible under applicable law,
if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
Liabilities and/or for Expenses, in connection with any Proceeding relating to
an indemnifiable event under this Agreement, in such proportion as is deemed
fair and reasonable in light of all of the circumstances of such Proceeding in
order to reflect (1) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving rise to such
Proceeding; and (2) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s)
and/or transaction(s).

Section 10. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company’s inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 10. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

Section 11. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

(a) Excluded Acts. To indemnify Indemnitee for any acts or omissions or
transactions from which a director, officer, employee or agent may not be
relieved of liability under applicable law; or

 
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(b) Claims Initiated by Indemnitee. To indemnify or advance Expenses to
Indemnitee with respect to any Proceeding initiated or brought voluntarily by
Indemnitee and not by way of defense, except with respect to Proceedings brought
to establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 317 of the
California General Corporation Law, but such indemnification or advancement of
Expenses may be provided by the Company in specific cases if the Company’s Board
of Directors has approved the initiation or bringing of such Proceeding; or

(c) Lack of Good Faith. To indemnify Indemnitee for any Expenses incurred by the
Indemnitee with respect to any Proceeding instituted by Indemnitee to enforce or
interpret this Agreement, if a court of competent jurisdiction determines that
the material assertions made by the Indemnitee in such Proceeding were not made
in good faith or were frivolous; or

(d) Insured Claims. To indemnify Indemnitee for Expenses or Liabilities that
have been paid directly to Indemnitee by an insurance carrier under a policy of
directors and officers liability insurance maintained by the Company; or

(e) Claims under Section 16(b). To indemnify Indemnitee for Expenses and the
payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Exchange Act or any similar
successor statute; or

(f) Claims under Sarbanes-Oxley Act of 2002. To indemnify Indemnitee for any
reimbursement of the Company by Indemnitee of any bonus or other incentive-based
or equity-based compensation or of any profits realized by Indemnitee from the
sale of securities of the Company, as required in each case under the Exchange
Act (including any such reimbursements that arise from an accounting restatement
of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, or the
payment to the Company of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act
of 2002).

Section 12. Effectiveness of Agreement. This Agreement shall be effective as of
the date set forth on the first page and shall apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was serving in any
Corporate Status at the time such act or omission occurred.

Section 13. Construction of Certain Phrases.

(a) As used in this Agreement:

“Change of Control” means any one of the following circumstances occurring after
the date hereof: (i) there shall have occurred an event required to be reported
with respect to the Company in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item or any similar schedule or
form) under the Exchange Act, regardless of whether the Company is then subject
to such reporting requirement; (ii) any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) shall have become, without
prior approval of the Company’s Board of Directors by approval of at least a
majority of the Continuing Directors, the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company’s
then outstanding voting securities (provided that, for purposes of this clause
(ii), the term “person” shall exclude (x) the Company, (y) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, and
(z) any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company); (iii) there occurs a merger or consolidation of the Company with any
other entity, other than a merger or consolidation which 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) more than 51% of
the combined voting power of the voting securities of the surviving entity
outstanding immediately after such merger or consolidation and with the power to
elect at least a majority of the board of directors or other governing body of
such surviving entity; (iv) all or substantially all the assets of the Company
are sold or disposed of in a transaction or series of related transactions; (v)
the approval by the stockholders of the Company of a complete liquidation of the
Company; or (vi) the Continuing Directors cease for any reason to constitute at
least a majority of the members of the Company’s Board of Directors.

“Continuing Director” means (i) each director on the Company’s Board of
Directors on the date hereof or (ii) any new director whose election or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority of the directors then still in office who were directors on
the date hereof or whose election or nomination was so approved.

“Corporate Status” means the status of a person who is or was a director,
officer, trustee, general partner, managing member, fiduciary, board of
directors’ committee member, employee or agent of the Company or of any other
Enterprise.

“Enterprise” means the Company, any Subsidiary and any other corporation,
limited liability company, partnership, joint venture, trust, employee benefit
plan or other enterprise of which Indemnitee is or was serving at the request of
the Company as a director, officer, trustee, general partner, managing member,
fiduciary, board of directors’ committee member, employee or agent.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 
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“Expenses” means all direct and indirect costs (including without limitation
attorneys’ fees, retainers, court costs, transcripts, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or
expenses) reasonably and actually incurred in connection with (i) prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing
to be a witness in, or otherwise participating in, a Proceeding or (ii)
establishing or enforcing a right to indemnification under this Agreement, the
Company’s Articles of Incorporation, as amended or Bylaws, as amended,
applicable law or otherwise. Expenses also shall include Expenses incurred in
connection with any appeal resulting from any Proceeding, including the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent. For the avoidance of doubt, however,
Expenses shall not include any Liabilities.

“Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporate law and neither currently is, nor in the
five years prior to its selection or appointment has been, retained to represent
(i) the Company or Indemnitee in any matter material to either such party (other
than with respect to matters concerning Indemnitee under this Agreement or of
other indemnitees under similar indemnification agreements), or (ii) any other
party to the Proceeding 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 Company
or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement.

“Liabilities” means any losses or liabilities, including without limitation any
judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid
in settlement, arising out of or in connection with any Proceeding (including
all interest, assessments and other charges paid or payable in connection with
or in respect of any such judgments, fines, ERISA excise taxes and penalties,
penalties or amounts paid in settlement).

“Proceeding” means any threatened, pending or completed action, derivative
action, suit, claim, counterclaim, cross claim, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether civil (including
intentional and unintentional tort claims), criminal, administrative or
investigative, including any appeal therefrom, and whether instituted by or on
behalf of the Company or any other party, or any inquiry or investigation that
Indemnitee in good faith believes might lead to the institution of any such
action, suit or other proceeding hereinabove listed in which Indemnitee was, is
or will be involved as a party, potential party, non-party witness or otherwise
by reason of any Corporate Status of Indemnitee, or by reason of any action
taken (or failure to act) by him or her or of any action (or failure to act) on
his or her part while serving in any Corporate Status.

(b) For purposes of this Agreement:

References to “Company” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger that, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees or agents, so that, if Indemnitee is or was a director,
officer, employee or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.

References to “Subsidiary” shall include a corporation, company or other entity:

(i) 50% or more of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority) are, or

(ii) that does not have outstanding shares or securities (as may be the case in
a partnership, joint venture or unincorporated association), but 50% or more of
whose ownership interest representing the right to make decisions for such other
entity is, now or hereafter, owned or controlled, directly or indirectly, by the
Company, or one or more Subsidiaries.

References to “other enterprises” shall include employee benefit plans;
references to “fines” shall include any excise taxes assessed on Indemnitee with
respect to an employee benefit plan; and references to “serving at the request
of the Company” shall include any service as a director, officer, employee or
agent of the Company that imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants, or beneficiaries.

Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

Section 15. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee’s estate, heirs, legal representatives and assigns.

Section 16. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand or recognized courier and receipted for by the party
addressee, on the date of such receipt, (ii) if mailed by domestic certified or
registered mail with postage prepaid, on the fifth business day after the date
postmarked, or (iii) if sent by confirmed facsimile, on the date sent. Notices
shall be addressed as follows:

 
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(a) if to the Company:

Yuma Energy, Inc.
1177 West Loop South, Suite 1825
Houston, Texas 77027
Telephone: (713) 968-7068
Facsimile: (713) 968-7016
Attention: Chief Financial Officer;

(b) if to Indemnitee, to the address of Indemnitee set forth under Indemnitee’s
signature below; or to such other address or attention of such other person as
any party shall advise the other parties in writing.

Section 17. Consent to Jurisdiction; Choice of Venue. The Company and Indemnitee
each hereby irrevocably consents to the jurisdiction of the courts of the State
of Texas and the federal courts within the State for all purposes in connection
with any action or proceeding that arises out of or relates to this Agreement
and agrees that any action instituted under this Agreement shall be brought only
in the United States District Court for the Southern District of Texas and any
Texas State court within that District.

Section 18. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of California.
 
[Signature Page Follows]

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 

           
YUMA ENERGY, INC.
                         
By:
       
Name:
       
Title:
                                       
INDEMNITEE
                         
By:
       
Name:
             

 
[Signature Page to Indemnification Agreement]

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