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EXHIBIT 10.8  


 
 

ABRAXAS ENERGY PARTNERS, L.P.
  LONG-TERM INCENTIVE PLAN
  OPTION AGREEMENT    
    


        This Option Agreement ("Option Agreement") is made and entered into effective as
of                        , 2007 (the
"Grant Date") by and between ABRAXAS ENERGY PARTNERS, L.P., a Delaware limited partnership (the
"Partnership"), and                        ("Participant"). 


        WHEREAS, the Partnership considers it to be in its best interest that Participant be given an inducement to acquire a proprietary interest
in the Partnership and an added incentive to advance the interests of the Partnership; and 


        WHEREAS, the Partnership desires to accomplish such objectives by affording Participant an option to purchase Units pursuant to the
Abraxas Energy Partners, L.P. Long-Term Incentive Plan, which is incorporated by reference herein (the "Plan"). 


        NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereby agree as follows: 


        1.    Defined Terms.    Unless otherwise defined herein, capitalized
terms used in this Option Agreement shall have the meaning given such terms in the Plan. 



        2.    Grant of Option.    The Partnership hereby grants to Participant
an option (the "Option") to purchase all or any part of an aggregate
of                        Units, under and subject to the terms and conditions of this
Option Agreement and the Plan. 


        3.    Purchase Price.    The purchase price for each Unit to be
purchased hereunder shall be $                        (the "Exercise Price"), which
has been determined to be no less than the Fair Market Value of a Unit on
the Grant Date. 


        4.    Vesting and Option Period.    Participant may exercise the
Option in whole or in part. Provided that Participant remains in continuous service with the Partnership, Company, or any Affiliate thereof from the Grant Date through the relevant vesting date, the
Option shall become vested and exercisable with respect to 25% of the covered Units on the first (1st) anniversary of the Grant Date, with respect to an additional 25% of the covered
Units on the second (2nd) anniversary of the Grant Date, with respect to an additional 25% of the covered Units on the third (3rd) anniversary of the Grant Date, and with
respect to the final 25% of the covered Units on the fourth (4th) anniversary of the Grant Date. Prior to the date of vesting, no portion of the Option shall be exercisable unless its
exercisability is accelerated as provided in the Plan or approved by the Committee in its sole discretion. Notwithstanding the foregoing, all Options not previously vested, will vest immediately prior
to the effective date of, and contingent upon, a Change of Control. Except as provided otherwise in this Option Agreement or the Plan, the Option, to the extent not theretofore exercised, shall
terminate on the expiration of ten (10) years from the Grant Date. 


        5.    Exercise Period; Method of Exercise; Payment.    



        (a)   To
the extent that the Option has vested, the vested portion of such Option must be exercised on or prior to the later to occur of the following dates:
(i) 70 days from the date of vesting and (ii) December 31st of the year in which vesting occurs, but in no event following the expiration of the term of the
Option as set forth in Section 4 of this Option Agreement. Any vested portion of any Option not exercised within the period described in this  Section 5(a)
 will terminate and no longer be exercisable, and the Units covered by such forfeited portion of the Option will be available for
issuance of Awards under the Plan. 


        (b)   The
Option shall be exercised by written notice to the Partnership, in substantially the form attached hereto as  Appendix A or such other form as may be approved from time to time by the Committee,
accompanied by payment of the aggregate Exercise Price for
the Units to be 








 




purchased
in accordance with the terms of this Option Agreement and any required tax withholding amount as may be determined in the discretion of the Committee. 


        (c)   At
the time the Option is exercised, payment of the aggregate Exercise Price for the Units to be purchased shall be made to the Partnership (i) in cash (including
check, bank draft or money order), (ii) by transfer from the Participant to the Partnership of Units (other than Units that the Committee determines by rule may not be used to exercise this
option) that the Participant has held for more than six (6) months with a then current aggregate Fair Market Value equal to the aggregate Exercise Price for the portion of this Option being
exercised, (iii) by the Partnership's retaining a number of Units deliverable upon exercise of this Option whose aggregate Fair Market Value is equal to the aggregate Exercise Price to be paid
in connection with such exercise; or (iv) to the extent permissible under applicable law, delivery to the Partnership of: (A) a properly executed exercise notice, (B) irrevocable
instructions to a broker to sell a sufficient number of the Units being exercised to cover the aggregate Exercise Price and to promptly deliver to the Partnership (on the same day that the Units
issuable upon exercise are delivered) the amount of sale proceeds required to pay the aggregate Exercise Price and any required tax withholding relating to the exercise, and (C) such other
documentation as the Committee and the broker shall require to effect a same-day exercise and sale. 




        6.    General Restrictions.    Subject to the terms of this Option
Agreement and the Plan, the Option may be exercised with respect to vested Units covered by the Option as set forth in Section 5 above. The
Option shall not be assignable or transferable except as expressly provided by the Plan, this Option Agreement or approved by the Committee in its sole discretion. 


        7.    Termination of Service Other Than for Death or Disability.    In
the case of termination of Participant's service relationship with the Partnership, Company, or any Affiliate, whether by the action of the Participant or the Partnership, Company or any Affiliate,
for any reason other than due to Participant's death or Disability (as defined herein), Participant may, until the earlier of (a) 90 days from the date of such termination (b) the
expiration of the Option in accordance with Section 4 of this Option Agreement, or (c) the forfeiture and termination of the vested
portion of any Option pursuant to Section 5(a) above, exercise the vested portion of any Option in accordance with  Section 5 of this Option
Agreement. To the extent such Option was not vested immediately prior to such termination, the Option shall
automatically terminate and become null and void. 


        8.    Death or Disability.    In the case of termination of
Participant's service relationship with the Partnership, Company, or an Affiliate thereof due to death or Disability, Participant or Participant's estate (or any person who acquired the right to
exercise such Option by bequest or inheritance or otherwise by reason of Participant's death) as applicable, may, until the earlier of (a) the expiration of the Option in accordance with  Section 4 of this Option Agreement or (b) the forfeiture and termination of the vested portion of any Option pursuant to  Section 5(a) above, exercise the vested portion of any Option in
accordance with Section 5
of this Option Agreement to the extent such Option had vested immediately prior to the time of Participant's death or Disability. To the extent such Option was not vested immediately prior to such
termination, the Option shall automatically terminate and become null and void. "Disability" shall mean the determination by a physician selected by the
Partnership that Participant has been unable to substantially perform Participant's usual and customary duties for a period of at least one hundred twenty (120) consecutive days or a
non-consecutive period of one hundred eighty (180) days during any twelve-month period as a result of incapacity due to mental or physical illness or disease. 


        9.    Rights as a Unitholder.    Participant, or a transferee of the
Option, shall have no rights as a holder of a limited partner interest in the Partnership pursuant to this Option Agreement except as to any Units actually purchased pursuant to the exercise of the
Option. 


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        10.    Plan Controlling Document.    Participant agrees that the Plan
is the controlling instrument and that to the extent there is any conflict between the terms of the Plan and this Option Agreement, the Plan shall control and be the governing document. 



        11.    Limited Partnership Agreement.    As a condition to the
exercise of the Option, Participant agrees to be bound by all applicable provisions of the Partnership's Agreement of Limited Partnership, as amended from time to time. 


        12.    Taxes.    The Partnership and any affiliate thereof are
authorized to withhold from any payment relating to the Option, or any payroll or other payment to Participant, amounts of withholding and other taxes due or potentially payable in connection with the
exercise of the Option, and to take such other action as the Committee may deem advisable to enable the Partnership, any affiliate, and Participant to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to the Option. This authority shall include authority to withhold or receive Units or other property and to make cash payments in respect thereof
in satisfaction of Participant's tax obligations, either on a mandatory or elective basis in the discretion of the Committee. 


        13.    Section 409A Acknowledgement and Release.    Participant
understands that payments under the Plan and this Option Agreement are potentially subject to Section 409A of the Code and that if the Plan and Option Agreement do satisfy an exception to Code
Section 409A or do not comply with the requirements of Section 409A and the applicable guidance thereunder, then Participant may incur adverse tax consequences under Section 409A.
Participant acknowledges and agrees that (a) Participant is solely responsible for all obligations arising as a result of the tax consequences associated with payments under this Option
Agreement including, without limitation, any taxes, interest or penalties associated with Section 409A, (b) Participant is not relying upon any written or oral statement or
representation the Partnership, Company or any Affiliate thereof, or any of their respective employees, directors, officers, attorneys or agents (collectively, the "Partnership
Parties") regarding the tax effects associated with the execution of this Option Agreement and the payment under this Option Agreement and the Plan, and (c) in deciding
to enter into this Option Agreement, Participant is relying on his or her own judgment and the judgment of the professionals of his or her choice with whom Participant has consulted. Participant
hereby releases, acquits and forever discharges the Partnership Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any
nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with the execution of this Option Agreement and any payment under the Plan and
this Option Agreement. 


        14.    No Right to Continued Employment.    Nothing in this Option
Agreement shall be deemed by implication or otherwise to confer upon the Participant the right to continue in the employment or service of the Partnership, Company or any Affiliate thereof, or impose
any limitation on any right of the Partnership, Company or any Affiliate thereof, to terminate the Participant's employment or service at any time for any reason. 


        15.    Service Relationship.    For purposes of this Option Agreement,
Participant will be considered to be in continuous service as long as Participant remains an Employee, Director, or Consultant (as applicable) of either the Partnership, Company, or any Affiliate
thereof or an employee, consultant, or director of an entity or a parent or subsidiary of such entity assuming or substituting new units for the Units covered by the Option. Any question as to whether
and when there has been a termination of such Service, and the cause of such termination, will be determined by the Committee, and its determination will be final. 


        16.    Issuance of Units.    The Partnership shall not be obligated to
issue any Units pursuant to the Option at any time when the Units covered by such Option have not been registered under the Securities Act of 1933, as amended, and such other state and federal laws,
rules or regulations as the Partnership or the Committee deems applicable and, in the opinion of legal counsel for the 


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Partnership,
there is no exemption from the registration requirements of such laws, rules or regulations available for the issuance and sale of such Units. 


        17.    Notices.    Any notices given in connection with this Option
Agreement shall, if issued to Participant, be delivered to Participant's current address on file with the Partnership, or if issued to the Partnership, be delivered to the Partnership's principal
offices. 


        18.    Execution of Receipts and Releases.    Any payment of cash or
any issuance or transfer of Units or other property to Participant, or to Participant's legal representatives, heirs, legatees or distributees, in accordance with the provisions hereof, shall, to the
extent thereof, be in full satisfaction of all claims of such persons hereunder. The Partnership may require Participant or Participant's legal representatives, heirs, legatees or distributees, as a
condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine. 


        19.    Successors.    This Option Agreement shall be binding upon
Participant, Participant's legal representatives, heirs, legatees and distributees, and upon the Partnership, its successors and assigns. 


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        IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement to be effective as of the day and year first above written. 



	 	 	ABRAXAS ENERGY PARTNERS, L.P.
	 	 	By:	Abraxas General Partner, LLC
	 	 	Its:	General Partner
	

 	
 	

By:	

 Barbara M. Stuckey

President and Chief Operating Officer
	
 	
 	

PARTICIPANT:
	

 	
 	
By:	







	

 	
 	

 	

 
	 	 	Printed Name:	





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   APPENDIX A  


FORM OF OPTION EXERCISE NOTICE  


ABRAXAS ENERGY PARTNERS, L.P.

LONG-TERM INCENTIVE PLAN

OPTION EXERCISE NOTICE  



	

PLEASE PRINT:	

 
	

TODAY'S DATE:	







	

OPTIONHOLDER NAME:	







	

MAILING ADDRESS:	


	

 	







	

Attention:	

	

 





I
hereby exercise my Option to acquire                        Units, as defined in the ABRAXAS ENERGY PARTNERS, L.P. Long-Term
Incentive Plan (the
"Plan"), at my exercise price per Unit of $                        . Enclosed is
the original of my Option Agreement evidencing my Option hereby exercised and
consideration in a form provided for in my Option Agreement in the amount of $                        . 



I
hereby represent that I have previously received a copy of the Plan from the Partnership and that I understand the terms and restrictions described therein and agree to be bound by the terms of such
document and my Option Agreement. 



	

 	
 	

 	

 
	 	 	By:	






Receipt
of Notice and Payment in Full Acknowledged: 



	

By:	

	

 





	

Name:	

	

 





	

Date:	

	

 





	

NOTE:	

If exercising the Option represented by the enclosed Option Agreement to purchase less than all of the Units to which the Option relates, the original Option Agreement will be returned with an appropriate notation evidencing the Units for which the
Option has been exercised.




Appendix A-1











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ABRAXAS ENERGY PARTNERS, L.P. LONG-TERM INCENTIVE PLAN OPTION AGREEMENT